Commons Sitting of 20 May 2004

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  IPSWICH MARKET BILL
  Considered; to be read the Third time.
Oral Answers to Questions
  ENVIRONMENT, FOOD AND RURAL AFFAIRS
  The Secretary of State was asked—
  ENVIRONMENT, FOOD AND RURAL AFFAIRS

    Haskins Report
    Dr. Vincent Cable: If she will make a statement on the progress her Department is making towards implementing the Haskins report. [174399]
    The Secretary of State for Environment, Food and Rural Affairs: I intend to publish a refreshed rural strategy for England later in the spring. The strategy will include a full response to the recommendations coming out of Lord Haskins's rural delivery review. Good progress is being made with stakeholders to develop this response.
    Dr. Cable: I thank the Secretary of State for the positive tone of her reply. How does she propose to reconcile the approach of Lord Haskins, which is to deal with inefficiency and overstaffing in DEFRA through decentralisation, with the approach set out in the Chancellor's Gershon process, which is to deal with overstaffing and inefficiency by centralising decision making?
    Margaret Beckett: With respect, I think that the hon. Gentleman has misunderstood the impact of the Chancellor's proposals. There is no difference of view between us that the decentralisation of delivery processes would be highly desirable, and that is entirely consistent with reducing perhaps unnecessarily full core activities at the centre.
    Mr. David Drew: Does my right hon. Friend accept that, although Haskins has made many good recommendations, the true test is what is happening in rural areas? We must ensure that some of
    1078
    the good programmes that have been put in place by the Countryside Agency and others are allowed to continue. Does she agree that we need to ensure that that happens?
    Margaret Beckett: I entirely agree that there are at least two important aspects to Lord Haskins's proposals, one of which is that we should have more effective organisation of the agencies and organisations that relate to DEFRA. The second, which is much more germane to the ordinary citizen in rural areas, is what happens to the plethora of rural funding streams; I believe that Lord Haskins identified between 70 and 100 of them. I have asked the Department to examine, as its first priority, how we can simplify this area to give better delivery of services to customers in rural areas.
    Mr. Michael Jack: The Secretary of State talks about her rural strategy, and she will be aware that there is a plethora of organisations involved in the provision of flexible labour in agriculture and horticulture, particularly related to the work of gangmasters. What steps will she take, in the light of the report of the Environment, Food and Rural Affairs Committee, to ensure that the Government at last appoint a Minister with the power to rationalise and make policy in this area effective?
    Margaret Beckett: The right hon. Gentleman will know that the Select Committee report, which was published only yesterday, deals with a good number of the Committee's thoughts on that matter. I have not had a chance to study it, although I shall of course do so. The Government are conscious that this is an extremely difficult problem, with which successive Governments have grappled without success. We hope to be more successful.
    David Taylor: The Secretary of State will know that, as resources are moved from the Countryside Agency to local authorities and regional development agencies, concerns remain in rural areas that the money intended for improvements to the countryside might be swallowed by other budgets and that, instead of the delivery of projects, there might be delay or even destruction in some circumstances. What assurance can she give the House that that is unlikely to happen?
    Margaret Beckett: Of course I understand that anxiety, and I seem to recall that great concern was expressed when the regional development agencies were first set up. However, it will be within my hon. Friend's memory—as it is within that of most of us—that, during the recent outbreak of foot and mouth disease, the RDAs were very helpful and supportive. Many of those anxieties have therefore not been realised. I can assure him that we shall monitor the situation carefully to ensure that the right support goes to rural areas. That will also be part of the remit of the new, slimmed-down Countryside Agency, which I am sure will be robust in its observations.

    Fallen Stock
    Mr. David Rendel: When she expects to introduce a national collection scheme to assist livestock farmers in disposing of fallen stock. [174400]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw): It is expected that an industry-led scheme backed by Government funding will be introduced in the autumn of this year.
    Mr. Rendel: Obviously, the scheme should have been introduced before the regulation was introduced last July. We were promised then that it would be introduced by the new year. Is it not deeply depressing that we still have no definite date for the scheme—merely "the autumn of this year"? Will the Minister guarantee that any farmer who does not have an abattoir within easy reach of his or her farm will not be prosecuted if they do their best to dispose safely of their fallen stock on their own farm premises?
    Mr. Bradshaw: Farmers are expected to comply with the regulation, although local authorities, which are responsible for enforcement, have been told to implement it with a light touch before the scheme is up and running. I share the hon. Gentleman's regrets about the length of time that it has taken, but this is quite a complex matter. It involves trying to get agreement across all the livestock and other sectors involved. We have now achieved that. It is an industry-run scheme, it has buy-in from the industry and those who run it are confident that it will be launched this autumn.
    Ann Winterton: Does the Minister recognise that any future ban on hunting with hounds would reduce the options available to farmers? Will he acknowledge that in 2003, 143 hunt kennels processed 500,000 carcases, free to local farmers? There will be further problems if that is not recognised and if there is a ban. Will he also tell the House whether the EU—
    Mr. Speaker: Order.
    Mr. Bradshaw: If the hon. Lady checks, she will find that the vast majority of hunt kennels charge for the service—they do not provide a free service. We acknowledge that hunt kennels play a role, but it is small in terms of the amount of stock they collect and dispose of, and it is sensible for them to develop this service as an alternative source of income. Those on the board who administer the scheme, and representatives of the collection and disposal industry, assure me that a hunting ban would have absolutely no effect on their ability to dispose of fallen stock. There is plenty of capacity available within the industry.
    Mr. James Gray: The Minister says glibly that any ban on hunting would have no effect whatever on the fallen stock company that was set up this week. Why, then, did he announce that 146 of the registered collection centres will be hunt kennels, and that about 80 per cent. of the countryside of England will not be serviced by anybody apart from
    1080
    hunt kennels? Will he not pay some tribute to the valuable service that they have given to the countryside over many years? Will he acknowledge that whether or not hunts charge for collection—most of them do not— they collected 600,000 carcases last year, at a cost of £3.5 million? What would he do if hunting were to be banned?
    Mr. Bradshaw: The hon. Gentleman was not listening to my answer. I quoted the chairman of the board of the National Fallen Stock Company, who assured me that a ban on hunting would have no impact whatever on the industry's capacity to dispose of fallen stock.
    Andrew George: Will the Minister reassure the House that farmers in remoter rural areas will not be disadvantaged by excessive charges for the collection of their fallen stock compared with those in areas closer to collection centres? Given the Government's evidently maňana attitude to a regulation that should have been acted on more than a year ago, do they believe that it is an effective and worthwhile scheme that is making a significant impact on the biosecurity of livestock farms?
    Mr. Bradshaw: I am not sure whether the hon. Gentleman is suggesting that we gold-plate all EU regulations, although perhaps that is the new Liberal Democrat approach to these matters. I take on board his concern about livestock farmers in remoter rural areas. I am aware, for example, of the concerns of the sheep industry in the remoter parts of Wales, although the National Sheep Association supports this scheme. One of the advantages of the new scheme is that it is a pay-as-you-go scheme, so it is likely to drive down prices. We already know that at least one collector in Wales has said that he will reduce his prices once the scheme is up and running.

    Single Farm Payments
    Sir Nicholas Winterton: What discussions she has had on her proposals for single farm payments in respect of farmers in severely disadvantaged areas. [174401]
    The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): I have had discussions with, and received representations from, a wide range of interests on this subject. As a result, I made a parliamentary written statement to the House on 22 April.
    Sir Nicholas Winterton: As the Secretary of State knows, part of my Macclesfield constituency lies within the Peak District national park. Will she take seriously the views of my farmers, who are deeply concerned about the proposed single farm payments? Up to 200,000 cows are estimated to be on the 5,000 farms in severely disadvantaged areas, and the National Farmers Union believes that those farms will no longer be profitable and will go out of business in respect of livestock farming. Would not that be a disaster for farming, the upland environment and our rural economy?
    Margaret Beckett: Of course I am aware of the concerns that exist. It is because of them that the

    1081
    Government have agreed to phase in the move to area payment over some eight years. That gives farmers in every part of the United Kingdom plenty of opportunity to assess the position of their own businesses and make their own business decisions. Other payments are available, such as the hill farm allowance, which is paid under the rural development regulation. It will continue until the present period ends in 2006.
    We believe that all farming interests will benefit from decoupling. We have sought to deal with the concerns, but the hon. Gentleman, who is also a staunch advocate of his manufacturing constituents' interests, will know that many businesses would like the degree of certainty that we seek to offer agriculture.
    Lawrie Quinn: Many of my constituents in areas such as the North York moors will be affected by the proposals. Will my right hon. Friend consider holding a seminar for all Members representing such severely disadvantaged areas, so that we can talk to officials and perhaps, if necessary, bring along some of our staff? I am sure that we shall need to give a great deal of information to constituents facing the new arrangements. It would be helpful if that information were as good, as up to date and as factual as possible, so that we could cut through some of the confusion that currently exists.
    Margaret Beckett: That is a wise suggestion, which echoes one made a while ago by the right hon. Member for Fylde (Mr. Jack), who chairs the Select Committee. We certainly have it in mind to offer special briefing to all interested colleagues, not least those representing moorland areas. We are well aware that although the moorland line has been fairly well established for a long time, when it was established there was no process of appeal, as there was in the case of the boundaries for special areas.
    We are considering all the issues. Officials are currently tied up with detail, but I hope and expect that we shall be able to offer the support that my hon. Friend seeks in the not-too-distant future.
    Mr. Patrick McLoughlin: The Secretary of State is familiar with my constituency in the Peak district. Although the change she has had to make since her original announcement has been welcomed, many farmers are asking why they are being treated differently from those farming perhaps only half a mile away but outside the area. Would it not be better to have only one distinction, between moorland and non-moorland farms?
    Margaret Beckett: We thought about that carefully. One of the factors that led us to refine our decision—not reverse it, as the hon. Gentleman suggested, although he may not really have meant that—was the scale and unanimity of representations from a wide range of farming organisations. We believe that this is an improvement, because it mitigates the effects of the redistribution that would otherwise have occurred.
    We looked carefully at the possibility of using the distinction suggested by the hon. Gentleman, but when people were forced to choose the balance was in favour of the proposals I announced a week or so ago.

    Hunting
    Mrs. Helen Clark: What progress has been made towards a ban on hunting with dogs. [174402]
    The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): A clear commitment has been given to the House that the issue of hunting with dogs will be dealt with during the life of this Parliament.
    Mrs. Clark: The Minister is of course aware that three quarters of the British public think hunting with dogs should be banned. Over the past seven years, the House has repeatedly shown the same determination. Will the Government introduce a Bill to ban hunting with dogs in time for it to become law during this Session? I will accept a one-word answer—yes or no.
    Alun Michael: My hon. Friend knows that I am not going to give her a one-word answer. She also knows from the reaction of Opposition Members that there is a knee-jerk reaction in some quarters when the issue of hunting is mentioned. I have made it clear that a commitment has been given to the House by the Prime Minister, the Leader of the House and me that the issue will be dealt with during the life of this Parliament.
    Sir Patrick Cormack: What possible case is there for criminalising a large section of the most law-abiding members of the rural community?
    Alun Michael: In view of the hon. Gentleman's long experience in the House, I should have thought that he would know that the House of Commons—the Houses of Parliament—frequently passes new laws, as a result of which certain actions become illegal. It is not a question of criminalising people; those who offend against laws passed by Parliament are offenders. Therefore, the hon. Gentleman should put his question in a rather more neutral manner.
    Mr. Peter Pike: I know that my right hon. Friend gave his answer in good faith, and I am sure that he intends to deliver on it, but does he accept that many people who are currently writing to many MPs believe that this House has overwhelmingly voted in favour of the banning of hunting on many occasions and that it is wrong for the other House to block that? They want to see that ban as soon as possible.
    Alun Michael: I understand the strength of view that is shared by a large number of right hon. and hon. Members. I should say gently to my hon. Friend that much concern is often expressed before things happen, and then silence when the Government deliver on what they have promised, as they have on so many issues.
    Mr. Douglas Hogg: Does the right hon. Gentleman understand that such a Bill would be widely regarded as an unwarranted attack on the civil liberties of minorities, and would tend to bring parliamentary government into widespread disrepute?
    Alun Michael: The right hon. and learned Gentleman voices an opinion that is shared by a narrow group of

    1083
    people. It is only fair to say that opinion on this issue is divided passionately among rural people, just as it is divided among urban dwellers. It is one of those issues on which there is a deep divide between those who hold strong and opposing views. I have tried to encourage people on both sides of that divide to listen to those on the other side, and I would encourage the right hon. and learned Gentleman to take that approach.
    Mr. Dennis Skinner: Does the Minister recall that in the course of the past two or three weeks the Tories have laid claim to the notion that when we have introduced some decent legislation, they thought of it first? This is something that they have not thought of first. If the Minister wants to wipe that oily grin off the Tory party leader's face, this is the one thing that he should do—and do in this Session of Parliament.
    Alun Michael: My hon. Friend makes his points in his usual, vigorous manner. I am not sure whether many of those claims to have thought of things first are justified, but I recall some of the things that the current leader of the Opposition thought of first when he was Home Secretary. I do not recall that he was very effective then in bearing down on crime and disorder in the way that this Government have been, but I hear what my hon. Friend says.
    Gregory Barker: In order to demonstrate that this is not a piece of malignant legislation left over from the old Labour class-war politics, will the Minister inform the House what the scientific basis is for introducing such a Bill? What scientific research has he seen that informs him that hunting with dogs has a greater adverse effect on the welfare of the fox than shooting, trapping, snaring or poisoning foxes, which will remain perfectly legal under his proposals?
    Alun Michael: The hon. Gentleman always gives the impression that he has wandered in from some sort of parallel universe. I would urge him to do what both sides in the debate urged us to do: to start with the Burns report. That interesting, revealing report was produced with independence and great engagement from all sides. He should also carefully consider the hearings that took place in Portcullis House in September 2002. They were very interesting, because we looked at the facts and the science and gave everyone the opportunity to question those who gave evidence. I suggest that the hon. Gentleman stay in our universe for a few minutes, and do some reading and some homework.

    Cormorant Predation
    Mr. Martin Salter: What plans the Government have to allow fishery owners and angling clubs to protect inland waterways from the effects of cormorant predation. [174403]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw): Following representations from my hon. Friend the Member for Reading, West (Mr. Salter), I am actively considering extra measures that could help fishery owners and angling clubs to deal with the increasing problem of predation by cormorants.
    Mr. Salter: I thank the Minister for his reply, which will be welcomed by the 3.5 million anglers in this country. He is well aware of the serious environmental damage being caused to many inland fisheries in Britain as a result of the massive increase in cormorant numbers in the past 10 years. He is also aware that many European countries are relaxing their rules and granting themselves derogation from the EU birds directive. Is it not about time that Britain followed suit?
    Mr. Bradshaw: I am not sure that we would be prepared to go that far. If my hon. Friend studies the experience of France, which has granted such derogation and has killed many cormorants, he will see that the evidence of a beneficial effect is at best patchy. I accept the concern that he expresses on anglers' behalf that serious localised problems exist, particularly in some of our inland fisheries, and I will re-examine this issue to see whether more can be done.
    Mr. David Heathcoat-Amory: The Government have a declared policy of equal rights, yet the hon. Gentleman's Department is here defending and promoting the interests of those who like dragging fish around in the water and pulling them out by sharp hooks before putting them back, while at the same time wishing to ban hunting with dogs. What are the Government and his Department doing to stamp out hypocrisy on these issues, both inside and outside this House?
    Mr. Bradshaw: I am not sure what that has to do with cormorants, but the right hon. Gentleman is right: any Government have to strike a balance between the rights of fish and the rights of cormorants, and we are indeed trying to strike that balance.
    Mr. Tony Banks: Why has there been such a large increase in the cormorant population?
    Mr. Bradshaw: As with many of these very interesting questions, there is no conclusive scientific evidence, but one reason might well be that because our streams and rivers are cleaner than they have been for generations— thanks to the environmental improvements undertaken by this Government—fish populations in inland waterways are much higher, and cormorants that used not to live inland have migrated there in recent years.

    State Veterinary Service
    Mr. Roger Williams: If she will make a statement on the future of the state veterinary service.—[174404]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs: The Government believe that the state

    1085
    veterinary service should become an Executive agency from 1 April 2005. A consultation exercise will be launched soon.
    Mr. Williams: I thank the Minister for that reply. The announcement was made last October, and it seems that the Minister has already made his mind up, given that the advertisement for the post of chief executive of the next steps executive agency has already appeared. Surely the Minister should have consulted first. Has he consulted the British Veterinary Association, the National Farmers Union or—in particular, so far as I am concerned—the National Assembly for Wales?
    Mr. Bradshaw: We have had discussions with those bodies. Indeed, the former president of the British Veterinary Association said on the wireless this morning—on the "Farming Today" programme—that in his view the separation of delivery and policy was a good idea. However, we have not made up our minds. This is a genuine consultation process, and if the results are overwhelmingly hostile we will think again. The advertisement had to be placed then in view of the need to stick to the deadline and of the time it will take to appoint somebody. No firm decisions have been taken, which is why full consultation will take place.
    Mr. Owen Paterson: Is the state veterinary service sufficiently organised to cope with the annual 20 per cent. increase in bovine tuberculosis predicted by the Government?
    Mr. Bradshaw: Yes. it is, and the hon. Gentleman might be interested in the following figures. Currently, there are the equivalent of 1,445 full-time members of staff in the state veterinary service, compared with only 1,100 in 1995—a 31 per cent. increase since the Conservatives were in government. Moreover, the amount spent on the state veterinary service increased in the same period by 60 per cent.

    Large Combustion Plant Directive
    Paddy Tipping: If she will make a statement on how she intends to implement the large combustion plant directive. [174408]
    The Minister for the Environment and Agri-environment (Mr. Elliot Morley): We have yet to make a final decision on the mode of implementation of the revised large combustion plant directive. We will make an announcement as soon as possible.
    Paddy Tipping: Will the Minister confirm and publish the Mott MacDonald study commissioned by his Department, and will he confirm that his noble and ministerial Friend Lord Whitty visited one of the midlands pits only a few days ago? In the light of both those events, is it not true that if a national plan approach were taken half the coal collieries in this country would close within the next five to six years?
    Mr. Morley: It is true that if the national plan approach were implemented in is currently discussed format, it would have an impact on the coal sector. There are no two ways about that. Similarly, if the
    1086
    alternative approach on emission limits were put in place, that would also have an impact on manufacturing. It is a complicated issue, as my hon. Friend knows. We want to put as much information as possible in the public domain. Our objective is to meet desirable environmental standards, but to do so with the minimal impact on the relevant sectors. That is what we are currently trying to do.
    Miss Anne McIntosh: As the Minister rightly says, this is a complicated issue. He would accept that existing plants are in danger of breaking all the Government's emission targets. When will the Government make an announcement to confirm that existing plants will be included as part of the national plan, and what will be the costs to the industry of meeting the regulatory impact goals?
    Mr. Morley: On the latter point, some figures have been made available on the costs of the regulatory impact, but we need to be aware that there are also health benefits to wider society from lower emissions. That reduces costs on the NHS, for example, so there are positives and negatives to the approach. I repeat that we want implementation to produce environmental gain with the minimum impact on the sectors concerned. That could mean some delay as we assess the various models and talk to the different sectors about implementation. I believe that it is better to have some delay in order to get it right and minimise the impact.
    Mr. Bill O'Brien: I join my hon. Friend the Member for Sherwood (Paddy Tipping) in appealing to the Minister to have regard to the impact of the national plan on the electricity generating industry and the coal industry. I accept that the aluminium industry, with its single unit, has to be taken into account. Will the Minister impress on the European Commission the need for some variation in the application of the plan, which is what the French are doing in their submission to the EEC by seeking to variate in order to protect their businesses and industries?
    Mr. Morley: I can assure my hon. Friend that we examining the French proposals, but he will be aware that there are complexities surrounding legal interpretation. I repeat my general point. In respect of the Commission, there should be elements of flexibility in the regulations that are designed to bring about the desirable environmental outcomes. We want those outcomes to be achieved in a way that recognises the impacts on industry and does not have a disproportionate effect. We want the outcomes, but with the minimal effect in respect of the economic impact.

    Sugar Beet
    Mr. Henry Bellingham: When she next expects to meet sugar beet growers to discuss reforms of the EU sugar beet regime. [174409]
    The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): Ministers frequently

    1087
    meet the National Farmers Union and other farming organisations to discuss a range of topical subjects, including sugar reform.
    Mr. Bellingham: I am grateful to the Secretary of State for that reply, but is she aware of the vital importance of sugar beet to Norfolk's rural economy? In fact, Norfolk grows about half of the beet grown in this country. Has she had a chance to reflect on the recent remarks of the noble Lord Whitty given in evidence to the Select Committee on Environment, Food and Rural Affairs? He seemed to say that he favours full liberalisation, but is that the Secretary of State's view. Does she agree that, if the Government are to opt for full—or, indeed, any— liberalization, it is vital to put in place a well thought out bioethanol programme? That alone can offer hope to Norfolk's beet growers.
    Margaret Beckett: First, I do know about some of the remarks of my noble Friend. His point was that he did not believe that any of the options currently on the table—including the status quo—were fully viable. He was speculating about what might finally emerge from the balance of potential options. I take the hon. Gentleman's point about bioethanol and the possibilities for the future, but I was under the impression that the Conservative party was in favour of liberalisation. I believe that it was on 1 March that the Leader of the Opposition said:
    "Rich countries should act in accordance with what they know to be true: free trade spreads prosperity, protectionism does not."
    Mr. Kelvin Hopkins: Will my right hon. Friend confirm that the common agricultural policy damages the third world most of all through what it does to the sugar trade? Does that not make a powerful case for the eventual abolition of the CAP? Should not sugar policy be repatriated to member states so that they can choose what they do with their sugar producers? Should we not aim to create a world in which we do not damage third-world producers?
    Margaret Beckett: I certainly agree that it is important to try to make sure that we do not damage third-world producers, and any proposals that are made ultimately will have to be judged in part against that criterion. However, I am afraid that I do not share my hon. Friend's view that there should not be a common policy on agriculture. The Opposition took us into the European Community and passed the Single European Act, and one requirement of a single market is that there is some sort of co-operative marketing structure.
    Mr. John Whittingdale: Does the Secretary of State accept that, unlike other European producers, the UK produces only half of what it consumes, with the rest being imported from third-world countries? Does she agree, therefore, that any reform should take account of that fact, and that the EU might do well to look at the British model—that is, opening up its market to third-world countries while at the same time preserving a domestic sugar industry? Does she also agree that, as part of reform, the Government must help sugar growers to find new markets, of which the bioethanol market is certainly one?
    Margaret Beckett: Certainly, any implications of new proposals would have to be examined carefully.
    1088
    However, although sugar producers, refiners and so on can make a very strong case, the sugar regime has remained basically unchanged for something like 35 years while every other regime has been reformed around it. It seems to me that a regime that demands a price for sugar that is twice the world price is not sustainable in the long term.

    Wind Turbines
    Mr. Eric Forth: What discussions she has had with the Department of Trade and Industry on the environmental impact of wind turbines. [174410]
    Bob Spink: What discussions she has had with the Department of Trade and Industry on the environmental impact of wind turbines. [174411]
    The Minister for the Environment and Agri-environment (Mr. Elliot Morley): Lead responsibility for wind energy lies with the DTI, although the Department for Environment, Food and Rural Affairs is also a regulator for offshore wind farms. My right hon. Friend the Secretary of State regularly meets with my right hon. Friend the Secretary of State for Trade and Industry to discuss matters of mutual interest.
    Mr. Forth: The Minister for Energy, E-Commerce and Postal Services at the DTI is a well-known wind enthusiast. Indeed, I think that he has said that 80 per cent. of renewable energy should come from wind. Will the Minister say where the thousands of wind turbines needed to achieve that target will be located? What account has he or his Department taken of the effect on birds, aircraft and local communities? Has he discussed that with the DTI? How on earth is the Minister's wind going to provide reliable energy?
    Mr. Morley: We must put the matter into perspective. The objective is to get 10 per cent.—rising to 15 per cent.—of our energy from renewables, of which wind is but one part. We are encouraging and supporting other technologies, and it is likely that the sector will develop in due course. However, there is no getting away from the fact that wind is a cheap and reliable option in the renewables sector. It is important that we increase the amount of energy taken from renewable sources in this country, but the impact on the environment and landscape cannot be ignored.
    The potential impact on birds is a serious issue that we take into account in our studies of offshore farms. In the constituency of my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), for example, very large applications for wind farms have been made. He and other hon. Members have represented very strongly the reasonable case put by local people about the potential impact. We take that case seriously, and take it into account.
    Bob Spink: The hon. Gentleman is generally an excellent Minister, but he is a little unsound on this subject. He will be aware that a wind farm is mooted for the Thames estuary that would have serious implications for navigation and the environment. In addition, some people say that the noise of such a farm

    1089
    would adversely affect surrounding residential areas. Before any steps are taken in respect of the Thames estuary wind farm, will he ensure that the people of Castle Point—and of Canvey island, in particular—are fully consulted, so that their interests can be taken into account?
    Mr. Morley: I want to make it clear that many of these matters are for the DTI, while others, such as navigation, are for the Department for Transport. A co-ordinated approach is therefore required, but I can assure the hon. Gentleman that this Department takes very seriously those aspects of the environmental impact of wind farms that are our responsibility. They tend to be offshore, as we have a role in offshore consents. I assure him that we insist on environmental impact assessments: for example, we support the research into offshore bird populations undertaken by the Joint Nature Conservation Committee. We also insist on long-term monitoring of those effects. All those issues can be taken into account. If we are serious about tackling climate change, we must increase the amount of renewable energy used, and wind is an important part of that.
    Mr. Ian Cawsey: When my hon. Friend considers the environmental impact of wind turbines, will he include the gold-digging syndrome that is seen when one company comes into an area and does a study to see if it is suitable, and then many other companies come in on the back of that study? In no time, an area is bogged down with application after application for wind turbines. My hon. Friend will know, from his knowledge of my area, that in North Axholme and Goole Fields many companies are now considering applications. The people of Crowle are not anti-renewable energy and they can see that wind might have a role to play, but they are sick and tired of the scale of what is proposed. It is too much for one small part of the country.
    Mr. Morley: I understand the point that my hon. Friend makes, and he arranged a meeting with the local action groups in his constituency, which I attended to listen to their views. I have great sympathy with many of the points that were made. People oppose wind farms for many reasons, not always because of their environmental impact. People have valid concerns and we take those into account in our environmental assessments. I know that the scale of the applications is taken into account by the DTI in its scoping studies, and I will certainly speak to my colleagues in that Department about my hon. Friend's concerns.
    Mr. David Chaytor: Has my hon. Friend the Minister seen the press reports this week about the first school in the UK to construct a wind turbine on its roof? Is not it the case that the new generation of compact wind turbines will enable every school, factory, hospital and even private house in the UK to generate its own electricity? When my hon. Friend next discusses the issues with his colleagues in the DTI, will he also involve my right hon. Friend the
    1090
    Secretary of State for Education and Skills in discussing the potential for more schools to generate their own electricity through wind turbines?
    Mr. Morley: My hon. Friend makes a very good point. We have been discussing issues such as sustainability with the Green Ministers group and I know that the DFES is very interested. The House should also recognise that this country is developing industries that are leaders in new energy technologies. The roof-based wind turbines are produced by a British company based in Scotland, and the export market for their products has enormous potential. The new technology will provide environmental benefits, as well as gains for our wider economy.
    Norman Baker: Has the Minister noticed that those who are keen to rubbish wind power are often the same people who advocate a new generation of nuclear power stations? Has he discussed with the Secretary of State for Trade and Industry the full lifecycle costs of wind power as against nuclear power, given the £48 billion decommissioning costs—£8,000 per person in this country—of the latter? Does the Minister agree with the Secretary of State that it would therefore be wrong to set out on a new generation of nuclear power?
    Mr. Morley: There are no proposals in the energy White Paper for new nuclear power stations. The hon. Gentleman makes the point about the choices that have to be made about energy generation. Renewables must be part of that balance, and we must increase the proportion they provide. People have various motivations for opposing applications for wind farms, including some members of the hon. Gentleman's party in their constituencies. I hope that he will speak to them about that.
    Richard Ottaway: The Minister and the DTI are swamping the country with wind farms in pursuit of his failing policy on climate change. Is he aware that CO2 emissions went up last year? Instead of putting all his eggs into the wind farm basket, he should focus on wave and tidal power, solar energy, photovoltaics, biomass and hydrogen, and introduce a proper diversified renewables policy that might actually see CO2 emissions going down, instead of up.
    Mr. Morley: What blatant opportunism! It comes from the party that tabled a Prayer to try to block emissions trading in the European Union and that made no progress in addressing climate change when it had the opportunity to do so. The energy White Paper is universally recognised as a world leader in global strategies for dealing with climate change. It addresses all the issues, including tidal energy, solar power and gas. That is all part of the research and development that we have put in, but which the previous Conservative Government cut.

    Milk Prices
    Mr. Andrew Turner: If she will make a statement on milk prices. [174412]
    The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): The most recent available figure shows that the average UK farm-gate price for milk delivered in March was 18.51p per litre, which is 1.14p per litre higher than last year. That is the highest figure for milk delivered in March since 1999.
    Mr. Turner: I thank the Minister for his reply. Farmers in my constituency strive to get 10p a pint for milk, but the housewife in the supermarket has to pay 37p. How successful have the Government been in dealing with rip-off supermarkets and their oligopoly?
    Alun Michael: We welcome the Office of Fair Trading decision to undertake a compliance audit of the supermarket code of practice to establish evidence for any further action. Furthermore, the work that has been done demonstrates that changes in farm-gate prices and supermarket prices are reflected one on the other. There was thought to be dissonance between the two, but that does not appear to be the case.
    Mr. Lindsay Hoyle: I am sure that my right hon. Friend is aware that some milk processors are going out of business at present. The supermarkets' cartel is putting on pressure, so farmers struggle to find someone to buy their milk and are then forced into selling it at a reduced price against the premium that they always had in the past. That is a worry and we need to look into it. The matter is urgent for dairy farmers, especially as they have nowhere else to turn if they produce milk alone.
    Alun Michael: I understand my hon. Friend's concern, but we are trying to move to a situation where farmers produce what the market requires. In my initial reply, I referred to the work of the OFT, which is considering whether anything needs to be done to ensure that there is a level playing field. I encourage my hon. Friend to look at the available information, especially from the KPMG study on prices and profitability in the British dairy chain, which contains a number of lessons for us to learn in looking at the future of the dairy industry.
    Mr. David Heath: Is it not still the case that the entire dairy chain is distorted from beginning to end, so that primary producers and processors are constantly squeezed to the point that there are unsustainable milk prices, which mean that many of them are going out of business? Do we not need if not a stronger code of conduct, one that is properly implemented and properly enforced so that supermarkets do not simply make profits while our dairy industry is being exported?
    Alun Michael: I encourage the hon. Gentleman, too, to look at the detailed information about the industry. We have gone to some trouble to ensure that it is available—for example, on fluctuations, a 1p increase in the farm-gate price resulted in an increase of only 0.6p in the retail price of liquid milk, whereas a 1p decrease in farm-gate prices reduced the retail price by 0.7p. Clearly, there are fluctuations in the market and there are pressures, and supermarkets do things in order to try to keep their prices down. That is why the examination
    1092
    by the OFT, which is based on facts, not fears—although the fears are understandable—is the right way to approach the issue.

    Hunting With Dogs
    Mr. Bob Blizzard: When she will be in a position to bring forward legislation to ban hunting with dogs. [174413]
    The Minister for Rural Affairs and Local Environmental Quality (Alun Michael): I can only repeat the assurances, which the Government have given consistently and repeatedly, that the issue will be dealt with in the present Parliament.
    It must be remembered that the Government did bring forward legislation during the last Session, which was amended in the House of Commons, and that the House of Lords failed to complete its consideration of the Bill.
    Mr. Blizzard: I thank my right hon. Friend for that answer.
    There have been inquiries and endless debates on whether hunting is an essential tool of countryside management, but is not the key to be found on the placards that huntsmen hold up when they go on their demonstrations? The placards say, "Leave country sports alone". Hunting is a sport. It is a cruel sport. It is an unnecessary sport. It is a sport that the people of this country want banned. It is a sport that the House wants banned. May we have a Bill as soon as possible so that we can do just that?
    Alun Michael: My hon. Friend is right to point to the revealing nature of the messages on some of the placards. I do not think that such messages did any favour to those who tried to make a case for hunting having a role in, for instance, the control of vermin and so on. I would only point him to the conclusions that I reached and brought before the House as a result of exhaustive inquiries and listening to all sides of the debate. The evidence deserves better attention than the sort of placard to which he refers.
    Mr. Peter Luff: The Minister again referred to the evidence during his answer to the hon. Member for Waveney (Mr. Blizzard), and the Minister often professes a great attachment to scientific objectivity and curiosity in matters that relate to hunting with dogs, although his body language and rhetoric sometimes suggest something rather different. I suspect that that criticism could be made of me, of course. The peer group review will be completed soon into the middle way group study into the welfare effects of shooting foxes. May I ask the Minister to pay very careful attention to that peer group review, whatever it says? It may or may not support our study, but may I ask him for an assurance that he will at least look at the peer group review before introducing any further legislation in the House?
    Alun Michael: As for body language, the hon. Gentleman is sometimes referred to as enthusiastic and perhaps as over-excited. I think that he will

    1093
    acknowledge that I have always looked at any evidence that he, the middle way group or, indeed, other organisations have produced, and I have tried to do so objectively and to listen with care where they have evidence that should be treated as a serious contribution to the debate. So, of course I will look at anything that he and his group produce.
    Mr. Gordon Prentice: Would it shock and surprise my right hon. Friend if I were to tell him that I no longer believe that this Government will ban hunting with dogs? May I remind him—this is why he is being pressed by Labour colleagues—that the Parliament Acts can be used only if a Bill is brought back in this Session? If a Bill is not brought back in this Session, we will not ban hunting with dogs. So why does he not forget about being so delphic and just give us a straight answer to a straight question?
    Alun Michael: Nothing that my hon. Friend contributes in the Chamber could shock or dismay me. I assure him that he lost all capacity to have that sort of impact a long time ago. I have given a straight answer to a straight question: the matter will be dealt with in this Parliament. If he wishes to extrapolate from that into the mechanics, I can assure him that I have looked at the implications of the procedures as well, and with great care.

    Statutory Management Requirements
    Mr. James Plaskitt: What representations she has received in respect of the inspection regime to oversee statutory management requirements. [174415]
    The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): Officials continue to work closely with stakeholders and enforcement bodies to evaluate the current inspection regimes. Stakeholders have been engaged throughout by involvement in bilateral meetings, workshops and the current public consultation on cross-compliance.
    Mr. Plaskitt: I thank my right hon. Friend for that answer, but will she confirm whether the new regime, when it is introduced, will be made fully consistent with all the other inspection regimes that are already in place? Will there be full data sharing between them?
    Margaret Beckett: My hon. Friend makes a very important point. That is exactly the kind of issue that we are discussing with stakeholders. We are conscious of the fact that, as he will appreciate, the statutory regimes are already the subject of current inspection, but we are anxious to simplify and streamline inspection processes as much as is practicable. We are certainly very mindful of the point that he makes about the need in the future for greater data sharing and greater efficiency. That is something that we are considering in general, with a view to all our regulation, but in particular, of course, in this new field.
    Tony Baldry: What mechanisms exist in the Secretary of State's Department to ensure that that regime, or any other inspection regime or
    1094
    regulatory burden, does not weigh down harder on British business than similar regulatory regimes do in other EU member states?
    Margaret Beckett: Quite simply, there are Commission requirements, and they are binding on every member state and apply in particular to that section of the cross-compliance regime. We believe that the changes that we are making will make ours a more efficient and effective regime than perhaps those in some of the other member states.

    Waste Disposal
    Andrew Selous: If she will make a statement on her policy on fly-tipping and waste disposal. [174416]
    The Minister for the Environment and Agri-environment (Mr. Elliot Morley): The Government are determined to tackle fly-tipping. We issued a wide-ranging strategy for consultation in February. The consultation period closed on 14 May and responses are currently being collated. The Government's policy on waste disposal is set out in "Waste Strategy 2000". A number of actions are also being taken forward as a result of recommendations in the 2002 strategy unit report, "Waste Not, Want not".
    Andrew Selous: Does the Minister recognise that there is a fundamental contradiction between his waste disposal policy and his anti-fly-tipping policy? In particular, should not small building or garden maintenance firms be allowed to take their waste to tidy tips? If we cannot differentiate between an ICI and a small business, we have got the policy wrong. In addition, will not limiting householders to a permit for one item per month significantly increase fly-tipping throughout the country?
    Mr. Morley: I think that the hon. Gentleman's point relates to a decision by his local authority in respect of its disposal sites. It is entirely up to local authorities to decide what to do in respect of their own sites and how to apply such decisions. If local authorities feel that there is an issue of trade waste, it is not unreasonable to have a charge in that respect. The matters of strategy that the hon. Gentleman raises are for local councils to decide.
    Sue Doughty: The ban on co-disposal of hazardous waste in landfill sites becomes operational this year. The industry says that few facilities will be available to deal with that waste. What will the Government do to prevent fly-tipping resulting from their inability to implement effective solutions in response to legislation that was in place in 1999?
    Mr. Morley: Let me update the hon. Lady. There are about 30 applications for separate cells for the disposal of hazardous waste, and that number does not include in-house sites. We take fly-tipping seriously, which is why we have given local authorities new powers, for example, to stop, search and confiscate vehicles. We are also considering the way in which the legislation works and how to disseminate information. We are prepared

    1095
    to bring in further measures and to examine the level of fines, if there is a case for doing so. We are not complacent—we are dealing with these issues on a wide front, in relation to our overall waste strategies.

    Animal Welfare
    Mr. Richard Bacon: If she will make a statement on the animal welfare rules governing (a) domestic and (b) imported pig rearing. [174418]
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Ben Bradshaw): The vast majority of imports of pork and pork products into the UK are from other member states. All member states have to implement and comply with minimum welfare standards for pigs, as agreed by the European Union.
    Mr. Bacon: The British Pig Executive estimates that 70 per cent. of the 767,000 tonnes of pigmeat imported into this country is produced to standards that would be unlawful in the UK. Given that 92 per cent. of consumers want imported meat to be produced to animal welfare standards equivalent to those in the UK, is it not time at least to have clear and unambiguous country of origin labelling, so that consumers can make an informed choice? To that end, will the Minister give his full support to the magnificent Bill of which I am the promoter, which is to receive its Second Reading on 16 July, and which would give effect to clear food labelling?
    Mr. Bradshaw: We are looking at the subject of labelling. I always urge all British consumers to buy British pork. One of the reasons for the figures that the hon. Gentleman quotes is the unilateral ban on sow stalls and tethering that was passed by the Conservative Government—a move that we supported and implemented in 1999. It was the Labour Government who, in 2001, managed to extend the ban to the rest of the European Union, thus ensuring a level playing field for our pig producers.

    Waste Incinerators
    Bob Russell: How many waste incinerators have been built in (a) London and (b) Kent since 1997; and how many others have been approved in (i) London and (ii) Kent since 1997. [174419]
    The Minister for the Environment and Agri-environment (Mr. Elliot Morley): No waste incinerators have been built in London or Kent since 1997. At Allington, near Maidstone in Kent, an operating permit was granted in September 2003, and planning permission has been obtained for an incinerator. An application for a proposed incinerator at Bexley, south London, was granted a permit in September 2003.
    Bob Russell: I wonder whether the Minister will therefore kindly instruct local authorities in Kent and
    1096
    London to stop dumping their rubbish in Essex. If they want to incinerate their waste, why do those local authorities not build the incinerators in their area, instead of transporting the waste 60 miles into Essex?
    Mr. Morley: That might well be something that authorities consider. There is a strong case for local authorities coming together to provide a strategic approach to waste disposal, which can require consideration of a range of options of which incineration is but one.

    Vital Villages Grant Scheme
    Norman Lamb: If she will make a statement on the termination of the Countryside Agency's vital villages grant scheme. [174420]
    The Minister for Rural Affairs and Local Environmental Quality (Akin Michael): Vital villages was established in 2001 as a three-year programme, so it should come as no surprise that the Countryside Agency has announced that the scheme is closed to new applicants. All existing grant commitments will be met, and some £14.2 million will be spent in 2004–05 supporting action by and in rural communities.
    Norman Lamb: I thank the Minister for his response. The vital villages scheme has provided funding for some valuable schemes in north Norfolk, including the revitalisation of village shops. Many people who have applied for grants are frustrated by the plethora of different routes that they have to take to get money, which often means that it is the most informed communities—the ones that know how to play the system—that get hold of the money. Is there not a case for rationalisation—making sure that money is available and goes to the communities that need it most?
    Alun Michael: I thank the hon. Gentleman for making an excellent point. He is absolutely right to be concerned about the plethora of funding streams, which is why my right hon. Friend established the inquiry that was undertaken by Lord Haskins and why some of the emphasis of her forthcoming statement on the refreshed rural strategy is about simplification of funding streams. Since DEFRA was set up, we have been keen to get better evidence about where disadvantage lies in rural communities rather than, as he suggested, merely allowing those who are best informed get to the source of finance first—I nearly said get to the trough first, but that was the previous question. The publication of work by the Rural Research Centre in January will be the start of our having the quality of information to help rural communities that we have been able to take for granted in urban regeneration for many years. I am glad that the hon. Gentleman clearly welcomes that.

Business of the House
12.31 pm
Mr. Oliver Heald: Will the Leader of the House give us the business for next week?
The Leader of the House of Commons (Mr. Peter Hain): Mr. Speaker, you are responsible for security within the House, but I thought that it would be helpful to update Members on my discussions with the Security Service this morning in advance of announcing the business. It is advising on what action needs to be taken following the incident yesterday. This will be considered by the joint committee on security on Monday and the House of Commons Commission on Tuesday. As the House will be aware, there has been a wider Security Service review, which will report in the summer. It is my intention that, once the final report is considered, the executive summary will be published and will be followed by a debate on the Floor of the House.
I want to reassure the House that we need to strike a proper balance between proper security and the right of public access to Parliament and its Members. Voters should, and will, continue to have the right to come to Parliament, but in conditions that are secure for them and for Members and their staff.
The business for next week will be as follows:
MONDAY 24 MAY—Remaining stages of the Civil Contingencies Bill
TUESDAY 25 MAY—Remaining stages of the Gender Recognition Bill[Lords].
WEDNESDAY 26 MAY—Opposition Day [12th Allotted Day]. There will be a debate entitled "Financial Burdens on Local Authorities by Central Government", followed by a debate entitled "Town Planning and Urban Sprawl". Both debates arise on an Opposition motion.
THURSDAY 27 MAY—Motion on the Whitsun recess Adjournment.
FRIDAY 28 MAY—The House will not be sitting.
The provisional business for the week after the Whitsun recess will be:
MONDAY 7 JUNE—Second Reading of the Patents Bill[Lords] followed by a motion to amend the Standing Orders in relation to the nomination of Select Committees.
TUESDAY 8 JUNE—Remaining stages of the Age-Related Payments Bill, followed by a debate on the future of air transport White Paper on a motion for the Adjournment of the House.
WEDNESDAY 9 JUNE —A debate on veterans' affairs on a motion for the Adjournment of the House.
THURSDAY 10 JUNE—A debate on disability on a motion for the Adjournment of the House.
FRIDAY 11 JUNE—The House will not be sitting.
I should also like to inform the House that the business in Westminster Hall for June will be:
THURSDAY 17 JUNE—Debate on the report from the Work and Pensions Committee on the European social fund.
1098
THURSDAY 24 JUNE—Debate on the report from the Science and Technology Committee on Government investment in nanotechnology.
Mr. Heald: I thank the Leader of the House for the business, particularly the debate on the air transport White Paper, for which we have been calling.
There is widespread concern about the incident yesterday during Prime Minister's questions. Does the Leader of the House accept that he has my support for sensible measures to improve security, while always remembering that the public must have access to their Parliament? There are clearly lessons to be learned, which the Commission will consider next week.
Turning to another policing issue, about a week ago it looked as though the long-standing demonstration on Parliament square that involves so much police time might be over. Yesterday, my right hon. Friend the Member for North-West Hampshire (Sir George Young) opened a debate in Westminster Hall on the Sessional Orders. What progress can the Leader of the House report concerning the Sessional Orders?
The right hon. Gentleman will know how anxious we are to have the debate foreshadowed by the Foreign Secretary about Iraq. This morning the Leader of the House criticised the Leader of the Opposition as "opportunistic" for telling the Prime Minister to stand up to President Bush when he disagrees with him, and not just to tag along. What would he say about these remarks:
"A future in which the UK tags along behind a unilateralist United States would reap a bitter harvest"?
Those were his words last October, reported in The Sun under the heading, "The Hate of Hain". So who is the opportunist now?
Then there is the Deputy Prime Minister, who was telling us this week that "Tony" was consistently trying "to channel America" towards UN action, but that
"we might lose … influence if we start having a go at the Americans".
Is it not time that the Prime Minister took a lesson from Baroness Thatcher when she was Prime Minister and was a frank and straightforward friend of the United States of America?
Turning to our Olympic bid, it seems that it depends on the completion of the London Crossrail project. The Leader of the House will have heard the concern expressed by business leaders about the Government's failure to implement it. Can he confirm that as soon as the period of election purdah is over, there will be a statement about its future?
Finally, now that the Chancellor has been forced to concede the failures of the new deal, will the Leader of the House arrange an oral statement so that the Chancellor can apologise for wasting billions of pounds providing help to those who would have found a job anyway and doing precious little for those with real problems finding a job, such as the over-50s, those on incapacity benefit through stress or disability and the lone parents with children at secondary school—all of them let down by Labour?
Mr. Hain: The local election campaigns really do seem to have started, do they not, Mr. Speaker?

1099
On the hon. Gentleman's last point, I find it extraordinary that when 210 people in his constituency have had the opportunity of getting a job with extra training and skills, he wants to send them back to the dole queue, where they were under the Conservatives. Nearly 1 million people have had the chance for skills training, extra opportunities and jobs under the new deal, including very many disabled people in my constituency. The hon. Gentleman should be supporting them, not seeking to consign them to the scrap heap, as they were under the Conservatives.
I am grateful for the hon. Gentleman's support for what he calls sensible measures to improve security in the House and I agree that lessons—some hard lessons—need to be learned about what happened yesterday. There will be, as I described, recommendations coming from the Security Service, which we will be able to consider early next week. It is extremely important that the old-fashioned culture of security in the House is modernised and that we update our procedures and protect the House against terrorist attacks or any other security breaches.
As regards Parliament square, the Home Office will undertake a consultation exercise on developing police powers and ensuring that the police are empowered to act effectively and proportionately, including using their existing powers. The paper will be issued shortly and there will be a three-month consultation period. I am well aware of the Adjournment debate yesterday in the name of the right hon. Member for North-West Hampshire (Sir George Young), the Chairman of the Standards and Privileges Committee. I am also aware of the long delay on the matter, which I greatly regret, but the debate yesterday may have accelerated the outcome, to the general benefit of the House.
On Iraq, which the hon. Member for North-East Hertfordshire (Mr. Heald) raised in a contentious fashion, it is extraordinary that Conservative Members should seek to split our soldiers and American soldiers by separating those armed forces' leaders in Washington and London when the situation is at its most dangerous in the field. I wonder whether the shadow Defence Secretary agrees that we should distance ourselves, when our soldiers and American soldiers are battling together side by side against terrorists and jointly working to hand over power to Iraqis at the end of June.
On the Olympics and transport, the relevant Ministers and authorities are addressing the issues. I should have thought that the hon. Member for North-East Hertfordshire would welcome London's being on the shortlist and pay tribute to the Government's drive in securing that position.
Mr. Heald: You had to bring Seb in.
Mr. Hain: The Government were prepared to put in extra resources to win the Olympics for London, and the hon. Gentleman should back that.
Sir Stuart Bell: The House is grateful for the confirmation by the Leader of the House that the Speaker has sole responsibility for security in the House. Can the Leader of the House confirm that
1100
the House supported the Speaker's decision to raise the screen? Can he also confirm that after the review to which he referred and the meetings of the joint committee on security on Monday and of the House of Commons Commission on Tuesday, any recommendations that the Speaker makes to the House should be fully supported, rather than receiving a majority of seven, which we saw in the last vote?
Mr. Hain: I agree with everything that my hon. Friend said. You, Mr. Speaker, are indeed responsible for security in the House. Everybody in the House of Commons Commission, including my hon. Friend, the shadow Leader of the House and me, backed your decision to the hilt. Our position was united, and we intend to maintain it. Following recommendations from the security services, we will move forward together to ensure that the House is properly protected, while always ensuring that we do not shut ourselves off to influence and pressure from members of the public who are properly here to lobby us.
Mr. Paul Tyler: May I assure the Leader of the House that my hon. Friends and I support his new approach on the security of the House? May I ask him to re-examine the debate on the security screen on 22 April, to which other hon. Members have already referred, and particularly column 478 of Hansard? He will recall that in that debate several senior hon. Members and I expressed the precise concerns that have now become so important. For example, I said that it was important to make certain that the new screen did not divert attention from the wider interest of the security of the whole House, and that we should review the positioning of the screen in the light of the assessment to which he referred.
Will the Leader of the House now accept that the perimeter of Parliament is the critical issue? Although nearly 13,000 security passes have been issued, hundreds of them have gone astray. What steps are being taken urgently to review that point? I have asked him that question on two previous occasions, but I have not received an answer on either the number of passes that have gone astray or the steps that might be taken.
We all accept that it is difficult for the Leader of the House or anyone else to give details on a public occasion such as this, but will he assure us that this summer's executive report will be by the professionals, who should be given an opportunity comprehensively to examine the whole House, including all the buildings and all the people who come here, rather than just this Chamber? Although every democrat wants to resist this building becoming a fortress—we must maintain a balance—it is important to ensure that, rather than simply putting this Chamber in a glass box, we are making Parliament a safe place for all our constituents to meet us and hear what is undertaken on their behalf.
The issue is extremely important and I understand the point that the Leader of the House made about getting the right professional advice, which is difficult to bring to the Floor of the House, but he must accept that the issue concerns not only security, but this House's important role as the cockpit of the nation's debates.
Mr. Hain: If that was support for my proposals, I would like to know what opposition is. As the shadow

1101
Leader of the House indicated, it is important that we move together on a united basis with the Serjeant at Arms and the Speaker in order to maintain security.
If hon. Members—possibly even the hon. Gentleman himself—wish to consult Hansard to look at what was actually said in that debate on 22 April, they will realise that there is a certain amount of humble pie to be eaten by those who voted against the erection of the security screen. If it was possible for a guest sponsored by a Member of the House of Lords to do what was done yesterday, imagine what might have happened if someone had come in, apparently innocently, with anthrax or ricin and lobbed it into the Chamber at the Prime Minister. What is important now is that we should examine the access arrangements for sponsored visitors to ensure that the whole Palace is properly secure. That is being done.
I very much agree with the hon. Member for North Cornwall (Mr. Tyler) that it is a question of protecting not only Members in the Chamber, but our constituents who visit this place and the staff of the House of Commons. We must consider the security arrangements for the whole of the Palace. That is precisely why, a few months ago, the House of Commons Commission, under the leadership of the Speaker and with the support of the shadow Leader of the House and other members of the Commission, embarked on the wider security review. There will be an interim report from that security review next month. The final report will be published later in the summer and thereafter proper consideration can be given to it.
I agree with the hon. Member for North Cornwall that there is no intention to make this place into a fortress and lock ourselves away from our constituents, who are entitled to come here to press us and to make their representations. That will of course continue, but in conditions of greater safety for them as well as us.
Mr. Alan Meale: Will the Leader of the House give time in the coming weeks to a debate on press intrusion into ordinary people's lives? I raise that issue because in the past couple of weeks much public and press attention has been given to the case in my constituency of a 14-year-old girl who was pregnant and subsequently had an abortion. Money has changed hands and photographs and the names and addresses of all the children involved have been made public. That is despicable and should not be allowed in British society today.
Mr. Hain: I share my hon. Friend's concern about the most unfortunate circumstances surrounding that story. It is very important that everybody learns serious lessons from it.
Mr. Andrew Mackay: Just why have we still not had the debate on Zimbabwe that has been promised by the Leader of the House and by Foreign Office Ministers? Given that the business for the week after the recess is incredibly light because of the local elections, surely the Leader of the House is running out of excuses.
Mr. Hain: The right hon. Gentleman and I share a common position on what is happening in Zimbabwe.
1102
Interestingly, I was notified earlier about an Opposition application for a debate on Zimbabwe that was withdrawn at very short notice.
Anne Picking: May I draw my right hon. Friend's attention to this week's edition of "All-Party and Associate Parliamentary Group Notices", which said that postal services from this House are to be changed from special delivery to first class? That once again disadvantages MPs who have only constituency-based staff members. London-based MPs will not be affected by that, but those who are as far-flung as I am will be. Will the Leader of the House please look at that urgently?
Mr. Hain: That is primarily a matter for the Administration Committee, but my hon. Friend raises a serious point. I am frankly surprised and concerned to hear what she says, and I hope that the necessary authorities will take action to remedy the problem.
Mr. Humfrey Matins: While I appreciate that in March we had a general debate about the Post Office service, can the Leader of the House tell me whether it will be possible in the next few weeks to have a specific debate on village post offices and their importance to the community? I mention that because the village post office of Pyrford in my constituency is threatened with closure, as are many others. Village post offices provide a vital service. Is not that issue of sufficient importance across the country to have a debate on it in Government time?
Mr. Hain: I appreciate the hon. Gentleman's point about the effect on his constituency. As he knows, £400 million has gone into supporting local post offices. He has the opportunity to apply for a debate but, given the number of questions that have been asked on the matter at business questions in recent months, I shall consider his request.
Mr. Peter Kilfoyle: Will the Leader of the House take the opportunity to read a letter, a copy of which I have, to the leader of the Liberal Democrats? It is written by Mr. Sean Doherty, Liberal Democrat membership No. 8056293, an erstwhile candidate in the local elections in Liverpool. He wrote to the right hon. Gentleman to complain about what he described as the "disgusting and unbelievable practices" of the Liberal Democrats in Liverpool. He implies racism among Liberal Democrat councillors. Will my right hon. Friend consider finding time to give the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) a chance to come here to confirm or deny the veracity of the charges of his former candidate? That might also give the right hon. Gentleman an opportunity to clean up the act of his councillors in Liverpool.
Mr. Hain: I am concerned to hear my hon. Friend's remarks and I am sure that the people of Liverpool will be even more concerned.
Mr. Adrian Sanders: Will there be an opportunity to debate an issue that has affected my constituency and will affect many others? It is the

1103
removal of manufacturing jobs from this country to China. My constituency lost 600 jobs yesterday in Bookham Technologies on top of the 4,300 non-seasonal manufacturing jobs that we have lost in the past three years. That is a serious matter, which has hit the south Devon economy especially hard. However, there is a wider issue about the movement of assembly jobs to the far east.
Mr. Hain: The hon. Gentleman is absolutely right that we are affected by global economic pressures and he is right to identify the vulnerability of assembly-level manufacturing jobs. Last month, during the Easter recess, I was in China as Secretary of State for Wales. I discovered that engineering wages there are 60p an hour, but that is only one side of the picture that threatens our competitiveness. The other is that last year China produced 2.1 million new graduates—two thirds of them in science, IT and engineering. I am advised that this year it will produce 2.8 million new graduates. There is therefore a massive increase in China's capability at graduate level. We beat that competition not by seeking to defend ourselves against all global pressures—that is impossible—but by being the best, investing in skills, infrastructure, science and communications so that jobs in Devon and elsewhere can be safeguarded and improved. However, one does not achieve that by cutting spending on education, science and skills but by investing more and more. The Government are doing that.
Mr. Tony McWalter: I hear what my right hon. Friend said about security, but does he accept that many of us were surprised that the Chamber was evacuated yesterday when the event occurred? All the advice that we received from the Select Committee on Science and Technology about substances such as anthrax and ricin was that hon. Members should either have stayed in the Chamber or been contained in immediate outside areas, such as the Lobbies. I should be grateful if my right hon. Friend would give urgent attention to providing hon. Members with instructions about what to do if yesterday's events are repeated.
Mr. Hain: That is, of course, a matter for you, Mr. Speaker, and for the Serjeant. We can all learn some hard lessons from what happened yesterday and it is important that we do that. That is exactly why I announced that the House of Commons Commission and the joint committee on security would meet to receive urgent recommendations from the Security Service. The subjects covered will include the way in which House arrangements are affected in the circumstances to which my hon. Friend referred.
Sir George Young: The Leader of the House has announced provisional business for 10 June. Does he acknowledge that attendance on that day may be thinner than it is today because the whole country will vote in the European elections and many parts of the country have local elections? Would it not be better if the important debate that has been announced for that day were held on
1104
another day so that all hon. Members were free to be in their constituencies, reawakening interest in democratic institutions?
Mr. Hain: I shall certainly consider the right hon. Gentleman's request, but I do not propose to adjourn the House on that Thursday and I am sure that he would not propose that either. The business is a motion on the Adjournment but if his point relates to the fact that the subject is disability issues rather than others on which there could sensibly be such a motion—the previous Government would have tabled a motion on the Adjournment in the same circumstances—I can consider the matter. However, I am sure that he would not want a three-liner on 10 June.
Mr. John Lyons: Yesterday, most of us believed that there was a lack of clarity about what we should do in the circumstances that we faced. I agree with the point that my hon. Friend the Member for Hemel Hempstead (Mr. McWalter) made. In my right hon. Friend's review of security, I recommend a paper from the Royal Society on chemical and biological attack. Its main theme and central point is the need for greater co-ordination between the frontline services and sometimes with business, which has to supply the chemicals and equipment to help deal with the attack.
Mr. Hain: I am sure that you, Mr. Speaker, would not wish to me to go into a great deal of operational detail, but my hon. Friend makes serious points, which the House authorities will note and take into account.
David Burnside: The Leader of the House may have seen a new series, which started this week on BBC 3, called "Underworld Rich List". It named Thomas "Slab" Murphy from south Armagh as having amassed a personal fortune of £35 million in his role as chief of staff of the Provisional IRA. May we have an urgent debate about why Mr. Murphy and his two colleagues on the army council—Gerry Adams, the president of Sinn Fein, and Martin McGuinness, the chief negotiator—are not under investigation by the Police Service of Northern Ireland for their continuing involvement in major international criminal activity?
Mr. Hain: That is not a matter for me, but the hon. Gentleman has the right to apply for a debate, if he wishes.
Mr. Michael Connarty: I agree with the earlier points about security. I was shocked to see hon. Members running around like headless chickens yesterday. Last night, some told me that they did not know what to do but they knew that they were not doing what they should be doing. In April, I tabled a question to the House of Commons Commission that was not called. I subsequently spoke to a senior Government Whip and the Chairman of the House of Commons Commission. I wrote to him on 20 April, asking when Members of Parliament would be briefed in the same way as BP workers, who deal with chemicals every day, are briefed about what to do in the case of major incidents. I received a reply on 28 April, saying that letters would be sent to heads of department in the

1105
following week, that briefings would commence with members of staff of the House and that Members of Parliament and their staff would be included in the briefings. What has happened to that promise by the Chairman of the House of Commons Commission?
Mr. Speaker: Order. I am the Chairman of the House of Commons Commission. Is the hon. Gentleman referring to my writing to him?
Mr. Connarty: The person to whom I wrote and who replied to me was the right hon. Member for Roxburgh and Berwickshire (Sir Archy Kirkwood).
Mr. Speaker: He is not the Chairman of the House of Commons Commission.
Mr. Hain: Mr. Speaker, I think that you have dealt with that matter, but the point behind my hon. Friend's question is that hon. Members and members of staff are entitled and ought to know exactly what the procedures are. That is one of the many hard-learned lessons from yesterday's incident.
Mr. Alex Salmond: Will not people find it inexplicable that a statement or debate has not been scheduled on civilian deaths in Palestine? As the Leader of the House must know, in the Islamic world the events in Gaza get even more publicity than the disastrous events in Iraq. Is there not a need for clarity in the Government's approach, given that yesterday they rightly signed and supported the United Nations Security Council resolution condemning civilian deaths but only a few weeks ago, they abstained from the Security Council resolution that condemned extra-judicial killings of Palestinian leaders? For clarity and to reassure many of our fellow citizens that we are worried about those events, is not there a need for an urgent statement and debate on the massacres in Gaza?
Mr. Hain: I shall bear in mind the hon. Gentleman's comments about the need for a debate. However let me be clear: the British Government were in the lead in obtaining the Security Council resolution, which condemned the actions in Rafah and the appalling destruction of Palestinian homes. Such action escalates the conflict rather than producing circumstances in which a negotiated settlement could occur, resulting in a secure Israel, secure from terrorists and suicide terrorist attacks, and an independent Palestinian state, which can move forward in justice and freedom. That is imperative, as the Prime Minister has made clear throughout. It is important that Members remember that the Prime Minister insisted that the road map was part of the process of negotiation alongside the decisions about intervention in Iraq. I am absolutely at one with the hon. Member for Banff and Buchan (Mr. Salmond) in condemning the appalling acts and the predicament of the Palestinians, but I am sure that he would join me in saying that the tit-for-tat violence and killing has to stop on both sides and that Israelis are just as entitled to be free from suicide attacks.
Mrs. Alice Mahon: The Leader of the House will be aware that yesterday more than 40 Iraqis were killed by American troops in Iraq, adding to the
1106
thousands of civilians who have already been killed by the coalition. There is huge concern outside the House about what is going on in Iraq, yet we are not having debates on the matter in Government time. It is a bit like "Fawlty Towers" in here: "Don't mention the war!" Will the Leader of the House assure us that we will have at least a one-day debate on what is going on, and an update on the number of civilians who have been killed?
Mr. Hain: I am certainly ready to discuss with my colleagues the scope and opportunity for a debate on Iraq when the time is right, and I shall note what my hon. Friend has said. It is important, however, to get into perspective the events that she has described, which often follow terrorist attacks on Iraqi civilians as well as on the coalition. We should also bear it in mind that there are 20,000 reconstruction projects going on in Iraq, supported by our Government, which are providing hundreds of thousands of jobs. The Baghdad to Mosul train service has been reopened, almost 33,000 Iraqi teachers underwent training in the February school holidays, and so on. My hon. Friend the Member for Cynon Valley (Ann Clwyd) has reported regularly—and again recently—that, whatever the Iraqis' legitimate concerns about the security predicament in which they find themselves, they want us to continue to enable them to take control of their own lives, as we are determined to do by handing over control to the new Iraqi interim authority at the end of next month.
Mrs. Cheryl Gillan: There is growing discontent and disbelief among prison and probation officers, the voluntary sector and, now, politicians in the House about the way in which the Government are implementing the National Offender Management Service, which is the successor to the Prison Service and the probation service. It is probably the largest ever change in the justice system, yet there has been no debate in the House on a motion to discuss NOMS. The implementation date is 1 June, but the problems involved are so great that it is rumoured that that is to be pushed back to 1 September. There was a large lobby of the House the week before last by prison and probation officers, but still the appropriate Minister has not given us the detail that we need.
Will the Leader of the House consider having an urgent debate in Government time on this serious subject, so that the Minister can give us more details and let us know whether legislation is necessary to ensure that public protection is not jeopardised by the terrible way in which the Government are implementing the changes?
Mr. Hain: The hon. Lady has the right to apply for a debate in the normal way, and the Home Secretary will obviously have noted the points that she has made. I am sure that she will want to support the Government in resolving any teething troubles that might become apparent, in order to bring together the services to create an integrated service for dealing with offenders. That is surely something that she would welcome.
Rob Marris: In replying to an earlier question, the Leader of the House referred to the need to invest in education and science. He might not be aware that the university of Cambridge

1107
gets four times as much money per student as the university of Wolverhampton, which is headquartered in my constituency. Conversely, the university of Cambridge is one of the least accessible to working-class students—indeed, it got worse last year—while the university of Wolverhampton is the most accessible mainstream university in the country. Another contrast between them is that, whereas the university of Wolverhampton allows students to work, the university of Cambridge tells prospective students that they will be "sent down", to use its archaic language, if they get a job. That is hardly doing much to encourage accessibility for working-class students. Can we have an early debate on the matter?
Mr. Dennis Skinner: Vote Labour in Wolverhampton!
Mr. Hain: Indeed; vote Labour in Wolverhampton and right across the country.
I am concerned to hear what my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) says. Obviously, Wolverhampton is lighting a path for opportunities for students from working-class and low-income backgrounds, and that example should be followed right across the university sector. That is precisely why, as a result of the Government's new legislation, more and more opportunities will be provided for low-income students, and more obligations will be placed on universities such as Cambridge to ensure that those students can take advantage of them.
Sir Sydney Chapman: Further to the issue raised by my hon. Friend the shadow Leader of the House and the hon. Member for Halifax (Mrs. Mahon), I believe that my constituents will think it very strange if we do not have a debate on the question of strategy in Iraq post-30 June. Will the Leader of the House give us some indication that the Government will have a debate on the issue well before the end of next month? To have such a debate would in no way undermine the valiant duties being performed now by the British forces in Iraq.
Mr. Hain: I accept the hon. Gentleman's point and, as I have said, I am open-minded about such a debate and its timing. That is not to suggest—I am sure that he is not doing so—that there have not been many opportunities to debate Iraq. Defence debates in recent times—including one only last week—have been dominated by the subject, and the Prime Minister made a statement on Iraq very recently, in which hon. Members were able to question him. If and when it is the right time to have a debate on Iraq, the hon. Gentleman can be assured that the Government will call one.
Lynne Jones: May I draw my right hon. Friend's attention to early-day motion 1173?
[That this House notes that the monitoring evidence collected by the International Baby Food Action Network (IBFAN), a network of more than 200 groups in over 100 countries, demonstrates that companies continue to market baby food products in breach of the World Health
1108
Assembly International Code of Marketing of Breastmilk Substitutes and subsequent relevant resolutions; also notes that where there is malpractice it is systematic and institutionalised and that, globally, 1.5 million infants die every year because they are not breastfed, and that even in industrialised countries with universal access to health care, there are significant negative effects of artificial infant feeding, including increased risk of diabetes and obesity; is concerned that UK law only implements some provisions of the Code, limiting these to infant formula, not all breastmilk substitutes, and that follow-on formula, with similar packaging and the same name as the infant formula, is widely advertised, that bottles and teat marketing is totally unregulated, and that while the Code bans direct contact with the mother, UK companies have baby clubs and carelines; therefore calls on the Government to support independently monitored and enforced legislation fully implementing the Code and resolutions at UK, EU and international level and additional WHA resolutions to strengthen protection of appropriate infant feeding practices, to address emerging aggressive baby milk food marketing, to make appropriate policy changes in response to scientific developments, and to take action to ensure that EU Council Resolution 92/C172/01 on the marketing of breastmilk substitutes in third countries by community-based manufacturers functions effectively.]
The motion was tabled in national breast-feeding awareness week, and draws attention to the violations of the international code on the marketing of breast milk substitutes by the manufacturers of baby food products, and the consequential harmful effect that that is having on infant mortality across the world, and even on public health in this country. The Under-Secretary of State for Health, my hon. Friend the Member for Welwyn Hatfield (Miss Johnson), has accepted that the 1995 regulations on infant formula are not fully in compliance with the code. Will my right hon. Friend make time available so that the Government can implement the recommendation of the committee on the rights of the child that the UK should adopt the international code in full?
Mr. Hain: All parents will be grateful to my hon. Friend for raising that matter. As she says, the Government are well aware of the differences between United Kingdom legislation and the international code, and we are exploring, with the Food Standards Agency, ways in which our regulations could be better aligned to the code.
Richard Younger-Ross: There are two things that we learned from yesterday. One is that those on the Treasury Bench and the Prime Minister did not flinch under fire, and they should be applauded for that. The other is that the House does not have an evacuation plan. Will the Leader of the House tell us whether the review that is being undertaken will take a holistic approach to incidents that occur both at this end of the Palace and at the other end, where other people are responsible for security? We have concrete barriers outside at the moment, which are unsightly and have been there for a long time. We need to do things that are

1109
not so intimidatory or obvious, but which will make us secure. Other procedures for evacuation need to be put in place. It is not a matter of just sitting here and waiting.
Mr. Alex Salmond: Or running away.
Richard Younger-Ross: Or running away. We will need walk-through showering facilities, for example. I hope that that will be taken into account in the review, without going into detail.
Mr. Hain: May I express my gratitude for the hon. Gentleman's steadfast praise for the Prime Minister? "Holistic" is more of a Liberal Democrat word than a Labour word, but I take his point. It is not sufficient to look at just one aspect of security, such as the screen in front of the Strangers Gallery. Every aspect of the issue must be looked at in the round, which is precisely why the Speaker and the House of Commons Commission have ordered this widespread review by the Security Service and the Metropolitan Police Commissioner, and why we are determined, as a result of that review, to see big modifications in security and to learn the lessons of recent events. We are agreed on that, and we intend to take it forward—in a holistic way, by all means.
Jim Sheridan: My right hon. Friend will be well aware of the genuine concern surrounding the future of British manufacturing. Can he begin to understand the frustration felt by British workers, including those employed at Fergusons shipyard in my constituency, who tender for British contracts, are denied, and see the contract awarded to foreign competitors? More worryingly, such decisions are taken by faceless bureaucrats, with little or no ministerial responsibility or accountability. Will he therefore use his good offices to ensure that the Government's procurement policy takes account of the potential job losses when British Government contracts are awarded to foreign competitors?
Mr. Hain: My hon. Friend make, a persuasive point, and I am sure that the Secretary of State for Trade and Industry will want to listen carefully to his comments. I am sure that if my hon. Friend had had more time or had been in order to do so, he would have wanted to acknowledge the Government's very good record on job creation, having been responsible for running an economy in which since we came to power nearly 2 million more jobs have been created in the past seven years, and in which unemployment is lower in every constituency in the land, including my hon. Friend's.
Mr. Graham Brady: Can time be found for a series of statements from Departments on what steps they are taking to improve their woeful record on the answering of written parliamentary questions and the quality of the answers given? Statistics that I have obtained show that the worst offenders in answering written questions are the Foreign Office, which in the previous Session took 102 working days to answer one question; the Department of Health, which took 127 working days; the Department for Work and Pensions, which took 130 days; and the Department for Culture, Media and
1110
Sport, which took 132 working days. Other Departments either cannot or will not answer the question on how long it has taken them. The Home Office took nearly three months to answer my question by saying that it could not give the figures that I was seeking.
Even when answers are given, they are frequently inadequate. I have been waiting since 2 March for a letter that was promised to me regarding greenbelt erosion in metropolitan areas, and on 4 May, the Minister for Lifelong Learning, Further and Higher Education told me that the figures that I had requested were "not to hand", but that he would send them to me when they were—apparently, they are still not to hand. It is simply unacceptable. Members of Parliament cannot get on with their jobs if the Government will not give us the information that we request. Can we have some statements on what will be done about it?
Mr. Hain: I have ensured that everybody in government is aware of the need to answer Members' questions as appropriately and as quickly as possible. Every effort is being made to do that. In some circumstances, the basis for the answers takes time to collect. Obviously, our intention is to meet the House's requests and to meet our obligations, and we continue to strive towards that.
Llew Smith: The Leader of the House will be aware that last week I requested that time be found to debate the future—or lack of it—of further education in Wales, and particularly in Gwent. As he will be aware, in some of the poorest communities in Wales, such as mine, colleges are facing redundancies, closure of departments and transfer of departments to other parts of the county, which are almost impossible to get to. He will also be aware of the importance of maintaining those departments in an area of high deprivation, with some of the highest levels of unemployment.
Can we have a debate on the discussions that the Leader of the House has had in the past with Coleg Gwent—perhaps he can share with the House his experience of dealing with its management—and with Education and Learning Wales and the Welsh Assembly? Would he be willing, with the First Minister of the Welsh Assembly, to conduct an investigation into the management of that institution, because we are now faced with a new principal, who will be in post within the next few weeks but who, we are told, still supports the plans to carry out those redundancies and department closures?
Mr. Hain: I share my hon. Friend's concern about what has happened, as I have said publicly previously, and as I repeat now. I still find it baffling that, given all the huge resources that have gone into education funding right across Wales—including further education funding, which is getting more resources under our Labour Government than ever before—this situation should have arisen. That is why I have raised it with the First Minister. As my hon. Friend will know, the Education Minister made a statement in the

1111
National Assembly this week saying that she wanted to get to the bottom of the affair, so his representations are being closely listened to and followed.
Mr. John Wilkinson: May I, too, warmly welcome the debate on the civil aviation White Paper, which is to take place on 8 June, especially as it is on the Adjournment and not on a substantive motion? Will the right hon. Gentleman assure the House that soon after that debate the Secretary of State for Transport will come to the House and give his conclusions on the precise policy that Her Majesty's Government are to follow, since air transport operators, airport operators and communities around airports need to have blight lifted and to have some certainty about the future?
Mr. Hain: I am grateful for the hon. Gentleman's welcome of the debate. He is one of the Members who has in recent weeks been pressing on me the need for such a debate. I am well aware of the situation that he is properly looking after at Northolt and of course at Heathrow, near to his constituency. I will certainly bear in mind what he has said.
Mr. Michael Clapham: Is my right hon. Friend aware that deaths from exposure to asbestos have now reached epidemic proportions? For example, last year, there were 2,000 deaths from mesothelioma cancer alone, and it is forecast that by 2015 those deaths will be beyond 6,000 per year, and that over the next 40 years, there will be 185,000 such deaths. Will he therefore consider a debate in Government time to discuss how we might develop a strategy—a health, prevention, benefit and care strategy—for sufferers of exposure to asbestos?
Mr. Hain: I congratulate my hon. Friend on his tireless, lifelong work, especially in the House, to expose this problem and to work to solve it. I know that the Secretary of State for Health is aware of that, and is conscious of the representations that he is making. My right hon. Friend will certainly be aware now of my hon. Friend's passionate feelings about the need to tackle the matter.
Tony Baldry: Shortly after the invasion of Afghanistan, we were having a sensible debate on post-conflict reconstruction, nation building, and international donor conferences. Notwithstanding the fairly sizeable chunk of the Department for International Development's budget that is now going to Iraq, we simply have not had that sort of debate in relation to Iraq. Today, the Financial Times reports a poll finding that, even in northern Iraq, nine out of 10 Iraqis now see the coalition as occupiers rather than liberators. The House must work out how we are going to win the peace and the humanitarian campaign. Please can we start to debate those issues on the Floor of the House?
Mr. Hain: I very much take the hon. Gentleman's point on conflict resolution and conflict prevention, particularly given his position on the Select Committee
1112
on International Development. It is essential to maintain the focus that the Government have had on these matters through the Department for International Development—working with the Foreign Office and the Ministry of Defence—and the special conflict prevention fund, which was established through pooling those Departments' resources, which I am sure the hon. Gentleman will welcome.
I note the hon. Gentleman's point about the opinion reported in the Financial Times, but the other reports that we are getting are that people in Iraq—while being very worried about the situation and having many criticisms of one kind or another about the security situation and even the performance of the coalition—do not want us just to walk out on them. It is important that he acknowledges that, given the Leader of the Opposition's statement overnight that he also acknowledges it.
Mr. Lindsay Hoyle: Does my right hon. Friend agree that time should be allowed for a debate on those people who loyally give up valuable time by volunteering to become magistrates? There is a great danger in Lancashire and in the Chorley constituency, where there are no magistrates under the age of 40 and the age profile is much older, that they will all retire together. What will the future hold for magistrates courts if we do not get young people involved and volunteering?
Mr. Hain: I could not agree more with my hon. Friend. It is not simply a question of filling vacant seats on the bench but of getting and maintaining a bench that is representative of the community, as I am sure that he agrees. I am sure that his points will have been carefully noted.
Mr. Andrew Turner: May I gently counsel the Leader of the House against using the term "old-fashioned" as an all-purpose term of deprecation, as in old-fashioned security measures"? The way in which we refer to each other here is old-fashioned, but it makes for a good and effective form of debate. The security staff, the policeman, the Badge Messengers, the men in tails and the men in tights respond to us with great but old-fashioned courtesy, which is very effective in the context of the security measures that they implement on our behalf.
Mr. Hain: I join the hon. Gentleman in paying tribute to all staff of the House for the support that they give us, in terms of security and in other ways, which enables us to do our jobs as Members of Parliament. We are all very grateful for that. I am sure that the hon. Gentleman will agree, however, that an old-fashioned security approach was dealing with an old-fashioned security situation 20, 30 and 40 years ago, when we did not face the risk of suicide terrorist attack and did not experience the breaches of security that we have seen in the last few months—protesters climbing up the Big Ben tower, or what happened yesterday. In 2004—in the age of the suicide terrorist, which is an entirely new development—we need a House of Commons that is

1113
properly protected. Surely the hon. Gentleman agrees that that is a modern, not an old-fashioned approach to security.
Mr. Stephen McCabe: May we have an early debate on the uses of neighbourhood renewal funding? I was shocked to learn that £40,000 of money earmarked for my constituents had been spent by local Tory councillors on consultancies for a project that probably would not go ahead, and is not even in my constituency. At a time when my constituents' priorities are better street lighting and action to deal with graffiti, litter and antisocial behaviour, is it not outrageous that these people can short-change them in such a fashion?
Mr. Hain: On the basis of that account, I find it outrageous as well. I am sure that my hon. Friend's constituents, and voters in the coming weeks, will bear in mind what he has said.
Mr. Harry Barnes: Will my right hon. Friend re-examine the way in which we deal with Northern Ireland business? On Tuesday, during our debate on the Pensions Bill, there was a discussion about the problem of matters having to be dealt with by Order-in-Council rather than being written into the Bill. It is a general problem with Northern Ireland legislation.
Why does the Northern Ireland Grand Committee, which will meet in about an hour, never visit Northern Ireland? The Northern Ireland people might be interested to meet Grand Committee members from the mainland, and convey their interests and concerns as they do to members of the Select Committee on Northern Ireland Affairs.
Mr. Hain: The meeting arrangements for the Northern Ireland Grand Committee are not a matter for me, but my hon. Friend's points have been noted and will also be noted by the Secretary of State for Northern Ireland.
Mr. David Chaytor: I support the earlier call by the shadow Leader of the House for a debate on the new deal and employment policy. In my constituency, more people are in work than ever before. There is a job for everyone who wants one, and there are more opportunities for the over-50s, disabled people and single parents to return to the labour market. Given that the Tories have expressed concern about the topics
1114
of debates taking place during the week beginning 7 June, would it not be appropriate for us to have a debate on the new deal on one of the days leading up to 10 June?
Mr. Hain: I am very tempted to consider that. Many hundreds of thousands of people, including those with disabilities—
Mr. Heald indicated dissent.
Mr. Hain: The shadow Leader of the House shakes his head. I repeat that many hundreds of thousands of people, including those with disabilities, lone parents, and youngsters and long-term unemployed people—including some in my constituency—whose prospects were hopeless under the Conservatives are now being given opportunities to upskill and start work. I have met many people—I am sure that we all have; if we have not, we are not doing our jobs as Members of Parliament—who have benefited from the new deal, and would be horrified if they realised that the Conservatives planned to abolish it.
David Taylor: I thank the Leader of the House for his announcement about a debate on the aviation White Paper after the recess. Next time we have the opportunity of a full day's debate on a motion for the Adjournment, will he agree that it is about time we discussed public health? As he is one of the best-briefed Cabinet Ministers, it will not have escaped his attention that in recent weeks the Royal College of Nursing, the British Medical Association and the Government's own chief medical officer have called for action to ban smoking in public places, that a Mintel survey showed this week that most British adults were in favour of a ban, and that an Imperial college study showed that hundreds of people die every year in this country from the effects of second-hand tobacco smoke. As chair of the all-party group on smoking and health, may I urge my right hon. Friend to ensure that the Government's programme includes further action on that important area of public health before the end of this Parliament?
Mr. Hain: I am very sympathetic to my hon. Friend's policy points on smoking. As a non-smoker myself, I am well aware of its impact on the health of smokers, and indeed of the danger of passive smoking. That is why the Secretary of State for Health has embarked on a consultation exercise, and why the issue is being debated up and down the country in the big conversation. The idea is to discuss how policies on smoking can make progress in the future.

Points of Order
1.26 pm
Mr. Michael Connarty: On a point of order, Mr. Speaker. May I apologise to you unreservedly for confusing the role of the hon. Member for Roxburgh and Berwickshire (Sir Archy Kirkwood)—who speaks on behalf of the House of Commons Commission—with your role as Chairman? My question to the Commission spokesman was not starred for inclusion on the Order Paper. Having spoken to the hon. Gentleman, I am sure he did not intend to mislead me, but assumed that I knew his role. He asked me to write to him, in his capacity as the Commission's representative. I have furnished you with the letter, Mr. Speaker, to which he replied on 28 April.
I hope you will accept my apology, Mr. Speaker, and that the promise of briefings for Members and their staff will be kept so that Members know what to do in times of crisis.
Mr. Speaker: The hon. Gentleman need not apologise. It is just that I have a good memory, and I always remember when I have written to him.
Mr. Oliver Heald: On a point of order, Mr. Speaker. Given that only 6,000 of the 1 million disabled people who want jobs have been helped in any way by the new deal, is it in order for the Leader of the House to pretend that the Conservatives want to wind down help for the disabled? In fact we want to increase it, rather than wasting money on people who would have had a job anyway.
Mr. Speaker: The hon. Gentleman has some privileges, but they do not include a second go at business questions.
Mr. Andrew Robathan: On a point of order, Mr. Speaker. In the last hour I have received an extremely unusual and very disturbing e-mail from Zimbabwe. It was sent by Sekai Holland, the former Secretary for International Relations to the Movement for Democratic Change, and states
"The unfolding story is that … zanu/pf thugs are being bussed into Harare … to then find their way to Parliament where they are saying that they want to kill MP Roy Bennet … and then they will bomb the MDC … headquarters … please pass this to parliamentarians all over the world now."
Is there anything that this Parliament can do to support the remnants of parliamentary democracy that are left in Zimbabwe, or is there any way of sending a message to the Government—who have acted well over this—perhaps via the Leader of the House?
Mr. Speaker: As the hon. Gentleman will know, that is not a matter for me, but many Back Benchers on both sides of the House are doing what they can to raise the case of Zimbabwe.
Mr. Alex Salmond: On a point of order, Mr. Speaker. I have here a printout from the website of the Conservative party, which has launched an attack on me for withdrawing the Fisheries
1116
Jurisdiction Bill. That comes as something of a surprise to me. In fact, this excellent Bill is due to be debated further on Friday 16 July instead of tomorrow, which I think would have been inauspicious in terms of its chances of further progress.
Another curious aspect is the fact that the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan), who is named on the website, did not manage to sign early-day motion 937, in which 42 Members on both sides of the House demand parliamentary time for my excellent Bill.
Is there anything you can do, Mr. Speaker, to protect the House from misleading websites that report our proceedings—or, for that matter, from the blundering incompetence of novice Conservative Members who do not read the parliamentary monitor?
Mr. Speaker: The hon. Gentleman has broad shoulders, and I am quite sure that he can take criticism. From time to time, he has had criticism from me, but that was at another time and on another day.
Richard Burden: On a point of order, Mr. Speaker. I seek your advice on a point of order of which I have given you notice. As you know, robust debate is in the nature of politics and no one, least of all you, would want to inhibit that. However, I hope that you agree with me that there is an important distinction to be made between matters of argument and the deliberate misreporting outside this place of proceedings within it, including the doctoring of quotes from Hansard and the invention of votes by hon. Members on motions that were never moved.
My point of order, Mr. Speaker, is to say that that is what has been happening in Birmingham, where a Conservative councillor, Peter Douglas Osborn, distributed a leaflet misreporting aHansard quote from the Minister for E-Commerce, Energy and Postal Services in respect of the Post Office urban reinvention programme. You will also be aware that Councillor Douglas Osborn, together with Liberal Democrat Councillor Holtom, has written to a third party alleging that I voted against a motion that did not exist regarding a post office in my constituency. Those documents follow allegations made by the leader of the Liberal Democrats on the city council in leaflets distributed in my constituency., also alleging that I and other Labour colleagues voted for a number of propositions concerning local post offices that were never put to this House.
May I therefore seek your advice, Mr. Speaker, on what can be done to protect the integrity of the parliamentary record and to safeguard the reputations of hon. Members of all parties against those who seek to falsify them?
Mr. Speaker: I am grateful to the hon. Gentleman for giving me advance notice of his point of order. He has raised a significant matter, which should be of concern to the whole House.
On 16 July 1971, the House resolved not to entertain any complaint of contempt or breach of privilege in respect of the publication of its debates or proceedings, but that resolution in no way removed the constraints

1117
on those who, for whatever reason, choose to misrepresent the proceedings of the House or to publish false or misleading reports of our debates.
As "Erskine May" makes clear, since at least 1699 the House has regarded the misrepresentation of its proceedings not only as a contempt, but as
"destructive of the freedom of Parliament".
Nothing in the 1971 resolution alters that view.
I can therefore advise the hon. Gentleman and the House that the deliberate or reckless misrepresentation of the debates and proceedings of the House is potentially a contempt of the House, against which the House may wish to proceed. Moreover, those who act in this way are unlikely to be protected in the courts by the unqualified privilege which normally attaches to the reporting of our proceedings.
I am sure the that House will take, a serious view of the situation if the conduct which the hon. Gentleman has described continues.
Mr. Andrew Turner: On a point of order, Mr. Speaker. I am grateful to you for responding in that way to the point of order raised by the hon. Member for Birmingham, Northfield (Richard Burden). It certainly illuminates a number of remarks that might be made about any of us, at any time. However, is it not the case that many Labour Members voted for the network reinvention scheme on 15 October 2002, and that it is under that scheme that many urban post offices are threatened?
Mr. Speaker: That has nothing to do with the point that I made regarding the point of order of the hon. Member for Birmingham, Northfield (Richard Burden).

Orders of the Day
  Pensions Bill
    3RD ALLOTTED DAY
    As amended in the Standing Committee, further considered.
    Clause 125

      PAYMENT OF SCHEME BENEFITS
      Amendment proposed [19 May]: Government amendment No. 101, in page 84, line 7, leave out 'for that period'.—[Malcolm Wicks.]
      1.34 pm
      Question again proposed, That the amendment be made.
      Mr. Speaker: I remind the House that with this we are discussing the following: Government amendments Nos. 102 and 103,
      Amendment No. 26, in page 232, line 15, Schedule 7, leave out from 'means' to end of line 17 and insert '90 per cent.'.
      Amendment No. 27, in page 232, line 24, leave out sub-paragraph (7).
      Government amendment No. 144,
      Amendment No. 28, in page 247, line 42, leave out '2.5%' and insert '5 %'.
      Amendment No. 31, in page 249, line 19, leave out paragraph 29.
      The Minister for Pensions: We were yesterday in the middle of an important debate on aspects of the pension protection fund. As I recall, as proceedings came to a halt I was gently advising the hon. Member for Northavon (Mr. Webb), in relation to important social reforms, that he should perhaps try to adopt a less pessimistic and cynical approach to what I regard as proper social advances. Although there are always difficult questions to ask and proper scrutiny is needed, we should not be in the business of trying to undermine confidence in important measures such as the pension protection fund.
      In the course of yesterday's discussion, various detailed issues were raised, and I should like to reply to them in a little detail, notwithstanding the pressures on time this afternoon. I feel that some of the issues around the 100 per cent. compensation, as opposed to 90 per cent., were discussed in great detail in Committee, but I shall try to summarise some of the issues.
      Hon. Members made various suggestions about changing the levels of compensation to be paid to those over and under a scheme's normal pension age. There were some calls for compensation to be increased to 100 per cent. of the PPF benefits for non-pensioners, and questions about levelling down to 90 per cent. for all. Before I begin a detailed response to the points made, I shall first remind Members why we are setting up the PPF. It is to guard against a situation in future where employers go bust, leaving pension schemes desperately underfunded and pension scheme members receiving

      1119
      only a small fraction of the pension that they were promised. From time to time, one or two hon. Members forget that important fact. We can argue about the respective merits of 100 per cent. and 90 per cent., or something in between, but many people, who after years of paying contributions would otherwise be left receiving only 20 or 30 per cent., will be grateful that Parliament has done its work to provide at least the 90 per cent. That is sometimes forgotten.
      All things being equal, we would of course prefer to pay 100 per cent. to all, but some reduction in compensation is necessary to guard against the moral hazard of companies' taking advantage of PPF compensation and, of course, to control costs. By providing 90 per cent. compensation for those under a scheme's normal pension age, we are incentivising those who have the greatest influence over funding levels—such as high-paid directors—to keep the scheme out of PPF. That is an important element of the range of moral hazard provisions that the Bill now contains.
      In designing the pension protection fund we have learned lessons from the Pension Benefit Guaranty Corporation in the United States. Yesterday, we discussed the admissible rules and the disregarding of rule changes in the previous three years, which are learned directly from the US experience. Like the US PBGC, the PPF will apply a benefit cap—in our case £25,000 for those below normal pension age. The 90 per cent. compensation level for those below normal pension age, too, builds on the US experience, where no such moral hazard provision exists, and where all scheme members are guaranteed 100 per cent. We do not want to take money away from people above normal pension age who are receiving their pension. Under our scheme, those who enter the PPF who are already above normal pension age and receiving their pension will receive 100 per cent. compensation and will not suddenly be left with a drop in their income. Surely that is sensible.
      I should emphasise that, in designing the PPF, we have worked hard to balance the need to provide meaningful protection for scheme members with the need to ensure that the fund will be affordable. Hon. Members have suggested equalising compensation to 100 per cent. for all, but that would add an estimated £100 million to the levy each year. As I said to hon. Members yesterday—again, gently—they were not very forthcoming about the cost implications of their amendments, and it was not at all clear whether those costs would be met by increasing the levy or by the taxpayer.
      Mr. Steve Webb: Perhaps, then, the Minister can assist the House by assessing the cost implication of a proposed reform. He says that the extra would be £100 million if everyone under normal pension age were to receive 100 per cent., but I made the distinction in my contribution yesterday between workers below pension age and retired people below pension age. Does he know how much of that £100 million relates to retired people—people who are drawing pensions below pension age? I imagine that that is a small fraction of the figure. My key point was that the anti-moral hazard measures will hit carers and
      1120
      others who have retired early for good reasons. There might be a better way of dealing with the moral hazard issue.
      Malcolm Wicks: From memory, the figure is approximately £10 million, but if I have it badly wrong I shall write to the hon. Gentleman.
      The hon. Gentleman asked about early retirees and whether the PPF compensation levels were unfair. We recognise that with any scheme such as this there will be aspects of rough justice, but we have taken the view that early retirees will be more likely than those over the normal pension age to be able to top up their income—for example, through part-time work. We recognise that that will not be true for those who retire early on grounds of ill health, so such people will receive 100 per cent. compensation if the board considers that the trustees made the ill-health award correctly.
      If we did not apply the 90 per cent. figure to early retirees, new questions of moral hazard would be opened up. If early retirees also received 100 per cent., individuals could start taking early retirement with the sole intention of maximising their entitlement to PPF compensation. It would be hugely difficult to prevent this, as early retirement is not awarded in the same way as an ill health pension, so it would be more difficult for the PPF to police. Furthermore, there is also a cost implication in paying early retirees 100 per cent. compensation. Notwithstanding the moral hazard risk that I have described, we estimate that such a payment would require PPF levies to be increased by £10 million per annum.
      On the power to vary compensation and levels of benefit, the hon. Member for Northavon—he features in our debates and in our thoughts—asked what extreme circumstances might lead to the board's making a recommendation to the Secretary of State. He inferred that as soon as a big scheme came into the PPF, compensation levels would immediately be reduced. We expect that the circumstances in which that might happen would be extraordinary rather than extreme. It is important to emphasise that if two or three big FTSE 100 companies go bust—in case any City editors are half-listening, I should repeat that this is an extraordinary, in extremis scenario—the PPF will take control of the pension assets. In the short to medium term, the PPF will therefore be very cash rich, so the circumstance described in which the PPF might "fall over" is simply not right. In such a scenario, the board will have no problem in paying benefits, but it will obviously want to consider the requirements of the long-term funding situation in order to reduce any deficit between assets and liabilities. In other words, the PPF is likely to be able to cope, even in the in extremis situation of two or three very large companies going bust.
      In the very unlikely event that the board wanted to vary the level of compensation, it would have to consider raising the levy. Before a recommendation was made to the Secretary of State, the board would have to reduce indexation and revaluation to zero, which would significantly reduce liabilities. The board would also be required to consult. Any changes to the compensation percentages would of course be subject to the affirmative procedure. There is no need, therefore, for the Government to be a lender of last resort. If a large pension scheme comes into the PPF, this will not create

      1121
      a liquidity problem, as the assets of the scheme will be taken into the PPF. The scheme will of course be underfunded to some extent, and the PPF levy will ensure that, over time, the PPF is financed adequately to pay all its liabilities.
      Mr. Geoffrey Clifton-Brown: My neighbour the hon. Member for Stroud (Mr. Drew) has drawn the Minister's attention to the problems associated with the Lister-Petter pension scheme, and the Minister is indeed meeting the hon. Gentleman and some members of that scheme. The subsidiary went bust and the main company is still trading, yet pensioners in the subsidiary scheme seem not to be covered. Can the Minister clarify what is happening? If he cannot do so now, perhaps he will write to me if I first supply him with more details of that scheme.
      Malcolm Wicks: It would be wrong of me to comment on a particular scheme because I do not know the circumstances, but if the hon. Gentleman sends me the information I shall consider it carefully and write to him. We have considered various moral hazard provisions, and we are fully aware of the danger that sophisticated company structures—involving parent companies and many subsidiaries—can lead to the dumping of pensions in one scheme, while the parent or subsidiary companies remain solvent. We are dealing with this issue in general terms, but I am grateful to the hon. Gentleman for raising it. We will deal with it in the way that we discussed.
      1.45 pm
      Mr. Webb: The Minister is being very generous in giving way—he has clearly had a good night's sleep. No one is arguing that it is likely that the Government will have to be the lender of last resort, and he is right: if a large scheme goes down, a big pot of money goes into the PPF in the year in question, so there is no problem. However, the Government have included a "what if?" provision in schedule 7, with which amendment No. 31 deals, that creates a reserve power. My question is: what happens if the fund gets into a really difficult situation? The Minister says that that is not very likely, but he clearly concedes that it is possible; otherwise, such a power would not be included in the Bill. If such a situation is possible and that power could be exercised, surely it would be better for the Government to act as lender of last resort, rather than cutting benefits. So the question of the likelihood or otherwise of the scenario is not relevant; the Government have included the "what if?" provision in the Bill, so would not the alternative strategy be preferable?
      Malcolm Wicks: As ever, I am in a generous mood, so I shall not point out that the hon. Gentleman is rather good at "what if?" scenarios. That can be helpful in testing things out, but occasionally it can prove somewhat absurd. It is right and proper that there should be no liability on the general taxpayer as regards the PPF, not least because many taxpayers are not in final salary pension schemes. We have therefore carefully costed likely liabilities to the PPF. Yes, we
      1122
      have built in certain provisions and safeguards, because it would be irresponsible to ask the House to support this Bill without building in an in extremis scenario.
      Mr. Webb: A "what if?" scenario.
      Malcolm Wicks: Yes. In terms of national emergencies—perhaps this is not a very good comparison—it is right and proper that we plan for the most extraordinary things that might happen to our various institutions, or to the country as a whole. However, so far as such events are concerned, we are not talking about their likelihood. We are convinced that raising the levy by 25 per cent. a year to a cap of 100 per cent., along with the requirement to consult the Secretary of State on crucial matters, provides the necessary flexibility.
      We have learned the lesson of the need for such flexibility from the United States. In discussing the American war on poverty and its relationship to this country, the great Professor Halsey of Oxford once spoke of ideas drifting across the Atlantic, soggy on arrival and of dubious utility. However, as a proponent of the special relationship, I should point out that this situation is very different; we have learned proper lessons from across the Atlantic. The fact that the board itself, subject to certain provisions, can raise the levy without having to come to Parliament—in the United States, Congress has to be consulted—is a very important flexibility.
      I emphasise the point about assets because in this debate and the dubious comments occasionally made about the American Pension Benefit Guaranty Corporation, it is sometimes forgotten that the PBGC, despite the current financial difficulties, holds considerable assets. Notwithstanding anything else, those assets would enable it to meet its commitments for several decades. It is sometimes suggested that in an extreme scenario in which a particular company crashes, the PPF would be unable to operate, but in fact, considerable assets would go to the PPF. That point gets forgotten.
      A recent Channel 4 documentary—the hon. Member for Northavon might have contributed to it—talked about the PBGC being on the verge of collapse. On watching that documentary, I thought that the merger of Channel 4 and Channel 5 had already taken place, such was the absurdity of the analysis offered by the young gentleman presenting it. He was riding a moped, and seemed to think that he was in a film with Sophia Loren.
      May I move on to indexation? One of the amendments was designed to increase the cap on indexation to 5 per cent. As I have already explained, the Bill is designed to reduce the level of the indexation cap to 2.5 per cent. on all future accruals. By restricting the amount of indexation paid, the PPF is better able to predict its liabilities. It also means that the PPF will not end up paying more than some schemes are required to do. Furthermore, it avoids creating a further increase to the levy of around £100 million a year. If we add to that the proposal for 100 per cent. compensation for all, the amendments would effectively add an estimated £200 million to the levy each year.
      Once again, I look to Conservative Front Benchers to intervene to explain their proposals. If they seriously believe in provisions that would add an extra

      1123
      £200 million a year, we need to know whether it is a proper spending commitment. It sounds like one. Are they saying that the taxpayer should fund the proposals or that the levy should be substantially increased? Or is it that they are thrashing around as ever without being clear where they are going—one way or the other?
      Mr. Nigel Waterson: Given that the Minister provokes me and that the world's media are standing several deep in the Press Gallery, craning to hear our every word, let me make it clear that our probing amendments are designed to get the Minister to admit that what the Government are selling is not a total safety net. Indeed, the Minister just made the point—it will be interesting to read the Hansard—that the reason for making reductions in indexation is to ensure that the PPF has enough money to pay people out. It is yet another example of cheese-paring the benefits to be paid to pensioners in order to make the scheme work in the first place. That is the point, and it is important that the public end up with a clear impression of what they are and are not getting with the scheme.
      Malcolm Wicks: If we are cheese paring, there should presumably be more cheese and it has to be paid for. The hon. Gentleman has not answered my point. Is he making a spending commitment—I think he is—of £200 million a year? Is he telling industry to pay much more on the levy or saying that the taxpayer should subsidise it? I would be happy to give way again. Answer came there none. We are not cheese paring. Unlike in Monty Python, this is a cheese shop with a whole variety of cheeses—ample for everyone and ample to cover the liabilities on pensions that we are predicting. A further point is the impact that such a measure might have on schemes. If schemes followed suit, it would increase scheme liabilities and contribution levels, as well as a bigger hit on schemes via the levy.
      The hon. Member for Northavon also asked about the consistency of 2.5 per cent. indexation with a revaluation cap of 5 per cent. There is no inconsistency. Pension schemes are required to revalue in line with the retail prices index with a cumulative cap of 5 per cent. The PPF revaluation maximum rate of 5 per cent. therefore mirrors the maximum rate in the Pension Schemes Act 1993 and, as with the PPF indexation, it is in line with the requirements of the schemes.
      The Government have taken account of the recommendations made in the Pickering report regarding indexation and revaluation. While that report recommends a reduction in indexation, it specifically recommends that revaluation should remain unchanged. We followed that advice.
      Finally, I should like to clarify the position on borrowing. I hope that my distinction between the cash flow position of the PPF and its funding position has already dealt with the doomsday scenario of the hon. Member for Northavon.[Interruption.] My speech writer is beginning to understand my approach to these matters. I should clarify that borrowing will be needed only in extreme cases where there is an exceptional cash flow need. That is most likely to happen at the outset, but even there, the PPF will collect the levy at least a
      1124
      year in advance of the PPF having to start paying any pensions. There will also be a limit, set through regulations, on the amount that the PPF can borrow.
      Mr. Webb: It is not me who puts the provisions in the Bill; it is the Minister—or somebody. It is the Bill, not me, that gives the PPF the power to borrow money. It is the Bill that says that those circumstances may arise and that provision needs to be made for them. At that point, why is it better value for money for the taxpayer for the PPF to borrow privately at a higher interest rate than the Government could provide?
      Malcolm Wicks: We covered that in Committee. We believe that the normal rules of borrowing should apply. I urge the hon. Gentleman—gently, as ever—not to adopt a doomsday scenario on this front. Like many of us, I am sure he has insurance against fire risk in his house, but it is unlikely that his house or my house will burn down. It is perfectly proper for the most difficult scenarios to be taken into account in legislation and to make provision for them. The PPF is a well developed, well-costed and evidence-based scheme, which we believe will stand the test of time. I hope that I have convinced the House that hon. Members should not press their amendments.
      Amendment agreed to.
      Amendments made. No. 102, in page 84, line 16, after 'pension' insert
      'or payment of a member's lump sum'.
      No. 103, in page 84, line 19, at end insert—
      '(4A) For the purposes of subsection (4)—

      (a) "normal pension age", in relation to an eligible scheme and any pension or other benefit under it. means the age specified in the scheme rules as the earliest age at which the pension or other benefit becomes payable without actuarial adjustment (disregarding any scheme rule making special provision as to early payment on the grounds of ill health), and

      (b) where different ages are so specified in relation to different parts of a pension or other benefit—

      (i) subsection (4) has effect as if those parts were separate pensions or, as the case may be, benefits, and

      (ii) in relation to a part of a pension or other benefit, the reference in that subsection to normal pension age is to be read as a reference to the age specified in the scheme rules as the earliest age at which that part becomes so payable.

      (4B) In subsection (4A) "scheme rules" has the meaning given by section 134(7).'.—[Mr. Jim Murphy.]

    Clause 127

      BOARD'S OBLIGATION TO OBTAIN VALUATION OF ASSETS AND PRIOTECTED LIABILITIES
      Amendments made: No. 104, in page 85, line 13, leave out from second 'valuation' to end of line 15 and insert
      'of the assets and protected liabilities of the scheme which—

      (a) is in the prescribed form and contains the prescribed information, and

      (b) is prepared and signed by a person with prescribed qualifications;'

      1125
      No. 105, in page 85, line 32, at end insert—
      '() In a case where there are one or more reviewable ill health pensions (within the meaning of section [Reviewable ill health pensions]) under the scheme, nothing in subsection (2) requires the actuarial valuation to be obtained during the period mentioned in section [Effect of review](5)(b) (period during which Board may exercise its power to make a decision following a review) relating to any such pension.'.—[Mr. Jim Murphy.]

    Clause 134

      APPLICATION FOR RECONSIDERATION
      Mr. Webb: I beg to move amendment No. 219, in page 90, leave out lines 14 to 16 and insert—
      "(b) audited accounts covering the period from the date of the latest statutory annual accounts of the scheme to a date no later than three months prior to the day the application is made.'.
      You will have noticed, Madam Deputy Speaker, that relatively few of the amendments tabled on Report—I do not mean the Government amendments—are signed by both Liberal Democrat and Conservative Members. This is one of those rare examples. We were simultaneously inspired by the need to change the audit and accounting arrangements in cases where trustees make an approach to the pension protection fund. We both received the same letter from the Institute of Chartered Accountants in England and Wales. It wrote to the hon. Member for Eastbourne (Mr. Waterson), who did not reply, so it asked me to table the amendments. The Conservatives then got round to it and may have been rather shocked to find their names on our amendment—but we will move on. In Committee, the hon. Member for Eastbourne generally got to speak first and read out the brief before I did; on this occasion—I am enjoying the moment—I can read it to him first.
      The substance of the point is that, under clause 134, arrangements need to be made for trustees to approach the PPF to ask it to take over the assets of the scheme. There are two issues. First, the clause refers to
      "an auditor's valuation of the scheme as at a date ("the reconsideration date") within the prescribed period ending with the day on which the application is made "
      That is straightforward. The first question asked by the Institute of Chartered Accountants is about the concept of an auditor's valuation. Usually, there is a set of accounts and the role of the auditor is not to value the assets of the scheme, but to audit those accounts. It is the accountant who produces the account and the auditor who then certifies whether it has been done properly. The Institute of Chartered Accountants believes that it is not the job of the auditor to provide the valuation. Should the PPF be supplied with audited accounts, and is the auditor the right person to do the valuation? That is the first question.
      That is why our amendment refers to "audited accounts" and not to an "auditor's valuation", as the Bill does.
      2 pm
      The second point has to do with timing. The concept of an auditor's valuation is difficult. We are talking about audited accounts, which have to be signed by trustees. However, the Bill provides that trustees
      1126
      relinquish responsibility when a scheme's assets are transferred to the PPF, in which case there would be no trustees to sign the audited accounts. If the Minister accepts that we need audited accounts and not an auditor's valuation, there needs to be a provision in the Bill to ensure that trustees are in place to sign the accounts. That implies that the date of valuation or of the audit of the accounts must come before the assets are handed over to the PPF, as otherwise there would be no trustees to sign the audited accounts.
      The amendment provides that the period should extend from the final annual accounts to three months before the date when the application is made. The reasoning is that it will take three months to produce accounts, have them audited and passed to the PPF. The ICAEW reckons that three months will be just enough time for that. The trustees—who would remain until the assets were handed over—would be able to sign the accounts off, and the PPF board and its staff would be able to look at what happened to the assets in the three months after the audited accounts were signed off.
      I freely admit that I am not an authority on the distinction between the roles of auditors and accountants, but not surprisingly, it is important to the ICAEW. The institute considers that the Bill is unclear when it refers to a
      "prescribed period ending with the day on which the application is made."
      It also believes that the clause confuses the role of the auditor with that of the accountant, as the latter prepares accounts to be audited. It is also concerned that audited accounts could not be signed off by trustees if the assets had already been handed over to the PPF, for the reason that I have given already.
      I hope that I have done justice to the concerns that have been raised. I am delighted that the hon. Member for Eastbourne backs the amendment. I look forward to his contribution and to the Minister's response.
      Mr. Waterson: There seems to have been a photo-finish at the Table Office when the amendment was submitted. All credit must go to the ICAEW for getting in just under the wire and ensuring, on the final possible date, that the amendment could be debated in the House. I hope that it will add some credibility to the amendment if I make it clear that it is backed by the official Opposition. I do not want it to be undermined by the fact that the names of Liberal Democrat Members appear at the top of the list of sponsors.
      The hon. Member for Glasgow, Anniesland (John Robertson) has popped out of the Chamber for a moment. I am delighted about that, as the mere mention of any professional body incenses him and provokes him into an attack. Yesterday it was lawyers, and today it might have been the turn of accountants. I had better sit down before he reappears, so I will only say that we support the amendment and hope that the Government will accept it.
      Malcolm Wicks: The support of Her Majesty's loyal Opposition of course adds enormously to the credibility of the amendment. It therefore pains me to suggest that it is unnecessary and might be withdrawn.
      Clause 134 details the process by which the trustees or managers of a scheme may make an application to the board to reconsider a decision not to admit the scheme

      1127
      into the PPF. Amendment No. 219 would require this application to be accompanied by audited accounts that cover the period between the date of the latest set of annual accounts and a date that must be no later than three months prior to the date of application.
      Clause 134(4)(b) already requires an application to be accompanied by an auditor's valuation of the scheme. Because an auditor's valuation would have to take, as a starting point, the final set of statutory accounts, there is no substantive difference between an auditor's valuation and a set of audited accounts as described in the amendment.
      The amendment would require the accounts to cover a specific period of time—the period between the latest set of annual accounts and a date that must be no later than three months prior to the date that the application is made. It is absolutely essential that the application for reconsideration be accompanied by an up-to-date set of accounts, as that will provide the basis for the board's decision. The amendment would effectively allow the accounts to be three months out of date, which is unlikely to be acceptable in all cases.
      We will be consulting further with the pensions industry, wind-up specialists and trustees to ensure that the period prescribed is the right one. We will also consult all those who have made useful contributions to the debate.
      Mr. Webb: The audit could take place 11 months after the accounts for the previous year have been completed. I do not understand how the auditor is supposed to do an evaluation when the available accounts are 11 months old. The amendment would mean that, at worst, the accounts would be only three months old. The ICAEW has said that the auditor's role is different from the accountant's, so how can the auditor provide an up-to-date valuation when the accounts are 11 months old? Is that not what accountants do, rather than auditors? Is not what the accountants produce validated by the auditors?
      Malcolm Wicks: This is very detailed territory, and none of us is an expert. However, we are talking about an auditor's valuation, and that will clearly involve the auditor making a judgment about a scheme's finances. The final set of statutory accounts will be one of the building blocks in that, but I promise that my officials will reconsider the matter. I have said that we will consult on it in any case. We are not against the spirit of the amendment, but we do not think it necessary.
      Given the reassurances that we will consult, I hope that the hon. Member for Northavon will withdraw the amendment.
      Mr. Webb: I am grateful to the Minister for his constructive response to the amendment. My assumption is that auditors check what other people have done. Although it may be rather crude, that is the distinction that I am trying to draw. I do not want to demean large swathes of the profession, but it seems to me that auditors check someone else's sums and do not do the sums themselves. Accountants and auditors have different qualifications and expertise, which I do not want to understate.
      1128
      The Minister has listened to the argument, however, and reflected on it, and he has promised to talk to people who can advise him on these matters. I therefore beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendment made: No. 106, in page 91, line 4, leave out from 'as' to 'overrides' in line 6 and insert '—

      (i) paragraph 3 of Schedule 5 to the Social Security Act 1989 (c. 24),

      (ii) section 129 of the Pension Schemes Act 1993 (c. 48),

      (iii) section 117 of the Pensions Act 1995 (c. 26),

      (iv) section 31(4) of the Welfare Reform and Pensions Act 1999 (c. 30) (pension debits: reduction of benefit), or

      (v) section 264 of this Act,'.—[Derek Twigg.]

    Clause 138

      TREATMENT OF CLOSED SCHEMES
      Amendments made: No. 107, in page 95, line 1, at end insert—
      '() section 37(5) and (6) (Board to act as creditor for debt due by virtue of a contribution notice under section 35);'.
      No. 108, in page 95, line 1, at end insert—
      '() section 44(5) and (6) (Board to act as creditor for debt due by virtue of a contribution notice under section 42);'.
      No. 109, in page 95, line 1, at end insert—
      '() section [Content and effect of a restoration order](5) and (6) (Board to act as creditor for debt due by virtue of a restoration order under section [Restoration orders where transactions at an undervalue]);'.
      No. 110, in page 95, line 1, at end insert—
      '() section [Content and effect of a section [Contribution notice where failure to comply with restoration order] contribution notice](5) and (6) (Board to act as creditor for debt due by virtue of a contribution notice under section [Contribution notice where failure to comply with restoration order]);'.—[Derek Twigg.]

    Clause 145

      THE PENSION COMPENSATION PROVISIONS
      Amendment made: No. 111, in page 99, line 5, leave out second 'section' and insert—
      'sections [Reviewable ill health pensions] to [Interpretation of sections [Reviewable ill health pensions] and [Effect of review]] and'.—[Derek Twigg.]

    Clause 156

      PENSION PROTECTION FUND
      Amendments made: No. 112, in page 104, line 15, at end insert—
      '() any amount paid to the Board in respect of a debt due to the Board under section 37(7) by virtue of a contribution notice under section 35,'.
      No. 113, in page 104, line 15, at end insert—
      '() any property transferred or amounts paid to the Board as required by a restoration order under section [Restoration orders where transactions at an undervalue].'.
      No. 114, in page 104, line 15, at end insert—
      '() any amount paid to the Board in respect of a debt due to the Board under section [Content and effect of a section [Contribution notices where failure to comply with restoration order] contribution notice](7) by virtue of a contribution notice under section [Contribution notices where failure to comply with restoration order],'.
      No. 115, in page 104, line 22, leave out 'payable' and insert
      'to be paid or transferred'.
      No. 116, in page 104, line 37, at end insert—
      '() any sums required to meet any liabilities arising from obligations imposed on the Board by a restoration order under section [Restoration orders where transactions at an undervalue],'.
      No. 117, in page 104, line 37, at end insert—
      '() any property (other than sums) required to meet any liabilities—

      (i) transferred to the Board as mentioned in paragraph (a) and arising from obligations imposed by a restoration order under section [Restoration orders where transactions at an undervalue], or

      (ii) arising from obligations imposed on the Board by such an order,'.

      No. 118, in page 104, line 42leave out 'payable' and insert
      'to be paid or transferred'.
      No. 119, in page 104, line 42, at end insert—
      '() In subsection (1) (other than paragraph (d)) and subsection (3) (other than paragraph (c)) any reference to a provision of this Act is to be read as including a reference to any provision in force in Northern Ireland corresponding to that provision.'.—[Derek Twigg.]

    Clause 157

      INITIAL LEVY
      Mr. Waterson: I beg to move amendment No. 33, in page 105, line 5, after 'regulations', insert
      ', which shall be no earlier than the day on which the basis for calculating the risk-based levy in the first financial year after the initial period has been published.'.
      Madam Deputy Speaker (Sylvia Heal): With this it will be convenient to discuss the following amendments:
      No. 34, in page 105, line 6, leave out '12' and insert '6'.
      No. 35, in page 105, line 27,after 'liabilities', insert—
      '(ia) the likelihood of an insolvency event occurring in relation to the employer in relation to a scheme,'.
      No. 36, in page 105, line 33, leave out paragraph (a).
      No. 37, in page 107, line 10, leave out '50%' and insert '75%'.
      No. 38, in page 107, line 43, at end insert
      'save that in the first year, the levy ceiling will be no higher than £600 million'.
      No. 39, in page 109, line 31, leave out from 'means' to end of line 33 and insert
      'a period of time no longer than two years after the initial period begins.'.
      1130
      No. 40, in page 109, line 41,at end insert—
      '() The trustees or managers of the scheme may charge a sum at least equivalent to the non-risked based amount of the levy to all scheme members.'.

      Mr. Waterson: I shall be fairly brief as the amendments, almost without exception, echo equally important amendments that we moved in Committee—much good it did us then. They have to do with the nature of the levies, and especially the initial levy. The Government are moving, slowly, to a risk-based levy—and I shall say more about that on Third Reading—but they are opting for a flat-rate levy in the initial stages.
      The amendments probe the matter from different directions. Amendment No. 33 would delay the start of the levy until the risk base had been established. Amendment No. 34 stipulates a shorter period for the initial levy. Amendments Nos. 35 and 36 deal with expanding the basis of the risk in the risk-based levy, and would give higher priority to the likelihood of an insolvency event relating to the sponsoring employer of a pension scheme.
      Amendment No. 37 provides that the risk-based element of the levy, when it is finally sorted out, should be at least 75 per cent., rather than the 50 per cent. set out in the Bill. I think that the Minister said in Committee that that was Government's intention, but that he did not want to be tied down to it. We still think that it would be worth while to make it clear that far and away the greater proportion of the levy would be risk based.
      Amendment No. 38 would place a cap on the initial levy of £600 million a year. Amendment No. 39 calls for a shorter period for the introduction of the risk-based levy. Its merits are fairly clear, and we debated the matter at length in Committee.
      Amendment No. 40 raises the difficult issue of whether a sponsored scheme can pass on some or part of the levy to the members of that scheme. When we tabled the amendment in Committee, the Minister gave various reasons why it would not work, including that it would be difficult to administer. I understand that some schemes would face practical difficulties in finding the people to invoice. The Minister said that it could
      "result in a reduction in the level of income for current pensioner members".—[Official Report, Standing Committee B, 1 April 2004: c. 597.]
      He also thought that it might be unfair. I raised at length the situation of some companies that, for historical reasons, are now relatively small but have large numbers of pension members in their scheme. For example, Marconi, which has written to me on the issue, has 3,327 active members and 69,000 deferred and pension members, which is a ratio of more than 20:1. For a company like that, the levy will be a significant chunk off the bottom line.
      In the debate, I also referred the Minister to the regulatory impact assessment on the Bill, which suggested—in the impenetrable language in which RIAs tend to be written—that it was envisaged that schemes would be able to pass on some or all of the levy to their members. However, the Minister was adamant that that was not the case. Imagine my surprise to read an answer

      1131
      given by Baroness Hollis in the other place in which she said that
      "the requirement to pay the levy will fall on the trustees of the scheme, who will be left to judge how the levy charge could then be shared as they see fit among employers and employees as one of the overall pension costs."—[Official Report, House of Lords, 4 May 2004; Vol. 660, c. WA101.]
      Obviously the Government were in "being nice to business" mode on that particular day. She also talked of minimising the burden on schemes. My question is: who was right—the Minister in Committee or Baroness Hollis?
      Mr. Webb: This is an important group of amendments, because the basis of the PPF levy is central to the nature of the scheme. I know that my noble Friends in the other place attach great importance to the PPF being a genuine insurance scheme, and therefore think that the levy should be a risk-based levy, preferably in its entirety and from day one. I therefore have much sympathy with some of the amendments in the group, especially amendment No. 37, which would raise the proportion of the levy that would be risk based.
      The worry about amendment No. 33 is that there might be a delay in getting the scheme going. I think that I understand the effect the amendment would have, but if I misrepresent it I hope that the hon. Member for Eastbourne (Mr. Waterson) will correct me. His point is that a risk-based levy would need some tough arithmetic, some data gathering and some research—in other words, it would not be easy to implement and industry should be warned about that—and all that would need to be done before the initial levy was introduced. I am beginning to think that "half-baked" was a generous assessment of the Bill, but I shall return to that point on Third Reading. We certainly want to start providing the assistance as soon as possible, especially given the meagre level of benefits provided by the financial assistance scheme introduced yesterday. Any delay in the introduction of the full PPF could mean that some pensioners get not the 90 per cent. payable under the PPF but the lower rate payable—perhaps 65 per cent.—under the financial assistance scheme. Therefore, timing matters. Amendment No. 33 might introduce delay and that would be a worry. Any significant delay would be a cause of anxiety, especially to members of pension schemes whose companies were not financially strong.
      Amendment No. 34 is in the same spirit and would shorten the period over which the initial non-risk-based levy would apply from 12 months to six. My concern is the practicality of changing the rate of the levy half way through a financial year. It could be done, but it would not assist firms in their financial planning. It would perhaps be better to do away with the concept of an initial levy and introduce the full scheme as quickly as possible.
      2.15 pm
      I support amendment No. 35. The risk-based levy has to be based on the underfunding in the fund, but that is all that it must include. The Bill says that it may also include insolvency risk and other risks, but that is not a
      1132
      requirement. What is the basis for a claim on the PPF? The first requirement will be an insolvency event, so it is bizarre that the PPF will not be required to base the risk-based levy on the risk of the very event that would trigger a claim. It is like providing car insurance without assessing the risk of the insured person having a crash. It is right to take account of insolvency risk, and amendment No. 35 would achieve that.
      Another factor that should be included is size of firm. The Bill does not require the risk-based premium to take any account of the size of the firm, and that seems strange. Can the Minister advise the House of why that does not appear as a consideration? The risk of insolvency should be included from day one, and the only objection I can think of to that is how one would measure it. It is one thing to examine a large, blue chip FTSE-100 company and look at its credit rating and accounts, and reach a judgment. A lot of information is available about such firms, but in the case of a small firm with a one or two-member scheme, such as Wiggins Widgets—a mythical firm that I have used as an example in these debates—the finances would not be well known, and it would be difficult for the PPF to assess its insolvency risk.
      If we were to accept amendment No. 35, it would not require the PPF board to perform an insolvency risk assessment of every employer—there are some 100,000. The PPF board would simply say that it would take account of insolvency risk as far as it was able to measure, without having to go to silly lengths for very small firms that would not have a credit rating or other information that could be used. I hope that the Minister will confirm that interpretation; if so, I certainly agree with the spirit of amendment No. 35,
      Amendment No. 37 provides that the minimum risk-based levy should be 75 per cent., rather than the 50 per cent. that is assumed. I recall in Committee that the Government suggested that that was the sort of number they were thinking of.
      Do we leave the PPF board the flexibility to ignore the Government? After all, the Minister told us constantly in Committee that he wants the PPF to be at arm's length from the Department. It would thus have the flexibility not to go above 50 per cent. even though the Government want 75 per cent.
      That is rather odd. Surely, Parliament should be giving a clear steer to arm's length organisations whose actions have implications for the economy, the health of business and the funding of pension schemes. It is not good enough for the Minister to say that the PPF board can make up its own mind; the House should give it a stronger steer. A risk-based levy of 75 per cent. might not be enough; perhaps the figure should be 100 per cent.
      A recent example shows why a large risk-based element is important—I think the hon. Member for Eastbourne hinted at it when he raised the Marconi case. What about schemes where a large number of members have very small pensions? Because the premium is based partly on membership and not solely on risk, there might be a temptation to get such people to leave the scheme. If the levy is not wholly risk based, there could be behavioural consequences. Has the Minister given any thought to the consequences of a membership-based levy?

      1133
      In a large pension scheme, a "legacy" could have built up of former workers, many of whom have only small entitlements—for example, because they worked for the company a long time ago, before indexation rules and when salaries were low. If the levy is not fully risk based, the employer has an incentive to get rid of people with very small pension rights. The firm will realise that it is incurring a membership-based liability for each such person, and the danger is that they could be offered a buy-out, such as a defined contribution asset—something that was actuarially equivalent at the time, but that would give them less security in the future. Scheme members would need advice about whether to accept such an offer. After consulting people who run pension funds, I understand that that could happen, so it is a serious, practical point and I hope that the Minister will give me a response.
      The point might not be important if only a few people were likely to be affected, but there must be many large schemes with many members with fairly small pensions, so unless we accept the amendment and, indeed, go further and make the levy entirely risk based, we shall have to pay money for every person in the scheme for every year that they are in the scheme until they reach pension age, which would cost a lot of money. Of course, it would also cost money to get rid of those people by giving them cash equivalents. I shall not labour the point, but will the Minister tell us whether the Department has thought through the possible effects of a membership-based levy over a long period?
      We should like the 50 per cent. to be increased. Parliament should give a strong steer to the PPF board. My noble Friends in another place attach great importance to the issue and they want the Government to consider it in the later stages of the Bill.
      Amendment No. 38 would put a £600 million cap on the levy in the first year of the PPF. Although the figure seems rather arbitrary, one can see the point that is being made. As the figure relates only to the first year, it would not need uprating. However, I understood that in the first year the levy would raise only about £300 million, or even less, so I am puzzled by the cautiousness of the cap. As the Minister pointed out earlier, the PPF will not be paying out anything in the first year; no schemes will yet have gone into it so no liabilities will have been incurred. As there will be no pensions in payment, there are unlikely to be any nasty shocks in year one.
      Amendment No. 39 relates to our earlier arguments about the transitional period. I accept that these are probing amendments so I shall not be unduly critical, but amendment No. 39 would allow a two-year transition, while under other Conservative amendments either the scheme would not start until there was a risk-based levy or there would be a six-month transition period. If the Conservatives were actually in government, which permutation would they choose? Do they have a view on which of their amendments they support? I suspect not. However, as they have done the House a service by tabling amendments on these important issues, it would be unfair to criticise them for the fact that all the provisions are mutually inconsistent.
      Amendment No. 40 deals with passing on the levy to scheme members, but I am not sure why we need such provision. Surely, an employer running a scheme who has to pay a levy to the PPF can do what they like. They can make the extra payment and negotiate with their
      1134
      employees, so there is no need for a statutory basis for passing on the levy. Whether employers pass on the levy will depend on the relative negotiating strength of the parties involved.
      I should not want employers to be able to wave a big stick and say, "Look, we've got a statutory power and we can force you to pay the money". I should prefer things to be on a negotiated basis. Pensions are a key industrial relations issue. Only today, we read that the rail unions are talking about taking strike action over pensions, so anything that would make the pensions negotiating climate more adversarial—as the amendment would do—would be regrettable.
      Many of the amendments raise important points. I welcome those that would not delay the scheme but would introduce the risk-based premium earlier and at greater length. However, some of them are probably unnecessary.
      Malcolm Wicks: Clauses 157 and 164 set out the provisions relating to the initial levy and the pension protection levies. The amendments are aimed at amending the structure of the current provisions and altering the factors that the PPF board may take into account when setting future pension protection levy rates and structures. For clarity, I will deal with each clause in turn setting out the proposed amendments relating to it.
      Clause 157 provides for the Secretary of State to set the initial levy rate and structure, with the approval of the Treasury. The initial period is needed in order to get the PPF up and running. That is because the information required to set in place a risk-based pension protection levy from the outset is not available. Amendment No. 33 would prevent the setting up of the PPF until it is in a position to establish the basis for the risk-based pension protection levy.
      The amendment could have several implications. The setting up of the PPF could be postponed, which in turn would delay the vital protection for scheme members the PPF will provide; it could require the PPF board to set in place a risk-based levy structure based on incomplete information; or it could require employers to conduct an out-of-cycle PPF-style valuation, placing additional financial burdens on sponsoring employers. Alternatively, it could result in no levy being collected in the initial period, which could have financial implications for the PPF in future. It is not clear to me which of those intentions lies behind amendment No. 33.
      2.30 pm
      Amendment No. 34 would reduce the length of time that the initial period could be extended from 12 to six months. If we put in place a provision that can increase the period of the initial levy to more than 12 months, we have built in a contingency. Restricting that flexibility may impact on the setting of the pension protection levies in the year that follows the initial period, because, as a result of that restriction, the board may need to implement a further, simplified levy structure for the whole year following the initial levy. In addition, allowing the initial levy to apply for a period other than one that coincides with the end of a financial year would have implications on the setting of future pension

      1135
      protection levies, because the pension protection levies that immediately follow the initial levy operate in respect of financial years.
      Clause 158 sets out the provisions that relate to the pension protection levies, including the factors that the board can take into account when calculating those levies. Amendment No. 35 would require the board to take account of the likelihood of an insolvency event occurring in relation to a scheme when it sets the risk-based pension protection levy. Amendment No. 36, if taken in isolation, would result in the board being unable to take account of the likelihood of an insolvency event occurring in relation to a scheme. However, we have assumed that that amendment was proposed in conjunction with and to complement amendment No. 35.
      When setting the risk-based pension protection levy, the PPF board will be required to take account of the level of funding within a scheme, because we consider that underfunding is the most critical factor in determining whether a scheme may require PPF assistance. However, we recognise the importance of other risk factors, such as insolvency risk or investment strategy risk, when setting the pension protection levies, but it will be for the PPF board to determine if and how those other risks can be used. Officials in my Department are continuing to work with industry representatives to establish the most appropriate options available to the board in taking account of insolvency risk.
      Mr. Webb: The Minister is generous in giving way. I have never heard him put it quite as starkly before that the Department considers that the underfunding level is the critical thing and that everything else is in a sense second order. That certainly mirrors the Bill's structure. However, for example, let us compare BT, which, on certain measures, has a socking great deficit but practically no chance of making a claim on the fund, with another scheme with a fairly small deficit but a really shaky company. It is the second company that will make a claim on the PPF, so why is the insolvency risk deemed to be second order?
      Malcolm Wicks: I will not mention any company, but where a company is perfectly solid and judged by the board on different criteria, probably not just one, to be very solid—to use that non-technical description—it will do well out of the risk-based levy, so there should be no concern.
      Kevin Brennan: Is not a possible danger of incorporating an insolvency risk into the levy that the PPF itself would participate in disseminating commercial information that could damage the business concerned in the markets?
      Malcolm Wicks: A key point is that the levy can influence the behaviour of scheme sponsors to ensure adequate funding. The PPF must try to do that in many respects. The other risk factors are obviously desirable in relation to the one that I mention, and we assume that the PPF will include them in the levy's structure.
      1136
      However, it would be wholly desirable if the fact that such information becomes public—I guess that it will in a sense—encourages a scheme to fund itself properly.
      Mr. Bill Tynan: It is obviously important that companies are not jeopardised because a levy is placed on them. Will my hon. Friend clarify the situation? Under the Bill, the PPF has to be mindful of the financial position, but it does not have to take that totally into account. Would it not be better if the PPF had to take account of a company's financial problems in a more structured way before it levied that company?
      Malcolm Wicks: In those circumstances, the importance of the regulator will come into play. As my hon. Friend knows. as well as I do, from his service on the Standing Committee, we very much need to consider the PPF in tandem with the new regulator. The regulator's task is to act early where signs of risk arise and to try to ensure, using a range of powers from the relatively soft to the very tough, that company pension schemes come up to scratch. Obviously, in an ideal world, we would want as few companies as possible to pay the risk-based levy because we do not want too much risk to be placed on the PPF. If that came about, the levy for all companies could be relatively low, but that is probably an aspiration for the longer-term future.
      Clause 160 sets out the provisions that relate to the amounts to be raised by the pension protection levies and the parameters within which the board may operate. Amendment No. 37 would require the PPF board to estimate that it would collect at least 75 per cent. of the pension protection levies via the risk-based levy. That would have an impact upon the PPF board's flexibility when setting and determining future pension protection levy rates and structures.
      We consider that the Bill will restrict the PPF board adequately, while ensuring that the board has the freedom, flexibility and independence to set the most appropriate pension protection levy rates and structures in the future. However, we share with hon. Members a desire that the great majority of the levy in the transition period will be based on risk factors. As guidance to colleagues, we consider, after consulting stakeholders and other relevant bodies, that an appropriate split would be—this is a guideline—about 80:20 in favour of risk factors; but there will be flexibility and that will be a decision for the board, not for Ministers.
      Mr. Webb: I shall endeavour not to intervene on the Minister again in the debate on this group of amendments, but I must have failed to make my point about what counts as risk, because the Minister's response was completely wrong. If the risk-based premium is based only on underfunding, a scheme such as BT's—a big, solid company but temporarily with a big deficit—will pay a socking great premium. He said that a solid company need have nothing to fear from a risk-based premium, but the Bill will allow the premium to be based only on underfunding risk, so such a company would be very heavily penalised.
      Malcolm Wicks: I will not talk about any company in particular. When I used the word "solid", I was not

      1137
      talking about any company, whether solid or a bit soggy. Of course, while underfunding is absolutely crucial, other factors can be taken into account by the board. That comes back to the discussion that the hon. Gentleman hinted at earlier, but we think it important that the new PPF is at considerable arm's length from the Government. Obviously, we are accountable ultimately to the House, through the Secretary of State, but we are establishing a board that will have much expertise. People willing to serve on the board should have the appropriate flexibility, and new members of the board will want to read the reports of the considerations of the House on such matters.
      Clause 161 sets out the provisions that relate to the levy ceiling in connection with the pension protection levies. The levy ceiling will be set by the Secretary of State, with the approval of the Treasury, and will restrict the PPF board from increasing the pension protection levies beyond a set amount. Under amendment No. 38, the Bill would set the levy ceiling at no more than £600 million for the first financial year following the initial period. The amendment would not have the desired effect, for the reasons that I shall now set out.
      During the transitional period and the first year thereafter, provisions have been put in place to lower the levy ceiling. That is to restrict the board when setting pension protection levies during the transitional period, when the 25 per cent. yearly increase rule does not apply. The levy ceiling is therefore likely to be significantly lower in the first year after the initial period than the £600 million suggested in the amendment. In addition, it would be unusual to state a figure such as the levy ceiling in primary legislation, especially given that the Secretary of State will be required to make an order every year specifying the amount of the levy ceiling and that the Bill already provides for further provisions to modify the levy ceiling. We are confident that the provisions that we have put in place for the setting of the levy ceiling and future pension protection levies are both appropriate and sufficient. It is important to balance the needs for the PPF board to have the necessary flexibility and for the costs relating to the pension protection levies to be managed effectively.
      Clause 163 sets out the provisions relating to the pension protection levies during the transitional period. The transitional period is needed because some of the information that we need to set up a risk-based pension protection levy from the outset is not available. The transitional period will allow the board to take a balanced approach to determine what information it has available and what information is necessary to implement the risk-based approach effectively. Amendment No. 39 would restrict the transitional period to two years and would have implications for the setting of future pension protection levies, because the information that the board needs to implement a risk-based pension protection levy will not be fully available from the outset. The amendment could therefore result in the board being required by the provisions of the Bill to implement a very simplified or inaccurate risk-based approach based on incomplete or out-of-date data. Alternatively, if the board decided that it needed to base its decisions on more complete information, additional financial burdens could be placed on employers, which would have to provide an out-of-cycle valuation
      1138
      because the board would need a completed PPF-style valuation to be able to determine accurately comprehensive risk-based pension protection levies.
      The calculation, collection and recovery provisions relating to the initial levy and the pension protection levies are contained in clause 164. Amendment No. 40 would amend the clause by providing scheme trustees and managers with the power to recoup from all scheme members, whether active, pensioner or deferred members, the cost of at least the scheme factors element of the initial levy and the pension protection levies. Although we understand the intention behind the amendment, we must consider the implications. It could, for example, result in a reduction in the income of current pensioner members, or have an impact on future pension entitlements where there is no current pension in payment. Alternatively, it could allow pension scheme trustees and managers to invoice active and deferred members directly to request a contribution in respect of the pension protection levies. I am not sure that the hon. Member for Eastbourne (Mr. Waterson) wants that, and there would be a practical problem with doing so, as many schemes do not have up-to-date contact details for many deferred members. In addition, the amendment does not set a limit on the amount that can be recovered from the scheme member. Giving scheme trustees or managers such a power could result in members paying towards the risk-based element of the pension protection levies, which would be unfair because scheme members cannot influence how the scheme invests its funds or its financial state.
      Because of the various implications that the proposed amendments have for the setting of the initial levy and the pension protection levy, I urge that they be withdrawn. At present, schemes would be allowed to draw the costs of the levy from current members, but that would involve a higher contribution. The scheme can make that judgment if it wishes to. However, such flexibility is altogether different from allowing via the Bill a levy to be imposed in such a way on deferred or retired members of a scheme.
      2.45 pm
      The hon. Member for Northavon (Mr. Webb) presented another scenario, his argument being essentially that the company or pension scheme might try to shift members away from the scheme by giving them a transfer value—getting rid of them simply to avoid paying the levy. I think that that is a little farfetched. The new full buy-out procedure for solvent employers means that no company could do that on the cheap. It would have to buy out fully the pension rights of the individuals' concerned, and, no doubt, incur many administrative and other costs in trying to do so. In addition, as we drive up standards of pensions literacy and as the trade unions continue to become more involved in pension issues, that scenario becomes even less likely to arise. None the less, we shall reflect on it.
      I hope that in view of my assurances—perhaps explanations is a better word—the hon. Member for Eastbourne will withdraw his amendment.
      Mr. Waterson: I am grateful to the Minister for his full explanations and for his confirmation that, in

      1139
      certain circumstances, schemes can recover some of the levy from active members. On that basis, I am happy to beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 165

      CASES WHERE FRAUD COMPENSATION PAYMENTS CAN BE MADE
      The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): I beg to move amendment No. 120, in page 110, line 27, after 'not' insert
      'a prescribed scheme or a scheme'.
      Madam Deputy Speaker: With this it will be convenient to discuss Government amendment No. 122.
      Mr. Pond: The amendments are technical, but important none the less. They amend clauses 165 and 172 to mirror the arrangements set out in clause 113, which is about eligible schemes. They enable certain schemes to be excluded from wider PPF coverage. Together, the clauses make it possible to exclude named—I emphasise, named—occupational schemes and general types of scheme from the pension protection fund and fraud compensation umbrellas. In other words, a more selective approach to exclusion will be possible. Although it is possible to exclude from compensation coverage schemes with fewer than two members, or ones that offer only death benefits, the clauses will now allow the exclusion of named schemes that are not considered to be suitable for PPF and fraud compensation coverage—typically, defined benefit schemes that will always be able to meet their liabilities to members due to credible guarantees provided by the employer. It would be wrong to include such schemes within the PPF and fraud compensation umbrellas, and unfair to require them to pay levies.
      Kevin Brennan: Will my hon. Friend explain the difference between a prescribed scheme and a scheme of a prescribed description? The amendments appear to draw a distinction between the two.
      Mr. Pond: That is one of the reasons why, although technical, the amendments are very important. I am not sure that the House wants me to delay our business by dealing with that specific point now—[HON. MEMBERS: "Oh, go on."] Perhaps if I meet my hon. Friend in the Tea Room after the debate, we can discuss the matter at some length, or I could set it out in writing, if that is acceptable to him. Perhaps he would prefer—[Interruption.] Oh, let us deal with it now, shall we?[Laughter.]
      People will know that a prescribed scheme is, of course, a named scheme—I thought that that was obvious from what I said—whereas a scheme of a prescribed description could be a type of scheme. I hope that that clarifies the matter, but I shall happily go further in the Tea Room.
      Mr. Webb: I shall not ask the Minister to go any further. However, to be serious, scheme members want
      1140
      their scheme to be protected against fraud. The Minister appears to be saying that a named scheme may be deemed not to be covered by fraud protection, because "credible guarantees" have been given by the sponsoring employer. However, credible assurances can be subject to fraud if someone reneges on them. Does that undermine the anti-fraud protection that the Bill is trying to provide?
      Mr. Pond: No, I do not think that it does. I take these things particularly seriously because I am the Government's anti-fraud Minister. I am not, as some people have unkindly suggested, the Minister for fraud and error, both of which I am against. The measures are important, because they apply to schemes that are unlikely to require fraud compensation, as they have other forms of protection built into them. Later clauses deal with schemes with a partial Crown guarantee that are exempt from fraud and other levies as they have other back-up. For that reason, we do not expect there to be any circumstances in which the schemes would be vulnerable to fraud.
      Schemes should have a collective responsibility to help to protect members from the loss of benefits resulting from fraud, which is why the Pensions Compensation Board currently imposes a levy on all schemes. It is reasonable, however, to spread the burden of the levy as widely as possible to minimise the impact. We expect the levy to be applied occasionally, as and when fraud compensation is needed.
      Kali Mountford: On the issue of fairness and compensation, is my hon. Friend satisfied that it is reasonable to demand that schemes that have already been subject to fraud should continue to pay the levy?
      Mr. Pond: My hon. Friend makes a fair point, which we have considered carefully. We envisage that the levy will be applied only occasionally, and in the seven years since the Pensions Compensation Board was created only four cases of fraud have been discovered and less than £600,000 has been paid out in compensation. We need to make sure both that the levy is applied proportionately and that it provides appropriate protection against fraud. By exempting certain schemes we can build in that proportionality and protection.
      Mr. Webb: There is still a slight loophole, and I should be grateful if the Minister could reassure me that it will be closed. In an intervention, I asked about the type of schemes that will be exempt from the fraud component of the PPF levy. As a quid pro quo, scheme members would be exempt from payouts for fraud. As I suggested, we do not want scheme members to become vulnerable if everything looks kosher if I might use that phrase—I probably cannot, so I shall say if everything looks fine—but a few years later, perhaps after a personnel change in which a dishonest person is appointed, there is fraud. The Minister mentioned Crown guarantees, and we would all accept that in such cases there is no reason why there should be a levy to cover a fraud levy because that eventuality is covered anyway. However, his phraseology made me think that that was a specific instance, not an exhaustive list. There are other cases in which, to use his phrase, the employer gives "credible guarantees", only for the scheme to be taken over by a less reliable employer.

      1141
      Once we say that schemes fall outside the scope of the anti-fraud measures we are at the top of a slippery slope. I should therefore be grateful for a little more reassurance. The amendments make provision, as we heard in the intervention of the hon. Member for Cardiff, West (Kevin Brennan), for prescribed or named schemes. Can the Minister tell us about the scope of the provision? Will the PPF prescribe the schemes, or will that be done by statutory instrument? Prescription is usually done through regulation, so I would be grateful for clarification. Will the PPF have a delegated power to prescribe schemes, or will that be done by Parliament? I would not be confident about prescribing schemes, but my key concern is that there may be a gaping hole. Is there a long list of schemes that do not get fraud protection? In future, will workers look at the seemingly technical amendments that were agreed in the House and say, "No, it should not have done so, because they drive a coach and horse through the fraud protection that everyone wants"? Or is it a matter of nit-picking, and it will be only the odd scheme that falls outside the scope of the pension fraud protection scheme? I should therefore be grateful for a little mote reassurance on the record about the scope of the measures, as I am worried that we are opening up a bigger void. I am sure that that is not the intention, but I would like to register my concern. That is not so that I can say "I told you so" in 10 years' time, but so that our constituents never experience those unfortunate circumstances.
      Mr. Pond: The hon. Gentleman is right to express his concerns, so that reassurances can be given on the Floor of the House and are on the record. We have been careful not to allow the gaping holes that he mentioned to appear in the safety net or even tiny chinks of light. The schemes that we are debating are guaranteed, so scheme members cannot lose out. The hon. Gentleman asked for an example—the Chatsworth House settlement scheme is a unique scheme that provides a guarantee. We cannot legislate in general terms to exempt such schemes, but it would be unfair to include them in the levy. By definition, they already offer a guarantee to their members. We must therefore make provision for named schemes. When I was introducing the amendments, I emphasised the need for the schemes to be listed by name.
      Mr. Webb: The Minister raised the distinction between named schemes and a prescribed category. Would it not be simpler to describe a category of schemes, such as those with Crown guarantee, so that we do not need separate prescriptions or regulations? Either the House would have to consider such regulations, or the PPF would have to proceed case by case. That echoes the points that I made yesterday about adopting a set of principles that apply to every case rather than having to predict in advance everything that might crop up and deal with it. Could there not have been a more general approach to the issue?
      Mr. Pond: Later clauses, as I said, deal with schemes covered by partial Crown guarantee that, as a category, will be exempt. In that case, we can use a category, but in this case, we need to name individual schemes and
      1142
      adopt a much more targeted approach, to make sure that we do not allow unfairness to slip into the overall process.
      Kevin Brennan: My hon. Friend named a particular scheme that was guaranteed. Is it a guarantee against fraud or a guarantee that pensions will be paid? Surely, every scheme is guaranteed against fraud, which is an illegal act.
      David Cairns: The law is the guarantee against fraud.
      Mr. Pond: As my hon. Friend the Member for Greenock and Inverclyde (David Cairns) said, the law should be a guarantee against fraud. The fraud compensation scheme was set up, because, although the effort to prevent fraud in the first place offers a guarantee, once fraud has been committed, resources are not necessarily available for cash compensation. Here we are talking about a guarantee also that the pension will be paid. That is built into the scheme, which I know is the sort of reassurance that my hon. Friend would want.In reply to the hon. Member for Northavon, I should say that it is the Government, not the PPF, who will prescribe which schemes are to be exempted in this way.
      It being Three o'clock, MADAM DEPUTY SPEAKER proceeded to put forthwith the Questions necessary for the disposal of business to be concluded at that hour, pursuant to Order [18 May].
      Amendment agreed to.

    Clause 171

      FRAUD COMPENSATION FUND
      Amendment made: No. 121, in page 116, line 5, at end insert—
      '() In subsection (1) (other than paragraphs (a) and (e)) and subsection (3)(other than paragraphs (a) and (e)) any reference to a provision of this Act is to be read as including a reference to any provision in force in Northern Ireland corresponding to that provision.'.—[Malcolm Wicks.]

    Clause 172
      FRAUD COMPENSATION LEVY
      Amendment made: No. 122, in page 116, line 11, after 'is' insert 'prescribed or'.—[Malcolm Wicks.]
    Clause 264

      OVERRIDING REQUIREMENTS
      Amendments made: No. 127, in page 191, line 11, at end insert—
      '() any direction issued by the Regulator under section 38(4);'.
      No. 128, in page 191, line 11, at end insert—
      '() any direction issued by the Regulator under section 45(4);'.—[Malcolm Wicks.]

    Clause 265

      MODIFICATION OF THIS ACT IN RELATION TO HYBRID OR MULTI-EMPLOYER SCHEMES
      Amendments made: No. 129, in page 192, line 3, at end insert—
      '(2A) Regulations may also modify any of the provisions of Part 2 as it applies in relation to an eligible scheme in respect of which a relevant public authority has—

      (a) given a guarantee in relation to any part of the scheme, any benefits payable under the scheme or any member of the scheme, or

      (b) made any other arrangements for the purposes of securing that the assets of the scheme are sufficient to meet any part of its liabilities.'.

      No. 130, in page 192, line 4, at end insert—
      ' "eligible scheme" has the meaning given in section 113;'.
      No. 131, in page 192, line 12, at end insert—
      ' "relevant public authority" means—

      (a) a Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975 (c.26)),

      (b) a government department (including any body or authority exercising statutory functions on behalf of the Crown), or

      (c) the Scottish Ministers.'.—[Malcolm Wicks.]

    Clause 275

      GENERAL INTERPRETATION
      Amendment made: No. 132, in page 197, line 27, leave out
      'persons in the description or category of employment'
      and insert
      'people with service in employments of the description'.—[Malcohn Wicks.]

    Schedule 1

      THE PENSIONS REGULATOR
      Amendments made: No. 133, in page 207, line 30, at end insert—
      '() the power to issue a notice under section 41(1) approving the details of arrangements;'.
      No. 61, in page 207, line 30, at end insert—
      '() the power to grant or revoke authorisation under section (General authorisation to accept contributions from European employers);
      () the power to grant or revoke approval under section (Approval in relation to particular European employer;
      ()the power to issue a notice under section (Functions of Regulator in relation to institutions administered in other member States)(5);'
      No. 134, in page 207, line 38, at end insert—
      '() the power to appoint an independent trustee under section 23 of that Act;'.—[Malcolm Wicks]

    Schedule 2

      THE RESERVED REGULATORY FUNCTIONS
      Amendments made: No. 135, in page 213, line 11, at end insert—
      '. The power to make an order under section 67G(2) by virtue of which any modification of, or grant of rights under, an occupational pension scheme is void to any extent.
      '. The power to make an order under section 67H(2) prohibiting, or specifying steps to be taken in relation to, the exercise of a power to modify an occupational pension scheme.'.
      No. 136, in page 213, line 32, at end insert—
      '. The power to issue a contribution notice under section 35.'.
      No. 137, in page 213, line 32, at end insert—
      '. The power to issue a direction under section 38(4) to the trustees or managers of an occupational pension scheme.'.
      No. 138, in page 213, line 32, at end insert—
      '.The power to issue a financial support direction under section 39.'.
      No. 139, in page 213, line 32, at end insert—
      '. The power to issue a contribution notice under section 42.'.
      No. 140, in page 213, line 32, at end insert—
      '. The power to issue a direction under section 45(4) to the trustees or managers of an occupational pension scheme.'.
      No. 141, in page 213, line 32, at end insert—
      '.The power to make a restoration order under section [Restoration orders where transactions at an undervalue].'.
      No. 142, in page 213, line 32, at end insert—
      '. The power to issue a contribution notice under section [Contribution notices where failure to comply with restoration order].'.—[Malcolm Wicks.]

    Schedule 6

      TRANSFER OF PROPERTY, RIGHTS AND LIABILITIES TO THE BOARD
      Amendment made: No. 143, in page 230, line 42, after 'employment', insert
      'between the trustees or managers of the scheme and an individual'.—[Makolm Wicks.]

    Schedule 7

      PENSION COMPENSATION PROVISIONS
      Amendments made: No. 144, in page 239, line 36, after first 'that', insert '—

      (a) in that paragraph the references to the pension are to be read as references to the scheme lump sum, and

      (b)'.

      No. 145, in page 250, line 8, at end insert—
      '(1) The powers conferred by this paragraph are exercisable in relation to cases where—

      (a) immediately before the assessment date, a person ("the pensioner") is entitled to present payment of a pension under the scheme rules ("the pre-assessment date pension"), but

      (b) the case is one co which paragraph 31(4) applies and the effect of disregarding the recent rule changes is that the pensioner is not entitled to compensation under paragraph 3(2) by reason of the pension or a part of the pension.

      1145
      (2) Regulations may provide—

      (a) for the pensioner to be treated, for the purposes of the pension compensation provisions, as entitled, immediately before the assessment date, to present payment of a pension under the admissible rules, and

      (b) for the compensation payable under paragraph 3 in respect of that pension to be determined in the prescribed manner and, for this purpose, for any provision of this Schedule to be applied with such modifications as may be prescribed.

      (3) Regulations may also provide, in cases where—

      (a) the pensioner is not treated as entitled to present payment of a pension by virtue of regulations under sub-paragraph (2), but

      (b) he is or may become entitled to compensation in respect of the pre-assessment date pension otherwise than under paragraph 3,

      for any provision of this Schedule to apply with such modifications as may be prescribed.'.
      No. 146, in page 250, line 37, leave out from 'as' to 'overrides' in line 39 and insert—

      (i) paragraph 3 of Schedule 5 to the Social Security Act 1989 (c. 24),

      (ii) section 129 of the Pension Schemes Act 1993 (c. 48),

      (iii) section 117 of the Pensions Act 1995 (c. 26),

      (iv) section 31(4) of the Welfare Reform and Pensions Act 1999 (c. 30) (pension debits: reduction of benefit), or

      (v) section 264 of this Act,'.

      No. 147, in page 253, line 18, leave out from first 'to' to end of line 20 and insert'—

      (a) a transfer to the scheme of, or transfer payment to the trustees or managers of the scheme in respect of, any of his rights (which may include conditional rights and transfer credits allowed) under another scheme, other than pension credit rights, or

      (b) a cash transfer sum paid under Chapter 5 of Part 4 of the Pension Schemes Act 1993 (c.48) (early leavers) in respect of him to the trustees or managers of the scheme.'—[Malcolm Wicks.]

    Schedule 11

      DEFERRAL OF RETIREMENT PENSIONS AND SHARED ADDITIONAL PENSIONS
      Amendments made: No. 148, in page 263, leave out lines 14 and 15 and inert—
      'R is—

      (a) a percentage rate two per cent.higher than the Bank of England base rate, or

      (b) if regulations so provide, such higher rate as may be prescribed.'.

      No. 149, in page 263, line 15, at end insert—
      '() For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—

      (a) at the beginning of the accrual period immediately following the accrual period during which the change took effect, or

      (b) if regulations so provide, at such other time as may be prescribed.'.

      No. 150, in page 265, leave out lines 33 and 34 and insert—
      'R is—

      (a) a percentage rate two per cent.higher than the Bank of England base rate, or

      (b) if regulations so provide, such higher rate as may be prescribed.'.

      No. 151, in page 265, line 34, at end insert—
      '() For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—

      (a) at the beginning of the accrual period immediately following the accrual period during which the change took effect, or

      (b) if regulations so provide, at such other time as may be prescribed.'.

      No. 152, in page 267, line 44, leave out '1995'.
      No. 153, in page 268, leave out lines 41 and 42 and insert—
      'R is—

      (a) a percentage rate two per cent. higher than the Bank of England base rate, or

      (b) if a higher rate is prescribed for the purposes of paragraphs 3B and 7B of Schedule 5, that higher rate.'.

      No. 154, in page 268, line 42, at end insert—
      '() For the purposes of sub-paragraph (3), any change in the Bank of England base rate is to be treated as taking effect—

      (a) at the beginning of the accrual period immediately following the accrual period during which the change took effect, or

      (b) if regulations so provide, at such other time as may be prescribed.'.

      No. 155, in page 269, line 19, after '6)', insert—

      (a) before the definition of "beneficiary" insert—

      "Bank of England base rate" means—

      (a) the rate announced from time to time by the Monetary Policy Committee of the Bank of England as the official dealing rate, being the rate at which the Bank is willing to enter into transactions for providing short term liquidity in the money markets, or

      (b) where an order under section 19 of the Bank of England Act 1998 is in force, any equivalent rate determined by the Treasury under that section.",and

      (b)'. —[Malcolm Wicks.]

    Schedule 12

      MINOR AND CONSEQUENTIAL AMENDMENTS
      Amendments made: No. 156, in page 271, line 35, at end insert—
      '. In section 56 (provision supplementary to provision relating to payment of state scheme premiums), in subsection (4) for the words from the beginning to "another scheme" substitute—
      "(4) Where under the rules of the scheme, transfer credits have been allowed—

      (a) in respect of the earner's rights under another scheme, or

      (b) in respect of the earner by reference to the payment of a cash transfer sum (within the meaning of Chapter 5 of Part 4) to the trustees or managers of the scheme by the trustees or managers of another occupational pension scheme,".'.

      No. 157, in page 271, line 35, at end insert—
      '. In section 61 (deduction of contributions equivalent premium from refund of scheme contributions), after subsection (9) insert—
      "(9A) Where under section 101AH the trustees or managers of an occupational pension scheme may pay a contribution refund to a member of the scheme, the member is to be treated for the purposes of this section as being entitled to the contribution refund.".'.

      No. 158, in page 271, line 35, at end insert—
      '. In section 94(2) (right to cash equivalent), for the definition of "the applicable rules" substitute—
      ""the applicable rules" means—

      (a) the rules of the scheme, except so far as—

      (i) paragraph 3 of Schedule 5 to the Social Security Act 1989,

      (ii) section 129 of this Act,

      (iii) section 117 of the Pensions Act 1995,

      (iv) section 31(4) of the Welfare Reform and Pensions Act 1999 (pension debits: reduction of benefit), or

      (v) section 264 of the Pensions Act 2004,

      overrides them;

      (b) any provision of any of those Acts which overrides or modifies any of the rules of the scheme by virtue of one of the provisions mentioned in paragraph (a); and

      (c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with Chapter 1 of Part 4 of this Act;".'.

      No. 159, in page 272, line 6, at end insert—
      ' After section 113 insert—
      "113A Disclosure of information about transfers etc Regulations may provide that, where—

      (a) a payment is made out of an occupational pension scheme to the trustees or managers of another occupational pension scheme, and

      (b) transfer credits are allowed to a member of that other scheme in respect of the payment,

      the trustees or managers of the first scheme must, in prescribed circumstances and in the prescribed manner, provide to the trustees or managers of the other scheme prescribed information relating to the payment.".'.
      No. 160, in page 272, line 6, at end insert—
      '. In section 129(1) (overriding requirements), for "and IV" substitute ", IV and V".'.

      No. 161, in page 272, line 6, at end insert—
      '. In section 130(b) (extra-statutory benefits), for "or IV" substitute ", IV or V".'.
      No. 162, in page 272, line 37, at end insert—

      '. (1) Section 179 (linked qualifying service) is amended as follows.

      (2) In subsection (1)(a)—

      (a) for "the rules of a scheme" substitute "Chapter 4 or 5 of Part 4 or under the rules of a scheme",

      (b) for sub-paragraph (i) substitute—

      "(i) there was made a transfer of his rights (which may include conditional rights or any transfer credits allowed) under that scheme, or a transfer payment in respect of those rights, to, or to the trustees or managers of, another scheme applying to him in the later period of service;",

      (c) for "and" at the end of sub-paragraph (ii), substitute "or", and

      (d) after that sub-paragraph insert—

      "(iii) a cash equivalent (within the meaning of Chapter 4 of Part 4) or cash transfer sum (within the meaning of Chapter 5 of that Part) was paid in respect of him to the trustees or managers of another scheme applying to him in the later period of service; and".

      (3) In subsection (1)(b), after "second scheme," insert ", or the payment to the trustees or managers of that scheme,".'.

      No. 163, in page 272, line 37, at end insert—
      '. In section 181(1) (general interpretation), in the definition of "transfer credits", for the words following "by reference to" substitute "—

      (a) a transfer to the scheme of, or transfer payment to the trustees or managers of the scheme in respect of, any of his rights (which may include conditional rights and transfer credits allowed) under another scheme, other than rights attributable (directly or indirectly) to a pension credit, or

      (b) a cash transfer sum paid under Chapter 5 of Part 4 in respect of him, to the trustees or managers of the scheme.".'.

      No. 164, in page 272, line 37, at end insert—
      '. In section 183(3) (sub-delegation), after "97(1)" insert ", 101AF(1)".'.

      No. 165, in page 272, line 42, after '145A', insert '(except subsection (6)(b))'.
      No. 166, in page 273, line 45, at end insert—
      '.In section 34 (powers of investment and delegation) in subsection (1) after "subject to" insert "section 36(1) and to".
      No. 167, in page 274, line 1, leave out paragraph 29.
      No. 175, in page 274, line 3, leave out paragraph 30.
      No. 176, in page 274, line 44, leave out paragraph 38 and insert—
      '38 In section 69 (grounds for applying modifications)—

      (a) in subsection (2) for "about the manner of dealing with applications under this section" substitute "requiring applications under this section to meet prescribed requirements'',

      (b) in subsection (3) omit paragraph (a),

      (c) in subsection (4)(a) omit "(a) or", and

      (d) in subsection (5)(a) omit "either of" and for "subsection (3)(a) or (b)" substitute "subsection (3)(b)".'.

      No. 177, in page 275, line 31, leave out paragraph 44 and insert—
      '44 In section 76 (excess assets on winding up)—

      (a) in subsection (3), omit paragraph (c) (but not the word "and" immediately following it),

      (b) omit subsection (5), and

      (c) in subsection (6) for "sections 3 and 10 apply" substitute "section 10 applies".'.

      No. 178, in page 275, line 33, leave out paragraph 45 and insert—
      '45 In section 77 (excess assets remaining after winding up: power to distribute)—

      (a) omit subsections (2) and (3),

      (b) in subsection (4)—

      (i) for the opening words substitute "Where this section applies—", and

      (ii) in paragraph (a) for "those assets" substitute "the undistributed assets".

      (c) in subsection (5) for "sections 3 and 10 apply" substitute "section 10 applies".'

      No. 168, in page 275, line 39, leave out from 'schemes' to end of line 43 and insert ')—

      (a) in subsection (1)(a)—

      (i) for "sections 56 to 60" substitute "Part 3 of the Pensions Act 2004", and

      (ii) for "those sections" substitute "that Part", and

      (b) in subsection (2) omit "insolvency".'.

      No. 169, in page 276, leave out lines 3 and 4 and insert—
      '(1) Section 124 (interpretation of Part 1) is amended as follows.'.
      No. 170, in page 276, line 4, at end insert—
      '() In subsection (1), in the definition of "employer", for "persons in the description or category of employment" substitute "people with service in employments of the description".'.
      No. 171, in page 276, line 4, at end insert—
      ' () In that subsection, in the definition of "transfer credits", for the words following "by reference to" substitute "—

      (a) a transfer to the scheme of, or transfer payment to the trustees or managers of the scheme in respect of, any of his rights (which may include conditional rights and transfer credits allowed) under another scheme, other than pension credit rights, or

      (b) a cash transfer sum paid under Chapter 5 of Part 4 of the Pension Schemes Act 1993 (c.48) (early leavers) in respect of him, to the trustees or managers of the scheme.".'.

      No. 172, in page 276, line 4, at end insert—
      '() In subsection (3A) after "(3E)" insert "and to sections 25, 122 and 137 of the Pensions Act 2004" '—[Malcolm Wicks.]

    Schedule 13

      REPEALS AND REVOCATIONS
      Amendments made: No. 173, in page 278, line 44, at end insert—
      'Section 36(2).'
      No. 179, in page 278, line 54, at end insert—
      In section 69—(a) in subsection (3), paragraph (a),(b) in subsection (4)(a), the words "(a) or", and(c) in subsection (5)(a), the words "either of".
      No. 180, in page 279, line 8, at end insert—
      In section 76—(a) in subsection (3), paragraph (c) (but not the word "and" immediately following it), and(b) subsection (5).
      In section 77, subsections (2) and (3).
      No. 174, in page 279, line 13, at end insert—
      'In section 89(2), the word "insolvency".'—[Malcolm Wicks.]

      Order for Third Reading read.
      3.1 pm
      The Secretary of State for Work and Pensions (Mr. Andrew Smith): I beg to move, That the Bill be now read the Third time.
      The Bill—and all it brings about—is a landmark in pensions reform. I start by thanking all those who have got us this far: officials who have worked long and hard and still have the other place to look forward to, the Employer Task Force on Pensions, everyone who took part in our extensive consultation, all members of the Standing Committee and all the hon. Members who have taken part in the debate on Report over the past two and a half days. I express particular thanks to my
      1150
      hon. Friend the Minister for Pensions, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), for doing a first-rate job in steering the Bill through Committee and Report.
      As I said, the Pensions Bill is a landmark Bill. With the amendments and new clauses added in Committee and on Report, it is an even better and more comprehensive Bill than it was on Second Reading. My hon. Friend the Member for Cardiff, West (Kevin Brennan) yesterday described it as
      "among the most progressive pieces of legislation to pass through this House"—[Official Report, 19 May 2004; Vol. 421, c. 1015.]
      It is a vital step forward for security and confidence in pensions. It will transform pensions security by setting up the pension protection fund—a major social reform—to give invaluable reassurance to both members and scheme providers. It will benefit at least 13 million members by giving them the peace of mind they need when they pay into their company scheme, knowing that a fund is in place to pick up the pieces if and when companies go bust.
      Mr. Michael Fallon: Can the Secretary of State estimate how long the £400 million fund will last?
      Mr. Smith: As was extensively debated yesterday, we have set the figure of £400 million on the basis that through the scheme, we will be able to provide significant help to those who have lost out. It is £400 million over 20 years. It is our judgment of the amount that is necessary to provide that help. I shall have more to say about that later in my speech.
      Gregory Barker: Can the Secretary of State clarify that? How much does he expect that to be worth to each individual pensioner on a weekly or monthly basis? What are the minimum and the maximum that he is using in his calculations?
      Mr. Smith: Obviously, that will depend on a number of factors. It will depend on any additional industry contribution that is made, on the number of applications to the scheme, on the balance of different sorts of members in the scheme and on the form that the scheme takes—for example, rolling forward assets, and the extent of those assets. It is not possible at this stage to make the calculation that the hon. Gentleman requests. It will depend on those factors as the scheme is put together, as we set out yesterday, in consultation with expert groups and all stakeholders.
      David Taylor: Further to the previous question, can my right hon. Friend confirm that the valuable and much welcomed assistance that will be given will be skewed towards older members of former pension funds, who have less time to prepare for their retirement and to compensate for the losses they have incurred?
      Mr. Smith: I recognise the force of my hon. Friend's point, but I will not be drawn into sketching out outlines of the details of the scheme before the consultations with stakeholders and expert groups. These are matters to be

      1151
      determined. We are all mindful of the particular plight of those who paid into schemes for a long time, who are older and nearing retirement, and who have lost so much.
      Gregory Barker: I am grateful for the Secretary of State's patience. If he is saying that he has done no calculations at all and has no idea how much the help will mean for individual pensioners, how can he assert that the figure is the right amount? Has it just been plucked out of the air? There must be some arithmetical basis for alighting on that specific figure; otherwise, it is pulled out of a hat.
      Mr. Smith: I have already explained the basis on which we made our judgment. As we set out yesterday, before the end of June we will present a report to the House which will provide further details on the basis of the work that we have done.
      Let me explain candidly to the hon. Gentleman and to the House why it would be sheer folly and would risk being misleading for me to give an estimate based on the information that I currently have. If I did that, it would be taken as a percentage guarantee. However I might seek to qualify and condition it, that is how it would be taken by many people. I have been concerned throughout to be absolutely straight with people. I would not want some idea of a level of guarantee to take root before and until we knew details of the sort I have enumerated, which must be the ultimate means of determining the level of payouts.
      Mr. Waterson: The point that my hon. Friend the Member for Bexhill and Battle (Gregory Barker) was trying to make, I think, is that the Secretary of State has already decided what the end-point is: £400 million. He is rather like a restaurateur who says, "Here is the menu with a range of possible options, but you're not allowed to spend more than X pounds in the course of the evening." That is the reality.
      Mr. Smith: The reality is that £400 million is a very substantial contribution indeed. The reason the Government are able to maintain economic stability, growth and fiscal prudence is that there are not blank cheques flying around out there. We are making £400 million available. As I said, that sum is based on our judgment not only of what is affordable, but of what will provide significant help to those who have lost out—
      Mr. Jim Cunningham: Will my right hon. Friend give way?
      Mr. Smith: I intended to deal with these matters later in my speech. If I may make a little more progress, I shall be happy to take further interventions later.
      It is important that we recognise the step forward that the Bill represents in placing a proactive and tough pensions regulator in place, helping to ensure that tragedies of the sort that we have witnessed do not happen in future. The pensions regulator will have the powers needed to step in and tackle fraud and
      1152
      maladministration. As the House knows, the Bill represents a step forward in many other respects. It extends TUPE so that workers no longer lose all their pension rights just because their firm is taken over. It will ensure consultation before schemes are changed, which is long overdue.
      Provisions in the Bill will put an end to the practice of requiring scheme members to purchase an annuity with small pension pots. That is called trivial commutation, but it is not a trivial matter for those affected. Measures in the Bill will more than double the limit, so that people can take all their pension as a lump sum up to £15,000. That will help thousands of people each year.
      The Bill will also provide security for a more mobile work force by enabling people in short-stay jobs for the first time to take the full pension that they have built up with them to another scheme. Both of those measures will particularly affect women, and I am sure that the House welcomes our commitment, which was suggested by my hon. and learned Friend the Member for Redcar (Vera Baird), whom I am pleased to see in her place, to publish a report on women and pensions next year.
      Alongside greater protection, it is essential that we take action to make it easier for employers to run schemes. We have taken a hard-headed look at whether pensions legislation is well targeted, proportionate and effective. The Bill will remove the barriers of the old section 67 provisions and free firms to recast benefits to suit them best.
      On indexation, it was clear to me that regulation had become disproportionate. We were effectively forcing everybody providing a pension to buy a high level of inflation insurance, which was becoming so expensive that some providers IA ere choosing to pull out of pension provision altogether. We have not ducked tough choices to keep pension provision affordable, and I have no doubt that the person in the street would sooner have a bit less inflation protection and a lot more confidence that they will get their pension in retirement.
      The Bill will also drive forward a range of simplification measures to streamline the requirements on member-nominated trustees, dispute resolution procedures and reporting arrangements, particularly in relation to late payments, and remove the requirement for schemes to provide additional voluntary contributions. We are also replacing the one-size-fits-all approach of the minimum funding requirement with funding arrangements that will allow schemes to adopt funding strategies suited to their particular circumstances.
      We are determined to put people in control of planning for their retirement. The Bill makes possible huge steps forward in retirement planning, with better information on pension options and workplace advice, and it provides for the development of the retirement planner. The roll-out of both combined pension forecasts and individual state forecasts, of which there will be about 15 million by 2006, will enable people to make better informed choices for their retirement. The Bill will also open up new choices for retirement, by giving a worthwhile return to those who defer taking their state pension. For the first time, lump sums will no longer be the preserve of those with good occupational pensions. The Pensions Bill is substantial. It will bolster security for scheme members while making things

      1153
      easier, simpler and more flexible for pension providers, and it goes together with other important steps that the Government are taking.
      By replacing the current eight taxation regimes with one, we are taking a radical simplification step to support saving. By enabling people to draw down their pension while carrying on in employment, we are eroding the cliff edge between work and retirement. By outlawing age discrimination and opening up training opportunities for older people—the Bill also contains improved pension deferral provisions—we are making it easier for those who choose to do so to carry on working, while keeping the state pensionable age at 65 so that no one is forced to do so. By spending an extra £10 billion each year on pensioners we are tackling pensioner poverty and rewarding those with modest savings.
      Taken with all those measures, the Bill is another huge step forward. It will renew the pensions partnership in this country and will deliver real progress on simplicity, security and choice in pensions. What is more, this Bill will bring significant help and boost confidence in pensions, through the pre-PPF scheme we debated yesterday.
      We have listened to all those workers, trade unionists and hon. Members who have been to see me and my ministerial colleagues to argue the compelling case for those who have lost pensions through no fault of their own when their firm went bust—such people often lose their job at the same time. I have said throughout that we were examining closely whether something could be done to alleviate their plight. Nobody could fail to be deeply moved by the personal histories of those who were initially compelled as a condition of employment to join their company scheme and were given a pension promise, only to lose it and their job at the same time when their company went bust.
      I pay tribute to the campaigners, their trade unions and all those hon. Members who have put their cases in an energetic and constructive way. 'They have truly done justice to their cause.
      Mr. Webb: Among those campaigners, whom the right hon. Gentleman rightly praises, are many workers who have lost their company pension rights but whose employers are solvent. When they heard Friday's announcement, they hoped that they were to obtain justice. Yesterday, the Minister for Pensions said that if the employer is solvent it is the employer's problem, but that is not the case in law. Those people have lost out and have no redress. How many of the 60,000 people—the Secretary of State said in the House that 60,000 is about the right number—were employed by solvent employers and will get nothing from the scheme?
      Mr. Smith: We have also acted on cases in which employers are solvent. On 11 June, I stated that full buyout would be required after that date, which not only improved protection for the future but addressed the Maersk workers' cases. The Maersk workers were not covered because their cases predated the statement, but the company came into line with the spirit of the Government's intention, and other companies would be right to do the same.
      1154
      When we set up the scheme, most of the arguments for it concerned companies that had gone bust, which the scheme is intended to cover.
      Richard Burden: Yesterday, the Minister for Pensions gave me heart when he emphasised that the principle of fairness will underlie how the details are drawn up:
      "we are not about using technicalities or legalese to define people out of a proper assistance programme."—[Official Report, 19 May 2004; Vol. 421, c. 1034.]
      I ask my right hon. Friend the Secretary of State to bear in mind that a number of the pension funds and firms involved have been passed like a parcel from owner to owner, and the precise point at which they are solvent or insolvent is not an exact science. My constituents at Kalamazoo, as well as Cheney, Warwick and Debenholt pensioners, will be looking for that kind of fairness and flexibility.
      Mr. Smith: I listened to my hon. Friend carefully and pay tribute to him—I am sure that his constituents also do so—for his energetic representation of the Kalamazoo workers in his constituency, whose case he has put vigorously to Ministers. I am happy to repeat the criteria set out by my hon. Friend the Minister for Pensions. The House will have noted carefully that the terms of the amendment were open, with questions of eligibility and periods of coverage yet to be prescribed. Throughout this process, however, I have been careful not to raise false hope, and I will not start now. We will examine the matter carefully, and all stakeholders, including workers and hon. Members, will have an opportunity to feed their views into the process by which we collectively determine how the scheme will operate. As my hon. Friend the Minister for Pensions said yesterday, we will pay clear regard to principles of fairness.
      Mr. Jim Cunningham: I appreciate that my right hon. Friend has listened to all kinds of organisations on the pensions problem. I welcome the Bill, which I know has its limits. Will he tell us more about the consultation and the criteria that will be used? Does he hope to develop the criteria during the consultation?
      Mr. Smith: I pay tribute to my hon. Friend, who has also been to see me more than once in campaigning on behalf of his constituents. We will, of course, take account of representations as we develop the criteria through the consultation process.
      Mr. Tynan: I have listened intently to the Minister for Pensions. Many people who have lost their pensions will read with interest yesterday's contributions. It would be a tragedy if individuals were left out of gaining payment in lieu of their lost pensions, which could become a focal point for disquiet. I hope that my right hon. Friend accepts that we must carefully consider all 60,000 people who have lost their pensions.
      Mr. Smith: I thank my hon. Friend for his remarks and pay tribute to his service on the Committee. He has made a great contribution. Yes, of course we will look very carefully at that issue in the spirit in which

      1155
      he raises it. I have to say, however, that when the case was being made to me and to the Government that a scheme was required and action was imperative, hon. Members accepted that one of the difficulties was that whatever that action might be, there will always be the problem of where to draw the boundary. Wherever it is drawn, there is a risk that someone, possibly with a case deserving of sympathy, will fall on the wrong side of it. I have gone through this process with my eyes open, as, I hope, have other hon. Members. We look at every case carefully, but we cannot give an unlimited undertaking, whatever the circumstances, to anybody who has been hard done by in terms of the way that their pension has turned out.
      As I have said all along, I have been very conscious of the need to look workers in the eye and the need for them to know that I have been straight with them all the way through. We have been straight, and we will continue to be so. Although there is no legal liability and no precedent set, I have been conscious all along that if the Government could do something to help these people, it would be the right thing to do. We have announced £400 million over 20 years to help to address the serious losses that some now face, with encouragement to industry to offer further support. Furthermore, we have set out practical steps, including involving our partners and industry experts in developing the scheme, consulting on draft regulations by the end of November and having the scheme in place by next spring, with payments to follow as soon as practicable thereafter.
      David Taylor: My right hon. Friend has told the House on several occasions that later this summer he will provide figures and analyses that show how the scheme might work. Will those figures include the net savings that are anticipated in relation to the means-tested benefits that will not be payable because of the welcome support that the Government are giving?
      Mr. Smith: I will carefully examine whether that can be included in the report. I am sure that it will be a consideration that is brought to bear by people who take the figures to make estimates.
      I want to be absolutely straight about this. The money will not cover everyone who feels aggrieved, nor will it give to those whom it does help everything that they might want, but it will provide significant help to those who have lost out so badly.
      I am proud that a Labour Government are taking action that many said was not possible. I honestly do not think that help on this scale would have been forthcoming under any other Government. The crucial thing is that thousands of people who thought that they had lost their pensions will now receive help. The measures in the Bill, such as the pension protection fund, will give extra protection for the future to more than 13 million members of final salary schemes.
      The Bill is a big step forward for security and choice and for confidence in pensions. I commend it to the House.
      3.23 pm
      Mr. Waterson: This has been a long and hard road for those of us who served on the Standing Committee, which had some 22 sittings—[Interruption.] I see that the tension is getting to the Secretary of State, as well. I thank all hon. Members concerned, who, on the whole, kept their senses of humour—those who had them in the first place, that is. I exclude the Minister from that, of course, although I believe that he is still going to the evening classes.
      I thank the officials who desperately tried to assist Ministers in maintaining the pretence that there was some sort of order and organising genius behind the Bill, which at times seemed to acquire a life of its own. I thank all those who advised us—the voices from outside who were able to send us draft amendments, briefings and comments—and all those who would have liked to do so if so much had not happened in a rush at the end of the proceedings.
      Without in any sense denigrating the efforts of other members of the Committee, I particularly thank my hon. Friends the Member for Tatton (Mr. Osborne) and for Bexhill and Battle (Gregory Barker) for their sterling efforts. To use a contemporary cinematic expression, they both worked liked Trojans.
      Mr. George Osborne: We got defeated.
      Mr. Waterson: We did get defeated, although I am afraid that there was no wooden horse, just a lot of wooden jokes.
      This is a very large Bill, but it does not give much away. Having spent 22 sittings trying to peer behind the verbiage, enormous amounts of detail still remain for regulations, codes of practice and so on. At times, we seemed almost to have reversed roles, with the Government frantically tabling amendments and new clauses to their own Bill, which the Minister, with his gift for understatement, once memorably described as "work in progress".
      I turn first to the part of the Bill that deals with the state retirement pension. Earlier this week, I had the privilege of attending the pensioners' parliament in Blackpool, and a very special event it was. The Minister, having bottled out of turning up, had the temerity to claim that my duties should have kept me in the House. However, as I said to the pensioners' parliament, I am the shadow Pensions Minister, I want to be the Pensions Minister, and if I were the Pensions Minister I would be in Blackpool for that occasion, not in the House of Commons. The Department for Work and Pensions has a large ministerial team, and the Minister could well have made the effort. Once we had pointed out the clash of dates, it was always open to the Government to schedule Report for a different day, but they did not take that opportunity. That shows where their priorities lie.
      I should tell the Minister, before I share with him some other thoughts from the pensioners' parliament, that they were deeply unimpressed with the Age-Related Payments Bill, which we have the pleasure of debating in Committee next week—[Interruption.] The Secretary of State is taking on the role played in Committee by the Minister's PPS, the hon. Member for Greenock and

      1157
      Inverclyde (David Cairns), which was to shout abuse from a sedentary position—or perhaps he was saying his rosary; I could not quite make it out.
      It will not have escaped people's attention, particularly those in the pensioners' parliament, that the Government have been careful to engineer the situation so that we did not have the opportunity to debate restoring the earnings link for the state retirement pension. That suited the Government down to the ground, because it is definitely not part of their pensions policy. To be fair, it suited the Liberal Democrats, too, because their policy is under review, whatever that means. That is a great shame. We spent a lot of time discussing some highly technical amendments, perhaps to a greater extent than their merits deserved. There will be an opportunity to vote on restoring the earnings link at the next general election.
      Let me explain in my consideration of the provisions that deal with the state pension why restoring the earnings link is so important.
      Mr. Andrew Smith: If restoring the link is so important, will the hon. Gentleman give a commitment to extending it beyond four years?
      Mr. Waterson: It is a bit of a cheek when Ministers make such interventions. I invariably ask them in return when the Government will tell us whether the pension credit will be increased in the next Parliament, should they, by happenstance, be re-elected. When will they give a commitment to increase it in line with either earnings or prices? The answer is currently that they will not, but we might hear more about that in July.
      I want to consider means-testing and the importance of the relationship between occupational pensions, which are largely but not entirely the concern of the Pensions Bill, and the state retirement pension. The latter should be a decent and sufficient platform on which people can build provision for their retirement. Under the Government, savings have fallen by roughly half. Is it any wonder given that people, especially young people, read bad news stories almost every day about pensions? In the long-term, that could prove to be the worst part of the pensions crisis that we face.
      At the moment, 59 per cent. of pensioners are subject to means-testing. On the Government's projections, that figure will increase to 82 per cent. by the middle of the century. That is an extraordinary figure, which means that we are going entirely in the wrong direction. I shall not embarrass the Minister again by trotting out his views on means-testing when he did not bear the burdens of office.
      Malcolm Wicks: Go on.
      Mr. Waterson: I shall if the Minister presses me, although we can agree that matters should not progress in the way that I have described in the 21st century. Despite spending some £47 million of taxpayers' money on advertising and publicity for the pension credit, the take-up remains little more than 50 per cent. The Government's working assumption is that 1.4 million of the poorest pensioners will never get around to claiming it.
      Mr. Tynan: In the unlikely event of the hon. Gentleman being in government, would he guarantee to
      1158
      pensioners in Hamilton, South that they would not lose any of the money that they currently receive under the pension credit if the Conservatives restored the earnings link to pensions?
      Mr. Waterson: I pay tribute to the hon. Gentleman's role in Committee. I give him an absolute assurance on the point that he makes. I shall shortly put it in context. He referred to my being in government. Two things have to happen: the Conservative party has to win an election and the new Prime Minister has to recognise my talents. I do not want to be too hypothetical.
      Richard Burden: I fully recognise the hon. Gentleman's talents, but the first criterion of the Conservative party convincing the electorate might be more difficult to achieve. Let me revert to the question that my right hon. Friend the Secretary of State asked. The hon. Gentleman bases his arguments about means-testing on what will happen in several years' time. Given that the earnings link is not a figure but a formula, why cannot he project beyond four years?
      Mr. Waterson: We shall enter the next election campaign on promises that are based on a Parliament. We would hope and intend to continue with the same formula. An amendment that we tabled referred to whichever was higher: earnings or prices, because we do not know what the future holds.
      To revert to the subject of means-testing, there has been a collapse in savings.
      Miss Anne Begg: The biggest means test is the income tax system. Do Conservative Front Benchers now suggest that that should not be means-tested? Or is means-testing considered good when the Government are taking money from somebody but bad when they are giving people money?
      Mr. Deputy Speaker (Sir Michael Lord): Order. I remind hon. Members that we are debating the Bill's contents, that many Members are trying to catch my eye and that the debate is time limited. Although interventions are understandable, they take time out of the debate. Those who wish to catch my eye might think twice before they intervene.
      Mr. Waterson: On the basis of your ruling, M r. Deputy Speaker, I shall not rise to the previous intervention. [HON. MEMBERS: "Oh!"] All right then, I shall—
      Mr. Deputy Speaker: Order. I would be grateful if the hon. Gentleman did not, because it is definitely outside the terms of the Bill.
      Mr. Waterson: Then I will not, Mr. Deputy Speaker. I am just too easily provoked.
      I should like to pull together the points that I was making on means-testing. It is too complex, too intrusive and too demeaning. The high marginal rates of withdrawal are difficult to defend, and our proposal is to reverse the level of means-testing and restore dignity to pensioners. No pensioner will lose under our proposals, to answer the question of the hon. Member for Hamilton, South (Mr. Tynan), and most will gain. For

      1159
      the record, we have no plans to remove the Christmas bonus or the winter fuel payment, and we are not—I repeat, not—scrapping the pension credit. We shall merely let it wither on the vine as the level of the state pension rises. All these proposals have been very carefully costed.
      Gregory Barker: Before my hon. Friend leaves the issue of the Government's favourite policy of more and more means-testing, will he tell me whether he shares my surprise that the Bill contains nothing that would make their means-testing policies more effective? The most damning thing that can be said about the Government's means-testing feast is that it is singularly ineffective, because so many people slip out of the system and do not take up the means-tested benefits to which they are entitled. That is why it is wrong, and that is why it must go.
      Mr. Waterson: My hon. Friend makes my point better than I did.
      One thing that we know about the state retirement pension is that the take-up rate is more or less 100 per cent. Our provisions would therefore be a way of ensuring that every pensioner had a decent state retirement pension and that the poorest pensioners would be helped. It is paradoxical that it is often the very poorest people who do not get around to claiming means-tested benefits such as council tax benefit, for example, despite the sterling efforts of the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond).
      There is a significant read-across between that argument and the question of occupational pensions. As the system of means-tested benefits for pensioners becomes ever more complex and confusing, how are pensioners or would-be pensioners to divine whether they are doing the right thing in saving money for their retirement? More than once we have put to Ministers a figure produced for us by independent actuaries showing the amount that an average couple would have to set aside in their lifetime—over and above the equity in their house—to be sure of not being subject to means-testing when they retired. That figure is £180,000. It has been comprehensively rubbished by the Secretary of State and other Ministers, but it is important for the Government to come up with their own figure. It is important not just from the point of view of future pensioners, who have to make a judgment as to whether they are wasting their time saving money for their retirement—that could well be an explanation for the collapse of the savings culture since this Government came to power—but from the point of view of the industry. How is the industry to be aware of whether it is mis-selling products to people if no one knows whether those people will get a net benefit from them?
      Nowhere has this argument been better put than in the briefing produced for this debate by Age Concern, which states:
      "To tackle pensioner poverty in the long-term, pension policy must be built around a higher and more inclusive basic state pension. This Government must move away from means-testing: it is costly, complex and too many pensioners miss out on their
      1160
      entitlement. Instead of putting money into pensioners' pockets once they are in poverty, the Government must address the causes of that poverty."

      Vera Baird: Can we hear the Conservatives' proposals for making the basic state pension more inclusive, in relation to women in particular?
      Mr. Deputy Speaker: Order. I do not think that that is part of the content of the Bill before the House.
      Mr. Waterson: I think that the answer is no. In passing, however, may I pay tribute to the sterling efforts of the hon. and learned Lady in raising those issues in Committee? If she has not squeezed an annual report on women's pensions out of the Minister, she can at least expect one report some time next year.
      The Bill is riven by the law of unintended consequences. A problem that we faced in Committee was that an awful lot of very important issues came up only at the last minute. One example, to which the Secretary of State has quite reasonably referred, was the section 67 issue. When I first started chatting to people in the industry, when the Bill was merely a twinkle in some parliamentary draftsman's eye, they all said that the most important issue was simplification, because it is clearly easier to shut down a scheme than it is to make a minor amendment to it. Typically, the Government produced amendments or new clauses right at the end of the Committee stage—proposals that ran to pages and pages—in an attempt to simplify that part of the previous legislation.
      Another example, which has been highlighted in the business press this week, is to be found in the anti-avoidance measures. Early on, people were saying that in many ways the key to this Bill will be the anti-avoidance provisions, which are sometimes called the moral hazard provisions, although anti-avoidance is more appropriate in this regard. Those are measures to ensure that badly disposed people and companies will not find a way round the provisions. We debated that quite a lot in the latter part of the Committee stage, and earlier on Report. I have no difficulty at all with anti-avoidance provisions: when the House passes a law on whatever subject, it is absolutely right that we try to limit the options for people to get round it. By definition, however, such provisions should be properly consulted on, at length, with some of the very people who might be paid large fees to find a way round the legislation in the first place.
      Among the issues that have been raised by Messrs Cameron McKenna, who are highly respected lawyers in this field, are the financial support directions, which we have had precious little opportunity to consider, let alone debate. The regulator may decide that an employer is either a service company or insufficiently resourced, and may be required to make payments to the pension scheme. There are wide-ranging powers to draw in other related people and companies. As Mr. Nigel Moore of Cameron McKenna says:
      "These reforms are potentially very wide ranging and implications go beyond simple anti-avoidance activity … For trustees, the financial support provisions are very significant and are likely to lead to trustees seeking support from group companies who are not currently employers under the pension scheme, failing which they could apply to the regulator to issue a financial support direction."

      1161
      I believe that the Secretary of State has received a letter from the venture capital industry expressing real concerns about whether in future there will be takeovers and so on. I saw his rather blustering response reported in The Times—I am sure that it did not do it justice. The reality, however, is that there may be situations—on the basis of the law of unintended consequences—in which another company that has the potential to take over a struggling company and keep it going, thereby keeping the pension scheme going, will be deterred from doing so by the provisions. That is one of the clear messages in the British Venture Capital Association's comments to the Secretary of State. There are other examples.
      Mr. Fallon: What my hon. Friend says applies even more widely. Suppose a company is in difficulty and another wishes to come to its aid, take it over and put funding into it, and neither has a pension fund that is in difficulty. In circumstances where there is a third associated subsidiary company in the group, the directors and investors of the second company will be personally liable if that third company runs into difficulties with its pension fund.
      Mr. Waterson: My hon. Friend makes an excellent point. Those are the kind of issues that one would have hoped would be hammered out at an early stage, before the Bill was even published. One wonders what the Government have been doing in the past couple of years, as the pensions crisis has mounted.
      Let me turn to the question of the assistance package—that seems to be the term that has stuck on both sides of the House—for the 60,000 people who have already lost pension rights. I had the impression towards the end of the Secretary of State's speech that he was throttling back a little on the rhetoric, as he finally alighted on the phrase, "significant help". What that significant help will turn out to be is the real issue that we must address. Understandably, this entire Bill—the good parts and the bad—has from the beginning been overshadowed by the plight of those 60,000 people. We heard some details of that package yesterday, but there is much that remains to be seen. In fairness, the Secretary of State made that clear. One or two hon. Members described the scheme yesterday as a breakthrough, and I hope that it is. There was even a reference to "teutonic plates", which I think was intended to be a reference to tectonic plates. That is of course the sort of term that the Deputy Prime Minister uses as the small change of conversation.
      I pay tribute to Members who have represented their constituents so valiantly. It is invidious to single anyone out, but I mention in particular the hon. Members for Cardiff, West (Kevin Brennan) and for Sittingbourne and Sheppey (Mr. Wyatt) and the right hon. Member for Birkenhead (Mr. Field), who has a distinguished track record. The trade unions, especially the steel union, have played a significant role. I also pay tribute to the Pensions Action Group—I believe that Mr. Andrew Parr is its doughty webmaster—and various groups such as Kalamazoo whose representatives have been to see many of us over a long period. Then there is the formidable Dr. Ros Altmann, whom we have all come to know as part of the process. Last but by no means least, there is my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard),
      1162
      who seems to have been—if I may mix my metaphors—the final catalyst that made the tectonic plates start shifting.
      We know from a no less authoritative source than The Times that after Prime Minister's questions a week ago, the Prime Minister stormed out and demanded to know why there had been so little progress on this issue. It seems fairly clear that at one point the DWP was taken out of the loop and the Prime Minister intervened directly with the Chancellor.
      Let us be in no doubt that this package is nothing to do with principle; it is all about politics. It is another U-turn, negotiated at the very last minute by a Government who were staring defeat in the House of Commons in the face. A cross-party campaign had been welded together that would have defeated the Government had they not done something. They have done something, but is it enough?
      The Secretary of State made a virtue of the fact that many of the details were simply not yet there, and said that new clause 34, which we debated yesterday, was very wide and general. The one detail that is absolutely clear and set in stone is the £400 million figure. The Government seem to have begun with the answer, and are now going to work out how to get there. It is no earthly good their saying that they are gathering data, as the Minister said yesterday. Why did they not start the process ages ago?
      I remember that some months ago, at Question Time, Ministers refused a request from the hon. Member for Sittingbourne and Sheppey for an independent inquiry into the size of the problem. Eventually—and only after pressure from Conservative Members—the Secretary of State adopted the figure of 60,000. The work could and should have been done only by the Government. Why was it left to Dr. Altmann to produce her figures? They may be right and they may be wrong; I am not in a position to judge. Conservative Members simply do not have resources of that kind. But why have the Government so recently signed up to the notion that they should be in the business of finding out the scale of the problem?[Interruption.]
      Mr. Deputy Speaker: Order. I think we have had enough of these continuous sedentary interventions.
      Gregory Barker: My hon. Friend has considerably more experience in this place than I have. Can he think of another instance in which a Government of either colour have come up with such a neat, round-figure solution as the £400 million in answer to such an extraordinarily complex and difficult question, without even knowing at the outset what the question is?
      Mr. Waterson: My hon. Friend makes the central point. How was it possible to produce a figure without knowing the extent of the problem? The 60,000 figure has been bandied around for some time. It will presumably go up rather than down as other people get into pensions difficulties. But no matter what actuarial tables are used, dividing £400 million by 60,000 over 20 years does not produce a very satisfactory set of figures.

      1163
      That is why we seem to be talking about assistance, not compensation. Even the hon. Member for Cardiff, West yesterday adopted the word "assistance", and the Minister for Pensions, too, has used it. We are talking not about full compensation, or perhaps anything like it, but about something to help the people affected. It will be more than tea and sympathy but less than compensation.
      Why are solvent wind-ups not included? That point was made by the hon. Member for Northavon (Mr. Webb). I appreciate the Government's formal position, and as a lawyer, I understand why they have to have that kind of ex gratia arrangement. I shall come back to that in a moment. However, once we concede the moral case and decide to go beyond the legalities, how is the moral case of the pensioners who have lost out because of insolvent wind-ups any different in reality from that of those who have lost just as much, or possibly more, in solvent wind-ups? How can we make that distinction?
      I mentioned the case in the European Court. It is rather odd, with the Government as the guardian of the taxpayers' interests, that as part of the deal that has been put together at short notice—not in the car park of the Loch Fyne oyster bar, but no doubt somewhere similar—no one thought to make it a term of everyone's signing up to the deal that that court case would be withdrawn. My understanding is that the unions think that they have a good case, and that they expect to win. Might the Government not therefore end up in a situation in which, having put together this package with the best of intentions—although we still have to hear much of the detail—they then find that there is a judgment against them for far more money in the European Court?
      Another puzzling loose end to the package is the airy-fairy talk about contributions from industry and the pensions industry—about rattling the begging bowl to them to top up the amount. As the right hon. Member for Birkenhead, who obviously spends more time in the real world than some of the Ministers, said, why should industry do that? What possible argument is there for it to pay out money, particularly when it is gearing up to face the PPF and the levy?
      The great unsolved mystery is the question of unclaimed assets. For month after month, Ministers' line and the Treasury line—of course, as I have said before, the DWP is a wholly owned subsidiary of the Treasury—has been that the fact that those assets are not claimed does not necessarily mean that they do not belong to someone. Suddenly, in the small print of the Red Book, those unclaimed assets, which were apparently previously unavailable for this purpose, are available to hand out to charities. That is very curious, and our line, as my hon. Friend the Member for Havant (Mr. Willetts) said yesterday, is that if there is a funding gap beyond the £400 million, that will be the moment to call on the unclaimed assets. Our preference, as the House knows, would be to start with the unclaimed assets from the beginning and to have a parallel fund to the PPF, under the same administration, which would be endowed not with retrospective use of the levy, because we accept the principle on that, but with the unclaimed assets.
      1164
      That brings me to another curious question: why not entrust the administration of that separate scheme to the PPF itself? It sounds as if the time scale for that will be roughly the same as that for the PPF's coming into force, so why not just use the same people? That might be one option that is being considered, but it would certainly make sense to us.
      I shall come in a moment to discuss compensation under the PPF, but one thing that is clear is that whatever compensation the 60,000—or some of them—will get will be significantly less than that which they would have received under the PPF arrangements. As I said, we have had very little detail. We will receive more, to which we look forward, but the Government still have to square the circle on how the £400 million will go round.
      Finally—which with politicians generally means that they are roughly halfway through their remarks—I shall deal with the PPF itself, which will be the Bill's longterm legacy. Indeed, it is fair to say that it is the Bill's centrepiece. The Minister said in various speeches on Report that the Government have learned lessons from the American Pension Benefit Guaranty Corporation, which, I should remind him, has a current deficit well in excess of $11 billion. I have visited the United States to meet people such as Steve Kandarian—as has the Minister—although I need not have bothered, as he came to London to give a lecture only a couple of weeks ago. He has given up the burden of running the PBGC, and the advice that he gave in Washington and in his London lecture was based on the PBGC's 30-year track record. First, one must get things right at the outset; otherwise, the political pressures against making significant changes are too great later on.
      Secondly, one must have a proper risk-based levy at the outset. Of course, although the PBGC was set up to deal with the collapse of the Studebaker car company, none of its workers ever received any compensation and it was several years before benefits were paid out. However, we now know—the Minister let the information slip in Committee—that it could be 2009 or 2010 before the full risk-based levy is up and running for all companies. That is extraordinary. It will lead to all the additional problems of moral hazard and to the good subsidising the bad, and it will make nonsense of the early years of the PPF. We have long taken the view that the PPF will be highly vulnerable in its early stages. It is widely believed throughout the industry that its estimated £300 million cost is understated, and there is plenty of anecdotal evidence of schemes waiting to collapse into the welcoming arms of the PPF once it is up and running. Indeed, it could well face some significant claims in its early days.
      An interesting side issue is the PPF's investment strategy—
      Mr. Andrew Smith: The hon. Gentleman speculates that it will be 2009 before the levy is up and running for all companies, but he is able to arrive at that position only by virtue of the allowances that we have made in respect of triennial valuations. In terms of minimising the very regulatory burdens on business about which he would otherwise be complaining, it makes sense to allow some who have a valuation at the end of the period in question to have a valuation at the time. This is a

      1165
      sensible way to introduce the provision. It minimises the extra cost and regulatory burden on businesses and their schemes.
      Mr. Waterson: With respect, the Secretary of State is explaining why we have this delay, rather than whether it is a good thing.[Interruption.] The Minister for Pensions asks what we think, and I shall come to that in a moment. I understand the point about the triennial cycle. In Committee, we suggested a stop-gap approach—I do not expect the Minister to remember; none of us has a memory that good—based on the recommendations of actuaries. As a temporary measure, one could rely on the old minimum funding requirement system. But what is clear is that it will be extremely bad news if the risk-based levy is not up and running by day one, or very close to it.
      One of the unanswered questions in Committee was whether the PPF constitutes an insurance scheme or a pension fund. The Minister has memorably said that it is neither, but the answer makes an important difference to its investment strategy. Mr. Kandarian touched on this issue in his lecture, which the Minister unfortunately missed as he had other things to deal with. Of course, before leaving the PBGC, Mr. Kandarian changed its investment strategy in respect of equities and bonds. He likened the situation to a fund being set up to insure owners of Atlantic coast seafront properties against hurricanes and floods, only for the fund itself to invest its assets in such properties. There is a real danger in this regard, and we fail to listen to Mr. Kandarian at our peril.
      The central issue is what people out there believe they will receive under the legislation. There is a danger of them running away with the idea that they are being given a full safety net or a full guarantee, whereas the reality is very different. If the Bill is a lifeboat, it is, for several reasons, a leaking lifeboat.
      The first is the cap that is built into the Bill. Another is the 90 per cent. rate for people who are not retired, which we debated earlier today and yesterday. Another is indexation and the 1997 cut-off date. Organisations such as Age Concern have expressed concern that some pensioners might receive only 70 or 80 per cent. of what they had expected. There is also the Government's retained power to reduce benefits in what the Minister calls "extreme circumstances". As I said yesterday, extreme circumstances are likely to be when the fund does not have enough money. Finally, there is the Government's unwillingness to stand behind the PPF. For the average punter, the Government's willingness to do so would be the critical factor for establishing confidence in an occupational pension scheme.
      Mr. Smith: Is the hon. Gentleman saying that a Conservative Government would stand behind the PPF? He has been telling us all how bad the Bill is, so is he going to repeat Conservative voting on Second Reading by voting against it on Third Reading?
      Mr. Waterson: Well, we did not vote against the Bill on Second Reading and I will come on to Third Reading in a moment.[Interruption.] I am not in a position to commit the next Conservative Government to standing behind the PPF, but the Government should not have dismissed that option so lightly. I wonder whether
      1166
      Ministers met the same people and heard the same things as I did when I was in Washington. I did not meet a single person who dissented from the view that, if it came to it, the Federal Government would have to stand behind the PPF.
      Our concern is that we want the Bill to work properly because we will have to inherit the problems that are built into it. The Minister for Pensions was right when, in a moment of revealing candour yesterday, he talked about rough justice. That is exactly what we are talking about. Clearly, the Bill does not necessarily provide full compensation—or anything like it.
      Will the Bill achieve its central aim, which must be to restore confidence in the pension system? That is the cross-party aspiration. The Association of Consulting Actuaries has conducted a survey of employers since the Bill was published. It found that the majority of firms felt that the measures would decrease occupational pension scheme coverage. Fewer than one in 10 firms felt that the measure would improve pension coverage. About 64 per cent. thought that £15 for the levy per defined benefit scheme member would be too much; and more than three-quarters said that the new knowledge and understanding requirement placed on trustees would deter individuals from wishing to be trustees. Not much encouraging news there.
      Only rarely do Governments have the opportunity to amend pensions law. I should know, because I served in Committee on the Pensions Act 1995. Faced with an unprecedented pensions crisis and a halving of savings in this country, the prsent Government have simply not risen to the challenge. They have produced legislation that is confused, complex and bureaucratic. They also failed to tackle the problem of the 60,000 people who have lost pensions—a problem crying out to be dealt with—until they were forced to in a panic through a last-minute assistance scheme. The Government have failed to do a single thing to encourage new defined benefit schemes or to keep existing ones open. Nothing in this flawed Bill will restore public confidence in the pensions system. In short, they have blown it.
      We will not vote against the Bill on Third Reading any more than we voted against it on Second Reading. However, we hope that their lordships will improve the measure beyond recognition.
      4.4 pm
      Mr. Tynan: First, I am grateful for the opportunity to speak today. I was going to make this speech yesterday, but I have managed to hold on to it until today. I was very happy about new clause 34 yesterday, but I am concerned about the nuts and bolts of it. The proposals put before the House yesterday still cause me concern, as I made clear in an intervention earlier.
      This is a very serious matter, and the Bill allows us to make real progress on it. Six of my constituents have lost their pensions, as I wanted to put on the record yesterday. Three of them—James Gilmour, Robert Heggison and a Mr. Sam Stevenson—worked at Motherwell Bridge Holdings, a firm which had lasted for 100 years. The firm went into receivership and was then recreated as a new company. My constituents lost their pensions as a result of that revolving-door receivership. I am worried that they will get nothing from the proposed fund.

      1167
      Two other constituents, Mr. Japp and Mr. Kenneth Barrie, worked for Melville Dundas in Hamilton, and I do not expect that they will face any problems. However, Mr. Colin Preston worked for the Bradstock company, and he wrote to me about the difficulties that could arise with his pension.
      I welcome this important Bill. My hon. Friends on the Front Bench and others put in much hard work in Standing Committee, for which I am grateful. Much had to be done, and an enormous number of amendments were tabled. The Bill has been turned into something that will make a real difference to the people of this country.
      The Bill is badly needed, because people had lost confidence in the pensions industry. I hope that the Bill will restore their confidence, but as I said, there remains one tiny element that requires attention.
      I turn now to the pension credit and means testing. I read a speech—I think that it was made by the hon. Member for Eastbourne (Mr. Waterson)—in which it was stated that people were being driven into poverty by means testing. However, my understanding is that means testing, as it is structured at present, lifts people out of poverty. It is therefore difficult to understand the claim made in the speech. The pension credit has helped pensioners enormously, and the Bill is another piece in the jigsaw puzzle.
      John Robertson: Would my hon. Friend be surprised to hear that 4,978 constituents of the hon. Member for Eastbourne (Mr. Waterson) have been made in excess of £39.11 a week better off by the pension credit?
      Mr. Tynan: I thank my hon. Friend for that intervention. I am sure that the hon. Gentleman's constituents will look very closely at the Opposition's policy, especially if they endanger the real benefits accruing from the pension credit.
      I hope that next year's Pensions Commission report will be the final piece of the puzzle, and that it will recommend some form of compulsion. Amendments tabled by my hon. Friend the Member for Glasgow, Anniesland (John Robertson) and me were not reached in the debate yesterday, but I hope that the proposals that they contain will be included in any future Bill.
      This Bill has many excellent attributes. My right hon. Friend the Secretary of State deserves congratulations on introducing new clause 34 yesterday. He and my hon. Friend the Minister for Pensions, as well as the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), tabled many amendments in Standing Committee, and they did so with good humour. Many hon. Members will agree that new clause 34 was the provision that we were all waiting for.
      I still have concerns, however. In my earlier intervention I said that people will examine closely what was said in yesterday's debate, and that they will look very carefully at the responses from Ministers. I mean no disrespect to ASW workers, but if they receive payments from the fund when other workers do not, I
      1168
      can see that a campaign will build up that will destroy the good work that has been done. We must be mindful of that.
      I did not get the opportunity to speak yesterday, but I want to congratulate my hon. Friend the Member for Cardiff, West (Kevin Brennan), who has done an enormous amount of work on this matter. I also wish to congratulate my hon. Friends the Members for Sittingbourne and Sheppey (Mr. Wyatt) and for Ayr (Sandra Osborne). The latter made an excellent contribution yesterday and she has fought doggedly for the people whom she represents.
      No credit goes to the Opposition, however. The hon. Member for Eastbourne said today that this was a political issue. It should not be a political issue. The Government introduced the scheme because it is necessary, and it is unacceptable to play politics with people's pensions. People will see through the ploys of the official Opposition, who have not contributed in the right spirit to the Bill.
      I sound a note of caution, because there are still many questions about the financial assistance scheme and what it will mean for the 60,000 who have lost their pensions. I look forward to seeing the draft regulations well before Royal Assent. Ministers have said that we should not hold out false hope, and I hope that that has not happened. Regardless of our opinion, individuals hear about a new scheme with £400 million of funds and they think that they will get a share of it. If they do not get that share, they will be disappointed.
      The Bill has much more in it than the financial assistance scheme. We spent only one sitting out of 22 discussing that issue in Committee. We can welcome much else in the Bill, including the new regulator, the new TUPE arrangements, the consultation provisions and the PPF. Much depends on implementation. The Government need to consider how various aspects of the Bill will work in practice, including the consequence of the introduction of the levy and the savings from the streamlining of pensions administration. Employers need to recognise that pensions are part of pay and they need to provide pension schemes for their staff, just as they now need to pay the minimum wage.
      The Bill is welcome and it will make a difference. I thank my hon. Friend the Minister and his colleagues and civil servants for all their hard work. I also thank Opposition Members—especially the hon. Member for Tatton (Mr. Osborne), in spite of what I have said—for making the Committee stage enlightening and enjoyable. No one can accuse the Government of not acting on the issue of pensions. I look forward to seeing the changes from next April, when the regulator and the PPF come into force. I also look forward to many of my constituents now having a better life.
      4.12 pm
      Mr. Webb: It is a pleasure to follow the hon. Member for Hamilton, South (Mr. Tynan), who was one of the Labour Members who served in Committee. Those Labour Members were of uncharacteristically high quality—I shall leave it to them to work out whether that is a compliment or not. Certainly, they were knowledgeable about pensions and participated in the debate. They were not just lobby fodder, which is always a good thing, and they wrung one or two concessions

      1169
      out of the Government. For example, the hon. and learned Member for Redcar (Vera Baird) ensured that the report on women's pensions would be published next year. The hon. Member for Cardiff, West (Kevin Brennan) also worked hard.
      It was good to be on a Committee in which all members participated fully, including my hon. Friend the Member for Chesterfield (Paul Holmes) and the hon. Member for East Carmarthen and Dinefwr (Adam Price). We were grateful to the hon. Member for Tatton (Mr. Osborne) and his colleague, who ensured that the views of all the outside organisations were brought to the Committee's attention. We also appreciated the Ministers' contributions.
      It was a little harsh to suggest that the Minister for Pensions lacks a sense of humour: he certainly needed one at times. I also thank him for engaging with the specific points that were raised. Although his answers were on occasion less than wholly convincing, at least he tried to address the points made, which made it feel a little more worth while going through 22 sittings knowing that every amendment one tabled would not be accepted. We are grateful to the Minister for Pensions for that, and we also appreciated the able assistance of the Under-Secretary of State for Work and Pensions, who will now be known as the Minister for fraud and error.
      We should also thank the officials. The original explanatory notes on a Bill are often paraphrases of the clauses and do not explain anything. However, the Government wrote this Bill as they went along, and the explanatory notes were often very useful. It may be the same people who write both sets of notes—it is a mystery to me—but the later explanatory notes gave more clue of what was going on than the original explanatory notes. I am not suggesting that the Government should write Bills as they go along, but we were grateful for those briefings.
      With my usual prescience I described the Bill, on the eve of its publication, as half-baked, but I think I was guilty of exaggeration. It has grown substantially since Second Reading; it will get even thicker once the pages and pages of new clauses and amendments on Report have been added, and it ain't finished yet. We understand that their lordships will be given even more new clauses that the Government have not yet had the chance to write. In Committee, I likened that process to the moment when Wallace and Gromit were careering along in a train, furiously laying more and more track in front of them. Sometimes, the Bill felt like that. In the long run it does not make for good legislation. It would be nice to think that the Government have got away with it and have not unwittingly put gaping holes into the Bill at the last minute, but give n the length of the Bill, there is a danger that we have allowed through some provisions that will have, the unintended consequences of which the hon. Member for Eastbourne (Mr. Waterson) spoke, and that would be regrettable.
      There is much to welcome in the Bill. Mr. Alan Pickering called for a new kind a regulator—not a regulator who waits for people to complain, but one who goes out looking for trouble, like the Lone Ranger, and tries to do something about it, or who tries to prevent trouble in the first place. A proactive regulator is certainly a step in the right direction.
      1170
      The Bill has some slightly worrying parallels with the Pensions Act 1995. No doubt when the House was debating that Bill's Third Reading, some Members said, "It's great, we've created a new pensions regulator called OPRA which will be the answer to all our problems"; yet nine years later, here we are abolishing OPRA. At that time, no doubt Members said, "It's great, we've put in a minimum funding requirement to protect pension funds". Now, eight or nine years later, we are having to pick up the pieces of a measure that was not properly scrutinised. It did not set minimum funding at an adequate level, so people fell through the net. The 1995 Act introduced protection against fraud. The Bill introduces new protection. I hope that in another decade we shall not have to undo the problems caused by the Bill.
      The extension of TUPE to cover pensions is welcome. Pensions should be part of the overall package. However, the political debate on the Bill has focused on the pension protection fund, and I shall touch on that later.
      There was a missed opportunity in the Bill: the provisions on state pensions were very thin. Governments do not often legislate on pensions, and although the legislative book was open the Government missed the chance to do something substantive, especially on women's pensions. One of the groups of amendments that we did not reach was our set of proposals on women's pensions; I was especially disappointed that we could not discuss our provisions for women whose contribution record was less than 25 per cent. The hon. and learned Member for Redcar (Vera Baird) raised the issue of annuities, and much could be done about the state regime. There will be a report next year, which is all very well, but the problems on women's pensions were listed in the Green Paper and we are still no nearer tackling them. That is a missed opportunity.
      Gregory Barker: The hon. Gentleman is right: the Bill is a missed opportunity in respect of the state pension. Can he confirm whether it is Liberal policy to restore the earnings link?
      Mr. Webb: Unfortunately, we had no chance to debate that issue during our proceedings. However, as my colleague who speaks for older people has pointed out, we think it is so important that we are dedicating a major section of our autumn conference to the launch of our policy, so the hon. Gentleman can look forward to finding out the details at that stage.
      The key point of the Bill is the pension protection fund. I shall not rehearse the concerns that we expressed earlier, but my noble Friends are particularly worried by the failure to introduce a risk-based premium early on. That could penalise well run schemes at the expense of the cowboys, and we are especially concerned about that feature of the scheme.
      On Second Reading, the key omission was something for the 60,000 workers. I hope that the Secretary of State can give me a better answer than he did to an intervention on that point. When asked about that number, he said that, yes, 60,000 was the right sort of number. However, when he confirmed that figure, what did he think the question was? Sixty thousand people

      1171
      who did what? I presume that 60,000 is the number of people who have lost their pensions because underfunded pension schemes have closed or been wound up, but no one was then talking about excluding solvent employers.
      I am pretty sure that the 60,000 figure, which comes from the pensions action group, has throughout included members of solvent schemes. If they are included in the 60,000 and the Government plan to exclude them under the Bill, how many of them will not receive compensation? If the pre-1997 wind-ups are taken into account, how many will be excluded? The danger is that the figure will be perhaps 10,000 or 15,000. We do not know the figure, but I hope that the ministerial report will tell us at the end of June how many of those 60,000 people will be excluded under the Government's provisions.
      The Minister said yesterday that solvent employers should be held responsible for the underfunding of their schemes. However, solvent employers were allowed to close pension schemes under the old law that satisfied only the minimum funding requirement. The MFR did not provide full buy-out, so those people received less of a pension than they expected. As the hon. Member for Hamilton, South said, why is their moral claim to the pension that they expected any weaker because of the circumstances that led to the loss of their pension? It is not their fault that a solvent employer caused their pension to close, rather than it closing because their employer went out of business. Are we saying that it would be better for them if their employer had gone out of business than if it had remained solvent? According to the Government's logic, those people are somehow less deserving because their firm is still operating.
      If the Government are right and they want to do something for those people and chase the solvent employers to recover the deficit in the schemes, that would be a satisfactory answer, but they may simply say, "Well, it's tough." The Government seem to be saying, "We sympathise, but a line must be drawn somewhere. It's tough." That would be wholly unacceptable.
      Gregory Barker: Will the hon. Gentleman give way?
      Mr. Webb: No. I hope that the hon. Gentleman will forgive me, but I will not give way, because a lot of hon. Members want to contribute.
      I hope that the Government will give further thought to the position of those people. Large numbers of employees of solvent employers are profoundly bitter that, after campaigning alongside their colleagues from insolvent employers, they will get nothing. I wonder whether the Minister will tell us in responding to the debate about the Government's strategy for those people, whose moral case is just as good.
      The Bill inevitably misses an opportunity with state pensions. Clearly, we need action on women's pensions in particular, and the Bill says practically nothing about them.
      We have supported the principle of the Bill throughout. We voted for the Bill on Second Reading—we did not decline to do so, unlike some—because we want people's pensions to be protected. That is why I
      1172
      will ask all my colleagues, who are scattered around the parliamentary estate, to come in and vote for the Bill on Third Reading when the moment comes. That is what we should do, but there are concerns about the way that the PPF will work, particularly in penalising good schemes if the risk-based premium is not dealt with early. We remain very concerned that the financial assistance scheme—albeit a small step in the right direction—will create new injustices, and it would be better to get it right first time during the consultation phase than to draw lines that create unfair and arbitrary distinctions.
      4.23 pm
      Mr. Frank Field: I cannot remember the last time when, in effect, we said goodbye to a Bill to send it to the Lords that was such good news both for our supporters and for the country in general. I would not want that fact to go amiss, but to be personal about those on the Treasury Bench, while that is good news for the country, it is a good day for the Ministers who have seen the Bill through. Their names are attached to the Bill, and I am sure that they will look back in future years to the significance of their contribution to the development of safe pensions in this country.
      Ministers have worked hard, and so, too, has the Bill team. Any Bill puts a fair amount of pressure on civil servants, but if it becomes akin to a roller towel—seemingly endless—their work is made trebly difficult. I am sure that over the drinks this evening, the Secretary of State will convey the thanks of the House for the extraordinary effort that the Bill team has made.
      Three red lights are beginning to be seen in the Bill. Two years ago, several Labour Members tried to introduce a modest pensions Bill. which might have played a small role in shaping the Government's proposals. One of our ideas was to have a much fairer winding-up order, so that the formula would reflect significant contributions that people had made over the years. The most worrying—to me—piece of information that emerged from the debate was the industry's claim that membership records were such that it would be unable to give the Government people's contract years so that their eligibility under a years-based contribution formula could be worked out. If that is typical of the whole industry, a mega-problem looms in relation to the records that govern people's eligibility for occupational pensions.
      The second red light has been mentioned by my hon. Friend the Member for Hamilton, South (Mr. Tynan). I suppose that I am the only Labour Member who is not especially happy that £400 million of taxpayers' money has been found to fund compensation—help, assistance, whatever one wants to call it—under new clause 34. In retirement our nation is divided into two groups: the most privileged, who have occupational pensions, and—generally speaking—the rest. The Government, for reasons best known to themselves, have decided to put in a further £400 million of taxpayers' money to the sector that already draws most taxpayers' assistance and those pensioners who—generally speaking—are most well placed to face retirement. However, like other hon. Members, I believe that the fund will not be adequate. We want the Treasury not to put its hand deeper into our tax-paying constituents' pockets, but to look to unclaimed assets to make good any shortfall.

      1173
      My hon. Friend also mentioned the third and final red light: eligibility. Before the Government let the guillotine fall on the eligibility date, which will determine who is in the scheme and who is not, will they prepare for the House a detailed note on how many people they think would be brought within the scheme for each year that the eligibility date was moved back? I believe that the number of people in addition to the 60,000 who would be brought in from past years is quite small. The danger in relation to new clause 34 comes from employers who might find a way to dump their pension liabilities on to the scheme, not from those who have already done so.
      Gregory Barker: Will the right hon. Gentleman give way?
      Mr. Field: No, because many others want to speak.
      Those are my three red lights. I end with a question: what does it say about our procedure for consulting on, drafting and introducing Bills in Parliament when perhaps the most popular part of the Bill did not appear on the printed page at Second Reading? There must be lessons in that to be learned by a Government who, rightly, say that they listen.
      4.29 pm
      Mr. Fallon: As I made clear to the House on Tuesday, I have substantial reservations about the Bill, including the £400 million size of the fund, on which the right hon. Member for Birkenhead (Mr. Field) signalled a red light. There does not appear to be a rational explanation for that figure. The Secretary of State again suggested that £400 million would be enough to last 20 years, but I very much doubt that. I am happy to wager with him, but I do not think that it will last two years, given the scale of the problem and the speed with which cases could be submitted. Either the levy will be accelerated, advanced or intensified, or the Government must come back to the House, or the Secretary of State must go back to the Treasury, for an additional sum. If that is the case, it would be more honest to admit it now, or at least substantiate the choice of the figure of £400 million. I certainly caution shadow spokesmen against suggesting that the Government should hack the fund, as that would be a contingent liability, about which we complain but which ought to be properly scored, if accepted, in the Red Book. That contingent liability would quickly turn into a real one.
      I do not think that £400 million will be adequate. To his credit, the Secretary of State said that it was not tea and sympathy but, equally, it was not compensation. It was a sum that he had set aside for a predicted number of cases—the kindest way of putting it is that it was his best stab. The sum will not, in fact, be adequate, and the fund's address will become one of the better known addresses in our city.
      Gregory Barker: Does my hon. Friend share my view that the Minister is in a predicament partly because he was not party to the decisions that produced the figure in the first place? It was not calculated in a great arithmetical exercise by his Department and civil
      1174
      servants, but was dreamt up in a private meeting following much arm-twisting between the Prime Minister and the Chancellor of the Exchequer.
      Mr. Fallon: My hon. Friend is right. If the figure was a proper one, it would be included in the Bill, and there would be a memorandum explaining, analysing and justifying it to the House. However, it was not, and was clearly cobbled together at the last moment.
      Mr. Andrew Smith: Will the hon. Gentleman accept from me that the premise of the intervention by his hon. Friend the Member for Bexhill and Battle (Gregory Barker) was inaccurate and untrue?
      Mr. Fallon: I am not sure that I want to go down that route, as I have no way of knowing whether it was inaccurate or untrue. Certainly, the figure of £400 million seemed to emerge at rather a late stage, and is easily divisible by the figure 20. Leaving that aside, however, my next major reservation, which I voiced in the House on Tuesday, is an unfashionable one. Everyone in the House wishes the Government well in tackling well-publicised and obvious abuses, but it is worth pointing out that the powers that they are taking, particularly in clauses 35 to 46, are extremely draconian and are likely to damage business and investment in it.
      I shall give the House three brief examples of how wide the regulator's powers are. Under clause 39, it is for the regulator to decide whether or not an employer "is insufficiently resourced". Various definitions of that phrase are given in clause 40, but it is for the regulator to decide whether an employer is insufficiently resourced, and whether somebody else—it does not have to be a director, and could be a shareholder, an investor or an associate of the director—could make up the deficit. That is far too flimsy a basis on which the regulator can take action. The liabilities are described in an incredibly vague way. In clause 41, the employer's pension liabilities are defined as
      "the liabilities for any amounts payable …and…the liabilities for any debt which is or may become due …or otherwise."
      I do not know what "or otherwise" means. It could mean almost anything.
      Thirdly, as we discussed briefly on Tuesday evening, the powers given to the regulator to pursue people for their personal assets are incredibly wide ranging. The regulator can seize the assets—the personal assets, the homes and the wealth—of directors, of shareholders, of investors, of associates and even of friends of the directors of the particular company. That is simply a matter for the regulator to decide. It is left to his opinion. It was the hon. Member for Cardiff, West (Kevin Brennan), I think, who said there need not be an appeal provision because that can be judicially reviewed. He and I disagree about that.
      I think the power is too wide and it should be limited in the Bill and subject to some kind of appeal mechanism. If it is not, the effect of the clauses will be damaging in two respects. First, we can predict that on the day the Act comes into force, a large number of companies will be placed in receivership. If the Secretary of State does not believe that, I must ask him whether he really thinks that directors, shareholders, investors and even associates of directors will put at risk their own

      1175
      homes and assets, rather than put companies immediately into receivership if they are concerned about potential pension fund liabilities. That is a profound mistake.
      Secondly, if that is true, it follows necessarily that exactly the kind of people whom we are encouraging to invest in our companies will be less likely to do so. In an intervention, I gave the example where an investor from company B may be deciding to invest in company A. Neither of those companies has any connection with a pension fund, but it transpires that company A is associated with company C, which happens to have some potential difficulty with its pension fund. That, of course, will discourage precisely the kind of business investment that everybody wants.
      I am not entirely convinced that the Secretary of State intends it, but I assure him that those are likely to be the effects. In his defence, I suppose it can be said that the provisions that I am describing—clause 35 onwards—have been rushed. They were added to the Bill at a very late stage, right at the end of the Standing Committee proceedings. They were only briefly considered by the House and even then, all bundled together, on Tuesday evening. That is a bad way to legislate, and I suggest to the House that those clauses need re-examining in another place.
      4.37 pm
      Mr. Terry Rooney: For many years, I had the dubious privilege of serving on the Committee that considered every social security Bill that went though the House. Not one of them gave me the pleasure that this Bill has. Sadly, I did not serve on the Standing Committee considering it. For the one time there is good news around, I was excluded. There is probably a message for me in that.
      We need to understand that in every workplace in the country over the past four or five years, the biggest single issue has been security—security of employment and security of pension. When we look back at a decade of financial scandals that go wider than pensions—for example, BCCI, Barings bank, Equitable Life—there is a general suspicion out there, rightly, that the whole financial world is a nest of vipers ready to rob people of their money and escape to sunnier climes.
      There may be imperfections in the Bill that still need ironing out, but its provisions restore people's peace of mind like nothing has in the past 50 years. The Bill will also reinforce the confidence of people engaging in the savings habit. We know that the savings ratio goes up and down, and there are debates about what it should be. The Bill will give people confidence in the general financial services sector and encourage them to place their money in savings again. We need to understand that.
      I want to restrict my remarks to clause 224, which concerns the requirement for knowledge and understanding by individual trustees. In 1986, I was appointed chairman of the west Yorkshire superannuation fund, which had 45,000 contributors, thousands of beneficiaries and £2.5 billion-worth of assets. I had no qualifications to hold that position, had received no training and had never been a trustee of a
      1176
      pension scheme, but because of the political circumstances in west Yorkshire at the time, I was made chairman of that august organisation. I am happy to say that when I left four years later, the fund had nearly £4 billion in assets, so perhaps I did not do such a bad job.
      The way in which member trustees are chosen requires serious consideration—for example, men are chosen too often. For too often, Joe, for example, who has worked for an organisation for 40 years, who is a good egg, who buys his round down at the pub and who is popular, is chosen. That is not good enough. Whenever somebody takes out a financial services product, they must consult an independent financial adviser. On mortgages, for example, three levels of service are available, from execution only to full advice. However, pensions affect people for between one third and one quarter of their lives, but people do not know whose hands their pensions are in. Trustees of pension funds are often rank amateurs, and, although I do not intend to disparage any individual who is a trustee, we must do better.
      Clause 224(4) states:
      "An individual to whom this section applies must have knowledge and understanding of the law relating to pensions and trusts".
      The Library contains about 47 yd of books on the law relating to trusts, never mind pensions. The wonderful Child Poverty Action Group handbook contains 700 pages on pension law, but that is a brief summary. We must move to a situation in which courses, which lead to an NVQ2 or NVQ3, are run in centres around the country to a set curriculum, proving that people understand the matter. Most occupational pension funds exist in organisations where trade unions are recognised, and it would be magnificent to use the union learning fund and the union modernisation fund to provide training and education so that member trustees have the understanding to challenge the experts.
      In every single scheme that has gone down, the money was there at one time, but then it was gone. In those circumstances, where were the auditors and the actuaries on the minimum funding requirement, and who was signing off statements? Frankly, member trustees have been deceived, duped and misled. I should not say anything else because legal cases may occur, but we must give member trustees the tools to do the job. It is not sufficient simply to put a clause in a Bill, and I would like training to be provided.
      We have all received copious briefing notes about the situation from the TUC over many months. The TUC needs to put up, because it has a responsibility in the matter, as members of trade unions are suffering as a result of how things were done in the past. Trade unions must be honest enough to say, "We want the highest quality member representatives as trustees that we can get, and we will play our part in doing that." I feel very strongly about that, and I hope that my friend the Minister, who has been with me in the trenches over many years, will take my suggestion forward.
      Over the course of many months, the Secretary of State and the Minister have consulted, questioned, discussed and debated with Members of this House—I think on both sides, but certainly on the Labour Benches—to try to find ways to get out of the mess that

      1177
      we were in. I thank them for the openness, frankness and candour of those discussions, because the Bill that we have today is the better for it.
      4.45 pm
      Annabelle Ewing: I am pleased to be called to speak in the Third Reading debate on this very important Bill.
      The Bill is welcome in general terms. Its innovations include the pension protection fund, which I am pleased to see come to fruition, although it is somewhat overdue. The creation of the office of the pensions regulator is welcome, but I hope that its regulation will work better than has often been the case in the recent past. I hope that those measures will go some way towards restoring confidence in the pensions sector, which has sunk to an all-time low in recent years.
      The report on women and pensions is a step in the right direction, and I congratulate the hon. and learned Member for Redcar (Vera Baird) on wresting that concession from the Government. However, I agree with the hon. Member for Northavon (Mr. Webb) that the Bill is a missed opportunity in that it fails to make substantive progress in that important area.
      I welcome the Government amendments that were tabled, albeit at the eleventh hour, on the key issue of compensation for workers who, through no fault of their own, have lost out on their occupational pensions. During yesterday's constructive debate, Members on both sides of the House acknowledged that it was a good day for politics—leaving aside the dreadful events of the afternoon—because it showed that the Government were actually listening to the people whom they are there to serve, which has become extremely unusual.
      It was helpful to receive some clarification on the likely timetable for the roll-out of the proposals. I am glad that we secured the confirmation that they will be dealt with by the affirmative resolution procedure, which will allow each hon. Member to vote on the detail of the proposals in accordance with the statements that they have already made.
      I very much regret that during yesterday's debate the Minister resisted all attempts to extract details of the likely level of compensation that workers may expect to receive. Many of them have waited years for action and justifiably want to know, in light of the proposals put forward last Friday, what percentage of their lost pension they may expect to receive. We were not given any meaningful information on that.; nor were we given any reasonable explanation of how the £400 million figure was arrived at. With all due respect to the Secretary of State, neither did we get that information today. I fear that down the line many workers may find that the payout that they receive is much less than that for which they are now hoping. We await the specific proposals that the Government are to bring forward by the autumn.
      The Minister and the Secretary of State should be aware that they must come up with the goods. They promised yesterday and today that the proposals would result in "significant help." I appreciate that the new Labour Government have frequently stretched the English language—the Minister of State for the armed forces gave an interesting definition of "report" in a recent Adjournment debate—but "significant" means
      1178
      just that to every normal thinking person. The Government have promised significant help and they must deliver. Any failure to respond to the workers' legitimate case will be rightly regarded as entirely cynical.
      Apart from the important issue of women and pensions, the Bill represents a missed opportunity on another key matter. It fails to provide for restoring the link between pensions and earnings. The Tories first broke that link, but, like many other policies, new Labour took it up enthusiastically when it was elected in 1997. It has left many pensioners in poverty and that is unacceptable in an enlightened 21st century. Instead of a clear commitment to providing a decent, basic state pension, we have an approach based on means-testing that is unduly complex, costly to administer and acts as a disincentive to save. It is therefore a pity that the Government have not seen fit to take the opportunity of the Bill to tackle pensioner poverty head on. That will neither go unnoticed nor be forgiven by pensioners in Scotland and elsewhere in the United Kingdom.
      I am conscious that other hon. Members wish to speak, so I conclude by saying that, leaving the matters of concern to one side, the Bill is generally welcome and I am happy to lend my party's support to it on Third Reading.
      4.52 pm
      Kevin Brennan: I join in the welcome for the Bill. I particularly welcome the changes that were made yesterday through the incorporation of new clause 24 and assistance for those who have potentially lost their pensions as a result of insolvency. I echo the comments of other hon. Members who have spoken about the need to ensure that, in working out the detail of the package, the assistance for those workers is substantial. That was the word I used yesterday, and "significant" has been used today. It is vital that that happens and I believe that it is the Government's intention. We look forward to seeing the detail as it emerges but I fully understand that it is impossible for it to emerge now.
      I have probably said far too much about the subject in the past couple of years, so I thought that on Third Reading I would simply do the honours and pay tribute to a few hon. Members who have been particularly active. The newspapers recently described the hon. Member for Tatton (Mr. Osborne) as the Tories' youthful Tony Blair. They appeared to believe that the hon. Gentleman was younger than he is and gave the impression that his pensions expertise was remarkable since his only recent dealings with finance had been with his pocket money. That is not so: he has acquired much expertise.
      The hon. Member for Eastbourne (Mr. Waterson), who detained us for rather a long time this afternoon, has brought his wit to most of our proceedings. After his comments today, he may become known as the hon. Member for Wither-on-the-Vine. The hon. Gentleman thanked people from outside who had helped with the Bill, and has the admirable quality of being able to present the views of those outside without venturing an opinion of his own.
      The hon. Member for Northavon (Mr. Webb) is sadly not in his place. I accidentally got hold of some of his notes, including a couple of the "what ifs?" that he did

      1179
      not ask about, the first of which was, "What if a great flood were to cover the earth and sweep away all pensioners' records?", and the second of which was, "What if a large comet were to land and destroy the pension protection fund headquarters?" I think perhaps the hon. Member for Montgomeryshire (Lembit Öpik) might have given him that particular "what if?".
      I should like to thank my very good hon. Friend the Member for Greenock and Inverclyde (David Cairns), who was sneakily running caption competitions for the paintings in the Committee Room, but should be mentioned none the less.
      I also thank my hon. Friends the Members for Hamilton, South (Mr. Tynan) and for Glasgow, Anniesland (John Robertson). As Wellington might have said, "I don't know what they do to the enemy, but they certainly scare the life out of me." They held the Government properly to account with the many amendments that they tabled, and in doing so made sure that the rights of workers were being championed in Committee.
      I could not end without mentioning my hon. Friend the Minister for Pensions. He has the features and demeanour of an urbane Roman governor in a sleepy outpost of empire. That is not a very good description of the Department for Work and Pensions, which is not a sleepy outpost but an absolutely vital Department at the heart of the Government—and a very successful one, as we have seen during our deliberations on the Bill.
      I was interested to hear my right hon. Friend the Member for Birkenhead (Mr. Field) developing his own line in stand-up comedy here in the Chamber last night. Apparently it is not true that he is going to combine his skills as a pensions expert with his new-found comic talents to star in a new British comedy film called "Love Actuary". [HON. MEMBERS: "Oh!"] That was pretty bad, was it not? Enough of this.
      Finally, I should like seriously to thank the Secretary of State for his efforts on the Bill, and his Bill team, who have rightly been mentioned and who have had to work extremely hard. In my view my right hon. Friend is a thoroughly decent man. The fact that this is one of the most progressive—if not the most progressive—pieces of legislation that we have seen for some time is entirely due to his thoroughly decent instincts. Those instincts were in evidence when he met the many workers from around the country—not only from Allied Steel and Wire but from many other companies—who impressed him with their human stories. He then had the imagination to see beyond the standard bureaucratic answer that it was "not on", or impossible to act retrospectively. He saw beyond that to the human reality of the situation facing those people, and I believe that that is a major reason why the Bill now contains provisions to help them.
      We have conducted our proceedings with good spirit, and I pay tribute to every party represented. Members on both sides have attempted to scrutinise the Bill in good spirit most of the time. We have done our job, and it is now up to the other place to finish off the details. I believe that we shall be able to look back on these proceedings not in anger but with pride in the years to come, and I commend the Bill to the House.
      4.58 pm
      Rev. Ian Paisley: The Government cannot solve every problem in society, but where there are clear examples of personal tragedy and the ability exists for the Government to do something about them, they have a clear duty to do so. This Government have faced up to that duty. The provisions that are being introduced to deal with insolvent employers are to be welcomed, although only as a first step. Many other steps will need to be taken to address this problem as time goes on. It is, however, a major step in the right direction, in terms of the principle that has been adopted. It will not solve all the problems of those who have lost out when a firm has become insolvent, but at least it is a start. Many other questions about the extent of compensation or assistance are bound to arise.
      The Government have put forward £400 million over 20 years to help to address the serious losses that some people now face. I fear that that will not nearly be enough, but I welcome the fact that the legislation, the figures and the amounts will be reviewed every three years.
      No one can deny the financial disaster faced by those who have paid into company pensions for decades to look after themselves and their families in old age only to find that the money has gone and their retirement has been ruined, and that the security for which they paid during their working lives has been wiped out through no fault of their own. In Northern Ireland, we have many examples of that personal economic disaster. My party colleagues in Northern Ireland, along with many others all over the United Kingdom, have campaigned on behalf of those who have lost out. The case of Richardsons Fertilizers in Northern Ireland in particular, and the need for action, has been highlighted. My hon. Friends the Members for Belfast, North (Mr. Dodds) and for Strangford (Mrs. Robinson) have been particularly active on that issue, as some of those most affected have been from their constituencies.
      There is also a serious concern about 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. I was pleased to hear yesterday that the Minister gave an undertaking that an Order in Council would be introduced to ensure that this Bill would apply to Northern Ireland. The people of Northern Ireland welcome that. It is right that the people of Northern Ireland should receive the same compensation, at the same time, as everyone else in the United Kingdom.
      That case not only highlights the fact that the same provisions should exist in relation to pensions throughout the United Kingdom, but strengthens the argument that the same legislation should extend right across the UK. Even were devolution up and running in Northern Ireland, the ability of Northern Ireland to legislate on matters such as pensions and benefits is really just theoretical, because we must bow to the parity argument. It may be wise to consider the issue of pensions and benefits in the same way as income tax, and have one set of legislation for the entire United Kingdom.
      There are few examples today of Governments reacting to pressure or campaigns, but this has been an exception. All those, including Labour Members,

      1181
      members of various other parties and ordinary people, who have fought a good fight in this case have been at least partially rewarded. These provisions are to be welcomed, but the battle to protect those who have lost out through no fault of their own will have to continue, and I am sure that the Government recognise that.
      Several hon. Members rose—
      Mr. Deputy Speaker: Order. I call John Robertson.
      5.3 pm
      John Robertson: I was not ready for that, Mr. Deputy Speaker—[Laughter.] Perhaps I should explain some of the laughter, Sir. Having sat here for all of Tuesday, and having lost half my amendments towards the end of the day, and having come in yesterday to see that there was no chance of getting in, today would appear to have been another chance lost. Obviously, you have seen the error of my ways and picked me, and I am grateful for it.
      I would like to use this opportunity to take a brief overview of the Bill as amended, to consider how we got here and what lessons have been learned. In many ways, the progress of the Pensions Bill has shown the House of Commons at its best.
      First, the substance of the Bill is important in rebutting the arguments of those who say that politics cannot make a difference. Few issues are of greater long-term importance to us than how we will support ourselves when we are too old to work. For that reason, the risk of workers contributing to their pension, sometimes for 40 years, only to see it vanish overnight, is rightly viewed with horror and fear by most people. The Pensions Bill ends that scandal. It makes a difference.
      Secondly, the work done by Ministers, Labour Back Benchers and the Opposition has at times been fruitful. It has even been quite funny on some occasions. Like many hon. Members, on Second Reading I welcomed both the principles behind the Bill and the measures introduced. Again like many other Members, I asked the Minister to offer help to people who had already lost most of, in some cases all of, their final salary pensions when their employers had gone bust. Our arguments were pressed further in Committee, and were the subject of subsequent Government amendments. Opposition and Back-Bench Members played their part, and we can all have a sense of shared ownership of the Bill's final content.
      I hope, as the Minister hoped yesterday, that a degree of consensus has been engendered that will enable all Members to support the Bill as it stands. My only concerns relate to the way in which the Report stage was conducted. Owing to the sheer number of Government amendments, there was not enough time for us to consider many of those tabled by Opposition and Back-Bench Members. The other day my hon. Friend the Member for Hamilton, South (Mr. Tynan) and I tabled several amendments that were reached with minutes to spare before 7 pm. That meant that important issues such as implementation of the Government's commitment to extending the protection afforded by the Transfer of Undertakings (Protection of Employment) Regulations 1981 could not be afforded the discussion that they deserved.
      1182
      The TUC, Amicus, Connect and other unions want to ensure that no pension scheme member faces inadequate pension protection as a result of a TUPE transfer. That is why we tabled an amendment to clause 229 with the simple requirement that the receiving employer provide benefits broadly comparable, or of broadly equal value, to the benefits provided by the original scheme. Sadly, the amendment was negatived, but it is important for us not to lose sight of all that has been achieved. Clauses 228 and 229, for instance, introduce a minimum level of pension protection where a business transfer occurs and the TUPE regulations apply. In declining to accept my amendment, my hon. Friend the Minister asked me to acknowledge the progress that had been made, and I am more than happy to do so.
      On Second Reading, I described the Bill as the antithesis of laissez-faire Thatcherism. It sets out clearly the Government's responsibility to their citizens. In arguing for more support for pensioners, the hon. Members for Eastbourne (Mr. Waterson) and for Tatton (Mr. Osborne) have happily jettisoned the ideology that we owe no duty to those of our fellow men and women in need. Lady Thatcher must be seething in the other place at that ideological inconsistency, but if it is any consolation to those hon. Members, I welcome their change of heart.
      I was rather saddened when the hon. Member for Eastbourne said he would not stand behind the PPF in the future. The Opposition parties seem to be taking a Scrooge-like attitude on Third Reading. Hopefully, when Christmas day comes along they, like Scrooge, will look out of the window and say "We were only kidding: go and get that big goose".
      Mr. Waterson: We are a bit far away from Christmas—but let me correct one statement in the hon. Gentleman's otherwise useful speech. I did not say that we would not stand behind the PPF; I said that I was not currently in a position to commit my party. Nevertheless, I think it unconvincing for the Government to present a PPF that has no backing from the Government. I do not know whether the hon. Gentleman agrees with that.
      John Robertson: In many ways, that makes my case. I believe that on Second Reading, in Committee, on Report and on Third Reading, we have produced a Bill that no other Government have even thought about. In years gone by—and the Tories had 18 years in office—no one thought about the people who had lost their pensions. This Government have produced a Bill that has never been produced before—albeit because many other Members have pushed them into it, but I think that that is how government should work. Governments must listen to the people. I think that it is childish of Opposition Members to attack the Government for trying to do the best job that they can. It is easy to say that the legislation will not work, but let us have a look at it in 10 years' time, and then turn round and say whether it did or did not work. We can then have the arguments about what was right and what was wrong, and whether these measures were the best that could be put together at the time.
      We have all worked well to achieve a Bill on which there is now wide consensus. As amended, the Pensions Bill will help those who have lost their pensions and,

      1183
      most importantly for the pensions industry, boost confidence in pensions and set a long-term framework for future protection. It is my belief that if we can instil confidence in people's having pensions, the PPF will not be required. It is most important that all Members side with the Government on the Bill. I shall be very disappointed if there is a vote on Third Reading, and if there is, I can only say to the Members who call it that they do not really care about the people who need help most.
      5.11 pm
      Gregory Barker: I shall begin[Interruption.] I was going to begin with some uncharacteristic generosity towards Labour Members, but perhaps I should move on.
      I was going to say that it was a real privilege to serve on the Pensions Bill Committee. Although my part there was largely a non-speaking role behind the scenes, I was nevertheless able to observe a large number of high-quality, thoughtful interventions and speeches from both sides. Although the point of view on the two sides may have been profoundly different, most Members who spoke were motivated by a genuine concern to do their best for pensioners and for their constituents. It was clear that those Members had not just been allocated to a Committee, but were expressing concerns and articulating worries on a campaign and on issues that they had followed for many years. I certainly came out of the Committee a great deal wiser than I went in, having learned from Members on both sides. The public would have been pleased to see their legislators, who often get a bad press, acting responsibly.
      I must single out for praise, however, my own Front-Bench team. I do so because they were a very real match for a high-quality ministerial team on the other side, but with a fraction of the resources—
      David Cairns: And the talent.
      Gregory Barker: The hon. Gentleman is wasted in his present job; he really should go into vaudeville.
      The key point, which people often do not realise, is the small resource that is available to the Opposition. A torrent of amendments and new clauses kept coming all the way through the Committee stage—they involved a great deal of complex information and required overnight study—yet my hon. Friend the Member for Eastbourne (Mr. Waterson) was able to get right to the nub of some difficult issues, which I do not pretend fully to understand. Often, only after he had sat down was I able to get my mind round them. He did that with a fraction of the support staff that Ministers had.
      The hon. Member for Northavon (Mr. Webb) referred to Wallace and Gromit, and I can see that parallel clearly. As we were presented with more and more amendments and new clauses, it very much felt as if someone were laying new track in front of an out-of-control railway engine. I must say, however, that I felt rather more like I occasionally do when I am helping my eight-year-old son with his maths homework, and I am just one page ahead of him. I sometimes got the feeling that that was how the Minister felt, too, as he spoke rather more slowly and looked eagerly towards the Box.
      1184
      No issue has given us greater cause to worry that the Government did not know what was coming next than that of new clause 24 and the £400 million-worth of compensation. To all intents and purposes, that figure could have been arrived at by Wallace and Gromit or plucked out of my son's maths textbook. The Minister has offered no intellectual rationale for it. He has not given us the benefit of any papers, or presented a thought-through argument as to why £400 million is the right figure, rather than £350 million, £500 million, £450 million or £426 million. No intellectual case has been made.
      All the Government have said is that £400 million is a big sum. Well, we are dealing with big sums in the pensions field, and all figures are relative. In the national health budget, £400 million is a drop in the ocean, yet to an individual it is a huge sum; indeed, it is more than most people can even comprehend. Probably only the very largest of Labour donors, such as Bernie Ecclestone and the of hers who frequently put their hand in their pocket for the people's party, could really get their minds around £400 million. So I look forward to seeing the papers—perhaps we will see them in the Minister's memoirs—that show how the Government arrived at this extraordinarily round and convenient figure.
      What does £400 million actually mean? I understand that the Minister does not want to get drawn into discussing this issue, that there is no guarantee, and that he cannot give precise details; indeed, I would not expect him to say anything that might give people a misguided idea of what to expect. However, it is extraordinary that he should be unable to provide any range in terms of what that figure means. The reality is that £20 million a year for the 60,000 people in question—that is what the £400 million amounts to—equates to some £330 per claimant, on average. There are obvious ways in which that money could be graded, and it is clear that some people will claim and others will not, but the figure that we are working with is £330 per individual.[Interruption.] The Minister furrows his brow, but that is the calculation, and there are only so many ways in which one can stretch or condense that money. We are not convinced that the Government have done their calculations.
      It is all very well having a knockabout debate in which numbers are bandied about, but we must not forget that behind the figures lies very real personal tragedy. Indeed, all Members will have received correspondence from many constituents who have been ruined, and whose old age has been devastated by the loss of a pension. For many people, such a pension was their only other meaningful form of savings, yet they have been wiped out. We remain particularly and profoundly concerned about victims of situations in which pension funds have been wound up, yet the parent company has not become insolvent, remains in operation—perhaps abroad—and has effectively robbed such people of their life-savings.
      A constituent of mine, from Burwash Common, is surely typical of many constituents throughout the country. He will feel very let down, and he will want to know what more the Government can do. Tea and sympathy is not enough for people in his predicament. He wrote to tell me:
      "The money we contributed for our pension has, by law, been stolen and used to pay the pensions of others."

      1185
      He argued forcefully:
      "Nobody warned us of the risks we were taking, not the DWP, not OPRA, OPAS, NAPF, in fact, they encouraged us to join. Many people had to join their pension scheme; it was a condition of employment. The Inland Revenue prohibited belonging to a private scheme as well as an occupational scheme."
      In my constituent's case, the
      "parent company … Ballast Nedam, continues to trade in Holland"—
      and quite successfully. Nothing in the Bill goes anywhere near addressing the plight of the large body of pensioners throughout the country who have suffered. We certainly want to see more action taken to help them.
      I realise that other hon. Members want to contribute, so I shall draw my remarks to a conclusion. I am sorry that we were unable to debate this afternoon the restoration of the earnings link. I believe that the Government's promotion of a means-test culture is disgraceful. It is no wonder that we have seen a collapse in responsible saving, with 59 per cent. of pensioners now on means tests. By the Government's own admission, that is going to rise to 82 per cent.
      When we return to Government, we will restore the link to earnings. In the 21st century, that is a great policy because it is simple. It is a wonderful example of where both morality and efficiency march hand in hand. It is a simple policy that people can understand, which will bring back stability and predictability into a volatile sector. So many of our constituents' lives lack the personal sense of security that they crave. They are looking to Government—of whichever colour—to do something about it.
      Although the Bill takes many good steps forward in addressing the uncertainty of old age, it does not go far enough. It certainly does not take the steps that Conservatives would: it does nothing to address the decline of the savings culture; it does nothing to address the collapse in the household savings ratio; it certainly does not provide a guarantee. I saw pictures on the news last week of workers celebrating as if all their problems were over. I believe that in a few months' or years' time, that will seem precipitate, because they will work out how little they have benefited. There is a real danger that in over-egging the provisions, the Government could send out the wrong signal.
      There is a huge amount of work to do, but it would be churlish to end other than by saying that we welcome the steps forward taken by the Bill. There is a degree of consensus across the House, but Conservative Members want to do a great deal more.
      5.23 pm
      Vera Baird: For all the reasons set out by my hon. Friends, I welcome the Bill. At this time of night, I am not going to repeat what has already been said, especially when the Secretary of State is buying the drinks. At least I hope that he is, but he is frowning now.
      The Bill takes another step in the Government's march to improve pensions. The Committee stage was pleasant and a good learning experience for many of us, very much including me. The Minister for Pensions
      1186
      was knowledgeable and well briefed—a bipartisan compliment, because one cannot be well briefed without an excellent team of advisers, which we clearly had.
      The hon. Member for Eastbourne (Mr. Waterson) got it in the neck many times for reading other people's briefings, but to be fair, he always admitted that he was doing so and never pretended otherwise. His contributions were most welcome. Unfortunately, the hon. Member for Northavon (Mr. Webb) missed the references to him made by my hon. Friend the Member for Cardiff, West (Kevin Brennan). He will read them with interest in Hansard tomorrow. He is a bit of a worrier, but he is undoubtedly extremely knowledgeable. His contributions were also super.
      I was pleased to raise, within the ambit of debating the Bill, the real problems that women still face in connection with pensions. Women's organisations such as Fawcett, as well as bodies like the Equal Opportunities Commission and many others, were very pleased when my hon. Friend the Minister for Pensions agreed to produce a report on women and pensions. His offer did not have to be wrenched out of him, because he made it very willingly.
      Indeed, the result is rather better than I had tried to achieve with my new clause. I had hoped only to get a report every year after the Bill had been introduced. If my new clause had been accepted, it would have been placed in a part of the Bill that need not have been brought into force by any particular date. By contrast, my hon. Friend the Minister for Pensions has made a clear undertaking to produce a report on women and pensions next year.
      That is an essential minimum. The Bill's enhanced security and regulation with respect to pensions will benefit everybody, but it contains nothing that directly addresses the pension problems faced by women.
      I readily accept that the Bill is not like Santa Claus' sack, containing a present for everyone. However, 64 per cent. of pensioners are women, who receive on average only 57 per cent. of the income enjoyed by the average male pensioner. It is imperative that we put an end to that situation soon, and that we ensure that presents—if that is the right word—are given to women pensioners.
      I and others will therefore continue to press every week for progress in respect of women's pensions. In that way, I hope to ensure that the first report from my right hon. Friend the Secretary of State is a good one. However, I have got used to the team with whom I served in Standing Committee, and I expect that I will serve with them again. When I do, I hope that it will be to consider the women's pensions Bill.
      5.26 pm
      Miss Anne Begg: I welcomed the Bill on Second Reading, when I pointed out that it had one glaring omission. I tried to speak in yesterday's debate on new clause 34, but my hon. Friend the Member for Hamilton, South (Mr. Tynan) and I were the only two hon. Members not to be called before the debate ended. I was therefore keen to contribute today, as I want to thank the Government for listening to the argument put forward on Second Reading by me and many others—that the Bill offered nothing for people who would not be covered by the new pension protection provisions.

      1187
      That omission was a clear injustice, as people would not be covered when the company for which they worked or the pension scheme to which they belonged had been declared insolvent. I accepted the Government's argument that the PPF could not be made retrospective, but I said on Second Reading that I hoped that the Government would come up with something to put matters right. I was not quite sure what that something would be, but I am delighted that the assistance scheme that the Government came up with is to be put in place.
      Having constituents who are faced with a problem really helps to concentrate one's mind. The problem with pensions makes it clear why Members of Parliament should represent a distinct constituency. The phrase "restored the link" has a different resonance for my hon. Friends the Members for Hamilton, South and for Glasgow, Anniesland (John Robertson). They think that it refers to restoring the link for MSPs in the Scottish Parliament, for which they have argued very forcefully throughout the passage through the House of the Scottish Parliament (Constituencies) Bill.
      The changes that have been made to the Bill show that constituents can exert political pressure on their Member of Parliament to take up their case with Ministers. As many hon. Members have noted, that process works. In my case, pressure was brought to bear by members of the pension scheme run by the Richards textile company which, before it went into insolvency, used to be based in the constituency of my hon. Friend the Member for Aberdeen, Central (Mr. Doran).
      Those pension scheme members live all over Aberdeen and the north-east of Scotland. It was their plight that alerted me to the problem that the Bill addresses by setting up the PPF.
      Much of what is in the Bill, especially the PPF, would not have been necessary if it had not been for the failures of the Pensions Act 1995. The hon. Member for Eastbourne (Mr. Waterson) praised the work of Dr. Ros Altmann, and she did a lot of work in persuading the Government that the pensioners in question should be looked after, but she also laid the blame for the problems that we now face with insolvent pension funds at the door of the 1995 Act. I was openmouthed with amazement at the audacity of the Leader of the Opposition in taking credit for the solution to a problem caused by legislation passed by the Government of whom he was a member.
      This Government have made a habit of picking up the pieces of the failed legislation of the previous Government or setting right problems that they failed to address. We all know about the compensation scheme for miners, but there is another scheme, which has not had the same airing in the House but is very important for my constituents, and it provides compensation for those who were made redundant as a result of the cod wars. Many of my constituents who lost their jobs as fishermen at the time of the cod war have received compensation. Indeed, the total is some 500 across the north-east of Scotland; that is another example of the Government making right something that the previous Government refused to do.
      1188
      Several hon. Members have mentioned restoring the link. I would not wish the hon. Member for Eastbourne to be accused of misleading the House, but in a reply to a query by my hon. Friend the Member for Hamilton, South (Mr. Tynan) as to whether any of the hon. Gentleman's constituents would lose out as a result of the Opposition's policy on restoring the link and the freezing of pension credit, he replied that they would not. Well, perhaps they would not, in strict terms, because under the Opposition's policy the pension credit would be frozen. However, what is often forgotten in the argument about restoring the link is that not all pensioners qualify for the national state pension. Some 1.5 million pensioners have only a partial contributions record and therefore receive a part of the pension or do not qualify at all. Restoring the link would do nothing for those poorest of pensioners. If the Opposition froze the pension credit, it would mean that that group of people—and those who receive only the basic state pension and nothing else—would have their income frozen for many years into the future. In other words, they would have no increases in income, whether the pension was linked to inflation or earnings. For those who made no contributions and therefore had no state pension, their income would never go up beyond the present level of the pension credit, if the hon. Gentleman had his way and the pension credit was left to wither on the vine. It is disingenuous to argue that restoring the link will help the poorest pensioners, because it would not.
      The Bill is to be welcomed. It has many good aspects that have been well debated this afternoon. I add my congratulations to the Government on filling the glaring hole in the original Bill, and I hope that it comes out of the other place an even stronger Bill.
      5.34 pm
      Mr. George Osborne: I thought that the hon. Member for Aberdeen, South (Miss Begg) was a little ungenerous. To say that it was all the fault of the 1995 Act when that Act was introduced to deal with the fraud of a Labour MP, Robert Maxwell, and had the support—led by the previous Member for Glasgow, Anniesland—of the then Labour Opposition, is for the hon. Lady to forget her history.
      In general, the debate has been good. My job is to wind it up, so I have to utter the usual pleasantries—as everyone else has done. As the person in the parliamentary Conservative party who is, I hope, furthest from my pension, I am not sure why I was put on the Bill's Committee, but I have enjoyed being understudy to my hon. Friend the Member for Eastbourne (Mr. Waterson) who, with my hon. Friend the Member for Havant (Mr. Willetts), knows a hell of a lot more than I do about pensions—I hope you will excuse my language Mr. Deputy Speaker. My hon. Friend the Member for Eastbourne conducted proceedings in a relaxed and informal style, only occasionally rising to the sedentary interventions of the hon. Member for Greenock and Inverclyde (David Cairns).
      I have lost count of the number of Ministers I currently shadow—about five or six—but the Minister for Pensions and the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), are among my favourites. I congratulate

      1189
      the Under-Secretary as I think this is his first Bill as a Minister. He did extremely well. The Minister for Pensions managed to get a large number of song titles into his speeches in Committee. If he was doing it for a bet, he must have won.
      I pay tribute to the hon. and learned Member for Redcar (Vera Baird) and the hon. Members for Glasgow, Anniesland (John Robertson) and for Hamilton, South (Mr. Tynan) who played an active role in Committee. Normally, it is traditional for Government Back Benchers to sit in Committees without taking part, but those three certainly participated and I congratulate them.
      I also congratulate my hon. Friend, or rather the hon. Member for Cardiff, West (Kevin Brennan)—he was a friend during some of our Committee tactics. It is not generally known that the hon. Gentleman, the hon. Member for Greenock and Inverclyde and I share a woman. Her name is Linda Sanchez and she is a Congresswoman. The Under-Secretary of State for Work and Pensions, the hon. Member for Liverpool, Garston (Maria Eagle), may be interested to learn that she was the first sister of a Congresswoman to be elected to Congress. The hon. Gentlemen and I met her in Boston and, through sitting around the bar talking to her about American politics, got to know each other, so it has been a pleasure to serve on the Committee with them.
      Someone should write a book about what the hon. Member for Cardiff, West has done over the past year or two. He ran a textbook Government Back Bencher campaign, and did not wholly destroy his prospects of ministerial promotion in the process, which is quite a feat.
      At the beginning of the debate, the Secretary of State said that the Bill would transform pension security. That is certainly needed, given the halving of the savings ratio and the kind of things that the chairman of Aviva said earlier this week. In The Financial Times, he said:
      "We will have a generation of elderly people coming soon who will have a hard time to live above the poverty line. No one should be proud or pleased with that scenario."
      Aviva is the largest insurer in this country and is seeing faster rates of savings growth in many continental European markets than in the UK. A report from JP Morgan Fleming found that the number of defined benefit schemes that had closed or been restricted to new staff had doubled over two years.
      Will the Bill transform pension security? It would be churlish not to concede that the PPF is an important step forward in providing that security. My hon. Friend the Member for Eastbourne asked Important questions in Committee and also—as did my hon. Friend the Member for Sevenoaks (Mr. Fallon)—in the debate about how the risk-based levy is to work and how moral hazard will be dealt with. Those quest ions need answers. The Government—whichever Government are in power—will have to play catch-up to close loopholes in the legislation as they emerge.
      There were also questions about what kind of guarantee is behind the PPF. The Minister for Pensions was careful not to give an answer— as indeed was my hon. Friend the Member for Eastbourne. I suspect that there is a political guarantee: if the whole PPF goes bust, the Government in power at the time will be in a difficult position if they do not support it.
      1190
      Throughout our deliberations, the elephant in the room was the 60,000 pensioners who had lost all or part of their pension. The elephant emerged at the last moment on Report. It was extraordinary that the Secretary of State gave over half his speech to that great thing, which was only introduced at the very last moment.
      Perhaps if such compensation had been proposed earlier, we could have properly gone through some of the detailed issues raised, not just by Opposition Members such as my hon. Friends the Members for Bexhill and Battle (Gregory Barker) and for Sevenoaks, but by the right hon. Member for Birkenhead (Mr. Field) and, indeed, the hon. Member for Hamilton, South, who raised legitimate questions about the scope of the compensation and whether a group of very aggrieved people will receive no assistance having been given, if they watched the news during the past few days, some hope and an impression that they would do so. Time will tell.
      I welcome a couple of other things in the Bill. Of course, I welcome the acceptance of new clause 23. Unfortunately, I was not in the Chamber to debate that yesterday, but it was kindly called the Tatton amendment, although it was proposed by an outside organisation and accepted by the Government. I also welcome the assurances that the Minister for Pensions gave yesterday about the amendments that we moved on the involvement of pensioner members in respect of member-nominated trustees. He said that the Government would take a close look at that issue and possibly table an amendment in another place. That would be good news to the Occupational Pensioners Alliance, and I hope that the Minister can live up to his promise.
      I should note in passing that the hon. Member for Bradford, North (Mr. Rooney) made an important contribution to the debate when he referred to the need for trustees to have sufficient knowledge and training to discharge the important responsibilities that we place on them.
      Pension provision has been undermined not only by the security issue, but by the regulatory burden and costs on schemes that have accumulated under successive pensions legislation. I fear that the Bill will add to that burden, rather than reduce it, despite what the Government's rather optimistic regulatory impact assessment says. The new pensions regulator will cost 25 per cent. more than the previous one, and preparing the statement of funding principles will cost more than £16 million more than producing the minimum funding requirement, even according to the Government's estimates.
      We will find out whether the statement of funding principles turns out to be the benchmark. There is certainly a view in the pensions industry that the basis for setting the PPF risk-based premium will, in effect, become the new minimum funding requirement because a well-run pension scheme will not want to pay a risk-based levy. Over time, we will discover whether that is the case. Of course, there is the cost of the PPF levy itself.
      Additional costs will be placed on the industry, so despite what the Government say in their regulatory impact assessment, it is perhaps not surprising that the

      1191
      Association of Consulting Actuaries found, after conducting a survey in advance of the debate on Third Reading, that
      "a majority of firms feel that"
      the Bill
      "will decrease occupational pension scheme coverage. Fewer than 1 in 10 firms feel that the measures will improve pension coverage. Close to 9 out of 10 firms say that the Bill's measures will either add to costs … or make no difference … as against the Government's claims that there will be £130 million savings."
      That is what the industry says; it has certainly been our fear, and we have tried to make that clear as the Bill has been considered in Committee, on Report and now on Third Reading. The proof of the pudding will be in the eating, and the test will be whether more people save for their retirement. Will the closure of occupational schemes slow down, halt and perhaps even reverse? As my hon. Friend the Member for Eastbourne said, will confidence in pensions be restored? We will see.
      5.44 pm
      Malcolm Wicks: This has been a good debate, genuinely well informed and authoritative—a proper Third Reading debate. The wide range of contributions has revealed a fair degree of consensus on what we are trying to achieve—a consensus that I hope another place will note.
      We have heard contributions from all over the United Kingdom, from Northern Ireland, Scotland, Wales and England. Although I cannot comment on all the points made during the debate, we heard good speeches from the hon. Member for Eastbourne (Mr. Waterson), my hon. Friend the Member for Hamilton, South (Mr. Tynan) and the hon. Member for Northavon (Mr. Webb). Last night, in private—because it was during Report stage—I gave the hon. Gentleman gentle advice about not being too cynical. I thought that the constructive tone of his remarks today showed that he had taken my advice, for which I thank him. My right hon. Friend the Member for Birkenhead (Mr. Field) made an important contribution, as did the hon. Member for Sevenoaks (Mr. Fallon). I shall write to the hon. Gentleman to reassure him that an investor in a company who has not been involved in any wrongdoing in relation to pensions will not be penalised.
      We also heard important contributions from my hon. Friend the Member for Bradford, North (Mr. Rooney), the hon. Member for Perth (Annabelle Ewing) and my hon. Friend the Member for Cardiff, West (Kevin Brennan), whom I thank for his generosity. The hon. Member for North Antrim (Rev. Ian Paisley) helped to make this a United Kingdom occasion, as did my hon. Friend the Member for Glasgow, Anniesland (John Robertson). The hon. Member for Bexhill and Battle (Gregory Barker), my hon. and learned Friend the Member for Redcar (Vera Baird) and my hon. Friend the Member for Aberdeen, South (Miss Begg) also spoke, as did the hon. Member for Tatton (Mr. Osborne). I hope that I have left no one out—I want this to be a proper safety net.
      Mr. Waterson: What about the Secretary of State?
      Malcolm Wicks: The hon. Gentleman anticipates my list of "thank yous". We have heard lots of "thank yous"
      1192
      today, which is important, because we have had help from many people. I thank all right hon. and hon. Members present, especially those who have contributed to the debate, the members of the Standing Committee and our two able Chairmen. I have been aided by an excellent Parliamentary Private Secretary, my hon. Friend the Member for Greenock and Inverclyde (David Cairns). I cannot believe that he would ever make a sedentary comment, but I believe that yesterday, Mr. Deputy Speaker, you commented that traditionally PPSs are silent. As a former Minister for Lifelong Learning, I shall find an appropriate course on which to send my hon. Friend, to teach him that silence and humility that will make him an even more excellent PPS. He has many duties: at one stage, I wished him to say something to Opposition colleagues on the Standing Committee, and he went across, much to the amusement of his Labour peers. Since it doubled the number of Members on the Tory Benches, I thought that there was an important parliamentary purpose in doing so.
      Not merely because I was prompted to do so, I thank my right hon. Friend the Secretary of State, who has given us invaluable advice during the passage of the Bill. As I said yesterday, not only is the Bill the parent of the pension protection fund, but, because of my right hon. Friend's drive over many months, it contains the assistance scheme that has so dominated our debate, both in the past and today. I thank also the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond). He and I have known each other for many years. This is the first Bill that he has taken through Standing Committee, and I hope that the experience has not put him off, as it should not be his last. One day this week, he appeared before a Select Committee in the morning, put in a full day's debate on the Report stage of the Bill, then, because our Department covers work as well as pensions, he responded to the Adjournment debate. He is a role model for us all.
      We should thank all those who work behind the scenes, but I thank my officials in particular. Last week, the hon. Member for Eastbourne said that when I heard a certain piece of news there must have been expletives in the air. Perhaps too primly, I replied that I do not go in for expletives, and I am sure that my officials will testify to the fact that I approach my task with even temper and good humour most of the time—occasionally, anyway. I would like to thank them, parliamentary counsel and everyone else.
      I would like to take a moment to reflect on the journey the Bill has made through this House. Many hon. Members are about to make other journeys, so I will not detain the House too long. Three months ago, we introduced a Bill that, among other measures, made provision for a pension protection fund and a pensions regulator, which will significantly increase the protection offered to pension scheme members. We explained that the pensions regulator will be flexible and proactive and will focus on tackling the risks to members' benefits. while enabling well-administered and secure schemes to continue without unnecessary burden. We explained that the PPF will mean that, for the first time ever, individuals in defined benefit schemes, usually known as final salary schemes, based in the United Kingdom can rest assured that they will

      1193
      always receive a meaningful pension, even if their company goes bust and leaves the pension scheme underfunded.
      We explained that over 10 million members—a modest estimate—of defined benefit schemes could benefit from the security and peace of mind afforded by the pension protection fund. In addition to those 10 million people, we must remember their families, who also rely on that security. However, Mr. Speaker, you will remember that Opposition Members declined to give the Bill a Second Reading. We also wish to remind them that, if my history is right, they declined to give a Second Reading to the Bill that set up the national health service.
      Gregory Barker: I hate to interrupt the flow of the Minister's speech but, to be fair and for the record, does he not recall that the Opposition voted for a reasoned amendment, and did not simply decline to give the Bill a Second Reading? At this late hour, I would hate him to misrepresent the facts.
      Malcolm Wicks: I am not a legal expert, but I have enough education to know the meaning of the phrase "decline to give the Bill a Second Reading".
      In Committee, Members from all parties worked hard to scrutinise the Bill, including Opposition Members, who played a full and proper part in the proceedings. There was a highly informed and useful debate in Committee—it was not just a rubber-stamping exercise, and we discussed many issues. For example, we undertook to consider the proposal to remove the limited price index from defined contribution schemes when people are choosing an annuity. The new ombudsman may refer any question of law arising for determination in connection with cases to the High Court or, in Scotland, to the Court of Session. Pensioners as well as active members should be involved in the selection process for member-nominated trustees, so we have made a number of changes following scrutiny of the Bill in Committee.
      On Report, we introduced a requirement on employers to consult their employees, trade unions or other representatives before making significant changes to pension schemes. In the early stages, however, we faced one overriding challenge—the issue of people who had already lost their pension and for whom the PPF has come too late. We were determined to do all that we could, but it was essential that we did not commit ourselves to writing a blank cheque. We were not willing to commit to a solution until we knew more about the scale and nature of the problem. While Government cannot stand behind private agreements—they cannot nationalise financial risk—and do not accept legal liability, we recognise that that group deserves Government help. It is the right thing to do and will greatly increase confidence in pensions.
      We have therefore started a process to set up a financial assistance scheme with £400 million of public money spread over 20 years. The hon. Member for Havant (Mr. Willetts) banged his fists on the Dispatch Box at one stage, and demanded an end to claims of "No false hope". Following careful assessment, the assistance plan has now been announced and will bring true hope and, ultimately, true help for those who have lost out and suffered such a great injustice.
      1194
      Members of the House have an opportunity this evening—I hope we will all make use of the opportunity—to support an extremely important Bill. I contrast what we are proposing with the position of the Opposition earlier. The hon. Member for Eastbourne was very good in Committee. He honed the art of quoting other people's views—many late nights with a fountain pen. Today the hon. Gentleman and his colleague the hon. Member for Tatton quoted from the Association of Consulting Actuaries report. I regret to say, and I am sure this was simply because of the lateness of the hour, they did not quote it in full. I shall quote the views from the survey on the pension protection fund:
      "Encouragingly for the Government, a clear majority of firms offering defined benefit schemes are in favour of the proposed Pension Protection Fund (PPF), one of its key new proposals in the Pensions Bill. The importance of offering greater security to defined benefits scheme members was mentioned by many firms. Support for the PPF has grown since the publication of the Pensions Bill."
      We did not hear that.
      Although we listen with great care to detailed points from those on the Opposition Benches, we will never forget that it was a Conservative Government who presided over pensions mis-selling on a massive scale. They did not provide any money to sort it out. Nearly 2 million cases have had to be reviewed and it has taken £12 billion in pension industry money to resolve. People in the industry are still working to clear up the mess. We will remember that.
      It is interesting that the hon. Member for Eastbourne had to tell us that he could not commit his party to supporting the PPF, even at this stage. I hope the Opposition will nevertheless support the Bill this evening.
      With the new assistance plan, as with many other successes, many people are claiming parentage. We had an unlikely candidate, the Leader of the Opposition, who apparently came in late, mentioned it once or twice at Prime Minister's questions and is now the proud parent of the assisted pensions scheme. Success has many fathers, but there is no Tory DNA in the new assistance plan.
      Although I am being gentle with the hon. Member for Northavon today, I remind him of his cynicism when he said of the ASW and other workers on 12 January that
      "the Government will do precisely nothing, and take many months to do it …Would it not have been more honest and generated less false hope to have told them that at the start?"— [Official Report, 12 January 2004; Vol. 416, c. 513.]
      Those were the words of the Liberal Democrat spokesman. We have seen the plan from the Labour Government.
      Finally, I am proud that it is a Labour Government who are introducing the Pensions Bill. Sometimes the term "social security" is used as technical benefit jargon, but "social security" has a meaning in the English language. It is about providing individuals and their families with a real sense of financial security. The pension protection fund will one day be regarded by historians as one of the proudest achievements of this Labour Government, because it brings a real sense of assurance and security to 10 million scheme members and their families. It is vital. Social security is also the right description of the assistance scheme that will be developed in the months to come.

      1195
      In Committee there were one or two musical references. There was a rather serious one yesterday when my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) mentioned the great Woody Guthrie, in the context of a song saying that one could rob people with a pen. Woody Guthrie is also known for the song, "This Land is Your Land". We have been speaking about the people's pensions, and we will protect them.
      Question put and agreed to.
      Bill accordingly read the Third time, and passed.

  Fire Service College
  Motion made, and Question proposed, That this House do now adjourn.—[Margaret Moran.]
  5.59 pm
  Mr. Geoffrey Clifton-Brown: May I start by thanking you, Mr. Deputy Speaker, for the opportunity to raise the future of the Fire Service College in Moreton-in-Marsh? I also welcome the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Corby (Phil Hope), and hope that I can thank him in advance for what he is about to say.
  A Treasury minute of March 1992 states:
  "Section 4(1) of the Government Trading Funds Act 1973 provides that a trading fund established under that Act shall be under the control and management of the responsible Minister."
  According to the Treasury minute, the Minister is responsible to Parliament for the running of the college, and I hope that he will make good use of his responsibilities.
  The Fire Service College is the world's premier fire training establishment. It is also a very important employer in my constituency, employing some 262 people, most of whom come from the small Cotswold market town of Moreton-in-Marsh, with which it maintains cordial and close relations. It is from that standpoint I have secured this evening's Adjournment debate.
  The Fire Service College covers some 500 acres,or 200 hectares. Its facilities include one third of a mile of two-lane motorway, a mock-up oil rig, a boat and an office block, all of which may be set on fire in exercises. It has some of the most modern equipment in the world, including modern lire hoses and fire tenders. It can stage multi-agency mock exercises in which the ambulance, police and fire services are all involved. It has mock aircraft and helicopters, accommodation blocks and a leisure centre. It is potentially a world-beating institution, subject to one or two caveats that I shall raise this evening.
  The Fire and Rescue Services Bill allows the Minister to define the college's position as
  "a national Centre of Excellence for the UK Fire and Rescue Service."
  However, I believe that the future role of the Fire Service College is still far too vague. It makes a loss, and it is no nearer the goal of partnership with the private sector, as identified in the 1999 report "Prior Options Review of the Fire Service College". There is obviously a clear need for a central fire training facility, and the Fire Service College is uniquely placed to meet it. However, it is imperative that the college resolves its short-term financial and organisational difficulties in order to secure a long-term future in the private sector. We must ensure that the college has an increasingly secure long-term future, which will benefit the public, the emergency services, fire officers who train there and, above all, my constituents, by providing increased numbers of jobs.
  I shall make five points about the future of the college. First, a chief executive must be appointed speedily. Secondly, the college must have a clear and defined role.

  1197
  Thirdly, it should be allowed to become a viable commercial entity, to compete in the global marketplace and to raise its own funds for reinvestment in new facilities. Fourthly, the current financial constraints make consistent profitability and meeting the college's financial targets almost impossible. Fifthly, the college has a unique opportunity to expand and become a global leader in the field of civil emergency planning, if the Government give it the freedom to do so.
  A key part of the long-term future is the speedy appointment of a new chief executive with a clear remit and proper scope for action. I understand that interviews for that position took place on Tuesday. Will the Minister inform the House when an appointment is likely to be made? Is he satisfied that the package that was advertised will attract a candidate of sufficient calibre, who has dynamism and a proven track record of successfully running businesses of that size and complexity?
  Secondly, the Government must identify a clear and well-defined role for the college in the years to come, and must allow the college to compete in the global environment. The Bain report rightly commented:
  "There needs to be clarity of purpose and a culture which fosters organic change … The College must also become the focus for developing the new thinking required by the service … The Fire Service College and Fire Inspectorate need re form with new remits which include the promotion of best practice and the delivery of a wider vision of an effective service."
  The Government must allow the college to become a genuine global centre of excellence in multi-agency training by ending the present confusion over the college's role. They will fail the college and the dedicated people who work there if they fail to provide strategic direction. As the internal auditor stated in the 2002–03 annual report,
  "There is an urgent need for the strategic direction and associated funding arrangements of the Fire Service College to be clarified".
  The conclusions of the 1999 report into the college were supported by the then Home Secretary. The prior options review found that the college had been performing very poorly financially over a sustained period. The review concluded, based on the problems that it identified, that
  "a public sector management team acting alone would not be able to secure quick and effective changes needed at the College to ensure long term viability. We therefore believe that the right route lies in a partnership with the private sector; and we think that joining up the training requirements of the UK fire service with the MOD FSCTE"—
  at RAF Manston—
  "is preferable to going it alone."
  That was point 1.16. The review argued that
  "a private sector partner could strengthen and add to the expertise and skills at the College; offer the possibility of new funds for capital investment; act as catalyst to achieve culture change; and enhance the possibility of successful expansion into new markets to increase utilisation"
  of the excellent on-site facilities that I described.
  In the years following the publication of the review, and thanks to the hard work and dedication of the then chief executive Terry Glossop and his successor Robin Currie, the financial and overall performance of the college improved substantially. A deficit on ordinary activities before exceptional items of £3,322,000 in
  1198
  1997–98 was turned into a break-even point in 1999–2000, a surplus of just over £1 million in 2000–01, and a bigger surplus of £2,437,000 in 2001–02. The college also succeeded in winning a large number of international contracts and becoming increasingly attractive to the private sector.
  I fear that in recent years the momentum gained in those years has been lost. That is a serious point for the Minister to note. In 2002–03, the college reported an operating deficit of £883,000 and a total deficit of more than £1 million, compared with a surplus of more than £1 million in the previous year. Several courses were cancelled in the last financial year. Sadly, the financial situation has deteriorated further, and this year the accounts are likely to show an even worse result.
  The college must make correct decisions and eliminate waste. It recently commissioned an outside organisation to introduce a work regrading experiment, which was abandoned after it led to almost 90 grievances from the staff being received. It is imperative that that drift does not continue.
  The college suffers from underinvestment. Page 30 of its business plan states:
  "This has to be addressed as a matter of high priority if the FSC is to retain its existing business and deliver an effective modernisation programme. The under investment totalled some £9.8 million in 1996, and is now in the order of £12 million. In addition, costs associated with meeting modernisation and changed legislative requirements will take the total to an estimated £25 million."
  After all, if the college is to provide world-renowned facilities, it must have world-renowned equipment on which to train firefighters.
  I doubt whether the college will achieve its financial targets. It is required to achieve a minimum return, averaged over the period as a whole, of 6.5 per cent. a year in the form of an operating surplus expressed as a percentage of average net assets employed at current values. Given that it already has a public sector loan of some £16 million on which it is expected to pay a return of 7 per cent. to 9 per cent., I do not know how it is expected to make a profit. The valuation as at 31 March 2003 shows that the net book value of tangible fixed assets was revalued to some £30 million—an upwards valuation from £14 million as at 1 April 2000. Speaking as a chartered surveyor, I suspect that valuation, and I intend to draw it to the attention of Sir John Bourn at the National Audit Office before he draws up the next accounts. If the valuation is too high, how can the college be expected to make a 6.5 per cent. return on assets?
  If the college is given commercial freedom, it can develop a proper business plan and consider its income stream before deciding how much to invest in facilities and what those facilities should be. Clearly, the Government must choose to go down one of those routes—privatisation or keeping the college in the public sector but providing it with the investment that it needs.
  KPMG faced that stark choice when it suggested that the best option for the Fire Service College was either complete privatisation or management privatisation.

  1199
  That led the then Minister, the hon. Member for North Warwickshire (Mr. O'Brien), to aim to privatise the college by the end of the year. Sadly, those plans have subsequently been changed.
  If the Government decide to avoid commercialism for the Fire Service College, they will find it extremely difficult to make a profit. In addition to the 6.5 per cent. that the college is required to make on assets, the Treasury minute that I have already quoted decrees that
  "the prices to be charged to UK fire authorities and also to Exchequer customers, must not exceed the full cost of courses provided for them. For the purpose of calculating full cost for UK fire authorities and Exchequer customers the required return on capital should be 6%."
  I have already mentioned the public loan, which is currently £16 million. Under pressure from me in 1997, the previous Conservative Government wrote off £13 million.
  It is essential that the new chief executive has a properly defined role and remit. I hope that the Minister will tell us something about that tonight. He must agree a new strategic direction for the future of the college with the Government within a few months of his appointment. There must not be a repeat of previous occasions, when previous chief executives have been blocked when trying to gain new business abroad in countries such as Malaysia, Qatar and Saudi Arabia. Some of those countries are excellent places for new business.
  The Minister should consider several issues for the future of the college. Previous chief executives have been in negotiation with Cotswold district council to use some of the college's brownfield land on the western edge of the site for new housing. That could generate mixed tenure and social housing, which is needed in the area and, above all, generate up to £26 million. Will the Minister give an assurance that, if the money were generated by a sale or some form of partnership, all of it would be used to write off the £16 million public loan, and the balance used to reinvest in the site rather than being taken back into Treasury coffers?
  The Minister might also like to reflect on the impact of the Government's airfield support services project, its part privatisation and its effect on the college. That is a big privatisation of various services in the Ministry of Defence and I have already said that if its firefighting training were concentrated at the college, that could hugely benefit the institution. One of the bidders for the ASSP is Serco, which has a large training college in Teesside. If the bid were successful, there might be some synergy in moving some of its aviation training from Teesside to Moreton-in-Marsh and beefing up the facilities there.
  The global environment created by 11 September and the threat of global terrorism has made the need for a first-class training centre to deal with all civil emergencies through a multi-agency approach even more urgent. The Fire Service College has the potential to be the centre of best practice. Indeed, the Minister should consider that the college, which our forefathers set up as a world centre of excellence to train fire officers in 1968, could be transformed into a world centre for civil emergencies planning.
  1200
  Firemen are unlike members of the armed forces, who may or may not experience armed combat in their career. From the moment they are trained and attend their first incident, firemen put their lives at risk. They deserve the best training we can give them. That means that the Government's previous blurred vision must now be cleared. The Government must give the college a proper vision for the future.
  A former London fire officer, Gerry Clarkson, described the Fire Service College as
  "one of the most critical parts of the British Fire Service."
  The people of Moreton-in-Marsh, those who work in the fire industry, those who work in the Fire Service College and the people who are trained there look to the Minister tonight to give us a clear vision for the future.
  6.14 pm
  The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister: I congratulate the hon. Member for Cotswold (Mr. Clifton-Brown) on securing this important debate on the future of the Fire Service College at Moreton-in-Marsh. I want to begin by doing exactly w hat he has just asked me to do, which is to reaffirm our support for the college and to acknowledge the huge importance of its role in the modernisation of fire and rescue service. The Deputy Prime Minister has visited it, as have I and other Ministers on a number of occasions.
  The hon. Gentleman's brief description of the fire ground did it little justice. It is a unique facility not just in this country but across the globe. He was right to say that our firefighters deserve the very best, and at the Fire Service College, that is exactly what they have. I appreciate that with an annual turnover of £20 million and a permanent staff of more than 200—the hon. Gentleman mentioned a figure of 262—the college is a major local employer and supporter of the local economy. Many of the staff and their families live in the immediate area, and I am pleased to say that the college has a good relationship with the Moreton-in-Marsh community. It opens itself up for many annual events and gives support to local charities. Membership of the modern, well equipped sports centre is also available to the local community. The college also has other more formal roles within the community. For example, it is the designated evacuation centre for Gloucestershire county council. The House and the fire service, along with the Moreton community, are bound to take an interest in what goes on at the college, and in its future.
  In May 2002, my hon. Friend the Member for Southampton, Test (Dr. Whitehead) announced the creation of a task group of fire and rescue service stakeholders to look into the future of the Fire Service College. As I announced to the House on 30 June last year, the task group concluded that there was a need for a central training facility for the fire and rescue service, to take forward work on vocational development through the integrated personal development system, on the civil contingency response arising from the events of 11 September, and on the modernisation agenda opened up by the 13ain report. The task group also recommended that a national work force development strategy be drawn up to define the role of the college in relation to other training providers, and that there should be a long-tern plan for improving the college's infrastructure and services.

  1201
  In accepting the recommendations of the Fire Service College task group, I also accepted the need to address the shortcomings set out in the task group's report, some of which the hon. Gentleman has mentioned tonight. As a trading fund since April 1992, the college has struggled to meet its financial targets. It has not been able to generate the income necessary to invest in the site, or to develop its training facilities to meet the needs of today's fire and rescue service. Nor has it been able to modernise its student accommodation to meet the standard now expected by stakeholders.
  So where do we go from here? It is important that the college should be fit for purpose and able to deliver the key role that it has in modernisation of the fire and rescue service, as set out in the White Paper. This sets out a number of functions for the college as a centre of excellence. It should be a national centre for incident command training, based on a fire ground that is unique in the world in its size and scope. It should provide national specialist training in urban search and rescue and other new dimension techniques, working closely with the other emergency services. It should also provide drive and leadership for reform of the fire and rescue service through links with other services and fire industry institutions, and training and development for the most senior and specialist roles. It should lead the implementation of the integrated personal development system, and spearhead e-learning in partnership with the Scottish Fire Services College.
  The hon. Gentleman mentioned investment. In my statement of 30 June, I confirmed that we would make £5 million available to the college for the upgrades necessary to meet health and safety and other legislative requirements, and to invest in its training facilities and student accommodation. I am pleased to say that that work is well under way, with training rigs on the fire ground being upgraded and a new accommodation block under construction. A further £2.5 million in new dimension funding has paid for a brand new urban search and rescue training facility. This is now in use, enabling the college to provide training to fire and rescue services in how to deal with collapsed buildings, for example. Those skills of the UK fire service search and rescue terms were recently used at the tragic factory explosion in Glasgow to very good effect.
  We are also making good progress in bringing the college fire ground and facilities up to standard, but years of limited investment can only be made good over the longer term. It is therefore important that the college has a coherent and realistic corporate strategy in place that shows how it will benefit from our investment and how it will generate the income for future investment, which I know that the hon. Gentleman is keen to see.
  When I visited the college earlier this month, I met the acting chief executive and college directors, and we discussed both their business plan for the current year and, importantly, the development of a corporate strategy for the next five years. The hon. Gentleman is right that that strategy will need to explore the options for partnerships with both the public and private sectors. He mentioned one specific project—the airfield support services project. He will know that the fire service college is a service provider for the consortiums bidding for firefighter training under the airfield support services project. Certainly, the college welcomes the possibility of joint working with the Ministry of
  1202
  Defence. It has made provision in its business plan to do so, but given that negotiations must continue, the college's planning remains flexible, depending on the outcomes of those discussions.
  The hon. Gentleman also mentioned the importance of the right management team. He is right about that. I share his view that having the right management team in place is essential to realise this clear vision for the college. The appointment of a new chief executive is a key component in drawing up and delivering the college's future strategy. The selection process for a new chief executive is being run in accordance with Civil Service Commission recruitment rules to ensure fair and open competition. The competition has attracted strong interest and a selection panel chaired by a commissioner is interviewing a strong shortlist of candidates. When that process of selection has been concluded, I will have an early meeting with the new chief executive and college senior managers to discuss the corporate strategy as it takes shape.
  Mr. Clifton-Brown: This is a critical point. Can the Minister give us any idea, as there has been a long period of uncertainty, how long that process will take? That would be helpful to people working at the college.
  Phil Hope: I am mindful of the point that the hon. Gentleman raises. Of course, the proper processes must be followed, and it is not for Ministers to intervene in that. It is right that we need to get on with this job, because of the uncertainty that there has been, and the sooner that we get a chief executive in place in the college, the better for the college and the whole senior management team. I fully understand that concern, and I will take back those comments.
  The hon. Gentleman mentioned financial and performance targets. It is important for the college to meet its targets and to have a sound financial footing so that it can meet its obligations as a trading fund, as set in the Treasury Minute that he mentioned, laid before the House on 15 January. To remind the House, those obligations were to meet outgoings from its funded operations, and to achieve a surplus on ordinary activities of 4 per cent., expressed as a percentage of average capital employed. The college has not met those targets in the past two years, but he and I would recognise that in both years trading was significantly disrupted by the fire dispute, resulting in the cancellation of 22 weeks of courses. That is one of the realities.
  In my recent discussions with college senior managers, we have been in full agreement that a return to at least break-even in 2004—05 is a priority, and that is reflected in the college's budget plan for the current year. The college has also made substantial progress in modernising its products and services, with the development of a more flexible, modular form of training within a new course prospectus that is fully compliant with the integrated personal development system. We are continuing to work together to strengthen the college's trading performance in this and future years.
  I want to emphasise training. The take-up of new training by fire and rescue services is positive, and the coming on-stream of new urban search and rescue

  1203
  training facilities in particular has prompted strong interest. The college does not have a monopoly of training for the fire and rescue service, however, and it operates in a highly competitive market. As I said earlier, the task group recommended the drawing up of a national work force development strategy to define the college's role in relation to others. The strategy will build on areas in which the college is a strong performer, where it has an established reputation, and where training and development can most efficiently and effectively be delivered at national level.
  However, there will remain a need for some training and development to be delivered at regional and local levels. It is likely that the college will have a part to play in supporting the fire and rescue authorities and the regional management boards in those local and regional responsibilities. We look forward to the possibility of its offering services such as outreach training, development programmes and quality assurance.
  I believe that the college is best equipped to provide specialist and operational training, taking advantage of the unique fire ground facilities that have already been mentioned. We have invested in updating those facilities, and in the provision of new capabilities. Further development is planned, and we are exploring ways in which the site's potential for joint training with other emergency services might be realised. The hon. Gentleman mentioned that, and we are keen to pursue it.
  Mr. Clifton-Brown: I assure the Minister that this will be my last intervention, as time is getting on.
  Part of the college's way of meeting the business plan—and this is where it was so successful under its former chief executive, Terry Glossop—was going out into the world and selling itself. Could the Minister tell us something about this aspect of the new business plan for the next five years? How does he envisage foreign businesses being brought into the college?
  Phil Hope: I think the hon. Gentleman has been reading my notes! I was about to deal with the market strategy for—literally—the wider world.
  I think it fair to say that the college has an established reputation in the fire service community, not just here but abroad. I was keen for it to adopt a new marketing strategy to build on that, which it has now done. The Fire and Rescue Services Bill, which has been dealt with in the House of Commons but has not completed its passage, will give the college the additional flexibility that it needs to consolidate or—this is the point raised by the hon. Gentleman—expand
  1204
  its presence in wider markets both in the United Kingdom and overseas where it has the products, capability and capacity to do so. I should stress that meeting the training and development needs of the UK fire and rescue service will remain the college's primary task, but the hon. Gentleman is right to draw attention to the opportunity offered by business abroad.
  The college also has a key role in the support framework for the IPDS, which we set out in chapter 6 of the national framework document. The ODPM's enhanced support for the IPDS has resulted in a strengthened central team and three regional teams working from the college, giving advice and support to fire and rescue services. The college is currently working on a proposal to establish a major e-learning capability that will support the rolling out of the IPDS, especially in the retained service.
  The White Paper sets out further development for the college as a nucleus of a centre of excellence for the fire and rescue service, bringing together service and fire industry institutions to provide a focus of expertise, research and innovation. I recently approved in principle the relocation of the Fire Protection Association and the Institution of Fire Engineers to Moreton, and subject to negotiation of terms both are expecting to move in September.
  The task group's report spoke of the need to strengthen arrangements for those using the college to give feedback. The practitioners' forum will be able to play that role, enabling key stakeholders to comment on its performance.
  Training and development are at the heart of the Government's modernisation agenda for the fire and rescue service. The college has a key role to play. We have invested in it to improve its facilities, and to put it on a sound footing for the future. We will continue to work with it to strengthen its trading performance, and to deliver the modernisation agenda.
  Mr. Deputy Speaker (Sir Alan Haselhurst): The Question is—
  Mr. Clifton-Brown: On a point of order, Mr. Deputy Speaker. I thank you for allowing me to speak, and I thank the Minister for what he has said and for the positive and constructive manner in which he has said it. I think—subject to reading the small print in Hansard tomorrow—that my constituents will be greatly reassured.
  Mr. Deputy Speaker: I am not sure that that was a point of order, but I am sure that the House will be grateful for what the hon. Gentleman has said.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes past Six o'clock.