Pensions Bill

Of course, I join my hon. Friend in those sentiments, and I know that everybody in the House would send Mr. Humphreys their best wishes. The new clauses have been tabled in the name of my right hon. Friend the Leader of the Opposition, who has taken a particular interest in this, not least because he has a special constituency interest in a particularly heartbreaking case. They are supported by the leader of the Liberal Democrat party, by the right hon. Member for Birkenhead (Mr. Field), and by other Labour Members who have seen the need for a cross-party solution. I hope that that cross-party approach sends a message to the Government about the strength of feeling and sense of moral obligation across the House. This is one of those occasions when we as parliamentarians have to stand up and be counted and be seen to be doing the right thing. Before I go through the new clauses, there is a procedural issue that I should like to explain to hon. Members. I understand that for reasons of time it is unlikely that it will be possible to vote on more than one new clause in the group. I should like to indicate to you now, Mr. Deputy Speaker, that I will, if possible, seek a Division on new clause 41. It is our understanding, on advice, that new clauses 42, 43, 44, 45 and 47 are essentially consequential, and if the House agreed to new clause 41 there would then be an opportunity to consider the other new clauses. That leaves out new clauses 39 and 46, which are not consequential but would do slightly different things. I will deal with those separately. I hope that the Government will accept that this is a package and look constructively at its proposals, including the proposal for a moratorium on annuitisation, which, despite the Minister’s being so critical, was intended to be helpful and supportive of the review process. There is no point in reviewing the possible use of residual scheme assets if by the time that the review has completed its course and the Minister has considered it the residual scheme assets have all been given to the Pru and Legal and General. That is why we need a moratorium. New clause 39 would provide that the PPF board should take over from the Secretary of State the role of scheme manager, for two reasons: on the merits of the case for the PFF board, which has demonstrated its competence by winding up the MG Rover scheme and taking it into the PPF in less than two years; and secondly, as part of a wider architecture in this group of new clauses, which would put the PPF board in overall control board of pension compensation—separate funds, for very good reasons, but under a single administration with single payment structures and, it is to be hoped, administrative savings to be made and efficiencies to be gained. The new clause would achieve its objective simply by substituting the PPF board for the Secretary of State in the 2005 regulations. The substantive new clause is new clause 41, which would create the lifeboat fund, also to be placed under PPF management. We need a separate fund, as opposed to one merely incorporated into the FAS. The source of funds for the lifeboat fund would be different from that of the FAS. The FAS is a body publicly funded with taxpayers’ money; the lifeboat fund is intended to be funded with unclaimed assets, perhaps with residual scheme assets or some part of them, if they become available, and in the interim to be allowed to go about its work with the benefit of a Treasury loan. The lifeboat fund would be mandated to pay top-up benefits so that people who are being paid under the FAS would be topped up to PPF levels, and people who are below the FAS qualifying age but above the scheme retirement age would be paid from the lifeboat fund. Crucially, it would provide for loans from the Secretary of State to allow immediate operations. Later new clauses would provide for the collection of assets. I have acknowledged, and will do so again, that in granting a loan there is a residual risk of a liability to the public purse. However, having considered it carefully and looked at the moral obligation that falls upon us, we think that it is a tiny risk that it is right and reasonable to ask the taxpayer to bear. The costs would be slightly more than the £2 billion in cash over 50 or 60 years, or £600 million net present value, that the parliamentary Labour party briefing document set out, because it appears that the Secretary of State’s briefing to the PLP did not factor in the cost of including those who were under 65. We estimate that the initial cost of the lifeboat fund—its initial cash flow need—would be about £30 million a year, rising to £100 million in 2033 and then tailing off to zero. Today, the Prime Minister quoted a figure of £2.48 billion in cash, or about £750 million NPV, as the total cost of the package of proposals that stand in the name of the Leader of the Opposition. That estimate does not look unreasonable, although we all recognise that in calculating such figures there is a fairly wide degree of error. I should emphasise, however, that the figure would not have to be found immediately but over a period of 50 or 60 years—exactly the same as the £8 billion that the Secretary of State has committed to the FAS. The lifeboat fund would receive unclaimed assets and residual scheme assets if those become available. New clauses 42 to 45 would create the rather inelegantly named pensions unclaimed assets recovery agency. I pay tribute to the right hon. Member for Birkenhead, who will have recognised in the new clauses a large chunk of his private Member’s Bill, the Pensions (Unclaimed Assets) Bill. I am grateful to him for doing a large amount of the drafting work. The agency would be charged with first identifying these assets, then collecting and supplying information to the Secretary of State, and then collecting the assets in. The new clause would provide that the Secretary of State specified the classes of unclaimed assets to be collected by the agency. Our focus is on unclaimed pension assets, including the possibility of residual scheme assets. We think that there is an elegance and a justice in using unclaimed pension assets to deal with a pensions problem. However, the House should be aware that the new clause would enable the Secretary of State, over time, should he wish, to widen or change the scope of the classes of unclaimed assets that could be included. The Unclaimed Assets Register says that there is about £3 billion in pension sector unclaimed assets. We are rather more cautious. On the basis of private discussions with companies, we think that there may be £600 million to £800 million of readily accessible pension unclaimed assets and a modest flow thereafter. However, Members who have looked into this will be aware of the Irish experience whereby the initial estimates, based largely on information volunteered by the companies holding these assets, turned out to be understated by a factor of 10 or 15-fold. Together, the new clauses would create a framework for a fair settlement at PPF levels, with a single payment mechanism based on putting the PPF board in control of the FAS and the lifeboat fund. Although there would be two streams of funding, there would be a single payment mechanism delivering efficiency and seamlessness for recipients. The system would minimise the risk to the public purse, while a loan would allow for an immediate start to payments to those most in need. It would be flexible as to the classes of asset that could be used, so that the Secretary of State would have wide discretion in managing the process in future. It would deliver the objectives of new clauses 26 and 27 and amendment (a) to new clause 38. As far as beneficiaries are concerned, its effect would be no different, but it would be achieved without placing the burden on to the taxpayer. New clause 46 proposes a moratorium on annuities. As I have already said, its intention is to support the review that the Government are undertaking. We acknowledge that there are problems with the use of residual scheme assets but our discussions suggest that there is between £1 billion and £2 billion in the schemes that is not already committed to the purchase of annuities, as well as a further sum, which may be subject to some penalty costs when annuity option arrangements have been entered into. That is a sizeable sum. If just part of it could be released to support the lifeboat fund, it would be a useful additional source. That is worth pursuing and we would be happy to engage in the review that the Secretary of State has set up and examine with him some of the problems, which we acknowledge must be overcome to make the proposal work. New clause 47 deals with schemes that are still being wound up and places on the trustees a duty to make interim payments. They already have the power to make interim payments if they choose, but trustees, by their nature, tend to be conservative people. Their inclination to ask for interim payments has been disappointing, as the Minister acknowledged. He has written letters to encourage them to do so. We believe that it would be right to impose a duty on them to make such payments, the cost of which they would recover from the FAS and the lifeboat fund in due course when the scheme was wound up. The new clause also provides for the unlikely position whereby a scheme does not have the liquid resources to make payments and Treasury loans might be made to trustees to bridge the gap while they get their assets into liquid form. There is a consensus across the House and with outside bodies that represent the victims of the crisis that new clauses 25—which incorporates what the Minister told us about solvent schemes—and 41 are the way forward. The House today has it in its power to resolve the problem and bring to an end a blot on the reputation of not only Governments but Parliament. We could deal with the issue now. The overwhelming majority of the victims will accept PPF level benefits as a fair compromise. Parliament, as well as the Government, has been damaged by the continuing disaster. Parliament at least now has the opportunity to set party politics aside and do the right thing. I urge hon. Members of all parties to support new clauses 25 and 41.