Pensions Bill

Provided that I am in order, I wish to speak to Amendment No. 69 in this group. It performs the essential and important function of removing the necessity for an employing company to be in a state of bankruptcy before it can transfer into the lifeboat fund. I declare an interestin that I speak from practical experience of this situation, having been chairman of a company that passed through this process, but that is all resolved and there are no outstanding issues relating to this matter. There was once a British company listed on the London Stock Exchange that had traded successfully for a great many years until it was tempted to make a very large investment in purchasing a series of parallel manufacturing businesses in the US, for which purpose it borrowed $1 billion. That venture did not prosper and, very rapidly, the group’s consolidated position was one of borderline insolvency. The American bankers were consulted separately from the British ones and agreed to write off $400 million and inject an additional $200 million to sustain the American business, provided that they were allowed to have unencumbered ownership of those assets. Separate pension schemes had applied to both the US and British arms, and at that time the British pension scheme was in deficit by £96 million. Members of the Committee will rapidly have understood the problem. If the Americans were to put in $200 million of new capital, it would have to pass through the parent company in London and that money might have been attacked by the pension trustees in Britain with a view to filling the £96 million hole. The Americans did not think that that was very funny, so they decided that they should make certain conditions. They offered the British pension scheme a £10 million contribution to their deficit and 10 per cent of the equity of the new company which they would create in America. The pension trustees were initially happy to do that. We reached the point when the whole deal was to come out of escrow and be signed at nine o’clock the next morning. Incidentally, I should add that this happened to be the first day of the only honeymoon of my life, which made for very interesting proceedings.