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Labour Market

5. Mr. Bill Rammell (Harlow): If he will make a statement on trends in the labour market since11 September. [55491]

The Minister for Work (Mr. Nicholas Brown): There are problems in the world economy, but the UK is withstanding them better than other major countries. Compared with last September, there are more than 70,000 more people in employment and unemployment is broadly unchanged. Our labour market is in a strong position: the number of people in employment is at a record level—up by more than 1.5 million since 1997. The number of job vacancies is high—more than 10,000 are being notified to jobcentres every working day; and recent unemployment levels are the lowest since 1975.

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Mr. Rammell: I welcome that response, which clearly indicates that, contrary to some predictions, we have not gone into an employment downturn since 11 September. Indeed, in my Harlow constituency, the claimant count this month shows that unemployment figures continue to fall. However, does my right hon. Friend agree that certain sectors of the economy, especially telecommunications, face continuing problems because of the worldwide situation? Does he agree that where redundancies occur, it is the responsibility of both national and local government to work with employers and trade unions to help people to retrain and up-skill to take advantage of the job opportunities that are available?

Mr. Brown: Yes, I agree with my hon. Friend. On job losses in the telecommunications industry, specifically in his constituency, I can confirm that Harlow jobcentre is in touch with local employers and that we shall do whatever we can to stand the corner of his constituents. Nevertheless, as he says, it is a fact that unemployment has fallen—it has halved in Harlow's travel-to-work area since 1997.

Mr. John Wilkinson (Ruislip-Northwood): The Minister said that notwithstanding problems in the world economy, the United Kingdom's employment trends are better than those in many other countries. Is it not interesting that since 11 September last year—and, indeed, for some months before that—those trends have been particularly favourable compared with those in the eurozone? Will the Minister do the sensible and honourable thing on behalf of the hard-working British public in recommending to the Treasury, both to the First Lord and to the Chancellor, that we keep the pound?

Mr. Brown: I always try to do the sensible thing on behalf of the hard-working British public. I think that our colleagues in the European Union have much to learn from the way in which we manage the labour market.

Mr. Peter Pike (Burnley): My right hon. Friend will recognise that in constituencies such as mine, it is high-paid and high-skill jobs in the aerospace industry that have been lost or put at risk the most by what happened on 11 September. Will he reiterate that the Government remain committed, for the benefit of constituencies such as Burnley and, indeed, of the whole country's economy, to maintaining high-skill jobs at the sharp end and to doing everything possible for investment to secure those jobs in the future?

Mr. Brown: I understand what my hon. Friend says. It is true that in constituencies such as Burnley the labour market is undergoing a period of adjustment. To address some of those local issues, we have introduced a number of special programmes designed to bear down on unemployment, especially long-term unemployment. My hon. Friend is right that there has been movement in the labour market away from employment in manufacturing towards employment in the service sector, but it would not be true to say that there are not secure, well-paid careers in the service sector—there are.

Miss Anne McIntosh (Vale of York): Does the Minister agree that in this longest, deepest recession, which has been compounded by 11 September, two

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sectors—the airline industry and farming—have been particularly badly hit? Will he give some assurance to constituents of mine who came to see me having, in the case of the husband, just been made redundant from farming? Will people get a fairer hearing and more assistance from the jobcentre and Employment Service staff than was the case in that instance?

Mr. Brown: I do not agree with the hon. Lady that we are in a long and deep recession. Indeed, there have never been so many people in employment. However, I am happy to consider cases of individual constituents who, according to the hon. Lady, have been displaced from employment in agriculture. It is fair to point out that agriculture employs fewer than 1 per cent. of the total work force, but if the hon. Lady has a constituent who is looking for work and needs help, and she writes to me about the case, I shall see what I can do.

David Cairns (Greenock and Inverclyde): The electronics sector has also suffered since 11 September. After many years of decline, unemployment in my constituency has risen sharply since 11 September.A characteristic of the sector is the number of people employed on short-term and casual contracts. Too often, Government employment initiatives are not sufficiently flexible to deal with people who experience periods of unemployment. Will my right hon. Friend consider the operation of Jobcentre Plus and the new deal to ascertain whether people on short-term contracts can be caught more quickly and helped back into work so that they can benefit from the booming economy elsewhere?

Mr. Brown: Employment on short-term contracts is relatively low nationally, but if it is a peculiar feature of the labour market in my hon. Friend's constituency, I shall, of course, consider the problems that he mentioned. However, I must emphasise that the trend that he cites goes against the national trend. Perhaps he wishes to draw some local circumstance to my attention. I assure him that the staff who work for Jobcentre Plus—as it will become—are there to help his constituents. If he wants to draw a specific problem to my attention, I shall examine it.

Child Support Agency

6. Mr. Andrew Turner (Isle of Wight): How many staff vacancies there are in the Child Support Agency. [55492]

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): When expressed as the equivalent number of full-time posts, the latest available estimate for staff vacancies in the Child Support Agency is 798. At the end of March, the agency had just over 12,000 staff. That gives a vacancy rate of 6 per cent. We are taking several steps to fill those vacancies.

Mr. Turner: If there are so many vacancies, why does the Child Support Agency, like many other Government agencies, refuse to consider people over 65 who apply for jobs with them? Instead of waiting for Europe to direct the Government to do what is clearly right, why do not Ministers end Government age discrimination?

Malcolm Wicks: Many companies and public services have vacancies, not least because unemployment has

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declined—by 48 per cent. in the hon. Gentleman's constituency. We are taking several steps, which include recruiting and promoting opportunities for evening work and family friendly employment. I acknowledge that there is a debate about ageism and appropriate retirement rates. That will continue in future, because as hon. Members have pointed out earlier, we are all getting older.

Mr. Bill O'Brien (Normanton): There will be a greater demand for staff at the Child Support Agency, and vacancies will increase when the reforms are introduced later this year. The reforms introduce two standards on maintenance payments. One is the new rate of 15 per cent. and the other is the old rate of 30 per cent. That will create a greater anomaly and more staff will have to be recruited to deal with it. Will my hon. Friend address that?

Malcolm Wicks: I do not recognise that the reforms will lead to more staff. We are simplifying the formula for child support and placing greater emphasis on enforcement. It was pointed out earlier that hon. Members of all parties are worried about absent parents who donot understand their obligations. We are therefore emphasising enforcement.

I pay tribute to the staff of the CSA who, in the past five years, have seen maintenance increase from£400 million to £800 million. That is a credit to them.

Dr. Phyllis Starkey (Milton Keynes, South-West): As the Minister said, the new formula will increase the efficiency of the staff of the CSA but will it better take account of cases in which the care of children is genuinely shared 50:50 between the parents, especially as 100 per cent. of child benefit has to go to one parent?

Malcolm Wicks: Yes is the short answer. Some children are brought up by both parents and we want to encourage that. The formula therefore takes account of it.


7. Mr. Hugo Swire (East Devon): If he will make a statement of the number of final salary schemes that have closed since 1998. [55493]

The Secretary of State for Work and Pensions (Mr. Alistair Darling): Since 1998, about 4 per cent. of known defined benefit schemes have notified the pension schemes registry of their closure.The overriding issue is how much is being saved towards a pension. The fact is that most people are not saving enough towards their retirement. Therefore, building on the reforms we have already made, we shall be making further proposals to help individuals and companies to make provisions for retirement. As I said at the previous Work and Pensions Question Time, I expect to publish our proposals this autumn.

Mr. Swire: We are now witnessing the demise of the final salary pension scheme with the day-to-day closure of more and more of those schemes. Do the Secretary of State and his Government accept that the increasing burdens they have placed on such schemes since 1997 include the disastrous abolition of advance corporation tax

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relief, which is responsible for the precarious situation in which many of today's and tomorrow's pensioners find themselves?

Mr. Darling: No. Interestingly, the chairman of the National Association of Pension Funds said in his recent address to the association's annual conference, at which I spoke, that he and his association were not calling for a return to the old ACT system. When we made the changes four or five years ago, we also cut corporation tax. It is now at 30 per cent., something that the party of which the hon. Gentleman is a member never managed to achieve in its 18 years in power. That has helped investors, including pension funds.

The real reason why companies are facing difficulties with their final salary schemes is, first, because of increased longevity, which means that costs are rising; and secondly, because the stock market has fallen quite dramatically, for reasons of which we are all aware. That is putting pressure on them. Their contribution holidays have ended and so on. The annuity rules have nothing to do with the final salary schemes. I can understand why the hon. Gentleman personally may want to see some changes: people in the top 5 per cent. of the income bracket may gain from them. However, the majority would not.

As I have said, we want to build on the reforms that we have already made. We intend to bring forward proposals this autumn, which will build on the recommendations from the Sandler and Pickering reviews. They will help companies and individuals to make better provision for their retirement.

Mr. John McFall (Dumbarton): Does the Secretary of State agree that the flight from final salary schemes is down not to FRS17 or the Government's inaction but to the almost £30 billion fall in equities in the market, as indicated by Boots, which moved from equities to bonds? Recognising that there is a £27 billion shortfall in savings, will he take the opportunity to ensure that companies that are not performing as they should by their employees close the savings gap? Otherwise, in future, many pensioners will be in penury.

Mr. Darling: My hon. Friend is right that there is a savings gap. Whether it is £27 billion or something near it, no one can be sure, but what is beyond doubt, as I said earlier, is that most people are not saving enough for their retirement. One of the measures that will help will be to strip away some of the unnecessary regulation in the pensions industry.

We have reached the stage where the buying of pensions has become so complex that even when people want to get a pension and are seriously thinking about making provision for themselves, they are sometimes faced with a five or six-hour selling process. That is why about 10 days ago I advocated setting out perhaps a small range of stakeholder-type products suitable for pension savings. They would be simple, regulated products but the selling of them would not be so bound up in red tape, as it is at present. All these measures are being considered by the Sandler and Pickering reviews. We will publish them in the summer and publish proposals in the autumn.

We are looking at other matters. There are measures that we can take to help individuals and companies to increase the amount of saving. I cite one example,

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in relation not to pensions but to ISAs. We were criticised heavily by the Conservative party when we replaced PEPs and TESSAs with ISAs. It is a fact that 12 million people, about one in four working adults, have saved £78 billion since ISAs were introduced. That shows what can be done with a simple, easy to understand product that removes some of the mystique and complexity that currently surrounds the selling of pensions.

Dr. Vincent Cable (Twickenham): Does the Secretary of State agree that the problem is not just that final salary schemes are closing, but that conditions for existing pensioners are often changed retrospectively by employers, and that trustees are proving ineffectual or insufficiently independent? Does he also agree that the arrangements need to be looked at afresh, to breed some confidence in this rather battered sector?

Mr. Darling: There has been criticism of some pension trustees. My hon. Friend the Member for Dumbarton(Mr. McFall) and my right hon. Friend the Member for Birkenhead (Mr. Field) asked about FRS17. In many cases, transparency in companies' affairs might have revealed serious problems with pension funds, particularly smaller funds, which tend not to be examined as efficiently as those of bigger companies. That is an example of how greater transparency and openness would help pensioners.

The hon. Member for Twickenham (Dr. Cable) will doubtless be aware that, as part of our general review of pensions, Brian Davis—former chief executive of Nationwide building society—is examining the operation and powers of the Occupational Pensions Regulatory Authority. When he makes his recommendations later in the year, I hope to build on them, and on the general recommendations put before the House to improve pension provision in this country.

David Winnick (Walsall, North): Does my right hon. Friend understand how deeply disappointing it is for long-serving employees to discover that, as a result of changes in their company's pension scheme, they will receive a significantly reduced occupational pension? That is totally unacceptable. What would happen if Members of Parliament and Officers of the House discovered late in the day that their anticipated pension was to be substantially reduced? This issue constitutes a clear injustice in the labour market, and I hope that my right hon. Friend will pursue the matter.

Mr. Darling: A company scheme involves a contractual agreement between the company concerned and its employees—it is not something that the Government underwrite or stand behind. Of course, the Government do pay money into contracted-out pension schemes and take certain steps through national insurance contributions and tax relief.

On the general proposition, as I have told the House on several occasions, we are considering a range of measures that will help individuals as well as companies. As I said, it is not the accounting standard that is causing the difficulties with certain pension schemes. Not all companies that are deciding to close their pension schemes have to do so; in some circumstances, they could

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continue with them. Long and hard thought should be given to their obligations to their employees—both current and retired.

Mr. David Willetts (Havant): May I invite the Secretary of State to agree with the hon. Member for Bolsover (Mr. Skinner)—sadly, he is not in his place—the hon. Member for Liverpool, Walton (Mr. Kilfoyle) and the many other of his colleagues who have signed early-day motion 1180, which expresses concern at the impact of advance corporation tax on the former registered dockworkers pension scheme? That early-day motion also notes that their dividend income has been reduced by 33 per cent., and that that income could have been reinvested, or provided higher benefits. Instead of the complacency that the Secretary of State has shown this afternoon, why does he not listen to his colleagues? They understand the damage that the tax increase is doing to people's pensions, and everything that their early-day motion says about the dockworkers pension scheme applies to every other pension fund in the country.

Mr. Darling: My right hon. Friend the Minister for Pensions has just reminded me that, under several of the privatisations that took place when the hon. Gentleman was a Minister and his party were in office, pension schemes were sometimes the biggest casualties. I had no idea that the hon. Gentleman has joined the campaign group to which he refers, and I am sure that they will welcome him as a new recruit.

On the hon. Gentleman's central point, I do not accept the underlying proposition that he attributes to the early-day motion—I have not seen it—tabled by my hon. Friends. The changes that we made to the corporation tax regime four years' ago were entirely right. If the hon. Gentleman was right to argue that they were the cause of current problems, one would have expected them to have occurred four years' ago, but they did not. The problems have been provoked by two factors: companies are belatedly waking up to the fact that beneficiaries are living longer; and, for reasons that we all understand, the stock exchange has fallen dramatically. That has concentrated minds in an unprecedented way. Those are the underlying reasons for the current difficulties, and it is the Government's job to ensure that we introduce proposals that can help individuals and companies. That is precisely what we will do later this year.

8. Mr. Mark Hoban (Fareham): If he will make a statement on the availability of occupational pension schemes for future pensioners. [55494]

The Minister for Pensions (Mr. Ian McCartney): It is estimated that occupational pension schemes are available to 16.4 million employees, or 66 per cent. of the total number of employees in Great Britain. Many of those employees who do not have access to an occupational scheme will have access to either a stakeholder scheme or the second state pension.

Mr. Hoban: I thank the Minister for his response. Will he ensure that one of the outcomes of the numerous reviews that the Secretary of State outlined in his earlier answers will be a legal and regulatory framework that will

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ensure that the decline in occupational pension schemes is reversed, so that more occupational pension schemes will be available to future pensioners?

Mr. McCartney: The whole purpose of the reviews is to ensure that we encourage people to save in a way that they have not previously, and that schemes do not suffer overbearing regulation or disproportionate costs. The difficulties of management of such schemes make it less likely that they will continue or even be set up in the first place. I would welcome the hon. Gentleman's views on the proposals when they are published. It is also important that we review proactively the role of the Occupational Pensions Regulatory Authority. It will be the first time that it has been reviewed since its establishment. The purpose of the review is to ensure that the body is recognised as one that represents the interests of pensioners when it considers the general problems of schemes or particular problems connected with the management of schemes.

Mr. Tim Boswell (Daventry): Will the Minister of State take any notice of the chairman of the National Association of Pension Funds at its annual conference less than a fortnight ago when he said:

Does not the Minister of State feel some regret now that the Budget last month made no reference to pensions or savings? In order to save the time of the House, I shall not invite him to read out the long list of companies that have changed their pension arrangements from defined benefit to defined contribution schemes. Instead, I invite him to name one company that has moved in the opposite direction in the past 12 months.

Mr. McCartney: I would prefer to have a proper debate instead of juvenile ping-pong over the issue. So far this Question Time, we have had an adult debate about the issues. The hon. Gentleman asked for a list, so I shall give him one. The companies in question include BAE Systems, BP, British American Tobacco, Diageo, Corus, the John Lewis Partnership and Tesco, among others. However, I do not rest my case on that list. This is the first Government in a long time to set up several reviews in partnership with industry, the outcome of which will be to strip out regulations and burdens on schemes—both continuing and those being set up. This is the first Government to introduce stakeholder arrangements and pension forecasting. All that is being done in partnership with industry and, with all due respect to the hon. Gentleman, it is a hell of a different picture now compared with when he left office a few years ago.

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