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Alan Howarth: Would the Secretary of State go further than simply requiring consultation on the part of employers? Would he consider requiring them to give adequate notice before they close a defined benefit scheme and, in cases where they do close such a scheme, preventing them from using it for themselves?
Mr. Smith: Sensible and proper consultation must involve the giving of notice, so I am sure that the spirit of my right hon. Friend's suggestion will be taken into account.
Sir John Butterfill (Bournemouth, West) (Con): Did I hear the Secretary of State say that he would end the obligation for employers to provide AVCs? If so, I am very glad to hear it.
Mr. Smith: Indeed, I said that we would want to introduce amendments on that matter.
Mr. Willetts: The further amendments are obviously important, so can the Secretary of State tell the House
when he expects us to be able to see them, because we must have enough time to reflect on them before they are debated in Committee?
Mr. Smith: I would be pleased to meet the hon. Gentleman, Liberal Democrat Members and others to discuss how best to handle the matter in a timely fashion. I understand the impatience and frustration of the House when substantial as well as technical amendments—often necessary in Bills such as this—have to be considered. I want all hon. Members to have a reasonable period of notice and decent briefings in respect of the amendments so that we can debate them properly. I apologise in advance for the demands that that will make in Committee and on Report, but I believe that it is important to cover those further areas of debate. I do not think that any of our constituents would thank us, whichever part of the House we sit in, if we were to delay necessary measures or hold back the Bill.
I have read the Opposition's so-called reasoned amendment for declining to give the Bill a Second Reading, but I have to say that their arguments do not stack up. They advance four reasons for declining a Second Reading, which I shall answer in turn.
First, the Opposition say that there is no encouragement to save or for firms to keep schemes open, but what could be more important to encourage saving than the confidence that people are going to get a pension that they have saved for, with the protection against insolvency or fraud that the pension protection fund provides? Encouraging people to plan for the retirement that they want is the whole point of the improved information and advice set out in part 4, which I understood the Opposition supported.
Secondly, the Opposition talk yet again about a means-testing culture, so let us remember the big difference between the system that the Conservatives operated and what we are delivering through the pension credit. Under their system, there was pound-for-pound withdrawal of benefit for those with modest savings and occupational pensions, while the pension credit gives rewards for saving.
Thirdly, the Conservatives point to measures on simplification, but they should reflect on all the simplification measures that appear in the Bill—on nomination of trustees, on disputes, on scheme-specific funding and on proactive regulation, as well as the further simplification measures to which I have referred. Fourthly, they point to the estimated 60,000 people who have lost out through insolvency, but just as last week, they make no constructive suggestion as to what should be done. Again, we have seen stories spun in the press that they are going to support retrospection, but when it comes to making any commitment as to what they would do, none is forthcoming. Now that their shadow Chancellor has committed them to spending less than the Government, anyone who believes that workers would do better under the Tories than under Labour has forgotten their arithmetic as well as their history.
To conclude, if the Opposition decline to give the Bill a Second Reading, they are positioning themselves against extra protection for more than 10 million members of final salary pension schemes. They are positioning themselves against increased security,
against making it easier for companies to run schemes and against giving people more choice about when they retire. In short, they are against simplicity, security and choice in pensions.The Bill complements the other steps that we are taking to renew the pensions partnership such things as informed choice, much of which does not require legislation; the work of the employer taskforce in identifying and recommending best practice; the independent Pensions Commission in examining the question of compulsion for the future; and everything we are doing through pension credit and the new Pension Service to tackle pensioner poverty all have a crucial part to play.
In extending TUPE, putting a proactive and tough regulator in place, cutting through the layered cake of complexity, opening up new choices for retirement and, crucially, through the pension protection fund, the Bill provides a major step forward for pensions security and confidence, and I commend it to the House.
1.26 pm
Mr. David Willetts (Havant) (Con): I beg to move,
- That this House declines to give a Second Reading to the Pensions Bill because it fails to provide encouragement for individuals to save for their retirement or for companies to keep open existing pension schemes or start new ones and does nothing to mitigate the effect on the savings culture of the expansion of means-tested benefits in retirement; it omits measures permitting simplification and amendment of pension schemes' terms, abolishing compulsory AVC provision, simplifying anti-franking provisions, permitting people to continue working part-time for a company after retirement, abolishing or modifying Guaranteed Minimum Pensions, and new vesting arrangements; and further fails to provide help for the estimated 60,000 people who have already lost all or most of their pension entitlement.
I welcome the opportunity to set out my party's approach to the Pensions Bill and the wider pensions crisis. We tabled the reasoned amendment because it is a most unsatisfactory Bill. One reason is that it has taken so long in coming. At least we now have a feeling of relief that it has finally appeared. The minimum funding requirement, which it replaces, has been under almost continuous review since December 1998. The Pickering inquiry was set up in September 2001 and we had a Green Paper in December 2002.
We have heard today that important provisions that are not in the Bill before us are still to be added. The Secretary of State was suitably apologetic about the various aspects that will require further amendment, but I have to say that he has consulted on these matters for years. He is like an ill-organised teenager who knows that the exam has been due for years, but is still in a panic when he suddenly realises that he has to sit the test in few days' time. The Bill manages to be both late and panicky—an unusual combination, but that is what we have before us.
The Bill is very long, but it also contrives to be, on close inspection, sadly lacking in the substance and detail that we require properly to appraise it. Many of the clauses set up frameworks and committees or appoint bodies, but lack crucial information about the substance of the key provisions. There is much on administrative mechanisms, but little on the tough
choices that any Government have to take in tackling a crisis as serious as the one we now face. Inside this rather fat Bill, therefore, is a rather thin Bill trying to get out. It has surprisingly little in it, and Ministers cannot expect the House to do its proper job of scrutinising legislation unless we receive more crucial information. It is most disappointing, to make the point again, that the House will vote on a programme motion in a few hours' time, fixing a timetable for the Bill, when we have heard from the Secretary of State that we shall have to wait for amendments to be tabled on many crucial aspects of it.Let me turn to the measures at the heart of the Bill. Above all, there is the issue of insurance for pensions. We support the principle of pension insurance, but we are not satisfied that the Secretary of State has set out the correct way of implementing it. I wholly agreed with him, however, when he remarked that it is odd that we insure our holidays with the Association of British Travel Agents, that we insure our bank deposits, yet we do not insure our pensions. The principle of having some insurance for our pensions is wholly right and we fully support it.
It would be interesting to hear from the Secretary of State why, on his watch, the Government's approach to pensions insurance has changed so radically. In October 2002, the then pensions Minister his right hon. Friend the Member for Makerfield (Mr. McCartney), came to the House for an Adjournment debate on this very subject. I shall quote him at some length, because we need to hear from the Secretary of State exactly why the Government have changed their minds in the subsequent 15 months.
The right hon. Member for Makerfield said:
- "My hon. Friend"—
- "called for the introduction of a form of pension benefit guarantee. The Government have previously considered . . . schemes . . . Both issues of a central discontinuance fund and compulsory insurance were consulted on . . . Both options received little support. That is mainly due to two factors. First, the majority of schemes are well run in this country. Those who are members of schemes and the trustees who represent them were not supportive of the idea that they should top-slice their well run schemes to assist the underfunding of poorly run schemes."
The right hon. Member for Makerfield went on:
- "Nor was there any great support for the idea of a fund linked to an insurance-based system. An insurance system would have to be created to re-invest in the risk associated with it."
- "There was little support when we consulted on that."
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