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20 Jan 2003 : Column 81continued
Adam Price (East Carmarthen and Dinefwr): We have heard a lot of talk about consensus. Perhaps the consensus that dare not speak its name but that is emerging is that successive Governments of all political colours have failed to provide adequate protection for current employees in cases of insolvency. We are almost unique in the industrialised world in lacking any protection for workers in those situations. I think that the Government now accept that if the guiding principle of the Goode committee on pensions law reform was to provide maximum security, the legislation based on it, the minimum funding requirement, has been an unmitigated failure in meeting that objective.
The Government have floated the idea of a mutual insurance system or a central discontinuance fund on a number of occasions. Indeed, they have commissioned research or consulted on those two options on no less than four occasions over the past five and a half years. At the time of the last round of consultation two years ago, the Government claimed that the responses received were overwhelmingly against mutual insurance or a central discontinuance fund.
That strikes me as a little curious and strange to say the least, given the fact that the Trades Union Congress, the Confederation of British Industry, the National Association of Pension Funds and Pensions Management Institute have all been lobbying for the introduction of a central discontinuance fund for the past 10 years. Indeed, when in opposition, the Labour party tabled an amendment, during discussions of what became the Pensions Act 1995, to create a central discontinuance fund. Unfortunately, that was conveniently forgotten when Labour won the election.
It strikes me that the Government cannot have it both ways: they cannot sanction an increasing reliance on private provision without providing adequate protection against the danger of fund collapse. It is no accident that in every country where widespread private provision exists, a central discontinuance fund or a mutual insurance system is an integral component of the pension system. As we have heard, since the Pension Benefit Guaranty Corporation was set up in America in 1974, the benefits of hundreds of thousands of scheme members have been saved from the failure of their pension funds.
The Government have said that they will look again at these ideas in the Green Paper, but even if they do improve provision and protection for future generations, that will not address the plight of former workers at companies such as ASW, as the hon. Member for Cardiff, West (Kevin Brennan) pointed out. The Minister has again ruled out any prospect of retrospection, but retrospection is precisely what happened in similar situations in the United States when the PBGC was established. More than 200 companies that had gone into liquidation were retrospectively brought under the terms of the relevant legislation.
Faced with a lawsuit on behalf of ASW workers who are in the ISTC, the Government must ask themselves whether they are prepared to send Government counsel into the courts to rob redundant steel workers of their entitlements under European law. That would be a new low for the Government. Instead, I hope that they will make it clear that they intend not only to provide real protection for future generations of workers, butas has been arguedto compensate in full the former workers who have been failed by the inaction of this Government and of previous Governments.
Lynne Jones (Birmingham, Selly Oak): I am told that I must finish by 7.10 pm, so although there is much that I would have liked to say, I will have to curtail my comments. Today's debate reminds me of one that my hon. Friend the Member for Birmingham, Northfield (Richard Burden) and I initiated back in 1994, concerning the Teampace pension fund. The directors of that company, Michael Spiers and Kenneth Shaw, were able to milk dry the pension funds of companies that they took over to such an extentand to their own benefitthat they decided to wind up the company, leaving the pension scheme £2 million in the red. During that debate, the then Ministera former Member of Parliament for Tattonsaid that that would never have happened if Goode's proposals for minimum solvency requirements had been in place, but as we have learned today, that that was not in fact the case.
I must also place on the record that the then Government were unable to deal with an application for those individuals to be disqualified as company directors because the Department of Trade and Industry did not have the resources to deal with the many claims arising from insolvency schemes. As far as I am aware, those individuals, whose activities verged on the criminal, can still act as company directors to this dayunless they have been caught with their hands in the till elsewhere.
It is disingenuousindeed, it beggars belieffor the Opposition to suggest that a major factor is the Government's decision to end tax credits. That may have a small effect, but given that more than £400 billion has been wiped off the value of stocks in the FTSE all-share index in the past couple of years, the taking out of the system of a few billion pounds a year through Government measures is not the major point. As the Financial Times said in its leader of 27 February
In putting forward in the Green Paper their exemplifications of what people might expect from pension schemes, the Government assume that the return on investment will be 6.55 per cent., which is 2 per cent. above their predicted rise in earnings over the long term. We do not know whether that is true. There will always be risks in a system that is based on stocks and shares. That is why, as I said earlier, I hope that the pensions commission will consider the interrelationship of the state system and private pensions. There is no virtue in having a set percentage of pensions provided by the state or by the private sector; what is important is the total amount of money that we save for our pensions.