Mr. Frank Field (Birkenhead)

2.8 pm

No great Department is a free agent in any Government. Under this Government, we know that the imperial power of the Treasury has an extensive interest throughout Whitehall, and especially in Work and Pensions, so we should congratulate my right hon. Friend the Secretary of State on what he has been able to bring forward today within the limits set on him.

I hope that we will have changed the Bill in some important respects before it passes into law, but I doubt whether we will be able to deal with the subject of my first caution. Although we cannot expect those on the Treasury Bench to acknowledge this fact publicly at present, we know that we do not have a satisfactory long-term policy on savings and pension provision. One of the reasons for that—it is a paradox—is because the Chancellor, in his proper enthusiasm to help the poorest pensioners, has concentrated help in the form of the minimum income guarantee and pension credit. If help continues to be concentrated in the form of a means test that stands alone with no other measures, it will undermine the long-term confidence of perhaps 40 per cent. of the population in providing for themselves. I do not believe that any free society can operate in the longer run if most working people know that it is not in their interest to save. At some stage, the House will have to return to the consideration of our long-term strategy on pension savings.

The Government expect to receive a report from their Pensions Commission. I appreciate that there might be some logic in believing that when the commission reports in July, although perhaps that will be delayed until the autumn, the Government will ask it to deliver a report on its proposals and suggestions for long-term reform a year hence—after a general election. My caution for those on the Treasury Bench is that the results of the first period of operation of the Pensions Commission, which is exclusively concerned with collecting a coherent set of data on long-term savings for the first time, might be so shocking to us and our constituents that the voters will not give the Government another year in which the commission may think of what fine schemes it would like to commend.

Let us consider what is happening in all our constituencies. The turnout of people below pensionable age at elections has fallen dramatically.

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Turnout is falling most gently among people who are approaching retirement age or beyond it, so the next election will probably be the first ever in this country in which the majority of people who vote will be pensioners. There will certainly be a majority of voters who are five years from retirement or retired. Although pensions do not play in the Gallup polls that are useful guide to all of us, long-term savings and security in retirement might be concerns below the surface that will have a joker-type effect when the ballot boxes are opened after the next general election. I make a plea to those on the Treasury Bench to think about long-term reforms. We need to back up the success of the Government's short-term policies of helping the poorest pensioners now.

My other three cautions relate to the Bill, and my first refers to the risk factor and its weighting when working out the levy. I make a plea to those on the Treasury Bench to take a totally different approach to working out the levy. The people who are most interested in seeing the scheme up and running are not employers, but our constituents who are members of pension schemes. I happen to believe the trade union line that pension savings are deferred wages. The logic of that position means that those who will benefit from a pension should pay the levy, which should be related to the number of years for which they contribute and the size of the pension that is being insured.

It would not be wise to try to put a risk-based levy on employers, especially given what the Secretary of State said about that possibly taking a firm's credit rating into account. If we go down that avenue, the markets will eagerly wait for the Government to approve the publication of the risk-based levy, after which they will start to punish firms with a low credit rating on the Government's list. The need for an insurance scheme thus might become that much greater because more companies could be driven over the edge as a result of the publication of the information than would otherwise have been the case. I know that such a change to the Bill would be large, but I ask the Government to determine whether there is an alternative way of raising the required funds—we all agree that they are necessary—for an insurance-based scheme before we reach Committee.

My next caution relates to the loss of pensions, which many of our constituents have already suffered and that many more may suffer before the Government's scheme comes into operation. I agree with all those, especially Labour Members, who have said that if the Secretary of State fights his corner in government and comes forward with a scheme to compensate people who have already lost their pensions—I hope that he will be able to do that—all hon. Members will have a duty to ensure that none of us use that scheme to try to ensure that our favoured group is covered.

I was disappointed by Opposition Members the last time we discussed the matter because they immediately jumped up and said, "What about Equitable Life?" I declare an interest because I saved with Equitable Life. That was a foolish decision, in retrospect, but no one made me save with Equitable Life. We are talking about our constituents who, as a condition of employment, were made to join their pension schemes. Even after that

requirement was dropped, most people in pension schemes did not know that the Government had changed the law.

The Secretary of State has given two outings to his view that just because assets are unclaimed, that does not mean that they do not belong to people, so perhaps we should not touch them. Most people in this country know what their income is, and the Chancellor thinks that it is totally proper to tax us. If we agree to that, surely we can start to consider unclaimed assets that go back more than 100 years. I know that several Scottish Members are slightly jumpy at the thought of placing a levy on unclaimed assets in case they mistakenly own some, but given that some go back 150 or 200 years, we can start at the end of the queue and work forward. I make a plea: let us not try to impress any proposals on the Secretary of State unless we are prepared to suggest where the money would come from.

My last plea is about parking pension liabilities, which have already been touched on. However, before I move on to that point, may I say that I am sure that the my right hon. Friend the Secretary of State picked up the mood of the House when hon. Members discussed meting out justice to our constituents who were forced to save yet now face the horrendous prospect of a retirement with little or no pension? I want to strengthen my right hon. Friend's hand in the negotiations in which he will be involved. If the Government are unable to introduce suitable measures on Report, I hope that my right hon. Friend has picked up the feeling that at that stage, while the rest of the Bill may be secure, the Government might find difficulty in holding to their line when the vote takes place. Even if we do not manage to persuade the Government in this place, there is the revising Chamber. I do not say that in a threatening way. However, my right hon. Friend faces some tough negotiations and we all want him to be in as strong a position as possible when he takes on the powers that we are discussing.

The last issue and caution is whether, on Report, we can put into the Bill some measures that prevent unscrupulous employers from trying to park their

pension liabilities in companies that then sink. I say that because last week I was debating the impact of the actions of a firm in Birkenhead. Although that firm paid all its insurance to Chesterstreet Holdings to cover its workers on asbestosis claims, Chesterstreet Holdings decided that it would leave all its liabilities for asbestosis cover in its main company. It took away all the said firm's profitable business and placed it in another company. That company still trades. Many constituents suffered considerable shock and alarm when the insurance cover for asbestosis went down with what was then nearly a cardboard firm.

I hope that the Government will be open to comments and suggestions about reform from us all when we come to consideration on Report, to ensure that those employers who want to rid themselves of their pension liabilities and then continue trading in another guise cannot do so. We must somehow link the responsibilities that are built up to the company that collected contributions and invested them on behalf of employers.

This is an important day for the Secretary of State and his team. I thank them for the huge amount of work that they have done to get the Bill in its present form. However, I remind my right hon. Friend of my four cautions. I hope that before the general election we shall set out to the electors a choice about long-term pensions reform. A risk-based levy on employers might bring down some companies, and in that event people will point the finger at the Secretary of State. Could we devise some way of preventing people from walking away from past pension liabilities, as Chesterstreet Holdings did with its insurance claims?

Lastly, before the Bill receives Royal Assent, I hope that the Government will give us the opportunity to ensure that those of our constituents who did everything that was required of them to save for their old age and who have been wickedly robbed of that inheritance will be given some justice before that date.