Corporate Insolvency and Governance Bill

Debate between Lord Fox and Lord Blunkett

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

[Lord Blunkett (Lab) [V]]

My Lords, it had been my intention to speak on the final day of Committee but, because of an administrative blip, my name went in at entirely the wrong time.

I am pleased that the Government have been prepared to move on this area, as they have on other parts of this complex and detailed Bill. Like my noble friend Lord Hain, I was the Pensions Minister for a time, at the time when the Pension Protection Fund was being brought into full operation. It built on the incredible work—unsung and unknown to many people—of my good friend Andrew Smith, the previous Secretary of State for Work and Pensions. The noble Baroness, Lady Altmann, was a lobbyist at the time. I remember the withering nature of her commentary on what we were doing. I cannot ever remember the noble Baroness giving us credit for anything, but now she probably thinks that, 15 years ago, we were doing the right thing. This is why I take seriously what she has said in relation to contingent assets and their likely disposal.

Consequent to what my noble friend Lady Drake said about the Pension Schemes Bill, can the Minister say whether, with regard to the legislation that is being brought forward by the Government to protect our crucial national infrastructure from the sale of assets which would otherwise be detrimental to our economy and to the supply chain, which has arisen from the experience of the last four months, there can be an interrelationship between the different pieces of legislation? That is so that we can be clear not only about the rules that are being applied and the power that would exist for the Pension Protection Fund if this amendment is passed but about how we can ensure that one piece of legislation relates directly to and integrates with another piece of the Government’s policy. If we can get them to act together, some of the fears that have been raised can be allayed.

[Lord Fox]

My Lords, I am grateful to all noble Lords who have spoken in this important debate. I am a signatory to Amendment 15 and I thank my noble friend Lady Bowles, the noble Baroness, Lady Altmann, and the noble Lord, Lord Hain, for co-signing it. I join other Peers in acknowledging that the Government have moved in terms of listening to the previous debate and going forward, but the issue that Amendment 15 seeks to address is a serious one. If this Bill went through without the sorts of assurances that we are looking for from the Minister, or remained unamended, that would create a huge issue for pension trustees all over the country. Never mind the ones that are going into insolvency—as the noble Lord, Lord Balfe, set out so eloquently, every single pension trustee would revisit every single pledged asset and would go back to the management of their sponsoring companies to ask for cash instead. I do not need to remind the Minister that cash flow is one of the biggest challenges facing businesses at the moment; it is actually cash that is the problem. To knowingly put in a measure that will drain profitable businesses of cash would be careless, and I do not think that that is what the Government are doing. I think this is an unknowing consequence of the Bill.

To be clear, this concerns assets that have already been pledged. When the Minister spoke earlier, he seemed to be referring to assets being pledged at the time of insolvency, but these are assets which have been pledged in lieu of cash. Given that, I am a little bemused by the idea put forward by the noble Baroness, Lady Neville-Rolfe, that the Pension Protection Fund would somehow be overreaching itself in seeking to protect these funds for pensioners and that it would be giving the PPF too much power. Rather, it is merely the power to protect assets that have been signed over to the pension fund. If they were not assets such as those set out by the noble Baroness, Lady Altmann—real estate and securities—then it would be money. I do not think that the noble Baroness, Lady Neville-Rolfe, is proposing that the courts should have the power to extract money from pension funds, so why should they not have the power to protect against judges extracting assets that have been put aside in lieu of money?

The noble Baroness, Lady Altmann, put a clear question to the Minister, one that I think is very apposite to this point. Does the PPF have the power to prevent judges extracting pledged assets from pension funds and putting them into the pool of assets for distribution to other creditors? If the Minister is able to stand up and say that clearly and unambiguously—for those Members watching remotely, it does not look like he is—there is no problem. However, if the Bill leaves this House unamended or without that pledge, this issue will become a very serious one not just for the pension funds of distressed companies but for every defined benefit pension fund in the country.