Oral Answers to Questions

Debate between Gareth Snell and Lord Harrington of Watford

Tuesday 16th October 2018 Commons Chamber

[Richard Harrington]

I thank my hon. Friend for this question because it is absolutely relevant to our nuclear sector deal, which concentrates very much on the development of skills particularly for young people. I was most impressed on a recent visit to Hinkley Point C by how many young people are in training, particularly the increase in the number of young women involved in nuclear, and I know that will continue.

[Gareth Snell (Stoke-on-Trent Central) (Lab/ Co-op)]

T7. When will the Secretary of State be able to announce a sector deal for the ceramics industry? He will know of the benefits that can be brought to both Stoke-on-Trent and the industry with that deal, and if he is unable to give a date today, will he meet me so we can progress this issue, so that the next time I ask him in the House he can give me a date?

Mineworkers’ Pension Scheme

Debate between Gareth Snell and Lord Harrington of Watford

Tuesday 5th December 2017 Westminster Hall

[Richard Harrington]

The cost to the guarantor is a contingent cost. It could, in theory, be all the money—the billions in the pension fund. That is the only answer I can give, because, of course, that is what a guarantee is. If one guarantees a loan to a bank, to use the analogy I gave before, it is the whole thing. If the person who has borrowed the money pays back 25% of it, the guarantor pays 75% of it. The principle is exactly the same. However, the scheme in question has been a success, and I would argue, and I think the trustees would agree, that it is the guarantee that made that possible. All the other pension funds—I dealt with quite a few in my previous job—buy very low-risk Government bonds, all the time. They do it because of fear; obviously, they have got to pay money out. With their fiduciary duty they cannot risk it. That is one of the reasons that British pension funds do not invest in infrastructure and similar things as much as we would like. They cannot risk the pensioners’ money, because of the need for returns. A guarantee on all pension funds would transform the whole pensions industry, but of course the Government would then have a contingent liability of I do not know how many billions.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I do not think anyone is arguing that the scheme has not been successful. I am a coalfield MP and have many constituents with long-term health conditions that are the effect of their jobs. My hon. Friends and I are saying that if the scheme has been successful, the success should be shared by the people who benefit from the scheme, and not necessarily by the Government, who have been involved in a technical role, as opposed to being an actual part of the scheme.

[Richard Harrington]

I hope that the hon. Gentleman understands that the role is more than technical. First, the Government have also contributed a lot to the scheme. Secondly, the guarantee is more than just technical; it is a golden guarantee. That is a good thing—I ask the House please not to think that I am saying it is not, but it is more than just technical. The fact that the guarantee has not been called on may make it look far less important than it is. I want hon. Members and others who listen to the debate to know that a lot of successful investments were made because the trustees have had the security of the knowledge that the Government are standing by.

Surpluses are calculated during scheme valuations, which happen every three years, by the Government actuary. That is not controversial. The trustees are invited to give their views before conclusions are reached. There have been eight such valuations. I have set out the benefits of the guarantee during good times, but we must bear in mind the fact that future outcomes are not known. There may be very bad times ahead in the pension world. I do not know, and I hope not. If things turn out to be disastrous, and if investments turn bad—Members may have been listening to debates in the House about the European Union, and who knows what will happen?—it is for the trustees to consider the situation. It is for that very reason that a lot of general pensions will hold surpluses. Any volatility going forward would certainly affect the amount of money in the scheme. Taxpayers would then bear that burden.

There was a valuation in 2013, and pensioners were paid a bonus—a new bonus of 4% was given in March 2014. The trustees have subsequently been able to award those bonuses, so it is not as if the surpluses just stay where they are. However, I accept that it is the trustees’ job to be prudent. They have a fiduciary duty to consider the position. I have not met the trustees, but I imagine that for that reason some of them would err on the side of caution and say, “We can’t distribute the money,” because that is their fiduciary duty. However, the bonuses that are paid are very important. It is one of those things. Current arrangements have certainly allowed the trustees to implement a high-risk investment strategy, but I want hon. Members to know that because of that strategy the typical pensioner receives a pension that is 33% higher in real terms than they would have with a normal Government bond-type of strategy. It is not as if they do not benefit from it. The strategy is backed up by the Government guarantee, which can be called on at any time, on demand, based on the ages of scheme members. We expect it to run for about another 60 years.

I accept the points that hon. Members have brought up, and am happy to meet and go into further detail or discuss new stuff. I am very open to representations. However, I have looked at the matter in the limited time I have had since I have been in the job, compared the scheme with others, tried to assess whether the risk element, the guarantee and compensation are fair in all ways—the hon. Member for Blaenau Gwent mentioned that quite a lot of aspects are fair—and I have reached the conclusion that the existing arrangements in this case remain fair to all parties.

Question put and agreed to.

Oral Answers to Questions

Debate between Gareth Snell and Lord Harrington of Watford

Tuesday 27th June 2017 Commons Chamber

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

6. What estimate his Department has made of the future level of investment required in the UK’s gas storage facilities.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)]

There has been significant investment in the UK’s natural gas supply infrastructure over the past decade. It is highly complex, because we benefit from highly diverse and flexible sources of natural gas. They include: indigenous production from the North sea; six international gas pipelines with Norway, Belgium and the Netherlands; three liquefied natural gas terminals that can bring supply from anywhere in the world; and a number of modern, responsive gas storage facilities. We are confident that market-led investment will continue to deliver secure gas supplies, but I will continue to monitor the position.

[Gareth Snell]

I thank the Minister for his answer. The ceramics industry is a major employer in my constituency. It is very energy-intensive and heavily reliant on a secure supply of gas for business continuity. In the light of the announcement that the Rough gas storage facility is to close, what assurances can the Minister give the ceramics industry that the gas it needs will not run out or become unaffordable?

[Richard Harrington]

As I explained in my answer to the hon. Gentleman’s first question, we have a very diverse range of sources. Analysis conducted by the National Grid and others confirms that the closure of Rough will not cause a problem with security. I give the hon. Gentleman an undertaking to monitor this, with my Department, on a weekly basis.