Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) Regulations 2020

Jonathan Reynolds Excerpts

Monday 7th September 2020 General Committees

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Thank you, Mrs Murray, for letting me appear as a late substitute in Committee. My hon. Friend the Member for Birmingham, Erdington (Jack Dromey), the shadow Minister for Pensions, has been unavoidably detained this afternoon. I am grateful for the chance to be here. I send my hon. Friend and his constituents my best wishes, and I am sure those of the Committee, after the very distressing events in Birmingham over the weekend. We are all thinking about that part of the United Kingdom today.

Organisations of all kinds face unprecedented challenges due to the impact of coronavirus. It is right for the law to change to reflect that. Recent figures suggest that Britain’s economy shrank by a fifth in the past quarter, and economists are warning us that we face risks of mass bankruptcies and job losses, particularly as Government support is set to be withdrawn in the coming months.

With that difficult context in mind, Labour supported measures in the Corporate Insolvency and Governance Act to help struggling businesses to remain open. We support the measures in the regulations to protect pension schemes when companies face financial difficulty, in particular by giving the Pension Protection Fund the ability to participate in the process. It is critical that the Government act to protect pension schemes at this difficult time.

The Minister is right to note the important role of the Pension Protection Fund in circumstances in which companies face financial difficulty. It is therefore crucial for the PPF to have access to, and influence over, the decisions about recovery plans in such circumstances. To that end, it is welcome that, further to assurances made by the Government during the passage of the Corporate Insolvency and Governance Act, this statutory instrument provides creditor and voting rights to the Pension Protection Fund, subject to appropriate constraints.

The Act, as was noted during its passage through Parliament, gives the Secretary of State considerable powers to intervene if restructuring plans and insolvency procedures are seeming to be abused to the detriment of pension scheme members. Will the Minister say a little more about the criteria to be used to assess the need for intervention? How will the Department for Work and Pensions stay vigilant about cases that may need its attention?

As I stressed at the outset, this is a period of unprecedented challenge to companies, as well as for partnerships and charities. We must all work to ensure that workers’ pensions are protected and that they fall under the protection and within the remit of the legislation that we are considering today, particularly in cases where their employers or former employers are in understandable financial difficulty.