Pension Schemes Bill [Lords]

Pete Wishart Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

On resuming—

[Pete Wishart (Perth and North Perthshire) (SNP)]

On a point of order, Madam Deputy Speaker. I wonder if you could tell the House why there was the necessity for the further cleaning of the Chamber. I understand that this is the first time that this has ever happened. Is there anything in particular that the House needs to be informed about because of that arrangement?

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the hon. Gentleman for that point of order. We were asked to suspend the House just to ensure that there was a little bit of extra cleaning. I do not have any further information other than that, but I am sure that it is precautionary, and if there is anything further that Members need to be informed of, I am sure that they will be.

--- Later in debate ---

[Aaron Bell]

I thank the hon. Lady for that intervention. Yes, I think Mr Golding successfully pushed the Telecommunications Bill to the other side of the 1983 general election, but that election, as she may well remember, did not go well for her party.

This Bill makes pensions safer, better and greener. I will briefly turn to some amendments on each of those three topics. Amendments 2 to 5 are on scams. The right hon. Member for East Ham (Stephen Timms) acknowledged that those are probing amendments. I will not repeat the story that I told on Second Reading of my constituents who suffered from a pension scam—all hon. Members will have similar stories—but those scams are extremely destructive. As my hon. Friend the Member for West Bromwich West (Shaun Bailey) said, they often affect people who have no real experience of financial matters. At a vulnerable point in their lives, they can be taken advantage of, so I welcome the work that has been done, and I welcome the commitments that the Minister has made to work further in this area.

On the greener side of things, like my hon. Friend the Member for West Bromwich West, I cannot add much to the excellent speech by my hon. Friend the Member for Grantham and Stamford (Gareth Davies), who set out the reasons why the Government disagree with the amendment 16. It is an inappropriate use of the legislation. As my hon. Friend the Member for Amber Valley (Nigel Mills), on whom I intervened, said, the Government have other ways to make sure that companies meet those targets. We cannot ask pension trustees to make those fine decisions. I firmly believe that the Bill is a real step forward, but engagement, not divestment, is the way to proceed.

I turn principally to dashboards which, for me, are the most exciting part of the Bill, enabling the same sort of transparency, flexibility and, crucially, easy tracking of our pensions as we have all come to expect of our current accounts, credit cards and mortgages. We are in the information age, and we need to make that information accessible to people, particularly with all the stuff that we have heard in Committee and on Second Reading about the number of jobs and pension schemes that people have. Auto enrolment, in particular, enables people to bring their pensions into one place and perhaps to consolidate them, which is a real step forward, as it empowers people. As my hon. Friend the Member for Delyn (Rob Roberts), who cannot be here today, said in Committee, the key principle is informed choices. When we inform people about their choices, that can drive sensible decision making on, for example, consolidation.

The amendments that seem to circumscribe dashboards —for example, amendment 15, 8, 14 and others—are not necessary. More than that, they would be frustrated by the market. The Which? report that I quoted on Second Reading said:

“It is clear that even if the government was to decide that there should only be a single government-run dashboard, other private sector dashboards would continue to develop outside of the regulated market. These may rely on screen-scraping or other potentially unsecure forms of transmitting customer data.”

Alternative products are already springing up, and we cannot hold back the tide like Canute. We have to go where the customer is, as the Minister said when intervening on the hon. Member for Wallasey.

I do not think that we should try to buck the market in regulation. Instead, we should regulate effectively, and that is what the Bill does. I urge the House to reject the amendments, although I accept that they are well meaning. As many hon. Members have said, there is real agreement among us about how we should proceed, but I do not think that any of the amendments are necessary. I congratulate the Minister on the Bill, and I look forward to the safer, better and greener pensions that we all deserve.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I support new clauses 4 and 5, which I tabled with my hon. Friends. It is a pleasure to follow the hon. Member for Newcastle-under-Lyme (Aaron Bell). This has been a good-natured debate. We all have particular issues we want to raise in relation to the Bill, but everything has been presented in a compelling, interesting and mainly consensual way.

The pernicious impact of section 75 of the Pensions Act 1995 on multi-employer pension schemes, particularly plumbers’ pensions, must rate as one of the biggest pension injustices of recent years. The litany of devastating stories of honest, hard-working men and women who face crippling debts and liabilities, sometimes of hundreds of thousands of pounds, is simply heartbreaking. We heard another example today from the hon. Member for North East Fife (Wendy Chamberlain), who is not in the Chamber. I have had plumbers, including some in their 60s or even 70s, who have been forced to continue to work because of the effects of the scheme. They have been in tears describing to me what that will do to them and the impact on their life and health. They are on all sorts of support to try and get through the real concerns and anxieties about possibly losing everything, from their home and bank balance to their livelihood and sense of self. It has been a dreadful experience for anyone who has been caught up in it. These are people who have worked all their lives, earnestly and honestly paying into their pension scheme, believing that their retirement was safe, secure and something to look forward to, only for it to become a living nightmare.

I have been trying to get justice for these plumbers for some five years now. I formed the all-party parliamentary group on plumbers’ pensions in an attempt to get this addressed and resolved. Over the years, we have met successive Pensions Ministers, including the current Minister, with colleagues from all parties, we have secured debates in Westminster Hall and on the Floor of the House, and we have brought in a private Member’s Bill from my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown). We have even facilitated brainstorming sessions involving officials from the DWP, the pension providers, SNIPEF—the Scottish and Northern Ireland Plumbing Employers Federation—and some of the trustees, all without being able to address the fundamental problems associated with section 75 of the 1995 Act. Here we are, years later, with this still unresolved, and some plumbers facing the possibility of ruin for doing exactly nothing wrong.

I appreciate that the Government have addressed this responsibly, and even helpfully. I congratulate and thank them for the easements that have been introduced in the course of the past few years. But there has been no resolution to the central issue, and today there are still plumbers in all our constituencies who will be facing crippling debts and their retirement being made an absolute misery. We know that this is difficult to resolve. We know that the best brains in pensions across the country have looked at it to try to find a solution. My plea to the Minister is that we cannot give up: we cannot simply desert these people who have done absolutely nothing wrong. If we have not found the solution yet, we must keep on looking for it. We will keep on trying to ensure that we do get justice for these people, We cannot leave a certain section of our constituents in such a hellish limbo in being faced with these demanding constraints and pressures.

If I could find a couple of words that would adequately describe section 75 of the Pensions Act 1995, they would be “unintended consequences”. There is nothing wrong with section 75. It is designed to meet a few demands and requirements, and it is actually quite a sensible and elegant inclusion in the Bill, but the unintended consequences for these multi-employer pension schemes have been absolutely and utterly devastating. Since 2005, any employer who has left the scheme or prompted a trigger event is required to pay the section 75 debt. That debt is calculated on a buy-out basis that assumes that the whole scheme has been bought out by an insurance company, but more than that, the accrual value that the insurance companies would put on to it is real testament to that value. They are then required to pay part of the orphan liabilities of past employers who may have become insolvent or left the scheme before 2005 and who did not pay their own section 75 debts. This means that those who remain in the scheme are required to pick up the debt of others who have been able to leave it without that burden being placed on them. Under no circumstances can this be thought to be right.

Some Pensions Ministers—I give credit to the Department, which has looked at this very seriously—have gone the extra mile to try to have this resolved, but I want to mention one of them who was getting to the heart of it—Richard Harrington. Richard did a huge amount of work on this. He worked diligently on it, putting energy, resource and commitment into trying to find a solution. I am pretty certain that if Richard was still in government he would be closer to finding some sort of resolution. I have only had one meeting on this with the current Minister, but I detected an enthusiasm from him to try to get this resolved. I will overlook some of the comments that he made in Committee in response to the excellent speech by my hon. Friend the Member for Gordon (Richard Thomson). I hope that the Minister may take a generous view of some of our amendments, because they are actually very modest amendments that would at least start to improve the situation of those who are facing the biggest liabilities. There are only about 30 of them.

[Guy Opperman]

The hon. Gentleman knows that we have looked at this repeatedly, and I have met many of the individual plumbers, from Perthshire to Angus, Lancashire and beyond. He refers to my esteemed colleague Richard Harrington, who is no longer in this place. He put forward the Green Paper that looked specifically at this point and applied the full force of Government, and all the consultations on section 75. There were 853 responses, including 70 specific responses to the question regarding legislative changes on employer debt. Regrettably, as the hon. Gentleman knows, the vast majority sought no change to the employer debt position. That is the reason we are in the situation we are in.

[Pete Wishart]

I am grateful to the Minister for reminding the House of the work that has been done. I am fully aware of what was discussed in that Green Paper, and I am aware of the responses. I want to come on to some of the longer-term issues, because those were not really addressed in how this was looked at, but that was a decent attempt by the previous Minister to get to the heart of this and pull it together. I encourage the current Minister not to give up and to look again at our amendments—I am going to try to convince him of this; we will see how we get on—because they are modest amendments that would help people who are caught in this nightmare. They are not a total solution, but our new clauses would considerably help those who have been caught up in all this.

New clause 5 would simply permit employers in a pension scheme closed to future accrual to apply for a deferred debt arrangement provided that they meet all the other tests. It would support those who are still trading prior to section 75 being triggered to use the easements before the closure of the scheme to be included. New clause 4 would allow the flexibility to waive a debt in certain circumstances to allow an employer to exit from a pension scheme where the debt is below a de minimis threshold, which the new clause would set at 0.5% of the fund value.

Those are sensible and modest proposals that would not cost the world to enact and would leave the integrity of these pension schemes intact. We know that the Minister is likely to oppose them, but I hope that he has a think about it, and perhaps there are things that he can do in subsequent legislation based on what is proposed. I know that he recognises the difficulty in all this, but he will offer no further easements beyond those already provided for in legislation. He also says that the

“current employer debt system is intended to be equitable to all employers”––[Official Report, Pension Schemes Public Bill Committee, 5 November 2020; c. 122.]

and insists that schemes must be fully funded, but setting a de minimis write-off at 0.5% will have a negligible impact on any of these arrangements.

There are other multi-employer schemes where there may be issues. It is staggering that there have been so few issues with these multi-employer schemes outside the plumbers’ pension, but I say to the Minister that this is more of a ticking time-bomb than a sleeping lion. There are consequences to come. Government failure to get this resolved when they had the opportunity with plumbers’ pensions will come back to haunt them at some point in the future. Introducing easements and partial solutions is all very well, but if the central issue remains unaddressed, there will be consequences for everyone involved in these schemes.

I will never forget the meeting when I was first made aware of this issue. I was utterly horrified that this level of debt was stalking plumbers like some sort of malicious apparition. I said to them then that I would do everything possible to ensure that this was addressed. Five years later, we have not been able to do that. It is now all down to the Minister. He can do something to lessen this burden on honest, hard-working men and women, or we can come back here in a few years with this misery still in place and this injustice still not put right. I still hope that he will consider the amendments that we have tabled this evening.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I rise to address a number of issues. First, let me say that I fully support the amendments tabled by my hon. Friends—amendment 16 and others—on climate change. With respect to some of the comments that were made earlier, we need much more radical thinking on this if we are to see the types of fundamental shifts that we need in our economy, not just in this country but globally—recognising, of course, that pensions are invested globally—to achieve the kind of action that is needed to deal with the scale of the climate emergency. That will affect the generations to come, just as, if we do not get pensions right, the generations to come will not have the resources they thought they would receive.

I want to focus my remarks on new clause 1 and amendment 14, which show the importance of improved guidance and consumer protections, and the clauses in the Bill that relate to the valuations of pensions schemes. These issues all matter and the protections—many introduced on a cross-party basis—are so crucial because of the scandals and scams that many right hon. and hon. Members from across the House have referred to. A range of measures are needed to clear up the weaknesses in our pensions systems and pensions regulation, which have led to huge injustices.

I want to talk briefly about two injustices that have affected people in my constituency over many years: the Allied Steel and Wire pensioners and the Roadchef employees. I thank my hon. Friend the Member for Neath (Christina Rees), and my hon. Friends the Members for Birmingham, Erdington (Jack Dromey), for Oxford East (Anneliese Dodds) and for Stalybridge and Hyde (Jonathan Reynolds) on the Front Bench, for their work to support action on these issues, in particular the meeting that we had recently with Allied Steel and Wire pensioners from my constituency. I also thank the Minister, who has been in conversations about this case with my hon. Friend the Member for Birmingham, Erdington. I am grateful to him for agreeing to meet us to discuss it further. I hope we can find the time for that in the weeks to come, because it needs to be looked at. It is a historic injustice that has affected many, many people who have waited many years for it to be resolved. The Secretary of State said on Second Reading that we need to tackle all those who try to plunder the pension pots of hard-working employees, which was very much what happened in both cases.

The campaigners and members of the Pensions Action Group, which include many former Allied Steel and Wire employees, have explained clearly—I am sure it has been spoken of many times in this House—how they lost the pensions they put into and expected to receive in retirement. This has affected workers from across the country: not only former workers at the Allied Steel and Wire plant in my constituency, but in locations such as Sheerness in Kent and in other businesses, such as the shelving giant Dexion, which were also hit. Those workers were helped and supported by the financial assistance scheme set up by the Labour Government in the early 2000s. That was followed by the establishment of the Pension Protection Fund, which still exists today to step in to ensure workers’ accrued defined benefit pensions are safeguarded when employers collapse. A fundamental issue, however, is that under the terms of the protection scheme, pension income based on service prior to 1997 is not eligible to be increased in line with inflation, unlike post-1997 service. The pension income of 140,000 workers who built their pension pre-1997 has not been protected from rising consumer prices.

I want to name the individuals who have campaigned resolutely on this issue for many years: John Benson, Phil Jones and many others. Alongside other Members, I have been with them to Downing Street and elsewhere to take their case. Essentially, they have devoted their lives to making steel, making this country great and supporting our infrastructure projects, yet they have been denied dignity in their retirement. Tragically, many are sadly passing away without having received what they were entitled to. They point out, quite rightly, that the type of restrictive legislation that has existed around their circumstances does not apply to, for example, the pensions of Members of Parliament who were elected prior to 1997, many of whom have moved on to the other place. We need to think about justice and equity in all these matters, particularly as we enjoy very generous pension settlements.

Many financial assistance scheme members currently receive only 90% of their restricted pension. That was what was achieved by the scheme and the agreement under the previous Labour Government. Unfortunately, because of the lack of indexation many are seeing their actual income drop below the 50% redress required under Hampshire v. PPF in September 2018. I recently spoke to a number of them and asked them to explain how the situation had affected them and their families. We have heard today of many other such instances, which not only have financial implications but cause emotional and family strain. I want to quote some of their own words, because they bear strong witness to the reality. One worker, who left school in 1961, aged 15, and started working at the steel company, told me, “For some years, the company paid into the pension scheme. I myself in those early years did not contribute, but then the ASW pension scheme was formed.” The workforce were called to the canteen on a number of occasions for meetings with the company’s directors and told of the plan regarding the new pension scheme, which they were told had the backing of the UK Government. The workforce were given all sorts of assurances that “it would secure a comfortable retirement for themselves and their families, and everyone to my knowledge agreed this was the right thing to do.”

We then fast-forward to 2002 when shift teams were called to the conference room and told by one of the receivers that the company would close and they would lose their jobs. One colleague had tears rolling down their face. The receiver told them, “The pensions we had saved and worked for were safe as they were not touching those funds”. One worker said, “I went home after my shift had finished and told my wife I had lost my job but the pension was safe, only to find out days later that there was a shortfall and that we could lose in the region of 85% of the pension. It put me on the verge of a nervous breakdown, and at one point I thought I would go over the edge. After all those years working in heavy industry with noise, dust, fumes and unsociable hours, I have nothing to look forward to.”

Unfortunately, I could recount case after case from Allied Steel and Wire pensioners. It is only a matter of natural justice that, as well as ensuring that such scandals never happen again, as measures in the Bill seek to do —and as much reform since that time has attempted to do, to ensure guidance and protections—we must remember those who did not and will not benefit from these changes. I look forward to discussing that case with the Minister.

Many Members across the House have signed early-day motion 802 on the Roadchef scandal, which has been going on for nearly 30 years and has involved 4,000 low-paid workers who saw millions illegally transferred from their funds and then £10 million taken in taxes. I express my sadness at the recent death of my constituent Tim Warwick, who was the company secretary who exposed the Roadchef shares scandal perpetrated by the former chief executive. I pay tribute to the former Member of Parliament for Monmouth, Huw Edwards, and the GMB trade union—I declare an interest as a member of the GMB—who have campaigned on this issue for many years. Sadly—and as we saw with the Allied Steel and Wire pension scandal—Tim Warwick and others died waiting for clarity from HMRC about what tax they or the trust should be liable for, despite Parliament’s clear intention that such employee benefit schemes should be tax free. Will the Minister therefore give us an update—either in his wind-up, or perhaps he could write to me—on the latest position of the DWP and HMRC on this matter, which has been of great concern to Members across the House? That is one of the injustices that led us to the point of needing to make the types of changes outlined in the Bill and the many amendments to it.

Many of the amendments and proposals put forward are about increasing the transparency, safety and security of our pensions, which we all want to see, as well as tackling scams and injustices in the pensions system. I add my support to the amendments tabled by my colleagues on the Front Bench and by my right hon. Friend the Member for East Ham (Stephen Timms), the Chair of the Work and Pensions Committee. In that spirit of tackling injustice, we need to recognise the damage done by robbing people of their life savings and of their and their family’s future. They paid in, they expected to get something out, and they have not. I mentioned two examples, but there are still far too many injustices for many pensioners. I hope that, in a spirit of cross-party working, the Minister and others will continue to try to find justice for all those affected, and particularly those affected by the ASW and Roadchef scandals.