Ford and Visteon UK Ltd

Steve Webb Excerpts

Thursday 12th December 2013 Commons Chamber

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I join in congratulating my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) on his work as chair of the all-party group and his perseverance over a number years in raising this issue, along with the officers and members of the all-party group, which is well represented today. Such unanimity across the House, across political parties and across parts of the United Kingdom is rare and is all the more telling for that. The House has spoken today with a single voice. Those who follow our proceedings, both in person and by other means, will have heard clearly the single view of the House of Commons.

As you will be aware, Madam Deputy Speaker, at the beginning of our proceedings your fellow Deputy Speaker relayed Mr Speaker’s guidance. We respect that guidance, of course. I am particularly conscious of the need to avoid saying anything that would in any way undermine or prejudice the case being brought by Unite the union and by individual former Visteon workers. We want to see justice done through due process. I hope the House will understand that my remarks are slightly more guarded for that reason.

We discussed this matter almost exactly a year ago in a debate in Westminster Hall that raised many of the same issues. In the course of that debate, I said that I was particularly conscious of the Visteon workers ending up in the Pension Protection Fund and, as hon. Members have said, finding that the pension they receive is not much more than half the pension they were expecting. With my hon. Friend the Member for South Basildon and East Thurrock, I met members of the Visteon Pension Action Group in summer 2012, and it was their individual case studies that made me acutely aware of the impact of the PPF cap on their entitlements under the scheme. As I explained at the time, the thinking behind the cap was to ensure that what I loosely call the “fat cats” of the scheme, the people right at the top, could not manipulate matters and still receive a full pension. That was why the previous Government introduced the cap. It was my judgment at the time, and it remains so, that the cap was having an unfair and adverse impact on people who had relatively large pension entitlements not because they had earned phenomenal amounts of money, but because they had given very long service.

During the debate, my hon. Friend the Member for South Basildon and East Thurrock referred to his constituent Mr Varney, who had about 38 years of combined service with Visteon and Ford, and my hon. Friend the Member for Maldon (Mr Whittingdale) referred to his constituent Mr Sharpe, who had served for 27 years. These are the sorts of workers potentially caught by the cap, depending—obviously—on their wage. I said in last year’s debate that we were looking at whether we could do something about that, and I am pleased to confirm today that we have acted upon that promise. The Pensions Bill, which is now in another place, provides that for those who have been members of a scheme for more than 20 years, the cap should be increased by 3% for each additional year they are above the cap. Obviously I cannot comment on individual cases but, in principle, someone who has served for 38 years would have 18 lots of 3% so a cap 54% higher than the standard cap. If they were still capped at that point, as it were, their pension would be 54% higher than it is currently.

Sadly, these things take time—the Bill has not passed the other place and when it has we will have to produce detailed secondary legislation—but I can assure the House that we intend these higher rates of payment to be in place in the lifetime of this Parliament and to apply from that date onwards. They will not be retrospectively applied, but they will apply to schemes already in the PPF, such as the Visteon scheme. I am aware that probably only 60 or 70 Visteon employees will be affected by this measure, but I hope that for them, who have suffered the biggest proportionate loss, this will be of some benefit.

[James Duddridge]

I fully support the payment protection being discussed, but if I follow the logic correctly, the Government are, in effect, paying for Ford’s failure to take moral responsibility. Will there come a point when the Government look to Ford to repay money they have paid out through the PPF?

--- Later in debate ---

[Steve Webb]

It is not the Government who pay for the PPF, but the rest of British industry. It is funded partly by the assets of the schemes in the fund and the investment returns on them and partly by a levy on schemes with defined benefit pension liabilities. I realise it does not change the issue my hon. Friend raises, but it is not the taxpayer who funds the PPF; it is other firms with ongoing defined benefit pension liabilities. The PPF does not form a judgment on the rights and wrongs of a firm’s conduct leading up to insolvency. That is a separate matter that might come up during the court proceedings.

During the debate, we heard that Visteon was spun off from Ford in 2000, before the present architecture—the Pensions Regulator and the PPF—was in place. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) asked whether these sorts of things could happen again and whether a hypothetical future firm could structure its affairs with a view to minimising its pensions liabilities and passing them on to the PPF. I can reassure her that part of the remit of the Pensions Regulator is to protect the PPF and hence other levy payers. For example, firms considering a corporate restructuring that would have implications for the covenant of their pensions scheme can seek pre-clearance from the Pensions Regulator, and the latter has powers to act if a corporate transaction has been undertaken with specific intent to weaken pension protection. The situation, therefore, is considerably different from the one pertaining in 2000.

The hon. Member for Ogmore (Huw Irranca-Davies) and my hon. Friend the Member for Castle Point (Rebecca Harris) described the workers who accepted the transfer from Ford to Visteon. The hon. Gentleman said they were not greedy or stupid, which of course they were not, and my hon. Friend said they were sensible and level-headed. It was the natural thing to do at the time: someone’s employment is transferred from one employer to another, they are given assurances about their pension and it is suggested they transfer it across. There are different accounts of exactly how the conversation went, but it was an entirely rational thing for people to do. There is no suggestion that people who made that decision acted inappropriately; they acted in good faith on the assurances given.

[Stephen Metcalfe]

One issue that arose about the point of transfer was that some were reaching the end of their careers within Ford but were still left obliged to transfer before—in one case, only three months before—they retired, only to find out later that they had been disadvantaged. Could the Government look at providing for those in the process of reaching retirement a buffer zone, whereby people do not have to transfer out of the fund into which they have put most of their earnings over their working lives?

[Steve Webb]

It is worth bearing in mind that, in all these cases, we are generally dealing with a trust—a pension fund set up as a trust has trustees—and with private companies, scheme rules and so forth. It is difficult to see how the Government could write a law that interacted with all those different aspects in a rational way. I take my hon. Friend’s point, as I, too, have heard about folk who worked only a few months for Visteon, yet transferred across their life’s pension rights with Ford—with very adverse consequences. I appreciate that that happened. It is quite clear that no blame or criticism could possibly attach to the workers whose pensions were transferred across; they are clearly the innocent parties in all this.

Prior to this debate, I re-read the transcript of our debate of a year ago. I was struck by the tone, which was slightly different. I do not know whether this was co-ordinated because I was not involved in those conversations, but I was struck that a number of hon. Members said that they did not want to drag Ford down, as they recognised that Ford was a key employer for this country and that many people who worked for the company were proud to do. As I say, I was struck that hon. Members were not trying to denigrate Ford, but were concerned that, if the matter remained unresolved, Ford’s reputation would suffer. I think this striking tone will have been noticed.

It was made clear during the debate that although Visteon was spun off as a separate company, there were close links between Visteon and Ford. My hon. Friend the Member for Enfield North (Nick de Bois) mentioned the nature of the relationship, drawing on his business expertise, while some hon. Members pointed out that new contracts were not signed. Reference was made to the fact that the long service award that Visteon workers received accumulated their Ford service, and there was Ford branding and all of that. Leaving aside the legalities, it is absolutely clear that the two companies were very closely interlinked; there can be no doubt about that.

During our discussions, the potential for Select Committees to look into this issue was raised. What Select Committees choose to investigate is obviously not a matter for the Government, but I am happy to repeat the assurance I gave a year ago that if any Select Committee—perhaps the Culture, Media and Sport Committee could find an obscure angle to get going on this—decided to take up this issue, we would be happy to put at its disposal the expertise of the Pensions Regulator, the Pension Protection Fund and my own officials to advise or guide in any such investigation.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) asked what the Government could do. At this point, I refer back to the motion, which “calls on the Government” to do what they can and use what influence they can to bring matters to a “resolution”. The court process is happening, so the legalities will be resolved one way or another through that.

Prompted by today’s debate, I asked my officials to contact Ford UK, which they have done. We have agreed that I shall meet Ford UK early in the UK and I shall take up the concerns that have been voiced. Ford and I have agreed that the spirit of that meeting will be one of constructive dialogue. I thought the best way I could reflect the spirit of today’s debate and the many excellent speeches we have heard would be to relay in person to senior executives of Ford UK the tenor of our debate and the views of the House. Almost uniquely, we have spoken with one voice. I hope that that reassures hon. Members. In addition to what they have done by properly putting their concerns on the record again, I hope that, with our proceedings being heard beyond this House, further steps will be taken on behalf of these pensioners.

[James Duddridge]

I totally agree that constructive dialogue will provide the right way forward. It is what everyone has been trying to achieve ever since the first debate on the issue. If that constructive dialogue does not produce the results we hope for, will the Minister consider seeking a meeting with his opposite number in the United States to see whether any political options across the pond could be explored to encourage everyone to do the right thing?

[Steve Webb]

At the back of my mind is a feeling that I would not want to meet my hon. Friend in a dark alley at night. I am not sure why I have that feeling. [Laughter.] My hon. Friend put his point forcefully. Given that representatives of Ford have agreed to meet me in a spirit of constructive dialogue, I shall leave it at that for now, but we shall clearly have to reflect on what further actions could be taken.

Finally, let me reassure members of the all-party parliamentary group that I shall be happy to report the outcome of my conversation with Ford UK to their office. Obviously I do not want to raise any false hopes—Ford’s position is well known, and I do not want to pretend that it has suddenly changed—but I am trying to engage constructively with the company, and I hope that the company will engage constructively with the House.