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Occupational Pensions

Volume 454: debated on Thursday 7 December 2006

[Relevant documents: Sixth Report from the Select Committee on Public Administration, Session 2005-06, The Ombudsman in Question: the Ombudsman’s report on pensions and its constitutional implications, HC 1081, and the Government’s response thereto, Cm 6961; and Sixth Report from the Parliamentary and Health Service Ombudsman, Session 2005-06, Trusting in the pensions promise, HC 984, and the Government’s response thereto.]

Motion made, and Question proposed,

That, for the year ending with 31st March 2007, for expenditure by the Department for Work and Pensions—

(1) further resources, not exceeding £782,539,000, be authorised for use as set out in HC 2,

(2) a further sum, not exceeding £517,523,000, be granted to Her Majesty out of the Consolidated Fund, to meet the costs as so set out, and

(3) limits as so set out be set on appropriations in aid.—[Liz Blackman.]

I am glad to have the opportunity to introduce the recent report of the Public Administration Committee on occupational pensions following the report of the parliamentary ombudsman earlier this year. I pay tribute to my colleagues on the Committee: it is a great privilege to work with them, and I thank them for what they do to enable the Committee to function as it does. I also pay tribute to both the office and the officers of the parliamentary ombudsman, who have served this Parliament with distinction and continue to do so.

It is almost 40 years since Parliament decided to establish the office of ombudsman, which was then called the parliamentary commissioner for administration. We will mark the 40th anniversary in April next year. The original legislation, the Parliamentary Commissioner Act 1967, contained a provision allowing the ombudsman to report to Parliament in cases in which maladministration leading to injustice had been unremedied. That sensible provision enabled Parliament’s attention to be drawn to what were believed to be the exceptional circumstances in which a finding of maladministration leading to injustice had remained unremedied by the Government of the day.

We are dealing with what is only the fourth occasion in 40 years on which the parliamentary ombudsman has had to use that provision to report to Parliament. It is the first time—the only time; the unique time—that a case has arisen in which not only has the finding of maladministration been rejected by the Government of the day, but the injustice has remained unremedied. Both components of the ombudsman’s work have been set aside: the finding of maladministration and the description of how it might be put right. It is an important moment for the House when Parliament’s ombudsman is in such a position over an issue of this kind.

Does my hon. Friend share my surprise, and that of others, at the Government’s over-reaction? In asking “What must we do now to make good the shortfall in pensions?”, the parliamentary ombudsman merely requested that the best brains should be put together to try to come up with a better scheme. Given what some of those observing our debate would consider to be the mildness of that recommendation, was my hon. Friend as surprised as I was at the Government’s excessive response?

I was surprised and disappointed, as no doubt was the ombudsman, by the way in which her report was immediately set aside. I think she was particularly troubled by the fact that, in her view, the report had been misrepresented. She had not said to the Government, “You must sign a blank cheque straight away: that will take care of it.” However, I think she was even more upset by the rejection of her finding of maladministration.

The whole point of the ombudsman system created 40 years ago by this House of Commons was to establish an independent person to decide whether there had been maladministration on the part of a Department or body. The decision would be transferred from the normal exchanges to an arena in which someone could make it independently, which is what the parliamentary ombudsman has done.

We must not forget what this involves. More than 100,000 people—and many of us have constituents in this position—have lost some, or in a number of cases all, of the occupational pensions that they believed to have been secured. In human terms, that is what we are talking about. Many of us will know the real human stories behind the figures, the real human consequences as well as the financial loss, and the stress and health issues that have arisen from people seeing their pension, and therefore their ability to support families and to contemplate a decent retirement, disappear.

The argument centres on the question of liability. Again, to respond to my right hon. Friend the Member for Birkenhead (Mr. Field), the point is not that the ombudsman said that the Government had sole responsibility for what had happened. What was affronting was the proposition that the Government had no responsibility for what had happened. Whichever way we look at the evidence, which has been pored over endlessly by the ombudsman, our Committee and others, there can be no question but that there is a liability. There is some maladministration.

I am listening to my hon. Friend’s comments with extreme interest and some concern. Please will he clarify whether it is just this Government who are criticised, or whether the previous Government also come under criticism for the period between 1995 and 1997?

I am grateful for that point, which I was going to make towards the end of my remarks, but which I will make now. The reason that the issue should concern us all is that it involves this and the previous Government. It flows from the Pensions Act 1995 following Maxwell, and the protections that were supposed to have been put in place then. Although, of course, my comments are necessarily critical of my Government’s response so far, I also note that the Conservative Opposition have said that they are not prepared to spend an extra penny on helping such people. This is a House of Commons matter. It affects both major parties, and we both have an obligation.

I did not want to interrupt the hon. Gentleman’s flow, as he is doing extremely well, but it would not be fair to characterise the Opposition’s position in that way. I will develop that point later. Will he also clarify, however, that the minimum funding requirement, as set out in the 1995 Act, was weakened on more than one occasion under this Government?

I wanted to come to that point, which concerns liability and the denial on the part of Government, in their response to the ombudsman and to the Committee, of all liability in this area. The ombudsman herself explains most effectively why that cannot be right. First, she says,

“Government was responsible for establishing the legal framework governing both the regulation of the occupational pension system and also the funding framework relevant to each individual scheme”.

Secondly, she says,

“Government decided to design a system that would provide non-pensioner scheme members with only a 50 per cent. chance of securing their pension contributions if their scheme wound up—and took other policy decisions which directly affected the financial stability of schemes”.

Thirdly, she says,

“Government was responsible for approving the actuarial basis of the level at which each scheme had to be funded—and reduced that level twice”.

Fourthly, she says,

“Government designed a priority order which over-rode the discretion of trustees to apportion the assets of schemes fairly between all the members of a scheme in wind-up—and gave itself and financial institutions higher priority than pension schemes when the assets of insolvent employers were distributed. Public bodies thus received a proportion of the assets of insolvent companies that was denied to those companies' pension schemes”.

And fifthly, she says,

“Government prescribed what trustees had to tell scheme members about their pensions through what were known as the Disclosure Regulations. The Government decided that this should not include issues of risk.”

Did my hon. Friend’s Committee probe the ombudsman on why she did not look back to the short-termist approach that was developed in the Finance Act 1986, when caps were effectively imposed on surpluses? That was desperately short-termist and it has given rise to many of the problems that we face today.

I am sure that there are many issues that provide context and background to what we are talking about. What I am identifying—as the ombudsman has done—is a direct set of public responsibilities. This answers the question about whether these were simply private schemes. They were private schemes, but they were private schemes that sat within a framework of regulation.

I am intrigued by my hon. Friend’s reference to risk. I am sure that he is right that the Government did not prescribe that scheme trustees should advise their members on risk, but he phrased that remark in such a way that it implied that they were advised that they should not describe the risk of their schemes or any issues relating to that. I am a member of a scheme, and I can remember being advised by trustees of risk issues relating to it. Is my hon. Friend not mistaken in the way he expressed that point?

I was trying to say—again, this has been exhaustively analysed through the literature that was put out in relation to the protection framework—that there was no identification of the risk attached to the schemes on wind-up despite the fact that we now know that there was such a risk. That is clearly an admission.

I have listened carefully to my hon. Friend’s arguments, but it seems to me that in order to come to the conclusion that he has reached it is necessary that there be some causal link. Let me refer to a response by the ombudsman while giving evidence to my hon. Friend’s Committee. The ombudsman said that the causal argument is not in the report, and that the report does not say that the maladministration that has been talked about in terms of the leaflets caused the financial losses. Therefore, it seems to me that there is a recommendation advocating compensation while there is also an acknowledgement that the Government leaflets that are supposedly the basis for the argument did not cause the losses.

I think that there has been a misunderstanding that somehow this argument is about leaflets. I have not even mentioned leaflets yet. So far, all I have said is that the occupational pension schemes that operated during the period in question operated within a regulatory framework that had been set up through the Pensions Act 1995, and that from that certain implicit guarantees—and in some cases explicit guarantees—had been given to people post-Maxwell about the safety of those schemes. Indeed, words such as “safe” and “guaranteed,” and phrases such as “protected by laws,” were frequently used.

I wish my hon. Friend to explain something. Given that the trustee has a fiduciary duty generally to explain matters such as risk, just because it was not explicitly put out that they are required to do so—

Order. It is a courtesy to address the Chair and—more importantly, and from a practical point of view—to address the microphone.

I am grateful for that, Mr. Deputy Speaker; I fear that I must find a better place to sit.

Even though it might not have been specifically stated in guidance whether it was post-1995, does not a trustee have a general responsibility, indeed a fiduciary responsibility, to explain all levels of risk in any case?

Again, the evidence available to trustees has been exhaustively analysed. We took evidence from trustees, and it was clear from the advice that they were given that the schemes were entirely safe. There can be no dispute about what was said about the regulatory framework.

On the information that was given out, Members need to understand that the ombudsman is charged with deciding whether there has been maladministration. She took the Department for Work and Pensions’ commitment to the quality of information that it puts out and tested what happened in this case against its own standard. On the back of inherited SERPS and all that flowed from that—as Members will recall—the DWP described its commitment to information. It said that it would be

“accurate and up-to-date with no significant omissions”.

That takes us back to the question of risk. On the basis of advice given to it by its lawyers, it also said that

“where we choose to give information it is incumbent on us to ensure it is accurate, complete and can be relied on”.

That was the DWP’s own test, which it applied to its own information, and the ombudsman looked at the information put out about these schemes and their regulatory framework in relation to that test.

My hon. Friend is right to paint a picture of employees in the post-Maxwell era losing faith in their employers and, to an extent, in their trustees; of course, the same was also true of the post-pensions mis-selling era. However, were residents of North-West Leicestershire who were in the collapsed British United Shoe Machinery scheme not entitled to rely on information that was described in the initial leaflets as “impartial information”? The then Government

“told Parliament and the public in its consultations that it had produced materials to help inform members of the benefits ‘and risks’ from a source they could trust”.

Surely that was the lifeline that was thrown to many people, which disappeared beneath the waves.

Indeed it did, which is why, when the Government responded to what the ombudsman had said about their failings on the informational front, she was disturbed by the nature of that response. She said in her memorandum that it simply reinforced her finding

“that official information provided about the security of pensions was inaccurate, incomplete, inconsistent or unclear.”

She gives a concrete example that is worth attending to. She says:

“In paragraph 22.1 of the Government’s response”—

to her report—

“the Government refers to a leaflet issued in January 1996 as being ‘only a brief summary of the changes’ introduced by the 1995 Act and notes that that leaflet dealt with the MFR ‘in just four sentences’.

Yet, as my report shows, that same leaflet began by saying that these changes, including the development of the MFR, had been introduced as ‘the Government wanted to remove any worries people had about the safety of their occupational…pension following the Maxwell affair’. It then went on to state (with emphasis added) that ‘the minimum funding requirement is intended to make sure that pensions are protected whatever happens to the employer’.”

As the ombudsman says,

“That was not true.

This leaflet may well have given only a brief summary of the changes introduced by the 1995 Pensions Act; it may also only have dealt with MFR issues in four sentences. Yet it did both inaccurately.

Given the stated aim of the reforms it was describing and the context in which it was published, the leaflet’s brevity cannot excuse its material inaccuracy.”

Is my hon. Friend aware of the Government’s response to the ombudsman, who has not allowed us to see the full actuarial advice on which some of her comments were based? That means we cannot challenge how she arrived at some of her conclusions. Will he comment about the proposed £15 billion cost of putting right that wrong and has he had a chance to look in detail at the figures?

My understanding is that the ombudsman has said that, if necessary, she can supply the actuarial basis. I shall say something about cost in a moment.

The conclusion that I have reached so far is that the Government set up the framework of protection, after Maxwell, in the 1995 Act and then issued information about it. Those are the two bases on which people can legitimately say that they have been let down.

Like my hon. Friend the Member for North-West Leicestershire (David Taylor), I have many constituents affected by the BUSM collapse. One of them alleges that, in other countries affected, the distribution on wind-up was protected by law. Can my hon. Friend confirm that a loophole in the 1995 Act allows wind-ups in this country to take place without protection? While the leaflet is important, it is clearly the 1995 legislation that is the fundamental problem.

The easiest way to agree with my hon. Friend is to cite examples of companies that operated in different jurisdictions so that members of schemes were treated differently. One example is that of IFI Richardsons, which operated in the Irish Republic and in Northern Ireland. The company went insolvent and the pension scheme was wound up, but the workers in the Republic of Ireland had their full pension protected by Irish law. The workers in the same company in Northern Ireland lost their whole pensions. So it is the framework of protection that is fundamental, not whether a leaflet said this or that. The leaflet reflected what was believed about the framework of protection that had been established.

The hon. Gentleman makes a compelling and well informed case. He will be aware that I represent several Albert Fisher pensioners, most of whom have lost 22 years’ worth of occupational pension benefits. They tell me that they relied on those leaflets, and the parliamentary ombudsman found that they did so, but the Government argue that she did not prove that they relied on the leaflets. The Government are essentially claiming that my constituents are not telling the truth when they tell me that they relied on that information.

My argument is that the information on the leaflet matters, but only in the context of knowing that a framework of protection has been put in place.

As we are back on the subject of the accuracy of leaflets, paragraph 39 of the Committee’s report cites the Secretary of State for Social Security saying in March 2000 that

“The public rely on government information. They are entitled to be reassured that leaflets are accurate and comprehensive.”

My hon. Friend will agree with that.

Indeed. It is a basic principle of good public administration that leaflets should be of that character and that is why we are entitled to give attention to them.

The point about the lack of protection is dealt with by the Pension Protection Fund. The issue for the ombudsman is maladministration. My contention is that many of my constituents who lost their pensions previously because of insolvency are not entitled to anything. If the Government were to pay compensation to one lot, they would be asked, “How about all the others?” It seems to me that the right way to deal with the issue is to provide the protection that has now been provided through the Pension Protection Fund.

Indeed. I thought for a moment that my hon. Friend was confusing the Pension Protection Fund with the financial assistance scheme, but I realised at the end of her observation that she was not and that I was able to agree with her.

I am grateful to my hon. Friend for giving way to me yet again. I apologise for pressing this point, but it is crucial. He is making an extremely coherent argument about where liability lies, which is the central matter in this debate. He is also making it clear that the fundamental problem arises from the legislation, but will he explain once and for all the position of trustees? Does he agree that, instead of relying on four brief sentences or paragraphs in a leaflet, trustees should have sought professional advice? Does he accept that, had they done so, constituents of mine and other people would not find themselves facing another bleak Christmas?

There is a trustee responsibility, but the ombudsman explored the matter and I do not think that it can be argued that the problem can be laid entirely at the trustees’ door. The Committee took evidence from trustees, some of whom were trade union members. It is clear that they could not have known about the risk that existed when a company was wound up, as everything they had been told officially pointed in the other direction.

I want to reinforce that point. One of the people who came to see us was a trade unionist who was described as being a lifelong Labour man. He trusted what he had been told because a Labour Government was in charge, and for that reason told his trade union colleagues to continue to pay into their pension schemes.

That was very telling and memorable evidence, as was other evidence that we gathered from people directly affected by what happened.

The Government have responded by saying that they do not accept that there was maladministration and that they are not liable. They have made it clear that they would like to help, if possible, although they will not provide a compensation package because the problem is not their fault. It was in that spirit that the Government introduced the FAS and then, as time went by, the extension to it.

The Government have written to hon. Members to make it clear that the existing scheme is working very well—that it is doing its job and helping people—but it is worth explaining why it is nothing like a compensation package. I do not want to go into the costs that have been cited for either a full compensation scheme or the FAS, as they are much disputed. Instead, I shall list some reasons why the FAS is not the package that is required.

I begin by stressing that financial assistance under the scheme is not paid to many people. More than 10,000 people past pension age have been affected by the problems that have been set out, but scarcely more than 400 have been paid anything under the FAS. Most of those affected are not sure when, or if, they will get help; meanwhile, they continue to suffer the consequences of what went wrong.

In addition, the Government have overstated or exaggerated the amount that people will get under the scheme. They will not get 80 per cent. of the pension that they originally expected: instead, they will get only 80 per cent. of what is called the core pension, which is much lower. Among other reasons, that is because the FAS excludes inflation linking, has no tax-free lump sum and does not start until wind-up is finished.

Further, the whole FAS payment is taxed, whereas the scheme pension would have a tax-free lump sum. The member not only receives far less pension but pays more in tax.

Members who expected to retire at scheme pension age have to wait until age 65 and the conclusion of wind-up. There is no inflation linking. The value of the payments from the financial assistance scheme will decline over time. Within 10 years, the value will be cut by more than 20 per cent. in real terms. The £12,000 pension cap is too low and is not inflation-linked. The real value of the cap will wither and take away much more of people’s pension than currently appears from the headline figures.

I congratulate my hon. Friend on the work of his Committee, which has made a welcome contribution to this debate. Notwithstanding the ombudsman’s report, does he agree that by introducing the Pension Protection Fund the Government have acknowledged that protection was not adequate? Should not the financial assistance scheme provide at least similar benefits to those provided by the Pension Protection Fund?

Absolutely. The financial assistance scheme is not intended to be as generous as the Pension Protection Fund. One of the problems is having a separate scheme, with those deficiencies. I will say a little more about that later.

To continue with the deficiencies, spouse benefits are much lower than scheme benefits. Members of schemes winding up with solvent employers are excluded altogether. Those over 15 years from pension age are excluded. People in their 50s, who have contributed for more than 25 years, still have no means of redressing the loss and will get no help. Finally, the FAS does not provide any explicit recognition for the losses of the so-called guaranteed minimum pension—the second state pension that was lost. That turned out to be neither guaranteed, nor minimum. The complexities of the so-called deemed buy-back scheme are proving impossible to negotiate and access.

Earlier, my hon. Friend said that there was a moderate response from the ombudsman about the financial implications. Reference was made to not writing a blank cheque. However, the report also says that

“the Government should consider whether it should make arrangements for the restoration of the core pension and non-core benefits”.

It seems that there is confusion about what the ombudsman recommended and the Select Committee recommended. What is being denied is the accurate figure that the Government say is the implication of what is being recommended. My hon. Friend is not bringing that point out adequately.

As was pointed out earlier, what the ombudsman really said was, “Look, it’s not my job to tell you what kind of redress package to put in. That is not what I am charged with doing. I am charged with telling you that there has been maladministration, and there has to be effective redress package.” Then she said, as someone pointed out, “Put your best people on to it. Send them away to put together an effective package, combining public funding and other sources of funding.”

That takes me quickly and neatly to my next point. At the moment, the Government are saying that they are not liable, but what if their proposition was that they accepted that there had been some maladministration and that they therefore had some liability? Let us say that they accepted that they must put together a more effective package than they have so far. What might such a package involve? It might involve taking the contracted-out state pension back into the national insurance scheme for free, possibly issuing an interest-free loan to trustees to cover the costs. Something like that happened with Maxwell. It might involve setting up a trust fund to collect money and use unclaimed assets for a rescue scheme. We could try to encourage actuaries, venture capitalists, employers and the pensions industry to contribute, as well as investing taxpayers’ money.

If the guaranteed minimum pensions are taken care of, compensation for the rest of members’ pensions could be paid at Pension Protection Fund levels, as hon. Members have suggested. Alternatively, we could stick with a level of 80 per cent. of the FAS, but make payments tax free and linked to inflation. We could set up a mechanism for members who have suffered severely or who could prove that they read and relied on Government information to claim direct compensation from the Department for Work and Pensions.

In a moment.

Members who could have retired already should receive their pensions. It is obvious that if they had known about the priority order, they would have retired and secured their pension rather than stay at work and lose it. Tax-free lump sums should be paid, which would make a huge difference to many victims. Finally, spouse benefits could be improved beyond what is currently suggested. That package of effective measures could be adopted by a Government who were not committed to full compensation or full liability, but had come to think that they had some liability after maladministration and should be able to do much better.

For two years I tried to promote a private Member’s Bill that dealt with that very issue. I did not think that we should always assume that taxpayers should foot every bill, so I suggested that we use the unclaimed assets of banks and building societies. The response from the Treasury Bench was, “We cannot do that; they are not our assets”. What is my hon. Friend’s response to the fact that the Government are now going to use those assets to fund charitable activities in another special scheme? Surely the first priority of any moneys drawn down from those sources should be to people who have already lost, in effect, a large part of their life savings.

I thank my right hon. Friend for that. When things that are said to be impossible suddenly become possible, I get very interested. It is right to think about which people should have first claim on such moneys and I believe that the people we are talking about today should have that first claim.

I conclude by emphasising again what I view as the fundamental point. Whatever we say about this whole story, when we have traced all the events, read all the reports and expressed our sympathies, the fact remains that only the Government can organise a remedy. It is not a blank cheque argument. Whatever else we say, the truth is that only the Government can organise a remedy and only the Government can put together the package that we need. That is the argument: it is what the ombudsman told the Government and what the Select Committee told the Government. As I said earlier, both parties who have been in government and who have had a role in this should accept that they have an obligation to take the necessary action together.

I end by taking us back to where I started, which is what the ombudsman herself told us about the constitutional significance of the issue. After the ombudsman read the Government response to her findings and recommendations, she told us that she saw a

“worrying trend—that the Department for Work and Pensions, the body whose actions were under investigation, considers that it is appropriate for it to decide whether to accept the findings of the Ombudsman, which Parliament has decided should on its behalf investigate and adjudge the administrative actions of government bodies…It is one thing for the Department for Work and Pensions or another government body to reject recommendations that I may make, after proper consideration of the public interest, and other calls on the public purse, and any other relevant matters. That is a decision that it is entitled to take, was one envisaged by Parliament when it decided that I would not have powers to make binding recommendations, and would be one for which the relevant Department would have to account to Parliament…However, it is entirely inappropriate, within a system of scrutiny of the way in which public bodies deal with citizens, for those whose actions are subject to such scrutiny to seek to over-ride the judgment of the independent arbiter established by Parliament to act on its behalf—and for the Department for Work and Pensions’ response to be merely to say that it does not accept that judgment”.

She concluded:

“This goes to the heart of the Ombudsman system—and of parliamentary scrutiny of the executive—and is a matter on which the Committee may wish to reflect.”

The Committee has reflected and has reported to the House. I hope that the House will reflect on the importance of the issue and that the Government will reflect further and respond appropriately. We responded to Maxwell’s fraud. We responded to the pensions mis-selling scandal. We now have an obligation to respond to a failure of regulatory protection that has deprived tens of thousands of people of the pensions to which they were properly entitled.

I congratulate the hon. Member for Cannock Chase (Dr. Wright) both on a compelling speech in support of his Select Committee’s report and on chairing what must have been a difficult report to produce, as it has some uncomfortable recommendations for the Government. I also congratulate the Committee on not simply rubber-stamping the findings of the ombudsman, but going round the course again and satisfying itself about the integrity of her arguments.

Many Members want to speak in the debate, so I shall intervene only briefly. I do so for three reasons. First, like other Members, I have constituents who have been hit by the failure of their occupational scheme. Secondly, I believe the matter raises constitutional issues, which were touched on by the hon. Member for Cannock Chase at the end of his speech. Thirdly—perhaps uniquely, in relation to this debate—when I was Secretary of State for Transport, my Department had a similar run-in with the ombudsman, which was satisfactorily concluded and might offer a model for a way out of the impasse in which we find ourselves.

Like everyone else, I have constituents who have lost money in occupational schemes, and who are hoping for justice from the ombudsman’s findings. Former employees of Croydex, a manufacturer of bathroom accessories in Andover, are now members of the Lionheart pension scheme. In 2000, the scheme was funded 98 per cent. on a minimum funding requirement basis, but by the end of 2001 the amount was only 87 per cent. and the company stopped making contributions. Following some complex legal arguments, the trustees had to accept a final settlement that left the scheme with a deficit of £8 million. If they had not agreed, they would have been even worse-off, as the company, which had negative net assets, would have gone into receivership. None of the approximately 600 deferred members of the Lionheart scheme will receive any assistance from the financial assistance scheme, because Croydex continues to trade. None of them will receive any assistance from the Pension Protection Fund because the scheme entered wind-up before April 2005. Most will receive only 10 to 20 per cent. of their pension. One employee who had worked for the company since 1958 found out two years before his retirement that he would lose 90 per cent. of his pension. He will receive no assistance whatsoever.

My constituent, Mr. Hawkes, has campaigned tirelessly on behalf of these constituents and, along with others, he is understandably bitter about the recent letter that I and others received from the Secretary of State that made it clear that he may seek the costs of judicial review from the pensioners. Mr. Hawkes’s confidence in the democratic process, and that of others who have read the Select Committee’s report, will depend on how the issue is resolved.

My right hon. Friend has highlighted two important problems with the FAS: first, solvent employer schemes are excluded; and, secondly, anyone more than 15 years from pension age is excluded, which affects quite a few of my constituents. The Government said that the extension to the FAS would be worth £1.9 billion. Is my right hon. Friend aware that the present cash value of the extension is only £540 million? The Government have to be clear about what the extension is worth.

The Select Committee began to query some of the estimates that the Government have given about costs.

The second reason I wished to speak was to comment on the constitutional aspect of the situation. At a time at which neither MPs nor Parliament are held in high regard, this matter is a litmus test for the democratic process. We are all sent here to hold the Government to account. This is not the Opposition against the Government, but Parliament against the Executive. On the one hand, we have the unanimous conclusion of a Select Committee of the House that supports the findings of our parliamentary ombudsman, and on the other we have the Department for Work and Pensions, which is accountable, through its Secretary of State, to the House. The House, through its Select Committee, heard the Secretary of State’s defence and unanimously rejected it. My constituents know that if Members of Parliament have the will, they can compel the Government to think again. If we do not, their worst fears—and those of others who have faith in Parliament—will be fulfilled.

I have a third and final reason for speaking in the debate. As Secretary of State for Transport in the previous Administration, my Department was involved in a similar stand-off with the ombudsman and the Select Committee. I say this in defence of the Secretary of State: he is pulled two ways because although the ombudsman and the Select Committee may be pulling him one way, he might well have his accounting officer and his permanent secretary, and perhaps the Treasury and the National Audit Office, pulling him the other way, reminding him that he is accountable for public funds.

A letter dated 5 December was perhaps sent out in anticipation of the debate. It enclosed some Q and A—questions and answers—but there was no A to the most frequently asked Q: why have the Government rejected the Select Committee’s report? I found the letter rather dismissive of the Select Committee. Its unanimous recommendation is dismissed with the comment:

“While recognising some members disagree with that view”.

The case in which I was involved, which is referred to in the report, involved compensation for blight caused by the Channel tunnel rail link. I believe that it offers a way out of the current impasse. In that case, a satisfactory resolution was achieved—it is referred to on page 36 of the report. Initially, the Department rejected the recommendations of the ombudsman and the Select Committee on compensation for blight. At this stage in the proceedings, however, the Government thought again.

The letter that I wrote to the Select Committee on 1 November 1995 identifies the route that should be used on this occasion. I wrote:

“Despite the doubts recorded earlier, the Government is prepared to consider afresh whether a scheme might be formulated to implement the Committee’s recommendation that redress should be granted”.

I went on to write:

“The Government would of course consult the Committee as proposals are being developed. I should add that in agreeing to look again at a compensation scheme, the Government does so out of respect for the PCA Select Committee and the office of the Parliamentary Commissioner, and without admission of fault or liability.”

I then added two somewhat pompous sentences:

“While being prepared to look at the possibility of a scheme, I hope you will also understand my making it clear at this early stage that we will need to consider seriously the possible costs of a scheme, which cannot yet be established. As Chairman of the Select Committee whose remit is good administration, you will understand that I would not be discharging my responsibility to the taxpayer by offering an open-ended commitment on an uncosted basis.”

The Select Committee that made the recommendations that we are debating today is looking for a similar response from the Government. All that the Minister need do at the end of the debate is say my exact words—there is no copyright on them. If he does, he will begin to build a bridge between the Government and Parliament, instead of further widening the chasm, and setting the Government on a collision course with the House.

Finally, I offer a quote that the Minister might find helpful in his negotiations with the Treasury. Who said that there was

“clear and unmistakable evidence in the ombudsman’s report of five significant areas of maladministration by the Department…Many pensioners have…lost their life savings, and retired workers their redundancy payments…I must ask why we have had to rely on the ombudsman to confirm the mismanagement…and incompetence that was widely known about more than one year ago…Does the Secretary of State agree that the House will find it strange that he…continues to deny the Government’s responsibility for mistakes and does not even apologise for his Department’s role?”?—[Official Report, 19 December 1989; Vol. 164, c. 204.]

Those are the words of the Chancellor of the Exchequer, spoken in 1989. When the Minister writes to the Treasury, asking whether he can reopen the matter of the Government’s decision, he might like to pray in aid that quotation, to secure a response from the Treasury. When he makes his winding-up speech, I ask him to put to one side the line that his Department might have drafted for him, and instead to respond to the mood of the House, which is, as I see it, that the Government should think again.

In truth, it ought not to be me speaking in this debate, but my constituent Brian Wilson, who is one of the pensioners who had their pensions stolen. He has turned out to be an incredibly valuable source of knowledge to me. I suspect that virtually all hon. Members have someone like Brian Wilson on their patch. If they do not, they should count themselves lucky to have missed out on the problem, but they are also missing out on an education as to where we went wrong.

It is puzzling to understand why we should still need to hold such debates, because if we had followed a principle of “three strikes and you’re out”, the Government would already be out. The comprehensive and damning report from the parliamentary ombudsman sets out why the Government are responsible—not for the collapse of schemes, but for failing to set a rules framework for the schemes that made secure what the Government promised was secure. A report from the Public Administration Committee pretty much endorsed that conclusion, and it endorsed the call for the Government to intervene to set the matter fully, not partly, right.

On the deliberations held in the High Court, only this week, in the case brought by the pensioners, the Government received an almighty rollicking from the High Court judge for failing to produce an outline of their defence until what was almost literally the last minute. They finally did so on Monday night. The words of rebuke uttered by the High Court judge on Tuesday morning, and the grovelling presentation made by Government legal representatives, demonstrated how poor a position the Government are in. When successive independent verdicts ultimately trace the line of responsibility back to the Government, the Government cannot say, “We just don’t care about those independent judgments; we won’t accept responsibility for redressing the balance, whatever form that balance takes.”

It is with sadness that I approach our debate, because ultimately the courts will require the Government to accept the responsibilities set out by the ombudsman. As a result, those pensioners will be failed not just by the Government but by Parliament, which will be failing in its duty of scrutiny if it does not tell the Government of the day that they must accept responsibility, and if it does not introduce measures to provide full redress.

I am pleased that it has been established that the matter does not rest solely on the Government’s shoulders. In fact, it stems from the provisions put in place after the Pensions Act 1995, and the guarantees made by the Conservative Government that were endorsed when Labour came to power in 1997. It cannot be argued, however, that the Government fail to understand the nature of weaknesses and deficiencies that were built into the scheme that they put in place. After Maxwell, the actuaries advising the Government expressed doubts on several occasions about the weaknesses of the pension guarantee. The executive summary of the review of the minimum funding requirement published in May 2000 stated:

“there is a large and worrying gap between the level of security which the MFR test actually delivers and the public’s perception of what it will deliver”.

The report went on to say:

“We recommend that, in addition to the MFR test, there should be a security measure which is clearly disclosed to members…Members would be informed that the MFR test differs from a true security test and does not give 100 per cent. security, as they currently believe.”

Much of the confusion that has emerged in debates is rooted in that belief.

People who argue that the Government are responsible have never claimed that they were responsible for the failures of the schemes. However, the Government failed to put in place an adequate rules base for the functioning of the schemes; they failed to disclose to members the rules that would give preference to existing pensioners, rather than non-pensioner contributors; and they failed to disclose that the guarantee was not 100 per cent., or that members would probably reclaim only 50 per cent. of their funds.

There is no point quibbling about people’s distrust of the Government, and people’s wish to check information elsewhere, because in the post-Maxwell climate, Government assurances had enormous importance. We failed the Ronseal test—the notion that the product does what it says on the tin—because we told people that their pension was secure when we knew, because the actuaries told us so, that that was not the case.

I hope that I am not misrepresenting my hon. Friend’s argument, which is that the Government should pay compensation because they failed to implement an adequate regulatory framework to maintain the solvency of pension schemes. If one accepts that argument, there is a problem with the situation before 1995, when the regulatory framework was even weaker and a number of pension schemes went bust. Would the Government not have to consider compensating those people, if they were to accept that basis for paying compensation?

I do not accept that, because the Government said, “Your pensions are secure”, in the Pensions Act 1995. That may not have been true before 1995, and that legislation did not address the injustices of previous arrangements. From that point in time, the Government—and, through the Government, Parliament—were giving assurances to pension contributors that the Government knew to be untrue, because their own actuaries were telling them that they were. The actuaries have told us that successive Governments had a choice: they either needed to change the basis for the minimum funding requirement and make it do what it said on the tin, or they needed to tell contributors about the situation and give them the choice of making other provision. Successive Governments must take responsibility for the non-disclosure of those realities to contributors to pension schemes.

Will my hon. Friend clarify a couple of points? First, back in the mid-1990s, when legislation was introduced post-Maxwell, it was said that pensions would be safe from somebody doing something underhand to steal them, not that pensions would be safe if the underlying investments or the company supporting the pension scheme did not do very well. The second point—

We cannot rewrite history in retrospect in order to make it convenient for the present, when it was never true for the past. I have yet to find anyone involved in setting up those schemes who believed that all they were getting was a 50 per cent. chance of getting their money back. If Governments had said that to people, the contributors would have asked for the right either to get into another scheme or to bet their money on the horses at such odds themselves. That was not the guarantee that people believed they were getting as part of the post-Maxwell protection.

I shall briefly move on to the question whether that means that the Government must pay compensation. As various hon. Members have said, the Government could use a number of mechanisms to try to make good the entirety of the provision, so they do not have to step in and take full responsibility. In order to understand why pensioners whose pensions have been stolen are so aggrieved about the nature of the current debate, we need to be clear that the financial assistance scheme does not remotely cover that provision, and that the numbers do not stack up against the losses.

Although the Government claim that a total of £2 billion is being put forward to help 40,000 people, in truth the figures are somewhat different. A little more than £540 million has been committed over 50 years, which is about £12 million a year. The briefing issued by the Department for Work and Pensions before this debate points out that £1.5 million has been paid out since 2005 to about 450 people. That is a long way short of being a measure that deals with the stolen pensions of 120,000 or 125,000 people.

Is the hon. Gentleman aware that delivering that fairly meagre sum of £1.5 million has already incurred costs of more than £7 million, for setting up a completely separate organisation in York to administer the FAS?

I am not aware of that figure, but I am aware of the bureaucracy and the tediously, grindingly slow process of getting money out of the system at all. Having constructed a bureaucracy of that sort, it is helpful to follow the first law of holes: “When you’re in one, stop digging.” This mechanism is not remotely relevant to the scale of the problem that we have to address.

I want to outline the positive choices that I hope that Parliament will explore in providing a full package of redress. We must do this not only because we have a moral responsibility to those who have had their pensions stolen but because we have a selfish interest, in that we must restore the credibility of pensions provision if we are to have any chance of getting a future generation of pension schemes to be endorsed by the public, in the face of such cynicism.

Mr. Butler, a constituent of mine who has lost an £18,000-a-year pension, will not be a beneficiary of the FAS because he is too young. He is not the only one affected, because his friends, family and others now have no confidence whatever in current pension provision or in saving for the future, notwithstanding the Pensions Bill. There are generations who now lack confidence in us.

Absolutely. It is vital that the House understands the degree of cynicism that our response to the collapse of these funds has generated. I have had countless discussions in which whole families have taken part and someone has said, “I’ll tell you what advice I’m giving to my son or my daughter: when the Government say to you, ‘Put your money into a pension scheme’, I’ll say to you, ‘Blow it! Open the window and throw it out there and go and have a good time. At least you’ll enjoy it rather than allowing it to be stolen behind Government guarantees.’” If we fail to understand that cynicism, we are deeply damaging our prospects of bringing in new arrangements for stronger pension provisions that equate to the longer lives that we hope and expect to live in retirement. People will not play in a game that steals their life savings. These are acts of theft from people who have done what we asked. They have not been profligate; they have not blown the money: they have put it into schemes to make proper provision for their retirement. Those are the people whose cynicism we are having to deal with.

I heard exactly those words from someone in my constituency who was a victim of the failed Henlys pension scheme. Some people not only paid for many years into that scheme but transferred large lumps of other schemes into it, in some cases only months before it failed. They are advising their relatives and friends not to invest in the future but to spend the money on bricks and mortar, or even on holidays.

The hon. Gentleman is absolutely right.

Let me dash quickly through what I think we should be doing. What is required is a sum of, say, £150 million a year that needs to be put in place now and remain there for the foreseeable future. How could we do that? First, we could take a scoop out of the unallocated budgets for the Department for Work and Pensions for the next six years; it would not even be noticed. That would provide ample time to establish a trust fund, with whatever forms of partnerships in it, to make secure the ongoing provision of that £150 million.

Secondly, we could pursue the initial proposal of my right hon. Friend the Member for Birkenhead (Mr. Field) and use a sliver of the money that we propose to take out of orphan assets from banks, building societies and insurance funds. That would easily cover such provision.

We could consider our direct Government responsibilities and acknowledge that if we took a fraction of the £10 billion-a-year taxpayer subsidy that we currently allocate to higher rate tax relief, £150 million out of £10 billion would barely scratch the surface. It would not be much more of a pinch out of the £10 billion of taxpayer support that goes into the payment of contracting-out rebates. It is not as though we are short of existing taxpayer subsidies for doing the wrong things.

If we can afford to tax-subsidise the pensions of the rich and those who contracted out rather than remained within, we should be able to find the £150 million to do the decent thing for pensioners whose only crime was to believe us when we told them that their pensions were secure.

We are considering a worse problem than that caused by Maxwell, which affected 32,000 pensioners. The current problem affects 120,000 to 125,000 pensioners. Then, the Government acted quickly and properly. Today our response is partial, parsimonious and reluctant. My plea is to give Parliament the opportunity to decide for itself, on an affirmative resolution, whether we believe that we should exercise that responsibility to pensioners who acted on our assurances and were misled. If we fail to make that stand, not only will we be made to look foolish and shallow by the courts, but any future generation of pension schemes that we devise will simply fall off the table of credibility. We owe it to ourselves as much as to pensioners to redress the error.

I congratulate the Chairman of the Select Committee, the hon. Member for Cannock Chase (Dr. Wright), on the Committee’s report and his opening speech, which clearly set out the case for the prosecution.

All contributors to the debate so far have considered how we hold the Executive to account in this place. It is reassuring to know that at least one of the Select Committees on which the House relies is doing its job effectively. The hon. Member for Cannock Chase, who is an independent-minded and effective Chairman, deserves some credit for that because the nature of Select Committees depends much on the individuals who chair them. It is a telling achievement to have produced such a critical report on a cross-party, unanimous basis.

The Chairman of the Select Committee began his comments by paying tribute to the ombudsman and her hard work. I should like to do that on behalf of my party. I also pay tribute to those of all parties who have campaigned hard inside and outside Parliament on behalf of those affected by the loss of occupational pensions in the past few years. That applies not least to Ros Altmann, who has been a strong and powerful voice outside the House, and several Liberal Democrat Members, including my hon. Friends the Members for Chesterfield (Paul Holmes) and for Sutton and Cheam (Mr. Burstow), both of whom are present.

The debate is important for three reasons. The first is the most obvious. As the hon. Member for Nottingham, South (Alan Simpson) reminded us, the problem affects 120,000 or 125,000 people, who have lost savings that, in many cases, they built up over many years. As the hon. Gentleman also said, the debate is important because the Government’s handling of the matter will have a great impact on people’s confidence in saving in future. On Tuesday, the Minister for Pensions Reform will launch a White Paper on personal accounts and he will try to persuade individuals who have not been saving for their retirement to do so in future. But he seems to be launching that policy in a hole-ridden boat, because confidence in pensions has been eroded by a number of developments in the past few years. It has undoubtedly been eroded by what has happened to these occupational pensions and, most significantly, by the way in which the Government appear to have walked away from their responsibilities to the 125,000 pensioners involved.

A further reason for this brief debate today being so important was touched on by the hon. Member for Cannock Chase and by the right hon. Member for North-West Hampshire (Sir George Young); it is also central to the Select Committee’s report. It is that the way in which the Government have handled this matter is directly relevant to the role and credibility of the ombudsman process. We heard today how there has been only a small number of occasions—perhaps four or five, since the ombudsman service was established—on which Governments have ignored the conclusions of an ombudsman’s report. In her evidence to the Select Committee the ombudsman expressed her serious concern about the way in which the Government had decided to treat her report, following a highly consultative process that led to the information that she gave to the Department for Work and Pensions.

When my constituents, Mr. Barrett and Mr. Sloane, who are members of the Acroelectric pension scheme, read the report of this debate, they will want to know one thing more than anything else. In 1995, they were promised safe pensions that were assured, and they want to know when that promise is going to be fulfilled. They will also want to know, after the three counts of maladministration cited by the ombudsman and a Select Committee report endorsed by all its members, when they will get the justice that they and many thousands of other pensioners across the country want. When will the Government implement a sensible scheme to resolve this injustice?

I am grateful to my hon. Friend for raising those points. His constituents share the view of many people outside the House who have seen what the hon. Member for Nottingham, South called a “three-strikes-and-you’re-out” process in relation to the Government’s position on this issue. We find the Government still determined to resist the conclusions of a three-stage process. First, the ombudsman prepared her report in a way that fed back to the Department her developing conclusions, but that did not persuade the Government. Then we had the highly critical report from the ombudsman, and now we have a unanimous and extremely critical report from a cross-party Select Committee.

We could continue to rehearse some of the detailed debates that the ombudsman and the Select Committee reflect on in their reports, but that would be difficult to do in the detail that some of the issues deserve in the 50 or so minutes that we have left. It is worth reflecting, however, on the strength of the conclusions that the ombudsman and the Select Committee have reached. The Chairman of the Select Committee reminded us of the terms in which the ombudsman put her conclusions. She concluded that the Government had provided information to the people who had lost their pensions which was “inaccurate”, “incomplete”, “unclear” and “inconsistent”. It is hard to imagine a more decisive, unambiguous and critical description of the information provided by the Government.

The ombudsman’s report went on to state:

“I have found that maladministration was a significant contributory factor in the creation of financial loss…Nothing in DWP’s submissions persuades me otherwise.”

That was a conclusion from the first part of her process. She went on to reinforce the point about her own position when she said that

“Parliament has decided that it is my role—and not that of any party to a complaint—to determine what constitutes maladministration.”

That is a fair point. Many of us would feel that the Government had a responsibility, after a process in which they had been given every opportunity to comment on and refute the allegations and concerns that the parliamentary ombudsman was looking into, to take far more seriously the conclusions that the ombudsman has reached, and which have been reinforced by the Select Committee.

Despite being a cross-party body, the Select Committee has produced a report that echoes the criticisms of the ombudsman and, I believe, sides entirely with the ombudsman on every major point of dispute. It states:

“We agree with the Ombudsman that maladministration occurred. Government information about pensions was deficient and reasonable people would have been misled… the Government should have considered the Ombudsman's recommendations properly, rather than immediately assuming that they would place large burdens on the public purse.”

In language whose critical tone is similar to that used by the ombudsman, the Select Committee points out that it has conducted its own investigations and taken its own evidence. It also states:

“We believe that the Government is being, at best, naïve and, at worst, misleading.”

That is a very strong conclusion for a cross-party Select Committee to reach, particularly given that—as many of us who have served on Select Committees know—in circumstances of this kind Committee members representing the governing party are often under pressure to water down conclusions that are especially critical of the Government. The terms of the report and its conclusions show that there must have been a very strong conviction among the Committee’s members about the Government’s handling of the matter.

The Committee also reflected on the way in which the Government had decided to deal with the ombudsman’s conclusions. In the ninth of its conclusions and recommendations, it says:

“We share the Ombudsman's concern that the Government has been far too ready to dismiss her findings of maladministration. Our investigations have shown that these findings were sound. It would be extremely damaging if Government became accustomed simply to reject findings of maladministration”.

As the hon. Member for Nottingham, South said, the Government have undergone a three-strikes process involving the initial consultations with the ombudsman, the ombudsman’s report and a cross-party Select Committee report. In the light of that, I would expect the House and the Select Committee to be immensely disappointed by the Government’s response to the Committee. On the issue of the ombudsman’s position, they respond thus to the criticisms made of them:

“The ombudsman has, and will continue to have, the total and unqualified respect of the Government.”

It is one thing for the Government to respect the ombudsman; it is another thing for them to cast aside and ignore major recommendations affecting thousands of people when an ombudsman’s report has trailed through all the evidence, and has been reinforced by a Select Committee of the House. If the Government are going to take future reports by the ombudsman seriously, they cannot afford to give the impression that advice in such reports will be accepted in small cases in which small issues and small amounts of money are at stake, while conclusions with a much greater impact on Government finances can simply be cast aside.

In their response, the Government repeated the highly questionable—if I may describe it in that way—allegation, or assertion, that the financial assistance scheme is a good enough replacement, and the changes to it debated in the other place yesterday an adequate back-up, for the individuals who have lost their pensions. The response says:

“The Government agrees there should be a significant package of support and believes that FAS, as extended, constitutes such a package.”

The hon. Member for Cannock Chase gave a detailed explanation of all the ways in which the financial assistance scheme is deficient in relation to the Pension Protection Fund, and all the ways in which the headline statistics in the scheme relating to the proportion of pensions that people can expect to be returned to them are let down by the proportion of the total pension package that is returned. In the Committee’s report, the hon. Gentleman has also described all the ways in which the FAS is deficient. We debated the issue yesterday with regard to new regulations to improve the FAS. The improvements are welcomed by Members on both sides of the House, but they are still a long way short of adequate compensation.

The Minister acknowledged that the Prime Minister was questioned on that specific issue yesterday. In response to a question from one of his hon. Friends, it seemed that the Prime Minister left open the possibility of further changes and improvements to the scheme. He said:

“I agree that it is important to keep the terms of the scheme under review”.—[Official Report, 6 December 2006; Vol. 454, c. 301.]

I hope that that was not simply the sort of comment that Prime Ministers make under pressure, as a way of fobbing of their own Back Benchers who are concerned about injustices of this type. When the Minister responded to my question about the Prime Minister’s commitment, he did so in rather lukewarm and ambiguous terms. He said that the Government keep all their policies under review and will continue to do so. That was not particularly cheery and it rather made me think that the Prime Minister had been giving a brush-off rather than a hope of real improvement.

Perhaps we should not be so gloomy, however. The Minister looked unimpressed when the hon. Member for Nottingham, South described some of the ways in which the financial assistance scheme could be improved, and some of the ways in which a fairer compensation package should be delivered. I remind him that his predecessors were similarly unimpressed when the arguments for such a scheme were first made. At that stage, the Government did not want to give way on the issue. Eventually, they found the money to introduce a scheme, and then maintained that it was good enough. Yesterday, we debated the new scheme and the improvements to be made. Ministers always say that improvements to such schemes are unaffordable, and go on saying that until they are forced to make changes and improvements. The right hon. Member for North-West Hampshire made a helpful suggestion to the Minister, and demonstrated how Governments can make rather elegant U-turns if they want to do so. I seem to recall that the Government of which he was a member had a habit of making quite a few U-turns, not all of which were elegant, but he showed how Governments, if they wish to do so, can change their opinion.

Given the Government’s formal response, I do not have high hopes that today’s ministerial summing-up will take on board the criticisms made by the Select Committee and the ombudsman. I hope, however, that the strength of opinion expressed in the House during the debate, and the strength of opinion in a cross-party report, will cause the Government to keep the issue under review. I hope that the Prime Minister’s comments yesterday will allow further improvements to be made to provide a fair package of compensation to people who have lost their pensions under such circumstances.

Order. Approximately 17 minutes are left for Back-Bench contributions to the debate. Under the circumstances, may I ask hon. Members to make their contributions brief?

As a member of the Public Administration Committee, I am very pleased to speak in this debate. This is an important debate in two respects: first, in relation to the fate of the estimated 125,000 people affected; and secondly, in relation to the status of the ombudsman’s office and the Government’s response to her recommendations.

The Public Administration Committee, ably led by my hon. Friend the Member for Cannock Chase (Dr. Wright), interviewed many people who had suffered the loss of most of their pensions. They gave moving testimonies. As a Cardiff MP, my constituency was very much affected by the closure of Allied Steel and Wire, which, in 2002, went into receivership, resulting in 838 employees losing their jobs. In the summer, I met a large group of Allied Steel and Wire workers in my constituency, who told me how upset they were when they first learned that the plant would close, although at least they thought that their pensions were safe. Ten days later, however, they learned that they had lost most of their pensions. When the ombudsman’s report came out, they believed that they were saved. They thought that the Government always took notice of the ombudsman and that there would be a solution. The issue of the ASW workers’ pensions is still a running sore, and they continue to campaign on it to this day. They strongly believed that the ombudsman was an independent voice that the Government would heed, but that has not happened in this case.

On Monday, the ombudsman made a speech at a seminar at the constitution unit. She mentioned three prominent cases where there was disagreement but where the Government changed their mind and, to some extent at least, remedied the injustice. As a result of our debate, I hope that the Government will think again, and that they will look back to see how the Government did change their mind in those three cases and moved, at least in part, towards what the ombudsman recommended. There are now two outstanding cases, one of which is the occupational pensions issue.

I do not suggest that the Government have done nothing. The Pension Protection Fund has been mentioned and it will in future protect pensioners who fall into such circumstances. The Government have also set up a financial assistance scheme, but we have heard about that today and we know that it is woefully inadequate. I pay tribute to the hard work that has been done, led by ASW pensioners and by the unions Amicus and Community, to keep the issue on the agenda by taking it to the European courts and trying to get recompense for their members. The changes that were made to the financial assistance scheme—which must have been brought in partly as a result of the ombudsman’s report—improved things by extending the scheme to those within 15 years of retirement. That was a step forward. But there are still huge inadequacies.

I have constituents who miss out on the 15-year extension even though they paid into the pension fund for more than 30 years. One of my constituents, from Whitchurch in Cardiff, misses the 15-year extension by three months. It is impossible to underestimate the stress and anxiety that is caused to entire families.

Another constituent from Heath worked in the steel industry in Cardiff from the age of 15. He worked with ASW until the closure in 2002, contributing to the works pension scheme. He had previously contributed to the state earnings-related pension scheme, and he transferred to the final salary works pension scheme believing—under the guidance of the Government, as he saw it—that that was guaranteed. When he heard about the increased funding under the financial assistance scheme he wrote to me:

“To my utter dismay, I find that no assistance is available to me, since I do not fall into the category of being within 15 years of retirement, being 2 months short of the qualifying period. This is totally unjust, as up to the closure of ASW, I was employed in a very harsh environment, paying taxes fully, while doing my utmost to secure my future for retirement via the works pension scheme, as recommended by the Government…After 34 years contributing, I face a bleak retirement.”

The ASW pensioners whom I have met in Cardiff all believed that they were following the Government’s guidance, and they also believed that the Government would act on the ombudsman’s recommendations. This is a matter of trust, and the Government should address it. It will be good if the Minister confirms today that they will at least look at what can be done to address the important issues that have been raised.

Attention has been drawn to the ombudsman’s recommendations. She has not asked for the Government to fork out the entire amount. She was not asking for a blank cheque. As she said:

“I did not say, “Write a blank cheque”, but to organise a remedy.”

The Government’s response to the ombudsman has, however, been very disappointing. It states that

“the Government does not believe that the information issued by the Government can be regarded as having caused the losses”.

The Government cannot of course be blamed for the failure of the schemes. The failure was that member schemes were not protected by the Government in the way that the members believed they were. That is what they said in evidence to the Committee. They believed that they were protected. However, although we are not blaming the Government for the fact that these schemes have collapsed, it is in this context that they should look at the matter.

On the question of the leaflets, the Government reject the notion of maladministration because they believe that it was clear that the information on the leaflets should not have been taken in isolation. However, the ombudsman made it clear to us in Committee that the information did influence many of the people affected. She described individuals coming to see her and showing her the parts of the leaflets to which they had paid attention. There is no doubt in my mind that the ASW pensioners in Cardiff strongly believed that they had been following Government advice, and that, as far as they were able, they had looked into protecting themselves responsibly for their retirement.

Most of the past disagreements between the Government and the ombudsman have reached a satisfactory conclusion, and the ombudsman herself says that she sees no need for a power to make her recommendations legally binding. Surely Parliament can work out a solution to this situation. The evidence is strong and compelling. The Government should listen to what is being said in the House today and find some way of sorting out a grievous situation and running sore that will otherwise continue.

I think and hope that the Government have listened to the compelling arguments made by all those who have spoken this afternoon in this very important debate, which has sadly been cut short, not least by an obviously orchestrated campaign by the Government Whips Office to intervene in order, it would seem, to put the ombudsman on trial. However, I shall not waste time discussing that; the members of the public who have been listening to this debate, and the 700 members of the former Dexion scheme, will have heard that for themselves.

I pay tribute to the Chairman of the Select Committee and to the ombudsman for a brave report and for sticking to their guns. There is an old-fashioned phrase that is not heard much these days: natural justice. Their report is an attempt to secure natural justice for many of our constituents and their families and loved ones, who have had their pensions stolen from them.

I became a Member of this House only some 18 months ago, but approximately five years ago the campaign team for the former Dexion workers approached me and showed me the documentation that they had been given over the many years that they had worked for Dexion. They left that documentation with me and it did not take me long to realise that they had a very strong case, in the light not just of the recommendations and actions of this Government, but of those of my own Government in the period since 1995. The leaflets were flawed; that was my view before the election, and the reason why I have worked tirelessly to help them.

The 120,000-plus people whose pensions were affected are not just numbers. We have heard about the fantastic work that Ros Altmann has done on behalf of the campaign group, and I pay tribute to Ros today. These are ordinary people who were going about their business; in my company’s case, they had worked for the company for a very long time. They had done the right thing. They had paid into a Government-recommended, perfectly safe pension scheme, so that they would rely not on state benefit, charity or a handout from a scheme, but on a pension scheme that they had purchased on behalf of their families and loved ones.

Marlene Cheshire—a delightful lady—had to tell her husband David on the day he died that the compensation had come through and that everything was okay, so that he would pass away thinking that everything was okay for her, and that she had been left with the money. The Minister met the widows group that I brought to him. The stories that they tell are massively distressing. Marlene is one of 400-odd members of such schemes who receive some money from the financial assistance scheme. The Minister knows how much she gets—£20.00 a week. If the decimal point were shifted, that would be somewhere near what she should have got.

I am not saying that the taxpayer should pay everything, and nor are the former Dexion workers campaign group, the ombudsman or the Select Committee. What we are saying is that we need to come up with a plan. The hon. Member for Nottingham, South (Alan Simpson) has come close with the ideas that he put forward today, some of which I was going to offer myself. I shall raise other issues. For instance, the schemes are still being forced to purchase annuities. Why? How much is left in the schemes? Perhaps the Minister can tell us when he winds up the debate, because the figure is missing and there is a lot of money still being administered by the trustees.

Many of the unclaimed assets that the Chancellor thinks that he can use are from pension schemes in insurance companies. What better use could there be for that money than to compensate those wonderful people?

My hon. Friend makes a compelling case. He will be aware that I represent several Albert Fisher pensioners, many of whom have lost more than 20 years of occupational pension benefits. They were forced to contract out of SERPS and put their NI contributions into the Albert Fisher scheme, but they will get only about 50 per cent. of their expected pensions. What my hon. Friend is saying about the unused assts and other approaches that the Government must consider is absolutely correct.

I am grateful for my hon. Friend’s support. So many of those people joined their companies on apprenticeships when they were 15, 16 or 17. I was lucky in that I joined an apprenticeship in the armed forces at 16, so my pension is safe. Those people worked for one company, loyally, for their working life and, if they are not within 15 years of retirement, they have lost everything. The scheme will not give them a farthing. They have to go back out to work and build up a whole new pension all over again. What faith can they, their families and friends or anybody who reads the report of this debate today have in pension schemes? They will be frightened because they will not get many of the benefits of the Pension Protection Fund that the Government have introduced. It is not index-linked and they cannot take any of the benefits in a tax-free lump sum, which they would have been able to do in their own schemes. The widows are suffering enormously. There are so many issues that make one scheme right for one group of people but wrong for another. Where is the natural justice in that?

I would have loved to speak for longer, but the debate has been cut short, as I have said. I hope that we can all come together as a Parliament to accept the ombudsman’s report. Parliament appointed her to assess cases and she can find for the Government or against them. In this case, she happens to have found against the Government and that there was maladministration. I hope that we can accept the Committee’s report, sit down, bang some heads together and set up a fund that will give the people the living that they deserve and the pensions that they should have had.

I can tell the hon. Member for Hemel Hempstead (Mike Penning) why he should not just simply accept the ombudsman’s report. She should have started back in 1986 when a 5 per cent. cap on surpluses was established by Nigel Lawson, who said in his Budget statement that he needed

“to deal with the growing problem of the rules governing pension fund surpluses.”—[Official Report, 18 March 1986; Vol. 94, c. 176.]

He thought that there was too much money in pension funds, but in hindsight that was a lunatic’s decision. Soon after that, through the combination of the impact of his changes and the raids that companies conducted on their pension funds, we saw the beginning of the end for many of our big pension funds. Had the ombudsman started at that point, I am certain that she would have got further down the route. The decision was of course made at a time of 10 per cent. inflation.

There are still £1,000 billion-worth of assets in our pension funds and we should not pretend that all the funds are on their knees; there are still some extremely good ones. The pension fund failure that resulted in my being the first Member of Parliament to say that the Government should put their hand in their pocket was that of H. H. Robertson, which collapsed at the fag-end of the previous Conservative Government. I have already thanked John Taylor, the Minister at the time, for the work that he did in getting the Serious Fraud Office involved in the matter. I am glad to tell my hon. Friend the Minister that members of that scheme are now receiving some payments through the financial assistance scheme.

Some details remain to be sorted out to make sure that the transition works, but I shall take my hon. Friend through them at another time. However, if a pension scheme had collapsed when regulations under the 1995 Act came into force in April 1997, the actuary would have been required to value the scheme using the benchmark minimum funding valuation. The contributions due to the scheme would have been certified by the actuary as adequate to increase the funding level over the five years, bringing it up to the statutory minimum level.

The House needs to ask serious questions about the competence of the actuarial professionals who certified the schemes year after year. They did not make sure that the standards of their professional associations were met. In addition, I remind my hon. Friend the Minister of an observation that I made to one of his predecessors in 1998. I said that, because of the losses incurred as a result of pension fund collapses, the state was paying out a huge amount of money in benefits and pension credits. If the Government were to conduct an analysis of the money involved, they could determine a better figure for what needs to go into the FAS, and that solution could meet the requirements set out in the report presented by my hon. Friend the Member for Cannock Chase (Dr. Wright). I therefore urge the Minister to keep probing away down that route.

It is always a pleasure to follow the hon. Member for Ellesmere Port and Neston (Andrew Miller), and I am very pleased to contribute to a debate that is rather shorter than originally envisaged. I begin by joining others in paying tribute to the hon. Member for Cannock Chase (Dr. Wright) for the report that he has produced and the masterful way in which he opened the debate.

Although it is invidious to mention individuals at the end of a debate such as this, I should like to pay particular tribute to my right hon. Friend the Member for North-West Hampshire (Sir George Young). He made an excellent contribution and may have showed the Government how they can get out of this mess. I also want to pay tribute to my hon. Friend the Member for Hemel Hempstead (Mike Penning), who has been a truly doughty campaigner for those of his constituents who have suffered so badly. After nine long years, this Government are finally tackling the pensions crisis. The Opposition have been working hard with Ministers and officials to try to achieve a consensus on pensions reform. We embarked on the task for three reasons. First, it is the right thing to do, given the breadth and depth of the pensions crisis. Some 2 million pensioners are still living in poverty, and a recent report showed that, unlike the rest of the population, pensioners have to live with a 9 per cent. rate of inflation. Council tax has soared, and half of all pensioners are subject to means-tested benefits. Recent figures from the Office for National Statistics show a further decline in private sector pension provision. Since 1997, 60,000 occupational pension schemes have closed, and 125,000 people have lost their pensions.

When Labour took office in 1997, Britain had the strongest pension provision in Europe, but now it is among the weakest. The charge sheet laid at the Government’s door in respect of pensions goes beyond mere inaction in the face of a growing crisis: it makes it clear that the Government have heaped additional costs and red tape on companies that have tried to keep their pension schemes going.

Moreover, it is this Chancellor—the clunking fist himself—who through his annual £5 billion tax raid on pensions has forced schemes into deficit or to close to new, or even existing, members.

Does my hon. Friend not think it extraordinary that no one on the Government Benches mentioned the Chancellor’s 1998 Budget changes, which have heaped these extra costs on pension funds? Is he aware that the total cost now is not £50 billion? The total cost, including all the opportunity costs, is nearer £100 billion.

My hon. Friend is right. What is also extraordinary is how fiercely the Chancellor is resisting freedom of information applications to obtain the advice that he received at the time on his decision to scrap dividend tax credit.

I mentioned that there were three reasons for building a consensus. The second is that any decisions made, or not made, now will have an effect 40 or 50 years on. Any number of Ministers and Governments will have come and gone by then. Thirdly, there is every possibility that it will fall to the Conservatives to implement many of the reforms. That serves to concentrate the mind in opposition. We want to ensure that whatever happens is workable and can deliver a sustained and meaningful benefit to future generations of people in retirement.

I will say little in this debate about the state pension changes. The restoration of the earnings link and help for women pensioners, for example, were both in our last manifesto. Retirement must become more of a process, rather than an event. Yes, we should gradually extend the state pension age, but we must build in flexibility in retirement. A massively important part of the Turner-inspired reforms is the setting up of personal accounts. We support the general direction of travel on that, but we have a number of serious concerns—as the Minister knows, because we share them fairly regularly. I do not have time to go into them in this debate. They include means-testing, levelling down, some of the cliff edges in the state pension changes and the whole issue of public sector pensions, where the total liabilities are now estimated at over £1 trillion.

It is interesting that research to be published by the pensions industry tomorrow includes some quite serious figures on the effect that levelling down could have under the personal accounts regime. If personal accounts are to fill the yawning gap in savings for retirement in this country, they must command the confidence of British workers. That in itself is a good enough reason for trying to achieve consensus. If people pick up on the fact that the official Opposition and Government-in-waiting have concerns and might change everything in due course, it would be yet another excuse for putting off decisions about their own pensions.

There is another factor that has caused untold damage to people’s confidence in pensions: the regular publicity surrounding those who through no fault of their own have lost their pensions. We have heard a great deal about that tonight. On any view—I choose my words carefully—the Government’s handling of the situation has been both shabby and inept. It has been an insult to the 125,000 people involved. However, the Government have also undermined the pivotal position of the ombudsman in our constitutional system.

Does my hon. Friend agree, in thinking about the Government’s response to the report by the Public Administration Committee, the role of the ombudsman and the relationship between Parliament and the Executive, with the reference to this matter as a litmus test? Does he agree with the comments made by my constituent, Thomas Ackland, who is one of the 1 million former Equitable Life victims? He says:

“There would seem to be little point in an independent investigative body, designed to uncover departmental failure and maladministration, if the Government then, bald-faced, refuses to act on the recommendations and, worse still, contests the Parliamentary Ombudsman’s findings.”

My hon. Friend is absolutely right. I remember, as a fresh-faced law student in 1968, learning about the exciting new post of the parliamentary ombudsman and the massive significance that it would have. The Government have also undermined confidence in the whole pensions system at precisely the moment when restoring confidence is so important to underpin durable pensions reform.

In the event of the Government being unable to get a package of further support from the private sector, is the hon. Gentleman making a commitment that his party would totally fund the recommendations of the ombudsman’s report and the Select Committee report?

I shall come in a moment to what should happen and what the Government should be doing, if the hon. Gentleman will bear with me.

Various hon. Members have quoted from the ombudsman’s report and I shall not pursue it further, particularly in view of the shortage of time. However, I would like to mention the ombudsman’s views on the financial assistance scheme. She said:

“I am quite clear that the FAS will not constitute an adequate and appropriate remedy for the injustice claimed by those who have complained to me”.

I would also like to take the opportunity to pay tribute to Ros Altmann, who has been an extremely energetic campaigner for various pensioner groups and has quite rightly pursued all of us at different times to come up to the mark on this issue.

Before responding to the question of what the Government should be doing, I would like to cite one passage from the Select Committee report. I could use many, but time does not allow. It states:

“We have made our own investigations. We believe the Government is being, at best, naïve and, at worst, misleading… It would be extremely damaging if Government became accustomed simply to reject findings of maladministration”.

I agree with that.

What are the Opposition’s views about how the Government should properly address this matter? First, the Government should agree without equivocation or evasion that there has been maladministration. It is not their job to decide whether there has been maladministration, but the ombudsman’s job—and she has decided. Why should these desperate people have to resort to taking the Government to court to obtain justice?

I shall now provide one quote to illustrate what the Government’s approach should be:

“The giving of wrong information by a Department is inexcusable. There is a clear responsibility to ensure that the information that Departments provide is accurate and complete… As a matter of principle, we believe that when someone loses out because they were given the wrong information by a Department, they are entitled to redress.”—[Official Report, 15 March 2000; Vol. 346, c. 307-8.]

Those were the remarks of the then Secretary of State for Work and Pensions, the right hon. Member for Edinburgh, South-West (Mr. Darling).

Secondly, the Government should apologise, as directed by the ombudsman. An apology costs nothing. If it helps, Conservative Members will accept a modest share of the blame arising from our stewardship in 1996-97, while being clear that the problem of the weakening of the minimum funding requirement on more than one occasion, the change in the priority order, the collapsing pension funds and the ombudsman’s investigation and report all took place on this Government’s watch.

As the hon. Gentleman has heard, I have been critical of the Government and I agree with all who say that this is a matter between the House of Commons and the Executive, but I would like to hear from him—lest he mislead anyone—why the Conservative party has officially said that none of its Front Benchers can sign a cross-party early-day motion on the matter because it might just incur some spending of public money. It would be helpful if the hon. Gentleman could clarify exactly the Conservative party position.

The answer is very clear: it was not a cross-party early-day motion. If the hon. Gentleman, for whom I have utmost respect, had troubled to talk to us before tabling his early-day motion, we might have been able to agree a slightly different wording with which we would have been content. It is unfortunate that the impression has somehow been gained by some of the pensioner groups outside the House that that did happen when it did not.

Will the hon. Gentleman tell us which part of the early-day motion he disagrees with? We were not consulted either, but it is a broad early-day motion and I would not have thought that it would lead to any objections. Which part, then, does the hon. Gentleman object to?

In my next life, I hope to be a Liberal Democrat, as it is so much easier and any early-day motion can be signed. If the hon. Gentleman will bear with me, I am coming on to the substance of his point.

Thirdly, the Government should finally recognise that the recommendations to ensure an appropriate level of support for those who have lost out must be taken seriously. They should stop floating absurdly inflated figures such as the £15 billion figure tossed around by, among others, the Prime Minister. That sort of thing is insulting to our intelligence and, indeed, to the victims.

The Government should do some serious and credible work on calculating the real likely cost of helping the victims. In their calculations, they should give credit for benefit payments saved, pool the assets of the failed funds and take full account of the possible benefits of deemed buy-back—one of the best kept secrets in the DWP and the Treasury. They should examine whether purchasing bulk annuities is the best way forward. Perhaps they could also provide relevant information about how much money is left for that purpose in the relevant funds. They should scrap altogether the wasteful and unnecessary administrative machinery of the FAS and run the compensation scheme in parallel with the PPF, using the same skills base.

It seems to us a matter of principle that those who deserve help, following the ombudsman’s report, should expect that help to be at a reasonable level. Will the Government estimate the real cost of providing support at a level similar to that available under the PPF? In making those calculations, they should factor in the money already committed, as well as using unclaimed assets—something on which we have campaigned for some time, as has the right hon. Member for Birkenhead (Mr. Field). The Chancellor now accepts that unclaimed assets can be used for certain purposes, and we agree. It is interesting that according to the unclaimed assets register unclaimed pensions alone amount to about £3 billion.

Above all, the Government must recognise the immense damage that this episode has inflicted and continues to inflict on long-term pensions confidence and stability. If the system of personal accounts foreshadowed by Turner and picked up by the Government, and which we broadly support, is to succeed, confidence-building must happen. In short, we and the victims expect the Government to show leadership on the issue. That means examining the options realistically, providing the necessary information and promoting an informed and sensible debate. Then we will see whether the positive benefits of consensus can apply in this situation, too.

In some ways it is unfortunate that we shall not be voting on the motion. I leave Members—including Labour colleagues, many of whom are sympathetic to the case—with the words of Dick Crossman, on the Second Reading of the Parliamentary Commissioner Bill:

“Wisely used, this can be a potent instrument for the protection of the good name of the Civil Service, for the restoration of Parliamentary authority and for the redress of individual grievances.”—[Official Report, 18 October 1966; Vol. 734, c. 61.]

I will try to get through as much of the material covered in the speeches as I can. If I do not cover points made by Members I shall be happy to meet them to discuss matters with them and their constituents.

I congratulate my hon. Friend the Member for Cannock Chase (Dr. Wright) and the Select Committee on their work. I hope to go through as many of the points they raised as I can.

I want to make it clear that the Government respect the role played by the ombudsman, and we will continue to do so. The case we have been discussing is exceptional. The Committee asked us to explain whether it was a new policy or a new approach. The case is exceptional. We shall continue our approach, which is to respect the ombudsman. In fact, in 39 years, this is the first time that my Department has not responded positively to an ombudsman’s findings.

In the Government response to the Select Committee report, there is an indication that in future an official in the Treasury or Her Majesty’s Revenue and Customs will be regarded as the ombudsman’s champion. I think the House is meant to be reassured by that. Does the Minister think we will be? What will the role of that official be?

As I understand it, their role will be to work with the whole Government to make sure that we follow good principles of administration and that we respond to the ombudsman appropriately. She has been working with us on some good principles of administration. If the hon. Gentleman asked her, I think he would find that she was relatively happy with those proposals.

It is worth making the point that although what happened was exceptional, it is not unprecedented. The ombudsman herself recognises that the Government may

“reject recommendations that I may make, after proper consideration of the public interest, and other calls on the public purse, and any other relevant matters”.

As the right hon. Member for North-West Hampshire (Sir George Young) said, we have two duties to Parliament: first, to take proper account of the ombudsman’s findings and, secondly, properly to account for the use of public money. It is not our money, it is taxpayers’ money. We have been trying to strike a balance between those two duties—our respect for the ombudsman and the proper use of public money.

The Minister quotes the ombudsman, but why did he not continue the quote, which shows that it is unprecedented for the Government to reject her findings? The ombudsman says:

“The Government appears to draw no distinction between a rejection of the Ombudsman’s findings of maladministration and injustice and a rejection of the Ombudsman’s recommendations for redress.”

It is both rejections that make the action unprecedented.

It is not unprecedented for a Government to reject findings of maladministration. The previous Conservative Government did precisely that. In that case, the then Secretary of State for Trade and Industry said:

“I want to make it clear that the Government do not accept the Parliamentary Commissioner’s main findings”.—[Official Report, 19 December 1989; Vol. 164, c. 203.]

The question that we should be asking today is not whether people have suffered—we realise that they have suffered, which is exactly why we put in place the financial assistance scheme—but what is the proportionate response?

My hon. Friend might recall that during Question Time on 16 October I suggested that this matter might well end up in the courts. Although it would be quite wrong to talk about the substance of the court case, the pensioners themselves feel that the Government are threatening them with costs if the case is pursued to judicial review. My hon. Friend said that the Government were waiting to hear from the pensioners’ representatives, but it has now been established that it is the other way round. When will the representatives of the pensioners be hearing from the Government?

That has not been established. I said—this continues to be the situation—that the representatives have not made the case that the matter fits into the normal precedent whereby the Government would waive costs. We have said not that we will enforce costs, but that we will consider them, as we always do, at the end of the case.

We have tried to respond to the Public Administration Committee’s report as constructively as possible. We are implementing several of its recommendations. For example, there will now be a two-year wind-up. We have also made it clear that survivors will be paid and that people can be paid from the age of 65. It is true that the support that we have put in place continues to be less than what it asked for.

It is worth saying that the scheme has been extended to 40,000 people since the ombudsman first published her report. We took that report into account when we made the extension, and I think that the House has welcomed our action.

I am grateful to my hon. Friend for giving way because I know that time is short. He will be aware that MB Aerospace in my constituency restructured and closed its pension scheme in 2003. I have written to the Minister about this matter, but will he confirm today that employees of the company in their 50s will be eligible for financial assistance? Will he urge the administrators to complete the wind-up, because while it is not completed great uncertainty is being caused?

I am happy to give my hon. Friend that confirmation. I think that there are some members in payment in that scheme.

We want trustees, administrators and insurance companies to co-operate as fully as possible. There are now about 600 people in payment, and we are in a position to pay more than 800—that is up from 39 in May. We want to pay more people, but the main obstacle is either schemes requesting initial payments, or problems regarding the completion of schemes’ wind-ups. Although most schemes are being co-operative, we think that several could be making much more progress. We have written to some of those schemes. We have powers to deal with them if they fail to co-operate and, if necessary, we will not be afraid to use those powers.

I would like to make some progress. I have very little time, so I am afraid that I will not give way.

The main point that my hon. Friend the Member for Cannock Chase made was that the Government had set up the regulatory framework and were thus responsible. It is worth pointing out, however, that we think that most of the companies in the category did not meet the basic rules that were set out under the regulatory framework that was introduced by the Conservative Government. Most schemes did not meet the minimum funding requirement, and the leaflets made the case that protection was in place only if the MFR was met.

It is not correct to say, as my hon. Friend did, that the disclosure regulations prevented people from saying that there were risks in their schemes and pointing out what they were. They were perfectly able to do so. At the time, the Government did not say that they should not talk about risks. His interpretation of what happened was not correct.

As the Minister knows, I have some sympathy with aspects of the Government’s argument, but I have doubts about the quality of the literature produced by his Department. Will he make a statement that applauds the quality of that literature, without qualification? As I have pointed out to him, I think that it was flawed and incomplete, and we deserve at least some public acknowledgement of that.

It was the right level of information to provide, given the context. We are talking about introductory, very general leaflets. Hon. Members who have read them will know that they dealt with very basic questions such as, “What is a pension?” If we had given the amount of detail that it is suggested, with hindsight, we should have done, they would have been not leaflets but handbooks, and they would not have served the purpose for which they were intended.

I came to the Chamber this afternoon to hear the arguments, but I have not been convinced that most, if not all, liability rests with the trustees for not exploring, and conveying, how much risk there was. For the sake of Mr. and Mrs. Ward in my constituency and other people, I ask the Minister to look again at the financial assistance scheme, and consider whether any improvements can be made.

We will continue to keep the scheme under review, as is right, and if other sources were to make further contributions to it, that would be welcome. However, the key point is whether the assistance that has been given is proportionate. We need to ask ourselves what principle the ombudsman works to when making recommendations about recompense, and she actually gives the answer in her report:

“it is my usual practice to seek to put individuals back into the position they would have been in had that maladministration not occurred.”

The truth is that, if that were the situation, those individuals would have been put back into a situation in which funds were underfunded—significantly, in most cases—and in which their employers were about to become insolvent. There is very little that people could have done to rectify the situation in which they found themselves.

I am afraid that I must wind up my speech.

I would argue that the scheme that we put in place is far more generous than anything that would have been paid for we had done no more than consider the circumstances, because the vast majority of people—virtually everyone who was in the schemes—joined them before any of the leaflets were published. As we have made clear, we do not believe that there was maladministration, but even if people want to argue that there was, they must also address the fact that virtually everyone was in the scheme before the leaflets were published, and there was very little that they could have done to transfer out, because the value of their pension would have been reduced. There was little that they could have done to get the employer to put more money into the scheme, because the employer, as we know, was about to go to the wall, and it is extremely unlikely that any other company would have wanted to become involved and take over the liabilities.

We have great sympathy with the people who have lost significant amounts of money, and that is exactly why we put the financial assistance scheme in place. We want to work with Members on both sides of the House to make sure that we can make payments as quickly as possible.

I have wanted to intervene for some time, but the Minister keeps giving way to his hon. Friends, rather than Conservative Members. Will the Minister continue to tout the figure of £15 billion, which came out of the ether, as the amount that the taxpayer would have to pay, although it is clearly wrong?

That figure was calculated by our economists, and we have set out exactly how it was calculated. We have also made it clear that it is the net present value, but that is the way in which the Government accounts for their spending. It was net present value that was used in the pre-Budget report yesterday, too, because that is how resources are controlled in government. The debate has made it clear that, on one point, there is no difference between us and the Opposition—we both think that more taxpayer money should not be put into the scheme. The Opposition agree with us that we are at the limit of what taxpayers should do. We have worked hard to find extra assistance, and we have extended the scheme. In a previous speech on the subject, the hon. Member for Eastbourne (Mr. Waterson) said that

“at no stage have the official Opposition ever committed taxpayers’ money to this issue above and beyond what the Government have already committed.”—[Official Report, 27 June 2006; Vol. 448, c. 175.]

We have worked hard to increase the scheme and will continue to work hard with Members of all parties on the subject. We believe that we have made a significant contribution, because we recognise the real distress and loss that people have experienced. We have listened carefully to the arguments advanced by the hon. Member for Cannock Chase and his Committee, and we will continue to keep the matter under review. We have made it clear that we will consider deemed buy-back again, and that we will keep the issue of whether there are any other sources of funding under review, but I am afraid that we have come to the conclusion that there are no other sources of funding that could make good, and provide the significant amount of money that would be required—enough to pay for 8,000 nurses, 6,000 teachers or 3,000 doctors.

It being Six o’clock Madam Deputy Speaker proceeded to put forthwith the deferred Questions relating to Estimates, pursuant to Standing Order No. 54(5) (Consideration of estimates)