Dr Julian Lewis: Most of the people who have spoken before me know far more about this area of policy than I do, so I shall talk about what it means in human terms, to four of my constituents, that their pensions have, effectively, been stolen from them. Mr Andrew Kellaway, Mr T.N. Snelgrove, Mr Alan Harding and Mr Graham Henley all wrote to me independently towards the end of last year, and I will, with the indulgence of the House, read an extract from Mr Henley's letter.
Mr Henley said that he and his wife were "shattered" to receive a letter from APW Electronics Ltd., informing them that it had wound up the company's defined benefit pension scheme in deficit. From their point of view, the company had
"held secret negotiations with the trustees to this end back in August."
Mr Henley says that he
"like thousands of others in this country believed that this was not possible. That changes in the law since the Robert Maxwell pension fund scandal had sorted this out, and that pensions were now safe."
He relates that he and his wife
"have two sons and have a mortgaged home"
and that they have both worked very hard to bring their sons up
"as respected members of the community and are proud of the result."
"We have borne the cost of their education and upbringing and have never ... received any financial assistance. On three occasions during my manufacturing engineering career my job has become redundant."
It is only because he has lived a prudent lifestyle that he has been able to plan for retirement effectively.
I am sure that constituents of all the hon. Members who have spoken so far would be able to repeat such moving and extremely disturbing facts ad nauseam – a catalogue of misery that has been inflicted. As the right hon. Member for Southampton, Itchen (John Denham) has pointed out, that has engendered a great deal of cross-party support, precisely because of the injustice done to so many people.
I pay tribute to the hon. Member for Eastleigh (David Chidgey). He has spearheaded the campaign relentlessly. However, I also pay tribute to Mr Roger May of Blake Lapthorn Linnell, the professional team that acted as legal advisers to the trustees of the scheme. Over and above what they tried to do to help the work force, they have taken an interest in the issues on principle, and have gone to a great deal of trouble to analyse what has gone wrong in the case.
I refer now to a short memorandum that was circulated to us in the meeting with the Minister in December. The specialist advisers point out that the guidance from the regulatory authority, OPRA,
"is not working."
Trustees of the relevant pension funds
"can follow the OPRA guidance to the letter, and still end up in a situation where the members lose 70 percent or 80 percent of their promised pensions."
The key to the situation lies in the fact that the parent company is a foreign company and that the foreign company has, as it were, the first charge on the assets of the domestic company. It can happen that the domestic company is technically insolvent – it would normally go out of business, when, at least, its work force would come under the protection of the Financial Assistance Scheme – but is kept alive on a form of life support by small injections of cash from the parent company.
Then, when the point is reached where the parent company wants the conglomerate to walk away from its obligations to the work force, it suggests a compromise in which the UK pension scheme is wound up and a small amount of money is paid into the scheme. Originally the parent company, with magnificent generosity, proposed to offer 1 percent of the debt that it owed in respect of pensions to its own work force.
Bearing in mind that it remains possible and legal for a foreign parent to put the UK subsidiary into liquidation and then buy the business back from the liquidator, leaving behind the pension liabilities, we have a couple of recommendations from those specialist advisers. They have suggested that there ought to be a ban on
"pension scheme compromises where members will lose more than (say) 30 percent of their pension benefits. The compromise would not be allowed to go ahead unless the scheme actuary certified that all scheme members would receive at least 70 percent of their promised scheme benefits."
The advisers also recommend that schemes where the employer – that is to say, the British domestic employer –
"only remains solvent because the scheme trustees have compromised the buy-out debt, and where the members have lost"
a large percentage of their benefits, should become eligible for financial assistance from the Government.
I was not happy with the meeting that we had with the Minister in December. I felt that he was focusing far too much on the fact that the company was still trading, even though the only reason that it was still trading and had not become insolvent was that a gun had been held to the heads of the trustees of the workforce, in that they had been told that the company would go insolvent unless they allowed 80 per cent. of its pension funds to be – I make no apology for using this word – stolen from them.
At that meeting with the Minister I was able to remind him that, from time to time, there had been talk of the Chancellor of the Exchequer using the unclaimed assets of dormant accounts in banks and building societies for various good purposes. I was able to point out that the spokesman for my party in this area had pledged that, as a result of tens of thousands of people having done the right thing by paying into a company pension scheme, but having lost their savings when the company became insolvent, the Conservative Party would use the unclaimed assets in dormant bank and building society accounts to rebuild the pension funds of wind-up victims.
That is a practical proposal. It would also meet the situation where, even when the Financial Assistance Scheme goes into effect, it might be found that it would not make up the shortfall to anything more than a limited degree. That shortfall could be met by a policy of that sort. I did not get a clear answer from the Minister at the meeting, so I ask him again whether he will match that pledge to the victims of what has happened in this and other cases.