Sir George attacks Goverrnment for letting down Occupational Pensioners
7 Dec 2006
This is the text of a speech Sir George delivered in the House of Commons, criticising the Government for rejecting the recommendations of the Ombudsman on compensating occupational pensioners.

Sir George Young (North-West Hampshire) (Con): 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.

Mr. Bellingham: 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.

Sir George Young: 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.

 
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Copyright Sir George Young Bt. 2015