Pension Protection Fund (Pension Compensation Cap) Order 2007

We on these Benches have no complaints in principle with the orders, but we have a number of questions. Following the noble Lord, Lord Skelmersdale, and to save the Minister time, I believe that the Government have announced today that they are pursuing an appeal on the court ruling on the people who have been robbed of their pensions and who are covered most inadequately by the financial assistance scheme. That adds insult to injury and it is high time that the Government accepted the umpire’s decision and got on with compensating these people who have been appallingly treated. Let me make clear that our position is that they should receive at least the same level of compensation as they would have if they were covered by the Pension Protection Fund. In general, we support how the Pension Protection Fund has been doing its job. We think it is businesslike, thoughtful and respectful of the will of Parliament. We expressed views particularly in the amendments passed in the Chamber to ensure that the risk-based levy was drawn up on a proper commercial basis that did not penalise the funds that make a serious attempt to meet their commitments. None the less, we are concerned at the increase in cost. The noble Lord discussed the question of costs in a little more detail than in the order. As he is an accountant and probably understands more about it than most in the DWP, perhaps he could explain in a little more detail the cost figures and the separate depreciation figures. I find it difficult to see why the depreciation is put separately. If that is the normal cost of writing off capital equipment over its expected useful life, I is just a normal, straightforward cost. On that basis, the cost of the operation seems to have gone up from £12.7 million to £15.3 million over the past year, if I calculate it correctly, which is about a20 per cent increase. I do not understand the point he was making, that the DWP element separately would stop because it was only going on over three years. Again, why is it being depreciated over three years if that is not the normal and proper expected life? Surely it should be done over a longer period? Will he please explain that? In any other business you include the depreciation of your capital equipment with the costs in the normal way and just give a single cost figure. On that basis, this looks like a substantial increase. The Minister kindly updated us on the number of schemes that are in the assessment period, along with the PPF estimates of the likely number in the next couple of years. Taking the schemes that are in the assessment period now, on the most recent figures he has, what are the total assessments and liabilities and what is the total deficit? Will he also comment—I am happy if he wants to write to me if he does not have a full assessment with him—on what he and the PPF feel about, and what steps they are taking to deal with, the likely danger of the effect on pension funds of the current torrent of private equity buyouts, which is clearly going to lead to a great deal more risk in pension funds? I noticed today that the trustees of the Sainsbury’s pension fund, who are in considerable danger of being taken over by a highly-geared private equity consortium, have appointed independent advisers to advise the fund, and I welcome that step. There is likely to be a great deal more danger for the 12.5 million members potentially covered by the PPF in defined benefit schemes if this wave of private equity buyouts gathers pace. Those are my main questions on these orders. I look forward to the Minister’s reply.