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Pension Protection Fund (Pension Compensation Cap) Order 2008

I am grateful to the Minister for introducing these three orders together—which, of course, is exactly what he and I debated at roughly this time last year. But I think that I will yet again have to make a suggestion, as I did on some uprating orders the other day, because the Minister has already given the answer to my first question, which was why the two inflation figures on the level of earnings were different; and obviously I use the term ““inflation”” somewhat loosely. He explains that the discrepancy of half of 1 per cent was due solely to the starting dates of the period under review for the two different orders. Would it not make sense, therefore, to alter things so that the same period is used for both the compensation cap and the levy? If the will is there, so are the means in the forthcoming Pensions Bill. The Occupational Pension Schemes (Levy Ceiling) Order does just what the title implies: it sets a ceiling for the Pension Protection Fund—the statutory insurance scheme for direct-benefit pensions, as I like to call it—which, though young, is clearly settling down well. I agree with the Minister on his plaudits. The ceiling is the amount that the PPF may impose by way of insurance premiums. The ceiling was set at £773 million for the year ending 2007, against an estimated need of £575 million. The actual figures should have been produced by now, and it would be instructive to know how accurate those were. These are the figures that the Minister gave us in our debate last year. I ask that especially because last year he told us that there was a historical shortfall in collection during the first two years of the scheme. Has that been sorted out? Last year the Minister also told us that, on 1 March 2007, three schemes totalling 275 people had been admitted, and that around 66 of those were being paid an average of £3,700 a year. There were 147 further schemes, covering 102,000 scheme members in the pipeline at that stage. The Minister has just told us that the current level of PPF involvement will be 50 schemes covering 18,000 members by the end of March. It seems to have taken quite a long time to get down from 147 schemes to 50 schemes, and I hope the Minister will say something about that when he replies. Clearly, the 147 further schemes that he mentioned on the previous occasion have not yet completed the process of coming into the PPF regime. The Minister will not be surprised that the problems of Northern Rock figure quite highly this year. That bank is in a state that we would not like any firm with a pension scheme to be in. The 2006 accounts noted a deficit in the DB scheme that must have become much worse since the bank’s collapse. Does the Minister expect the scheme to be a candidate for the PPF? Lastly, in the past two years, the stock market has bounced about like flotsam on the sea. Almost daily, we hear differing accounts of the surplus or deficit in pension schemes of billions of pounds in either direction. I am sure that the Minister will cross his heart and say that this has nothing to do with the Government, but I will take issue with him because it is. In the past, the Government have prided themselves on rising growth. They cannot very well duck responsibility now that their own forecast of growth in the economy has had to be downgraded by 75 basis points. The result of this is more DB schemes closing to new entrants and, inevitably, a longer queue to join the PPR. In the Occupational Pension Schemes (Levy Ceiling) Order 2008, the levy consists of two parts: an administrative levy and a risk-based levy. Will the Minister be good enough to tell us how much the risk-based levy will be next year? Even better, will he write to the noble Lord, Lord Kirkwood, and me with the annual amounts of risk-based levy that have been raised so far? It seems obvious to me at least that, as the economy weakens, the risk to DB schemes will increase dramatically. There are already complaints from operators of schemes in deficit who feel they are being charged excessive amounts under the risk-based levy, and the firms who sponsor them and who are already financially weak are having to invest in their scheme’s deficit at the expense of their normal trading activities. This is not a happy situation. The Minister made a point about Northern Ireland. I had the privilege of being a Minister in Northern Ireland some years ago, and I am well aware that the Northern Ireland statute book is on the whole sacred. I shall debate an order with another Minister early next week on legislation that is not as sacred as the Government like to make out. There will of course be a Northern Ireland order, and I suspect that it will cover points that are identical to those in the orders that we are discussing. Having said that, I do not object to the orders or regulations at all.