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Pensions Bill

Before making my only intervention in this debate, I declare, first, my interest as chairman designate of BrightonRock, which, I would hasten to add, is not to be confused with any other rock. I should also make another declaration of non-interest: I am not a member of the Society of Turnaround Professionals, although I hold its lifetime award for achievement. That is not so very special when one bears in mind that I was once standing backstage at the Oscar ceremony when Mickey Rooney came off stage and immediately deposited his Oscar for a lifetime award in the trash can on the grounds that he thought that it would be more properly identified as a death-time award. In the case of our friends at BrightonRock, there is one very important distinction, which may answer part of the concerns of the noble Baroness. It is intended to be not just an insurance company, but would have a very big role as an interventionist in bringing to bear corporate rescue activity into the parent companies behind the sponsorship of the pension schemes concerned. There will be a proactive role to address the problem which is giving rise to the potential call which would come upon the PPF. That is a very important point and a most fundamental part of the BrightonRock concept. I shall answer the noble Baroness’s concern on whether it will get the funding necessary. The due diligence for this, effectively, will be dependent on demonstrating exactly that point of financial viability to the City, which we are looking to at present for a substantial fundraising, being handled by City professionals, aimed at achieving full financing capability by the end of September. The arrangements that that implies require us to demonstrate that viability. If we do not demonstrate it, we will not be in business. If we do, it will be because the market has decided that we are able to cover it. I would also remind Members of the Committee that the most successful corporate rescue ever mounted in this country was for Lloyd’s of London. It was beset widely by failure of reinsurance, but where the reinsurance was capable of being replaced and mutualised to an extent that it overcame the problem. My final point is that we who have put this BrightonRock scheme together, having read very carefully the Pensions Bill, take the view that it is coming from the wrong direction in a very important respect. It starts from the supposition that the problem that has to be addressed is the failure of management of the pension schemes. I would respectfully suggest that it is not. It is the corporate failure of the sponsoring companies behind. That is not properly addressed and, in many ways, the Bill tends to put obstacles in the way of the orderly approach to and correction of those problems. BrightonRock would seek to overcome those problems in the way I have indicated. These concerns worry us greatly because we believe that the future viability of the pensions industry depends on an address to the corporate financial management of the sponsoring companies and not to the fundamental managements of the pension schemes, which we think are generally pretty good. In the world of corporate rescue where I have seen pension schemes fail, the failure usually has come many years previously to the time when it acknowledges the failure as a result of the collapse of the sponsoring company and its inability to maintain the funding. The position demonstrated in the recent risk-sharing analysis in the risk sharing consultation on 5 June got it completely wrong when it said that the risks here are longevity and health improvement. They are not the risks which undermine the future viability of pensions. They are the risks of solvency to the sponsoring companies. In this respect, the Government and everyone in this country, all pension beneficiaries, need every bit of help that they can get in securing it, which is where what we are talking of would help. The easement of this arrangement by the manner of this amendment would greatly assist in the creation of the management of this company. I believe that it would make a positive contribution towards the Government’s own desire that we would be coming at it from the point of view of the corporate financing side, which is where the issue really lies.