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Pensions Bill

I am sure that it will be helpful if the Minister takes this away, but I shall probe him on shifting to this test of the detrimental effect of a transaction, including what is reasonably foreseeable. I take the already cited example of the payment of a dividend. Last year a company might have been healthy and profitable, paying dividends. It might have engaged in share buy-backs or paid special dividends if it had made a big profit. A year on, however, the credit crunch hits, the market falls away, losses ensue and the company cannot pay a dividend. In the mean time, the employer covenant is significantly weakened. If you look back, it is clear that it could reasonably have been foreseen that the dividend paid when times were good would have a detrimental effect, because resources left the group. When resources leave the group at any point, that has a potential detrimental effect on the pension scheme. One comes back to the question of what is reasonably foreseeable and to what extent hindsight will be used. If we go back a year, some companies—for example, building companies—predicted that the housing market would go under because it had been so frothy for such a long time. I do not think that many people would have predicted the precise set of circumstances involved in the credit crunch and its acceleration, but many people predicted that the good times for building companies and commercial property companies would come to an end. Therefore, on one reading it is entirely foreseeable, and reasonably so, that payments of special dividends or share buy-backs would have a detrimental effect given the ordinary course of a cycle. We should remember that we have not abolished cycles. Whatever the Chancellor used to try to pretend that he had done, he has not abolished cycles, and we are seeing the effect of it at the moment. I am concerned that, when analysed with the benefit of hindsight—and not very much hindsight, as it happens—ordinary transactions could be seen to have had the reasonably foreseeable consequence of having a material detrimental impact on a pension scheme. Those issues are causing people a lot of concern. I do not think that the Minister has yet addressed that. There seems to be an assertion that dividends will not be a problem. However, dividends are the biggest example of a transaction in the corporate year of significant resources leaving the group through a positive decision of the directors. As I mentioned, special dividends might be paid and capital might be returned. There might be share buy-backs and the repayment of unsubordinated debt—all things that appear to be normal in the circumstances of the time. However, you do not have to roll forward for long to see what the impact will be. The Minister has not explained what impact the Government think these new regulations will have on ordinary transactions. I should be grateful to hear his comments.