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Pensions Bill

The Minister already has referred to fair value in terms that I simply have not understood. All kinds of transactions are done for fair value and they should be judged at that time. But the Minister has suggested that they have to be judged by reference to some later events and circumstances. Lots of circumstances have been put to us. For example, a group of companies may buy a business and merge it with an existing company with a defined benefit scheme. The transaction is for fair value, but it does not work out. Somehow, with the benefit of hindsight, we come back to seeing that it has had a detrimental impact. If the new business had not been merged with the defined benefit scheme business, the covenant would not have been weakened. The Minister will know that lots of mergers fail for all kinds of reasons, so this is quite a significant business risk. But the original transaction of putting the businesses together is a fair value transaction; that is, buying the other business and putting them together. The concern is that these sorts of transactions will fall foul of the provision that is coming up. It is important for the Minister to be more explicit about the problems that the Government have with fair value transactions, because he has not been unequivocal about them to date.