Contribution
I will speak to my Amendment 203ZB. I thank my noble friend for the decision in the Budget to grant future increases. That is very much to be welcomed. As for the technical difficulties, I would love an opportunity to start discussing GMPs and even better if we got on to the anti-franking rules, but that is not the issue that I wish to raise today. As I have not moved the lead amendment, I have only 10 minutes.
In working out what I had to say, I realised that there are three groups dealing with pre-1997 increases: this group, group 2, the next group, group 3, where the noble Baroness, Lady Altmann, will move her amendment, and group 5, where at last I get 15 minutes as the mover of the amendment. There are issues that run through all three groups. That is not to downplay the importance of group 4 and the AWE proposals. There are intertwined issues here. There is the reduction in real terms of members’ benefits since they came into payment and the introduction of future increases. There is also the issue that is the subject of my amendment in group 2 and of the amendments in group 3, which is the losses that have been incurred by pre-1997 pensioners.
I am glad that the Minister said that those pensioners have lost out. I am glad that we have that common ground: they have lost out. Then there is the issue of pre-1997 benefits for schemes that are still active. Whether or not they are open to new members, they have pensioners and their legal entitlements to pre-1997 benefits differ from those post-1997. There are common themes there and I suspect that my remarks on all three groups could be put together and make a more coherent whole. In particular, there is a big issue about inflation protection for pre-1997. It is all about pre-1997. What was the feeling about inflation protection back in those days when it was under discussion? Even though it applies to this group, I am going to save that for group 3, when I shall move my Amendment 203.
I am not going to address in this group, although this is probably the most important point of all, the impact that this has had on the individuals concerned. I have had a substantial postbag, most of it by email, pointing out the problems that they have faced. I am not going to focus on that now because I have a limited amount of time, but to me it is the crucial point.
I shall start with the PPF and then come to the FAS in a moment. The principle has been established that PPF pensioners deserve increases in their pensions in respect of pre-1997 service. The Government agree with that principle but they are only going to implement it for the future. The same principle should apply to the past as to the future. Why should they be entitled to increases in the future if they are not entitled to exactly similar increases for the past? I am not talking about retrospection. This amendment has nothing to do with retrospection; it just says that these pensioners deserve pensions now in real terms that are the same in monetary value as they were when they came into payment.
The only reason why one would make a distinction between the increases in the future and making good the increases that have been lost in the past is the cost. I cannot think of any other plausible reason. There is no difference between them in terms of justice; it is simply about the cost. However, we know, because the PPF has given us the figures, that that does not apply here. The money is in the PPF that can afford these increases. It has a significant and growing excess of assets over liabilities and, because of that, the levy is being suspended. The employer providing these schemes is gaining the benefit—in effect, a sort of refund of the surplus that has been built up. Well, fair enough, they have paid for it, but so have the members and they are entitled to the increase. Whatever they had when their pensions came into payment should be increased from January 2027 to allow for what they would have got in respect of post-1997 benefits. That is clear and I hope that the Government will accept the point.
Then we come on to the FAS. The big difference between the PPF and the FAS is that the FAS is funded out of general taxation. However, let us be clear why the FAS is there: it is because Governments of both parties failed to provide the protection that they were required to give under European law, in the face of the fantastic campaign that was run on behalf of the pensioners of schemes that became insolvent—and employers that became insolvent—prior to the implementation of the PPF. That is the only reason why they are in the FAS. It was the Government’s failure; it was not their failure. Why should they lose out? Governments failed to provide them with protection. They only introduced the PPF from 2005, but the people who lost their pensions prior to that date are just as entitled. The Government gave in because of the fantastic campaign, as I say, but also because of the threat of further legal action at the European court that they knew they would lose. To make a distinction between FAS members and PPF is totally unfair and unreasonable.
There will be a cost and, because it is the FAS, it will fall on the taxpayers, but one principle is clear: where the Government have a debt to make good something that they have got wrong, they cannot excuse themselves from that debt by saying, “Sorry, we don’t quite have the money”. They should pay up. It is quite clear that the same treatment should be afforded to the FAS members as to the PPF members.