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Mr. Butterfill: Will the Minister give way?
Ms Hewitt: No. I gave way extensively during my opening remarks, and I still have a great deal of material to get through, and many points to which I wish to respond.
However, perhaps I should have dealt earlier with the point that the hon. Gentleman raised, which was about the PASS initiative by the Association of British Insurers. As he said, that was only for phase 1. Many IFAs are still struggling to complete phase 1, but if they need help with phase 2--no doubt many will--I certainly hope that those running the PASS initiative will consider their requests sympathetically. The issue had not been brought to my attention before.
The hon. Gentleman also raised an important point when he made a persuasive case about the value of the present polarisation rule. That matter is being reviewed by the Financial Services Authority now. Strong arguments are made on both sides, and I want to defer judgment until the FSA has completed its work.
It has also been suggested--by the right hon. Member for South Norfolk, I think--that rebate-only cases should be completely excluded from phase 2. I have no doubt that that idea will be considered by the FSA if, as the review unfolds, there is good reason for dealing differently with a particular category of case. It is far too early to make a judgment now.
The FSA has been keen throughout to learn from the experience of the industry in implementing phase 1. Phase 2 is identical in most respects to the phase 1 procedure, with which even the Independent Financial Advisers Association says that it is now content. The exception, of course, is the way in which firms will be actively required to seek out investors and bring appropriate cases within the review.
That is being done because the regulators know, as do the Government, that awareness of a possible pensions mis-selling will be considerably lower among younger investors than it was among those who were close to, or had already reached, retirement age when the personal pensions mis-selling scandal first came to public attention.
It is unreasonable to suggest, as many hon. Members have, that the onus should be on those clients, those investors, to come forward, with no initiative being taken by those upon whom the responsibility must fall.
Mr. Peter Brooke (Cities of London and Westminster):
Will the Minister give way?
Ms Hewitt:
No. I have already said that I have a great deal to get through in my closing remarks, and I do not intend to give way.
I wish to refer to the question--raised by my hon. Friend the Member for Edgbaston and by the hon. Members for Twickenham (Dr. Cable) and for Bournemouth, West--of where the costs of pensions mis-selling fall. The insurance directorate issued guidance to insurers in October 1994 on where the costs of compensation for pensions mis-selling should fall. That guidance applies to phase 2 just as it did to phase 1 of the review. The insurance directorate of the Treasury is monitoring compliance with that guidance.
The basic principle, which is very simple, is that the costs should be shared fairly among those parties which stood to gain from the sale of the pension. That will include both the shareholders and the policyholders in a proprietary company. In the case of mutual insurers, there is no alternative but for policyholders to be used. In the case of shareholder-owned companies, we consider it reasonable for the with-profits policyholders to bear a proportion of the costs, following the principle that they share in the good times as well as the bad, to the extent that they stood to share any profits made from the sale of pensions contracts involved--and, of course, provided that that does not lead to a failure to meet policyholders' reasonable benefit expectations.
My hon. Friend the Member for Edgbaston, who is extremely knowledgeable on the subject, mentioned orphan assets and inherited estates, which is a distinct--but none the less linked--issue. Our objective remains to protect policyholders in line with the normal position that with-profits policyholders should share in the whole surplus of a with-profits fund--usually in the proportion of at least 90 per cent. Any exceptions to that norm need to be carefully justified. However, the precise
circumstances of each case differ, and it is not always easy to judge where the legal ownership of these often substantial surpluses lies.
In many cases, use of the inherited estate to meet personal pensions mis-selling costs is a sensible way to protect policyholders from immediate and severe cuts in their bonuses. However, as I have said, we will continue to monitor the way in which the costs of compensating the victims of pensions mis-selling are being met, and we will take any necessary action to protect policyholders' reasonable expectations.
The hon. Member for Grantham and Stamford (Mr. Davies) asked whether the costs should not instead fall upon the individuals who themselves sold the pensions, or who were managing the firms responsible for that mis-selling. It is important to stress that the sales managers and the sales force were often carrying out company policy. As my hon. Friend the Member for Hemsworth pointed out, in some cases those who were sent out to sell were placed in a quite impossible position, and it would be utterly wrong to expect the cost of compensation to fall on those individuals.
The responsibility for compliance goes right to the top of the company. The Financial Services Authority has the power to fine individuals within firms if any of them are found responsible for systematic malpractice, although that evidence is not always easily available.
I wish to refer to our pensions policy, which the hon. Member for Maldon and East Chelmsford made much of. The story in the Daily Mail to which he referred--as my right hon. Friend the Chancellor has made clear--has no foundation whatever. The pensions review and the stakeholder pensions proposals that we are developing are on track, and will be disclosed in the forthcoming Green Paper.
The abolition of the payment of tax credits to pension funds is part of a reform of the structure of company taxation which is in line with our determination to secure long-term growth in the economy and to remove the perverse incentive that payable tax credits gave to companies to distribute dividends rather than retain profits for investment.
I must end by stressing that phase 2 of the pensions review will go ahead. The Treasury and the regulators will continue to work with the industry to ensure good progress. I urge the industry to co-operate with us and the regulators, and to build on the progress that we have at long last made in the past 18 months.
Mr. Robert Ainsworth (Lord Commissioner to the Treasury):
I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.
Ordered,
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Robert Ainsworth.]
Mr. Lindsay Hoyle (Chorley):
Thank you, Mr. Deputy Speaker, for allowing me the opportunity to speak about the farming industry and to highlight the problems that face farmers in my constituency, who have had one of the most dismal years since the 1973 crisis.
The north-west is the second most affected area in Britain as regards the crisis in farming. Chorley has approximately 500 farmers. They are predominantly livestock farmers, although there is some arable in the lower areas of the constituency. They have all been hit hard by the bad summer and the turndown in stock prices. A ewe costs as little as £5 on Clitheroe market today, compared with £60, 10 years ago. In the past year, five of my farmers have sold up and one has had to get rid of his entire stock of pigs for next to nothing, losing thousands of pounds. Many more farmers are on the brink of bankruptcy.
The Tenant Farmers Association estimates that the average income of farmers has fallen by nearly 55 per cent. in the past year to just over £7,000. Most of my tenant farmers rent their land from North West Water or RJB Mining. Perhaps those companies could forgo six month's rent to allow the farmers to recover and give them a chance to keep farming, especially given some of the profits made by the utilities.
The situation is desperate in Chorley and throughout the country. Farmers in my constituency have pleaded with the Government for help. Without drastic action to solve the crisis, we will witness the decline and perhaps the extinction of a valuable industry and a great tradition in Britain.
I welcome the measures that the Government have taken so far to deal with the problems created by years of Conservative neglect. They have responded positively by providing agrimonetary compensation totalling £85 million in just two months and have so far retained the calf processing aid scheme to support the market for beef, which I hope will continue after November.
The Government have supported Britain's farmers in fighting for an end to the beef ban and have met the cost of enforcement of controls on specified risk materials from cattle and sheep in 1998-99. That support is worth £35 million and has helped livestock producers.
One of the best ways actively to repair the industry is to lend our support and back the "Buy British" campaign. It is vital that we not only restore the British public's confidence in British meat, but actively promote the sale of British produce. Today, the National Farmers Union launched its "Proud to Serve British" campaign, which was attended by my hon. Friend the Minister of Agriculture, Fisheries and Food. The campaign will target catering companies by encouraging them to buy British and to demonstrate that at retail outlets with the use of promotional material. I have one of the posters here.
One cannot underestimate the role that catering companies can play in supporting farming. Families in Britain spend 26 per cent. of the annual food budget on eating out and turnover in catering outlets is rapidly on
the increase. In 1998, we spent £23 billion on catering and that figure is set to rise to at least £32 billion by the new millennium. However, only 50 per cent. of caterers buy their produce from a British source. We need to tackle that problem and to ensure that more caterers buy up to 100 per cent. from the United Kingdom. In the NFU's "Great British Food" survey of the general public, respondents said that they would like more British food to be served in local restaurants, cafes and pubs. Some 47 per cent. of the public state that their main reason for buying British is to support the rural economy, which the Government also support. We should build on that and make sure that everyone has the opportunity to purchase quality British produce.
I welcome the announcement by the Ministry of Defence that it is to serve British beef to the United Kingdom armed forces. That commitment will give a boost to the industry and help to restore confidence in beef among the British public. I hope that the MOD will soon follow suit with lamb. The lifting of the ban on beef on the bone next March will be another big step on the road to recovery.
We should now concentrate on schools, local education authorities, hospitals and other large establishments, which have a part to play in boosting the farming industry. We need a commitment from them that they will put beef back on the menu and make a concentrated effort to buy the British beef that we love.
We must put our full weight behind the campaign to back British produce. I hope that the people of the UK will show their support. We should actively encourage the public to purchase British produce by emphasising the high standards of our products.
I have already suggested to my hon. Friend the Minister that we should consider imposing stricter standards on imported meat and dairy produce. Often, inferior standard produce is imported and sold at a lower price. That must be stopped, by ensuring that meat and dairy produce adhere to high standards. The animal welfare standards observed in the UK should be applied to produce entering the UK market from abroad. For example, in the UK a qualified vet is required to be on hand at all slaughterhouses, but does the same rule apply in Greece and elsewhere--say, central America? What saving is made by not having to apply such strict standards in slaughterhouses there? If we applied equal controls, other countries would not be able to cut costs. We would be on an equal footing and furthermore, that would benefit animal welfare in other countries.
If a car is imported into the UK, we are careful to ensure that it meets all safety criteria to match our British standards. Why should meat and dairy produce be any different? I hope that the Minister will consider that.
I am disappointed by the way in which the supermarkets have acted during the crisis. It is about time that they acknowledged the vast problem. Instead of retaining the huge profits that they have been making, they should consider paying a fairer price for meat. Large supermarkets can afford to reduce their profits for the sake of a valuable industry, but instead they join together to maintain high retail prices. Soon they will no longer be able to offer the consumer a wide range of quality British products, as their greed will destroy the industry.
I welcome the fact that some supermarkets are beginning to see that. Sainsbury's, for example, now ensures that 90 per cent. of its produce is of British origin. Asda has removed New Zealand lamb from its shelves, in a move designed to boost Britain's struggling sheep farmers. I hope that Asda will pay a good price for the good quality lamb that it will sell.
In general, however, the supermarkets refuse to pay a fair price for meat and in some cases operate like a cartel, agreeing to keep prices high. Supermarkets may claim to be in competition when they sell products at rock-bottom prices, such as a tin of beans at 7p, but I do not see any savings being passed on to the consumer on beef, pork or lamb. I want a fair price for a quality product to be paid to farmers. That will protect farmers' livelihoods and allow the continuation of the farming industry and shoppers' choice.
Overall, I support the Government's efforts. They have acted swiftly to address the crisis in farming, and slowly but surely we are getting back on track. However, we need more support. I welcome the strong commitment to the UK farming industry and to the rural economy demonstrated in the intention to introduce market-oriented reform of the common agricultural policy.
That Mr. Eric Clarke be added to the Liaison Committee.--[Mr. Robert Ainsworth.]
3 Nov 1998 : Column 778
9.59 pm
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