Pensions have become one of the most regulated areas of life. Over the last 10 years they have become much more heavily regulated, and at the same time many more people have lost out. It is true that heavy regulation of funds began under the last government post Maxwell, but it has got far worse since 1997. Some have been told their funds cannot pay the pensions they had been promised. Some have been told their funds are closing down so they cannot contribute in future. Many new employees have been told the pension fund enjoyed by older memebrs of staff is not open to them.

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None of this is a good advert for regulation. The Regulators will say, "Don’t blame us, it wasn’t our fault." Some regulators privately blame the government for taking around ??5,000 million a year of tax out of these funds, which did a lot of damage. Some say companies took pensions holidays in the 1990s by not paying more money in, and this left them short of money to pay future pensions.

??What they fail to point out is that the regulatory and tax system made many companies take tax holidays. The rules stated that if a fund according to the actuaries had more than enough money to pay the pensions the company could not go on putting money with the accompanying tax relief into the funds. The Treasury wouldn’t allow it and the actuaries told the companies not to. They only took pension holidays if the funds were full up.

??So what is the use of regulation if it cannot deal with these kind of?? mistakes or threats??? Why didn’t the regulators protest when the government took the ??5 billion a year? Why did we not hear them warn that this was bound to damage the solvency of funds? And why didn’t the regulators go to the Treasury in the 1990s and say that they should allow companies to put even more money into the funds, if that was what was needed? It’s?? no good having regualtors who are tough on the Trustees or the investment managers if they aren’t tough on the main villains, in this case the government.

When I first became a government Minister I was made City regulation Minister in the DTI in the days when the DTI regulated the insurance and investment industries. I was keen to reduce unnecessary public spending, and supported a Prime Minister who was famous for cutting wasteful and marginal spending. It was not good news to discover shortly after arrival that Barlow Clowes, an??investment company, had let down its customers and lost them a lot of money. It was even worse news to discover that this was a regulated business,and my predecessor as Minister, Francis Maude,??had personally given an award to people for selling lots of Barlow Clowes investments. The Ombudsman found maladministration by the regulator.

I had no doubt what I had to do, although it was the last thing I wanted to do. I had to press the government to compensate the victims, as it was quite clear that the regulator had failed to protect the investing public. I am pleased to say my colleagues from the PM down agreed we had to say sorry. We?? paid up.

This government is far more guilty over pension funds than we were over Barlow Clowes. Barlow Clowes was a failure by the regulator to see what a private company was doing wrong. The pension crash is partly because the government itself took so much money out of the funds! There has been an Ombudsman finding against them, and a court verdict against them, and still they refuse to admit their mistakes and compensate victims.

Instead of doing the right thing they play silly politics. They point out that some??of the "misleading" statements about pensions predated this government, without also pointing out that before this government arrived there weren’t all these pension shortfalls. They claim that it would cost ??15 billion to put right the problem. Everyone else thinks the cost of the immediate victims would??be far less. The industry and the opposition are prepared to explore using other money like unclaimed funds to help bridge the gap. What’s stopping the government?

The regulatory system included a Minimum Funding Requirement. People were led to believe that this would take care of their pension if their company went bust. Trustees thought they were doing their job if the actuary told them their fund met the MFR. If people are not getting their pensions, they are entitled to ask what was the point of all this Minimum Funding requirement business?

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