Pension Schemes Bill (Second sitting)

Debate between Peter Bedford and John Milne

Tuesday 2nd September 2025 Public Bill Committees

[Mr Bedford]

Q I am just interested in examples of recent shocks that have happened, where you had to pay out significant sums and what those sums were.

Michelle Ostermann: The biggest example is a macroeconomic shock that would affect the solvency of corporations. The failure of the corporation itself is more likely to have an impact than just a change in interest rates or equity markets. The change in interest rates can affect the fundedness of a scheme, but many of those schemes, over 75% of them now, are actually really well funded. And they have pretty well locked down their interest rate risk because they have put a good chunk of assets against their liabilities in a fairly tight hedge. Although we saw, as a result of the liquidity crisis a few years ago now, that things can change. The degree of risk, specifically leverage risk inside some of those strategies, does make them fallible. I would say the biggest shocks would be massive interest rate movements that are unforeseen, a very significant macroeconomic environment causing failure in many corporations, and technically, even a significant move in equity markets, but we would usually just ride that out. Markets can go down 20% or 30%. We would only go down 10% or 15% and we would be able to recover that in under five years, historically speaking.

[John Milne]

Q It has been a long-standing battle over pre-1997 compensation rights. Would you agree that this Bill is perhaps an opportunity to at last address that issue, perhaps by a judicious amendment or two? Do you think that that is feasible, and what framework might that take?

Michelle Ostermann: We have been progressing on this quite a bit lately. It is one of the most prevalent discussions, both with our board and with our members. We speak very often with the entirety of the industry. Several are very strong advocates for it as well, a few of which are here today, and we have taken quite a bit of humble feedback. We have worked as best we can with the Work and Pensions Committee to estimate a significantly complex set of potential scenarios for making good on historical indexation needs for pre-’97. They range in price, are quite expensive and would require us to incur or crystallise a liability. They are not cheap. It would be difficult for both us and the Government to be able to afford. The taxpayer would have an implication to some of these, depending on how they are formed, and it is beyond our prerogative to make that decision but we have been facilitating and encouraging it to be made. We would welcome progress on that. I understand, in fact, an amendment was tabled earlier today in that regard, so I was warmed by that.

Cross-Boundary Housing Developments

Debate between Peter Bedford and John Milne

Thursday 28th November 2024 Commons Chamber

[Mr Bedford]

The hon. Gentleman is absolutely right. I will go on to address some of those points, particularly in relation to the use of infrastructure.

Markfield village sits in the local planning area of Hinckley and Bosworth borough council, but under the current framework, Markfield parish council and Hinckley and Bosworth borough council have very little say or influence over such decisions, as they are made in the adjacent Charnwood borough. It is obvious that the new Markfield residents will use services in Hinckley and Bosworth, Markfield and the surrounding areas, but those areas will see very little benefit, because those benefits will go to other villages. Worst of all, such developments are going ahead without constructive or binding input from the local parish council or the adjacent borough council.

Another example is in Glenfield village, in my constituency, which sits in Blaby district council, adjacent to Leicester city council. Steve Walters, who heads a local action group, has raised the issue that the city council plans to build several hundred homes on the edge of Glenfield village, but because the village does not sit within the city council boundary, it will see all the detriment of that development but have very little input in the decision-making process. Indeed, Steve has campaigned many times against the urban sprawl of the city affecting villages such as Glenfield. He is working constructively with me and local councillors to try to get progress on the issue.

[John Milne (Horsham) (LD)]

In my constituency of Horsham, we are almost entirely surrounded by other areas that, for one reason or another, have constrained housing targets—they have areas of outstanding natural beauty, are in national parks or are already built up. As a result, under the duty to co-operate, Horsham has to take a very unfair proportion of housing to serve the whole area. Does the hon. Gentleman agree that the duty to co-operate system needs to be revised to stop freak results happening in constituencies such as mine?

[Mr Bedford]

I absolutely agree with the hon. Gentleman. He gives an example in his constituency, but I have seen the same in Leicestershire and, from speaking to other hon. Members, I know there are similar examples in other constituencies.

So where are we heading? We have a Government that are steadfast in their plan to concrete over our green and pleasant land, especially in rural constituencies such as mine. In July, the Secretary of State for Housing, Communities and Local Government said that she believed the national planning policy framework

“offers extra stability to local authorities.”

Is that really the case?

The Government’s approach is to alleviate the pressure on housing in UK cities and force additional housing on rural areas, without providing sufficient support to the communities that will impact. That was seen by the Government’s plans to reduce housing targets for cities by an incredible 35% in the NPPF. In the village of Ratby in my constituency, predatory developers such as Lagan Homes are taking advantage of the current situation, forging ahead with proposals to bulldoze over The Burroughs, despite a staggering 900 households in that village writing to the borough council to oppose that ecological vandalism. I am sure Leicester city council was jumping for joy at the news that it would have to build 31% fewer homes by 2030, but that meant rural areas such as mine and my residents’ would have to see additional housing, as it is pushed further and further out.

In truth, the reduction is why the decision to build houses on the edge of Glenfield leaves such a sour taste in the mouths of local residents, particularly in Glenfield and Blaby district. What does it look like in context? The city council has been asked to produce fewer houses, whereas rural areas, such as Blaby and Hinckley and Bosworth, have been asked to dramatically increase their target, by 69% and 59%, respectively. Unfortunately, the planning reforms do not really take into account the cross-boundary implications, so what should we do instead?

The Government should foster a co-operative relationship from the top down. Our local authorities should be encouraged to work alongside one another to prevent situations such as those I have described. That can be done by allowing adjacent borough and district councils to have a say in housing development policies through their various local plans, particularly where that will have an impact on the neighbouring authority. There should also be an ability for residents in adjacent boroughs to view and comment on plans in other local planning authority areas. Furthermore, the increased arbitrary housing targets for each borough council area simply do not take into consideration the impact of the adjacent targets. There is surely a better method for developing sustainable housing county-wide, rather than local authorities parking houses next to their own front lawn.

Finally, and probably most importantly, under the current regime there is no requirement for financial compensation for local authorities that are adversely impacted. No thought is given to that. Section 106 agreements and community infrastructure levy contributions are paid by developers to local authorities to mitigate the impact of specific developments. They are well-intended negotiated agreements that force developers to give something back to the community, whether that be funding for infrastructure, improvements or green spaces. However, they fall short in cross-boundary considerations, as we have seen in the examples I have given from Markfield and Glenfield.

Charnwood borough council has made it explicitly clear that the section 106 moneys for the developments along the boundary of Hinckley and Bosworth would go to its own borough. How can spending all those allocations for a development on the edge of Markfield, to the benefit of Loughborough and Barrow, be in the interest of Markfield residents, who sit in a different borough? That undermines local buy-in to the planning process. Instead, there should be a more practical approach whereby section 106 agreements go to the authority where the services are actually being used. Another anomaly of cross-boundary development is the distribution of council tax precepts, with the new residents in Markfield, for example, paying into Charnwood borough council rather than their own.

I am not a nimby. I called this debate to raise the issue posed by cross-boundary planning applications. I believe there should be a collaborative, holistic approach, as mentioned by other hon. Members. I encourage the Government to listen to the debate and consider bringing about the changes and proposals that I have outlined.