§ The Minister of State, Department of Health and Social Security (Mr. Stanley Orme)
I will, with permission, Mr. Speaker, make a statement about occupational pension schemes.
Last year the Occupational Pensions Board reported to my right hon. Friend's predecessor on a number of questions she referred to it, including disclosure of information and member participation in occupational pension schemes.
The Board's report was made in February 1975. The Government have now carefully considered the report and have decided that the majority of the board's recommendations should be accepted. In particular, the Government have decided that there is an overwhelming case for a statutory provision which will require the full disclosure of information about schemes to scheme members. The Government also intend to extend this right to the independent recognised trade unions concerned.
The Government accept the board's views about the benefits to be gained from members taking a responsible role in the management of their schemes. Occupational pensions can be regarded as deferred pay, and it is therefore right that members should have a say in the running of their scheme. But the Government doubt whether satisfactory progress could be made by means of voluntary "code of good practice" as suggested by the board. Accordingly, the Government propose to provide by legislation for 50 per cent. member participation in the management 2026 of occupational pension schemes through the agency of independent recognised trade unions.
My right hon. Friend published yesterday a White Paper, Cmnd. 6514, containing the Government's proposals, which will prepare the way for a public discussion of the issues involved. The Government will continue their usual practice of consulting the TUC, the CBI and the main pensions organisations before bringing forward their proposals for legislation. Any views expressed by other bodies with an interest in this field would, of course, also be taken carefully into account.
§ Mr. Patrick Jenkin
I am grateful to the Minister of State for making this statement in the House. However, it is a little sad that it has to be made away from the tumult and shouting of yesterday and when most of the captains and kings have departed to their constituencies, because they are a very important White Paper and statement.
Do the Government recognise that, while we welcome the growing trade union interest in occupational pension schemes, the White Paper gives the trade unions as such a wholly unjustified measure of control over occupational pension schemes? Does the Minister recognise that this represents a further whittling away of the rights of employees—for instance, of middle management and others—who do not belong and do not wish to belong to trade unions?
Is the Minister aware that, coming after the very successful efforts to achieve bipartisan agreement on the future role of occupational pension schemes within the framework of overall pension policy, a role in which a notable part was played by the Minister's predecessor, the late Brian O'Malley, the White Paper now threatens to chuck the whole issue back into the arena of party politics?
I have three specific questions to put to the Minister. First, do the Government recognise the essential distinction between scheme members who are entitled to a say—indeed, a bigger say—in how their schemes are run, on the one hand, and, on the other, trade unions which may represent only a minority of the members of any particular scheme?
2027 Secondly, how do the Government propose that scheme members who are not trade union members should be represented? Will they have to be in addition to the 50 per cent. trade union representation, or will their representatives form part of it, even though they may not be trade union members?
Thirdly, will the right hon. Gentleman give a categorical assurance that he will include in the Bill a provision that, if the members of a pension scheme so wish, they may elect their own representatives to sit on the management body rather than having them appointed by trade unions?
§ Mr. Orme
I am rather surprised at the churlish attitude adopted by the right hon. Gentleman. I should have thought that the whole House would recognise that this was a positive step in industrial democracy, giving workers a 50 per cent. right only in the management of their own schemes, bearing in mind that this is, of course, deferred pay.
I come to the right hon. Gentleman's specific questions about trade union representation. The Government have considered this matter very fully. They have considered the increasing trade union representation which is now found throughout middle management, not just in middle management. These schemes apply throughout the whole of industry. The point should be made that we are talking about independent trade unions which are recognised by the Employment Protection Act but which need not necessarily be affiliated to the TUC.
In regard to the management of schemes, the Government are of the opinion that the overwhelming majority of people in occupational schemes are members of independent trade unions. Therefore, we feel that the right lines along which these schemes should be developed is through organised and collective bargaining and through the independent trade unions.
Let me emphasise in answer to the right hon. Gentleman's last question about participation and how schemes will be managed where there may be trade union and non-trade union membership that the statutory right for negotiation will be with the independent trade unions, 2028 but it will be a matter for the companies and firms concerned how these schemes develop. However, the Government make two central points in their proposals in the White Paper. The first is that it should be 50–50 representation, and the second is that it should be through the independent trade unions.
§ Mr. Freud
Will the Minister accept that we on the Liberal Bench welcome the board's desire to increase the areas of the disclosure of information and that we shall be taking part in the public debate? In view of what the right hon. Gentleman said about the Government's proposals to increase the possibilities of participation, I think we deserve an explanation of why only TUC-affiliated unions are to be involved.
§ Mr. Orme
I thank the hon. Gentleman for his general welcome of the White Paper. Naturally, he and his party and others will want to discuss the details. In paragraph 71 of the White Paper—and it is repeated many times throughout the White Paper—we say that we want consultation. The hon. Gentleman asked me why it was a White Paper and not a Green Paper. We have based it on the Occupational Pensions Board's report. We have gone into this in great detail. We feel that we want to get ahead with legislation, though we say again in the White Paper that we shall give two years' notice before the proposals come into operation. We feel that there is room within the terms of the White Paper for negotiation.
Finally, let me again correct the hon. Member for Isle of Ely (Mr. Freud). We refer to independent trade unions, which, of course, can be outside the TUC.
§ Mr. Ron. Thomas
May I say how much I welcome this White Paper, especially its references to the disclosure of information and participation in these pension schemes by the working people 2029 concerned because, as my right hon. Friend rightly said, this is a matter of deferred income?
I want to put two questions to my right hon. Friend. Is not it essential that the representatives come from independent trade unions since, under the Employment Protection Act, only then can we be clear that they are independent of the employer? I do not see how anyone can look at a pension scheme unless he is independent of the employer.
Secondly, will my right hon. Friend say a little more about the training of these representatives, which is also mentioned in the White Paper? That is very important.
§ Mr. Orme
I thank my hon. Friend for his welcome of the White Paper The answer to his first question is a very firm "Yes".
Training is one of the aspects which the Government want to examine. These are areas in which we need a great deal of consultation. I shall want to discuss this freely with the pensions interests and with others involved. Certainly we have no preconceived ideas, but obviously training will be necessary.
§ Mr. Paul Dean
I give a warm welcome to the general aim of the White Paper—namely, that there should be more information available to occupational scheme members and that there should be greater participation on the part of members in the management of their schemes. There will be general agreement in the House about that aim, and I hope that there will be constructive discussions of the proposals.
However, I put two notes of reservation to the right hon. Gentleman. First, will he at least keep an open mind about whether it is wise to proceed by legislation as opposed to a code of practice? In proposing to proceed by legislation, is he aware that he is acting contrary to the advice of the Occupational Pensions Board? Might it not be better, more flexible and easier to achieve the general aim to proceed by a code of practice?
The second point concerns that made by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). Does the right hon. Gentleman recognise that, unless he proceeds very carefully in 2030 his consideration of who should provide representation of members of a scheme, he runs the risk of the bipartisan approach to pensions being undermined? Does he recognise that all members of schemes at all levels in those schemes must be allowed effectively to participate and that, if there is any suspicion of political control coming into the investment of these very large sums rather than the interests of the members of those schemes, it will do grave damage to the future development of occupational pension schemes?
§ Mr. Orme
I thank the hon. Gentleman for his broad welcome of the White Paper and of course I note his two reservations.
Of course the Government considered whether to proceed by means of a code of practice as opposed to legislation. These are very complicated matters involving a multiplicity of schemes and different approaches. Therefore, the Government felt that a legal framework was essential to bring these schemes together and to take them, in effect, out of the area of criticism.
We shall now be moving into an area where there will be the possibility of contracting out of the better pensions scheme that comes in in 1978. There is a great deal of work to be done, and the members of schemes will want to feel that their schemes are safe and that their investments are sound.
That brings me to the hon. Gentleman's second point. It should be recognised—I think most people do recognise—that people in industry, whether in management, on the shop floor or in offices, are becoming increasingly concerned about pensions. They want a higher standard of living when they retire, and they are living longer. There are crucial factors which have entered into the bargaining sector of the trade union movement. People want to protect their interests, and we feel that their interests can best be protected on a collective basis and that the trade unions, acting independently and freely, are best equipped to do this.
§ Mr. William Hamilton
Does my right hon. Friend recognise that this step will be widely welcomed by all workers in the Labour movement generally as an 2031 important step towards industrial democracy, to which I presume everyone in the House wants to progress? I presume that there will be a debate in the House on these matters at an early date—I hope that it will take place before the Summer Recess, or certainly early in the new Session—but is it the Government's intention to introduce legislation in the next Session? The right hon. Member for Wanstead and Woodford (Mr. Jenkin) said that this was a wholly unjustified increase in the power of the trade unions, but what precisely is the present trade union representation in occupational schemes?
§ Mr. Orme
I thank my hon. Friend for his overall welcome. It is my intention to start consultations immediately, first with the TUC and CBI and then with the pension interests. I hope that the consultations will take place during July. I then hope to be in a position to produce a Bill. I cannot speak for my right hon. Friend the Lord President, but I hope that we can introduce the Bill next Session. My hon. Friend will appreciate that I cannot pre-empt the timetable of the House. If it is introduced next Session, we shall still have to give two years' notice of the implementation of the scheme. There is a great deal of work to be done, and the quicker we can get on with the Bill, the better.
I think that my hon. Friend's second question was about the power of the trade unions.
§ Mr. Orme
It is a very interesting question. Opposition Members laugh, but I do not see anything funny in it. Many schemes include trade union representation. The National Union of Mineworkers has a scheme that runs in line with that of the National Union of Railwaymen. Many schemes have such representation, and they will increasingly have it. We are not starting on virgin soil but building on the good things that already exist.
§ Mr. Fry
Does not the right hon. Gentleman feel that many people will contrast the Government's refusal to accept the advice of the board—namely, to make these moves voluntarily—with 2032 their attitude to the trade unions regarding incomes policy? If such an important step as the incomes policy can be taken on a voluntary basis, why not in this case? Will not this be seen as yet another Government submission to its paymasters in the trade unions?
§ Mr. Orme
The hon. Gentleman's knowledge of the trade union movement must be pretty small. The trade unions act as independent bodies. They act independently of one another. A great deal of discussion will be needed. The hon. Member for Somerset, North (Mr. Dean) referred to the voluntary approach. Naturally, we examined that, but we feel that there is a need for a framework as we are dealing with deferred pay. We feel that the standards must be increased.
I take this opportunity to refer to a statement that appears in this morning's Daily Mail. That sort of scaremongering does no service to pension schemes. In fact, we are doing the exact opposite of what the Daily Mail talks about. We are trying to give long-term democratic control over the investment of members' money. As the hon. Gentleman knows, pensions and fringe benefits are now an integral part of collective bargaining and are becoming more important.
§ Mr. Park
I add my welcome to these proposals. In deciding that representation will be on a 50–50 basis, I think that the Government are taking an essentially practical approach to this development. It is inevitable that we should hear the cry from the Opposition Benches "What about the non-unionists?" If Opposition Members care to examine that cry just for once, they might modify it on this and on future occasions.
Wage bargaining, for example, is done in essence by the trade unions. Management, even if willing to do so, are not able to negotiate individually with each person in their employ, except in very small businesses. However, in this instance we are talking about the membership of a body of trustees that in a given factory may number only 10 or a dozen, or fewer. In choosing to have independent trade unions come forward with representatives, the Government are facing the fact that the representatives will be responsible to the members. They will be required to report back to the 2033 members on their conduct on the trustee board.
If we turn to the non-unionists—
§ Mr. Deputy Speaker (Mr. Oscar Murton)
I am sorry to interrupt the hon. Gentleman, but it will be in order if he comes to the point of his question.
§ Mr. Park
The point is that representatives of trade unions are responsible to the members. Surely my right hon. Friend will agree that non-unionists are responsible only to themselves. To whom are they accountable except to themselves? How would they reflect the opinion of other trade unionists? They cannot all be on the trustee board.
§ Mr. Orme
I think that my hon. Friend is anticipating a Second Reading debate. However, his two central points are very important. When we talk about 50–50 representation, we also mean management representation of 50 per cent. I am convinced that employees, through their trade unions and managements, will want only the best operation of their scheme. In many instances in the past there has been far too much secrecy.
In the white-collar sector, as it is called, and in the managerial sector many unions can now show a 1,000 per cent. increase in membership over the past year. Membership is increasing. I think that those members will want their trade unions to play a positive part in the schemes.
§ Mr. Ridley
Is the right hon. Gentleman aware that he is right when he says that we are talking about workers' deferred wages? Does he appreciate that 2034 that makes it all the more important that the funds are invested commercially and not for idealistic or political motives? That is why it is better to give a 50 per cent. share of control to the workers themselves rather than to the trade unionists, who are not responsible for what happens to the money they lose that belongs to others.
§ Mr. Orme
I think that the hon. Gentleman has a misconception. It will be left to the individual companies to decide how they implement the scheme. One cannot envisage trade unionists wanting the company in which they work to lose money which is their own money. They will want to see funds invested in the best possible manner. It has been shown repeatedly in recent years that work people, whether by hand or by brain, are often far more concerned about the firm they work for than are some of the shareholders and management.
§ Mrs. Chalker
I welcome the participation that is outlined in the White Paper, but how does the right hon. Gentleman envisage paragraph 33 of the White Paper applying in companies where the works council rather than a trade union is the main negotiator?