HC Deb 30 June 1980 vol 987 cc1177-88 8.15 pm
Mr. Tebbit

I beg to move amendment No. 1, in page 2, line 19, after first "section" insert and section 4(1) of this Act".

Mr. Deputy Speaker

With this we may also take Government amendments Nos. 8 to 10.

Mr. Tebbit

I do not think that this group of amendments needs to detain the House for too long. The amendments are of a technical nature. They involve no change of policy. The amendment to clause 3, line 33 is designed to cater for the particular procedure for the issue of shares to and the sale by the Government. The other amendments are purely consequential to it.

If the House would like me to explain the details of the workings of renounceable letters of allotment I should be happy to do so, but I feel that that is not necessarily the wish of the House.

Amendment agreed to.

Mr. Clinton Davis

I beg to move amendment No. 5, in page 2, line 29, leave out "thing" and insert "act".

This is a matter of great significance. It arises from the inelegance of the drafting of subsection (3)— Any agreement made, transaction effected or other thing done by The Minister should have done better between Committee stage and Report. From having consulted the Oxford English Dictionary, my understanding is that "thing" in an obsolete legal term. Perhaps it is right that in that context it should be included in the Bill. I also understand, having further consulted the same dictionary, that Plato said Theft is a mean and robbery a shameless thing. That is another very good reason for having used the word.

This is a most undignified way of drafting legislation. I should have thought that the Minister would seize the opportunity, particularly since in the past he complained about the inelegance and falsity of the language and the way in which statutes are drafted, to make some advance here. So perhaps he will tell us that between now and consideration of the matter by their Lordships something will happen to change drastically the feeble language of the statute. Of course, it is a feeble piece of legislation, but even so I think that the Under-Secretary could do better.

Mr. Tebbit

I recollect that in Committee I agreed to consider an alternative— a more elegant phrase which would keep the draftsmen and lawyers happy".—[Official Report, Standing Committee B, 31 January 1980; c. 257.] I seized the opportunity, but then I dropped it because I could find no phrase that would keep the lawyers and draftsmen happy. Unfortunately the word "act" does not represent any improvement over "thing". It could be construed in a narrower sense, and so, as much as I wanted to be helpful, I could not accept the amendment.

To be perfectly serious about the matter, I should explain that a breach of duty by the board giving rise to a liability, or a breach of contract by a person obligated to the board may arise through a failure to act. The word "act" would not cover such a case whereas "thing" would.

We have not been idle on the matter, but we have been unable to improve on the word "thing" which brings across the meaning we require—

Mr. Clinton Davis

Has it been to Cabinet?

Mr. Tebbit

I must confess that it has not been to Cabinet. The Cabinet seems to have had other matters on its mind in recent times.

Although we criticise lawyers for using abstruse and difficult language, in this case we can find nothing more simple and ordinary than the good old Anglo Saxon word "thing"—before anyone thinks of anything else.

In the circumstances, I hope that the Opposition will not press the amendment. If any of their Lordships, with all the erudition for which they are famous, could find a better word I should still be willing for the matter to be considered in another place.

Mr. Clinton Davis

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. John Smith

I beg to move amendment No. 6, in page 2, line 31, after 'day', insert: '(including without prejudice to the generality of the foregoing, any obligation founded on legislation which is specifically repealed by this Act)'.

Mr. Deputy Speaker

With this we may also take the following amendments:

No. 7, in page 2, line 31, after 'day', insert: 'including, without prejudice to the generality of the foregoing, any pension right or contract of employment.'

No. 54, in schedule 3, page 25, line 14, column 3, leave out 'section 15'.

Mr. Smith

These amendments give us an opportunity to raise the question of pensions of employees of British Airways as it is presently constituted. We discussed the matter in Committee. The Under-Secretary will recollect that Opposition Members expressed concern about what will happen to the agreements made between British Airways as presently constituted and the relevant trade unions and professional associations about pensions.

It is fair to say that a good pension arrangement exists—of which the Under-Secretary is a beneficiary—for employees and former employees of British Airways. The change from a public corporation to a private sector company raises the question of what will be said when the shares are launched about the obligations of the company towards its employees, and the likely effect upon employees of such a change. If the change had not been proposed, they would know where they stand. As I understand the position, the pensions are index-linked. They are much the same as the pensions paid to employees in the public service.

We pressed the Under-Secretary about this matter in Committee because it is a matter of legitimate concern for the many employees of British Airways. Their pensions are a material part of their wages and conditions of service. The Under-Secretary said that pensions would be a matter for the new board of the successor company. He could not say what would be the attitude of the board towards the obligations that it inherited.

One reason why we tabled the amendment in this part of the Bill is that in this part of the Bill a legal technique has been used to change the nature of the corporation, providing that all previous obligations of British Airways will become the obligations of the new company. Just as the new company will have the right to the benefit of all the contracts and the advantages of British Airways, it will be subject to all their liabilities and obligations. It will be in the same legal position on rights and obligations, and we feel that the pension obligations should be included in that. The pension obligation of British Airways should be transferred lock, stock and barrel to the new company. It is not unreasonable to say that if the legal ownership of a company changes, especially when supervised by a Government who give similar pensions to their employees in the public sector—I remind the House that index-linking was introduced by a Conservative Government in 1971—it is unusual for them to put at risk the pensions of employees of a public corporation.

The problem could be solved easily if the Government said "We shall guarantee that, whatever happens, your pension rights will be secured". That is one of the things that any intelligent person acquiring a company in the private sector should wish to do. I know that, regrettably, that does not always happen. Surely what we expect of someone acquiring a company is that that person should say to the employees "I shall guarantee the same conditions of employment as you have at present, especially your pensions. I assure you that you will be no worse off. You may be no better off, but you will not be worse off under my control". It is an analogous position. Where the Government superintend the handover of the assets to the new creature, the successor company, it is entirely legitimate for the employees of British Airways—some of whom have spent a long time in their service in the expectation that they would have certain pension rights at the end of that service—to say that that was a factor that they took into account when deciding either to join British Airways or to remain in their previous employment.

We are entitled to ask the question that I know trade unions and professional associations have been asking about the matter. If they were not asking questions, they would not be carrying out their proper obligations to their members. I hope that tonight the Under-Secretary will deal with the matter as clearly as it should be dealt with. He should say that the Government will take steps to ensure that the pension rights will be in no way diminished or affected adversely by the Bill's proposals. When we tackled him in Committee we received a bland, turn-away answer. He said "Do not bother me about this because it is a matter for the successor company, and who am I to know what will be its position?"

However, investors will want to know the Government's attitude when they announce the prospectus. There is a considerable obligation towards the company's employees to maintain pensions on an index-linked basis. It is not common practice throughout the industry but, by and large, it is common practice throughout the public sector. In those circumstances the House would be failing in its duty if it let the legislation reach the statute book without a better answer to this highly pertinent and important point than that which we have so far been able to extract from the Under-Secretary in Committee. We touched on the matter in Committee, and it is proper to raise it again on Report because it is a matter with which the whole House should be concerned. It is almost a matter of honour in the way in which we deal with employees of companies.

If political parties are elected to power, and carry out changes—I am not saying that everybody should be protected from those changes, as that would be impossible in the modern world—the Government should set an example to other employers in elementary matters such as conditions of employment. Many employers take the trouble to reassure their employees when they are faced with a take-over. Some, unfortunately, do not do that. It is a compelling argument from the point of view of employees.

The other matter that relates to this group of amendments deals with the repeal of section 15 of the Civil Aviation Act 1949, which relates to comparability being introduced into wage negotiations for British Airways employees. I am not sure why the Government wish to make that change, or why they are so averse to this provision, which has been on the statute book for about 31 years. I wonder why it was swept in among the repeal provisions in the Bill. It is an important point, because I know that the trade unions thought it a valuable and important piece of statutory assistance in the pursuit of better wages and conditions for their members in the airline industry.

My first point about pensions is important. I ask all hon. Members to give careful consideration to the matter, especially as the Government have other pieces of legislation of this character. If the pension rights that employees are entitled to expect to be preserved are put at risk by the political activities of the Government, it is a matter that should be thrashed out in this place where we have the responsibility of deciding whether the Government should be permitted to change the law. The matter should engage the attention of all hon. Members in all quarters of the House. I put it forward not in any partisan spirit but because I am genuinely worried about the effects of the provision. I hope that the Under-Secretary will be able to reassure us better than he has done so far.

Mr. Tebbit

I am perhaps mildly hurt that the right hon. Gentleman should feel that I did not give sufficient assurance in Committee. I thought that I went as far as I could about this matter. Amendment No. 6 would be undersirable in several ways, for technical reasons with which I need not bother the House, because the right hon. Gentleman and I have never tried to base our arguments on technical points. I accept what he said in the spirit of his argument rather than in the detail of the amendments as drafted.

The right hon. Gentleman will find, at columns 259 and 260 of the Official Report of the Standing Committee, the points which I have to make again this evening, although I might use slightly different words on this occasion, since it would seem to be rather boring to read from the Official Report what I said on that occasion.

As I explained to the Committee, the successor company, both before or after any flotation of the shares, is to have precisely the same relationship with the airways pension scheme as the present board does, and the company will be subject to the same rules.

I am advised—indeed, I know perfectly well because I am a member of the pension scheme, as the right hon. Gentleman has mentioned—that there are safeguards within the scheme which would effectively prevent a worsening of the terms of benefit under the scheme. As I told the Committee, there is a 50–50 arrangement for representation on the board which manages the scheme. So, clearly, there will be some reference to the pension scheme in the prospectus for the sale of the shares, because it is an important factor to be taken into consideration by those who choose to invest in the airline.

We have to take into account the common base self-interest of the company. For a company which has inherited under the Bill all the obligations of its predecessor corporation—and they include all the obligations in the pension scheme—to try to change those or to evade them would hardly be a way in which to run a company successfully and profitably. It would cause grave difficulties.

8.30 p.m.

Mr. John Smith

I take the point that one might expect the company to behave decently for all sorts of reasons of self-interest, as well as for reasons of principle, which is the point that the Under-Secretary is making. But surely we could put the matter beyond doubt—in circumstances in which the Government will, at least for the reasonably foreseeable future, be the majority shareholder—by the Minister saying that he will take steps, using the Government's majority shareholding position, to give an assurance that the new pension scheme will not put people in a worse position than they are in at the moment. That is not a great deal to ask and it is within the Government's power.

Mr. Tebbitrose—

Mr. Blackburn

Will the hon. Gentleman give way?

Mr. Tebbitt

Certainly.

Mr. Blackburn

My hon. Friend will be well aware that I raised this point in Committee. I feel very strongly about it. I pointed out that at 31 March 1979 the assets of the pension fund stood at £500 million".—[Official Report, Standing Committee B, 31 January 1980; c. 265.] That was a bold statement of fact. I qualified it by saying that it did not mean a thing whether it was £500 million or £750 million, and that we were trying to determine whether the pension fund was in a sound and viable state.

It hinges, I suggest, on the earlier question in regard to clause 2, when we spent time discussing when the shares will be put on the market and at what price.

Before we reach that stage, we want to know what liabilities the new company will inherit. It may well be—as we tragically found in the matter of the Post Office—that the pension scheme is grossly under-funded. I hope that my hon. Friend will be able to help the House in this matter, because there is common ground on each side. Although we have had a debate in the desert of democracy, we have now reached the oasis of civilisation, because we are talking about men's pensionable rights, which we all want to safeguard.

Mr. Tebbit

I entirely accept my hon. Friend's point. At a later stage in Committee I referred to the progress that was due to be made in the review of the trustees to ensure that the assets were adequate, because they are under a statutory obligation to make sure that the fund is able to cope with its obligations.

Nothing in this world is absolutely certain, except death, and to say that a pension fund is soundly based is to say that it is soundly based so far as one can see; but in the event of war, in the event of absolutely disastrous economic circumstances, or a number of things of that sort, no pension fund can stand up. A pension fund which may well have seemed adequate to people in Germany just after the First World War would have looked very odd after the economic problems which hit that country.

There is no possibility of giving absolute guarantees. What I can give is an undertaking that there is nothing in this legislation which of itself affects the relationship between the corporation or its successor company, on the one hand, and the pension scheme, on the other hand. Any future changes in that pension scheme would be a matter between the employees and the company, as indeed at present any changes are a matter between the employees and the corporation—or, to be more accurate, the trustees of the fund, I think, because they represent also the existing pensioners as well as the employees. So nothing in that sense changes unless the parties conclude that it should change.

There are the two problems which I have outlined: first, the obvious implications, on the one hand, for industrial relations and other matters, and, on the other hand, the "no worsening" clause and the 50:50 representation on the trustees committee. I think that that is the best guarantee that one can give.

The Goverment's position as a shareholder will have to be maintained as I have outlined it—that the shareholding would not be used to interfere in the management of the company except in circumstances in which it was clear that something which was being done or was proposed to be done was gravely against the interest of the company. When I say "the company", one has to accept that the company includes the whole of the business, and if something was being done which would disrupt that business, clearly the Government's shareholding might be called upon. But I do not believe that I can go further than that in that respect. I hope that the right hon. Gentleman will feel that that is a reasonable position.

From an entirely personal point of view, as one of the beneficiaries of the fund, I am satisfied that it is a reasonable position to take. I have had no representation from the trustees of the fund to the contrary. I think that that is significant, because I am sure that they are aware of these matters and have had our debates drawn to their attention.

Mr. Sheerman

Have there been any representations from the trade unions whose members are employed in British Airways about the pension fund? Will the Minister confirm that it is the Government's priority that this should be a company which pursues profitability first and the welfare of its employees second?

Mr. Tebbit

The welfare of employees cannot be divorced from the profitability of a company. An unprofitable company cannot care for the welfare of its employees. It does not have any money to do so. We have learnt all too often that it is all very well to have mouth about the welfare of employees, but unless that mouth is backed by a wallet which is filled from profits the words are worth absolutely nothing.

I have to say, as I said in Committee, that I have made it perfectly obvious to the trade unions that I am willing to discuss with them any matter which they wished to discuss with me about the Bill, and that the door of my office, as I have said on many occasions, was open. I still await a substantive reply to a certain letter which I wrote to one leading trade union leader on these matters, generally speaking. The answer is that I have received no representations. I regret that I have not received representations from the trade unions about the Bill, because I might have been able to assist them in understanding its purpose and the way in which it was constructed.

Mr. John Smith

I think that I can summarise succinctly the Minister's response to the concern expressed in this debate. He said that there is nothing in this change which will positively harm the pension scheme and nothing in the Bill which can be said to depress rights in any way. That is true; there is not. The hon. Gentleman says also that he cannot guarantee people's pensions for ever. That is right; everyone accepts that British Airways cannot guarantee pensions any more than a successor company can.

However, the crucial point is that people should be no worse off as a result of the change in the ownership of the company. The Minister referred to the trustees of the pension fund—50 per cent. from the staff side, I understand, and 50 per cent. from the management side, which is a common arrangement in these matters. But the 50 per cent. on the management side might be following different instructions from the board of the successor company to the instructions at present emanating from British Airways. It is because we seek to prevent any change of policy from that quarter that we seek these assurances.

It does not seem much to ask that the Government should say that, one way or another, they will ensure that people are no worse off. I do not believe that there is any difficulty in the Government ensuring that their views are carried out. If a Minister said that it would be wrong for the successor company in any way to change the policy towards the pension fund, that would carry great weight with the successor company.

I hope that the Minister will ponder the matter. The Secretary of State is listening to the debate; I hope that he will consider this matter as well. The Government will, after all, remain, at least for a period while this matter is discussed, the 51 per cent. shareholder and they will have effective power. I am not asking the hon. Gentleman to commit other people to doing what he wants to do. The Government will be the beneficial owner for legal purposes of the successor company for that material period. I am asking for nothing that is unreasonable.

The Minister says that the amendments are technically deficient, so I shall not press them to a Division, but it would be well for hon. Members to consider the issues raised. I hope that the Minister will undertake to consider the arguments which have been advanced, as well as, if that is desired, any further representations from employees.

I understand that it may be a little while before the Bill is considered in the other place. Perhaps, between now and then, the Government can reconsider the matter. I am not asking them to give spot commitments now, but if the Minister will look at the matter again, he will go some way to assuaging the genuine concern which is felt.

Mr. Tebbit

Perhaps we can count that as an intervention in my speech, so that I can continue without asking the leave of the House to speak again. I am grateful to the right hon. Gentleman for the way in which he has put the matter. I am under an obligation to respond in a like manner.

Of course I am willing to look again at the matter to see whether I can give any more positive assurance. In the circumstances, that is probably not possible, but I shall certainly look at the matter again. If representations are made to me, I shall listen to them with care. If it were possible for anything more to be said in another place, I should certainly want that to be done.

The other matter involved in these amendments is the repeal of section 15 of the Civil Aviation Act 1949, which provided that terms and conditions of employment on any independent air transport undertaking should not be less favourable than those of the British Airways Board. That has been honoured, some times, more in the breach than in the observance, with the knowledge of the unions concerned, which have seen some of the difficulties that the independent companies went through from time to time and have been co-operative in seeing that those companies survived.

When British Airways becomes a Companies Act private sector company, it would not be appropriate if the wages and conditions of other companies were set by reference to it. That is not the way in which we conduct business in most other sectors of industry—that by negotiating with one company the wages and conditions are set for all the others. While we are making this change, therefore, it is appropriate to repeal section 15.

8.45 pm
Mr. John Smith

In view of the Minister's undertaking to reconsider the major point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Back to
Forward to