HC Deb 01 April 1981 vol 2 cc508-27
Mr. Charles R. Morris

I beg to move Amendment No. 52, in page 29, line 40, leave out clause 30.

It is a matter of some regret that we should be embarking on a major issue in the Bill, which deals with the pension rights of 400,000 postal and telecommunications workers, after 18 hours, deliberation on the Bill. It has been a hard day's night of debates.

One speech of great frankness and honesty to which I listened during the long night was that made by the hon. Member for Canterbury (Mr. Crouch). The House will recall that he related his experiences of meeting a number of telecommunications workers in the lobby held in Westminster yesterday. He correctly and honestly described them as responsible public employees of the Post Office. He said that they had understandable anxieties about a number of important issues in the Bill. He did not identify the anxieties, but I suggest that one of them is the proposal in clause 30 to separate the Post Office superannuation fund. That one proposal has generated more concern and anxiety than any other proposal in the Bill. Why should there be that anxiety? I invite every hon. Member to consider the terms of clause 30.

Never have I read a clause couched in such arrogant and—dare I suggest?—cavalier terms. Clause 30 gives the Secretary of State power to separate the Post Office superannuation fund. It overlooks the fact that the Secretary of State's is not the primary financial interest in the Post Office superannuation fund. There are also the interests of the individual members of the fund, the management of the Post Office and the trustees.

The question which has never been answered is: how is that power to be implemented? How does one separate the largest superannuation fund in this country with assets of 3 billion? It has investments in 1,470 companies throughout the world. It has £40 million invested in the Magasin du Louvre shopping centre in Paris. It has £26 million invested in the Milton Keynes town centre. How can one separate those investments? How can one separate investments on that scale and ensure equity in the interests of Post Office workers? I hope that hon. Members will clearly consider those issues before arriving at a decision.

In moving the amendment I seek merely to focus attention on the problems of separating the fund. It is not only the problem of separating the assets and investments on a fair and equitable basis. The Post Office superannuation fund has a large measure of indebtedness arising from an error made in the Post Office Act 1969. The error was in establishing the fund. No fund existed previously, so the Government proceeded on the assumption that there should be a notional pension fund, the assets of which would be invested in 2½ per cent. consols. The consols may have been reasonable in 1969 but inflation and the rising cost of living make nonsense of them.

By the time that I drew attention to the increasing indebtedness of the fund in 1975 the deficit was £729 million It reached £1,250 million before the Government decided that they had to take action. They decided to pay money back into the fund to make up for the deficit, but it will not be cleared until 1986. Not only have the fund's assets and investments to be split, but someone will have to decide what will happen to the indebtedness.

I have a document circulated by the two distinguished chairmen of the Post Office corporation and British Telecom to every member of the Post Office staff. The letter is disingenuous. It is illuminating not for what it says but for what it leaves out. It does not say that the trustees of the fund are against splitting it—and they have no interest to serve other than the best interests of the members and subscribers to the fund. The letter does not say that splitting the fund will result in additional expenditure of £1 million for administration. Neither point is referred to.

The letter states: Most unions have said they would prefer to retain one scheme for both corporations. Most unions! About 90 per cent. of the unions representing Post Office staff oppose separation on the basis proposed.

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The letter goes on: The procedures required for Inland Revenue approval of a scheme, which is essential for the preferential tax treatment which you presently enjoy as a member of an approved scheme, would prevent cross-subsidising between two separate employers. The chairmen make that point but fail to indicate what the Inland Revenue preferential treatment means in terms of money. Does it mean more than the additional £1 million in administrative costs that would be involved in the separation of the superannuation fund? That sort of information is not given in the letter. I believe that Post Office staff are entitled to the information.

Post Office staff generally work a lifetime for a very modest pension in their declining years. A large percentage would not have stayed or been attracted to service in the Post Office and telecommunications had there not existed the attractions of the pension scheme. It is not on for the Secretary of State to come along with clause 30 stating that he alone will decide and will have the power to apportion in order to separate the Post Office superannuation scheme. Assurances to the effect that the level of benefits will remain the same are nothing when one calls into question the issue of pensions, with which the whole financial future of the families of Post Office workers is involved.

I should like to read to the House some of the comments of the trustees of the superannuation fund on the question of separation. The trustees say that the most persuasive argument reveled by their analysis is that A pension fund is set up as an entity independent of the employer. There is no fundamental reason why it should follow the employer or divide if the employer divides, provided that the employers' views can be adequately conveyed. It is the view of the trustees that there is no reason why there should be a division between posts and telecommunications. To those who question the argument I would point out that British European Airways and British Overseas Airways were two separate businesses but continued to have a single and unified superannuation fund for many years. The trustees say that they believe that the fund has been well organised and managed. I must pay tribute to the chairman and directors of the trustees and to the trustees themselves for the efficent manner in which they have managed the fund.

The view that the fund has been well organised and managed is also held by members of the fund and their trade union representatives. The trustees go into some detail in explaining why it would be a disadvantage for the biggest pension fund in England to be split into the third and fourth largest funds. They say: One advantage they will lose is that they will no longer be the automatic first port of call for anyone with a large proposition, be it in property, the placing of new shares, or a sale for distress reasons of a large line of existing shares. Not only does this give us the advantage of first refusal, it also gives us the chance in any deal involving other partners of negotiating terms which are weighted towards us. The trustees add that there are therefore very good practical reasons for being the biggest fund. One of the reasons is that the staff themselves like to belong to the biggest and best fund or organisation of pensions that may be in existence. They point out that Another consequence of size is that it reduces risk. Size permits increased diversification. That is my view on the splitting of the Post Office superannuation fund. The hon. Member for Canterbury said that the matter had been raised with him by the deputation of postal and telecommunications workers. He acknowledged that those workers were concerned. That anxiety is shared by 400,000 postal and telecommunications workers.

I hope that the matter will not be decided by the usual ministerial vote, the pay roll brought in to vote down the proposition. On second thoughts, I hope that there will be no vote. I hope that the Minister will undertake to look at the issue, because it involves the future lives of the workers and their families. It is crucial to their future family security. It is not a minor political issue, but one that is central to their very existence.

Mr. Crouch

I had a representation from my constituents about the Bill and, in particular, about the pension provisions but I must point out to the right hon. Gentleman that I told them, on the best advice that I had received, that no pensioner, either in the Post Office or in the new corporation, would be disadvantaged in any way by having separate schemes. That was on the best advice that I had received.

Mr. Morris

I thank the hon. Member for what he said. I hope that he will take account of what I have said in my speech, because I have listened to the same argument that no one will be disadvantaged, that there will be £1 million more in administrative costs, and that not only the assets and the investments have to be separated, but the indebtedness. I heard one estimate that it will take between five and seven years to separate the funds.

What other argument has been advanced to justify the separation? We are told that it is a natural extension of the philosophy of separation. What does that mean? It means that the superannuation fund will have to be separated for administratively tidy reasons, if the two businesses are separated. The justification for separating the superannuation fund is merely that the two businesses are being separated. Facile justifications of that nature are simply not on.

Perhaps no one will be disadvantaged, but that fact has still to be proved. One can guess or estimate, but in the final analysis there has to be proof, and that cannot be furnished today.

Mr. Ioan Evans

One would need the wisdom of Solomon to separate the investments in such a way that one fund was not greater than the other. Surely, before asking us to pass a measure which implies that the superannuation funds are to be separated there is a moral obligation on the Government to have discussions with those concerned and with the two bodies that are to be separated to ensure that the scheme that will eventually emerge is beneficial to all parties. In fact, we are being asked to give the Secretary of State a blank cheque, and he will be able to decide in the way that he thinks best how to separate the two parts.

Mr. Morris

I agree with my hon. Friend. He mentioned discussion, and there has been discussion. The Minister was quick to invite the leaders of trade unions to discuss pension funds with him in his office. He responded quickly to the concern expressed by trade unionists.

The trusteees and unions are against separation, I understand that Ministers are not too happy about it either. The only people who are convinced about the separation are the managements and chairmen of the boards. What are their interests in the superannuation funds? They are probably not even members. They are probably covered by Inland Revenue memorandum No.12 provisions, which are infinitely more generous than any pension that will come from the superannuation scheme. The issue is of crucial importance. I hope that the House does not treat it lightly.

Mr. Michael Shersby (Uxbridge)

I listened with care to the right hon. Member for Manchester, Openshaw (Mr. Morris). I intervene briefly to register the anxiety of my constituents. They talked to me about it yesterday and previously in my constituency. I shall not speak for long because soon I must attend the Committee on the British Nationality Bill.

I hope that my hon. Friend will provide a careful and full explanation of the way in which this important matter is to be handled. Hon. Members who are listening to the debate would then understand exactly what is proposed and constituents would be satisfied that their interests are fully protected and that they will not be disadvantaged by the proposed changes. The matter is important because it affects the lives and futures of workers and their families. Hon. Members recognise that.

We have been discussing the Bill for many hours. That so many hon. Members are present illustrates that we share a concern and are anxious to ensure that the future of employees is fully protected. I hope that my hon. Friend will go to some length to place on record the arrangements and that he will satisfy us that they are more than adequate to ensure justice for every member of the pension fund.

Mr. Golding

Many Conservative Members share the views of the hon. Member for Uxbridge (Mr. Shersby). The Government could give an assurance without loss of face.

I was disappointed that management tried to bounce Ministers into taking a decision. The brief which managers in the local telephone areas sent to hon. Members is inadequate and disappointing. I hope that the Minister goes a long way to meet the arguments of the staff.

The trustees found that there were no arguments concerning the provision of benefits or the avoidance of subsidies which would indicate that any option is superior to another. They recognised that the level of benefit is in doubt but that one fund has advantages in regard to management risk, costs, the consequences of size and the timing of change; and, provisionally, with regard to security. They are important aspects. If the staff have been told by the trustees that for the moment their pensions are more secure in one fund, it will lead to insecurity, especially if Ministers take the decision to change the fund. I have not changed my opinion since the Committee stage, although it varies slightly from that held by my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris).

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My position is that of Mr. Brian Stanley and the other general secretaries who wrote to the Minister and who echoed the conclusions of the trustees.

What the trustees have said is that all the advantage at the moment is in staying as one fund, but that may not always be so. Over a period of years the situation could change, and the general secretaries have proposed to the Minister that we keep one fund at present but have a specific point in time, between three and five years ahead, at which the question will be reviewed and a decision taken. That would be a very much more reasonable way of proceeding.

As I have said to Ministers before, this whole change is producing a great deal of insecurity among the staff. It must be remembered that many of our members are ex-civil servants, they were that before the 1969 Act, and for many civil servants the pension is one of the most important symbols of security of tenure that they have. We appear to threaten that and we are going to add to the insecurity in a way that is totally unacceptable, because there seems to me to be no great reason for doing it.

I therefore beg the Minister on this question to leave it on the basis that is requested. Let us have a specific time, three to five years ahead, and look at it then and take a decision, but until then we should leave well alone.

Mr. Mikardo

My right hon. and hon. Friends have talked about the merits and demerits of the proposal to separate the pension fund into two funds and they have both rested part of their argument on what has been said by the trustees of the fund, who, after all, ought to be in a better position than anyone else to know what is to the benefit or otherwise of the fund. Two hon. Gentlemen have told us at various stages that their constituents who are members of the fund are concerned about the possible implication of the division.

I do not know anything about the fund. Therefore, I am not capable of making a judgment as to whether it would be beneficial or damaging to split the fund. I am bound to say that I am influenced by the views of the trustees, but I make no judgment of my own, because I am not competent to do so.

I rise on a different point. Irrespective of what changes the Minister proposes to make, irrespective of what orders he proposes to issue, and when, and irrespective of their merits and demerits, my question to the Minister is "What the heck has it got to do with you, anyway? Whose money is it? What gives you the right to make regulations about the disposition of other people's money?" This is not public money. This is not State money. The owners of the property, so to speak, are the members of the fund. It is their money and it is they and only they who are entitled to decide what to do with it.

It is true that they cannot, because there are 400,000 of them, have a sort of Greek city-state mass meeting to make every decision on what needs to be done, and so they have some chaps called trustees whom they appoint, as the name applies, because they trust them. The trustees decide to invest a lump of the fund in this piece of property and another lump in that group of shares, and so on, and they are authorised to do so by the people who own the money. The trustees themselves are members, so they own some of the money, and they are authorised by the other people who own the money to decide what ought to be done with it. If there are amendments to the rules of a pension fund, the amendments can be made and agreed only by the members of the fund. I know that from time to time amendments are made to cover different regulations for different classes of personnel and that the amendments are agreed by the members.

In the clause the Secretary of State is arrogating unto himself the power to decide what shall be done with someone else's money to which he has contributed nothing. He does not even have to consult the trustees or the members. He does not have to take a ha'p'orth of notice of what the owners of the money want to have done with their money. These are dictatorial powers.

I know the Minister for Industry and Information Technology very well. I know that he is about as undictatorial a chap as one would find in a very long seven-day march. Furthermore, as my old friend Damon Runyon would have said, he is by no means stupid. Therefore, I am sure that he realises the necessity of engaging in some consultation. I am sure that he would want to do so.

I am never satisfied when a Minister says "I know that I have been given powers that are unlimited by any obligation to consult, but I shall always consult. Indeed, I have already consulted." I have reason to believe that the Minister has had some conversations. We had this argument in Committee and I have had the same argument with Labour Ministers. I contend that those who are members of pension funds have a right to be consulted.

The consultation should not be a piece of condescension on the part of the Secretary or the Minister. He should be glad that they are prepared to talk to him about their money. The hon. Gentleman might say—Labour Ministers used to do this and I used to get equally angry with them—"Do not worry, honourable Friends. Of course I will do this, that and the other. Of course I will consult." That would be a recognition of the need to consult. If the need were recognised, it would be idiotic not to consult. Why does not the hon. Gentleman recognise that it would give reassurance to the constituents of Conservative Members who have spoken in the debate and to my constituents who have expressed their concern if their right to be consulted were written into the statute?

When I read the clause with care I considered that despite all its defects we should not vote against it. I think that that is the feeling of my hon. Friends. My hon. Friends know a great deal more about it than I do and I am willing to defer to them. However, on second thoughts I wondered whether I should vote against it not to get rid of it but to create a situation, if enough hon. Members shared my view, in which the hon. Gentleman would have to write it afresh, including the obligation to consult.

I hope that the least that we shall get today—and I fancy that we shall get it—is an account from the Minister on what talks he has had with whom and what talks he proposes to have with whom. If he is proposing not to take the advice of the trustees, on what grounds does he feel justified to defy that advice? That is the least that we should get from him.

Further, the Minister should give an undertaking to have a fresh think about that matter, with the object that at a later stage in the progress of the Bill, although it will have to be in the other place, he might include some provisions in clause 30 to reassure our constituents who are members of the fund.

Under those provisions, his consultations with representatives of the members should not be an act of Jove-like condescension on his part—the god descending from Olympus to consort for a few fleeting moments with the mortals milling round the base of the mountain. It should be not just a condescension on his part but the acceptance of an obligation that he should not be mucking about with other people's money without going to some trouble to find out what those other people want done with their money.

I hope that the Minister will see that as a reasonable case and that he will give a little more thought to it.

Mr. Crouch

I shall not take up much of the time of the House. I hope that on this occasion my short intervention will not provoke a considerable debate, because it would be an injustice and it would be unfair to the right hon. Member for Manchester, Openshaw (Mr. Morris) and the hon. Member for Newcastle-under-Lyme (Mr. Golding), who spoke cogently and with great sincerity. To their words I add the words of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), because he did not exaggerate the argument. Neither do I.

The constituents who saw me yesterday afternoon were concerned about a number of aspects in the Bill. Above all, they were concerned about their investment in their pensions and the corporation's investment in their pensions. They asked me to do something about it. I said that we would debate it at some stage, as we were debating the Bill through the night. That is a matter that I cannot neglect, even at this late hour when we are all tired. My constituents asked me to refer to it. They said that I might be a Tory but I could at least say that they were worried.

If the debate were to end now, without a response from the Minister, I am sure that the case would have been regarded as proven. It is proven that there is more justice in keeping a central fund for two corporations, at least for a while, until it can be seen to the satisfaction of all—perhaps in two or three years' time—that separation can be made. Perhaps separation is right in equity, in terms of the running of pension funds and insurance schemes. I am no expert in those matters. Perhaps there is a sound argument, advanced in insurance and trustee pension fund circles, that there should be a separate fund for a separate corporation and that money should be not be paid out to a pensioner working in one corporation from a fund that has been contributed to by members of another corporation.

There may be an argument for that, but it is not a strong argument. It may take a little time to understand and to be explained. It may take a year, or two years. Then perhaps the change can be made to the satisfaction of both Parliament and the pensioners.

I look forward with interest to the Minister's response. I hope that it will come now, because enough concern has already been shown. We want to know what the Minister has to say in response to these arguments.

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Mr. Cryer

We are coming to the nitty-gritty of the Government's plans for separating and hiving off the telecommunications and postal sides of the Post Office. Hon. Members on both sides of the House have expressed great concern that pensions should not be prejudiced by that procedure.

Earlier in the night the Minister confidently said that the Government's plans would secure more jobs and give more confidence to the industry. It is plain that the reverse is the position. People are worried. I was interested to hear the hon. Member for Canterbury (Mr. Crouch) reinforce that point. He was specifically asked to raise the question of pensions. There is a feeling of insecurity amongst the staff, which is reflected in the Government's mistaken attitude in putting the Bill through in the first place.

I do not know how Ministers view this matter. Recently I was talking to the directors of a large metal working company, which employs 15,000 people. They said that fear was a human emotion and that it had some part to play in employer-employee relations. They said that by creating unemployment the Government's policy was helping to create fear among workers and that they, the directors, regarded that as a good thing.

The Opposition reject that view. People should have a sense of security. Their loyalty and devotion should be reflected in decent terms and conditions of employment, not least among them being the provision of a reasonable pension entitlement at the end of their working lives. The Government's attitude has engendered fears that that entitlement might be prejudiced.

This is a probing amendment to remove Clause 30. I want to examine some of the subsections. There is a mysterious way of working. No doubt the Minister will be able to set our fears at rest by explaining that some of the legal provisions are routine.

In subsection (1)(c), for example, the Secretary of State may make an order for the apportionment of a pension fund held for the purposes of a Post Office scheme between that scheme and a Corporation scheme". There is then a reference to the apportionment of payments payable under section 47 of that Act to trustees and so on. That is the separation and apportionment about which people are concerned.

Subsection (3) provides: An order under this section shall be so framed as to secure that no person other than the Post Office, the Corporation or any of the Corporation's subsidiaries is placed in a worse position than he would have been in if the order had not been made. That is a comforting subsection. Therefore, no one would be worse off had the order not been made. However, it goes on to state that An order shall not be invalid by reason that in fact it does not secure that result". That is extraordinary. The legislation provides that an order must ensure that no one will be placed in a worse position had it not been made—that is a convoluted expression, anyhow—but that if the order does not secure the result set out in the legislation it does not make that order invalid.

The subsection continues: but if the Secretary of State is satisfied or it is determined as hereinafter mentioned that an order has failed to secure that result, the Secretary of State shall as soon as possible make the necessary amending order". What about the gap between one order and another? Any argument about the result of the first order can be referred to, and settled by, an industrial tribunal. That may take several months. The Minister may then make the second order, which is laid before the House for 40 days. Therefore, four or five months can pass—or perhaps six months, or longer—between the checking of the first order by the pension participants, the argument developing, the reference to an industrial tribunal, representations to the Minister following the decision of the tribunal, and the laying of another order.

Subsection (4) states: An order under this section may be made so as to have effect from a date prior to the making thereof, so however that so much of any order as provides that any provision thereof is to have effect from a date prior to the making of the order shall not place any person other than the Post Office or the Corporation in a worse position than he would have been in if the order had been made to have effect only from the date of its making. That is not exactly the clearest piece of English grammar, but I imagine that it gives the Secretary of State power to make a retrospective order covering the gap between the first order, a dispute arising that is settled and the laying of a second order that is given retrospective effect.

I cannot imagine a more convoluted procedure. It is legislatively undesirable. For one thing, it contains a specific retrospective provision. I do not object to that. Is this one of those circumstances in which the retrospective provision is designed to cover the gap between the laying of both orders following the reference to the industrial tribunal?

It would have been simpler to place a duty on the Secretary of State to hold consultations with the parties concerned before making an order. That should have been a requirement of the order. That should have been a vires consideration, so that if subsection (3) were not fulfilled the order would not be vires. In those circumstances, there would be no need for a second order, the retrospective provisions, or this cumbersome procedure.

Clearly, there are circumstances in which retrospection is necessary, but that is not the view of the Government. I am sure that they remember vividly their grave concern about the constitutional crisis that arose when the Labour Government introduced section 4 of the Housing Finance (Special Provisions) Act to make retrospective provision for the Clay Cross councillors. I know that it was a much bigger issue, but at that time the Conservatives said that retrospection was wrong in principle. They did not say that there were times when it was necessary; they said that they tried to avoid it and that they did not like it on that occasion because they thought that it singled out people for preferential treatment. That was not true in any case, but they could have said that. But they said that they did not accept retrospective legislation in principle and that the Labour Government were bending the constitution. They said that all kinds of things were happening, when nothing of the sort had occurred. Yet they now come to the House, perhaps for perfectly good reasons, saying that retrospective legislation is necessary.

I make the general point that as a general rule the House does not look too kindly on retrospective legislation. Power is given to the Secretary of State to make an order to take effect from a date prior to the making thereof. That is a fairly unusual provision, and it behoves the Secretary of State to explain why it is there. The explanation that I have given may be correct. The provision may be there to ensure that there is no gap between the two orders and that retrospective powers are therefore needed.

The other point is that the provision is, by common consent, complicated. I do not think that even a Conservative Member would say that the procedure was straightforward, plain and, on the face of it, sensible. Subsection (5) provides that An order under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament. That means, of course, the negative procedure. It means a prayer. The order is tabled and if the prayer is successful it is annulled. As this kind of legislation is important for the confidence of people in two sections of a large and important industry in terms of pension provisions, and as, on the face of it, there are some rather convoluted legal provisions, I should have thought that an affirmative order would be better.

The negative procedure may sound fine—one tables a prayer, the issue is raised for debate, and if the prayer is carried a new order is introduced—but we all know that it is not quite like that. First, if a prayer is to be heard at all and time is to be allocated, the nature of this place is such that one has to get a few Privy Councillors' names attached to the prayer. That should not happen, because we are all elected equally. People do not dangle their Privy Councillorships at elections and gain votes thereby. Nevertheless, that is the case. If one can get Opposition Front Bench spokesmen to support the prayer there is an even greater certainty that it will be debated, but if one can get only two or three ordinary Back Benchers, who serve their party as they feel best able and fitted to do, the chances are that the prayer will never be given time on the Floor of the House.

That is the reality. From bitter experience of laying prayers on important issues, hon. Members know that they have to prod, persuade and cajole if the prayer is to be debated. Therefore, the negative procedure is far from satisfactory. In view of these somewhat strange provisions I should have thought that the Government would at least have proposed an affirmative resolution.

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I hope that the Minister will be able to give an adequate explanation. The futures of thousands of people are bound up in these few words. They may be opposed to the Government's legislation. They may correctly think that it is dafter than necessary and that it has been put forward in order to satisfy some doctrinal quirk. Perhaps it has been put forward so that at their annual conference Conservative Members can say that they are getting to work on the public sector. Right-wingers will stand up and rave that a public sector exists despite the fact that the Conservative Government have been in power. The Government will have a few carrots to pull out of the bag. They will be able to show that they are getting ahead and that they are dismantling the Post Office and telecommunications. That may sound grand, but people's lives are involved.

People want to do a good job for the Post Office, but they see their determination and loyalty undermined by the provisions in general and by this clause in particular.

Mr. Don Dixon (Jarrow)

Does not my hon. Friend agree that for a long time it was hard to recruit people into lower-paid jobs? One attraction was job security and a pension. Job security has been taken away by the provisions relating to hiving off the profitable parts of the industry. The Government now wish to interfere with pensions. The Government's track record on pensions shows that last year they did old-age pensioners out of a fortnight's rise by extending the year to 54 weeks. This year they have introduced legislation to take back 1 per cent. This November the Government will take away what they gave pensioners last November. I cannot imagine anyone in the industry trusting the Government or the Secretary of State.

Mr. Cryer

I have been dealing with the legislation before us. My hon. Friend is right to refer to the atmosphere that the Government have created. We are discussing the private pension scheme of a public corporation. Those who will be in receipt of pensions as the corporations are split off will bear in mind my hon. Friend's remarks. Under the Government, pensioners have had a bad deal. They say that the Government have cheated, particularly over their legislation to create a 54-week year. They ask how Parliament can do that. They ask how Parliament can twist a year in that way. We have to reply that Parliament can legislate, and that although we opposed it the Government had a majority and trampled through the Lobby.

People say that that must be a distortion of reality. We reply that that is what the Government have done. For one year there was almost level pegging, but the Government said that pensioners had received 1 per cent. too much and that they would pinch it back the following year.

The Government try to deny that that atmosphere exists. However, pensioners are concerned. That concern is spreading to all pensioners, or potential pensioners, who are also in receipt of private pensions. They say "If the Government can muck about with the State pension, what will they do next?" My hon. Friend the Member for Jarrow (Mr. Dixon) is correct about the Post Office, because it has not been noted for high pay. It could be argued that the telecommunications side has a much greater component of skill and therefore, higher-paid employees, but I do not think that that can be argued for the Post Office. A fair proportion of its employees receive lower rates of pay; therefore they feel particularly vulnerable in the circumstances and are looking forward to obtaining pension rights as recompense for years of low pay.

I hope that the Minister will answer some of the questions that I have raised, because I think that he will agree that I have raised some cogent points, which need answering.

Mr. John Loveridge (Upminster)

I do not want to detain the House when it has been sitting for such a considerable time, but I echo the anxiety expressed by my hon. Friends the Members for Canterbury (Mr. Crouch) and for Uxbridge (Mr. Shersby).

Pensions are of great importance to those who are affected personally. Therefore, it is important that the House should give due consideration to the recipients' interests and fears. It is a matter in which right must not only be done but be seen to be done and, in addition, must be felt to be done by those whose futures are affected. I am sure that when the Secretary of State reaches his decision in due course he will do so reasonably and sensibly. He wants proper terms and pensions as well, but as it has not been possible to obtain a consensus of advice from management, unions and trustees it seems certain that the decision in the end will return to the Secretary of State.

When people find their conditions of service likely to be affected for the future it is natural that they should be worried and anxious. It was expressed to me in yesterday's lobby that the Post Office feels that its part of the existing business is the labour-intensive part. Therefore, if there is a split lasting a long time into the future, while people may be guarded by a provision which ensures that they will not be worse off, none the less they are anxious that the other part of the business might become considerably better off. One is a highly productive part of the service and the other, because it involves going on foot from house to house, must inevitably be less productive.

That is almost certain to give rise to fears in the minds, looking into the long-term distant future, that there will be a relationship between the output from the service and the pension paid. That does not exist under the present arrangements because they are likely to have the money shared across the board.

It is important for the Government to take that into account. Is there a need to rush to a decision? Would it not be possible to wait for some time and hope that, given time, all the people concerned—management, unions and trustees—will be able to come to a common agreement among them which will be far better and happier. It does not matter how good a decision is or how it is arrived at. It is important that it should be acceptable to those who have given such good service to the State in the past. In the case of the postmen, every one in the House knows the postal service to be so good. We have come to depend on it to such a degree. I hope that the Minister will think carefully about what has been said and to give some comfort to those who are worried.

Mr. Ioan Evans

Although there have been differences between both sides of the House, everyone agrees that Post Office workers are anxious about the pension fund. The hon. Members for Upminster Mr. Loveridge), for Canterbury (Mr. Crouch) and for Uxbridge (Mr. Shersby) confirm that. My right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) told us convincingly about the anxieties. We should give time to the matter. The pension measures should have been covered by a separate Bill. Three Bills have been rolled into one. We should have had a separate debate on telephone tapping, because the Bill deals mainly with hiving off certain sectors of the industry.

Telecommunications and postal workers give the country a tremendous service. An early-day motion tabled by Conservative Members pays tribute to them for the security of the letter post. Hon. Members have been influenced by the sensible and considerate lobby. The people who came from Wales were concerned not only with superannuation but with the other implications of the Bill. They believe that the Bill is against the national interest and will be detrimental to telecommunications and to the postal service. Superannuation was almost a postscript.

Dr. Alan Glyn (Windsor and Maidenhead)

Does the hon. Gentleman agree that the pension fund is the most emotional aspect of the Bill? Post office workers are worried about the future. The trustees have a duty to them, but in the best interests of everyone the Minister should reconsider the matter and try to get agreement between all the parties. No one should be disadvantaged. The pension fund should be fairly distributed.

Mr. Evans

When people have given a lifetime's service to an industry they look forward to their pension. I do not know whether Post Office workers get even a gold watch. We are anxious about their rights. It is wrong that we do not know what is to happen. The lobby should not have had to come here to ask what is to happen about pension rights. I agree wholeheartedly with the hon. Gentleman. He exposes the Government's inadequate presentation of the matter. Hon. Members are apprehensive because of the anxieties expressed to them. What will we get from the Minister to allay these fears?

Mr. Kenneth Baker

Sit down.

11 am

Mr. Evans

I am invited to conclude my remarks. Why did not the Minister seek to intervene at an earlier stage to try to allay those fears? The fears still exist. We are now into another day. Those people who travelled from all parts of Britain to express their anxieties on this and other matters have now gone back. We were unable to help them because we do not know what the situation is. We possess at the moment a scrambled egg of a pension scheme to which those on the telecommunications side and those on the postal side have contributed. The Government have apparently to try to find a method of unscrambling the egg. On what grounds can the Minister claim that everything will be all right and that their proposal will be agreed? The telecommunications side and the Post Office have stated in a document that they want the funds to be separated. They say: After careful consideration, and lengthy consultation with Post Office trades unions on the superannuation scheme trustees, the Post Office has recommended to the Secretary of State that British Telecom should establish its own pension scheme. The assets and liabilities of the existing Post Office scheme would be allocated fairly between it and the BT scheme. How can it possibly be stated that the assets and liabilities of the scheme will be allocated fairly? What happens if it is suggested that the investment in ICI and in North. Sea oil will go to British Telecom and that the investment that has occurred in numerous companies that have gone bankrupt or into liquidation is put in the Post Office side? That is the danger. The determination of how to split the assets will require the wisdom of Solomon.

There are people who make a living from advising on investment. It is not an easy task. Those who dabble on the Stock Exchange know that one day it goes up and one day it goes down. Some shares can be up and some can go to rock bottom. With one fund all the ups and downs are together in the scrambled egg. Can anyone claim that once a fund is separated, the benefits accruing to one or the other will be the same, and that one or the other will not be the loser? That is the anxiety that has been expressed.

The document adds: British Telecom and the Post Office believe that to have separate schemes, each on essentially the same lines as the present scheme, will be in the best interests of the staff of the new corporations. Both corporations will be very large employers and both the new schemes will be anong the half dozen largest in Britain". They say that they want the schemes to be separated. Who should be considered? The trade unions, although there is a difference between them, say that the scheme should not be separated for the time being. One union says that there should be no separation yet. The other union does not want separation. Both say that the funds should not be separated. Should the House listen to the trade unions or to the new companies? Those with whom we should be concerned are the trustees, elected by the beneficiaries, who state definitely that the fund should not be separated.

Surely, the Government should have regard to the trustees. Why are we discussing money that has been contributed to a fund over the years by people who never expected that any Government would bring in this stupid proposal to have separate funds? They had no idea what would happen in the future. They are looking forward to their pensions, but now they do not know how the two halves will be treated.

What arguments are there to persuade us to accept the clause? The heads of the two industries are appointed by the Government, and clearly they have to have regard to what the Government want. That is one of the weaknesses in looking to the two corporations—the Post Office and BT. It is better to look to the trustees and consider what factors have influenced them.

We are told that: One of the factors which has strongly influenced both BT and the Post Office"— apparently, this is the reason why they are to be separated— is the Inland Revenue requirement that the staff contributions of one employer cannot be used to finance the staff benefits of another". If the Government will the end they should will the means. Surely the Treasury could get together with the Inland Revenue. There is a presumption in the document that the benefit going to one will be greater than the benefit to the other, but we are assured that that is not so.

The document goes on: This means having to maintain quite separate financial arrangements for contributions and benefits for each corporation, even within a nominally single scheme, otherwise the tax benefits are lost. The schemes have to be virtually separate in practice. In my opinion that is a false argument. It may well be the present situation in the Inland Revenue, but if the Government wish to keep the funds together there is no reason why they should not get in touch with the Inland Revenue to make an exception in the special circumstances.

The document then says: Most of the Post Office trade unions and a majority of the Trustees have said that they would prefer to retain one scheme for both corporations. That, surely, is what the House should consider. The major trade unions and the trustees have said that they would prefer to have one scheme. The document continues: Since it has not been possible to achieve a consensus of all parties it will fall to the Secretary of State to decide what he will do. So we are acquiring a pig in a poke. There has been no consensus. We are leaving it to the Secretary of State. Unless we have a copper-bottomed guarantee from the Minister we shall not know what we are agreeing to. We are failing the people who lobbied us, who are anxious about their pensions and who do not know what is to happen to them. Unless we obtain definite guarantees, we shall be letting those people down.

Before proposals are made to the House we must be assured that the Government will have further discussions and arrive at a consensus. After all, we are talking about the pension rights of people who are still employed and of people who are retired. The document states: If separate schemes are adopted … the BT scheme would provide for the same employee contribution and the same staff retirement benefits as the existing Trust Deed. Nor would separate schemes necessarily require the extensive investments of the present scheme to be divided. Apparently there is no need for the investments to be divided. They would continue to be administered jointly as a central fund if this were felt to be the best course. Why cannot pension rights be kept separate from the other measures in the Bill? There has been unanimity in the House about the matter. I hope that there will be unanimity in the Division Lobby if we are compelled to divide.

I hope that the Minister will be able to assure us that our constituents' anxieties are unwarranted and that pensions will be safeguarded. When my constituents came to see me they objected to the whole Bill. However, this is an emotional issue. I hope that the Minister will provide real assurances.

Mr. Gregor MacKenzie

I do not intend to prevent hon. Members from making further contributions. However, it is sensible for me to say a few words and for the Minister to allay our fears. Sincere and genuine contributions have been made from both sides of the House by hon. Members with experience of the subject.

On Second Reading the Secretary of State said: No decision has yet been taken on the future of the Post Office pension fund. The enabling powers contained in clause 30 allow the Secretary of State either to split the fund or to retain a single fund for employees of both corporations … The final decision on the future of the fund will be taken only after all interested parties have been able to make their views known to me."—[Official Report, 2 December 1980; Vol. 995, c. 219]. I hope that the Secretary of State is still listening with care to representations by trade unionists and hon. Members. We are discussing a retirement fund that involves many hundreds of thousands of people. Everybody is concerned about the future. It is right that we should express such views, even at some length. The views have been conveyed to the Secretary of State officially by the trade unions and by right hon. and hon. Members on both sides. It is time that the Secretary of State spelt out his assessment of the representations.

11.15 am

I am not an expert on the fund. I have respect for both the chairmen. They have told the Secretary of State that they prefer the fund to be split. As I understand it, their view is that because the Post Office is to be split the fund should be divided accordingly. For the life of me I cannot see that there is any logical reason why, because the Secretary of State and his colleagues in the Government have decided to split the Post Office, the fund should be split. Certainly I cannot see any reason why we should choose to split the fund at this stage. No one has taken the trouble to explain the advantages to me or try to persuade me that this course of action should be adopted.

Mr. Henderson

I have listened with great care to the hon. Gentleman and his right hon. Friend the Member for Manchester, Openshaw (Mr. Morris), who opened the debate. Does the hon. Gentleman feel that there was validity in the argument put forward by BT that even if a single pension fund were retained there would have to be separate arrangements in view of the Inland Revenue regulations, and that separate schemes would not necessarily require that the extensive investments of the present scheme be divided?

Mr. MacKenzie

With great respect, it is not for me to make an assessment of that kind. I am asking the Minister what assessment he has made. I feel that it is very much a matter of what is thought to be administratively convenient, because that is the only possible explanation that has been suggested to me at any stage.

One hon. Gentleman quoted, as I did in Committee, from that very humorous programme "Yes, Minister". I think that if that Minister's permanent secretary were to be asked to say why he favoured this proposal he would reply "It would tidy things up, Minister." It looks to me as though people think that it is a tidying-up exercise and forget that there is a great deal more to the fund than just making it neat and tidy.

In the course of our deliberations, as the Minister will recall, my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) reminded us with considerable skill and detail that we are talking about £3.5 million—a fund that not only has investments in about 1,400 companies but has land and other investments of that kind.

The point that came home to me from my hon. Friend's comments and persuaded me that there was considerable merit in looking at this whole question was that the trustees of the fund and Sir Daniel Pettit, the very skilled administrator, who is the chairman of the fund and is well regarded in the public life of this country, have said that it would take about five years to split the fund. Therefore I can see no urgency at all about this matter. Indeed, I can see considerable difficulties in trying to split the fund at this time. I do not have the expertise that perhaps some of my colleagues on both sides of the House have in the buying and selling of stocks and shares, but I would not have thought that this was a particularly appropriate time at which to look around in the market and try to dispose of the money in the fund.

Above all, however, I think that the staff really need to be assured about the whole matter. They know that at present they have a well-managed fund. They know that the investments that they have are good and that they should not be scattered. They know, above all, that it is very much cheaper, administratively, to run one fund than to run two.

For those reasons I hope that the Minister will be able to give some sort of assurance about these matters at this stage in our deliberations.

Mr. Speaker

Mr. Kenneth Baker—

Mr. Alan Clark (Plymouth, Sutton)

On a point of order, Mr. Speaker. As you know, there was a lobby of Post Office workers who came from our constituencies yesterday. I think that everyone who spoke to them was struck by the reasonable, courteous and attentive way in which they put cases to us. Do you really think it appropriate, Mr. Speaker, that in a debate that has already lasted for over 18 hours no Back Bencher should be permitted even for one or two minutes to put a case to the Minister for reply on their behalf?

Mr. Speaker

I was in the Chair for three hours earlier this morning when there was plenty of opportunity for hon. Members to speak. I accept that during that time the House was not dealing with amendment No. 52. I have already called the Minister—

Mrs. Elaine Kellett-Bowman (Lancaster)


Mr. Speaker

Order. I have called the Minister and we must proceed.

Mr. Baker

If my hon. Friends wish to participate in the debate, they will be able to do so when I have resumed my seat. I was urged by some Labour Members to intervene early in the debate so that I could answer for the Government at the beginning.

I think that hon. Members on both sides of the House will appreciate that this is one of the issues that have caused the greatest anxiety and concern among postal and telephone workers. I am aware that during the lobby yesterday they focused very much upon their worries about what might happen to their pensions. That is entirely understandable. Apart from one's own house, a pension is probably the most valuable asset, or right to an asset, that will be acquired during one's lifetime.

I shall try to allay some of the anxieties that have been expressed by hon. Members on both sides of the House. The hon. Member for Newcastle-under-Lyme (Mr. Golding) and the right hon. Member for Manchester, Openshaw (Mr. Morris) from the Opposition Benches and my hon. Friends the Members for Uxbridge (Mr. Shersby), Canterbury (Mr. Crouch) and Upminster (Mr. Loveridge), and in an intervention my hon. Friend the Member for Windsor and Maidenhead (Dr. Glyn), have said that this is an emotional issue. I accept that.

It has been said that this is a face-saving exercise for Ministers. I refute that charge, because Ministers have not made up their minds. I had not made up my mind and my right hon. Friend the Secretary of State made it clear on Second Reading that he had not made up his mind. I can assure the House that we have not reached a decision. We do not intend to come to a decision for some months. I want to satisfy myself that I have heard all the views and representations of the various interested parties.

I have already met trade union leaders or their deputies and we have talked the issue through. There is a slight difference of opinion between the two main unions concerned. This is not a major difference but a slight difference in emphasis that was touched upon by the hon. Member for Newcastle-under-Lyme. I have also spoken to the trustees. I have had one meeting with the trustees and I intend to have a further meeting with them.

The trustees are not unanimous in their view. There is a difference of opinion among the trustees on how the matter should be treated. The board of the Post Office and the two chairmen designate both feel that the fund should be split. That view is shared by one of the smaller unions. There are differences of opinion. The issues are complex and I know that views are held strongly. It will not be possible to preserve the status quo absolutely. One of the reasons why I hope that the clause will not be defeated—it would be disastrous if it were voted down—is that it gives to the Secretary of State essential powers to make other changes that are necessary.

Even if one fund were maintained there would have to be a number of detailed amendments to the trust deed. Separate estimates of the pension liabilities of the two businesses have already been made. That would have to be continued.

The hon. Member for Aberdare (Mr. Evans) mentioned the Inland Revenue requirements, but those are exacting. The trustees tell me that in any event there will have to be two separate schemes, one for each corporation, which will have to be separately accounted for. The liabilities and assets will have to be separately assessed, and the contributions separately drawn in and the payments separately paid out. It is likely that those two schemes will have to have two sets of independent trustees. Therefore, there will be much de facto splitting which flows from the Inland Revenue regulations. I must resist the temptation put before me by the hon. Member for Aberdare to take on the Inland Revenue insurance pension fund regulations. I am sure that the hon. Gentleman will know that that is a non-starter. Ministers do not have powers to make special arrangements in special circumstances, and rightly so.

Mr. Mikardo

Are there other cases in which Ministers have power to make regulations on pension funds, or is this case a one-off?

Mr. Baker

I do not know the answer to that question, but I imagine that in other nationalisation statutes there must have been similar provisions, when funds were originally established. I shall find out about that and write to the hon. Member.

Dr. Glyn

Is there any statutory debarment, whereby the funds' investment can remain separate, whereas the distribution and the payments of the various amounts to which the individuals are entitled should not be separate? In other words, the investment should remain the same, but the distribution and payments should be different. Is there an Act of Parliament for that?

Mr. Baker

Before I answer that question, may I say that news has already reached me which will save me writing a letter to the hon. Member for Bethnal Green and Bow (Mr. Mikardo)? That is a fairly common provision in nationalised industry statutes.

I turn to the latter question. One solution which has been put to us is that, although there must be separate schemes, it would be possible, in certain circumstances, to retain a common fund. That would be largely for management purposes only of the fund, and that is one of the alternatives which I am considering.

I should like to satisfy the anxieties of all hon. Members that that matter is being considered most carefully and thoroughly. I am particularly concerned that in whatever change is made the pension entitlement cannot be removed or reduced by any action by me or any other Minister under the Bill. That is the basic assurance which the people who came to the lobby wanted to have yesterday. There are other more complicated issues about the relationship between the two unions, and their different views. The basic assurance is that no pension entitlement can be removed or reduced by any order under the Bill.

Mr. Loveridge

Is the question which was put to me in the lobby not merely about the fact that the pension entitlement will not be reduced but that if the two parts are separated one part will not grow differentially much greater in benefit for pension than the other? Therefore, the postman will be left behind.

Mr. Baker

That is an important issue for the management of the two corporations and the unions broadly representing those corporations to resolve. That matter is not for the Minister to decide. It is an issue of parity of treatment. It is essentially a matter on which the two new boards and unions should get together. Perhaps they will want to provide various better benefits in some cases, or they may want them to stay the same. That is a matter for the future. It does not necessarily depend on the splitting of the fund, because there will be two separate schemes.

Mrs. Kellett-Bowman

I am glad that I failed to catch Mr. Speaker's eye before my hon. Friend spoke, because I am delighted to know that he has not made up his mind and will not do so until he has further heard all the interested parties. I am also glad to know that the pension entitlement cannot be removed or reduced under the Bill. Therefore, it will not be necessary for me to catch Mr. Speaker's eye afterwards. I was relieved to hear that statement by my hon. Friend.

11.30 am
Mr. Baker

I am grateful to my hon. Friend for her comments. I am pleased that in this long night I have satisfied at least one hon. Member.

Mr. Cryer

The Minister said that the pension entitlement could not be removed, but he has not yet answered the point that orders made by the Minister can have a gap between them. The legislation as drafted is distinctly cumbersome and has a retrospective effect. Is that retrospective effect to fill the possible gap between two orders to prevent any removal of entitlement?

Mr. Baker

Ordinarily, yes. That is a safety-net provision.

Mr. Crouch

My hon. Friend has not yet answered the question about the splitting of the fund into two funds costing more money. A figure of £1 million extra has been mentioned. Will he answer that question?

Mr. Baker

I am exploring this matter with the trustees. It is one of the factors that I shall be taking into account.

Mr. Ioan Evans

The Minister having given certain assurances, we may not wish to divide on the amendment. However, before the Bill comes back for Royal Assent, will he make a statement to the House outlining the provisions of any scheme that he may agree?

Mr. Baker

I do not want to be tied to a time. I want to examine the matter with other interested parties. I shall do it in a reasonable time. I shall not rush it.

Amendment negatived.

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