§ Sir Gerard Vaughan (Reading, East)
I am grateful for this opportunity to draw attention to the unsatisfactory redundancy and re-employment terms offered to staff employed at the National Institute for Research in Dairying at Shinfield, Reading, in my constituency. The institute was closed last week. I am grateful for the support given by Lord Sherfield, chancellor of Reading university, who has put down questions in another place, and by my hon. Friend the Member for Wokingham (Sir W. van Straubenzee). With your permission, Mr. Deputy Speaker, and the consent of the Minister, my hon. Friend will join in this debate.
It seems that there may have been a serious misunderstanding about the nature of the employment of the staff of NIRD. The NIRD is administered by a delegacy of Reading university under their ordinance No. 24 and also under the terms of a trust that was set up in 1963. The effect is that the staff hold contracts with the university. A number of them are listed in the university calendar as university staff, some—this is important—as academic staff. It is quite clear that they are employed by the university, but the university does not manage the finances of NIRD. They are provided by the Agricultural and Food Research Council, which also set out the conditions of service. This seems to me to be a very complicated and, I should have thought, unsatisfactory arrangement, but it has worked very well over the years until now.
In 1974, the delegacy decided that all new staff should retire at the age of 60, not, as previously, at 65, but the existing staff—this is also important—were given an option to continue under their contracts until the age of 65. In the delegacy minutes of February 1974 it is notedthat the existing male staff will prefer to retain their present contractual age of 65.This was accepted by the AFRC.
In 1975, a further change was offered: to lower the pension age from 65 to 60. Again, this was an important option for the staff and no change was made to their contracts; it was a pension change. In April 1984 they were told, somewhat unexpectedly, that the NIRD at Reading would be closed in March of this year and that in its place there would be the Animals and Grassland Research Institute, mainly at Hurley and at Arborfield, and a completely new Food Research Institute Reading at Shinfield. But—and this is the unsatisfactory aspect to which I wish to draw the Minister's attention—staff under 60 were to be offered new posts on clearly less good terms, since they would be compelled to retire at the age of 60. Staff over 60 were to be made redundant without compensation.
In the intervening period since 1974 a number of the staff have refused other jobs, while some have not made pension arrangements which would have been beneficial to them had they known that they would be faced with this situation. There is also the aspect that quite large earnings will be lost because of the loss of five years of expected 1369 work. In one man's case—he is at the upper end—it will he in the region of £97,530, as well as the loss of part of the pension which he would have expected to receive.
This is clearly a matter of great concern to the approximately 160 staff who are involved. These people are employed by the university. The 1963 trust lays down that the institute can be closed down only by a decision of the council of the university, not by the delegacy, nor by the AFRC. This was not done. So far as I can ascertain, no decision was made by the council to this effect. There was merely a decision by the delegacy. Furthermore, under the trust two years' written notice has to be given to the AFRC.
Since these people were employed by the university, many of them had expected that if their employment was to be terminated it would be terminated under the procedures of the university. These are clearly set out in the university statute 32(4), in the university ordinance 24(3)(1) and in ordinance 32. This has not happened. Many of these staff are highly skilled and have given very long and devoted service to the NIRD.
There is absolutely no doubt that the reputation and standing of the institute not only contributed to agricultural research in this country but is one of the reasons why the staff retained their loyalty and stayed there over the years. They fully expected that their contracts would be honoured or that they would be compensated. They did not expect the Government to direct the AFRC not to pay them compensation.
The Minister, I am sure, recognises the justice of their case. He is a fair-minded and impartial Minister and I ask him to look at this again, Mr. Deputy Speaker, with your agreement and the Minister's consent. I give way to my hon. Friend the Member for Wokingham.
§ Mr. Deputy Speaker
At the beginning of the debate I failed to call the hon. Member for Reading, East by his correct title—Sir Gerard Vaughan. I apologise and beg his pardon.
§ Sir William van Straubenzee (Wokingham)
Your courtesy, Mr. Deputy Speaker, is typical of that which you show the House whenever you are in the Chair. I am very grateful to you and to my hon. Friend the Member for Reading, East (Sir G. Vaughan) for making it possible for me to intervene for a few moments to support the campaign which he has correctly led, because the institute of which we speak is in his constituency. He has led that campaign in defence of his constituents' rights with the pertinacity which we all associate with him. I, too, have a number of constituents who are involved. For some years the institute lay within the boundaries of the Wokingham constituency. I know that I share with many others admiration for the past work of the NIRD, now coming to its end.
I shall concentrate on one point only. I am grateful for the presence of the Under-Secretary of State for Education and Science and also for the conscientious and exhaustive way in which he personally has looked at this matter, as he always does when human matters are involved. It could be put like this. His view—of course it is upon advice and having looked at the matter carefully—is that staff entitlement was explicitly agreed when the current Agricultural and Food Research Council's pension scheme was introduced with a retirement age of 60. I think that that 1370 is a fair summary of the view that he has expressed to my hon. Friend and to me. I do not question the sincerity with which that view is put, but it is not a correct reflection of the position of those who are 60 or older or were on a contract that gave them certain rights when they reached 60.
I have drawn to the Minister's attention a letter to a constituent of mine from the secretary of the institute. So that the references are on the record, I should say that the letter is dated 14 March 1974. The letter was written to bring the then existing arrangements at the institute into line with the institutes of what was called the Agricultural Research Council. One can see the reasoning, purpose and rationalisation behind that in 1974.
However, as we have been reminded, the delegacy of the institute agreed in 1974 that the retirement age should be 60 in future contracts and that existing staff should have that option offered to them. That rule was reasonable, civilised and proper and I take no exception to it. However, a number of senior men, including the constituent in whose name I have provided documentation, did not take up that option in 1974. There is no dispute about that.
Furthermore, the Employment Protection Act 1978 requires that all employees should receive a statement of their terms and conditions of employment. I shall not weary the House by reading the statement and conditions of employment issued to those of whom we are speaking. I shall quote only paragraph 13 of the statement that was given to my constituent and, I have every reason to believe, to all others involved:Although the retirement age for staff is 60, you are allowed to retain a retirement age of 65, but you may choose to retire at 60 with immediate payment of any benefits to which you are entitled under the ARC superannuation scheme.That shows that the retirement age for my constituents and others was 65, and all compensation should be based on that age. However genuinely and sincerely the Minister states that he is satisfied that the retirement age is 60, he is not correct. I ask him to recognise that fact.
The House always likes matters such as these to be reduced to their effect on individuals. I have been a willingly loyal supporter of the Government's policy on universities, involving, as it has in recent years, severe reductions and retrenchments of personnel. However, we have always said — and, as far as I know, we have always honoured the commitment—that the rights of individuals are protected. If the House has interfered with the reasonable expectations of those employed in universities, we have recompensed them accordingly.
In this case, the amount involved is minuscule in terms of national expenditure, but for one of my constituents it represents a pension right of £1,000 a year. I know that the Minister accepts that that is a major change in the reasonable expectations of a person's professional life when he has been working for one of the most prestigious academic and practical institutions in its field.
I repeat my gratitude to my hon. Friend the Member for Reading, East for permitting me time in his debate to support his forceful advocacy. I feel deeply that, unwittingly I am sure, the Government are doing an injustice to some fine people. Such actions always leave me with a sense of deep unease and that is why I am grateful for the opportunity to help to raise the matter on the Floor of the House.
§ 12.6 pm
§ The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke)
I am grateful to my hon. Friend the Member for Reading, East (Sir G. Vaughan) for providing the House with an opportunity to debate the closure of the NIRD at Shinfield, Reading and the circumstances of the termination of service of people formerly employed by the institute. I am also grateful to my hon. Friend the Member for Wokingham (Sir W. van Straubenzee) for having joined in the debate and I thank both my hon. Friends for the way in which they put the issues. I recognise that the matter is one of particular concern to their constituents. We have had some correspondence about it and had the pleasure of meetings on the issue. I pay tribute to my hon. Friends, because no constituents could ask for more diligent hon. Members on their behalf.
Until its formal winding-up on 31 March, the NIRD was a state-aided agricultural research institute funded by the Agricultural and Food Research Council. The AFRC funds 14 such state-aided institutes in England and Wales, which, together with the council's own establishments and the state-aided institutes funded by the Department of Agriculture and Fisheries for Scotland, constitute the Agricultural and Food Research Service. With the agreement of the Ministry of Agriculture, Fisheries and Food, which provides about half the AFRC's income through payments for commissioned research, and DAFS, the AFRC undertakes corporate planning for the whole of the AFRS. I note that because the changes at the NIRD need to be understood in the context of the research service as a whole.
In its first corporate plan, published in December 1983, the AFRC identified as an important objective the achievement of more specific remits for individual institutions. It wishes to move towards a simpler and more integral management and structuring of research programmes. In line with that objective, the first plan gave notice of the council's intention to bring the NIRD and Grassland Research Institute programmes on nutrition and production studies in cattle, sheep and pigs under single management, with the possibility of a progressive concentration of the work at the GRI site at Hurley, near Maidenhead. The plan also envisaged expanding the programme of food research at the existing sites at Bristol, Norwich and at Shinfield, and to convert that part of the NIRD programme at Shinfield which has concentrated on milk utilisation to the study of a wider range of commodities.
These proposals in the plan are now well on the way to implementation. The closure of NIRD and the Grassland Research Institute at the end of last month coincided with the establishment of a new Animals and Grassland Research Institute based at Hurley and of a new Food Research Institute, Reading, which will continue to use some of the former NIRD premises. The initial staff of both institutes have been found by transfers from the former institutes, although inevitably in a rationalisation of this kind jobs could not be found for all the former members of staff. I should say in this connection that the council's planning and redirection of activity is being carried out in the context of a significant reduction of income from the Department of Education and Science, following advice from the Advisory Board for the Research Councils in 1982, and the prospect of equally 1372 serious reductions in commissioned research income. The council's second corporate plan, published in March, speaks of 550 posts having been lost in 1984–85—100 by compulsory redundancy—with at least 650 more to go by 1988, a significant proportion of whom will inevitably be made compulsorily redundant.
I turn now to the position of the staff at NIRD. In doing so I must stress that the AFRC acts in these matters as an independent body in receipt of its own legal advice. My Department is not necessarily privy to that advice, and in any case it has no power to intervene. Under the council's Royal Charter, the pay and pensions of its officers are subject to the approval of the Secretary of State for Education and Science and the Treasury. Details of conditions of service, however, are matters for the council to determine.
The NIRD was technically a constituent institution of the University of Reading and was administered by a delegacy of the university. Its staff were employed by the university, as my hon. Friend said, but it was a condition of the AFRC's grant to the university to run NIRD that their terms and conditions should be essentially the same as those of other 'staff in the AFRS. The AFRC told the university when the time for closure came that the grant was being withdrawn. Thereafter the university procedures to which my hon. Friend referred are essentially for the university. The staff concerned are members of the AFRC pension scheme and are employed on Civil Service rather than university salaries. That is why the decisions relating to the staff were taken by the AFRC rather than by the university. Effectively they were members of the Agricultural and Food Research Service. For many purposes that is treated as a unified service. For example, it is covered by a single Whitley council, a single redundancy agreement and unified disciplinary and promotion procedures.
The normal retirement age for AFRS staff has for a long time been 60. However, a number of staff at NIRD who were appointed before February 1974 had a specific provision in their contracts from the university, their employer, that their retirement age was 65. My hon. Friend the Member for Wokingham specifically referred to an individual.
When the decision was taken to close NIRD all its staff were given notice that their contracts would be terminated, as was allowed for in their terms and conditions. I understand that all staff below the age of 60 have been offered contracts at the new institutes, apart from eight industrial staff who left under the redundancy agreement. Those contracts specify a retirement age of 60 in all cases, including those of staff whose previous contracts specified retirement at 65.
Although I know that my hon. Friend is specifically referring to the group aged between 60 and 65, because he quoted the larger group I will dwell on them for a moment. It is obviously for individuals to decide whether to accept those new contracts—I am talking of those under 60. If they do so, they also accept the change in retirement age. If they reject the new contracts it is for AFRC to decide whether that rejection is reasonable. If the rejection is reasonable, the individual is treated as redundant and compensated accordingly. If it is not, he is treated as resigning and receives no immediate benefits. In the latter circumstances, it is open to an individual to take his case 1373 to an industrial tribunal. I understand, however, that the AFRC trade unions advised their staff to accept the new contracts and that as of yesterday all but one had done so.
Staff at NIRD who were aged 60 or more on 1 April 1985 have not been offered new contracts of employment and are therefore redundant. I shall come to the question of compensation in a moment, but it is important to realise why the AFRC has acted in this way. Its purpose of course is to apply across its whole service, including the new institutes, its retirement age of 60. This concern is given particular force by the fact that the AFRC is currently having to make a significant number of compulsory redundancies to stay within the Government's expenditure constraints. To retain former NIRD staff up to age 65 would, therefore, in effect mean that more younger staff in other institutes would have to be made redundant instead. It may be helpful if I give the House some idea of the numbers involved. When NIRD closed there were some 405 staff there. Of these, about 364 have accepted the offer of new contracts of employment at other AFRS institutes. For about a third of those this means accepting a contract with a different retiring age. Thirty-three staff are already aged 60 or more and are therefore not being offered new contracts and, as I mentioned earlier, eight industrial staff have been made redundant.
In considering the question of compensation for staff aged 60 or more who have been made redundant —which formed the nucleus of my hon. Friend's case—it is necessary to look back to 1975 when the AFRC introduced a new pension scheme. That scheme is essentially the same as the principal Civil Service pension scheme, which has a normal retirement age of 60. When its introduction was discussed the position of staff with a contractual entitlement to work until age 65 was looked into very carefully. It was explicitly accepted by all parties, including, I understand, the AFRC trade unions, that if such staff were made redundant after age 60 they should receive only immediate payment of their pension entitlement. Certainly there is a letter to the unions setting out these terms and there is a letter to the secretaries of all the institutes stating the circumstances of the case.
This was part of the agreed package for introducing pension arrangements which were in many ways an improvement on those that the staff concerned had before. The only exception would be if that was less than their statutory entitlement under redundancy compensation legislation, in which case it would be made up to the latter figure. This is the basis on which the NIRD staff are being compensated, since the situation envisaged back in 1975 has now arisen. It was, of course, the AFRC's decision in 1374 1975 to allow staff to retain a right to work until age 65 while joining a pension scheme with a normal retirement age of 60. It gave them the option to do this because it wished to encourage as many staff as possible to join the new scheme. However, I understand that if NIRD staff now being made redundant had stayed in their previous pension scheme they would not have been any better off, and might have been worse off.
Despite all this, the Government have considered carefully the possibility of allowing AFRC to pay additional compensation to NIRD staff aged 60 or more. We have not yet felt able to do so. The starting point must be that there is no legal entitlement to such compensation. The staff concerned have had their contracts terminated, are therefore redundant and have been compensated for this in line with arrangements made with their representatives in 1975. I am afraid that that is a fairly normal course of events in both the private and the public sector. They are receiving a Civil Service pension, which is not normally regarded as ungenerous. They were in many ways in a favourable position with a pension scheme posited on a retirement age of 60, a right to retire at 60, and yet a right to stay on until 65. In using the expresssion "a right", I am, of course, implying that it was subject to the provisions of the contracts of employment which allowed for termination by notice, and that observation applies both before and after 60. I acknowledge, nevertheless, their genuine concern that their expectation of working until 65 has been removed with a consequent reduction in their pensions. I can only say that this is by no means the only area where Government policy involves retrenchment and a requirement on staff to leave before the age to which they had hoped to serve.
I understand and sympathise with the concern of my hon. Friends the Members for Reading, East and for Wokingham for their constituents. The position is not one that any of us would have chosen. As has been kindly said, I have looked into it in some detail. I hope that I have demonstrated that none of the staff of the former NIRD has been unfairly or unreasonably treated. It is, of course, unpleasant for people who have given good and useful service to their employers, and who believe that they still have much to contribute, to have their service terminated or, as they see it, truncated. However, the AFRC, which has the responsibility for managing the service and deciding on the allocation of the funds entrusted to it must be free to make the changes which it regards as necessary for the proper development of the scientific work that it supports, bearing in mind resources and priorities.