HC Deb 22 May 1985 vol 79 cc1029-46
Mrs. Dunwoody

I beg to move amendment No. 63, in page 42, line 26, after 'shall' insert—

  1. ' (a) take such steps as may be necessary fully to secure the payment of the benefits that, but for the operation of this Part, would have been payable under any pension scheme or in accordance with customary practice in respect of the employment, before the coming into operation of this section, of persons employed or formerly employed by the Bus Company or in any undertaking or part of an undertaking which is to be the subject of a disposal under the programme, and to secure the due performance of the employer's obligations in respect of those benefits; and
  2. (b).'.

Mr. Deputy Speaker

With this it will be convenient to discuss the following amendments: No. 64, in page 42, line 27, leave out from 'any' to 'are' in line 29 and insert `such undertaking or part'.

No. 65, in line 37, after '(4)', insert ' (a) or (b) '.

No. 66, clause 48, in page 43, line 38, at end insert 'and where the scheme contains provision for the transfer of anything which constitutes an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981, as having effect on the day on which the scheme comes into force, the said regulations shall have effect as if regulation 7 (exclusive of occupational pension schemes) were omitted'. No. 67, clause 52, in page 47, line 10, at end insert ', including the payment of such sums as he may, with the approval of the Treasury, determine to the trustees of the Bus Employees Superannuation Trust and the trustees of the National Bus Pension Fund or either of them for the purpose of meeting the whole or part of any shortfall in the assets of the funds referable to the benefits and gratuities payable in respect of persons employed or formerly employed by the Bus Company or in any undertaking or part of an undertaking which is subject to a disposal under this Part.'.

Mrs. Dunwoody

In a long working life, one of the most important investments that anyone can make is in his or her pension entitlement. Those who have been working for the NBC or passenger transport authorities have not been among the highest paid and they have not been the best protected members of our society. They have not enjoyed the brilliantly framed contracts of the company director with the sharp lawyer who insists that, no matter why his services are dispensed with, he will leave with a large golden handshake. They have not received any overpayment for working long hours in a dirty and increasingly dangerous job. They have worked for authorities in the belief that their time as busmen and women would be rewarded at the end of their service with a proper retirement pension.

The Secretary of State has decided in the most arbitrary and insensitive way that the transport system shall be thrown into chaos and disaster. Those who have been least considered during the Bill's passage are those who are employed in the transport industry. Since the Bill was presented to us, we have been talking about the disposal of state assets and the destruction of a transport system that has operated since the early 1930s. At best it will be replaced by a number of smaller companies. It is probable that transport systems in many areas will decline—with, undoubtedly, the loss of many jobs.

Against that background, one would have expected to find somewhere in the Bill a pension entitlement guarantee. That would have reflected the recognition of a moral duty towards those who have worked for many years in the transport industry. Clause 50 refers to the NBC's staff pensions. Unlike other privatisation measures, the Bill ends the "no worsening" principle for staff pensions. Up to 65,000 employees could be affected, and it is clear that the Treasury is demanding that money should be raised in every possible way so that it can be given in tax concessions to those at the top end of the income scale. It is more interested in doing that than in making suitable provisions for those who are employed in the transport system.

Clause 50 sets out the transfer of pensions after the break-up of the NBC. It mentions briefly the involvement of its employees but it does not mention what will happen to the employees of the passenger transport executives. Their future has not been referred to by the Under-Secretary of State or by the Secretary of State. There is no reference to the pension rights of those who are most at risk.

There are a number of ways in which the Bill could have provided for transferred employees to retain their present entitlement to benefits, and we endeavoured to discuss them in Committee. We asked for simple guarantees to be written into the Bill. We observed that state assets had never been disposed of without a guarantee being written into the relevant Bill to cover the pension entitlement of those who had worked in the industry. We were told that employees' interests would be protected at the point of transfer and that we need not worry about the future as it would be in the interests of the companies taking over the assets to look after the employees that they took on. If that is genuinely the opinion of the Secretary of State and his ministerial colleagues, it is indescribably naive. If they have taken a cynical approach and do not believe that there is any guarantee for employees after the dissolution of the NBC, that is outrageous.

Whenever we endeavoured to extract answers from Ministers in Committee, we were told that they did not consider it necessary to insert a guarantee covering the NBC's pension funds. It is clear that there must be a proper arrangement. Surely Ministers understand that smaller companies will not be able to meet current pension commitments and may find themselves unable even to cover existing payments to pensioners.

We have been told that the NBC pension scheme is well funded and can meet all its liabilities. Ministers sought to stress that there will be no risks, but under this Government no one can foretell what will happen. It is relevant to observe that we have a higher rate of bankruptcy under the Government than we have had for many a long year. If there is no risk, a guarantee would cost the Government nothing and would be at least a demonstration of their good will.

We were told in Committee that we were raising unnecessary scares and that the problems we were outlining would not occur. I can assure the Secretary of State that many employees are deeply concerned about their future pensions. The very least that Ministers can do is treat those fears seriously. Subsection (3) contains a guarantee that individual companies will not be put in a worse position by Government order. That implies that, if there is a cash shortfall, pensioners will suffer. The only protection against that is to be found in section 74 of the Transport Act 1962, which provides a "no worsening" guarantee. However, if the money is not there to meet the pension entitlement, pensioners will suffer.

The two approaches which could have been taken to pension funds following privatisation would both have maintained some version of the "no worsening" undertaking. When British Telecom was taken over, the entire pension fund was transferred in one block. When Sealink was sold off—a section of a state organisation —the staff remained in the British Rail pension scheme. When the NBC is privatised, we shall not be left with a large company. The company is to be broken into small companies, in line with the Government's competition theory. There will be no large company with the resources to underwrite pension funds.

What was the Government's answer when we raised the issue time and again? It was that, as long as the Government predictions of inflation and investment are exactly correct for the next 40 years, the Government are convinced that there will not be a problem. However, if there is any shortfall, pensions will have to be topped up from some other source. One would be new NBC staff paying into the fund. However, that will end when the NBC is dissolved, which will make closed funds of both the National Bus pension fund and the Bus Employees Superannuation Trust.

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The other guarantee would be a straight payment from the NBC. We have been told today that companies must be small enough to ensure that there is no unfair competition. The Secretary of State appeared to be saying that there might be instances of some municipal companies with 3,000 buses, which he presumably thinks is fair competition. If there are only small companies and there is a shortfall, who will find the money to pay these people who, in good faith, entered into superannuation payments that will now not come to fruition? Is it seriously suggested that what is in effect a contract with the people working in the bus industry, a contract that they have honoured through their working lives, is to be discontinued without any undertakings or any attempt to give them a guarantee that the Government will underwrite any future problems?

If that is the case, I have to point out one or two things to the Secretary of State. The people who are to have their pension funds put at risk, and the existing pensioners who are wholly reliant on the arrangements into which they have entered, are not suddenly seeking to dissolve the arrangements in their superannuation fund. They are being told that the arrangements into which they have entered over the years are at risk and they have not been consulted. This has happened because the Secretary of State, in a great blaze of light, wants to throw us all back to the Victorian ages and recreate the horse bus system.

What kind of responsible Government is that? What kind of commitment to ordinary working men and women does that show? Where are the Government who care so much for the individual? If an individual earns more than £40,000 a year, the Government care for him, but if he is working in the bus industry and has made the grave mistake of trusting those with whom he has been in a contract for all his working life, the Government's answer is, "Hard luck." That is the answer of a Government who are uninterested in carrying out their responsibilities to the people working in the bus industry.

In the Committee on the Transport Act 1982, the hon. Member for Wallasey (Mrs. Chalker), the Minister of State, Department of Transport, claimed that staff pensions would not be worsened by that Act, and that it would be wrong if they were. True, pensions were not worsened by that Act — it took the Government two more years to come up with a brilliant bit of planning to destroy the base on which pension schemes had been worked out.

The Minister's pledge that it would be wrong to worsen the conditions of anybody in the staff pension funds is being broken with utter cynicism. Saving money is the basis of this Bill and saving money at the expense of the pensioners and people working in the bus industry is about the lowest way of taking advantage of those least able to fight for themselves.

There is no evidence that the Government intend to carry out their responsibilities. Are we to assume that the argument between the Treasury and the Secretary of State is so important that he regards the sale of the NBC's assets as taking precedence over everything else? It does not matter if, in so doing, he damages the interests of the people working in the industry or the interests of the passengers, or if he destroys the transport industry that has grown up over many years. All that matters to him is flogging off anything that is not actually nailed down to anybody who wants to take whatever assets he wants that used to belong to the state through the NBC.

Let us be clear what is happening to pensioners. They will be told that at the moment of transfer they need have no worries and their pension rights will be the same with the incoming company. That is nonsense, because the companies that will come into being will be much smaller and less viable and will have far fewer assets, by definition. The only people who will benefit from these changes are those who will be able to ignore all the commitments that were entered into by the NBC and the PTEs with their employees. It is a disgrace. It is one of the nastiest, most unacceptable and most rotten parts of the Bill.

I hope that the Secretary of State can sleep at night, because what he is doing both to the pensioners of, and those working in, the bus industry is disgraceful. [Laughter.] I am glad that the Secretary of State finds this amusing. Many of those who are now employed will ask one question of him and one question alone: how can he sit there calmly, knowing that his future is protected, while he cheats the bus industry and those who work in it out of their just entitlement? At the very least, the Secretary of State can accept the amendment. If he does not, we shall know clearly how much commitment he has to the interests of people who are now working in the bus industry.

Mr. Fry

I have added my name to the Opposition's amendment both in sorrow and in anger. I wrote to my right hon. Friend the Secretary of State some months ago expressing concern about the future of pensioners. Following a meeting with my hon. Friend the Under-Secretary of State, who invited me to write to him expressing my concern about the Bill, I wrote to him about my concern about the pension settlements. I am still awaiting a reply from both my right hon. Friend and my hon. Friend. It is a pity that my hon. Friend the Under-Secretary is not here.

I make it clear that I am speaking on behalf of the people who work in the bus industry, in my constituency or any other constituency, and who are worried about their pensions. I speak particularly on behalf of the Association of Management and Professional Staffs, which I know has written and is concerned about this matter.

As we consider these amendments, we might at least try to understand what the Government are up to and what they have done in similar circumstances. Accordingly, I put down for answer last week a question to my right hon. Friend the Chancellor of the Exchequer about certain other pension funds. The first related to the National Freight Consortium, and the figures will come as a shock to many Conservative Members and many in the Conservative party. Although the Government raised £53.5 million in gross proceeds from the sale of the consortium, they had to make up £48.7 million in the deficit under its pension funds. Therefore, the taxpayer did not make an enormous profit out of privatising the National Freight Consortium. We still have to make an annual payment of million to the fund. That is not a good deal for the taxpayer and those figures throw a lot of light on the Treasury's attitude to pension funds in the Bill.

It is clear in agreements that the Government have made with the industrial training boards that the Government set out to give those employees the type of guarantee that is requested in the amendment. The memorandum of agreement of 21 March 1983 between the Secretary of State for Employment, the Minister of Agriculture, Fisheries and Food and others refers to the arrangements agreed to be made to fund the whole or part of any deficiency in the 'closed' part of The ITB Combined Pension Fund". That was a clear commitment by the Government to do exactly what is requested in the amendment.

I mention those two items because they show the danger as it appeared to the Treasury and show that those who want the guarantee are not asking for something that the Government were not prepared to give in another respect.

It is unfortunate that my hon. Friend the Parliamentary Under-Secretary of State — the hon. Member for Hampshire, North-West (Mr. Mitchell) — is not in his place. When this matter was dealt with in the Standing Committee, of which I was not a member, several of my colleagues raised with the Under-Secretary of State a number of questions about pensions. It is interesting to read the details of that debate and note some of my hon. Friend's statements. He reassured my colleagues and, no doubt, persuaded them not to press their amendments. Having been approached about guaranteeing pensions, he said: other employees and former employees are already covered by section 74 of the 1962 Act. That is not so. Other employees and former British Electric Traction employees will not be covered by section 74, since that provides only that appropriate orders may be made. The orders which have been made so far—2,011 in 1958 and 1,824 in 1969—will lapse when the NBC is dissolved because they impose obligations on a company that will have ceased to exist. So much for that first statement.

My hon. Friend the Under-Secretary of State made a further reassuring gesture when referring to what would happen after the NBC had been disposed of. He said: Once the Secretary of State had approved the disposal programme the NBC would have a duty to implement it. How can the NBC implement protection against a future deterioration in funds after it has gone out of existence? That, too, was a misleading comment. My hon. Friend went on to say: The National Bus Company itself does not formally guarantee the pension funds. I believe that most people would agree that it is accepted that the NBC's covenant to make up contributions to the amounts required to maintain those funds is effectively a guarantee of a continuing employer. My hon. Friend the Under-Secretary of State said: a statutory guarantee would provide NBC pensioners and employees with more security than comparable groups. I have already referred to the pensions given to employees of the industrial training boards. It is clear that the guarantee to which my hon. Friend referred is on all fours with the guarantee given to employees of industrial training boards.

That was not the end of what I can only describe as a most misleading speech. Answering a suggestion by my hon. Friend the Member for Hertfordshire, West (Mr. Jones) about a common pension fund for the bus industry, my hon. Friend the Under-Secretary of State said: if the NBC wished to pursue it the Government would be happy to explore the possibility. In relation to the alternative suggestion that the 1:wo existing schemes should be closed to new entrants and that there should be a negotiation with a major insurance company to take over the funds, my hon. Friend said: The NBC has not yet put that proposal to us"—[Official Report, Standing Committee A, 18 April 1985; c. 1287$90. It is puzzling that my hon. Friend implied that the idea of a common fund and using an insurance company had not been considered. Both possibilities were discussed by the NBC with the Department of Transport well before that speech. In fact, the particular point about creating a separate fund with a new insurance company was discussed in the December 1984 paper which was submitted to the Department of Transport. In the light of that speech, three or four of my colleagues decided to withdraw their objections. They were right to be concerned. If I had listened to that speech, I might have been encouraged to withdraw my objection.

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If I had discovered that I had been misled—I use that word advisedly—by the Minister, either intentionally or unintentionally, I would have been very angry. I do not accuse him of making an intentionally misleading speech. I would have said, "I believe that the pensioners are entitled to some type of guarantee."

The real issue is whether the Government will follow up the type of obligation that any right-thinking Government should and would undertake—obligations towards employees when a concern is nationalised or denationalised. We are talking about people who were in a private fund, were brought into the public sector and will now be taken out of the public sector again. It is clear from earlier debates this afternoon that there can be no guarantee whatsoever for the future for many people. Even if there is a management buy-out, many of these companies will not be able to retain the same number of staff. They are asking only that the work which they have done and their pension entitlements should be given some form of guarantee.

I shall not join in the personal strictures of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), but I believe that the credibility of my hon. Friend the Under-Secretary of State and of the Government depends upon the answer my hon. Friend gives to these amendments. This is a Government who, whatever their failings, try to stick to their word and obligations. I sincerely hope that my hon. Friend the Under-Secretary of State will reconsider the decision which has already been made. I make this point on purely practical grounds: if my hon. Friend the Under-Secretary of State was correct and a guarantee is not needed because the fund will be adequate, what on earth are we arguing about? By giving that guarantee my hon. Friend will be showing an earnest of faith with the many thousands of workers who have given loyal service in the private and public sectors. I could never vote for the Third Reading of this Bill if my hon. Friend cannot give a satisfactory reply to the points made in the amendment.

Mr. Bruce

The hon. Member for Wellingborough (Mr. Fry) has made a powerful case to which the Under-Secretary of State must seriously address himself. The risk to which the Minister referred has been created, or not created, as a direct result of Government action. As the hon. Member for Wellingborough correctly pointed out, it seems reasonable that the people who have been in and out of the public sector should be given an assurance—first, that those who already benefit from the pension funds may securely expect that benefit to continue and, secondly, that all accrued benefits at the point of privatisation will be met by the funds.

I am fascinated by the somewhat distracting private conversation between the Parliamentary Under-Secretary of State and the hon. Member for Wellingborough, but if it produces the right result, it will have been worth while. Employees of NBC had every reason to expect that they would be treated similarly to others who have been subjected to developments such as this as a result of Government action. It is clear from correspondence that hon. Members have received that employees are shocked that the Government could proceed with a Bill with such a strong ideological thrust in which they are the pawns and not be prepared to guarantee them a fundamental right.

Mr. Leadbitter

Perhaps the hon. Gentleman would like to stress that, whereas the Government are over-anxious to provide future employers with fundamental rights to set up new companies, they are reticent about affording employees equally fundamental rights.

Mr. Bruce

The hon. Member for Wellingborough mentioned the cost that might be involved, which would wipe out a substantial part of the benefit. If there is no potential cost, we may as well have a guarantee and demonstrate good faith.

There are three categories of employee—those who are in receipt of pension and who must be protected, those who have accumulated pension rights up to the point of privatisation whose contributions and benefits should be guaranteed, and those who are employed after privatisa-tion and who will find that the companies for which they work might not be able to sustain previous levels of pension funding. The Government have an absolute obligation to the first two categories and some obligation to the third. It is a disgrace that the Government have got this far with the Bill without giving the first two categories such a guarantee.

Mr. Dafydd Wigley (Caernarfon)

Does the hon. Gentleman agree that, irrespective of what might have been said in Committee or off the record, there is much dismay and uncertainty among employees, their widows and people who depend on such pensions about the future? To end that uncertainty, clear provision must be made in the Bill. More than anything else, that has been the burden of the letters that we have received in the past few weeks.

Mr. Bruce

The hon. Gentleman is absolutely right. The Bill creates uncertainty in the transport system. Nobody denies that — the Secretary of State merely claims that it will be beneficial. If he wants to ensure that employees in the industry will make a go of the Bill, but he is not prepared to guarantee their fundamental rights, he is creating anarchy and will find that there are many disgruntled employees. He must also address himself to the fact that, as a result of the Bill, there are likely to be many redundancies because the new companies will take on new people to avoid the obligations that the Bill puts on them.

The Government's conduct on the Bill has been nothing less than disgraceful. If a guarantee about pensions is not given here, it must be included in another place. The right hon. Gentleman has an opportunity today to show that he recognises the obligations that he must accept if he is to give any credence to the commitment behind the Bill. If he does not do that, he will show himself to be no man of honour. I leave it to him to decide whether he wants that stigma.

Several Hon. Members


Mr. Deputy Speaker (Mr. Harold Walker)

Order. Many hon. Members wish to speak, but there is little time.

Mr. Richard Alexander (Newark)

If this group of amendments is accepted, much anxiety among employees of the NBC in my constituency will be relieved. They are worried by what they regard as inadequate provisions in the Bill for their pension rights. I speak on their behalf. They do not feel that the assurance given by my hon. Friend the Minister on 15 April, that their pensions would be protected, is enough. If there is nothing for them to worry about, there was no need to reject in Committee the amendments that afforded such protection.

My constituents want the Government to know that their proper concern is for their future. It is a simple, natural and fundamental worry of all who pay into a pension fund to know that it is protected. The anxieties go deeper than that, however. These people were obliged by the terms of their employment to pay into the National Bus pension fund or the Bus Employees Superannuation Trust, and many of them have made large contributions. They are now asking my right hon. Friend for the full protection of the law for their investment.

The Government Actuary has estimated that the assets of the post-privatisation fund will be quite sufficient to cover the outstanding liability for pensions and accrued rights. But just suppose he is incorrect. What guarantee will the pensioners have then? They will have been wronged and will have no concrete assurance that the wrong will be rectified. Correcting injustice is a slow business. It is all very well for my hon. Friend the Member for Wallasey (Mrs. Chalker), the Minister of State, to say in Committee that it is not the Government's policy to affect any existing pension rights, but the pensioners want their rights to be protected, not just not affected.

We should establish a scheme to replace the obligations to pay the balance of the cost of accrued pension rights. That was dealt with in previous legislation, in 1962, 1968 and 1969, when pensions were protected fully for past and future service. Why cannot the same be done now? The Bill has few enough frieds. A lot is taken on trust about bus services improving, but employees should not be asked to take their pension entitlement on trust too. Concern has been expressed by people in NBC, by members of the pension fund's management trustees and by their beneficiaries. Their worry is real and will be alleviated by the Government accepting the safeguards in the amendments or by greater reassurance than we have had so far.

Mr. John Home Robertson (East Lothian)

I am one of those unfortunates who was not a member of the Standing Committee, so I have not had an opportunity to say as much as I should like, on behalf of my Scottish rural constituents, about this ill-considered Bill.

I should like to express the strong support of the Transport Salaried Staffs Association, which sponsors me, for this group of amendments. The TSSA has members and retired members with pension rights in NBC pension schemes. I am not sure how many of its members are involved, but I understand that the total is about 65,000. They have every right to be anxious about the fact that the abolition of the NBC will leave their pension fund in limbo.

It is by no means impossible that in future the NBC pension fund will run into a temporary deficit. There will be no NBC to help it overcome such temporary difficulties, and problems could arise. Inflation will always be a factor, and no one will contribute to the scheme when the NBC has been scrapped. For that reason, such problems could continue for some time into the future. The beneficiaries are likely to be left with a lame duck residual pension organisation, with no NBC to guarantee it in times of need.

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I have read the report of the debate in Committee and am less than impressed by the Government's insensitive attitude towards the anxieties of NBC pension beneficiaries. I read the bland assurances that the NBC pension schemes will be able to meet their commitments. As the hon. Member for Wellingborough (Mr. Fry) said, if there is no risk, why are the Government so reluctant to give a reasonable guarantee? I read the Government's suggestion that there is technically no guarantee at present, but there is. The NBC covenants through the trustees to make up the total contributions required, and it would continue to do so if it were not to be scrapped. There is therefore an effective guarantee at present.

The Minister suggested that the successor companies could pick up the liability, but many of them will be small and will change hands, and there is no provision to compel them to make up any shortfall. Even the old chestnut that the. Government do not want to set a precedent has been dragged up, but there are precedents. The Government guaranteed the finances of the National Freight Corporation pension funds to the extent of ensuring that a payment for historic liabilities was made to the trustees of the fund. When subsidiaries of British Rail were privatised, such as British Transport Hotels and Sealink, specific commitments on maintaining no less favourable pension arrangements in future were written into the contracts of sale. There is no fear of a precedent being set, because a precedent already exists.

The other technicalities that have been mentioned are irrelevant. The case is overwhelming for a reasonable guarantee for pensioners who could be put at risk by the consequences of this aspect of the ill-considered legislation. I can only repeat that, if the Minister believes his own assurances about the risk of problems arising., he must agree that it will cost him nothing to give the House that guarantee this evening. We must have a positive response to the amendments. The House and people with pension rights under the schemes have a right to demand such assurances now.

Mr. Peter Griffiths (Portsmouth, North)

I have not taken part in previous debates because I class myself as a friend of the Bill. I have been able to defend its political implications from the beginning. However, more recently, since the Bill's implications for both the National Bus Company pension fund and the Bus Employees Superannuation Trust became more apparent, it has been extremely difficult to respond to my constituents' letters. I am referring not only to letters directly inspired by the NBC, which invited pensioners to write to me, but to direct approaches from people whose personal, immediate and direct anxiety is that they are pensioners and who see the future as uncertain and possibly bleak. I have also received letters from people who are nearing the end of their service with the NBC and do not see a place for themselves in a new, thrusting and possibly successful company. They want to know exactly what they can expect.

Whatever the past legal position of the NBC's covenant to support the pension scheme, I understand from the Minister's comments in Committee that there is no legal obligation on the NBC at present to make up any potential deficit. If that is so, it would be helpful if my right hon. Friend would reiterate that this evening so that the Opposition cannot suggest that the Government are creating conditions legally less favourable to pensioners.

I do not wish to make the semantic point about whether pensioners are or are not in a narrow sense better off, but I ask the Secretary of State please to give the House a clear assurance that it is his intention and understanding that the conditions of existing pensioners and those who will retire when the NBC ceases to be an entity will not worsen. If he can give us that assurance, I and other hon. Members will be able to respond to our pensioners and potential pensioners more adequately than we have been able to do during the past few weeks.

Mr. Brandon-Bravo

Will my hon. Friend also ask the Secretary of State to explain what is meant by "the ex gratia payments"? The dictionary definition of ex gratia is in the absence of a legal right", yet we are being told we must honour ex gratia payments.

Mr. Griffiths

I thank my hon. Friend, but I will not take up the time of the House by repeating the question, which I am sure my right hon. Friend heard.

Mr. Stuart Randall (Kingston upon Hull, West)

I shall make a brief contribution because other hon. Members wish to participate. I wish to say a word or two about the impact of the Bill on the bus depot in my constituency, that of the East Yorkshire Motor Services, which is part of the National Bus Company, and about the Bill's indirect effect on my constituents and everyone who lives in the Humberside region.

I feel particularly strongly because many people who worked in the company for many years are worried about the effect of its break-up on their pensions. My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said that about 65,000 people would be affected, but if the dependants are included the figure is probably double that. Therefore, a large number of people will be directly affected by these provisions.

We are making only a small request of the Government. We ask that people who have worked in the company for many years and those who at present draw pensions should have a guarantee for the future. It is trivial and would cost peanuts. If the Government do not respond, they will be seen as penny-pinching and mean.

During my surgery on Saturday morning, Mr. Fairless of Priory road, Hull, who is a bus operator, explained to me the great worries experienced by many families. It must be remembered that those people live on an extremely low income. Most of them are almost at benefit level, and they cannot get alternative occupational pension arrangements. To do that, one must earn a higher income than many of them earn, even with overtime rates.

If the Bill is enacted, many of the small companies that will be created after the break-up of the NBC will not provide the contributions that the NBC currently makes to its pension fund. We know that contributions come from the employer and employees. We cannot say what future employers will contribute, because many of them will be small companies running on tight margins. A cut in pensions is bound to ensue. That idea is appalling. It is another example of the Government moving wealth from the less well off to the very rich, as they have done for the past six years. They have failed to support those who worked in the industry and who contributed greatly to it.

The Bill shows the sort of Government we have. It is shameful and disappointing and it causes much worry to bus operators not only in my constituency and in the county of Humberside, but throughout the country.

The Secretary of State for Transport (Mr. Nicholas Ridley)

I am sorry that I must speak in the debate now, but since it is a fairly complex matter, I should take some time to reply to the points that have been made. First, I shall deal briefly with what I may call the peripheral points that have been raised, but I shall deal with the main matter soon.

I apologise to my hon. Friend the Member for Wellingborough (Mr. Fry) and to my colleagues who have not received answers to letters that they sent recently. We have received more than 600 letters, and it will take a little time to reply to them. However, my hon. Friend received a full letter from me on 22 February—I have a copy of it here —on this subject, so I hope that he will not accuse me of discourtesy. He asked about British Electric Traction in relation to the speech in Committee by my hon. Friend the Under-Secretary of State. If he discusses that with my hon. Friend the Under-Secretary of State, I am sure that his mind will be set at rest.

The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) asked about the future of the pensions of PTE employees. The matter was set down for debate yesterday, but we did not reach it because the guillotine fell. It is only right that I should say a few words about it now. There are several options for the pensions of PTE employees when they go to the new companies. The Government's preferred option is that they should stay in their local authority schemes. There is no reason why they should not do so, but we are discussing the matter with the local authorities to see whether they are content with that solution or whether they would prefer another opinion.

It would be wise to discuss the amendments later and to come to the point of principle now. The Government and the Opposition believe that the existing pension entitlements of the employees of the National Bus Company, and existing pensioners, are extremely important. They should be in no worse position and, for that matter, in no better position than members of any well managed pension fund. I accept entirely the obligation which my hon. Friend the Member for Wellingborough suggested lies upon the Government to achieve that aim when the NBC's subsidiaries pass into the private sector.

The hon. Member for Gordon (Mr. Bruce) said that we must consider three categories: service until now; service between now and the break-up; and service in the future. Of course, service after privatisation should be the responsibility of the new employers, who will set up a special scheme or will operate other arrangements to comply with their legal obligations in relation to pensions. However, I accept that the obligation about which my hon. Friend talked relates to the first two categories —existing pensioners, and rights earned up to the dissolution of the NBC.

5.45 pm

The difficulty is not whether we should achieve that objective—I agree that it is vitally important—but how we achieve it. A company standing behind its pension fund may be thought to provide extra security, but it does not guarantee the fund. It certainly does not do so legally. The company may meet financial difficulties; it may even go bankrupt. The best that any company can do is to ensure that the money invested in the fund, as a free-standing entity with its own assets and liabilities, is adequate to provide benefits earned to date. I remind the House that NBC employees and the NBC have already made proper provision for pensions on the appropriate actuarial basis. Therefore, substantial assets are already in the funds.

Secondly, it is wrong in principle for the Government to give an open-ended guarantee to a private sector fund. Indeed, there is no such legal guarantee at present. I should tell my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) that the NBC does not legally guarantee its pension fund. Neither the Government nor the NBC guarantee for all time the present NBC pension fund.

Mrs. Dunwoody

Will the Minister give way?

Mr. Ridley

If I complete what I have to say, the hon. Lady may be satisfied and may not need to intervene.

If we are transferring activities to the private sector, we must not perpetuate a link with the Government, let alone a guarantee. My hon. Friend the Member for Wellingborough and several hon. Members cited some instances where they believed that there was a Government guarantee. In relation to the British Rail fund and some parts of the National Freight Consortium fund, a guarantee was given many years ago by a different Government in different circumstances. The present Government accep-ted that they could not break that guarantee. However, it is not our policy to give any guarantees on privatisation.

My hon. Friend the Member for Wellingborough and other hon. Members mentioned the industrial training boards. They were not nationalised industries and were not privatised; they were dissolved. Therefore, there were no successor companies to them in the private sector. The Government remain the employer of those industrial training boards, although they were dissolved. It is simple for the Government to decide whether to guarantee the funds in its employees' closed pension funds or to make those funds actuarially sound so that they will be adequate. They chose the former. But that is not a parallel, because the boards were not active industrial concerns which passed into the private sector.

The reason for the great worry about this point—

Mr. Randall


Mr. Ridley

If the hon. Gentleman allows me to proceed, he will get his answer. I understand that anxiety is heightened on this occasion because there will be no one successor company to the NBC. Instead there will be several different-sized companies. We do not know how many there will be. As hon. Members said, they might merge, reduce in size or change to other activities. Clearly, that raises worries that they might not stand behind the funds. I recognise that concern, and no doubt the NBC will also take account of it when putting forward proposals for future pension funds arrangements—for example, whether the present funds should stay open, be divided or be closed. However, even if the NBC were privatised as one company, it would not be guaranteeing the funds any more than it does at present. No company can guarantee its future trading environment.

Even if the NBC were privatised as an entity, in future it could get into financial difficulties and find itself unable to support the funds of its own pension company. Therefore, the problem does not arise because of privatisation; it arises because of the many small companies — or whatever they will be — that will continue.

The right answer must be to look at the funds themselves, apart from the parent company, recognising that they have their own assets and their own liabilities. We must make sure—absolutely sure—that the assets are adequate to discharge the funds' responsibilities. That is what we have done on all previous privatisations. That is what we have undertaken to do in—[Interruption.] If Opposition Members want the answer, they should keep their mouths shut. I am coming to it.

That is what we have undertaken to do in this instance. It is doubly important in this case since, as I have said, the funds may be closed at the time of the dissolution of the NBC. They must be left with assets that are adequate to discharge their responsibilities in relation to all employees' service with the NBC up to that time.

I say this to the hon. Members for Crewe and Nantwich and for Gordon. The funds must be adequate, which is to deny totally that in some way there is a dispute between the Treasury and the Department of Transport because ultimately, if NBC itself were to put more money into the funds, it would be the Treasury that would have to make the funds more adequate through getting less from the sale of the NBC.

That brings me to amendment No. 63. It would be difficult to implement. For example, I can imagine lawyers arguing for weeks, to nobody's benefit but their own, about what would have been paid but for the operation of this Part". In so far as the wording of the amendment is meant to imply a formal guarantee for pension benefits either by the new employers or by the Government, I must remind hon. Members that the NBC itself does not guarantee the funds in that indefinite way. It would not be right to pledge taxpayers' money to put the funds in a specially favourable position.

The intention of the amendments is admirable, but their effect would be to make the present position too rigid and restrict the scope for negotiation. For example, if the trustees of the pension funds, my hon. Friend the Member for Wellingborough or other hon. Members, seek more certainty about the adequacy of their funding—perhaps because the funds are closed—they may want to seek wider backing from somewhere else in the private sector, such as the insurance industry. Indeed, I hope that the trustees will explore that option fully. That would require negotiation with insurance companies, and I repeat that the House should not seek to fetter that negotiation in advance. All that I ask is that we do not close options in the negotiations that must precede the trustees' acceptance that the funds are adequate. The trustees have to accept that the funds are adequate, so it would be wrong to put restrictions upon any discussions that they might wish to have to satisfy themselves.

Amendment No. 66 would amend the Transfer of Undertakings (Protection of Employment) Regulations 1981 to require the new employers taking over the NBC to take over the pension scheme rules as well. I think that the amendment can scarcely be meant seriously. Those regulations are of national application, and it would be quite inappropriate to make a special exemption from such legislation for one single case.

I also recommend the House not to accept amendment No. 67. It would provide for direct payments from the Exchequer to NBC pension funds. There may be payments into the funds. I have already made it clear that we are very ready to countenance that, to give the funds the proper security, but I envisage the payments coming from the NBC's own resources, which I am sure will be adequate for the purpose.

Therefore, I suspect that all hon. Members share the same objectives, although I do not think that any of the amendments would help to achieve them. That must be true, unless hon. Members want to put the NBC pension funds into a privileged position so that other taxpayers carry the risks in those funds while the pension funds of those same taxpayers are not so guaranteed. That would be intolerably unfair. I ask the House to reject the amendments and to trust the Government's assurance that they will see the funds at an adequate level at the time of dissolution of the NBC.

Mrs. Dunwoody

The Secretary of State has given a passable impersonation of Pontius Pilate. In effect, he says that the matter is nothing to do with him. He has refused to answer any of the questions. Indeed, he has positively distorted some of the truth.

Let us be clear. NBC employees, the pensioners and the deferred pensioners presently enjoy security because they have a covenant that the NBC will make up contributions to the amounts required to maintain the funds. On the dissolution of the NBC, that protection is lost. As it stands, clause 50 does not provide any substitute. The Secretary of State knows that. He knows that what he is trying to suggest is not tenable. There is a moral responsibility on the Government to fulfil the undertakings that were given to the pensioners working in the NBC. The very least that the right hon. Gentleman could do would be to say to his hon. Friends, "We shall take away the clauses, redraft them and bring them back in another place." The right hon. Gentleman is not prepared to do that. He has never been prepared to take up the responsibility that is inherent in his legislation.

Let me remind the Secretary of State of a few things. Why are those pensioners now at risk? How can he say that some of the companies might go bankrupt, and, when they are bankrupt, they might not be able to maintain pension rights? It is because of his legislation. Who is changing the structure of the NBC? The Secretary of State for Transport. Who is putting the pension rights of 65,000 people at risk? The Secretary of State for Transport. Who refuses to write in the guarantee or undertake the responsibility? The Secretary of State for Transport. Why is he not prepared to give the same undertakings to people in the bus industry that were given to people concerned in previous denationalisations? It is not good enough to say that in the case of the National Freight Corporation the Government had to honour certain responsibilities, but they were undertaken under another Government. I suppose that we should agree with the right hon. Gentleman about that.

This Conservative Government, unlike probably any previous Conservative Government, have no interest in either their responsibilities or a moral undertaking to protect the interests of the pensioners. This Conservative Government are interested only in asset-stripping. They are not prepared to carry out the undertaking to find the money to make sure that the pensioners of today or of tomorrow will be protected. As far as the Secretary of State is concerned, if they lose their jobs and their pension rights, so be it.

I offer just one challenge to Conservative Members. We have heard a great deal both in Committee and in the Chamber today about the fact that the Labour party has no monopoly of commitment or care.

Mr. Anthony Steen (South Hams)

That is right.

Mrs. Dunwoody

If that is right, let all Conservative Members join me in the Lobby. If that is so, let the Conservative party—even the old Conservative party—come forward and show the pensioners and workpeople in the bus industry that Conservatives are not just mouthing empty words. They have their rights and they have their challenge. We shall put this to the vote. How many of them will join us?

Question put, That the amendment be made:—

The House divided: Ayes 178, Noes 241.

Division No. 218] [6 pm
Archer, Rt Hon Peter Garrett, W. E.
Ashdown, Paddy George, Bruce
Ashley, Rt Hon Jack Gilbert, Rt Hon Dr John
Ashton, Joe Godman, Dr Norman
Atkinson, N. (Tottenham) Gould, Bryan
Bagier, Gordon A. T. Gourlay, Harry
Banks, Tony (Newham NW) Hamilton, W. W. (Central Fife)
Beckett, Mrs Margaret Hancock, Mr. Michael
Beith, A. J. Harman, Ms Harriet
Bell, Stuart Harrison, Rt Hon Walter
Benn, Tony Hattersley, Rt Hon Roy
Bennett, A. (Dent'n & Red'sh) Healey, Rt Hon Denis
Bermingham, Gerald Heffer, Eric S.
Bidwell, Sydney Hogg, N. (C'nauld & Kilsyth)
Blair, Anthony Home Robertson, John
Boyes, Roland Howell, Rt Hon D. (S'heath)
Bray, Dr Jeremy Howells, Geraint
Brown, Gordon (D'f'mline E) Hoyle, Douglas
Brown, Hugh D. (Provan) Hughes, Dr. Mark (Durham)
Brown, N. (N'c'tle-u-Tyne E) Hughes, Robert (Aberdeen N)
Brown, Ron (E'burgh, Leith) Hughes, Roy (Newport East)
Bruce, Malcolm Hughes, Sean (Knowsley S)
Buchan, Norman Janner, Hon Greville
Caborn, Richard John, Brynmor
Callaghan, Rt Hon J. Jones, Barry (Alyn & Deeside)
Callaghan, Jim (Heyw'd & M) Kaufman, Rt Hon Gerald
Campbell, Ian Kinnock, Rt Hon Neil
Campbell-Savours, Dale Kirkwood, Archy
Canavan, Dennis Lamond, James
Carter-Jones, Lewis Leadbitter, Ted
Cartwright, John Leighton, Ronald
Clark, Dr David (S Shields) Lewis, Ron (Carlisle)
Clarke, Thomas Lewis, Terence (Worsley)
Clay, Robert Litherland, Robert
Clwyd, Mrs Ann Lloyd, Tony (Stretford)
Cocks, Rt Hon M. (Bristol S.) Loyden, Edward
Cohen, Harry McCartney, Hugh
Cook, Frank (Stockton North) McCrea, Rev William
Cook, Robin F. (Livingston) McDonald, Dr Oonagh
Corbett, Robin McKay, Allen (Penistone)
Cowans, Harry McKelvey, William
Craigen, J, M. McNamara, Kevin
Crowther, Stan McTaggart, Robert
Cunningham, Dr John McWilliam, John
Dalyell, Tam Madden, Max
Davies, Rt Hon Denzil (L'lli) Marek, Dr John
Davis, Terry (B'ham, H'ge H'l) Marshall, David (Shettleston)
Deakins, Eric Martin, Michael
Dixon, Donald Maynard, Miss Joan
Dobson, Frank Meacher, Michael
Dormand, Jack Meadowcroft, Michael
Dubs, Alfred Michie, William
Duffy, A. E. P. Mikardo, Ian
Dunwoody, Hon Mrs G. Mitchell, Austin (G't Grimsby)
Eadie, Alex Morris, Rt Hon A. (W'shawe)
Eastham, Ken Morris, Rt Hon J. (Aberavon)
Ellis, Raymond Nellist, David
Evans, John (St. Helens N) O'Brien, William
Fatchett, Derek O'Neill, Martin
Faulds, Andrew Orme, Rt Hon Stanley
Field, Frank (Birkenhead) Owen, Rt Hon Dr David
Fisher, Mark Park, George
Flannery, Martin Parris, Matthew
Foot, Rt Hon Michael Patchett, Terry
Forrester, John Pavitt, Laurie
Foster, Derek Penhaligon, David
Foulkes, George Pike, Peter
Fraser, J. (Norwood) Prescott, John
Freeson, Rt Hon Reginald Radice, Giles
Freud, Clement Randall, Stuart
Fry, Peter Redmond, M.

Question accordingly negatived.

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