HC Deb 09 April 1986 vol 95 cc170-9

'(1) The Secretary of State may provide by regulations for the payment, by such persons as may be prescribed by or determined under the regulations, in such cases and to such extent as may be so prescribed or determined, of pensions, allowances or gratuities by way of compensation to or in respect of persons who have suffered loss or diminution of pension rights by reason of—

  1. (a) any transfer of property, rights and liabilies under section 14(7), or
  2. (b) the disposal under section 19(2) of any interests held by a principal council in a public airport company.

(2) Regulations under this section may—

  1. (a) include provision as to the manner in which and the persons to whom any claim for compensation is to be made, and for the determination of all questions arising under the regulations;
  2. (b) make or authorise the Secretary of State to make exceptions and conditions in relation to any classes of persons or any circumstances to which the regulations apply; and
  3. (c) be framed so as to have effect from a date earlier than the making of the regulations;
but regulations having effect from a date earlier than their making shall not place any individual who is qualified to participate in the benefits for which the regulations provide in a worse position than he would have been if the regulations had been framed so as to have effect only from the date of their making.

(3) Regulations under this section may include either or both of the following provisions, namely—

  1. (a) provision authorising the payment, without probate (or, in Scotland, confirmation) and without other proof of title, of any sum due under the regulations in respect of a person who has died to his personal representatives or such other persons as may be described by the regulations; and
  2. (b) provision rendering void any assignment of (or, in Scotland, assignation of) or charge on, or any agreement to assign or charge, any benefit under the regulations, and provision that on the bankruptcy of a person entitled to such a benefit (or, in Scotland, sequestration of the estate of, or granting of a trust deed for creditors by, such a person) no part of it shall pass to any trustee or other person acting on behalf of the creditors, except in accordance with an order made by a court in pursuance of any enactment specified in the regulations.

(4) Subject to subsection (5), where regulations under this section have made provision for the payment of pensions, allowances or gratuities as mentioned in subsection (1), compensation in respect of any such loss or diminution of pension rights as is mentioned in that subsection shall be paid only in accordance with those regulations in any case to which those regulations apply; and accordingly such compensation shall not be paid under any other statutory provision, by virtue of any provision in a contract or otherwise.

(5) Subsection (4) shall not prevent the payment of any sum to which a person is entitled by virtue of contractual rights acquired by him before such date as the Secretary of State may by order specify.

(6) Any regulations or order made under this section by the Secretary of State may make different provision for different cases to which those regulations or that order apply or applies, as the case may be, and may in particular make different provision as respects different areas.

(7) In this section— "pension", in relation to a person, means a pension, whether contributory or not, of any kind whatsoever payable to or in respect of him, and includes—

  1. (a) a gratuity so payable;
  2. (b) a return of contributions to a pension fund, with or without interest on or any other addition to those contributions; and
  3. (c) any sums payable on or in respect of the death of that person;
"pension rights" includes, in relation to any person, all forms of right to or eligibility for the present or future payment of a pension, and any expectation of the accruer of a pension under any customary practice, and includes a right of allocation in respect of the present or future payment of a pension.'.—[Mr. Ridley.]

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this, it will be convenient to take the following:

New clause 4—Superannuation and pension rights—

  1. '(1) No change shall be made to the structure, provisions or coverage of the BAA superannuation scheme without the agreement of those presently recognised trade unions who are members of the BAA Central Negotiating Committee.
  2. (2) No scheme providing for the transfer to a company of the business of operating a local authority undertaking or any activities incidental to or connected with carrying on that business shall be approved by the Secretary of State unless it provides for the establishment by the principal council of a body to administer the pension funds of such a company.'.

New clause 5—Pay and conditions—

  1. '(1) Neither the company to which the rights, property and liabilities of BAA are transferred nor any of its subsidiaries may introduce into the national agreements now in force with the central trade unions any term less favourable than the current terms, nor may they in any respect worsen the pay and conditions of service now obtaining for BAA employees without the agreement of all the presently recognised central trade unions.
  2. (2) The Secretary of State shall not approve any scheme for the creation of a company to carry on the business of operating a local authority airport or any activities incidental to or connected with carrying on that business, unless that scheme provides for any existing employees of a council to be transferred to the company upon terms of employment no less favourable to them than those under which they are employed immediately prior to such transfer.'.

Government amendment No. 64.

Mr. Ridley

On 4 March during the debate in Standing Committee, at column 384 of the Official Report I said that two options were open to public airport companies in respect of their employees' pensions. Staff transferred to the airport company may, under subordinate legislation, be deemed to remain employees of the local authority concerned while that company remains in the ownership of the parent authority. That is known as the deeming option. Alternatively, the company may negotiate continuing membership of the local government superannuation scheme while the local authority continues to own most of it. That is the admission agreement option. Under either option, nothing changes for the employees as their pension rights continue under the local government superannuation scheme.

The hon. Member for Aberdeen, North (Mr. Hughes) had some doubts about pension rights transfer, as evidenced by his proposed amendment in Committee. I undertook to see whether further measures were needed to safeguard the interests of transferred employees' pensions.

The deeming option or admission agreement option would, of course, have to be negotiated by the company and the parent authority. Although I am certain that the two parties could reach an agreement in every case, I must accept that it is just possible that an airport company finding the going difficult might seek a cheaper scheme and try to economise by leaving the local authority scheme. To cover that possibility—remote though it may be—I am pleased to introduce the new clause, which is modelled closely on section 84 of the Transport Act 1985 together with its associated consequential amendment, which provides the powers necessary for me to make regulations providing for compensation to be paid to public airport company employees who suffer loss or diminution of pension rights. I hope not to have to use the powers, but I assure the House that I will not hesitate to do so if necessary.

The hon. Member for Aberdeen, North returns to that point in new clause 4 and has a slightly wider point in new clause 5. It might be convenient if I responded to his arguments on those new clauses when I have heard them. I warn him in advance that we believe that the new clause 4 is unnecessary and that new clause 5 might be undesirable.

Mr. Robert Hughes (Aberdeen, North)

I am grateful to the Minister for his few remarks at the beginning of this debate. Especially in view of his final comments on new clauses 4 and 5, it might be convenient if I said now that, at the appropriate time, I shall request separate Divisions on new clauses 4 and 5 unless—which is unlikely—my eloquence persuades the Minister to accept both.

New clause 1 is welcome in that it recognises that a problem could arise for existing employees should a privatised company or a public limited company formerly in the direct ownership and control of local authorities move towards a pension or superannuation scheme which is less beneficial to employees than that which they currently enjoy.

New clause 1 is merely an enabling measure and is hedged about with all sorts of conditions. It is no more than a grace-and-favour clause and I for one have no faith that the Secretary of State will approach the issue with sufficient resolution and determination to ensure that justice is done.

We all have the benefit of the record to go by. We know, for example, that the 15,000 staff of the National Bus Company lost their guarantee to index-linked pensions as a result of the Transport Act 1985. New clause 1 goes in a direction that is dramatically opposite to the policy which would protect employees by having their pension rights guaranteed. The only thing that is guaranteed under the Secretary of State's policy is that in the drive and thrust for profit the well-being of employees will take second place.

The philosophy of the Secretary of State is the true philosophy of the Conservative party. He is open about this and has made it clear that he will have no truck with the benevolent face that the Government are seeking to show to the public, which is the face of caring capitalism. He is so proud of the fact that he states his opposition to such an approach on every possible occasion. At the same time other Ministers are trying busily to sell to the public a policy that suggests that private pension schemes provide the best answer to the problem of pension provision in future. Other Ministers are encouraging the public to make their own private pension arrangements. However, schemes have been built up over decades that have been negotiated between employees and employers and we must retain the better schemes by ensuring that they are enshrined in statute. The best that the Secretary of State can offer in new clause 1 is that if he happens to be in a generous mood he might provide for some compensation. It is clear that it is an enabling provision because it does not say that the Secretary of State shall do anything.

There is nothing in the Bill and nothing in new clause 1 which provides a modicum of protection for British Airports Authority employees.

Mr. Robert Litherland (Manchester, Central)

On a point of order, Mr. Speaker. I crave your indulgence. I have had time to reflect on your ruling on the hybridity of the Bill, which was the issue raised by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). I think that it would be helpful if your statement could be made available to all who wish to participate in the debate.

Mr. Speaker

Every hon. Member who was present in the Chamber will have heard my statement, and it will certainly appear in Hansard.

Mr. Hughes

I was saying that British Airports Authority employees will not have a modicum of protection for their pension arrangements. We have had the experience of previous privatisation legislation and we know that publicly owned companies have taken on the shadowy form of being neither one thing nor the other. These companies have been privatised but we know that they are in the ownership of the Secretary of State. We know also that British Airways changed its pension scheme considerably. It managed to do so by offering financial inducements to existing employees to transfer to the new and less favourable scheme. That does not detract from the argument I am advancing.

New clause 5 seeks to ensure that unions that are involved in the British Airports Authority's central negotiating committee must be consulted about any changes that are suggested to the pension scheme and provides that no change can be made without their agreement. On the local government side, new clause 4 provides that a body should be set up to administer the pension fund of such a company. I anticipate that trade union involvement would be allowed for in this instance.

I turn to pay and conditions, which come within new clause 5, and I shall comment briefly on the background to the costs that are involved in manning and running airports. We know that employee and staff wages in the British Airports Authority are currently the biggest items of expenditure. We also know that the profits generated within the BAA come not from the airport handling but from duty-free and other concessions at Heathrow and Gatwick. Of course, other airports are not in the same position. They do not have access to the throughput of passengers which makes the duty-free and other concessions a major factor in bringing in income.

Over the whole picture it seems clear that pay and conditions of service will be under attack in the efforts to cut costs. In other words, the success of privatisation will be at the expense of workers in the industry who have done so much to make the BAA the successful publicly owned company that it is now. We believe that workers have a strong right to protection of wages and conditions that have been obtained by many patient years of negotiations. We now fear that all that is under threat and that there may well be moves to decentralise wage bargaining, currently done centrally. We believe that the move will be towards individual negotiations with airport staff at individual airports, notwithstanding the fact that it is currently the BAA's policy to call upon its employees to work at any of the BAA airports.

We also know that the British Airports Authority management has told the workers that their job rights are guaranteed for 12 months after privatisation. After that, the future is extremely murky. It is being said in many quarters that there is no need to worry because the airline business is likely to expand and that with it the policy, programme income and so on generated at airports are also likely to expand.

No one can forecast with any certainty what will happen in the future. There are stories of many of the international airlines being in difficulty and there is some doubt whether the traffic will grow to the extent forecast. Although the argument is that the present work force has no fears for the future, that is not the case. I believe that attempts will be made to contract out services which are currently done in-house in an attempt to drive down costs and weaken the bargaining position of trade unions.

The Government's position is quite clear and they have never hidden it. They believe that market forces will take care of all those things—pay, conditions and pensions. They believe that those are issues in which the Government should not seek to interfere. I believe that the Government's policy exposes their claim that they are not anti-trade union as sham and hollow. It is a contradiction for them then to say that they favour responsible trade unions, proper negotiating procedures and that they want to encourage unions to undertake proper and sensible bargaining positions. The trade unions currently employed within the BAA and those employed within local authorities have been extremely responsible. They have bargained sensibly and achieved reasonable pay and conditions. It is sad that, once the airports are privatised, there will be nothing to protect them from the ravages of Government policy and there is nothing in the Bill that will do that.

We believe that trade unions should be encouraged. We believe that pay and conditions should be protected. The Government clearly do not. New clauses 4 and 5 seek to erect a barrier against predatory companies which may not have the welfare of employees at heart. The clauses will give a guarantee against the damaging change by encouraging negotiations. For those reasons, we shall seek to write new clauses 4 and 5 into the Bill.

Mr. Ridley

The hon. Gentleman has now advanced the argument for new clauses 4 and 5, and I shall respond to it. He said that the Transport Act 1985 had deprived the busmen of the guarantee of their pension schemes. With respect—I mention this only because it is relevant to the new clauses—that is not the case, because there was never a guarantee of the National Bus Company pension funds. There is not a guarantee of the BAA's pension fund as at present constituted, nor is there a guarantee of any nationalised industry pension fund or of the pension fund of any industry which has been privatised. Therefore, we are treating all those pension fund problems on a par with one another. There has been no precedent for a guarantee of a privatised company's pension fund. In fact, the British Airports Authority provides a generous pension scheme for its employees. Pensions are index-linked and amount to two thirds of pensionable pay on retirement for an employee with 36 years' service.

4 pm

Far from being under threat from privatisation, as the hon. Member for Aberdeen, North (Mr. Hughes) said, after consulting my Department the chairman of the BAA wrote to all the employees on 16 August last year making it clear that the pension rights of the BAA's existing staff and pensioners would remain unaltered as a result of privatisation. The scheme is managed by a board of trustees, which comprises three representatives each from the staff and management sides, plus a chairman. Proposals for amending the scheme are discussed fully at joint meetings of management and work force. The BAA has shown in the past that it is ready to listen to its employees' views, as any good employer should.

Like any private sector company, the BAA must retain the freedom to manage its own affairs, but I am sure that it will continue to do so in full consultation with its work force. It would be wrong to write in, as new clause 4 seeks to do, some sort of guarantee on that matter.

I refer to local authority airports' pension funds. Under new clause 4, a large number of comparatively small pension funds would be set up by local authorities which own airports, for those airports' employees. With respect, there is no difference in quality between that and the proposals in new clause 1. Employees of local authority airport companies should be able to join, or stay in local government superannuation schemes, by one means or another. Indeed, the hon. Gentleman's proposal is less acceptable than mine because it would mean a multiplication of small pension funds administered by bodies without experience.

New clause 5 would impose upon the BAA's successor company and its subsidiaries requirements that would exceed those placed on any other private sector company, or, for that matter, on any employers in the public sector. The agreement of all recognised unions would be required before the introduction of any change in employees' terms and conditions which might include some element that was unfavourable to the unions' members. There is no reason to put that group of people in a privileged position compared with the rest of the work force—that of having statutory protection against changes in their terms of employment additional to that for other employees under existing statutes. For example, they will have, as other employees have, the protection of the Employment Protection (Consolidation Act) 1978, which protects them against any unilateral change in their terms of employment which amounts to constructive unfair dismissal.

The pay of the BAA's employees after privatisation will be a matter for negotiation between employees and management, and I am sure that the hon. Gentleman would not have it any different, or he would not believe in collective bargaining, as he often professes he does. It would be wrong to fetter that process as the new clause proposes.

The second part of new clause 5 is unnecessary. In our view, each transfer of staff to an airport company under a scheme approved by the Secretary of State will be a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981. That means that the staff concerned will become employees on the terms and conditions under their contract with the relevant local authority immediately prior to transfer. In other words, their contracts should then be read as if they had been made with the company rather than with the authority. I am sure hon. Members will agree with me that that is an extremely satisfactory position and that it renders any other provision unnecessary.

Far from accepting the jibes of the hon. Member for Aberdeen, North that we are not looking after the pensions or conditions of the staff of either the BAA or the local authority airports, I believe that I have demonstrated that, with new clause 1 and the present statutory position, every precaution has been taken to secure what is right and proper in an economy where there is still room for collective bargaining over all those matters. I suggest to the House that we accept new clause 1 and the consequent amendment, and reject new clauses 4 and 5.

Mr. Tam Dalyell (Linlithgow)

I should like the Secretary of State to clarify something for me.

It has been put to me by trade union representatives at Edinburgh airport that their members might be disadvantaged, given traffic forecasts for forthcoming years, by accepting the proposed arrangements. After what the right hon. Gentleman has just said, am I entitled to go back to those representatives of the staff at the airport and assure them that he has given an undertaking to the Commons that they will not be so disadvantaged following the transfer?

Mr. Ridley

In response to the hon. Gentleman's question, I am not clear in what sense the employees of Edinburgh airport are suggesting that they might be disadvantaged. There is no possibility of their being disadvantaged in respect of their pension rights, compared with what would happen if they stayed in the public sector in the local authority scheme.

Mr. George Park (Coventry, North-East)

As I understand it, the object of the Bill is to privatise the airports and, in so doing, make them more efficient. When I read the Bill I was surprised to find that there is nothing in it which refers to probably the most vital part of the prosperity and efficiency of any undertaking, whether public or private—that is, matters connected with the work force. That is particularly relevant in this case because most of the cost of running an airport is in the wages and salaries paid to the employees. Therefore, I was surprised that there was no mention of that. That is why we have felt it necessary to table new clauses 4 and 5.

It is undoubtedly true that there is a feeling of insecurity among the employees at the airports. They are not sure how they will fare with privatisation. The experience of privatisations in other industries does not give them much confidence. I am sure that they would prefer to see something in writing rather than accept the bland assurances of the Secretary of State and then find the whole thing blowing up in their face.

Therefore, new clause 4 sets down in writing the reference to recognised trade unions who are members of the BAA. Central Negotiating Committee. Under the new clause, the unions will continue to function and to have a say in agreements that they have built up over a long time and that they wish to maintain. The new clause does not seek to add anything; it seeks merely to protect the current position.

The same applies to new clause 5, which refers to pay and conditions being no

less favourable than the current terms". Therefore, in new clauses 4 and 5 we are not trying to raise the ante, to try to gain some advantage for the employees in the interim period. What is absolutely essential is that something should be written into the Bill, as is proposed by new clauses 4 and 5, giving a firm assurance and a sense of security to the current employees. That would undoubtedly help to maintain and improve the efficiency of the airports.

I am surprised that the Secretary of State cannot see the matter in this light. It is not good enough to brush it to one side and say that what we propose is unnecessary. The Secretary of State said that, if required, he would step in, but he has not been all that smart in jumping in on other situations when employees were extremely worried about their pay and conditions.

These new clauses are an attempt to introduce a modicum of security for employees. They will enable employees to feel that, under privatisation, they will have a future for themselves and their families. All that we are seeking to do is to make it clear to employees that that is the intention of the Opposition, whether or not it is the intention of the Government.

Mr. David Lambie (Cunninghame, South)

If the Bill becomes an Act, I am interested, as a Scottish Member, in the fact that the four major airports in Scotland will be controlled by the new BAA company and that the rest of the airports of the Highlands and Islands will be controlled by the CAA.

I have listened to the assurances of the Secretary of State that the workers of the privatised BAA will not be disadvantaged compared with the workers in other similar privatised schemes. Can the right hon. Gentleman tell me whether superannuation pensions and conditions of work will be the same for the workers of the Highlands and Islands airports as those for the workers in the four Scottish airports which will be under the control of the BAA?

We have been given assurances from Sir Norman Payne and the present management of the BAA about what will happen when the newly privatised set-up takes over. However, Sir Norman will not continue indefinitely at the BAA. I am therefore concerned about the future.

There are provisions in the Bill to allow foreign people to buy control of BAA. Therefore, the outlook of the new management could be entirely different. We may get the American or Australian type of management which we are witnessing in the printing industry. Such foreign control will not be prevented unless some of our proposals are carried today.

As a Scottish Member, I am always concerned if we allow negotiations on pension rights and wages and conditions to develop separately in Scotland from England. In the south of England, especially around the London airports, there is high employment. In Scotland, with the exception of Aberdeen airport, the areas surrounding the airports have high unemployment. In areas of high unemployment, the management may say to workers that they are lucky to be working and that they are not like their colleagues who are unemployed. In fact, their colleagues are not just unemployed but are now longterm unemployed, having been without a job for a year or two years or more. The management could therefore tell the workers that they should be happy to accept a standstill in wages, or indeed a reduction in wages, which has been forced on the workers in some companies in my own constituency. The management may say, "Why worry about decent pensions? You are lucky to be working".

I should like an assurance from the Secretary of State that the pension conditions and the conditions of service of the workers in the privatised BAA, whether at Prestwick, Glasgow or the London airports, will be identical. For that reason, we must continue with central negotiation. There must be central control of the pension schemes and conditions of service. I accept the assurances given by the Secretary of State, but, just as Sir Norman Payne may not be part of the new privatised BAA, the Secretary of State's future in the Government is even more insecure.

Mr. Peter Snape (West Bromwich, East)

Tenuous.

Mr. Lambie

We have accepted the assurances of Ministers and Under-Secretaries in Committee and on Report, but often when we go home and listen to the television news we discover that the Minister has been replaced. The former Minister can then say that he did not given any assurances.

I ask the Secretary of State to give me an assurance that the conditions of the present workers in the CAA will be identical to those of the workers in the BAA. Will central negotiation be continued to ensure that wages and pension rights in the Scottish airports are identical to those in the London airports?

4.15 pm
Mr. Ridley

I shall answer briefly, as I think it is wrong for me to have intervened three times already in the debate. I should clear up what I said to the hon. Member for Linlithgow (Mr. Dalyell).

The substance of my reply was correct, that the pensions of the BAA employees are protected. It momentarily slipped my mind that Edinburgh airport is not a local authority airport but a BAA airport. What I said about the pensions of BAA employees applies to the earlier speech that I made on the subject. The pensions of the employees will be as safeguarded in the future as they are at present—indeed, as all other pension funds have been.

The hon. Member for Coventry, North-East (Mr. Park) and, to some extent, the hon. Member for Cunninghame, South (Mr. Lambie) have asked the Government to write into statute some form of guarantee about the wages and conditions of airport workers. I am sure that, on reflection, they will believe that we should not do that. It has not been done for any other group of workers in any other industry. If we were to embark on the course of writing into statute what the wages and pensions should be, not only would we frustrate collective bargaining but there would be fixed wages and conditions for all time without any possibility of future improvement.

I cannot give the hon. Member for Cunninghame, South an undertaking that the wages, terms and conditions and pensions of those who work for the CAA airports, the BAA airports, and local authority airports will necessarily be the same or will be underwritten by statute. Wages can vary between different employers, different parts of the country and different industries. To deny the possibility of wages varying would be to deny to some people the possibility of improving their standard of living. I am sure that that is not what the hon. Gentleman wants, and that is not what we want. We should leave it to the market to determine wages.

Mr. Robert Hughes

With the leave of the House.

I do not think I have heard such a specious argument in the 15½ years that I have been a Member of the House. To argue that the new clauses, which seek to guarantee existing pay and conditions, are an infringement of bargaining rights is complete nonsense.

The Secretary of State is saying that the employer should have the right to bargain wages down but that employees or trade unions should not have the right to bargain wages up. There is nothing in the new clauses which says that the present pay and conditions are to be frozen for all time. We would encourage the growth of the airport business and hope that there would be opportunities for better pay and conditions. That is not the problem. I am satisfied that an attempt will be made to drive wages down. The new owners of the BAA will have in mind what the Chancellor said during his Budget speech.

If the Secretary of State gets his way, local authority airports will not remain in local authority ownership for all time. If the Bill has any effect, an attempt will be made to move local authority-controlled airports into a second stage—the private sector.

The Chancellor of the Exchequer constantly bemoans, as every Minister does, the level of wages in industry generally. Indeed, he has gone so far as to say that high wage levels are the Achilles heel of the British economy. If that is not an invitation, encouragement, or even a direction for those in private industry to seek to drive down wages, I do not know what is.

There is a clear division between us. We want to see pay, conditions and pensions, which have been negotiated by responsible trade unions with responsible employers, kept as they are with no possibility of their being downgraded.

The Secretary of State says that that has never been done for any company or industry which has been privatised or for any public industries. The fact that it is novel does not mean that it is wrong. It does not put workers in a privileged position. It gives them rights which they should enjoy. The guarantees that the Secretary of State gives about the BAA and local authority ownership apply only so long as they are not private companies and in the market place. The right hon. Gentleman is well known as an advocate of market forces. We know that he dislikes the present level of pay and conditions, and part of the objective would be to try to drive those down.

I shall not ask my right hon. and hon. Friends to vote against new clause 1. It is a concession. It is a recognition that what we are saying might well happen. The fact that the Secretary of State is taking the power to provide for compensation shows that he recognises that that could be a reality. Therefore, I accept new clause 1, but I shall seek to divide the House on new clause 4.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Forward to