PROVISIONS SUPPLEMENTARY TO S.1 (Hansard, 18 May 1988)

§ Mr. Atkins
I beg to move amendment No. 20. in page 11, line 41, leave out 'and' and insert'(2)'.

§ Madam Deputy Speaker
With this, it will be convenient to take Government amendments Nos. 17 and 18.

§ Mr. Atkins
Opposition Members will be pleased to know that these amendments bring about a small improvement in the Bill. They ensure that where, for pension purposes, a period of employment with another company is to be deemed as a period of employment with the corporation, that arrangement is not disturbed by the vesting under clause 1, but continues to apply with the successor company substituted for the corporation. This may be relevant, for example, for the purpose of calculating the pension entitlement of a corporation employee who was, prior to 1967, employed by a private sector steel company that was subsequently nationalised.

§ Mr. Maxton
I beg to move amendment No. 8. in page 11, line 45, at end insert— '3A. There shall be no reduction in the value in real terms of the pensions, allowances and gratuities which the successor company becomes liable to pay under section 1 above.'.

§ Madam Deputy Speaker
With this it will be convenient to take Government amendment No. 21.

§ Mr. Maxton
I reiterate that the Opposition remain adamantly opposed to the concept of the privatisation of 1013 British Steel. We believe it to be bad for the economy and bad for the employees. However, as well as opposing, we have a responsibility to ensure that the best protection is available to employees if the privatisation goes ahead.
Existing employees and past employees now retired are concerned about what will happen to their pensions. Those who are already retired want to ensure that the pensions that they are receiving will continue to be paid to them and will continue to be meaningful in real terms. Those who are paying into the scheme, with the employer paying in as well, want to know that the value of their contributions will remain the same under privatisation.
We have tabled the amendment in an attempt to draw from the Government the exact nature of their plans. Since then, the Government have tabled amendment No. 21, which is considerably more detailed than our amendment No. 8. The Government have hard-working advisers who can give them help which, unfortunately, we do not have.
I am happy to keep my remarks brief and invite the Minister to explain the Government's amendment.

§ Mr. Morley
I appreciate that the Government have tabled an amendment that in some respects strengthens the protection of the pension fund. However, many British Steel workers in my constituency are worried about the future of the pension fund. In other companies there have been attempts to use pension funds as part of investment programmes. In some instances there has been a great deal of discontent and disagreement about the way in which the pension fund should be used.
When the BSC is floated, the Government will have no involvement or control. I appreciate that the Government have responded to some of the fears that have been expressed for some time about the future of the pension fund, but I hope that the Minister will give some reassurances that I can pass on to my constituents to the effect that the value of the fund will be protected. I seek also some safeguards on the way in which the fund will be used in future.

§ Mr. Atkins
Amendment No. 21 fulfils the promise that I made in Committee. The purpose of the amendment is to ensure that the repeal of schedule 3 to the Iron and Steel Act 1982 does not affect the continuation in force of any pension scheme, or any person's rights or liabilities in relation to any pension scheme, or the rights of any dependants, that derive from regulations that have effect as if made under that schedule. As I said in Committee, the amendment safeguards the continuity of the pension scheme after the appointed day, when schedule 3 to the 1982 Act is repealed.
The hon. Member for Dagenham (Mr. Gould) placed great weight in Committee on the power in paragraph 2 of schedule 3 to the 1982 Act to enable regulations to amend or repeal pension schemes provided that persons affected are not placed in any worse position. That provision does not, however, provide the general guarantee that he suggested. The BSC's present pension scheme is the responsibility of the corporation and the trustee, within the terms of the trust deed. I can assure the House that the corporation's firm intention, as I think I predicted in Committee, is that its present pension scheme will go forward unchanged into the private sector. Pensions should therefore continue to be provided subject to, and in 1014 accordance with, the present trust deed, at least as far as present employees and pensioners are concerned. I understand that the corporation will shortly be making the position clear to all its employees.
The imposition of a statutory requirement on the successor company and the trustees of the pension scheme of the sort proposed by amendment No. 8 is unacceptable to the Government. There is no such statutory constraint on the corporation at present. It is the terms of the trust deed that govern the corporation's pension scheme at present, and should continue, in our view, to apply to the successor company. That provides a very substantial assurance to all British Steel's pensioners and employees that their rights will be looked after.
As I said in Committee, there are 28 directors of the trustee committee, of whom 14 represent the work force. The trustees are bound both by the provisions of the trust deed and by a substantial body of trustee legislation to act at all times in the interests of the trust's beneficiaries. That is the overriding consideration affecting the activities of all trustees. The ability of British Steel plc to alter its pension scheme will therefore be heavily circumscribed.
British Steel's pensioners and employees have the assurance that all their present pension rights will pass unchanged to the successor company, and British Steel's clear intention is that they will continue unchanged into the private sector. Of course, I cannot offer absolute guarantees about the future any more than I could if British Steel were to remain a nationalised industry, but both the Government and British Steel are very well aware of the importance of this issue and fully understand the concerns that have been expressed.

§ Mr. Morgan
The Minister has said that 14 of the 28 trustees of the corporation's pension fund represent the work force. I take it that he means that the 14 were appointed through the representative trade unions of the work force, as is common in nationalised industries. Given the remarks of the Chancellor of the Duchy of Lancaster about employee share ownership schemes—the right hon. and learned Gentleman poured much derision on the idea that trade unions might represent the work force in terms of proxy voting through their shareholdings—does the right hon. and learned Gentleman envisage any changes in the rights of the work force to have 50 per cent. trustee representation on the pension fund? Is that to be altered in any way so that trade unions will not be permitted to act through their general secretaries or other officers as the trade union half of the trustees of the successor company's pension fund?

§ Mr. Atkins
The hon. Gentleman makes as convoluted a point now as he made in Committee when we discussed this issue at length. I promised in Committee that we would seek to persuade British Steel—British Steel seemed to have been persuaded—to maintain the same trust and pension fund when it became a privatised company as that which had applied in the past. The detailed arrangements of the constitution of the trust and the alterations to the trust are doubtless familiar both to the trade unions and the board of British Steel as it is now and as it will be. If there are to be amendments, they will be discussed through the normal channels within the company. If alterations have to be made, they will follow.
The position will be the same in future, as near as we can guarantee, as it is now. We cannot give absolute 1015 guarantees, because the position under a privatised company or a nationalised company cannot be guaranteed absolutely. For example, I cannot predict whether the world will end tomorrow.
All the signs are that, while the position of the pension fund is being reviewed, the liabilities will be adequately provided for. I understand the reasons that led to the tabling of amendment No. 8, but given the detailed spelling out of the meaning of amendment No. 21, which confirms the position as was and as will be, I hope that the Opposition will withdraw their amendment and support amendment No. 21.

§ Mr. Maxton
I think that we would all like a slightly fuller explanation of the scheme. I understand that the Minister cannot give absolute assurances on the future of the pension scheme, and I am grateful to him for putting into the Bill some form of control over the new private company, but I should like to know whether the corporation is saying that, if someone joins the privatised company, he or she will be offered the pension scheme that we are discussing along with existing employees who will continue with it. Will someone who joins the company get the same pension scheme? I am not entirely clear about the relationship between British Steel's pension scheme and other public sector pension schemes. Will it have the same transferability rights as other pension schemes? Will people be able to pay into it and take out of it as they move?

§ Mr. Atkins
The hon. Member knows that there is considerable precedent for this in other privatisations. I said, when I served on my first Standing Committee discussing British Aerospace, that pensions were one of the most important elements in any privatisation, and they still are. I undertook to bring forward on Report—as I have done—the Government's view on what the future pension scheme would be in relation to the past one, and I have explained that.
It is for the company to make a detailed statement to employees in the near future—I am not sure exactly when. The future pension scheme for new employees will be spelt out, but I cannot say at this stage exactly what its terms will be, largely because it is still being worked out. It would be folly to suggest what might be in it.
Pensioners and employees in the company will have a pension scheme that is, to all intents and purposes, exactly the same as the present one—except that I cannot give a guarantee about it, for the reasons I have given.

§ Mr. Maxton
I suppose that it is pleasant to end the Report stage on a note of amicable accord, because we welcome the Minister's guarantee, although it is not as absolute as we would have hoped. We wish that privatisation was not taking place and that the employees could remain in the public sector. Given that they cannot, this is about as good an assurance from the Government as we are likely to get, and I welcome it as such.
Accordingly, I beg to ask leave to withdraw the amendment.