PENSION SCHEMES

HC Deb 20 February 1989 vol 147 cc717-30

'The S.T.G. staff pension fund and the S.T.G. Transport Operatives Pension Scheme (T.O.P.S.) shall continue in operation, and it shall be a condition of sale that any new company operating any undertaking disposed of under section 1 above shall participate in them.'.—[Mr. Wilson.]

Brought up, and read the First time.

3.45 pm

Mr. Brian Wilson (Cunninghame, North)

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

Mr. Speaker

With this we may take amendment No. 17, in clause 12, page 6, line 32, at end insert 'and shall ensure that employees' pension rights are in no way diminished by the operation of this Act.'

Mr. Wilson

The new clause and amendment No. 17 deal with the pension rights of employees of the various sectors of the Scottish Bus Group under the present system and our concerns about how those rights will be affected by privatisation. New clause 4 simply asks that the Scottish Transport Group staff pension fund and the transport operatives pension scheme—TOPS—continue in operation and that it should be a condition of sale that any new company operating any undertaking disposed of under the Bill should participate in them. In other words, we are seeking to defend the rights of those who work within the Scottish Transport Group and to say that they and their rights cannot be sold off like so many cans of beans.

At present, the vast majority of people who work for the Scottish Transport Group come within a pension scheme—TOPS. The latest TOPS report and accounts list the participating employers as all those who are to be sold off under the Bill. There are 10,473 members of TOPS, not only contributing members but pensioner and deferred pensioner members. There seems to be general agreement that the scheme is well run, well managed and extremely beneficial to those who have, in many cases, worked for the Scottish Transport Group for many years. The correspondence I have received on the subject shows that members of the pension scheme are appreciative of what they consider to be a good scheme which is advantageous to their interests.

The scheme provides a pension on retirement linked to final pensionable pay near that time. As pay increases, pension expectation rises in line. For 40 years' membership, members receive a pension of two thirds pensionable pay near retirement.

The STG pension schemes are good. They have been revised at regular intervals and have been improved with members being contracted out of the state earnings-related pension scheme with subsequent savings in national insurance compensation. The employees' contribution is 5 per cent. of pensionable salary and they are allowed to make additional voluntary contributions if they wish. The employers pay the whole cost of the benefits for employees and their dependants. Those contributions are normally in excess of those paid by employees.

From everything I have said, I am sure that my hon. Friends will agree that it is a model pension scheme, which is what one would expect from the public sector. A person who has worked for 40 years for the Scottish Transport Group or one of its subsidiaries will receive a maximum pension of, as I have said, two thirds of pensionable salary. Therefore, someone who was earning £12,000 per annum would receive a pension of £8,000 per annum.

There are many benefits other than the retirement pension. There is an early retirement pension, a late retirement pension, an ill-health retirement pension and, perhaps more important, an in-built provision for index linking so that it is not simply a straightforward sum each year. A lump sum on retirement is also possible.

TOPS has been approved by the Inland Revenue superannuation fund under the Finance Act 1970. This is important because, from such approval, benefits stem to employees in tax relief on their contributions and their lump sums on retirement or death. The pension benefits are taxed, taking into account personal tax relief. Approval by the Inland Revenue also means that there may be limits on the contributions employees pay and on the amount of their benefits.

On every score, it is a well established and well operated pension scheme and it is no wonder that there is immense concern among employees of the Scottish Bus Group about the implications for the scheme after privatisation. They have only to look south of the border at some of the experiences of their former workmates within public sector bus operations to see what the alternative propositions might be.

It is tragic that any Government should, with such equanimity, be prepared to take away the rights of working people and the right to peace of mind for which they have paid over the years. One cannot do that in any sense of fairness or justice to those who have, without any political considerations, given their working lives to the Scottish Bus Group and its subsidiaries. There is contempt for those working people in the idea that pension rights can be swept aside together with their best interests and peace of mind. That is the proposition contained in the Bill. Make no mistake: nothing in the Bill will safeguard the interests of the employees of the Scottish Bus Group after it has been broken up and sold off, perhaps to the highest bidders.

When the Minister replied in Committee to our amendments and proposed new clauses, he said—as he has tended to say throughout the passage of the Bill—that the Government can take to themselves the power to give certain safeguards. He pointed out that clause 12 enables the Secretary of State to make orders to protect pension rights with respect to subsidiaries of the Scottish Transport Group after privatisation. The Minister told us that clause 12 provided for the Secretary of State to take into account representations made by those who administer the pension scheme in question. He assured us that the preservation of a proper pension scheme would be a consideration taken into account by the Secretary of State in determining to whom the subsidiaries of the Scottish Transport Group were to be sold. On every count, the Minister's defence on pension rights is that it will be within the powers of the Government to safeguard the interests of workers.

I take exception to that and regard it as inadequate, for two fundamental reasons. First, experience does nothing to reassure us that the Government will use the powers they have taken to themselves to interfere with the untrammelled workings of the market place. Many Opposition Members have severe doubts about the likelihood of the Secretary of State making orders for the implementation of a pension scheme after privatisation if the scheme introduced by the new owner was unsatisfactory.

Secondly, what will happen in the years after privatisation? As has been seen clearly from the English and Welsh experience, the initial sales of subsidiaries of the Scottish Bus Group may be only the beginning of a long and complicated saga. I have visited Southampton within the past few days to see what had become of one of the subsidiaries there—Hampshire Bus. What happened there was a classic example of asset stripping. A substantial part of Hampshire Bus—the operative side—was sold to another owner. As a result, many of the workers' previous pension rights have already disintegrated. I have not noticed the Secretary of State for Transport coming to the House with orders to reverse that process.

If the subsidiaries of the Scottish Bus Group are released into the private sector, with all the rhetoric about freedom and competition, one of the rights that will be established is the right of a buyer to sell on to a new owner. Whatever safeguards the Minister may tell us, to salve his conscience, are built into the legislation, the truth is that they will disappear immediately further sales take place. If the Minister can give us any example from the privatisation programme, in which the Government have been engaged since 1979, of a Secretary of State coming to the House in order to bring in check private owners who have subsequently done away with the right of the employees of former public companies, I should be extremely interested to hear about it. Such a precedent does not exist and will not be established under the relatively minor privatisation programme that we are discussing today. Unless safeguards of pension rights are written into the Bill now, it is extremely unlikely that those rights will be safeguarded subsequently.

Mr. John McAllion (Dundee, East)

New clause 4 calls for the continuation of the Scottish Transport Group staff pension fund and of its transport operatives pension scheme—otherwise known as TOPS. The reason why new clause 4 seeks to do that is set out in amendment No. 17 which states that we aim to ensure that employees' pension rights are in no way diminished". To secure that aim we want it to be a condition of sale to any private operator that pension conditions are preserved through the existing pension fund schemes. The existing arrangements are well established. Both the staff pension fund and TOPS are in the hands of trustees who run them through management committees. We are told in the notes on clauses that the management committee of the staff pension fund consists of group representatives and staff representatives in equal numbers, and that the management committee of TOPS consists of four members from the management of the Scottish Transport Group and three members from the trade unions, representing the workers.

However, in Committee my hon. Friend the Member for Falkirk, West (Mr. Canavan) pointed out that the report and accounts for 1987–88 referred to six trustees responsible for TOPS and a management committee of 10. I do not know which figure is correct, although the Minister did not contradict my hon. Friend in Committee. I do not know whether there are 10 members of the management committee or only seven, as is referred to in the notes on clauses. I hope that the Minister will clear that up when he replies. It is fairly important to know with whom we are dealing when winding up the scheme. We need to know whether it is a 10-strong or a seven-strong management committee, with a majority of management representatives. That was not made clear by the Minister or the Government in Committee.

There are good reasons why the schemes should be continued, even under the new privatised regime. The schemes involve all the subsidiaries of the Scottish Bus Group and are therefore comprehensive and national, covering more than 10,000 members. By definition, a scheme of that size must be better than a scheme that is based on an individual privatised subsidiary or on one privatised company on its own. We can take as an example Strathtay bus company in Tayside, which is to be privatised and which has only 461 employees. If that company were to set up a new pension scheme based on only 461 employees, the likelihood is that that scheme would in no way match a scheme based on more than 10,000 members, as is the case with the Scottish Transport Group. The principle that applies is, the bigger the scheme, the better the benefits to the people involved.

By opposing new clause 4 and amendment No. 17, the Minister seems to be trying to deny to the people who will be transferred to the new privatised subsidiaries the kind of benefits enjoyed by members of big schemes, such as the existing scheme. In 1987–88 the total investment income for TOPS was £6,208,000. The total income for TOPS in that year, in contributions from the company and the members, as well as transfers of pension rights from other schemes was £13,426,000. In the same year expenditure on benefits and other costs amounted to £3,104,000, leaving a net addition to the scheme of £10,322,000.

The Minister will have to explain to me and everyone else how a scheme with such benefits and based on more than 10,000 members can be matched by a privatised scheme covering only 461 employees. It seems common sense to say that if the Minister transfers the pension rights of existing employees of the Scottish Transport Group to the new privatised subsidiaries he will, by definition, sign away the substantial benefits that the employees enjoy under the existing scheme.

Under the existing TOPS arrangement, for example, the employees' contribution amounts to 5 per cent. of pensionable salary. The member can add to that voluntarily, if desired. However, the employers must pay the whole cost of the benefits that are not covered by the employees' contributions. That invariably means that the employer—the Scottish Transport Group and, through the Scottish Transport Group, Her Majesty's Government—ends up paying substantially more than the employees. I cannot see any private sector operator agreeing to match the scale of the contributions currently made by the Scottish Transport Group and Her Majesty's Government.

4 pm

In Committee, my hon. Friend the Member for Falkirk, West and the hon. Member for Tayside, North (Mr. Walker) had an interesting exchange about the merits of the existent or non-existing pension scheme run by Magic Bus and Stagecoach. It was never made clear, if Magic Bus and Stagecoach are to have schemes, what they would be. Whatever the schemes may or may not be, they will not be able to match the transport operatives pension scheme which is run by the Scottish Transport Group. The Minister has failed to counter that argument. I look forward to hearing his contribution and finding out whether he can guarantee to employees whose companies are about to be privatised that their future pension rights will be as secure as they are under TOPS.

TOPS benefits are substantial. Somebody who has spent 40 years of his life working for the Scottish Transport Group would receive two thirds of his pensionable salary on retirement. If he earned £12,000 in his last year, he would receive £8,000 from TOPS. That is a substantial benefit. As my hon. Friend the Member for Cunninghame, North (Mr. Wilson) said, there are other benefits over and above that—for example, the early retirement pension, the ill-health retirement pension, the lump sum on retirement, insurance so that any surviving dependants will receive the pension rights of the deceased, and so on. Most important, there is an assurance that pension rights are linked to the retail prices index.

If the experience of the National Bus Company, which was privatised in England, is taken as a model, we can be sure that privatised subsidiary companies will not index-link future pension rights for their employees in the way that TOPS has done for Scottish Transport Group employees. All 72 of the privatised National Bus Company subsidiaries left the best scheme, which was for them the equivalent of TOPS, and broke the link between pension rights and the rise in the cost of living. It is likely that the Scottish experience will be exactly the same as that in England. In Committee, the Minister confirmed that, saying: All accrued benefits under the scheme will continue to receive index linking in future. The key words are "accrued benefits". Until the moment of privatisation, benefits will be secured by index linking into the future. What about future pension rights when the Government have ended the scheme, abolished TOPS and transferred the employees into new pension schemes with new companies? The Minister also said: Pensions increase arrangements for new pension schemes will depend on the provisions of those schemes. Future pension rates will be at the mercy of employers who take over subsidiaries of the Scottish Bus Group. In the main, they will be private sector employers operating in a free market and looking to secure an edge over their competitors. The Minister will find it difficult to convince me that the new employers' priority will be to match the existing and future pension rights of STG employees.

What will happen when the existing scheme is abolished? What will happen to surpluses from TOPS? Again, that matter was debated in Committee as the Minister said, after remaining entitlements had been secured, using the surpluses which still remained from TOPS, if any surpluses are left in addition, Surpluses cannot be transferred to a purchaser. They would go to the Consolidated Fund."—[Official Report, First Scottish Standing Committee, 14 February 1989; c. 354.] The Minister used the word "cannot", but there is no such thing when one is dealing with Her Majesty's Government or Parliament. This is a sovereign Parliament, and it can decide anything that it likes. The Minister meant that any surpluses will not be transferred to pensioners because that is what the Government desire. The Minister is saying that the Government will take from pensioners what is currently theirs by right. That means that, in effect, the Bill will steal from pensioners what is their due.

In Committee, the Minister tried to argue that that was because the Scottish Transport Group and employers had contributed towards the pension scheme and that, by right, it was the Government's money. Of course, the employers contributed to the TOPS scheme on the basis that such contributions would fund the pension rights of their employees. The Minister is backing away from the commitment that the Scottish Transport Group and the Government gave, and is now saying that the money must go back into the Treasury's coffers. We hear that the Treasury's coffers are already bloated with a £15,000 million surplus which is to be used in the next Budget to line the pockets of the Government's private sector friends.

The Minister suggested also that the technical arrangements for preserving pension rights will be straightforward. He suggested two scenarios. First, any worker may have a transfer value of past entitlements paid into the new scheme offered by the new private owner. Secondly, if a worker does not want that to happen, sufficient funds may be transferred to a commercial company to enable it to continue to pay pension entitlements, including index linking. Either way, the schemes will no longer be underpinned by a publicly owned company and backed by the Government. Pension arrangements will be wholly in the private sector.

What will happen in the event of a catastrophe—for example, if a commercial company goes bust or the new pension scheme collapses? What will be the Government's commitment to past pension rights? Will the Government intervene to ensure that any pensioners who are affected will have their pension rights secured by her Majesty's Government in the event of a collapse of a commercial company or the new pension scheme?

The Minister claims also that the future of existing schemes is a matter for trustees and their members. In the case of TOPS that would mean the management committee—whether seven or 10—and more than 10,000 members. The Minister said that changes might be made by the trustees only with the approval of the Scottish Transport Group board and also with the approval of those voting at a meeting of members of the scheme. Exactly what arrangements have been put in place for more than 10,000 members to vote on proposals suggested by the STG management board?

The Minister also said that the Scottish Transport Group intends to meet with the trade unions to discuss pension arrangements. We will finalise the question about pensions even before the meeting takes place. What is the point of that meeting taking place when we are deciding the configuration of any pension settlement? The Bill will soon pass through the House and go to the House of Lords. After that meeting with the trade unions, the House will then meet to consider the proposed changes to protect the members' interests on privatisation. I am told that there is to be a meeting between the Secretary of State for Scotland and the Transport and General Workers Union as soon as it is practicable.

What is the point of the STG board, the Secretary of State for Scotland or the Minister meeting the Transport and General Workers Union? What is the point of meeting to discuss pension arrangements when hon. Members are deciding what the pension arrangements are to be? The Minister will have to tell me what he will discuss with the trade unions. More important, if the trade unions negotiate important concessions with the board, the Secretary of State for Scotland and the Minister himself, will they be incorporated into the legislation before it is enacted, or will the meetings be a complete waste of time?

The Minister has already made proposals about future arrangements. He said that the Scottish transport scheme should be wound up and that there should be a transitional period to ensure continuity of pension provision and that employees are to be allowed to remain in TOPS for a limited period. He did not spell out what was meant by a limited period, but he will have to tell hon. Members how long employees will be covered by TOPS before the Minister winds it up and what chance employees or their representatives will have to influence the outcome of negotiations on the way in which the scheme is to be wound up.

The Minister referred to Caledonian MacBrayne. He said that the workers who remained in the public sector with CalMac were assured continuity of pension provision and that their pension arrangements would be unaffected. If that is the case for 50 per cent. of CalMac employees who remain in the public sector, why cannot it be the case with the rest who will be transferred to the private sector? Why do they have to be the victims of the Government's dogma? Why are they to be denied any chance of having future pension rights secured under new clause 4 and amendment No. 17?

The Secretary of State for Scotland has statutory powers to make pension orders in relation to the STG. He has never used those powers. Clause 13 provides, as a cautionary measure, for the Secretary of State for Scotland to make such orders in relation to a privatised subsidiary in order to safeguard existing pension rights. That power enables the Secretary of State to intervene in the private sector and, in a sense, to discriminate against one particular group of private sector companies—those which take over one of the STG subsidiaries. I accept that that is fair. The price to pay for picking up the public asset should be respect for the pension rights of the public company employees. Why cannot the price also be to guarantee the future pension rights of the workers who happen to work in the public company?

I am sure that when the Minister speaks he will say that one cannot discriminate against one group of private sector employers. But he is already doing that in clause 13, so the principle is already there. It is just that he will not apply it to future pension rights because he is not in the least interested in defending workers' pension rights.

In Committee the Minister said that the Secretary of State will see clearly from the disposal programme whether pension arrangements are a key factor and will take that into account before he makes a decision. It seems that the Secretary of State will seek to safeguard the existing pension rights of those who work in the subsidiaries by looking closely at the buy-out proposals and that he will not favour any buy-out proposal which does not give some future security of pension rights to the workers who will be affected.

The Minister will not spell out what the Secretary of State is likely to find satisfactory. Are the standards which the Secretary of State will accept as sufficient to allow a buy-out proposal to go ahead those of TOPS or the standards of schemes run by Stagecoach and other private sector operators? The Minister has a responsibility to spell that out. Throughout our Committee proceedings he ran away from protecting the pension rights of STG workers.

The real problem is that there is no democracy in Scotland. No one in Scotland voted for this measure. It is being imposed on Scotland and, more important, on the workers who, with the rest of the Scottish people, voted overwhelmingly against the Government. They do not want the Bill, privatisation or to lose their pension rights. Yet they have no recourse because of the flawed structure of this United Kingdom Parliament. If the Minister wants to retain this unitary Parliament, he had better start looking at the ways in which he can secure the rights of the people affected. He is selling out the workers' rights and, by doing so, the future of any United Kingdom Parliament.

4.15 pm

The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton)

I am happy to respond. The hon. Member for Dundee, East (Mr. McAllion) asked how the TOPS management committee was made up. It consists, as the notes on clauses state, of four management representatives and three trade union representatives. The scheme is vested in individual trustees.

The hon. Member for Cunninghame, North (Mr. Wilson) was correct in suggesting that there are powers under clause 12 if future arrangements are inadequate. If future arrangements were inadequate, my right hon. and learned Friend the Secretary of State would undoubtedly use those powers. Pensions for employees of the Scottish Transport Group, with the exception of some Caledonian MacBrayne employees, are provided for by the group's pension schemes.

The hon. Member for Dundee, East asked about CalMac employees. He is correct that 50 per cent. of CalMac staff do not belong to the STG schemes, but are covered by the Merchant Navy officers' pension fund, the Merchant Navy ratings' pension fund and British Rail funds. The pensions of staff in those funds will be unaffected by the Bill. I am glad to confirm that fact.

Mr. McAllion

As 50 per cent. do not belong to TOPS, by definition 50 per cent. do. Will the Minister spell out exactly how pension rights will be affected? Will their rights be transferred to a commercial company or will some other arrangement be made through the Government or CalMac?

Lord James Douglas-Hamilton

If the hon. Gentleman wants me to go into more detail, I shall do so. When the subsidiaries are transferred to the private sector it will be for the new companies to make pension arrangements for employees. The existing pension arrangements will continue for a transitional period. Accrued rights under the existing schemes at the date of an employee's transfer to a new scheme will be fully protected. New pension arrangements will be made for CalMac employees in the STG scheme on broadly the same terms as they currently enjoy. Obviously, the STG pension schemes will be wound up.

Mr. McAllion

The Minister said that arrangements would be made "on broadly the same terms" for existing CalMac employees who are in TOPS. Exactly what does that mean? Will any of their existing rights be taken from them under the new arrangements?

Lord James Douglas-Hamilton

It is expected that the pension arrangements consequent upon privatisation will be made by those responsible for the schemes, without the need for any intervention by the Secretary of State. I am absolutely confident that in this case the 50 per cent. of CalMac staff who do not belong to STG schemes will be unaffected by the Bill. As for the remainder, I can only repeat what I have already said: the schemes will be on broadly the same terms as are currently enjoyed. I cannot envisage what the circumstances will be in 20 years' time.

Mr. Thomas McAvoy (Glasgow, Rutherglen)

Will the Minister give way?

Lord James Douglas-Hamilton

I should like to develop the next point.

It will be for the privatised companies in due course to establish pensions arrangements for their employees. The terms of such arrangements may be different from those provided by the existing STG schemes. When making bids, prospective purchasers will be asked to state their proposals for pensions arrangements and these will be taken into account in assessing bids. There are reserve powers in the Bill to make pensions orders if satisfactory pensions arrangements are not provided by any of the privatised companies.

The hon. Member for Dundee, East asked about the purpose of the meetings that will take place with the trade unions. Obviously, the purpose is to ensure that the best possible pensions arrangements are reached. The Secretary of State must approve each individual sale. The bids that prospective purchasers make and the outline of their proposals will be taken carefully into account.

The future of the STG schemes is a matter for the trustees and members of the schemes. Subject to the necessary amendments being made to the provisions of the schemes, they will continue for a transitional period after privatisation to provide for continuity of pension provisions and allow time for the privatised company to make new arrangements. The transitional period for a company will begin when it is privatised and will be at least six months and up to 16 months. During that period employees will be able to remain members of their STG scheme. They will be able to opt to have a transfer value paid into their new pension scheme at the end of the transitional period or to have their accrued pension rights in their STG scheme frozen to come into payment when they retire. Any such deferred pensions entitlement will be fully protected in accordance with the provisions of the appropriate STG scheme, both as regards the calculation of the pension to be paid at the time of retirement and provision for future increases. Deferred pension entitlements for employees who have left the STG or who leave prior to privatisation will be similarly protected.

Mr. McAllion

The period of between six and 16 months during which employees will be allowed to remain in the TOPS is to enable trade union representatives and the new employers to negotiate new pension arrangements. What happens if they fail to reach agreement? Will the period be extended, or will the trade union be almost forced to concede what the employers want at the end of 16 months?

Lord James Douglas-Hamilton

I have been careful not to lay down specific periods for the bids to come in, because, as I have said many times, it may take longer for some management-employee buy-outs to be lodged than others. But I can tell the hon. Gentleman that sufficient time will be given to take all such considerations properly into account.

The new pension arrangements will need to be established for the 50 per cent. of CalMac employees who are currently members of the STG pension schemes. They will provide for pensions on the same terms as are currently enjoyed. Retired STG employees and those retiring before privatisation or before the end of any transitional period will have their pensions provision fully secured so that they will receive the same pensions as they would have received from the Scottish Transport Group.

It would not be appropriate to make it a condition of sale, as is required by new clause 4, that new companies should participate in the existing pension scheme. The simple reason is that the provision of pension arrangements is a matter for those companies. However, prospective purchasers will be asked to declare their intentions when making bids, and that information will be taken into account when assessing bids. Should a company, after privatisation, fail to establish satsfactory pension arrangements, we would consider using the reserve powers in clause 12 to make pensions orders.

Mr. McAvoy

If any bid included a reduction of employees' pension rights, may we have a firm commitment from the Minister that the Government would not give that bid the go-ahead?

Lord James Douglas-Hamilton

To be frank, I do not envisage a management-employee buy-out team making a bid that would reduce pension rights. I have made the position clear. All relevant circumstances will be taken into account when bids are made, and pension provision will be a key subject for the Secretary of State to consider. As I said, the Secretary of State must approve each sale.

Mr. Wilson

The Minister cannot be allowed to get away with that. He knows as well as we do that there is no guarantee that all the purchases will be made by buy-out teams which, as he said, may reasonably not be expected to reduce the quality of their pension schemes. But the scale of the buy-outs might make it more difficult to maintain that position.

Lord James Douglas-Hamilton

All relevant circumstances will be taken into account, and those extremely important facts will be considered when bids are made. In that connection, clause 12 is an important insurance policy if adequate arrangements are not made.

On amendment No. 17, I have already explained to the hon. Member for Dundee, East that accrued entitlements will be protected. Employees will be able to opt for a transfer value or to have their accrued pension entitlements converted into deferred pensions which will be calculated in accordance with the provisions of the STG schemes. Future pensions are a matter for the new companies, and it would be surprising if they did not wish to secure pension arrangements that are satisfactory to their employees in the interests of attracting and retaining a motivated staff. I ask hon. Members to vote against amendment No. 17.

Mr. Wilson

On a point of order, Mr. Speaker. Should you not suspend the sitting until there is someone on the Tory Benches who is capable of walking over and picking up the notes to the Minister?

Mr. Sydney Chapman (Chipping Barnet)

Am I not capable?

Mr. Wilson

I thought that the hon. Gentleman, as a Government Whip, would have to maintain his position on the Bench. There is no one else on the Tory Benches, so perhaps we should give them time to get someone in to act as the Minister's runner.

Mr. Speaker

It is well known that when the Benches are empty there is much else going on in the House.

Mr. McAllion

rose—

Mr. Speaker

The hon. Gentleman has already spoken once. He cannot speak again.

Mr. McAllion

I had not realised that the Minister had finished speaking.

Lord James Douglas-Hamilton

I am happy to try to answer a few more hon. Members' queries.

The hon. Member for Dundee, East asked how a small scheme can match a large scheme. There is no reason in principle why a small firm should not make pension provision on the same scale as a large employer. But a small company may not set up and run its own scheme. It may arrange its pensions through an insurance company or a pensions firm. The hon. Gentleman asked what would happen if a pension scheme collapsed. It is for employers to set up suitable pension arrangements for their employees. A satisfactory pension scheme would be a funded scheme vested in the trustees under which, if an employer went out of business, employees' accrued entitlements would be safeguarded.

Mr. McAllion

I am grateful to the Minister for that reply. He said that the reserve powers to make pension orders would be used to secure existing pension rights if a subsidiary did not take the steps that, the Secretary of State considered appropriate to secure the pension rights of its employees. What happens if a company is sold to one private sector owner but is transferred to another within a year? Would the reserve powers still be available to the Secretary of State at the second or third sale?

Lord James Douglas-Hamilton

To the best of my knowledge, the answer is yes. The reserve powers are extremely important, and if grossly inadequate provision were made for pensions I would expect my right hon. and learned Friend to use them.

Mr. Sam Galbraith (Strathkelvin and Bearsden)

I was disappointed by the Minister's reply. It was full of even more weasel and imprecise words than usual. His speech was full of phrases such as, "All relevant circumstances will be taken into consideration"; "I am confident that" such and such a thing will not happen; "I do not envisage" that this will occur; "I fully realise that such may be the case"; "These will be taken into consideration"; "'The means will be satisfactory"; and "This will be taken into account." I was left wondering exactly what he meant, and I am not sure whether the Minister realised what he 'was trying to say. What he did not give in response to the many points made by my hon. Friend the Member for Dundee, East (Mr. McAllion) were absolute guarantees arid reassurance for the people who work for the Scottish Transport Group.

I hope that the Minister will go away to think about the matter and come back with some guarantees on the points that have been made. In response to my hon. Friend the Member for Dundee, East, the Minister said that the transitional arrangements will take between six and 16 months. He was rather vague about that, so my hon. Friend asked him more questions. Having said that he would be specific about six to 16 months, the Minister then said that he did not wish to use specific time periods when discussing the matter. What is the magic about the period chosen?

Lord James Douglas-Hamilton

The hon. Gentleman was not a member of the Standing Committee, so he may be unaware that the disposal programme will start in the autumn and will continue for a considerable time. A crucial factor upon which it will depend is the speed at which management-employee buy-out teams can mount bids. Their interests will have to be taken into account.

Mr. Galbraith

Perhaps, not being a classics or English scholar, I have trouble putting my words into a form that the Minister can understand. 1 was trying to ask what was so specific about the period of 16 months. I admit that I was not on the Committee and that I am on a steeply rising part of the learning curve, but I shall reach the asymptote fairly soon. May I ask what is wrong with 15 months or 17 months?

4.30 pm

Lord James Douglas-Hamilton

We consider a period of between six and 16 months altogether feasible. It seems reasonable to assume that the arrangements could be completed effectively within that time.

Mr. Galbraith

I do not 'wish to tease the Minister further. He is obviously in considerable difficulty, and as his PPS, the hon. Member for Tayside, North (Mr. Walker) is not yet here to assist him, I shall pass over the matter of the transitional period.

The Minister talked about the protection of pension rights. May we take it that that protection is absolute within the period of six to 16 months, although it may not be absolute outwith that period?

Lord James Douglas-Hamilton indicated assent.

Mr. McAllion

Perhaps, through my hon. Friend. I could try to obtain some sympathy. The Minister did riot answer me earlier when I tried to raise a point about the period of between six and 16 months. During that period the privatised company must come forward with a proposal that the Secretary of State can accept, but included in the proposal must be an agreement between the trade unions and the employer about pension arrangements. If such an agreement cannot be reached within 16 months, must the trade unions collapse and accept whatever the employer insists on?

Mr. Galbraith

That is the crux. I was on the point of asking the Minister the same question. He tried to fudge the issue earlier by saying that he did not want to specify periods. Must this period last until an agreement is reached by both parties, or will it be a finite period at the end of which the unions must accept the propositions put forward by their employers? Would the Minister like to clarify that now, or would he prefer to wait for his PPS?

Sir Nicholas Fairbairn (Perth and Kinross)

rose—

Mr. Galbraith

I will certainly give way to the hon. and learned Gentleman, who looks like a bus conductor in that outfit.

Sir Nicholas Fairbairn

The hon. Gentleman asked what was so magical about the number 16. If he cares to count the number of persons in the Chamber, including you, Mr. Speaker, the Chairman of Ways and Means and his Clerk, he will find that there are 16.

Mr. Galbraith

That was an excellent contribution. I actually understood what the hon. and learned Gentleman said, which is unusual, although I do not think that it contributed much to the debate.

Can the transitional period be extended for negotiation between union and employer? I shall be pleased to give way if the Minister wishes to provide some reassurance on the matter, but it appears that he does not wish to do so.

The question of retaining a national scheme rather than creating smaller schemes has already been touched on. I too have a Scottish Transport Group company in my constituency—Kelvin Scottish. Retaining a national scheme with 10,000 members, rather than creating a smaller one like the one on Tayside, would benefit all employees.

The Minister did not give a clear response to the question from my hon. Friend the Member for Dundee, East. What methods does he propose for consultation about transitional arrangements and pension schemes? We require a much more detailed answer before we can reassure those involved.

Pension schemes are vital to many of our constituents, and I should have thought that they would be of equal importance to Conservative Members in Scotland, who may soon have to look to their own pension schemes—although the Minister has reassured me that he may have other arrangements. That is why we are pursuing the matter in detail, particularly the transitional arrangements.

Lord James Douglas-Hamilton

The hon. Gentleman has raised a relevant point. If difficulties arose in a specific case, extending the 16-month period would certainly be considered. The period may start at different times for different companies. It will start on the date of a company's privatisation and will last for at least six months, to ensure continuity of pension arrangements for employees, and up to 16 months, depending on the circumstances of the company concerned. It is thought that 16 months should provide sufficient time for new pension arrangements to be set up, but if difficulties arose the powers in clause 12 would be available to the Secretary of State.

Mr. Galbraith

The Minister has certainly gone some way towards clarifying the position, and it would not be proper for me to be mean-spirited. His answer, however, was infected with the same problem of vague wording that has featured in all his replies. He says that the transitional period may be extended. Why can he not say that it will be extended? The Minister shakes his head. But who will decide whether the period "may" be extended? Will it be the Minister, the Secretary of State, the employers, the trade unions or some quango in which failed Tory Members of Parliament serve on inflated salaries? This is not merely a matter of semantics. Can the Minister not say "will" rather than "may"? Can he explain the difference between the two? Why cannot he be more specific?

Question put and negatived.