§ Madam Deputy Speaker
With this it will be convenient to discuss also Government amendments Nos. 17, 28 to 41, 18, 19, 42, and 20 to 27.
§ Amendment agreed to.
Amendments made: No. 17, in page 35, line 13, after 'consideration', insert
'being provided by the persons acquiring them'.
§ No 28, in page 35, line 18, at end insert—
§ '3A.—(1) Where—
- (a) in accordance with an approved scheme, shares in a subsidiary of the relevant board ("the transferred company") are transferred otherwise than under section 10 above to a qualifying body ("the successor"),
- (b) immediately after the transfer, the successor is a member of a group of which the relevant board is a member, and
- (c) the scheme provides as mentioned in paragraph 3(1)(b) above,
§ sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 shall not apply on the transferred company ceasing to be 361 a member of a group of which the relevant board is a member if, immediately after doing so, it is a member of a group of which the successor is a member.
§ (2) Where by virtue of sub-paragraph (1) above sections 178 and 179 of the Taxation of Chargeable Gains Act 1992 do not apply, then, on the transferred company ceasing to be a member of a group of which the successor is a member, those sections shall apply—
- (a) as if any assets acquired by the transferred company, at any time when it was a member of a group of which the relevant board was a member, from any member of that group had been acquired by it at that time from the successor, and
- (b) as if the transferred company and the successor had at all material times been associated companies for the purposes of those sections.
§ No. 29, in page 42, line 39, at end insert—
§ '( )where the trustees acquire the shares or securities on a disposal, the person making the disposal shall be treated as if the consideration for the disposal were of such amount as would secure that on the disposal neither a gain nor a loss accrues to him,'.
§ No. 30, in page 43, line 34, leave out 'share is' and insert 'shares are'.
No. 31, in page 43, line 37, after 'him,' insert—
'(aa) to trustees on terms which provide for the transfer of the shares to persons by virtue of their being, or having been, registered producers:.
§ No. 32, in page 43, line 46, leave out 'share' and insert'shares'.
§ No. 33, in page 43, line 47, leave out 'it' and insert 'they'.
§ No. 34, in page 43, line 49, leave out 'share' and insert 'shares'.
§ No. 35, in page 44, line 1, leave out 'share' and insert 'shares'.
§ No. 36, in page 44, line 2, leave out 'it' and insert 'they'.
§ No. 37, in page 44, line 7, leave out 'a share' and insert 'any shares'.
§ No. 38, in page 44, line 8, leave out 'share is' and insert 'shares are'.
§ No. 39. in page 44, line 18, leave out 'debenture' and insert '(a)'.
§ No. 40, in page 44, line 19, after 'board,', insert 'and
§ (b) is either—
- (i) issued'.
§ No. 41, in page 44, line 21, at end insert
§ ', or
- (ii) included in an issue of debentures to trustees on terms which provide for the debentures to be transferred to persons by virtue of their being, or having been, registered producers.'.
§ No. 18, in page 45, line 2, leave out 'for no' and insert 'without any'.
§ No. 19, in page 45, line 2, after 'consideration', insert 'being provided by the person acquiring them'.
§ No. 42, in page 45, line 32, at end insert—
§ '(3A) For the purposes of sub-paragraph (3)(b) above, a person to whom property is leased shall be treated as a person to whom property is transferred if the scheme could, without breaching the requirement in paragraph 7(2) of Schedule Ito this Act, have provided for the property concerned to be transferred to him.'.362
§ No. 20, in page 46, line 33, leave out from 'company' to 'to'
No. 21, in page 46, line 34, after 'class' insert
'without any consideration, or with only a nominal consideration, being provided by the members acquiring them'.
§ No. 22, in page 47, line 2, leave out 'for no' and insert 'without any'.
§ No. 23, in page 47, line 2, after 'or'. insert 'with only'.
No. 24, in page 47, line 2, at end insert
'being provided by the members acquiring them,'.
§ No. 25, in page 47, line 36, leave out 'for no' and insert 'without any'.
§ No. 26, in page 47, line 36, after second 'or', insert 'with only'.
§ No. 27, in page 47, line 37, after 'consideration,', insert 'being provided by the persons acquiring them,'.—[Mr. Jack.]
§ '(4) If as a result of a deficit in the funding of the pension scheme, the scheme is unable to meet its obligations to any or all of its members, the substitute principal employer or its successor shall have the power and be under a duty to require eligible milk producers to make contributions for the purpose of making good the deficit.
§ (5) The appropriate authority shall create a residuary body to the milk marketing board which shall exercise the power and be subject to the duty mentioned in subsection (4) above, if—
- (a) the substitute principal employer or its successor at any time ceases business without there being a further successor, or
- (b) the appropriate authority considers it otherwise desirable to create such a body.'.
§ The purpose of the amendment is straightforward. It seeks to protect the interests of present and future pensioners of the milk marketing scheme, who represent quite a large group—8,600 contributors and 5,500 pensioners, of whom, I understand, 1,000 are widows. I understand that the fund has assets of £300 million.
§ Pensioners of the fund are rightly concerned about its future. Quite simply, it is their future that we are debating. They have contributed to the fund and they want to be consulted on the way forward. They feel that there has been a lack of consultation and that so far their views have been rebutted. With the high profile of pension issues in the news, they are concerned. It is clear that, in any scheme of reorganisation, real changes must he made. Change is often worrying and past and present pensioners are clearly anxious about the future.
§ A number of issues can be identified. What is the present position of the pension fund'? Can it meet its liabilities? Is it in surplus or in deficit? Should there be a surplus—I understand that there is supposed to be one—how will it be dealt with? There is a strong case to be made that any surplus should he applied only to the beneficiaries of the scheme, since they have contributed to the scheme and built the foundations of the company. They believe that any surpluses should be applied to them rather than to funding reorganisation. They want the milk marketing scheme and successor bodies to give commitments in line with those that currently exist—such as a commitment that index-linked pensions will be continued.
§ The amendment addresses the issue of a possible deficit. The successor bodies must take responsibility for any deficits. The key issue is how pensioners will he split 363 among the successor pension schemes. The existing pension scheme may be split two ways—into a new Milk Marque scheme and a new Dairy Crest scheme.
§ Views differ quite markedly among pensioners about which might be the most profitable successor company. Both companies face major challenges. It is unclear how pensioners will be allocated to successor pension schemes. Will they have a choice, or will they, for example, simply be allocated to one scheme or another?
§ Pension matters are a live issue for the Government at the moment. I understand that the Department of Social Security promised to offer advice on how such pensioners might be dealt with. Its advice has been long promised, but slow in coming. I know that this is not a responsibility of Agriculture Ministers, but I look for a commitment from them that they will pursue this matter and try to facilitate the provision of advice that is needed to take the discussion forward.
§ Amendment No. 85 seeks to provide a safety net. It allocates responsibility for underwriting pension schemes. Pensioners want Dairy Crest and Milk Marque to do well. They have worked hard to build the foundations of the milk marketing board and want the successor companies to succeed. Having built the foundations, they do not want the roof—their pensions—to collapse over their head. The amendment would effectively secure their future.
§ Mr. Tyler
I simply want to endorse the general comments of the hon. Member for Sherwood (Mr. Tipping). The hon. Gentleman and I and others on both sides of the Committee wanted to ensure that the interests of pensioners were not adversely affected by these changes.
In Committee, the point was made many times—it would be wrong not to repeat it tonight—that the milk marketing board has given good service to this country, to producers and to everybody else in the industry. It would clearly be unacceptable for servants of the milk marketing board not to be treated so well in the future as a result of changes to the viability of the pension scheme.
The hon. Member for Sherwood made some general points, but his specific point about the way in which the successor pension schemes will operate is one on which, I hope, the Minister will be able to give us further reassurances, following those given by his predecessor in Committee.
It was clear, I think to all members of the Committee, that this important issue was causing much concern and anxiety among many people. I hope that the Minister will reiterate the assurance that was given in Committee that pensioners will not be forgotten.
§ Dr. Strang
I am glad to have the opportunity to support my hon. Friend the Member for Sherwood (Mr. Tipping). I am sure that the whole House will recognise that we have a responsibility to ensure that the interests of pensioners and future pensioners are properly safeguarded.
The changes are being initiated by the Government. They have decided that the boards should not continue and that, as a result, Milk Marque and Dairy Crest will operate independently. The Government have a responsibility to be rather more forthcoming than they have been to date about their determination to ensure that staff are not disadvantaged as a result of the Bill. That is the least 364 to which the staff are entitled. My hon. Friend the Member for Sherwood put the case admirably. I hope the Minister will now take the opportunity to respond positively.
§ Mr. Jack
I am most grateful for the considered and careful way in which Opposition Members have introduced this subject. I can well understand its sensitivity. At a time of any change, those who are nearing retirement want to know that their future sources of income have a degree of security.
The problem with amendment No. 85 is that it casts the role of the Government as one of last resort in creating a mechanism by which deficits of the successor pension operations could be made good. If the hon. Member for Sherwood (Mr. Tipping) studies what is about to happen, he will understand that the Government are not unwilling to acknowledge the importance of the issue to current and future pensioners. However, it is not proper for the Government to accept the responsibility that he offers us.
The Government accept a responsibility to pensioners under the operation of pension law. He will be aware that the Goode committee is looking into the matter. His remarks alluded to just that. There is already a complex and well-tried set of laws dealing with the responsibility of pension trustees to safeguard the interests of pensioners.
§ Mr. Jack
I shall conclude this point first.
I acknowledge that there have been cases in the past where the conditions of trust have not always been fulfilled, but by and large those who have operated the pension funds for large and small companies in Britain have carried out their duties with absolute probity and correctness, recognising their liabilities in law if they so fail. Those people will be responsible for the transference and the future of the pension funds, and I shall turn to that matter when I have given way to my hon. Friend.
§ Mrs. Peacock
My hon. Friend is quite right to say that the majority of pension funds carry out their duty very well indeed. However, there are pensioners of the milk marketing board who, having listened to what has happened to pension funds recently, are worried that they may be in a difficult position. They will be listening carefully for my hon. Friend's reassurance. Although this is not a matter for his Department, it is considered very much part of the Bill.
§ Mr. Jack
Let us explore this matter with care; it needs to be handled sympathetically and carefully. I shall do my best to paint a picture that will be at least of some satisfaction to hon. Members. My first task in addressing the problem was to find out whether any assurances had already been given to pensioners.
I have in front of me a copy of a letter dated April from Mr. R. S. Steven, chairman of the milk marketing board, to pensioners saying that he wrote on 29 Januaryon the subject of your pension".As it is a short letter, perhaps it is worth looking at the text. It is the first important strand of the views of those who will be responsible for taking decisions. The letter says:As work on the reform has progressed, we have had a pensions working group consisting of senior Milk Marketing Board and Dairy Crest management, a pensioner who is also a trustee and our actuaries and legal advisers actively considering this matter with the following objectives: meeting current members' reasonable expectations and allaying 365 pensioners' concerns; ensuring reasonable security measured by strength of funding, providing for similar contribution rates between Milk Marque and Dairy Crest at least in the short term; enabling the trustees of all funds to follow a flexible, balanced investment strategy and avoiding the need as far as practical for the proliferation of pension arrangements".The letter continues:We intend to make progress in time for the next trustees' meeting on 18 May".I find that helpful as a statement of intent to address those issues.
What does the board promise for the future? The letter might be deemed to be a statement of good intent, but is it backed by anything else? The milk marketing board and the Dairy Crest board have agreed to proposals for changes in the arrangements to be put to a meeting of the pension scheme trustees on 1 July. My hon. Friend the Member for Batley and Spen (Mrs. Peacock) will be pleased to know that the trustees will then give scheme members an opportunity to comment before they take a final decision, probably at the end of August. That is important because it means that members will have an opportunity to comment on what is proposed.
The hon. Member for Sherwood rightly asked about the state of the fund. At the back of his mind is the thought that perhaps those with an acute financial approach might see the pension fund as an opportunity for rich pickings. An actuarial valuation of the English and Wales MMB group fund at 31 March 1993 is being finalised and I understand that it is likely to show a small surplus of about 5 per cent. on an ongoing basis and no surplus, using assumptions prescribed by the Government Actuary for the purposes required by the Inland Revenue for checking surpluses in the scheme. The most recent actuarial valuation on the so-called "Board C" scheme has received a small surplus on a winding-up basis and a small deficit on an ongoing basic.
I am informed by those who understand the technicalities that there is also a small surplus in the part-timers' fund. The Scottish boards have advised us that it is almost certain that there will be no surplus in their pension plan. That shows that the principal schemes have been looked at and are in appropriate and satisfactory order. If we couple that with the fact that proposals will he put to pensioners and the letter that Mr. Steven sent out, it is clear that there is great concern about this matter.
It is also important to consider the wider perspective. As I have mentioned, pension schemes and their trustees are subject to the principles of trust law. To pick up on the point raised by my hon. Friend the Member for Batley and Spen. that is most important because the trustees have a duty to safeguard the interests of all scheme members. That position of trust will clearly determine future propositions.
The Occupational Pensions Board also has a role to play, so we have another monitoring body. The OPB has an ongoing role to ensure that the schemes continue to have sufficient funds to meet their liability to pay guaranteed minimum pensions broadly equivalent to the state earnings-related pension scheme; in other words, no one can enter opted-out funds unless those funds can do the job that they are supposed to do. The Occupational Pensions Board is asking whether the funds can. Clearly, that will be a function of the successor pension 366 organisations. In other words, they will have to be properly funded in the first place to enable those jobs to be done. I find that reassuring.
The OPB will continue to have a supervisory role in future. It will require a certificate from the schemes' actuary every three years and an annual statement from the schemes' administration. If documentation is not up to scratch, there can be problems in terms of cancelling the schemes' contracting-out certificates. Therefore, we have continuing monitoring to ensure that the schemes will have sufficient funding to do the job that the hon. Member for Sherwood wanted them to do.
Under present law, no pension scheme member may be transferred to another scheme without his consent unless an actuary certifies that the value of his rights and benefits will be maintained. In other words, there will be a further check, and no shanghaiing. There will be no transfer there unless the actuary says that the new scheme will do the same job.
The operation of pension law, the position of the trustees, the open and full disclosure of plans and the letter that Mr. Steven wrote show that the people who decide who will be on the MMB and how the Milk Marque and Dairy Crest pension run will take all that into account. Bearing in mind, too, that the existing members of the board will be involved in Milk Marque, I do not think that there will be any intention to put forward a scheme that will significantly disadvantage, upset or worry people.
Everything I have said paints a picture of reassurance in ensuring that the position of pensioners will be maintained as they would want: their pensions will be paid in accordance with expectations, particularly those that Mr. Steven outlined in his letter.
§ Mr. Tipping
I thank the Minister for the way in which he has pursued the matter. I know that he will look at it again when the scheme of reorganisation comes before him and his colleagues. With permission, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Madam Deputy Speaker
With this it will be convenient to discuss also Government amendments Nos. 62, 70, 71, 56, 57, 63, 72, 73, 58, 64, 74 to 76, 59, 65, 54, 51, 55, 52, 53, 77, 66, 78, 79, 60, 67, 80 to 82, 61 and 68.
§ Mr. Jack
The amendments are intended to complete and, in some cases, correct the provisions of schedules 2 and 4 that deal with the transfer of the property of the milk and potato marketing boards. The broad purpose is to ensure that third-party rights cannot be exercised in such a way as to disrupt or hold up the implementation of a reorganisation scheme—for example, where a lease gives a lessor the right to repossess a property. When a lessee wishes to assign a lease, the Bill will prevent that right from being exercised in the case of a board transferring a lease to its successor. The right would be exercisable only when the successor body wished to assign the lease. Where third-party rights are overridden by provision of that sort, resulting in a material reduction of the third party's interest in the property, the board of the successor body 367 will be liable to pay compensation. That is only an example, but it illustrates the principle that underlies all the property provisions.
Amendment No. 55 does not fall into that category, and it would be discourteous of me not to draw attention to it. It is intended to ensure that, if a flotation is proposed as part of a reorganisation scheme, it will not be jeopardised by a potential claim by former producers to the title of shares in the company. Leaving open even the possibility of such a claim, which would have to be publicly disclosed, could be more than enough to stop the flotation from going ahead.
The amendment removes a potentially serious source of delay from the reorganisation timetable. The Government consider that the sort of claim with which the amendment is intended to deal would have no more than a remote chance of succeeding; action is no less necessary for that, however. The amendment deals with the matter in a manner that does not prejudice the right of potential claimants to challenge approval of a reorganisation scheme, or their right to compensation if their arguments are eventually upheld. If a court found that, for example, a former producer who had not received shares in a company had a valid claim, that producer would be entitled to financial compensation and his claim would be directed against the residuary body.
§ Amendment agreed to.
§ Amendments made: No. 62, in page 50, line 42, leave out 'penalises' and insert 'has the effect of penalising'.
No. 70, in page 50, line 43, leave out
`, or a transfer without consent,'.
§ No. 71, in page 50, line 44, leave out from 'which' to first 'of in line 45 and insert 'imposes a prohibition (whether absolute or qualified) on the transfer'.
§ No. 56, in page 50, line 46, leave out 'if and insert 'unless'.
§ No. 57, in page 50, line 46, leave out 'private' and insert 'public'.
§ No. 63, in page 51, line 5, leave out 'penalises' and insert 'has the effect of penalising'.
No. 72, in page 51, line 6, leave out
or a transfer without consent,'.
No. 73, in page 51, line 7, leave out 'prohibits the effecting without consent' and insert
'imposes a qualified prohibition on the effecting'.
§ No. 58, in page 51, line 12, leave out 'private' and insert 'purposes other than public'.
§ No. 64, in page 51, line 19, leave out 'penalises' and insert 'has the effect of penalising'.
§ No. 74, in page 51, line 20, leave out 'without consent'. No. 75, in page 51, line 40, leave out 'prohibits' and insert 'imposes an absolute prohibition on'.
§ No. 76, in page 51, line 43, leave out paragraph (b).
§ No. 59, in page 51, line 44, leave out 'private' and insert 'purposes other than public.
§ No. 65, in page 52, line 29, leave out 'penalises' and insert 'has the effect of penalising'.
§ No. 54, in page 52, line 47, at end insert—
§ 'Restrictions on change of location
§ 43A.—(1) For the purposes of this paragraph, a provision is a qualifying provision if—
- (a) it is contained in a qualifying agreement,
- (b) it imposes an absolute or qualified prohibition on the movement outside a specified area of property to which the agreement relates, and
- (c) the prohibition which it imposes is imposed for purposes other than public purposes.
§ (2) For the purposes of sub-paragraph (1) above, an agreement is a qualifying agreement if—
- (a) it is an agreement under which moveable property is leased to a milk marketing board or to a subsidiary of such a board, and
- (b) an approved scheme makes provision for the transfer of rights and liabilities of the lessee under the agreement.
§ (3) Where an approved scheme—
- (a) identifies a qualifying provision as one to which this paragraph applies,
- (b) specifies a relevant modification in relation to that provision,
- (c) specifies a commencement date in relation to the modification, and
- (d) specifies one of the relevant bodies as the body against which any claim under paragraph 43B below, in relation to that provision, is to be made,
§ then, subject to any provision of regulations under sub-paragraph (4)(c) below, that provision shall have effect subject to the specified modification on and after the commencement date specified in relation to it.
§ (4) The appropriate authority may make regulations—
- (a) with respect to the giving of notice of a provision of an approved scheme which does any of the things mentioned in paragraphs (a) to (c) of sub-paragraph (3) above,
- (b) with respect to the giving by the authority of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
- (c) excluding sub-paragraph (3) above where no certificate of compliance under paragraph (b) above has been given before such date as may be specified in the regulations.
§ (5) Where by virtue of sub-paragraph (3) above a qualifying provision is modified in its application to any property, the fact that, at any time in the week beginning with the date on which the modification first has effect, that property is outside the permitted area shall not be treated as constituting a breach of the provision if the property—
- (a) is in the area which was the permitted area before the modification had effect, or
- (b) is in transit from that area to the permitted area.
§ (6) In sub-paragraph (3)(b) above, "relevant modification", in relation to a qualifying provision, means a change, in relation to any of the property to which the provision applies, in the area by reference to which the qualifying provision has effect.
§ (7) In sub-paragraph (3)(d) above, the reference to the relevant bodies is to—
- (a) the milk marketing board to which the scheme relates, and
- (b) the body or bodies to which property, rights or liabilities of that board are, under the scheme, to be transferred under section 10 above.
§ (8) In sub-paragraph (4) above, "appropriate authority" means—
- (a) in the case of an approved scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
- (b) in any other case, the Secretary of State.
§ (9) For the purposes of this paragraph, any provision which has the effect of penalising the movement of property outside a specified area shall be treated as prohibiting it.
§ 43B. Paragraph 43 above shall apply in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 43A above as it applies in relation to a person who suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 42 above.'.
§ No. 51, in page 52, line 47, at end insert—369
§ 43C.—(1) Where an approved scheme provides for rights and liabilities of a lessee under a qualifying agreement to be transferred to a company on a day earlier than the vesting day under the scheme, the provision shall have effect by virtue of this paragraph if, immediately before the day of the transfer, the company is a qualifying transferee.
§ (2) In sub-paragraph (1) above, "qualifying agreement" means an agreement under which moveable property is leased to the board to which the scheme relates or to a subsidiary of that board.
§ (3) For the purposes of sub-paragraph (1) above, a company is a qualifying transferee if it is—
- (a) a company in relation to which the scheme provides for the taking of steps with a view to securing its quotation on the Stock Exchange,
- (b) a subsidiary of a company falling within paragraph (a) above, or
- (c) a company which, if the scheme is carried out, will become a subsidiary of a company falling within paragraph (a) above before that company is quoted on the Stock Exchange.'.
§ No. 55, in page 52, line 47, at end insert—
§ '43D.—(1) Where—
- (a) an approved scheme provides for the taking of steps with a view to securing the quotation of a company on the Stock Exchange, and
- (b) the board to which the scheme relates makes under the scheme a qualifying transfer of shares in a subsidiary of its,
§ then, if the shares transferred were subject in the hands of that board to a resulting or constructive trust, they shall by virtue of the transfer cease to be subject to that trust.
§ (2) For the purposes of sub-paragraph (1) above, a transfer is a qualifying transfer if—
- (a) it takes place in connection with the carrying out of the provision mentioned in paragraph (a) of that sub-paragraph, or
- (b) the transferee is a qualifying person and the shares transferred arc of the same class as other shares in the subsidiary which fall to be transferred as mentioned in that paragraph.
§ (3) For the purposes of sub-paragraph (2) above, the transferee is a qualifying person if the shares are transferred to him—
- (a) by virtue of his being, or having been, a registered producer, or
- (b) as trustee for persons who are entitled to participate in the trust by virtue of their being, or having been, registered producers.
§ (4) For the purposes of this paragraph, shares of a company shall not be treated as of the same class unless they are so treated by the practice of the Stock Exchange or would be so treated if dealt with on the Stock Exchange.'.
§ No. 52, in page 56, line 9, after 'above', insert 'or paragraph 43C above'.
§ No. 53, in page 56, line 11, leave out 'vesting day' and insert 'day of the transfer'.—[Mr. Jack.]