§ The Minister for Public Transport (Mr. Roger Freeman)
I beg to move,That the draft Railway Pensions (Transfer and Miscellaneous Provisions) Order 1994, which was laid before this House on 7th July, be approved.The House will recall that, when we debated the Railway Pensions (Protection and Designation of Schemes) Order 1994 and the Railways Pension Scheme Order 1994—[Interruption.]
§ Madam Speaker
Order. Hon. Members who are having conversations must do so outside the Chamber. They must move on quickly. [Interruption.] The doors must be closed, and hon. Members must move out quietly.
§ Mr. Freeman
The House will recall that, when we debated the Railway Pensions (Protection and Designation of Schemes) Order 1994 and the Railways Pension Scheme Order 1994 on 23 May, I indicated that a further affirmative order would be required to transfer the pension rights and assets in the BR pension scheme to the railways pension scheme and to allocate them between the sections of the RPS.
We have long agreed with the trustees that when the time came to transfer funds from the British Rail pension scheme into new schemes, that would have to be done on an agreed actuarial basis and that, unless the BRPS was in deficit, the accrued rights of all active and pensioner members should be adequately funded. Since that was agreed, we have built on the policy considerably and now have the one railways pension scheme and its sections. The original policy on transfer of funds is safeguarded in the order. The order also has the effect of allocating between the sections any initial surplus that there may be in the scheme—and it is likely that there will be an initial surplus.
As I have said, we have long agreed the broad principles of this order, but, in past month or so, we have had intensive discussions with the trustees. The trustees' officers kept the trustee board members closely informed about that process. We went out formally to consultation on this with the trustees, the employers and the trade unions on 29 June, and laid the order before Parliament on 7 July.
The result of all those consultations was that the Government's proposals were changed in some points of detail as we explored the issues with the trustees and others. The provisions of schedule 11 to the Railways Act 1993 required us to consult the trustees on the provisions in the order relating to the transfer of pension rights and the pension scheme assets, and also the amendment of existing schemes, and further to lay before Parliament copies of the trustees' written comments. I am pleased to tell the House that we reached full agreement with the trustees, and that they do not wish to make any comments. I have placed in the Library a copy of their letter of 6 July confirming that.
The trustees have a fiduciary duty to all members of the scheme, both participating members and pensioners, and also, of course, to the participating employers. Both we and the trustees consider the transfer provisions equitable in the interests of all concerned.
Article 2 of the order has the effect of transferring the existing members of the main BR pension scheme, the BRPS, together with the assets and pension liabilities, into 129 the railways pension scheme, the RPS, on 1 October—with the BRPS then being wound up. Provision is made for the assets and pension rights to be allocated as appropriate to one or other of the pensioner sections or, in respect of serving staff, into the BR open section. In due course, participants may be moved, under the provisions of the scheme, out of the open section into the new sections of other employers as they are established.
Schedule 1 makes detailed provision for the allocation of assets between sections on a basis which, as I said earlier, we and the trustees consider to be fair both to serving staff—the participants—and to pensioners, existing or deferred. Once assets related to additional voluntary contributions, which are separately invested, and any contributions paid by an employer during the period of the current contribution holiday have been allocated to the appropriate section, the remaining assets will be apportioned between the sections on a "share of fund" basis—that is, in proportion to the respective pension liabilities.
For that purpose, the existing reserves for contribution holidays or reductions will count as pension liabilities of the open section, and the open section liabilities will also take account of any pensionable pay increases agreed on or before 30 September 1994 for implementation before 1 January 1995. The liabilities of the pensioners' sections will include an allowance for future administrative expenses because those expenses in respect of the pensioners' sections can no longer be met out of future contributions. The proportions of any pension rights funded under the Transport Act 1980 are excluded from the calculation of liabilities because Government support payments will be made direct to the relevant section.
Provision is made for the assets to be allocated net of apportionment costs, but those costs are likely to be minimal as BR will reimburse the actuary's costs in carrying out the valuation—the only substantial cost of making the apportionment.
The Government's and the scheme's actuaries have agreed the detailed actuarial assumptions set out in part III of the schedule. We have made provision for the trustees to make an initial allocation of assets, but have specified in the order certain minimum proportionate holdings of certain categories of assets in the final allocation of assets to the pensioners A section, again with the trustees' agreement. That ensures that the investment policy of that section has an appropriate degree of caution from the outset.
§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
The Minister will be aware that railway pensioners have been exceedingly upset by the suggestion that, as part of its current campaign, Railtrack might withhold some of the assets liable to be handed over to the funds. Will he assure us that under no circumstances will Railtrack be in a position to withhold any part of the pension funds or assets due to railwaymen and women and which they have paid for many times over?
§ Mr. Freeman
I give that assurance. It may help the hon. Lady if I explain the position. There is a substantial pay restructuring reserve of approximately £600 million currently within the pension fund. If an agreement is reached in the present dispute with the signalmen, for example, on new pensionable pay rates before 30 September this year, it will be possible, on the vesting of 130 the new pension scheme, to allocate a suitable proportion of the total pay restructuring reserve direct to the account of individual signalmen who contribute to the pension fund.
I assure the hon. Lady that Railtrack has no power to withhold the allocation of those funds. If no agreement is reached on improved pensionable pay for the signalmen, the pay restructuring reserve moneys go to the account of the open section of the fund. All that happens is that the signalmen and women who contribute to the British Rail pension fund will not have the specific allocation of funds that would otherwise be their right as at 1 October. The rest of the restructuring reserve will fall into a generality of funds allocated to the open section of the fund, but the money remains within the pension fund.
§ Mr. Brian Wilson (Cunninghame, North)
It would be helpful if the Minister could clarify this matter now to save time later. We are discussing a sum of about £100 million. Am I right in thinking that, if that money does not go to the signalmen because the dispute has not been resolved, when the Minister says that it goes to the "generality" of the fund, he means that it would be divided on a 53:47 per cent. basis like the rest of the surplus in the fund?
§ Mr. Freeman
The initial surplus as at 1 October, which includes a large measure of the pay restructuring reserve released for allocation to the closed and open sections of the fund, may result in £200 million or £300 million being allocated to the closed fund and a fraction more to the open fund. Those proportions have been fixed by the actuaries, not by the Government or Railtrack. I confirm that the part of the surplus allocated to the open section of the fund must, in due course, be allocated to the various employers in the rail industry, such as Railtrack, the British Railways Board and the franchised train operations. So that surplus will be allocated to specific sections of the pension fund.
If the strike is not resolved and no agreement is reached on higher pensionable pay for signalmen, they must join other members who contribute to the BR pension fund in claiming their right to that surplus in due course, possibly in terms of higher pension payments. There is no question of the money being removed or of Railtrack controlling its use.
§ Mr. John Heppell (Nottingham, East)
Is there a chance of the date of 30 September being changed so that an extra factor does not enter the signalmen's dispute and the threat of losing money from their pensions is not held over their heads as blackmail?
§ Mr. Freeman
It is not a question of blackmail. There has long been agreement with the trustees that 1 October was the target date for vesting. I remember an exchange with the hon. Gentleman in Committee on this very subject. The present dispute has arisen since the target date was fixed. I pay tribute to the trustees and their officers, who have been working with the Department to that target date, which is entirely achievable and realistic. It is in the interests of all existing and deferred pensioners within the railway industry that those outstanding difficulties should be resolved.
We have worked extremely hard in the past six months to fulfil our pledge on a guarantee of the pensions in the closed section of the fund, both for the existing and deferred pensioners, and the indefeasible right of all those 131 who were employed by British Rail on 5 November 1993 to remain in the pension scheme. We have agreed that, on voluntary transfer, there will be a continuous period of employment for purposes of calculating pensions. We have fulfilled all the obligations that my right hon. Friend the Secretary of State and I have given, and we have ended up with a situation with which I think all parties—but represented by the trustees—now agree. To move the date, or even to hold open the prospect of moving the date, would be in the interests of no one.
§ Mr. Heppell
Is it not a fact that the money that the Minister is talking about removing from the signalmen's pensions will effectively be used to cushion the Government's past guarantees in relation to solvency? The 47 per cent. that was intended for signalmen and drivers under the restructuring schemes will be going into the closed fund. Now it is in the closed fund, and effectively making it more difficult for the Government ever to have to honour that solvency guarantee, because they will have a cushion of approaching £300 million.
§ Mr. Freeman
I think, with respect, there is a confusion between two points.
Railtrack suggests reforms to the structure of the pay of signalmen and women, consolidating into basic rates of pay allowances that are in general not pensionable. If that happens before the vesting date, there will be an allocation of part of the pay restructuring reserve specifically for the benefit of the signalmen and women.
The rest of the pay restructuring reserve—the rest of the surplus that is agreed by the actuaries—will be allocated between the open and closed sections of the funds, not by Government diktat but by agreement between the two scheme actuaries. There is likely to be a significant surplus for allocation, and that is to the benefit of the pensioners as much as it is of those in the open fund, because they have that much greater a degree of security. That has arisen through good investment management of the fund, not by Government policy.
Schedule 2 makes detailed provision for the allocation of pension rights between the appropriate sections, and for the members with those pension rights to be allocated to the relevant sections.
Article 3 makes drafting amendments to clarify the meaning of the Railway Pensions (Protection and Designation of Schemes) Order 1994, which came into force on 31 May following the undertakings that I gave to the House to reconsider some of the drafting. We have honoured the undertaking that I gave. The amendments, however, do not change the substance of those earlier orders.
Article 4 introduces schedule 3, which amends the trust deed of the BR 1974 pension fund to enable BR staff who are transferred to new employers to remain in certain schemes that are included in that fund, and to enable those schemes to be wound up when appropriate.
Schedule 3 also makes a standard amendment to certain schemes other than the BRPS, for which the trustee company acts at present. That amendment would give the trustee company, and its directors and officers, an indemnity from the participating employers in those schemes against liability for honest mistakes but not wrongdoing, and a power to take out indemnity insurance 132 similar to the provisions contained in clauses 2E and 2F of the RPS trust. It will formalise the existing indemnity in respect of those schemes which the trustee has from BR.
Article 5 introduces schedule 4, which amends the schedule to the Railways Pension Scheme Order 1994, containing the trust and rules of the RPS. One amendment extends the limit of liability and indemnity in the RPS trust to any liability for breaches of trust transferred from the old trustee to the new. Another provides for the trustee of the RPS to amend the scheme before 1 October 1994, with the consent of the Secretary of State. It is the intention to use that provision to make amendments agreed to between us —inter alia, to clause 8C, which deals with transfers out of the trust, and to rules 13, dealing with surplus assets, 14, dealing with shortfall, and 16, dealing with winding up of the pensioners sections. The trustees' solicitor is currently preparing a deed of amendment for execution once that order has been approved.
The other amendments effected by schedule 4 include clarification as to eligibility to join the scheme and sections of it, and amendments to the model deed of establishment and participation to clarify the continuation for participants in open sections of the RPS of the present BRPS contribution reductions/holiday.
Article 6 introduces schedule 5, which designates sections of the scheme for the purpose of enabling or requiring the payment of Government support contributions under the Transport Act 1980. Article 7 introduces schedule 6, which makes consequential amendments or modifications to existing legislation.
Although we have still to lay a substitution order under section 52B of the 1980 Act varying the timing of Government support payments to the pensioners' sections on the basis already agreed with the trustees, the provisions to be implemented under the order complete the delivery of the undertakings given by the Government. They provide the promised security, protection and peace of mind to BR's existing staff, pensioners and deferred pensioners. They provide no mechanism for the Government to get hold of the funds, as my right hon. Friend the Secretary of State has made clear right from the outset. I hope that the House will support the order.
§ Mr. Brian Wilson (Cunninghame, North)
On one level, the order is non-controversial; on another, it is deeply controversial and raises fundamental issues. It also relates directly to some topical matters that I hope we can explore during the debate, and to which my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) has rightly referred.
It is important to put on record the fact that, every time we debate the future of the railway industry pension fund, there is no consensus in the House, no cosy agreement, no technical agreement that everything is fine and that we are progressing on a bipartisan basis towards satisfactory conclusions. It is the Opposition's view that the railway industry pension fund should never have been interfered with and should not be broken up, and the fact that it is being broken up is entirely a by-product of the unwanted fragmentation of the railways with a view to their privatisation.
We do not believe that there is any public support for those policies. We do not believe that there is any political support for them outside the narrow clique promoting them 133 within the Conservative party. The reprehensible aspect is that a great deal of concern has been caused to railway pensioners throughout the country, not specifically by the order but by the fact that their pension fund has been tampered with by a Government who have been acting not in the best interests—or indeed, any interests—of those pensioners, but who instead have been driven by the political imperative of fragmentation and privatisation of the railways.
That is the context in which we debate the order. While there will be agreement on the narrow basis of the order and although we may not divide the House—depending on what we hear later—there will be no agreement on the wider framework. Even now, when we believe that we have beaten back the worst intentions of the Tories towards the pension fund, there are still many, many railway pensioners who remember their original intentions only too well. They remember the intention to split the fund in two and transfer half of it to the Treasury, to be set against the public sector borrowing requirement. They remember the intention that there be no increases in benefits to pensioners other than the rate of the retail prices index. We and the railway pensioners remember all that, which is why they are right not to trust the Tories or to take anything that they say at face value.
I have been told, as the Minister has, that the pension fund trustees have no specific objections to the order. I am satisfied that, on purely actuarial grounds it is non-controversial. However, I stress that the context within which it arises is, and will remain, controversial and, in our view, downright wrong.
There is a direct relationship between what we are discussing tonight and the signalmen's dispute, as I shall show later in my speech. One thing that I want to get out of the way and firmly on the record is that if anyone says that previous settlements for railway workers have not taken account of past productivity gains—gains that have already been delivered—that is quite simply an untruth. That means that the Government's position, and therefore Railtrack's position, in the present dispute is based on the same—
§ Madam Deputy Speaker (Dame Janet Fookes)
Order. I am sorry to interrupt the hon. Gentleman, but that is strictly out of order, because it does not relate to the order that is the subject of the debate.
§ Mr. Wilson
With all respect, I assure you, Madam Deputy Speaker, that it relates very directly to the order, as I will show if I am allowed to develop the argument a little. It relates closely for the reasons already alluded to by my hon. Friends the Members for Crewe and Nantwich and for Nottingham, East (Mr. Heppell), and, indeed, which were acknowledged by the Minister when responding to their interventions. If you will allow me that degree of latitude, Madam Deputy Speaker, I will show you directly how it relates to the order tonight, without any—
§ Madam Deputy Speaker
Order. I will certainly give the hon. Gentleman a short opportunity to do so, but I have to be convinced.
§ Mr. Wilson
Among other things, it is my job to convince you, Madam Deputy Speaker. But I place it within that context. There is no question of it not being related to the order.
134 I shall now quote from a document that was produced by the railway staffs arbitration tribunal, in settlement of the previous national dispute on the railways, on 7 July 1989. The chairman and other members placed on record thatThe railway industry has been marked, in the last two years particularly, by very significant improvements in productivity as clearly demonstrated by data in the BRB latest annual report and accounts. Indeed, these productivity improvements have been of such an order that there has been no contribution to cost inflation from the wage bill of the rail industry in the last financial year.In our view, the exceptional productivity performance of this industry and its workers, and the co-operation displayed by the group involved in this reference towards restructuring, should properly be reflected in some real improvement in basic rates of pay.In other words, the previous rail dispute was settled specifically by taking account of past productivity gained within the industry.
§ Madam Deputy Speaker
Order. The hon. Gentleman has now been given the opportunity to demonstrate the connection between what he has been saying and the order. I have to say that he has not demonstrated that connection to me. I am sorry, but he must not continue along those lines.
§ Mr. Wilson
You are being uncharacteristically ungenerous, Madam Deputy Speaker, in the amount of time allowed to develop an argument. Perhaps I can help you in reaching your decision by referring to the headline in The Independent today, which states:Railtrack strikers threatened with £50m pension loss".That is why the two things are related. They are threatened with a £50 million pension loss precisely because of the relationship that I have mentioned.
Initially, the settlement of the dispute was related to the order not by me but by Ministers and Railtrack seeking to tie up the future of the pension fund with the outcome of the signal workers' dispute. I would be delighted to say that there is no relationship between them, but as long as such threats appear, clearly on the basis of a Government briefing, that relationship exists and cannot be said not to.
§ Madam Deputy Speaker
Order. But we are not debating newspaper reports. We are debating the order, and I see no connection.
§ Mr. Wilson
I shall try to make headway and take account of what you, Madam Deputy Speaker, have said—
§ Mr. Wilson
If the hon. Gentleman wanders in late at night and makes sedentary interventions, which, frankly, I think that he would be embarrassed about if he read them the next day in Hansard, that is his concern, but we will try to make serious arguments about serious subjects, which include the future of railway workers' pensions and which seems to me to be rather important.
§ Mrs. Dunwoody
On a point of order, Madam Deputy Speaker. I would never dream of questioning any ruling from the Chair, as you know. We are in some difficulty. I understand that you will not want to discuss newspaper reports in general, but the difficulty that those of us who represent railwaymen are in is that the two things are directly linked, and they are of great concern to the people who work in the railway industry and feel that the remarks of Railtrack are directly linked to the order.
§ Mr. Peter Snape (West Bromwich, East)
Further to that point of order, Madam Deputy Speaker. Will you also bear it in mind, before you stop my hon. Friend from proceeding along this particular track—if I can use that unfortunate phrase—that other groups of railway workers who were rewarded for productivity deals before the dispute had their pension payments based on those productivity deals, under the terms of the order? The anxiety that my hon. Friend expresses is that the delay in concluding the deal will directly affect the pensions of railway signal workers. Surely that is relevant to the order. It is the reason why most of us are here.
§ Mr. Peter Bottomley (Eltham)
Further to that point of order, Madam Deputy Speaker. Is it not clear, as my hon. Friend the Minister spelt out, that the date in the order is the end of September or beginning of October and the earnings of signal staff are relevant? However, for those of us who represent travellers on the railways as well as for some people who work on the railways, to go into the full ins and outs of the dispute would, as you have said, be out of order.
§ Madam Deputy Speaker
I have heard the various points made. I fully understand that there are concerns about the current dispute. There are other ways to raise those concerns. Tonight we must deal with the specific order before us.
§ Mr. Wilson
I have no difficulty with that ruling. I recognise the distinction that the hon. Member for Eltham (Mr. Bottomley) has made, but it cannot be said that there is no relationship. I have put on record a quotation which I am sure will be hung round the neck of Ministers in other ways. It disproves the idea that settlements of railway disputes have never been based on recognition of past productivity.
I shall now narrow the relationship between the order and the dispute. We have here the threat, ill-defined though it may be, that £50 million will be lost for ever to the railway employees pension fund. More specifically, the threat is that each striking signal worker will personally lose £1,700 in later life as a result of the dispute. That gives a whole new dimension to the order, which is certainly not irrelevant.
The threat arises out of the restructuring of railway workers' grades. The result of regrading employees and increasing their basic salaries is that the pension fund has to pay out more than expected because pension entitlements are based on the final salaries of fund members. I am pleased to see the Minister nod. In order to meet that reality, a substantial kitty was created out of the pension fund surplus. Indeed, the Minister obliged by giving it a more formal name. He called it the pay restructuring reserve.
Various groups of workers who successively have had their terms and conditions restructured have already benefited out of the pay restructuring reserve. The signal and telecom engineers, the permanent way staff—that is the track workers, for the ill-informed who have joined us —the traffic grades—that is the station staff—have all had their terms and conditions restructured. All have received increases in their basic rates of pay. In each case, the employer drew on the fund to meet the extra payments to pensioners as they drew their increased entitlement. In each and every case, past productivity was incorporated into the restructuring of the employees' pay and grades.
136 That leaves just two categories to be settled in the same way—the drivers, who are not immediately germane to tonight's discussion or the current controversy—and most significantly for the purposes of our discussions tonight and for the travelling public, the signalmen.
I have no doubt that the signalmen's dispute would not have happened and that their pay and conditions would have been restructured in the same way as the signal and telecom engineers, the permanent way staff and the traffic grades if we had not had the lunatic transfer of the role of negotiator from the British Railways Board to Railtrack.
So the signalmen are the people we have in our minds tonight. They have a direct relationship to the order. I understand, and I think that the Minister confirmed, that £600 million is left in that fund. Rather less than one fifth of that amount attaches to signalmen—a little more than £100 million. The threat is that, if agreement is not reached by 30 September, that pay restructuring reserve will effectively close.
The order would break down the fund on a 53:47 basis. Signalmen who are current employees would lose the 47 per cent., which would go to the fund for pensioners. In the words of The Independent and of a Department of Transport and Railtrack briefing, £50 million could be gone for ever. Others may offer advice to the contrary, but that is the relevance of my argument to the debate.
If one divides £50 million by the number of signalmen, it works out at about £1,700 per head. That is the basis of the threat that has been widely reported today in the briefing of the Department of Transport and Railtrack. It states that signalmen are to lose £1,700 in pension entitlements.
Two questions arise directly from that. The first is: is it appropriate for Ministers to associate themselves with such a threat? Will it help to solve the dispute if one threatens people—who in many cases have given their lives to the railway industry and have been employed on low pay—not only with what Ministers or Railtrack will do to them in their attempts to confront and defeat them in the dispute, but with the knowledge that, after they have left the employment of Railtrack, £1,700 will be taken from them? Does that improve the atmosphere of the dispute? I hope that the Minister will agree that it will not, any more than the Government's initial interference in the dispute assisted its settlement.
The second question is also worth asking to place on record one of the possible answers. What do the Government get out of it? Again, my colleagues have been right in the points that they have made. The Government have a vested interest in not achieving a settlement. If a settlement is not reached with signalmen by 30 September, £50 million will revert to the fund for railway pensioners. If a settlement is not reached with drivers, about £280 million will revert to that closed fund. The Government's interest lies in the fact that there would be a £280 million hedge against the solvency guarantee on the pensioners fund, which they so bitterly resisted in the first place.
I am not a conspiracy theorist, so I do not say that the Government are driving the dispute and preventing a settlement because they want £280 million. [Interruption.] The master of sedentary interventions, the hon. Member for Leeds, North-West (Dr. Hampson) must have something tremendously important to say. If he wishes to rise to his feet, he would be welcome to say it, but I suspect that he is limited to monosyllables.
§ Mr. Nigel Waterson (Eastbourne)
I take it from the hon. Gentleman's comments that he would like the dispute to end sooner rather than later. If that is so, will he advise his brethren in the RMT union to return to the negotiating table to try to find a solution?
§ Madam Deputy Speaker
Order. I remind hon. Members of my previous strictures. Comments must be narrowly connected to the order.
§ Mr. Wilson
I hope that I have proven conclusively, Madam Deputy Speaker, that everything that I said was directly related—
§ Madam Deputy Speaker
Order. I am sorry to interrupt the speech of the hon. Member for Cunninghame, North (Mr. Wilson). I do so to say that I deplore seated interventions, from whichever side they come. I frequently say so in the House. I do not want to hear any more from the Conservative Benches.
§ Mr. Wilson
I am grateful to you, Madam Deputy Speaker. I do not need protection, but the House does, against such foolishness.
On the question of the hon. Member for Eastbourne (Mr. Waterson), of course I want negotiations. I want people to return to the negotiating table tomorrow and I want the minimum of political interference in the dispute. With no political interference, the dispute would not have reached industrial action and it could have been resolved easily. That is why I asked earlier today whether the Government would block the restoration of the:5.7 per cent. offer, which would have been the basis of a settlement if only Ministers had not forced it to be taken off the table.
I do not want to stray wider than the order and so far I have resisted doing so, but I hope that the few hon. Members who have an interest in the matter will recognise that there is something in the order, in the delay, that is of potential benefit to the Government and to the Treasury. The Government may plant stories about a £1,700 threat to individual signal workers and about £50 million being taken out of the pension fund and not put back, but it is a double-edged sword because anyone who knows anything about the matter will be able to examine the circumstances and find out that there is a vested interest concealed in that story—the vested interest of government not to allow the issue to be settled. Other vested interests working in government do not want the dispute to be settled, but they are not germane to tonight's debate.
I do not know what reshuffling is going on, but if the present Secretary of State gets the heave later this week the nation, with one voice, will say "godspeed and good riddance" because all that he has brought to the industry has been fragmentation and chaos and a lowering of morale and investment to the point where the only country in Europe that invests less in its rail network is Finland. A boardroom in Helsinki may want him, but nobody in our public transport industry does.
Let us have none of the double talk. There is no agreement that we should be here tonight, because in the first place we should not be breaking up our railway industry, and if we were not doing so we would not be breaking up the pension fund. If we were not breaking up the pension fund, we would not have caused anguish and despair in the past 18 months to tens of thousands of railway pensioners. The Labour party, rail pensioners, 138 trade unions and public opinion have forced the Government to back off from their original intentions in respect of the railway pension funds, and for that much we are thankful, but there is no consensus on the primary aims and certainly no consensus on the fact that, once again, the Government seem to be using pensions as a threat to win a dispute.
Instead of doing that, the Government should be settling the dispute, which means people getting around a table, talking about a normal industrial dispute through normal industrial channels and recognising that it involves a retrospective claim that has been recognised as legitimate for every other section of the railway industry.
§ Mr. Peter Bottomley (Eltham)
That was a pretty pathetic speech. In effect, the hon. Member for Cunninghame, North (Mr. Wilson) was saying was that if the dispute were settled before the end of September, twice as much of the signalmen's pay—£100 million instead of £50 million—would become eligible for pensions.
I strongly object to any party spokesman being sponsored by one of the producer interests. We should be speaking of the fair division of the pension fund now that the railway industry is being divided, but when talking about the interests of the producers—signal staff and others who work in the industry—we should think first of those whom they serve: the travelling public.
My constituents want the order to give the full £100 million benefit to signalling staff because they want to see consolidation of people's earnings for sick pay, for mortgages and for pensions. When the hon. Member for Cunninghame, North spoke of the eligibility for pensions at low pay—pensions are obviously linked to pay--he should have said that the rate of increase of signalling staff's pay eligible for pension purposes now, and twice as much if they agree a modern pay deal, had risen significantly faster than the pay for manual workers.
One of the reasons for that is that signalling staff are on the bridge between being manual workers and modern industrial workers in a modern railway industry. Part of the agreement should have been to move them on to full, effective salary status, rather than the hotch-potch of allowances, overtime rates and shift and roster payments.
For seven years, the RMT, which sponsors 12 hon. Members, has failed, with management, to get a pension deal that doubles up the eligibility for pension.
You were absolutely right, Madam Deputy Speaker, to point out that if we confine our remarks to the pay that is eligible for pensions, and to that date at the end of September when the £50 million would return to the closed part of the fund rather than be eligible, open and available to those who are still working in Railtrack, and also for others working in the railway industry, we will stay in order.
I want everyone working in the railway industry to have modern terms and conditions of employment. That means that pension arrangements should take their full earnings into account. If people argue that the present dispute, which is tangential to this debate, is justified because of the amounts of money involved, I ask them to consider that a top grade member of the signalling staff would be able to have earnings of well over £20,000 a year eligible for pension entitlement.
139 If the dispute were settled, the average earnings eligible for pension entitlement would be £17,000 a year. Many of the people who travel on the railways, especially those who travel from stations in my constituency, who earn less than £17,000 a year—and certainly less than the £24,000 that top signalling staff receive—believe that the signalling staff should be doing what other people on lower pay have done, and that is ensuring that all their earnings are eligible for pension entitlement so that that entitlement is not made up of a basic pay which is half their average earnings.
When I first entered the industrial relations and personnel field and was working in industrial relations for the British Steel Corporation in the late 1960s, we tried, with the representatives of the people at work, to provide people with what was, in effect, common status.
Hon. Members who are sponsored in this House, apparently sponsored to be silent rather than to speak up, should have told the RMT that they wanted modern conditions and pension arrangements which do not involve leaks to the newspapers about the £50 million that may go missing, as that has been obvious for the past seven years of negotiation.
If the signalling staff are not aware of that, and of the effect of the order, what on earth have their representatives in the RMT being doing and saying to them for the past seven years, let alone for the past seven weeks of this dispute? [Interruption.]
The hon. Member for Holborn and St. Pancras (Mr. Dobson) interrupts from a sedentary position. He is One of those people who should give up his "money for votes" sponsorship by the RMT so that he can feel as free to speak on behalf of the travelling public as spokesmen of other parties are to speak on behalf of those who are supposed to receive the benefit of services in transport or other areas.
§ Mr. Snape
Will the hon. Gentleman accept from me, as a sponsored Member of the RMT, and as a former railwayman and railway signalman, that the RMT and its sponsorship does not influence my voice or my vote in this place? What the hon. Gentleman is saying is absolutely despicable and totally wrong. Seven years ago, there was no intention of progressing down this particularly barmy path of fragmenting the railway industry. If the hon. Gentleman wishes to participate in these debates late at night, he should do the House the service of reading something about the subject under discussion and read something about the order.
§ Mr. Bottomley
Other hon. Members will be aware that the order is about the division of the pension fund. It is a consequence of earlier legislation. I would be surprised if the hon. Gentleman had missed his chance of contributing to those debates; I thought that he had contributed to them.
If the hon. Member for West Bromwich, East (Mr. Snape) argues that union sponsorship has different effects from those that I have outlined, I would put it to him that a sensible union would want to have agreed a deal for its members whereby all their earnings were eligible for pensions seven years ago.
Would the hon. Gentleman disagree with that? It would be very surprising if he did.
§ Mr. Snape
I do not want to drag this out. However, I urge the hon. Gentleman to understand that the matter of salaried status for railway signal workers and others has 140 been the subject of long and contentious discussions. Of course the RMT would like its signalling staff to be placed on the salaried grades and thereby make their wages and salaries liable to the pension payments under the terms of the order. Understandably, the RMT also sought a lump sum payment for the productivity concessions that had already been made. That is partly what the dispute is about.
§ Madam Deputy Speaker
Order. I caution the hon. Member for Eltham (Mr. Bottomley) to keep narrowly to the terms of the order, rather than debate the history of the railways and any disputes therein.
§ Mr. Bottomley
Even leaving aside the past seven years, we seem to have established agreement that getting on to full pensionable earnings makes sense.
During the past seven weeks, when we have been moving toward this draft order coming before the House and when hon. Members have been speaking outside about the rights and wrongs of the dispute, we have had to face two facts. First, the RMT has failed to deliver fully for any of its members modern terms and conditions of employment. That is a tragedy.
Those who consider the past know that one of the reasons why the order, although not contentious in itself, is brought forward in a contentious atmosphere is that the RMT has had a different industrial relations history from that of many others. One has only to read the books to understand that point.
Secondly, the RMT sponsors 12 Members of Parliament, but, to my knowledge, it has not sent a full briefing to the other 630-odd Members of Parliament. In general, its sponsored Members have been almost silent and their communication with the rest of us on this and associated issues has been very slender.
If the union wants to say that it is important for its members to be able to get the pay restructuring reserve in the order, it should ask all hon. Members, "Will you say to the signallers and to other railway staff in your constituency that it is important that the RMT reaches a deal with the employer, so that we do not go past the end of September with the issue unresolved?" I am not talking about the strike, I am talking about how people are paid and—
§ Madam Deputy Speaker
Order. I am concerned that the hon. Gentleman now seems to be debating who should have said what and to whom. That is not relevant. The hon. Gentleman must deploy his own arguments and allow others to deploy theirs.
§ Mr. Bottomley
One of the reasons why I shall not get very far in politics and for my not hanging on to my telephone for the next two or three days is that I am not always very good at communicating. Under the heading "Citation and commencement", article 1(b) refers toarticles 2(1) to (10), 6 and 7 on 1st October 1994and is directly linked to my sentence before you gave me guidance, Madam Deputy Speaker.
All of us should be saying to all signalling staff in our constituencies for their benefit and, for that matter, for the benefit of the travelling public that a deal should be done before the end of September so that the provisions in the statutory instrument are to the benefit of those still working in the railway industry and not just for existing pensioners, which is where the money would go otherwise.
I hope that, by the end of September, the provisions in the order will be available in full measure to those working 141 in the industry, but I give this warning: if there is a failure by those who are sponsored by the union to help put pressure on the union to reach a deal, the people who will lose are those whose union subscriptions have been paying part of the election expenses of the silent 12, including a potential Labour leader, the Opposition's trade and industry spokesman, their transport spokesman, their employment spokesman and their social security spokesman.
§ 11.7 pm
§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
It is not my intention to detain the House very long, but this is a very important subject and I hope that it will be seriously considered, at least for the rest of this short debate.
I do not believe that the Minister is unaware of how tremendously worried railwaymen and railwaywomen are about their pensions. This and other orders are the culmination of much negotiation, frankly great misunderstanding, and certainly great unease. I am a sponsored Member of the RMT, and many railwaymen and railway women in my constituency regularly talk to me about their pension entitlements. They have been exceedingly disturbed by the negotiations, first, because they saw no need for them; secondly, because they were extremely concerned by the Government's attitude to the closed funds; and, thirdly, because they believed and still believe that there is considerable doubt about the veracity of the Government's arguments.
I am afraid that, in a miasma of total disbelief, people who have given their lives to the railway industry will find it very difficult to accept that they should accept what the Minister is proposing. They are deeply worried; they are not at all happy about the fact that what should be a straightforward organisation of their pensions for the future has suddenly become a political football. It upsets them very much that, at every stage of the negotiations on the pension funds that we are discussing, the Government appeared to have been forced into giving way until some kind of agreement was reached with the trustees.
I hope that a solution will be found to the current dispute. I believe that passengers' safety should be paramount, that the House should strive to retain the reliability and good will of railway operators and, above all, that no one inside or outside the industry should be in any doubt that the pension funds of a basic industry are being administered for the good of those who have contributed to them. If those people believe that the Government or their puppet Railtrack may be seeking to use their pension funds as a political football, they will not only feel real dismay and fear; they will feel that they have been betrayed by the House of Commons. I not only understand that attitude, but see it in my day-to-day dealing with railwaymen and women.
I must tell the Minister that there is a long way to go in rebuilding trust between the Government and transport operators. I hope that tonight's debate will not make the gap even wider.
§ Mr. John Heppell (Nottingham, East)
Let me begin, as I always do in debates about pensions, by declaring that I am a British Rail pensioner—a deferred pensioner. I have 142 been told on previous occasions that my interest is not significant enough to prevent me from speaking, but it is fairly significant to me, which is why I am speaking.
I was amazed by what was said by the hon. Member for Eltham (Mr. Bottomley). I shall do my best not to refer to it much, but part of the reason for my being a deferred pensioner is the fact that I was made redundant. If the hon. Gentleman's speech and—I think—the mood of the country are anything to go by, in the near future the hon. Gentleman may begin to know what redundancy feels like.
The order affects my income, and that of ordinary pensioners. I do not agree with my hon. Friend the Member for Cunninghame, North (Mr. Wilson) that this is just a product of the fragmentation of British Rail; I think that it is much worse than that. From the beginning, I had no doubt that the Government intended not just to privatise the railways but to get their hands on my pension fund. Their actions showed that. Only my hon. Friend the Member for Cunninghame, North, other Labour Members and pensioners themselves, who rose up in anger at the proposals, stopped the Government taking control of the pension funds.
The Minister was right: the Government did not actually take anything out of the pension funds. What they did was stop putting something in. The payments that they used to make have now ceased and will not be made again. I believe that undertakings have been made to resume them if they are needed, but, effectively, they have ceased.
I lost out. It is no use the Minister's saying that the trustees agreed to the move; they did not. They accepted it because it was the best deal that they could get from Government, but they did not want it or volunteer for it.
The trustees have a narrow role. They have a fiduciary duty and that is why they have had to accept—not agree to —the Government's tabling this order. I am not prepared to accept it, because I recognise that the pension that I had previously was better than the pension deal that I will get now. I am prepared, however, to accept that nothing that I say or do will change the Government's mind and that the deal will not get any better.
I take exception to one thing, to which other hon. Members have also referred. In fighting to protect my pension fund, one of the guarantees that we got—it had to be fought for—from the Government was a solvency guarantee. If the fund looked as if it were in difficulties, the Government would guarantee its solvency. What do I find now?
The Government stepped in as the unions and Railtrack were about to reach a 5.7 per cent. settlement and effectively snookered the deal. It was finished and I thought that it was merely political vindictiveness. I thought that Government were union-bashing again, and wanted to blame the difficulties on all -the left-wingers in the unions. I have sat with many signalmen and there are not many left-wingers among them, as my hon. Friend the Member for West Bromwich, East (Mr. Snape) will confirm, as en ex-signalman. Their political viewpoint is conservative—with a small "c"—and they have commonsense views. If they vote for a strike, it means that there is something radically wrong.
It really annoyed me when I found out that it was not merely dogma that had made the Government interfere in the pay settlement, that there was another reason. Once again, the Government were trying to get some money out of the fund. As before, they were not intending to take something out, but to stop themselves from having to put 143 something in. If, on 30 September, the fund is distributed, 47 per cent. will go to the closed fund and, effectively, will act as a cushion, which will mean that the Government will not have to pay the solvency guarantee if it is required. The money will have been stolen from the signalmen—possibly from the drivers as well.
I feel annoyed that the Government are using the pension funds to blackmail signalmen and, by doing so, are souring industrial relations and the chances of Railtrack's arriving at a settlement. The Government are using the money not merely for blackmail, but to hold the travelling public to ransom. Without Government interference in the strike, the dispute would have been settled by now and the travelling public would not have been inconvenienced in the way—
§ Mr. Andrew Rowe (Mid-Kent)
I have been present since the beginning of the debate and this is the second time that it has been suggested that it is somehow to the Government's advantage to spin the dispute out until the end of September. Has the hon. Gentleman no idea of the cost to the country, the Government, the travelling public, the businesses of this country and the prosperity of the nation caused by the dispute? The suggestion that the Government should be trying to spin it out for the benefit of some putative robbery of the pension fund seems bizarre.
§ Mr. Heppell
I should like to think that the hon. Gentleman is right. There is an easy solution—for the Government to tell Railtrack that it can do as it wants and decide on whatever settlement it wants. The answer would be simple, and Railtrack would already have settled because it was in the process of doing so when the Government interfered.
I recognise that what I say tonight will not make any difference to the Minister or to Tory Members. I want to make it clear, and put it on the record, that there is no consensus about what the Government are doing to railwaymen's pensions and my pension. My pension will be worse as a result of what the Government are doing. It is all right for the Minister to shake his head; he will not feel the difficulties in his wallet. I will feel the difficulties.
I am in a privileged position because I do not have to rely on only my railway pension. I will have the opportunity of a pension from here, which is much better than any railwayman's pension will ever be. However, many people, including many of my constituents, will be relying on that pension. I do not want to see them in the same position as the Maxwell pensioners in another 20 years.
§ Ms Glenda Jackson (Hampstead and Highgate)
I speak as a Member sponsored by the rail drivers' union, the Associated Society of Locomotive Engineers and Firemen. I say to the Minister, as I have had occasion to say to him before, that the peace of mind that he deems with his sanguine carelessness to be part and parcel of the lives of employees and pensioners of the railway industry is not anything other than a hope at present for the members of ASLEF.
The Minister and Tory Members who have spoken tonight in this debate, as in previous debates, have 144 persisted in attempting to present an image of the British Rail pension as something which the Government have restructured, and made safe and viable.
The Minister knows, as do all hon. Members in the House, that the British Rail pension scheme was one of the best managed, and certainly one of the most productive, schemes in the country. The turmoil came about when the Government decided erroneously, as Opposition Members believe, and as the majority of the British public believe, to restructure—effectively, to break up—the British Rail network in the ideological pursuit of privatisation.
It is that break-up which has caused the concern that is still being felt, certainly by the members of ASLEF, over what they perceive to be unnecessary breakages in what was an efficient and highly productive pension scheme. Nothing that the Minister has said this evening, and nothing in the statutory instrument, will bring about peace of mind for ASLEF members. It is extraordinary that the Minister can depute or, in fact, give a name to a sizeable proportion of the pension fund. It is the pay restructuring fund, £230 million of which is earmarked for the engine drivers' pension scheme. Yet, if no agreement is reached by 1 October, that entire sizeable amount will go into the general fund and be split 53:47. I agree with my hon. Friend the Member for Nottingham, East (Mr. Heppell) that there is a believable case for thinking that the Government wish effectively to drag things out until 1 October because such a sizeable amount in the fund would release them from having to make their first contribution to the pension fund.
I hope that I am wrong in this instance, but experience of the way the Government have handled the restructuring of the pension scheme for the rail industry leads me to believe that I am probably right. If the Minister really wishes the peace of mind to which he constantly alludes to be a reality for employees of the rail industry and pensioners, I urge him to clarify that issue tonight.
§ Mr. Peter Snape (West Bromwich, East)
Nearly, Madam Deputy Speaker. My hon. Friend the Member for Warrington, North (Mr. Hoyle) is not here. He is senior to me, anyway.
I had no intention of intervening in this debate. Madam Deputy Speaker, if I had realised that you thought that I was the chairman of the parliamentary Labour party, I would not have done so. I have been provoked into so doing by the deplorable speech of the hon. Member for Eltham (Mr. Bottomley), who displayed all the reasons why he was fired as a Transport Minister some years ago. He displayed a total lack of any knowledge of the subject which we are discussing tonight, and he made a deplorable attack on some of us who are proud of having worked in the railway industry.
I am proud of my background and that of my father, who also worked in the railway industry.
I listened to the scoffs a few moments ago when my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) said that she was sponsored by the Association of Locomotive Engineers and Firemen. I wonder at some Government Members who are prepared to defend some of the things which takes place here and the conduct of their 145 hon. Friends—particularly with regard to the events of the past week—yet sneer at those of us in the Opposition who are sponsored by industrial trade unions.
Anybody who knows me—including your good self, if I may say so, Madam Deputy Speaker—knows that I am hardly likely to be told either how to speak or how to vote in the House because the National Union of Rail, Maritime and Transport Workers pays a sum of money to my constituency party to see that I am elected from time to time. It has never paid me a penny, any more than ASLEF pays my hon. Friend the Member for Hampstead and Highgate or the RMT pays my hon. Friend the Member for Nottingham, East (Mr. Heppell). Yet we continually suffer jibes during debates such as this, that we are somehow bought and paid for. It is, of course, not true.
There are genuine fears among railway workers about the future of their pensions. Those fears have not been caused by Opposition Members, but have arisen directly from the legislation which has so fragmented the railway industry and, in so doing, has fragmented the pension funds on which those workers will depend in later life.
It is always interesting to listen to the emollient words of the Minister of State, who I hope survives the reported purge this week. It is not for me to rearrange the ornaments along the Government Front Bench, but some of us would welcome the Minister's survival, because he shows a genuine interest in and concern about the future of the railway industry and the pension funds.
I hope he will acknowledge that there are already deep-seated and genuine fears among not just the signalling grades, but all grades within the industry about the future of their pensions. The conduct of the Government and Railtrack during the current dispute has done nothing other than to exacerbate those fears.
§ Mr. Waterson
Will the hon. Gentleman clarify whether he thinks that the future of the rail industry will be helped or hindered by the current industrial action by the RMT?
§ Mr. Snape
The straight answer is that the future of the rail industry is in no way helped by the industrial action, and I wish that the hon. Gentleman and some of his hon. Friends would acknowledge that fact. The 5.7 per cent. offer which was made to the signalmen and withdrawn after the intervention of the Secretary of State does not help. [Interruption.] The hon. Gentleman asked me a straight question, and I have given him a straight answer.
The future of the railway industry will not be helped by the intransigent attitude of Ministers, who reacted to the 5.7 per cent. offer by saying that it must be 2.5 per cent., and interfering as they have done to drag on the dispute.
There are various other grades within the industry which have settled and received payment for past productivity, which means that their pension entitlement is obvious, laid down and transparent under the terms of this order. That does not apply to signalling staff, and without being, I hope, unduly partisan—my sympathies are well enough known, and I shall reiterate them tonight—there are real and understandable fears among signalling staff that they are being coerced into a settlement for which many will not vote. If the dispute comes towards a conclusion, signalling staff who voted for a strike in the first place will have to vote on whether any offer is acceptable.
146 They are enormously concerned that pressure will be put on them under the terms of the order to go back to work and see that the dispute is concluded by 30 September, or they will lose. My hon. Friend the Member for Hampstead and Highgate pointed out that a considerable sum of money —£250 million—is involved in the order, which would be paid in pensions to drivers. That is not an inconsiderable sum by any stretch of the imagination.
So far as signalling staff are concerned, the pension fund will be considerably affected and altered under the provisions of the order.
I hope that the Minister of State will ignore some of the more inflammatory comments made tonight, especially those from the hon. Member for Eltham. I hope that the right hon. Gentleman will say something sympathetic about those who have voted for action. The action has nothing to do with the extreme left. In a poll conducted among 80 per cent. of signalmen, they voted 4:1 for industrial action. Despite the terms of the order and question about the future of their pensions, the signalmen will not vote to return to work until they are satisfied that the efforts they have made are given some recognition.
I hope that the right hon. Gentleman will resist the temptation to make further propaganda and will ensure that the dispute is settled honourably, so that those signalmen too may benefit under the terms of the order, just as other railway grades, who have made equal contributions to the productivity of the industry, have already benefited.
§ Mr. Wilson
With the leave of the House, I should like to reply on behalf of the Opposition.
We have had a useful debate, not least because it has kicked around some of the current issues. The one contribution that I exempt from that description came from the hon. Member for Eltham (Mr. Bottomley). When the dispute started, I remember taking part in a discussion with him on radio, although we were in separate studios. The following morning, I did another radio interview when a tape of the comments of the hon. Member for Eltham was played. I said that that must have been what he said the night before, but I was told, "No, no. That is what he said this morning."
That demonstrated conclusively that he was reading from exactly the same script. After six weeks, he has managed to learn it off by heart, which is progress, I suppose, in terms of the hon. Gentleman, but it is still the same rubbish and is completely unhelpful in terms of resolving anything.
§ Dr. Hampson
On a point of order, Madam Deputy Speaker. You might rightly have been irritated by some of us on the Conservative Benches, who were getting extremely irritated by the Opposition Front-Bench spokesman, the hon. Member for Cunninghame, North (Mr.Wilson), who was abusing the terms of the narrow order to score points about the industrial dispute. The hon. Gentleman has now started to do just that again; he is deliberately using the debate to make points about the current dispute. He has just proved that by talking about events in past few weeks.
When the hon. Member grows up, he might make a speech on the subject.
147 We have demonstrated to your satisfaction, Madam Deputy Speaker, and to that of the Minister, who has some understanding of the matter, that there is a connection between the order and the dispute. The hon. Member for Leeds, North-West (Dr.Hampson) was perfectly right to draw attention to the narrow terms of the order.
I am not accusing the Government of using the pension arrangements as the motivating factor in perpetuating the dispute. The charge is that they are perpetuating the dispute anyway. The secondary charge is that, once they started the nonsense of threatening signal workers with £1,700 losses, as result of £50 million being taken out of their pension entitlements, it was necessary to show that there was another side to the dispute coin. There is a potential gain to the Government if the dispute continues. That is all we have sought to demonstrate.
It is much more important to get the dispute settled than to set out that territory. That means that both sides in politics should step back from the dispute and that the negotiations take place—
§ Madam Deputy Speaker
Order. I am sorry, but the hon. Gentleman is now referring to the general dispute, and is not linking it, as he did previously, with the order under consideration. I ask him to restrain himself.
Thank you, Madam Deputy Speaker. I am sure that that point has been made.
In the debate, we have proven conclusively that settlements take account retrospectively. We have also proved conclusively that the pension fund of signalmen and employees in other sectors of the railway industry is under threat if settlements are not reached by 30 September. We have linked that threat to the order under consideration.
We have no specific objection to that order, but we have made it absolutely clear that, although we do not contest it, we are not acquiescing with the general principle that has guided what has happened to the railway workers' pension fund. That outcome is a by-product of fragmentation and the potential, but not yet delivered privatisation.
I agree with my hon. Friend the Member for Nottingham, East (Mr. Heppell) that one of the great dilemmas in this issue is whether the Government thought first of railway privatisation and then recognised that, as a by-product, they might get their hands on £4 billion of railway pension fund money, or whether they thought, first, that they would go for the pension fund, but, in order to do that, they would have to break up the railways.
We have won half the battle in that the Government will not directly get their hands on the railway pension fund money. We shall win the other half of the battle, which is to stop them privatising the railways.
§ Mr. Freeman
May I correct some misapprehensions, so that pensioners and contributing members of the British Rail pension fund are properly informed about this debate?
The hon. Member for Cunninghame, North (Mr. Wilson) raised a number of issues and asked me a number of questions. First, he referred to the change in employment patters and therefore the pension liabilities building up in the pension fund. He is right to say that the number of signalmen has been substantially reduced from 148 7,600 in 1980 to 4,940 at the end of 1993. But, within the change in the total numbers employed and, therefore, the pension liabilities accruing, a dramatic change in grading has occurred. More signalmen are now on the top grades. In 1980, 22 per cent. of signalmen were on the bottom grade, grade A; by the end of 1993, only 9 per cent. were on grade A. So a reduction in the number of signalmen has been brought about by substantial investment over the past 10 years, resulting in higher grading as signalmen perform more complicated tasks, better pay and higher pension-accruing liabilities. The tragedy is that that has resulted in an increase in basic pay, not in allowances.
Secondly, the hon. Gentleman said that the Government briefed The Independent. The Government have not briefed The Independent and the figures to which the hon. Gentleman referred are not correct. He said that £100 million from the pay restructuring fund might be attributed to the signalmen; I believe that the figure is closer to £30 million. And he obviously reaches the figure of £50 million by dividing that mythical £100 million by two and calculating what might go to the closed fund.
§ Mr. Freeman
Let me first answer the hon. Gentleman's point. The £1,700 per head to which he referred is a figment of The Independent's imagination.
The importance for the signalmen is to so restructure their pay that their pension calculation is improved. They should agree with Railtrack the restructuring of their pay and allowances not just for their pensions but for their mortgages, which are calculated on the basis of their basic pay, not their total pay because some of the allowances are not guaranteed.
Finally, the hon. Gentleman asked about the solvency pledge. The Government do not determine the allocation of the surplus. It has been determined by the two actuaries —the scheme actuary and the Government actuary. It has not been Ministers' responsibility to decide that. Simply to allocate part of the initial surplus to the closed fund does not help Government public expenditure because the more money that is allocated to the closed fund, the less is allocated to the open fund and the higher the subsidy required from the franchising director. This allocation was done strictly on the basis of actuarial neutrality.
§ Mr. Wilson
I cannot pursue all the points that I would wish, but on the £50 million vis-a-vis £1,700, we agreed earlier that £600 million is left in the fund. Will the Minister confirm that the two categories still to be settled out of it are the drivers and the signalmen? If they divide numerically on roughly a 4.5:1 ratio and the figure is not, as I suggested, half of £100 million, which is £50 million, where does the rest of that fund go? My figures, which are the same as those which The Independent arrived at, are logical. There seems to be a large gap in the figures that the Minister suggested.
§ Mr. Freeman
We have no idea what the drivers may settle for in terms of restructuring their pay and allowances. Those negotiations have been desolatory and have been continuing for a number of years. I hope that they will reach a conclusion. I repeat what I said at the outset of the debate: it has long been held to be a sensible target to create a new joint industry scheme effective from 1 October. The signalmen's strike occurred long after that target was set. If the dispute is settled before 1 October, a 149 portion of the pay and restructuring reserve can attach itself directly to the earnings of signal men and women, and their pensions will benefit.
That is a statement of fact. If the drivers do not settle, they will have a claim on the generality of the surplus allocated to their own sections in the joint industry scheme. I have spelt out the truth as clearly as I can.
I shall briefly mention the other contributions to the debate. I agree with my hon. Friend the Member for Eltham (Mr. Bottomley) that we want a modern railway industry, with a modern pay structure, because that means that one gets a decent pension scheme, which means that railwaymen and women can look forward to a decent pension in retirement. It also means that they are able to borrow properly from the building societies on the basis of higher basic pay and lower allowances.
The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) spoke about the responsibility for creating fear of exploitation and the loss of assets. That charge cannot be levelled at the Government. The Government have not been creating the fear in the minds of pensioners. I think that other politicians have done so. It certainly does not help the peace of mind of pensioners, who do not understand the details and complexities of the reform of the pension scheme.
The hon. Member for Nottingham, East (Mr. Heppell) spoke about the Transport Act 1980 payments. They will not cease; they will continue. Fifty per cent. of the payments to the closed fund will continue, fifty per cent. will be deferred, with interest attaching to that deferment, and payments will be made in order to honcur the guarantee of RPI indexed pensions. That is an excellent provision for the closed section of the pension scheme.
§ Mr. Freeman
Will the hon. Gentleman let me finish now?
Finally, there is no truth in the allegation that the hon. Member for Hampstead and Highgate (Ms Jackson) makes that the Government want to seek to drag out the signalmen's dispute until September, in order to benefit in some unexplained way from the reorganisation of the pension fund. Every strike day costs £10 million. That is a loss to the railway industry and to the country. The sooner that the strike is settled, the better.
§ Question put and agreed to.
That the draft Railway Pensions (Transfer and Miscellaneous Provisions) Order 1994, which was laid before this House on 7th July, be approved.—[Mr. Freeman.]