HC Deb 23 May 1994 vol 244 cc128-54 10.15 pm
The Minister for Public Transport (Mr. Roger Freeman)

I beg to move, That the draft Railways Pension Scheme Order 1994, which was laid before this House on 10th May, be approved.

Madam Speaker

I understand that with this it will be convenient to discuss at the same time the following motion: That the draft Railway Pensions (Protection and Designation of Schemes) Order 1994, which was laid before this House on 10th May, be approved.

Mr. Freeman

The House will recall that, during the final stages of the Railways Bill last year, I undertook that there would be further consultation with all interested parties before the orders implementing the detailed future railway pensions arrangements were laid before Parliament for approval.

The industry and the present trustees were fully involved in working out the detailed arrangements on which we went out to wider consultation on 31 March with the trustees, employers, trade unions and pensioners' representative bodies. We have taken account of their comments as far as possible and I wish to thank all those consulted for the clarity and promptness of their representations.

In particular, we have reached full agreement with the British Rail pension trustees on all major points of principle relating to railway pensions after privatisation. The arrangements that we have agreed honour the commitments given by the Government in Parliament and elsewhere. I can assure the House—

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Will the Minister give way?

Mr. Freeman

If the hon. Lady will forgive me, I would like to finish my sentence.

I can assure the House that the pensions of all railwaymen and railwaywomen, both past and present, earned in their service with BR are safe, and that the future arrangements will give them security.

Mrs. Dunwoody

The Minister has just made a very definite statement. Is not it true that the trustees have not met and that any agreement that the Minister has reached has been because of the fiduciary duty of the chairman that there may be an agreement within a very narrow sense? However, it is not true that the Minister has reached complete agreement with the trustees.

Mr. Freeman

I do not believe that that is an accurate statement. The trustee board—that is, all the trustees—met on 5 May and agreed all points which had been negotiated except the treatment of the deficit and the surplus after deficit. However, all the trustees agreed a compromise proposal to put to the Government. We have agreed to that compromise, so I would argue that we have fully met our commitment to obtain agreement with the trustees.

Mr. Ieuan Wyn Jones (Ynys Môn)

Since the Minister has referred to the surplus and the deficit, will he clarify the position in respect of the solvency guarantee? As I understand it, the Government will make good deficits in the years where they occur, but they will recoup that money in years when there are surpluses. Is that right?

Mr. Freeman

This is a complicated subject. If the hon. Gentleman will bear with me, I will explain the issue as clearly and as succinctly as I can. If the hon. Gentleman is not satisfied when I reach that part of my speech, I will give way.

Mr. Donald Anderson (Swansea, East)

As I understand it, the Minister claims that there has been no difference of substance in respect of the proposals since the board of trustees met and agreed on 5 May. Is he aware that the trade unions feel a deep sense of grievance that they have not agreed the final package? There is therefore a considerable difference between what the Minister says tonight and what the unions say. We must remember that the pensions are of fundamental importance to trade union members. Surely it is important that the Minister ensures that the trade unions are fully consulted about and agree with the final proposals.

Mr. Freeman

I have had two separate rounds of meetings with all three railway unions. I believe that we have met all their substantive arguments and I shall discuss some of the issues later.

If there are specific drafting issues, but not points of principle—if the unions and their legal representatives feel that we have not reflected accurately in the final orders before us what they would wish—I give an assurance to the House that we will amend the legislation by subsequent orders for which the Government have to come back to the House, subsequent transfer orders and Transport Act 1980 orders. We will use those orders to amend in detail where there is agreement between the trade unions and their representatives and the Government—or the rules themselves can be changed. However, I assure the House that, following my lengthy meetings with the unions and their representatives, we have met all their arguments of substance.

Those are extremely difficult issues. Obviously, there will be an opportunity in another place for the orders to be debated yet again. Indeed, the Government will have to come back yet again with further orders during the summer. We are not seeking to bamboozle the unions—that is not possible. We are not seeking to railroad the issue through, if the hon. Member for Swansea, East (Mr. Anderson) will forgive the pun. We have pursued those negotiations. After all, we can only negotiate with the trustees. The consultation with the trade unions was in parallel with those negotiations but, I believe, carried out in good faith on both sides.

We have before us tonight the first two draft orders. Let me first discuss the draft Railway Pensions (Protection and Designation of Schemes) Order, which will give the promised statutory "no less favourable" protection to "protected persons"—broadly, people who were in service or retained benefits in the schemes on 5 November 1993 —and incorporates in article 11 the "indefeasible right" to remain in equivalent, that is to say, "shared cost", sections of the joint industry scheme, which will be called the "Railways Pension Scheme", for so long as their employer remains a part of the railway industry. We have agreed to extend that right. That is a point that was argued forcefully, not only by the trustees, but by all three unions, so that it will not now be lost where employees change jobs voluntarily within the industry—an important concession that was argued for well during the consultations.

I should like to clarify two points about that order. First, with regard to the definition of "designated scheme" in article 1(2), the intent is to protect relevant pension rights at the date of the order, including the right to future accrual of such rights on a "no less favourable" basis. Secondly, there is an area of concern between my Department's and the trustees' lawyers about the precise drafting of paragraph (4) of article 7. Should it be agreed that an amendment is necessary in respect of that latter point, we shall make it when we make the transfer order—I intend to lay a draft of that order next month.

For the purposes of the "indefeasible right" that is conveyed by article 11, paragraph (4) of that article defines the "railway industry". The intent is that the term should comprise activities currently carried on by BR which may in the future be carried on by successors, but only to the extent that they are activities connected with, or provided for, the railway industry.

The order also designates the existing pension schemes to which it applies for the purpose of enabling their members or beneficiaries to be protected persons. A handful of BR employees retain membership of pension schemes operated by Associated British Ports and the National Freight Company. If we did not specify those schemes, those BR employees would not be given statutory protection. I emphasise that that is the sole reason why we are designating the ABP and NFC schemes. I give an assurance to the House that the Government have no intention of using the powers in relation to "existing schemes" contained in schedule 11 to the Railways Act 1993 to amend either of those schemes.

The Railways Pension Scheme Order formally establishes on 31 May 1994, under the powers provided in paragraph 2 of schedule 11 to the Railways Act 1993, the "Railways Pension Scheme", which, it is planned, will succeed the existing main BR schemes—that is to say, principally the BR pension scheme, the BRPS—on 1 October 1994. The order also appoints the Railways Pension Trustee Company Ltd. as the first trustee to the scheme, and designates the scheme as "the joint industry scheme" for the purposes of paragraph 8—that is to say the "indefeasible right" provisions—of schedule 11. The key provisions are in the schedule, which contains the pension trust and the different scheme section rules.

Existing BRPS pensioners and deferred pensioners will be transferred into the 1994 pensioners section of the RPS —the closed section. Initially, there will be two such sections. The reason for that is a practical one related to valuation of the Government's liabilities to them under the Transport Act 1980. Those people who were already pensioners and deferred pensioners at 31 March 1994 will join the "A" section, while those retiring or deferring their pensions between 1 April and 30 September will join the "B" section. The two sections will have similar rules, and will be amalgamated as soon as possible thereafter.

The Secretary of State will be under a duty to give a solvency guarantee to those sections. The guarantee will secure the continued payment of fully index-linked pensions. The proposed draft of the guarantee, the details of which have been agreed with the present trustees, was deposited in the Library last Friday. The members will have rights under the rules to share in any future surpluses in their fund. The rules are contained in appendix 1 to the schedule.

Distributed surpluses will be shared as follows: 40 per cent. to payment to pensioners, and 60 per cent. to a special reserve retained in the fund. The Government cannot withdraw those sums while the fund continues. The 40 per cent. and 60 per cent. mirror the existing ratio of distribution. Serving staff who are members of the BRPS will be transferred into the BR section of the RPS. They will move into their new employers' sections, which will have materially the same rules, affording them the security and continuity that they have sought, as their employment is transferred, for example, from BR to a franchised railway operating company.

The rules are contained in part 1 of appendix 2 to the schedule. They provide that pensionable service will normally be treated as continuous, even on voluntary transfers between the equivalent sections of participating employers, subject to Inland Revenue restrictions. The Railtrack and European Passenger Services sections will be set up almost immediately. The continuous service provisions ensure that those who move involuntarily or voluntarily within the industry will protect their length of service. So there is no penalty involved in the truncation of service.

Mr. Hugh Bayley (York)

Will the Minister explain what he meant by the word "normally" He said that there would normally be continuity of service. As things stand, anyone who is in the British Rail pensions schemes retains, year for year, each year of service. Are there are any circumstances in which an employee who moves from one company's to another company's employment, but who retains his membership of the scheme, would not receive year for year, month for month, day for day, the service previously accrued in the scheme?

Mr. Freeman

Yes, and it relates to the Inland Revenue laws. I have explained this to the unions. Where an individual moves and has a very substantial salary increase, there are restrictions on the number of continuous years that can be provided for his or her pension.

Mr. Bayley

As there is detriment in those cases, will the Minister explain how the scheme, as agreed now, matches up to the Government's commitment that there will be no detriment in the new scheme and that the new scheme will be no worse? "No less favourable" are the words that Ministers used throughout the discussions in the Standing Committee which considered the Railways Bill. How can he say that the scheme is no less favourable when he admits that some people will be disadvantaged?

Mr. Freeman

I think that the hon. Gentleman will admit that there are bound to be some examples, but they will be few and far between. We are talking about an individual who moves from one job to another with a substantial salary increase. I do not believe that that will be the norm. Individuals will transfer within the industry from one train operating company to another, or from an infrastructure company to a train-operating company broadly on similar salaries. It is an Inland Revenue rule. It is not something that either the order or the Department of Transport can alter. It applies throughout the private sector. I understand the hon. Gentleman's concern and I may be able, through the means of a written answer, to make the House aware more precisely of the rule. If the hon. Gentleman cares to table a question, I shall answer it as fully and comprehensively as I can. The matter, I understand, may well be raised on another occasion.

Mr. Peter Bottomley (Eltham)

Does my right hon. Friend accept that few of us are concerned about the person who may be an engine driver and who goes on to become the deputy chairman of Railtrack? Most of us are concerned about those who have some years service with British Rail and who have perhaps moved to an operating company. They may spend part of their working lives working for Railtrack, and would hope to have continuous service instead of moving around different companies in the contracting industry. That is the problem which the Select Committee on Transport faced, and the Committee feels that the Government have managed to achieve agreement on it. Can my right hon. Friend confirm that it has been solved?

Mr. Freeman


The method for determining the initial split of assets between the sections of the RPS will be agreed with the trustees after taking the advice of our respective actuaries. The transfer order, another affirmative order, a draft of which will be laid before Parliament next month following the formal establishment of the scheme, may be used to split the assets between the sections of the RPS. Because we have to consult the trustees of the RPS first, the transfer order cannot be laid until the RPS has been formally established and the trustees appointed.

To maintain flexibility, employers will be able to admit new employees either to their section which succeeds BR's section, or to other new sections providing alternative pension arrangements. This will make the RPS more attractive to new employers, and give their employees the comfort of belonging to a large, well-managed pension scheme. A template for the rules for defined benefit and defined contribution sections is contained in parts 2 and 3 respectively of appendix 2 to the schedule.

Equal employer/employee representation will continue on the trustee board and the "Pensions Committees"—the management committees—of all sections. For legal and technical reasons, we are having to form a new trustee company, the Railways Pension Trustee Company Ltd., to act as trustees to the RPS. At 1 October this company will also take over as trustee of the other BR pension schemes for which the present trustee company acts so that the existing investment pooling and management arrangements can continue.

It is our intention that all the participating employers in the RPS will share in the ownership of the trustee company so as to prevent a single employer having sole influence over it. To facilitate this, the trustee company will be wholly owned by a holding company, Railtrust Holdings Ltd., which will be a company limited by guarantee making change of ownership easier when employees join or leave the scheme. The first directors will be the directors of the present trustee company together with two nominated by Railtrack, and one each by the British Transport Pensioners Federation and the Retired Railway Officers Society.

The present trustees have suggested that those latter two posts should be directly elected by the pensioners from the outset, but I have been advised that an early election would be difficult to organise. However, those nominees will only serve for the first two years until direct elections can be organised.

Although the articles of association provide for direct election of employee/pensioner directors after an initial two-year period, they empower the trustee board to devise alternative arrangements for voting, providing that equal employer/employee representation is maintained. That was a point put to me by the unions and the Government have agreed to provide flexibility in the mechanism for election.

Copies of the memorandum and articles of association of both companies, which will be incorporated by the BR board later this week, were placed in the Library last Friday.

For historical reasons, BR has a number of other pension schemes, all listed in the designation order. These schemes will stay in place. We see no requirement for the time being to transfer members, either serving staff or pensioners, out of their schemes. I should make it clear that no changes are proposed to the British Transport Police scheme.

Mr. Donald Anderson

On two occasions, the Minister has said that certain documents relevant to the debate were put in the Library last Friday. Does he think that that is an adequate time—however technical the documents are—for the outside interests to assess adequately the relevance and importance of those documents?

Mr. Freeman

I have given the House an assurance, with regard to the documentation placed in the Library and the orders in this complicated field, that if representations are made—either by the trustees or their representatives, or by the trade unions or their representatives—which improve the documentation, because we settled the points of principle, then amendments will be made. These are enormously complicated issues and we have kept faith with those whom we have consulted in their preparation.

In relation to the closed fund for pensioners—in other words, the pensioners' sections—we have honoured the memorandum of understanding entered into with the trustees and the BR board last July. We have reached agreement with the trustees on a formula for partial deferral of Government cash support payments, under the Transport Act 1980, to the pensioners' fund to take account of the Government solvency guarantee. Any deferred payments will remain an obligation of Government, earning interest, and will be accounted for as an asset of the section.

We intend to bring an order before Parliament before the summer recess giving effect to that agreement, which we intend will take effect in October. It was agreed last July that the Government must give their consent to decisions affecting their financial exposure under the guarantee. Originally, that consent was to have been exercised by a Government director on the trustee board. Because of potential conflict between his fiduciary duties under general trust law and his responsibility to the Government, we have decided not to proceed with that proposal. Instead, the consent of the Secretary of State will be required—within the terms and conditions of the guarantee—to strategic decisions about the fund, but not its day-to-day operation. Accordingly, there will be no Government director on the trustee board.

When the orders were laid before Parliament on 10 May, there was one issue in relation to the pensioners' fund on which we had failed to reach agreement with the trustees. Although we had accepted that pensions should not be reduced in cash terms in the event of a deficit in the fund, even if they included unguaranteed discretionary increases, we had not resolved the procedure that would apply in the absence of other agreement if the fund went into deficit and subsequently returned to surplus.

We have now reached agreement, however, on the basis of a compromise proposal put to us by the trustees. We have accepted the compromise. In the event of a deficit, the special reserve will be applied in full first, before any freezing of pensions. I should emphasise that the pension prevailing at the establishment of the closed sections on 1 October 1994 will always be indexed for inflation. It cannot be reduced or frozen. Total pensions may subsequently include discretionary real increases and it is the total that may, as a last resort, be temporarily frozen until the indexed guaranteed pension exceeds it. After those sources had been exhausted, Government guarantee payments would be made. A subsequent surplus would be applied in the reverse order.

The trustees have also offered changes to our original agreement on Transport Act 1980 payments, to reflect the ramifications of this proposal. Both we and the trustees regard that position as a fair way of dealing with a problem that was not foreseen at the time of the memorandum.

Even though the pensioners' section rules do not reflect that revision of policy, there is no need to amend the order. We are considering with the trustees changing the rules —in particular rules 13, 14 and 16—after formal establishment, through the amendment procedures written into them. That procedure might also be used with the agreement of the trustees to make other agreed amendments to the pension trust or rules, to clarify the existing drafting where that is considered necessary, especially in relation to the provision of "seamless" voluntary transfers between railway employers within the RPS, in normal circumstances on which agreement has been reached with industry employers. Failing that, the required amendments will be made together with the forthcoming transfer order. I repeat that assurance.

The arrangements to be implemented under the two orders will fully deliver the undertakings given by the Government and provide the promised security, protection and peace of mind to BR's existing staff, pensioners and deferred pensioners. I hope that the House will support them.

10.37 pm
Mr. Brian Wilson (Cunninghame, North)

The Minister constantly reminds me of a sort of upmarket job creation scheme whose business is digging holes to fill them in again. This Minister seems to revel in creating complexity in order to unravel it.

Let us rise for a minute above the minutiae of what is being so lovingly described by the Minister. Why are we here? What is the scandal about the British Rail pension fund that makes it the centre of attention in the House tonight? Why, out of all the problems that exist in the country and the world, have scores of parliamentary hours been devoted to the affairs of the British Rail pension fund?

The sole reason why the fund, which is well run, acts responsibly in the interests of its members and has attracted no complaints—unlike many of the private pension funds that the Tories have been anxious to shepherd people towards—is being debated is that it is a by-product of the Tories' destructive determination to fragment our railways. Out of that has arisen the opportunity to fragment the BR pension fund.

This has been a tawdry and wholly unnecessary exercise. It has given rise to thousands of hours of lawyers' time being wasted and having to be paid for over the past 18 months, just to deal with the complexities to which the Minister keeps referring. It has disrupted the operations of a smooth-running pension fund and, most important, it has caused immeasurable upset for tens of thousands of railway pensioners, who, like the rest of us, deeply resent this unwarranted interference in what should be the sacrosanct territory of a pension fund.

The whole exercise has been characterised by opportunism, by incompetence, and ultimately by a retreat on the part of the Government. At the start, the Treasury thought that it could get its hands on £4 billion of railway pensioners' money, to set against the public sector borrowing requirement. The simple device was to be the splitting of the pension fund and the taking over of half of it for future administrative purposes.

Step by step, the Treasury has been frustrated in the achievement of that end, and I welcome the assurance that it will get nothing out of the exercise. If that is indeed so, it has been a major victory for all concerned: for the Opposition, for the trade unions, but most of all for the thousands of railway pensioners who protested at what has been done—

The Secretary of State for Transport (Mr. John MacGregor)


Mr. Wilson

Let the right hon. Gentleman have another look at his original proposals, which sparked off fear and alarm among railway pensioners as they realised that half of their fund was to go directly, not into thin air, but to the Treasury. Four billion pounds was and is big bucks and big politics, but the people who planned the audacious raid have been forced to back off. I promise them that we will remain vigilant throughout every stage of the process to see that not one penny of the BR pension fund ends up in the Treasury.

Right to the end, interference with the pension fund was characterised by chaos and confusion. The Minister tonight used the same phrase as the Secretary of State used in the press release issued last Friday: John MacGregor, Secretary of State for Transport, today welcomed the final agreement of the BR Trustees to the joint industry pension scheme for railway industry staff and pensioners". Why do Ministers thus continually misrepresent what has occurred? The Secretary of State, the Minister and the authors of the press release know as well as I do that there had never been a meeting of the trustees to consider the final proposals. At the very time the press release was being drawn up, the proposals were still being drafted—late on Friday. Yet the Department had the cheek to put out a statement saying that the trustees had accepted them.

There is a precedent for the folly of this approach. The rest of us remember the memorandum of understanding of last year. In good faith, the chairman and chief executive of the pension fund accepted the memorandum when the trustees had not yet met. Yet Ministers misrepresented the facts, saying that they had accepted the memorandum. Ultimately, the fact that there had been no such acceptance was exposed—hence the scenes in the House of Lords, shortly before the legislation was finally passed, which brought the Bill into even greater disrepute.

The press release contained another untrue phrase as well. It speaks of the joint industry pension scheme for railway industry staff and pensioners in the new privatised railway. But there is no new privatised railway, and the way things are going there is not going to be one. No one is interested in investing in the "new privatised railway", and it matters not whether the train operators or Railtrack come first: still no one will be interested in investing in the new privatised railway, because it is a lousy bet for any investor.

In the event of there being a new privatised railway, what do we have to look forward to? I shall quote from Friday's edition of the Eastern Daily Press. It stated: Children 'put at risk' by rail cuts … Schoolchildren and commuters will be left stranded following railway bosses' decision to scrap a key rural service … Regional Railways insisted: 'We live in a commercial world where we have to generate the maximum amount of revenue'. So the new timetable changes will leave schoolchildren and commuters waiting at Spooner Row, Eccles Road and Harting Road.All those stations are in the constituency of the Secretary of State for Transport. [Interruption.] The Secretary of State attacks the Eastern Daily Press. Rarely can a Secretary of State have been so directly the author of his constituents' misfortune.

Under a previous arrangement, these orders were at one stage to be debated on Thursday. I make that point to my hon. Friends who complained about documents not being in the Library until Friday. Even on Friday, the Government were still changing this and altering that and amending, rubbing out and pencilling bits in. They got messengers to go running around with the documents so that they would reach the unions, the people who represent those most directly affected, before 5 o'clock. I have a copy of a document which states: On Her Majesty's Service. Express service at all stages. I certify that the papers transmitted under this label are official and of great urgency and require to be delivered by 5 pm today. That was 20 May. The matter has been going on for 18 months and affects the pensions of tens of thousands of people in the industry and those who have given their lives to it. But messengers were scurrying about on bikes at 5 pm on the Friday before the orders were to be debated. That is after 18 months and a great amount of candle power, and still the Government have not been able to complete the orders.

I shall later ask for undertakings that the changes to which I understand the Government have agreed, even since the statutory instruments were printed and since the bikes delivered the latest dispatches to the trade union headquarters, will eventually be incorporated in the instruments. What an impertinence that at 5 o'clock on Friday they were still messing about with people's pension funds on the basis of such a shambles.

I have three questions for the Minister. First, will he address the issue of seamless transfers for railway personnel between employers? On this, as on many other matters, the Tories have been forced into involuntary retreat in an attempt to offer sweeteners to potential private interests. They started by saying that they were not prepared to allow staff to maintain their pension rights if they transferred voluntarily from one company to another within the railway industry. That would apply only if transfer were compulsory.

In February, the Government finally changed their tune and agreed that voluntary transfers and promotions with the industry would carry the same rights. However, the terms of that climbdown continued to be unclear, and are not adequately covered in the orders. Can the Minister confirm that the period of pensionable service for rail staff will not be reduced as a result of a transfer from one employer to another within the railway industry? If that guarantee is forthcoming, as I believe it will be, will it apply to new entrants to the scheme?

A crucial question is whether the Minister will confirm that clause 8 of the pensions trust will be amended to implement the ministerial promise of seamless transfers between railway employees on promotion or other voluntary transfers.

Secondly, I turn to the issue of discretionary pension increases in the event of the fund's temporarily going into deficiency. The Government's previous position was that in those circumstances discretionary increases would cease in spite of the very effective safeguards proposed by the trustees. That is an important consideration for pensioners, and particularly older pensioners. I understand that discretionary increases account for some 15 per cent. of the average pension. Will the Minister confirm that he has also retreated on this issue and that rules 13, 14 and 16 of the pensioners' section—the one that covers pensioners and deferred pensioners—will be amended as agreed with the trustee company on 18 May to strengthen the security of pensioners' entitlements?

I again remind my hon. Friends that all this has been going on for 18 months, but the Government were still being forced into the reluctant concessions such as this last week.

Thirdly, I want some explanation of where the Government have reached on an insolvency guarantee for the existing and deferred pensioners' fund. I understand that the chief officials of the trustees are now satisfied with what is proposed. On the basis of their most recent information, the National Union of Rail, Maritirne and Transport Workers understands that a mechanism has been proposed to enable Ministers to harvest the surpluses of the fund in good years and to pay back money given under the solvency guarantee, which thus becomes a loan rather than a grant. I hope that the Minister will take this opportunity to clarify that.

My hon. Friends will raise many other questions, and I want to leave them plenty of time to do so. But I return to my original point. There is no reason for us to debate the British Rail pension fund now. It should never have been disturbed, in the same way that British Rail should never have been fragmented. A Labour Government will restore British Rail to a national, integrated railway company. We will restore its pension fund. We will restore peace of mind for its pensioners.

I believe that the Government have many problems. I believe that the Tories have many problems in the weeks ahead, never mind the months ahead, in selling rail privatisation to any substantial body of opinion. [Interruption.] I think that I just heard the hon. Member for Rutland and Melton (Mr. Duncan). I remember that lie was a member of the Committee that considered the Bill. We talked for weeks about railway pensions, yet the only time that he intervened was when a question arose about oil pipelines. When I hear an hon. Member intervene on a question of oil pipelines, that is the time to reach for the Register of Members' Interests. And sure enough the hon. Gentleman did not disappoint me. He does not seem to be able to get off his posterior this evening to contribute.

Mr. Peter Snape (West Bromwich, East)

Can my hon. Friend assure the House that that oil pipeline did not pass under a council house in Westminster?

Mr. Wilson

I think that we should intrude no further on the private grief of the hon. Gentleman and Lady Porter, though, I presume, not in unison.

Mr. Alan Duncan (Rutland and Melton)

Sink a bit lower.

Mr. Wilson

Sink an oil well.

The central subject of the debate tonight is the future of railway pensions. As the Minister said, there will be many more orders to find out exactly what the Government have in mind. I give him due notice that just as we have followed this from start to finish, just as we have forced retreats on all the major intentions that the Government had towards railway pensions, just as we wiped out the original options that the Government had the impertinence to lay before railway pensioners, so we will continue to monitor the whole process from now until the day when that whole shower is consigned to the dustbin of history. I do not trust them. The country does not trust them. Most importantly, the railway pensioners do not trust them.

10.52 pm
Mr. Peter Bottomley (Eltham)

The hon. Member for Cunninghame, North (Mr. Wilson) entertained the House, but asked unnecessarily why we are having the debate. For the past five elections, some of the trade unions sponsored Labour Members of Parliament to contribute to such debates. I think that if the trade unions that have political funds had been asked whether it is right to spend £10 million every general election to sponsor a party that has lost each one of them since 1974, they would begin to believe that they should start spreading their favours rather more widely. Even better, they should stop trying to pretend that the Labour party represents the political interests of their members.

The reason why we now have sensible pension arrangements is not just because of the Labour party, but because hon. Members on both sides of the House responded to the Government's invitation to comment, both on the Select Committee and individually. I think that rail pensioners and prospective rail pensioners have reason to be grateful to Ministers for their response to what Members have said.

Mr. John Heppell (Nottingham, East)

Will the hon. Gentleman give way on that point, as I am a railway pensioner?

Mr. Bottomley

I shall give way, but I had not developed any point beyond answering the rhetorical question from the hon. Member for Cunninghame, North.

Mr. Heppell

As a railway pensioner, let me say that I am not happy with the way in which the Government have handled the situation—and I suspect that mine is the view of most railway pensioners. My hon. Friend spelt out the position. First, the Government promised us "comparable" arrangements, before coming up with two options that were nowhere near comparable. Then they switched it to "favourable", before coming up with options that were not favourable. I am still in the same position: my pension will be less beneficial to me now than it was before privatisation.

Mr. Bottomley

The hon. Gentleman may wish to make his own speech later, unless he has made it already.

What really face us are the public problems of the Labour party. My right hon. Friend the Minister has made it obvious to all—including those Labour Members who are present and, by extension, those who are satisfied with the position but are not present, who make up probably nine tenths of the parliamentary Labour party—that railway workers have no further problems. I think that that outcome was predictable.

The hon. Member for Cunninghame, North has predicted that Labour will reverse the changes that are in progress in the railway industry. As I have made plain on a number of occasions, I believe that the Government's aim should be higher capital investment, less current subsidy and more use of the railways; but today we are more concerned with the interests of those who work on the railways—both in the operating companies as they now are, and in Railtrack as it now is.

The assurances given to the House—whether those announced on Friday or those that were predictable from the outset, and certainly those given by my right hon. Friend this evening—are acceptable. It is a disgrace that Labour's spokesman has not described what has now been proposed as right and acceptable. In no part of his speech has he said that it is unacceptable to those working in the rail industry.

Mr. Wilson


Mr. Bottomley

The hon. Gentleman made a fairly good speech, in his terms. If he wants me to give way, I will.

Mr. Wilson

I intervene mainly because the hon. Gentleman said that something was disgraceful. I asked for a list of assurances that I understand to have been given to the railway trustees; no doubt they will eventually be given to the trade unions, but they have not yet been translated into statute. Within the wider framework—to which I continue to object, without apology—immense progress has of course been made, but it now needs to be translated into legislation.

I reserve the right for other Labour Members to say that some problems have not been resolved, and I hope that they will take this opportunity to do so.

Mr. Bottomley

The hon. Gentleman did not describe them in his speech. Perhaps he did not know what they were, or perhaps he wanted to spread them around among his hon. Friends.

Over the past 20 years, the basic problem in the railway industry has not been pensions: there is no doubt that the workers' pension funds have been well financed. The basic problem has been overstaffing and under-investment. The biggest problem in Labour's approach to public services —of which public transport is certainly one—is that, given the choice between higher capital investment and higher current subsidies, Labour always chooses higher current subsidies.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. The hon. Gentleman is very experienced in the procedures of the House. We are supposed to be discussing railway pensions; may we return to that subject?

Mr. Bottomley

I say that the biggest problem has been under-investment in capital and too much subsidy because Labour has always been in hock to trade unions. That has been bad for those working in the industry, and bad for capital investment.

Mr. Deputy Speaker

Order. The hon. Gentleman clearly did not listen to my earlier remarks. The House is debating railway pensions: will he please return to that subject?

Mr. Bottomley

I am concerned about pensioners' interests because pensions come from investment, not from current subsidies. Perhaps if I had said all that the other way around it would have been clearer to me what I was trying to explain.

It is important to consider the way in which we are going about our capital investment to secure a railway service, pensions and pay for those working in the industry that match the best in Europe. Railway workers' pay has risen in recent times, as have the pensions of those working in the more modern services that the railways are now developing—which do not just include the channel tunnel services and the lines in which there has been heavy capital investment. If we want that to continue, we must break away from the trade union-Labour party links ordaining that an hon. Member must make a speech after 10 pm, describing a problem that no longer exists in the pensions of those who have worked for British Rail, and those who are working and will receive their pensions from the railway operating companies and Railtrack.

In the face of their sedentary interruptions, I make a plea to Labour Front-Bench spokesmen, who should make their own speeches rather than interrupting mine, that they should try to dedicate themselves to achieving a proper mixture of the interests of those who want to use railways and of those who work in them.

Those who want a capital intensive railway and good pensions for those who work in the railway operating companies and Railtrack should welcome the achievements of my right hon. Friends the Secretary of State and the Minister of State and should say that the trustees know what they are doing.

An attack has been made on the Treasury, which, generally, is not here to defend itself. That probably is wise because it might occasionally come under attack from my right hon. Friend the Minister of State, if one may interpret what he says to it in private. I believe that Ministers should be congratulated on the way in which they have represented the interests of rail workers.

Current and future employees can trust the provisions of the orders. Despite my doubts about the original lack of certainty, I recommend to trustees and workers that they can trust the proposals. Following developments in the past year, current pensioners can believe that their interests are safeguarded and future pensioners can go on taking part in the transformation of the railway industry so that it can start to meet a larger share of the transport needs of this country.

Without a Conservative Government since 1979, the railway industry would be in a worse situation. Pensioners would be experiencing the inflation that they were used to under the previous Labour Government. Nobody under 35 can believe that, but as most Labour Members are older than that they know that what I am saying is right.

The reason for the debate is the ancient link of the party political levy. A third of Labour Members have trade union sponsorship and almost all Labour Front-Bench spokesmen receive a third of their election sponsorship from trade unions. I say to them: break the link and we shall be offering a better service to pensioners and other rail users.

11.2 pm

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

It is always rather embarrassing to see Conservative Members trying to walk backwards and climb on a bandwagon at the same time. Had they any knowledge of what happens to people who get in the way of rolling stock, they might be rather more careful in their use of the English language.

The reality is that rail pensioners are exceedingly worried about the orders, not least because their contents were not transmitted to the rail unions until five days after they were officially published. Only when the unions went directly to the Minister and asked for an extension to the consultation period were they given sufficient time to discuss them with their members. The unions then put a number of detailed questions to the Minister but heard nothing further until last Friday. That is not my interpretation of consultation.

Pensioners in my constituency—I make no pretence of not representing their interests because I am a member of the National Union of Rail, Maritime and Transport Workers—are extremely concerned that the Minister, under the guise of protests that he is introducing a highly complex scheme, has not answered to the satisfaction of representatives of railwaymen and women a number of detailed questions that concern them. If what the Minister has done is so reliable and so good for the pensioners involved, why was he not prepared to make the detailed answers available sufficiently early for them to be circulated among the men and women directly affected? There should have been no difficulty about that. If the Government have only the interests of railwaymen and women at heart, why are they so coy about letting pensioners know what is involved?

If the Minister genuinely believes that the average voter trusts the Government when it comes to pension funds and the denuding of those funds, he has got another think coming. In fact, the average voter has absolutely no trust in the Government in respect of matters that are of concern to all individual members of the scheme. He is not convinced that the fund's surplus will be protected.

Is it true that the Government's proposals will mean that, although they may underwrite deficit years, in other years the Government will have the right to cream off funds? If so, how do the Government explain that? What are the changes in the rules on maternity provision? Is it true that the maternity provisions in the new revised scheme may implement the Social Security Act 1989 but will they also worsen current arrangements by giving the employer discretion? As there is already clear evidence about the effects of fragmentation in the railway industry, I am afraid that individual pensioners are right to be concerned about what is happening to their future provision.

I know that many hon. Members want to speak. I shall not dignify the remarks of the hon. Member for Eltham (Mr. Bottomley) by responding to them but I have this to say to him: if he had worked all his life in a low-paid, often dangerous and frequently undervalued industry, he would not have the effrontery to come here and talk such utter incompetent and arrogant rubbish.

11.6 pm

Mr. Keith Hill (Streatham)

The privatisation of the railways has been a shambles from the word go. At its very inception the Bill was awarded a vote of no confidence —to say the least—by the all-party Select Committee on Transport, of which the hon. Member for Eltham (Mr. Bottomley) is a member. It spluttered and faltered its way through its Committee stage and was subject to an unprecedented number of amendments in both Houses, the vast majority of which were tabled by the Government. We might reasonably have expected the shambles to have concluded with the ludicrous and unseemly proceedings of the Reasons Committee last November. However, it continues with the present, highly imperfect statutory instrument which, according to what the Minister has told us this evening, we understand is to be the subject of further amendment. Such confusion and lack of consultation has been the hallmark of privatisation and has persisted to its very dying throes in the proposals that we are now debating.

Let me illustrate how unsatisfactory the consultation process has been by reference to the experience of my sponsoring union—the National Union of Rail, Maritime and Transport Workers—which has more than a small stake in the issue, through its present and past members of the British Rail pensions fund and through its representation among the British Rail pensions fund trustees. A consultation draft of the proposals was circulated on 31 March, just before the Easter bank holiday. The RMT did not receive it until 7 April. The consultees—the RMT and the other unions involved—were given a mere handful of days until 25 April to examine and respond to the documents, which were several inches thick. Nevertheless, the RMT co-operated as far as possible with the foreshortened timetable and agreed to meet the Minister for Public Transport on 21 April. At that meeting, the Minister agreed to extend the consultation process so that the detailed paper prepared by RMT could be examined.

There was no response from the Government to the RMT's points until 4 pm last Friday, 20 May. In other words, the union representing many thousands of actual and potential pensioners had no guarantee that the orders took account of its constructive criticisms. It simply is not good enough. Nor is it good enough for the Secretary of State to claim, as he did in a letter entitled "Railway pensions after privatisation", sent to hon. Members on 18 May, that agreement had been reached with the British Rail pension fund trustees. Other hon. Members have made that point. The plain truth is that the trustees have not met since 5 May and no agreement has been recorded. The trustees have not met to endorse the proposals. Whatever the Minister may say, that is the indisputable truth.

It may well be—the Minister said as much this evening —that something has been settled with the chairman and chief executive of the British Rail pension fund trustees. We have been through this saga already—last summer—with the memorandum of understanding. We have learnt already that the assent of the chairman and the chief executive does not signify unanimous agreement by the trustees—far from it.

There is no excuse for this confusion and for the defective process of consultation that we have witnessed. It has been unfair to the institutional partners, such as RMT, and it has been grossly unfair to the many thousands of senior citizens who rely on their small British Rail pensions to supplement their meagre state pensions or to the thousands of potential pensioners still in railway employment. There are 330,000 of them in total. Those many hundreds of thousands have been subject to quite unnecessary anguish over the past two years as a result of an unnecessary privatisation and the Government's inept handling of it.

Throughout the period, we have witnessed example after example of policy-making on the hoof. Let us consider the present provisions concerning year-for-year credits for staff transferring from one to another employer's section of the industry. Until last Friday and possibly later, it was still unclear whether the protected persons provisions under paragraphs 5 and 6 did ensure that membership of one employer's section of the joint fund would be so credited on transfer.

Now, as we understand it, we have received reassurances from the Minister on the matter. We shall need to examine very carefully the written record tomorrow. Even if the reassurances are satisfactory, it is wrong that they should be subject to last-minute policy clarifications and announcements. It is wrong that staff and the organisations representing them should not have had an adequate opportunity to assess any changes that may have been made.

Meanwhile, it is far from clear that the necessary assurances have been offered or will be offered on other fundamental issues of concern. As I understand it, paragraph 8C.1 leaves discretionary powers in the area and paragraph 8C.2 also fails to provide year-to-year credit on compulsory or voluntary transfers.

Vital as those considerations are, an even more profound defect is the Government's proposal relating to the so-called "absolute solvency" guarantee in the new railway pension scheme. Certainly, the guarantee given to the existing and deferred pensioners' section of the scheme ensures Government support in deficit years, and that is to be welcomed. At the same time, the Government are now proposing a new mechanism to enable Ministers to harvest the surpluses of the fund in good years to pay back money given under the solvency guarantee. In other words, the solvency guarantee becomes a loan and not a grant.

By no stretch of the imagination can the scheme be regarded as a no less favourable arrangement. It is contrary to the 60:40 split agreed in the memorandum of understanding. In the event of a deficiency, it could result in members of the scheme being unable to benefit from future surpluses for many years. We have had repeated reassurances from the Government on that issue of "no less favourable terms". It is a scandal that such undertakings are not being honoured.

Privatisation of the railways has been the most unpopular privatisation ever. Never have so many Conservative Members voted with such lack of conviction to so little advantage for their party. Time after time, Conservative Members have been driven through the Division Lobby despite their better judgment. The desperate unpopularity of the privatisation scheme may have been allayed at least by the Government's hopes that they could hold out on the promise of milking the pension fund to pay for better times around the corner. They have even failed with that. The railway pensioners rose up and they forced the Government to give up their planned £4 billion clawback from the fund. That was one of the very few pluses in the whole sorry saga, but it was a major gain, for which the Opposition can take their fair share of the credit. Railway privatisation has been a shambles from start to finish and the biggest victim of that shambles have been the Government.

11.15 pm
Mr. John Heppell (Nottingham, East)

Thank you, Chair. I would like to start by—

The Minister for Roads and Traffic (Mr. Robert Key)

It is Mr. Deputy Speaker

Mr. Heppell

Sorry, Mr. Deputy Speaker. I apologise to the Minister as well, who seems more upset than you do.

I am a member of the Labour party and I am proud of that. I am also a member of RMT and I am proud of that. I also pay the political levy of RMT, so that money goes to the Labour party and I am proud of that. I am also a deferred member of the British Rail pension scheme and I am proud of that. For the benefit of the hon. Member for Eltham (Mr. Bottomley), may I tell him that there is no political levy on the British Rail pension fund? None of my pension is paid to the Labour party. Nothing is paid to the RMT. The fund is for the benefit of existing pensioners and future pensioners, one of which I hope to be at some time. I feel more than a little annoyed that the hon. Member for Eltham has muddied the water in that way, as though it is some sort of political issue generated by the Labour party.

I was astonished and, quite honestly, frightened about my future when the plans came out. It was not my hon. Friend the Member for Cunninghame, North (Mr. Wilson) who implanted some of those worries in my mind, nor was it my other hon. Friends. I was worried because of what I saw in the Government's papers. Effectively, it was one attempt to con me after another and I think that all railway pensioners feel the same. I mentioned to the hon. Member for Eltham earlier that, when I first saw the proposals, the Government talked about my pension being "comparable" —I think that that was the word—to what it is at present. When I then saw what they were proposing, I quickly realised that it was not comparable.

The Government then changed the words to "no less favourable" and I thought that we were moving in the right direction, but then I saw that they had put forward two options, which were Hobson's choice. Neither of them was even half as good as the pension that I already enjoy. When people say that there are two options, that I have to pick the one that I like best, but I have already got something better, why should I be grateful for that? Why should I be grateful for the fact that, rather than taking all my money, the Government are taking only half? I refuse to be grateful and I suspect that the majority of British Rail pensioners will refuse to be grateful, too.

Whether or not the Government were ruining British Rail—there is no doubt that they were—the pension fund was thriving. The trustees had invested the money wisely and we were enjoying massive surpluses. The employers and the employees had had their contributions frozen. We were not having to pay the amount of contributions that we were paying before and we were looking forward to enjoying extra benefits from the surpluses that had been generated. All of a sudden, the Government realised that there was money to be made. From that moment, things went downhill, but the Government tried to con me and other pensioners that there was nothing wrong with what they were doing. I resent the hon. Member for Eltham helping the Government to con people again.

Mr. Peter Bottomley

The hon. Gentleman is talking nonsense. He is talking as if the Government had not improved their proposals when they have produced a scheme that is acceptable to the trustees. The debate should be focused on the Government's current proposals, which are acceptable to the trustees and should be acceptable to the pensioners. The speeches that we are hearing from the Opposition Benches are being made by Members who are sponsored by trade unions.

Mr. Heppell

That is nonsense.

I suppose I have a vested interest because I am a pensioner irrespective of whether I am a trade unionist, but the Government are relying on short memories. There has been improvement but I want the arrangements to be as good as they were initially. It is not encouraging when the Government say, in effect, "We'll slash your pensions", and then say that they will not slash them quite that much. Should we accept that? The Government have moved, but not far enough.

We are told that the trustees are happy now, but I remember when the trustees were happier earlier. Some people's memories are failing. There was a memorandum of understanding, but the Government's understanding was different from that of the trustees and their chair. As soon as the trustees understood what the document stated, they did not accept it. It should be understood that the trustees have a voice and a message and some influence on our decision. Their perspective, however, is rather narrow. They are supposed to look after me and other current pensioners, and at the same time they should be protecting the interests of future pensioners.

The Minister talked about the present pensioners but he did not refer to future pensioners. I am concerned because I want those people to have decent pensions. There is nothing wrong with blue-collar employees having good pension schemes, but I have heard Conservative Members express astonishment that railway workers should have such marvellous pension arrangements. They think it disgusting that such lowly workers should have such a marvellous scheme. I am delighted that I am a member of such a scheme and I want to ensure that it stays as it is.

It is all very well for the Minister to say that we have arrived at a compromise. We have a guarantee of the fund's solvency but the arrangements for the Government's payments into the fund are rather cloudy. The so-called compromise was reached because, in effect, during the negotiations a gun was held at the heads of the trustees. They had a choice. They said to themselves, "We agree to this or we get nothing." The compromise is not one that I am prepared to accept. As a pensioner, the proposals are not acceptable to me. I shall continue to fight to ensure that pensioners have the scheme that they deserve, the scheme that they had before the Government embarked on the disastrous process of privatisation.

11.23 pm
Mr. Donald Anderson (Swansea, East)

It is significant that the only attempt by a Conservative Back-Bench Member to justify the orders was made by the hon. Member for Eltham (Mr. Bottomley), who produced a political knockabout about the relationship between the Labour party and the trade unions. Even the hon. Gentleman conceded that a significant change has been made to the earlier proposals. That is why there was such anxiety among those who already benefit from railway pensions and those who are likely to benefit in future.

We must surely consider the orders in the context that railway pensioners are some of the lowest paid people in the country. I am frequently appalled at the take-home pay of the railway workers in my constituency to whom I speak. It is therefore hardly surprising that they are very concerned about the way in which this matter will be handled. Those pensioners have become concerned after reading of personal pension sales and the fall in the value of those pensions. Our concerns about the orders are concerns of procedure and, in part, concerns of substance.

With regard to the procedure, the Minister agreed that it was only at 4 pm or 5 pm on Friday that there was a mad scramble to get the documents into the Library. We know what happens on a Friday. There are likely to be very few people around able to receive or adequately to digest documents that are delivered then. The weekend would have passed before people returned to this place.

Had there been an opportunity to scrutinise the documents, some of the anxieties might have been allayed. However, it is clear that in the time available people who were keen to look through the details to discover whether there were remaining areas of concern or detriment to pensioners in what are clearly matters of grave importance for their futures had insufficient time to assess such matters.

When the point was made about the late delivery of the documents on Friday, the Minister said that the order has to go to the other place. However, as I understand it, that will happen in only two or three days' time. There is unlikely to be sufficient time between now and then to examine the matter. As a fall-back position, the Minister said that, even if there is inadequate time between now and the matter going to the other place, further technical orders will allow further opportunities for examination.

Mr. Alan Williams (Swansea, West)

As my hon. Friend has been a Member of this place for some considerable time, does he recollect that it would have been a matter for incredulity at one time if a Minister came before the House and announced that he wanted to legislate on a matter that he knew contained drafting errors? Does my hon. Friend also agree that, when the matter goes to the other place, it goes in this form and stays in this form? Even if errors are found in the few days between now and its appearance in another place, there is no procedure whereby the other place can amend the order.

Mr. Anderson

Precisely. As always, Swansea, East agrees with Swansea, West on this matter.

I hope that the Minister will take this point on board. On a matter of such importance to so many people on low incomes, it is wholly unreasonable for the matter to be handled in this way. That is the point about procedure.

On a brief point of substance, the Minister conceded that there will be a detrimental effect for an element of the pensioners—those who he said had a substantial salary increase on moving from one company to another. He did not give the House details of how many people are likely to be affected or how substantial the pay increase would have to be before they were adversely affected as a result of the Inland Revenue procedure.

I hope that the Minister agrees that the fact that there is Inland Revenue involvement at this stage arises directly from the privatisation procedures. There is, indeed, detriment to an indeterminate number of people arising directly from the orders.

11.29 pm
Ms Glenda Jackson (Hampstead and Highgate)

I take great pride in being sponsored by a rail union—the Associated Society of Locomotive Engineers and Firemen. I must tell the Minister that the members and pensioners in that union are not experiencing the peace of mind to which he referred in the final sentence of his opening remarks. I intend to ask the Minister questions that have been asked by that membership. Other questions have been touched on by my hon. Friends.

I have found the debate which emanated from Conservative Members and from the Minister's opening remarks almost unbelievable. It was left to my hon. Friend the Member for Nottingham, East (Mr. Heppell) to point out that the British Rail pension scheme was universally acknowledged to be one of the best and best managed schemes in this country until the Government decided to destroy the railway industry by privatising and thought that there might be a strong possibility of getting their hands on £4 billion of surpluses.

I have also found remarkable, in remarks emanating from the Conservative Benches, the presumption that the BR pension scheme somehow belonged to the Government. It was my understanding, and it was certainly the understanding of members of that scheme, that it belonged to the membership. The gloss that the Government have attempted to put on the orders—as though they have, in their infinite wisdom and charity, decided to divine and define a pension scheme that would be of benefit to British Rail pensioners—is outrageous. Eighteen months ago, they deliberately set about trying to destroy that pension scheme. The outcry that was created in the country by those actions, by amendments that they were forced to table, and by the doughty fight put up by Opposition Members in Committee, forced the Government to retract from their initial desire to destroy the pension scheme and to transfer £4 billion, as we perceived, into the Treasury.

Pensioners are still disturbed and they have every right to be disturbed. My hon. Friends have described what seemed to me outrageous behaviour on the part of the Minister, scurrying around attempting to obtain agreements. Pretensions are still being presented in the House that some type of agreement has been reached by the trustees of the scheme when, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, there has been no such meeting. There are still grave worries and we are not scaremongering, even though that is the only cry that Conservative Members ever put to us; we are not creating fear among pensioners.

It is disgraceful that pensioners of the British Rail pension scheme, who have dedicated their lives to an industry and now have to watch it being destroyed, should be presented by Conservative Members as though they had not the brains, the intelligence, the character or the ability to understand what the Government are trying to do. The presentation of those dedicated, highly intelligent and mature people as a will-o'-the-wisp of some kind of party-political shenanigan is proof, if proof were needed, of the basic contempt of Conservative Members for any type of industrial work force.

I have to say to the Minister and to Conservative Members that I believe that worries will grow in future if they do not speedily answer the precise questions that I and my hon. Friends are asking. I intend to ask a couple of precise questions in conclusion, as speedily as possible. If the Government have the idea that there can be any kind of way forward for the scheme and what is left of the national rail industry without direct consultation with the members of that pension scheme, and with the trade unions which are also members of that scheme, as a priority—because obviously there will be changes along the way—the Government can justifiably look forward to even stormier months ahead.

In conclusion, I should like the Minister to answer two direct questions from the union by which I have the honour to be sponsored. They are about the pensioners section. My hon. Friend the Member for Streatham (Mr. Hill) referred to the first one—that the society is anxious that payments under the solvency guarantees should be a first charge against future surpluses. ASLEF believes that that is contrary to the intention behind the 60–40 division of surpluses written into the memorandum of understanding. In the event of large deficiencies arising, it could be many years before any surpluses were available for the benefit of members, if at all. I should be grateful if the Minister would give a direct reply to that question.

The other point is rule 16 on winding up the section. Rules 16A and 16B give grave cause for concern as they give the Secretary of State all powers, duties and discretion to wind up the section at any time.

Those are the two particular questions that I have to ask. If my hon. Friends had not asked other questions, I would have asked those questions too. I trust that the Minister will not labour under a delusion that the concerns have been answered satisfactorily. The hon. Member for Eltham (Mr. Bottomley) used the word "should" many times. He said what members of the British Rail pension scheme should feel. It is not his right or his privilege to tell them what they should feel. They know, and they would like direct answers to genuine concerns.

Mr. Peter Bottomley

Will the hon. Lady give way?

Ms Jackson


11.35 pm
Mr. Wilson

Mr. Deputy Speaker, follow that outline. With the leave of the House, I shall reply to the debate.

The Opposition have had two purposes in the debate. The first was to remove any misapprehension that it was some sort of technical debate—a mere mechanistic process to sort out a few little local difficulties round the edges. It was no such thing. There are still a great many questions to be answered and I and my hon. Friends have signposted them. I shall leave the Minister as much time as possible to answer them, but I appreciate that he will not answer them all and I look to him for an undertaking that he will deal with what he has acknowledged to be complex questions. I hope that he will write to the hon. Members who have raised them and try to give us some clarification before another barrel-load of amendments turn up in the Lords in a week's or a month's time.

Secondly, we make no apology for setting the debate in the wider context. The measure need not arise. It arises only as a by-product of what the Government are doing to the railways in general. Their measures are unwanted and have little public and very little political support. Without that fundamental interference in the workings of the railways, there would be no need to break up the railways pension fund and—

Mr. Bayley

Before my hon. Friend sits down, although I know that time is short, will he reply to one of the points made by the hon. Member for Eltham (Mr. Bottomley), who seemed to suggest to the House that there had been some bipartisan defence of the pensioners' rights? Will my hon. Friend confirm that in the Standing Committee which considered the Railways Bill we spent more time debating pensions than any other matter and that in not one of the Divisions did a Conservative member of the Committee vote with our party to support pensioners? Indeed, on many of those occasions the Liberal party did not vote with us either.

Mr. Wilson

I shall come to the hon. Member for Eltham (Mr. Bottomley) in a moment. Let me first finish the sentence. We make it absolutely clear that none of this would arise if it were not for the generality of what the Government are doing to the railways. What they are doing is unwanted. We regard it as despicable that the pensioners' worries and fears to which the Government's manoeuvre has given rise should be a by-product of that exercise.

I now come briefly to the hon. Member for Eltham. It is difficult to imagine a degree of brevity that is not over-generous. In a debate on the serious matter of the future of pensioners, their fears and concerns, their well-being, security and so on, the only Back-Bench speech from the entire Conservative party was an incoherent ramble in which the only interest of the hon. Member for Eltham seemed to be in circumventing your ruling, Mr. Deputy Speaker, so as to get on to subjects which were extraneous to the debate. It speaks volumes about the quality of intellect on the Benches behind the Minister, never mind what is on the Front Bench, that that was the best that could be put forward in a debate of this nature. Not one attempt was made at a rational defence or justification of what had been done.

What my hon. Friend the Member for York (Mr. Bayley) says is true. In the Standing Committee, pensions matters were dealt with at inordinate length. All the probing was done. All the objections from pensioners flooded in. As my colleagues who were members of that Committee and the Minister will remember, the only attempt by a Conservative member of the Committee to exert any pressure on the Government came from the late Stephen Milligan, the then hon. Member for Eastleigh. Although he did not vote for any of the amendments, he at least made an effort because he had a large constituency interest in that matter.

If the record of this debate is read nowhere else, by heaven it should be read in Eastleigh because of the cavalier way in which the Government and the Minister have been prepared to treat the interests of railway pensioners. The fact that we have had this sort of debate at this time of night, in which not one Tory Back Bencher has been prepared to defend what is being done—and the fact that the railway pensioners' interests are being treated as a by-product and side-effect of the other legislation—will have been noted in Eastleigh. It will continue to be noted there, and in every other community in Britain where there are railway pensioners—and a hell of a lot of constituencies are covered by that term.

11.41 pm
Mr. Freeman

I, too, pay tribute to what Stephen Milligan achieved in his brief time in the House, and to the distinguished contributions that he made to the debate on the Railways Bill. I look forward to a Conservative Member being returned at the Eastleigh by-election.

The hon. Member for Cunninghame, North (Mr. Wilson) spoke for 19 minutes, and failed to adduce a single argument against the orders. There is no point of disagreement. Has the hon. Gentleman got one? [Interruption.] No, the hon. Gentleman has not raised a single point of disagreement between the Government and the trustees.

I say to the hon. Member for Hampstead and Highgate (Ms Jackson) that I take exception to her remark that I had contempt for the industrial work force. I do take exception to that.

Ms Glenda Jackson

Will the Minister give way?

Mr. Freeman

No, I will not give way to the hon. Lady.

For the past six months, the Government have negotiated in good faith with the trustees and with the trade unions, and we have reached agreement.

The hon. Member for Cunninghame, North has left me four minutes to answer nine points. I shall deal with them, and there is no need for me to write to hon. Members because the answers are brief and clear. I made it plain during the proceedings in Committee that we were not to extend the indefeasible right to new entrants to the industry, and I made the arguments at great length.

We will amend clause 8(c) to mirror our agreement on the seamless transfer of benefits. We will also deal with clauses 13, 14 and 16, as I made plain in my opening remarks.

The hon. Member for Hampstead and Highgate asked about the solvency guarantee. Let me make it plain that the Government will not take out from the pension fund a single penny piece. Where the Government honour the solvency guarantee, those payments will go to support our commitment that pensions should be index linked.

Let us not forget that railwaymen and women have an excellent pension scheme. Not only do they have their pensions index linked; they have the scheme's solvency guaranteed from the Government. They also have—as they have had for many years—the right to 40 per cent. of any surpluses. That is an excellent pension scheme.

I repeat what I said at the outset about the solvency guarantee payments which go into the pension fund. No solvency guarantee payment will ever be repatriated to the Government while the fund is in existence. Any payments back would stay as a special reserve for the benefit of all pensioners.

We have had a number of speeches from members of the RMT, including the hon. Members for Crewe and Nantwich (Mrs. Dunwoody), for Streatham (Mr. Hill) and for Nottingham, East (Mr. Heppell). I must say that they were unfair in their descriptions of the negotiations and discussions that we had with the RMT. The RMT is not a trustee of the pension fund, but the Government have gone out of their way to deal with the unions with utmost respect. I have described the several rounds of meetings which we have had with the RMT.

Which detailed points remain unanswered with regard to the RMT? There are no outstanding issues. I explained clearly at the outset of the debate that, on 5 May, the trustees had met—including representatives of three unions—and had agreed on all the points which were negotiated until then, with one exception: the treatment of deficits and surpluses. What happened? The Government accepted the compromise proposed by the trustees. Therefore, so far as we are concerned, all the points raised by the trustees and the unions have been dealt with. If points of drafting detail are outstanding, I have given the House a commitment that when we deal with the rules —the memorandum and the articles of association—in detail, and when we lay further orders, we will certainly pick them up.

I do not accept the argument of the hon. Member for Swansea, East (Mr. Anderson) that we have not made time available. We have been reasonable, not unreasonable, and have reached agreement after months of discussion.

I pay tribute not only to the trustees and officers of the trustees, but also to the unions for their constructive contribution, which has been notably lacking tonight.

On the point made by the hon. Member for Hampstead and Highgate about rules 16A and 16B, the Government and the Secretary of State have no power to wind up the closed section of the pension fund for a period lasting until 2013—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Order [19 May].

Question put:

The House divided: Ayes 213, Noes 170.

Division No. 256] [11.45 pm
Ainsworth, Peter (East Surrey) Blackburn, Dr John G.
Alexander, Richard Bonsor, Sir Nicholas
Amess, David Booth, Hartley
Arbuthnot, James Boswell, Tim
Arnold, Jacques (Gravesham) Bottomley, Peter (Eltham)
Arnold, Sir Thomas (Hazel Grv) Bowden, Andrew
Ashby, David Bowis, John
Atkins, Robert Brandreth, Gyles
Atkinson, Peter (Hexham) Brazier, Julian
Baker, Rt Hon K. (Mole Valley) Bright, Graham
Baker, Nicholas (Dorset North) Browning, Mrs. Angela
Baldry, Tony Burns, Simon
Banks, Matthew (Southport) Carlisle, Kenneth (Lincoln)
Bellingham, Henry Carrington, Matthew
Biffen, Rt Hon John Carttiss, Michael
Cash, William Kirkhope, Timothy
Clappison, James Knapman, Roger
Clifton-Brown, Geoffrey Knight, Mrs Angela (Erewash)
Coe, Sebastian Knight, Greg (Derby N)
Conway, Derek Knox, Sir David
Coombs, Anthony (Wyre For'st) Kynoch, George (Kincardine)
Coombs, Simon (Swindon) Lait, Mrs Jacqui
Cope, Rt Hon Sir John Lang, Rt Hon Ian
Couchman, James Legg, Barry
Cran, James Leigh, Edward
Davies, Quentin (Stamford) Lennox-Boyd, Mark
Davis, David (Boothferry) Lidington, David
Day, Stephen Lightbown, David
Devlin, Tim Lilley, Rt Hon Peter
Dicks, Terry Lloyd, Rt Hon Peter (Fareham)
Douglas-Hamilton, Lord James Lord, Michael
Dover, Den Luff, Peter
Duncan, Alan Lyell, Rt Hon Sir Nicholas
Duncan-Smith, Iain MacGregor, Rt Hon John
Dunn, Bob MacKay, Andrew
Durant, Sir Anthony Maclean, David
Dykes, Hugh Malone, Gerald
Elletson, Harold Mans, Keith
Emery, Rt Hon Sir Peter Marlow, Tony
Evans, Nigel (Ribble Valley) Marshall, John (Hendon S)
Evans, Roger (Monmouth) Marshall, Sir Michael (Arundel)
Evennett, David Martin, David (Portsmouth S)
Faber, David Mates, Michael
Fabricant, Michael Mawhinney, Rt Hon Dr Brian
Fenner, Dame Peggy Merchant, Piers
Fishburn, Dudley Mills, Iain
Forman, Nigel Mitchell, Andrew (Gedling)
Forsyth, Michael (Stirling) Mitchell, Sir David (Hants NW)
Forth, Eric Moate, Sir Roger
Fox, Dr Liam (Woodspring) Moss, Malcolm
Freeman, Rt Hon Roger Nelson, Anthony
French, Douglas Neubert, Sir Michael
Fry, Sir Peter Nicholls, Patrick
Gale, Roger Nicholson, David (Taunton)
Gallie, Phil Nicholson, Emma (Devon West)
Gardiner, Sir George Norris, Steve
Garnier, Edward Onslow, Rt Hon Sir Cranley
Gillan, Cheryl Oppenheim, Phillip
Goodson-Wickes, Dr Charles Ottaway, Richard
Gorst, John Paice, James
Greenway, Harry (Ealing N) Patnick, Irvine
Greenway, John (Ryedale) Pattie, Rt Hon Sir Geoffrey
Griffiths, Peter (Portsmouth, N) Pawsey, James
Grylls, Sir Michael Peacock, Mrs Elizabeth
Gummer, Rt Hon John Selwyn Porter, David (Waveney)
Hague, William Rathbone, Tim
Hamilton, Rt Hon Sir Archie Redwood, Rt Hon John
Hamilton, Neil (Tatton) Riddick, Graham
Hanley, Jeremy Robathan, Andrew
Hargreaves, Andrew Robertson, Raymond (Ab'd'n S)
Harris, David Robinson, Mark (Somerton)
Haselhurst, Alan Ryder, Rt Hon Richard
Hawkins, Nick Sackville, Tom
Hawksley, Warren Scott, Rt Hon Nicholas
Hayes, Jerry Shaw, David (Dover)
Heald, Oliver Sims, Roger
Heathcoat-Amory, David Smith, Sir Dudley (Warwick)
Hendry, Charles Speed, Sir Keith
Higgins, Rt Hon Sir Terence L. Spencer, Sir Derek
Hill, James (Southampton Test) Spicer, Michael (S Worcs)
Horam, John Spink, Dr Robert
Howard, Rt Hon Michael Spring, Richard
Howarth, Alan (Strat'rd-on-A) Sproat, Iain
Howell, Sir Ralph (N Norfolk) Squire, Robin (Hornchurch)
Hughes Robert G. (Harrow W) Stanley, Rt Hon Sir John
Hunt, Sir John (Ravensbourne) Stephen, Michael
Jack, Michael Stewart, Allan
Jackson, Robert (Wantage) Streeter, Gary
Jenkin, Bernard Sweeney, Walter
Jessel, Toby Sykes, John
Jones, Gwilym (Cardiff N) Taylor, Ian (Esher)
Jones, Robert B. (W Hertfdshr) Taylor, John M. (Solihull)
Jopling, Rt Hon Michael Temple-Morris, Peter
Key, Robert Thomason, Roy
King, Rt Hon Tom Thompson, Patrick (Norwich N)
Thornton, Sir Malcolm Whitney, Ray
Thurnham, Peter Whittingdale, John
Townend, John (Bridlington) Widdecombe, Ann
Townsend, Cyril D. (Bexl'yh'th) Wiggin, Sir Jerry
Tredinnick, David Wilkinson, John
Trend, Michael Winterton, Nicholas (Macc'f'ld)
Twinn, Dr Ian Wolfson, Mark
Viggers, Peter Wood, Timothy
Walker, Bill (N Tayside) Young, Rt Hon Sir George
Waller, Gary
Ward, John Tellers for the Ayes:
Wardle, Charles (Bexhill) Mr. Sydney Chapman and
Waterson, Nigel Mr. Bowen Wells.
Watts, John
Adams, Mrs Irene Graham, Thomas
Ainsworth, Robert (Cov'try NE) Griffiths, Nigel (Edinburgh S)
Anderson, Donald (Swansea E) Griffiths, Win (Bridgend)
Anderson, Ms Janet (Ros'dale) Grocott, Bruce
Ashton, Joe Gunnell, John
Austin-Walker, John Hall, Mike
Banks, Tony (Newham NW) Hanson, David
Barnes, Harry Hardy, Peter
Battle, John Harman, Ms Harriet
Bayley, Hugh Harvey, Nick
Benton, Joe Heppell, John
Betts, Clive Hinchliffe, David
Boyes, Roland Home Robertson, John
Bradley, Keith Hood, Jimmy
Bray, Dr Jeremy Hoon, Geoffrey
Brown, Gordon (Dunfermline E) Howarth, George (Knowsley N)
Burden, Richard Howells, Dr. Kim (Pontypridd)
Byers, Stephen Hughes, Kevin (Doncaster N)
Callaghan, Jim Hughes, Robert (Aberdeen N)
Campbell, Mrs Anne (C'bridge) Hutton, John
Campbell, Menzies (Fife NE) Illsley, Eric
Campbell, Ronnie (Blyth V) Ingram, Adam
Campbell-Savours, D. N. Jackson, Glenda (H'stead)
Cann, Jamie Jackson, Helen (Shef'ld, H)
Chisholm, Malcolm Jones, Barry (Alyn and D'side)
Clapham, Michael Jones, Ieuan Wyn (Ynys Môn)
Clarke, Eric (Midlothian) Jones, Lynne (B'ham S O)
Clarke, Tom (Monklands W) Jones, Martyn (Clwyd, SW)
Clelland, David Jowell, Tessa
Clwyd, Mrs Ann Kennedy, Jane (Lpool Brdgn)
Coffey, Ann Khabra, Piara S.
Cohen, Harry Kilfoyle, Peter
Cook, Frank (Stockton N) Lewis, Terry
Cook, Robin (Livingston) Livingstone, Ken
Corston, Ms Jean Lloyd, Tony (Stretford)
Cousins, Jim Llwyd, Elfyn
Cunliffe, Lawrence Loyden, Eddie
Cunningham, Jim (Covy SE) Lynne, Ms Liz
Dafis, Cynog McAllion, John
Dalyell, Tam McAvoy, Thomas
Darling, Alistair McCartney, Ian
Davidson, Ian Macdonald, Calum
Davis, Terry (B'ham, H'dge H'I) McFall, John
Dewar, Donald McLeish, Henry
Dixon, Don McMaster, Gordon
Dobson, Frank McWilliam, John
Donohoe, Brian H. Maddock, Mrs Diana
Dowd, Jim Mahon, Alice
Dunnachie, Jimmy Mandelson, Peter
Dunwoody, Mrs Gwyneth Marek, Dr John
Eagle, Ms Angela Marshall, David (Shettleston)
Enright, Derek Martin, Michael J. (Springburn)
Etherington, Bill Martlew, Eric
Field, Frank (Birkenhead) Meale, Alan
Foster, Rt Hon Derek Michael, Alun
Foster, Don (Bath) Michie, Bill (Sheffield Heeley)
Foulkes, George Michie, Mrs Ray (Argyll Bute)
Fyfe, Maria Milburn, Alan
Gapes, Mike Miller, Andrew
George, Bruce Moonie, Dr Lewis
Gerrard, Neil Morgan, Rhodri
Godman, Dr Norman A. Mowlam, Marjorie
Godsiff, Roger Mudie, George
Golding, Mrs Llin Mullin, Chris
O'Brien, Michael (N W'kshire) Smith, C. (Isl'ton S & F'sbury)
O'Brien, William (Normanton) Smith, Llew (Blaenau Gwent)
O'Neill, Martin Snape, Peter
Patchett, Terry Soley, Clive
Pickthall, Colin Spearing, Nigel
Pike, Peter L. Spellar, John
Powell, Ray (Ogmore) Steinberg, Gerry
Prentice, Ms Bridget (Lew'm E) Stevenson, George
Prentice, Gordon (Pendle) Taylor, Mrs Ann (Dewsbury)
Prescott, John Turner, Dennis
Primarolo, Dawn Wareing, Robert N
Purchase, Ken Watson, Mike
Quin, Ms Joyce Williams, Rt Hon Alan (Sw'n W)
Raynsford, Nick Williams, Alan W (Carmarthen)
Reid, Dr John Wilson, Brian
Rendel, David Wise, Audrey
Roche, Mrs. Barbara Worthington, Tony
Ross, Ernie (Dundee W) Wray, Jimmy
Rowlands, Ted Young, David (Bolton SE)
Short, Clare
Simpson, Alan Tellers for the Noes:
Skinner, Dennis Mr. Jon Owen Jones and
Smith, Andrew (Oxford E) Mr. Keith Hill.

Question accordingly agreed to.

Resolved, That the draft Railways Pension Scheme Order 1994, which was laid before this House on 10th May, be approved.

Resolved, That the draft Railway Pensions (Protection and Designation of Schemes) Order 1994, which was laid before this House on 10th May, be approved.—[Mr. Lightbown.]