HC Deb 01 July 1996 vol 280 cc553-63

'. Schedule (Transfer schemes relating to the BBC transmission network: taxation provisions) (which makes provision about tax in connection with transfer schemes) shall have effect.'.—[Mr. Sproat.]

Brought up, and read the First time.

The Minister of State, Department of National Heritage (Mr. Iain Sproat)

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

Madam Speaker

With this, it will be convenient to discuss the following: Government new clause 31—Transfer schemes: successor companies.

New clause 17—BBC pensions— '—(1) The trustees of the BBC Pension Scheme shall refer to the Secretary of State, before such date as he may specify, the division and distribution of the relevant assets which is to be made for the purpose of making a transfer payment to a pension scheme established for their employees by a person or persons specified in a scheme under section 110 of the Act (the specified person): any such division and distribution of those assets and liabilities shall not be made by the trustees except—

  1. (a) with the consent of the Secretary of State, or
  2. (b) in accordance with an order made by the Secretary of State under subsection (2).
(2) Where any such division and distribution is referred to the Secretary of State under subsection (1), he may by order direct that the relevant assets shall be divided and distributed by the trustees in such a manner, and such a time, as is specified in the order; and any provision of—
  1. (a) the pension scheme established by the specified person referred to in subsection (1, or
  2. (b)any enactment relating to occupational pension schemes, including any enactment relating to transfer values,
shall not have effect to the extent that it is inconsistent with the division and distribution of those assets in accordance with any such order. (3) When making an order under subsection (2) the Secretary of State shall have regard to the interests of all classes of persons who are for the time being beneficiaries under the scheme referred to in subsection (1). (4) In this clause, "the relevant assets" means the assets held by or on behalf of the trustees and "the trustees" means the trustees of the Scheme referred to in subsection (1). (5) An order under subsection (2) shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.

Government new schedule 2—Transfer schemes relating to the BBC transmission network: taxation provisions.

Government new schedule 3—Transfer schemes' relating to the BBC transmission network: successor companies.

Amendment No. 51, in clause 125, page 104, line 36, at end insert— '(1A) Any such scheme shall make explicit provision requiring the maintaining during the 25 years following the transfer of transmission services in less populated areas of at least as good a quality as obtained at the time of the transfer. (1B) In subsection (1A) "less populated areas" means any counties with a population density of below half the average population density of the United Kingdom as a whole.'.

Amendment No. 255, in clause 125, page 104, line 36, at end insert:— '(1A) Any such scheme shall make explicit provision to ensure equality of access to transmission services in all areas of the United Kingdom, irrespective of population density.'.

Government amendments Nos. 10 and 141.

Amendment No. 52, in clause 126, page 105, line 16, at end insert— '(3A) The Secretary of State shall not approve any transfer scheme which does not make explicit provision for the maintaining during the 25 years following the transfer of transmission services in counties with below half the average population density of the United Kingdom as a whole of at least as good a quality as obtained at the time of the transfer.'.

Amendment No. 254, in clause 126, page 105, line 16, at end insert— '(3a) the Secretary of State shall withhold his consent for any scheme which does not provide for the enhancement and subsequent maintaining of transmission standards during the 25 years following the transfer in areas whose population density is below half the average density for the United Kingdom as a whole.'.

Government amendments Nos. 139, 140 and 164.

Mr. Sproat

There will be a number of occasions during our deliberations today when Government new clauses and Opposition amendments have quite properly been grouped together. For the convenience of the House, I propose to speak first to the Government new clauses and amendments and then to listen to what others have to say about theirs. I will then reply afterwards—

Dr. John Cunningham (Copeland)

But briefly.

Mr. Sproat

I shall do my best. I am glad that we can start by agreeing.

The amendments fulfil the commitment that I made in Committee to table an amendment on Report to achieve broad tax neutrality in the sale of the BBC's transmission assets. Similar arrangements have been made in the past in relation to Government privatisations. While we have agreed that the proceeds arising from the sale of licence fee-funded assets should be available to the BBC rather than returned to the Exchequer, we feel that it would be wrong effectively to tax the licence fee payer in relation to the sale of these transmission assets.

We have agreed with the BBC that the proceeds of sale will be invested in the digital technology that will be necessary for the corporation to maintain its place as the United Kingdom's main public service broadcaster.

The purpose of new clause 31 and new schedule 3 is to clarify certain technical and accounting aspects of the sale of the BBC's transmission services and to provide the BBC with greater flexibility in its structuring for sale. That will enable the BBC to achieve maximum value for the assets.

The purpose of amendments Nos. 139 and 141 is to make it clear that the transfer scheme relating to the BBC's transmission assets can take place for a consideration, which can be shares or securities. The amendments simply provide for flexibility for the structuring of the sale so that the BBC is best able to achieve maximum value from the arrangements.

Amendment No. 10 concerns the commitment that I gave in Committee to table an amendment, for the avoidance of doubt, so that pension rights and liabilities are capable of being transferred by the BBC in accordance with the transfer scheme established under clause 125. The amendment would add pension rights and liabilities to the list of property to which such a scheme may relate at paragraph 3 of schedule 5. Therefore, pension rights will be brought explicitly within the scope of the transfer scheme. Under clause 126, the Secretary of State's approval is needed for any transfer scheme made by the BBC which will provide an additional safeguard for BBC transmission staff.

Dr. Lewis Moonie (Kirkcaldy)

New clause 17 deals with the transfer of the pension rights of employees of the BBC transmission service. It has been grouped with the range of issues to which the Minister has just referred. I have no objection to any of his proposals and I do not intend to debate them any further.

The Labour party seeks to secure fair treatment for the 850 employees who will be transferred into the private sector as a result of the proposed sale, should it go ahead.

It appears that a regular feature of privatisation legislation is a detailed debate on pensions. Indeed, most privatisation legislation contains a sizeable schedule relating to pensions, which is carefully scrutinised and often improved—as was the case in relation to the other two privatisation Bills that I have examined in Committee: one relating to the British Technology Group in 1991–92 and the other to AEA Technology in 1994–95.

The Bill, as it stands, contains nothing on pensions for those employees, and our new clause attempts to remedy that situation. The issue of pensions for the BBC's employees was debated in another place and in Committee. On both occasions, Ministers promised that amendments would be brought forward to safeguard the pension rights of BBC employees when they transferred to new companies.

The Government's response to the concerns that were raised in the other place and in Committee has been to table amendment 10, which adds the words: rights and liabilities of the BBC under any agreement or arrangement for the payment of pensions, allowances and gratuities,". to an existing section of the Bill on transfer schemes. The problem is that the existing section of the Bill—paragraph 3 of schedule 5 on page 143—is only about rights and liabilities that shall be capable of being transferred and not about those that it will be compulsory to transfer. In Committee, the Minister said: the Government will introduce an amendment on Report for the avoidance of doubt along the lines of what is provided for the Broadcasting Standards Council in schedule 4(4)."—[Official Report, Standing Committee D, 11 June 1996; c. 638.] However, schedule 4(4) is a much more positive statement than amendment No. 10. It includes a statement to the effect that service before the transfer date will count as the equivalent after the transfer date. The Government are not avoiding doubt by introducing this amendment—they are increasing doubt in the minds of the BBC's employees.

The Labour party's new clause 17 is much the same as that which was tabled in Committee, and it was suggested to us by the Broadcasting, Entertainment and Cinematographic Trades Union, which represents many staff in BBC transmission. The Government have claimed that the new clause is defective in that it seeks to match the provisions contained in the sale of the Independent Broadcasting Authority.

However, the important part of the new clause is the granting of powers to the Secretary of State to intervene in the division of assets. The Secretary of State should have that power and should be prepared to use it so that the staff of BBC transmission get a fair deal. It should not be left to the BBC to decide what is correct or what is best for its employees. However good its intentions may be, it cannot guarantee it—only the Minister can.

The employees in this case are entitled to a fair deal, and they are not getting a fair deal from the Government's present proposals. I trust that, on reflection, the Minister will see fit to accept our new clause. It does not instruct him to do anything other than to oversee the transfer of funds—something that has been done in every previous case.

Mr. Cynog Dafis (Ceredigion and Pembroke, North)

We have heard about protecting the interests of the BBC and of pensioners—and quite rightly so. My amendments Nos. 51 and 52 and those tabled by the hon. Member for Moray (Mrs. Ewing) are about protecting the interests of viewers—particularly those in areas of low population density, including much of Scotland and of Wales.

It seems peculiar that so few conditions are attached to the legislation in relation to privatising the BBC transmission network. As I understand it, the BBC will draw up a scheme that will be approved by the Secretary of State for National Heritage. I assume that any approval of that sort would depend on close liaison with the Secretaries of State for Wales and for Scotland. However, I do not think that that process is enough. When the railways were privatised, there were detailed provisions to protect the services and the users of those services. Those provisions were in primary, and not simply secondary, legislation. The railways privatisation included a minimum service requirement and the privatisations of British Telecom, electricity and gas followed the same pattern.

I ask the Minister—it is not a rhetorical question; it requires an answer—what will stop a privatised transmission company deciding to run down the network in less populated areas on the grounds that they are not commercially viable or attractive? What guarantees can the Minister offer that that will not occur? We need guarantees to the effect that television reception will be provided as of right and that there will be no marginalisation or disadvantaging of peripheral regions or regions of low population density.

Amendments Nos. 51 and 52, which I have tabled, introduce minimal requirements. I look forward to hearing not only how those requirements can be guaranteed but how provision can be made for new developments. How will the privatised transmission system ensure that that occurs?

3.45 pm
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

I apologise for interrupting the hon. Gentleman, but I remind him that any scheme devised under the Bill will not be subject to formal approval or amendment by the House.

Mr. Dafis

That is correct. Measures of that sort should receive the assent of the House and I assume that that provision should be in the legislation. They should be part of the process of placing orders or regulations, which would bring decisions back to the House. The legislation gives serious cause for concern. We shall return to the question of transmission in a later debate, but I ask the Minister to consider my questions carefully now.

Mr. Andrew Miller (Ellesmere Port and Neston)

In Committee there was a useful exchange on the subject of pensions. At column 646 of the Hansard report of 11 June, the Minister agreed that accrued benefits should not be the sole criterion and that accrued surpluses are important. He said that he would consider the points that were raised and see whether they could be embodied in legislation at Report stage. I am disappointed with Government amendment No. 10 because it fails to do that. That is regrettable, as there was constructive debate about pensions in Committee.

There is no doubt that people face great difficulties when their pension arrangements are affected by changes of ownership. Many examples of that kind have been raised in the Chamber. It seems quite extraordinary that, when we have the opportunity to protect those people's interests, the House does not use its full powers so to do. That is why I think that hon. Members should consider carefully new clause 17 moved by my hon. Friend the Member for Kirkcaldy (Dr. Moonie).

Several factors must be taken into account when considering a change of ownership such as this. If it were an ordinary private sector transaction, there would be commercial considerations on both sides which I suspect that the Minister would argue would put it outside the scope of the House. No doubt he would argue that matters of commercial consideration were involved. In this case, the matters are not just of commercial consideration but are of relevance to viewers and listeners, to the employees and to the House. New clause 17 would enable the Minister to exercise common sense and control over the debate in the interests of all those parties. At the top of the list for consideration should be those people who have paid into the scheme—as we would expect if our pension fund were being discussed. The clause, as drafted at the moment, fails to take into account the interests of the employees and I urge the Minister to think carefully about the alternative in new clause 17.

In many other cases, the Government have exercised control in a variety of ways over the disposal of pension funds that have come under their control. One approach was adopted for the sale of Amersham International and, in subsequent privatisations, a different style was adopted. I am not arguing for one version or another: I am simply saying that the adoption of new clause 17 would give the Secretary of State the power to consider all the issues from the point of view of the fund members and to exercise that control in their interests, especially in relation to any surpluses. We had this exchange in Committee, and it is not unreasonable to argue that surpluses should be divided in the interests of those people who have contributed to the fund. The Minister accepted that point in Committee, but the Bill as drafted would not give him the appropriate power. I would be grateful if the Minister would respond to that point. He may be able to convince the House that the Bill will provide that power, but I believe that it will not.

Mrs. Margaret Ewing (Moray)

I endorse many of the points that have been made by Opposition Members, but I wish to speak specifically about amendments Nos. 254 and 255, which are similar in content and intent to those tabled by my hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Dafis).

I wish to mention especially the Glenlivet and Marypark areas of my constituency. People may know those names through the wonderful product that conies from Glenlivet and it is my pleasure to represent such a wonderful area. I have tabled amendments Nos. 254 and 255 so that I can remind the Government that the 200 people who live in that community are denied equality of access to television. Most houses in the area—this fact may surprise many people—get only fuzzy reception of BBC1 and Grampian, and Channel 4 and BBC2 are blacked out. I accept that communications in that area are difficult, but it seems ludicrous that more consideration and encouragement has not been given over the years to ensure that our people—in an area that provides so much money for the Treasury—have equal access to television channels.

The lack of reception affects everyone in the community. It affects the elderly population, some of whom are housebound, and it affects the young. Indeed, the local head teacher at Inveravon primary school has to ensure that educational tapes are made elsewhere for him to show to the young children in his care. This is a strong moral argument and I wish to hear what the Minister has to say on it. I have raised the problem with the Department of National Heritage and others over several years. The community council has been in touch with the Department and was appalled by the response that the people should resolve their problems by plugging into cable, which would entail running 80 miles of wire up to the nearest outlet in Aberdeen. The people regard that as ludicrous.

The Department's response to me of 21 March said: I was sorry to hear about the reception problems that some of your constituents have been having. That was hardly a positive response. It went on to say that, because of the 200 people involved and the nature of the landscape, it … appears unlikely that a further transmitter will be built. It then sent advice in the context of self-help television. Our people should not be asked to deal with the problem. They have a national right to have their television reception dealt with.

The only positive response that I received was from the Independent Television Commission. Mr. Brian Marjoribanks, the officer for Scotland, said in his letter of 7 March: should the Government announce an extension to the relay building programme beyond 1996, we will undertake to commission National Transcommunications Limited to conduct a new survey in the Glenlivet area in the hope that a solution may be found.

Will the Government extend that relay building programme or can the people of Glenlivet, Marypark and Inveravon expect to be in the same position many years hence?

Mr. Sproat

In tabling the new clause, hon. Members have highlighted concerns about the pension rights of the BBC transmission staff following the privatisation of the BBC's transmission services. Similar amendments were tabled on Third Reading in another place and in Committee. My noble Friend Lord Inglewood agreed to consider the matter further. I, in turn, undertook to introduce an amendment on Report to make it clear that the transfer scheme for which the Bill provides could include pensions arrangements. I have done so.

Let me explain briefly why the amendment is inappropriate. It seeks to apply to the sale of the BBC transmission assets provisions drawn from the 1990 Act in relation to the sale of the IBA transmission assets.

When the IBA's transmission network was sold, the whole of the IBA's business was divided up and the transmission network was sold by the Government.

The BBC's position is different. The BBC itself is handling the sale and the bulk of its business will continue. The BBC pension fund will remain in existence to meet its continuing liability to some 44,000 beneficiaries and potential beneficiaries. The two situations are therefore not analogous.

None the less, we recognise that pensions are of critical concern to the staff of BBC Transmission, which is why we have introduced the amendment to which I referred earlier. The precise arrangements will depend on the identity of the purchaser, but the BBC has agreed with the trustees of the BBC pension fund that, should employees wish to transfer their accrued benefits to an appropriate scheme operated by the purchaser of Transmission, the transferred value will be a full and fair valuation of their pension rights. The BBC has stated that it will use its best endeavours to have a buyer who operates a final salary scheme, as the BBC's is. It is right that the BBC should negotiate the arrangements with staff and their representatives, as it has with other such transfers of work. The BBC will offer independent financial advice to all those affected.

Mr. Miller

Will the Minister give way?

Mr. Sproat

I am about to discuss accrued surpluses. Does the hon. Gentleman wish to ask about something else?

Mr. Miller

Will the Minister confirm that he said that the transfer will include employees' pension rights? In that context, does he mean the benefits that they have accrued under the rules thus far, or their share of the pension fund?

Mr. Sproat

It means the former. We are talking about accrued benefits. If the scheme is a final salary scheme, the employees will get what they would have got if they had retired at the age at which they are moving to the new transmitter service.

We discussed accrued surpluses in Committee. If the hon. Member for Kirkcaldy (Dr. Moonie) looks at clause 126, he will see that it says that the Secretary of State has to approve any transfer scheme. I hope that that will give him the reassurance he seeks that the BBC cannot transfer the scheme without parliamentary approval. Clause 126 specifically states, for once in words that are understandable by someone who is not a lawyer, that the Secretary of State has to agree to the transfer. If she does not agree, the transfer cannot go ahead in its existing form.

4 pm

It is true that the hon. Member for Ellesmere Port and Neston (Mr. Miller) raised the matter of accrued surpluses in Committee. I said then and I repeat today that it is an important matter. I went back to my officials and we discussed whether it would be appropriate in this case to transfer accrued surpluses; the answer I received was that it would not be. As I have said, we agreed in Committee that accrued surpluses were an important consideration.

However, I now understand that the BBC scheme is a defined benefits scheme. Employees pay 4.5 per cent. of their salary for defined pension benefits, related to final salary; the BBC meets the rest of the cost.

Mr. Miller

indicated assent.

Mr. Sproat

I did not know when I began all this that the hon. Member for Ellesmere Port and Neston was something of an expert in these matters. Anyway, the BBC meets the rest of the cost. Any surplus or deficit is a BBC responsibility and it therefore remains with the main scheme. I hope that although the hon. Gentleman is clearly unlikely to agree with me, he will understand why we decided that it would not be proper for the 850-odd staff who were being transferred to the new organisation to get a share of the accrued surplus.

Mr. Clifford Forsythe (South Antrim)

I am trying to follow what the Minister is saying. Is he saying that the contributions made by employees would not be part of that surplus?

Mr. Sproat

I am saying three things. First, any employee who is transferred to the new undertaking will have the option of taking the accrued benefit to the new undertaking. Secondly, the employee will have the option of leaving the accrued benefit in the BBC scheme, knowing that it will be uprated by RPI every year up to a limit of 10 per cent. a year. Thirdly, the employee can transfer the accrued benefit to a private scheme. I was saying to the hon. Member for Ellesmere Port and Neston that it would not be appropriate to divide up any part of the accrued surplus and to hand that over.

Mr. Forsythe

Who will estimate the total value of the pension fund? Which actuaries will be involved? Will there be actuaries representing the BBC, will there be actuaries representing the new firm and will Government actuaries be involved in order to arrive at a satisfactory conclusion?

Mr. Sproat

That is a very fair question. The answer is that the BBC will take the advice of its actuaries; no doubt the new undertaking that purchases the transmission service will have its own actuaries. In addition, under clause 126, my right hon. Friend the Secretary of State has to approve the transfer of the scheme and she will agree to a transfer only if she is convinced by the Government actuaries that it is a fair way in which to do things.

Mr. Miller

Am I right in assuming, therefore, that if there was, say, a £1 million surplus attributable to the past contributions of the people transferred into the new company, the BBC could take a £1 million pension holiday? That would be much to the advantage of the licence payer, but clearly to the detriment of the 850 employees.

Mr. Sproat

What will happen is quite clear. I can see that I shall not convince the hon. Gentleman that it is not just clear but right. I believe that our proposal is right. I looked at the matter carefully after the hon. Gentleman's comments in Committee. The accrued surplus will remain with the BBC; it will remain for the pension fund that will service the 44,000 other BBC employees who will remain in it rather than for the 850. The 850 over 44,000 share will not be transferred because keeping a surplus is the responsibility of the BBC pension fund. The BBC provides the fund and it must maintain it for the benefit of the 44,000. However, I understand that under the proposed scheme, the three options that I set out to the hon. Member for South Antrim (Mr. Forsythe) will be available and the BBC will give every possible financial advice to those employees transferred as to which of the three options is best for them.

Amendments Nos. 51 and 52, tabled by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis), seek to ensure that the quality of transmission services in less populated areas will be maintained for 25 years following the privatisation of the BBC's transmission network. The hon. Gentleman's concern is understandable, but I hope to convince him—in this case, at least—that it is unnecessary.

Under the Broadcasting Act 1990 and the agreement between my right hon. Friend the Secretary of State and the BBC, the ITC and the BBC are responsible for establishing and maintaining the standards of quality, coverage and reliability of the four main terrestrial channels. That did not change when the IBA's transmission network was privatised in 1991 and it will not change with the privatisation of the BBC's transmission network.

As the hon. Gentleman will know from our previous discussions, the ITC and the BBC have achieved 99.4 per cent. coverage for their services in the United Kingdom and 98.3 per cent. in Wales. That impressive level of service will be maintained following privatisation.

The Government have already pledged that analogue transmissions will not be switched off until a roughly equivalent level of service is provided by digital terrestrial television. That will ensure that the interests of all viewers—including those in sparsely populated areas—are protected.

I hope that hon. Gentleman will be reassured that the privatisation of the BBC's transmission network will in no way disadvantage people in less populated areas of the country and withdraw his amendment.

I now turn to amendments Nos. 254 and 255, tabled by the hon. Member for Moray (Mrs. Ewing). Having had the honour to represent her part of the country, I well understand the strong feelings of people there. The amendments seek to ensure equality of access to transmission services for those living in less populated areas, following the privatisation of the BBC's transmission services. The amendments would provide for the quality of transmission services in such areas to be enhanced and then maintained for 25 years following privatisation.

Let me first reassure the hon. Lady and the House that the privatisation of the BBC's transmission network will in no way disadvantage people in less populated areas. I explained why a few moments ago in answer to hon. Member for Ceredigion and Pembroke, North. It is a long-standing principle of Government policy that broadcasters are not required to provide a television service to every potential viewer because of the cost and the technical difficulty of reaching small and scattered communities. That followed the recommendation of the Annan committee in 1977 that there should be no obligation on the broadcasting authorities to provide satisfactory coverage to communities of fewer than 500.

Mrs. Ewing

People in those areas are required to pay the same licence fees as everyone else, but they do not receive the same level of service. Could there be some adaptation in the light of that?

Mr. Sproat

Again, I know from personal experience that that irritates many people in those areas, but alas the television licence is no guarantee of the quality of reception; it simply gives permission to receive reception. I hope that some of the problems that the hon. Lady mentioned will be addressed and improved when we get digital television. In the meantime, I can say only that the Annan committee made that recommendation in 1977 and successive Labour Governments—for a few months, anyway—and Tory Governments have stuck to that principle.

The Government have pledged that analogue transmissions will not be switched off until a roughly equivalent level of service is provided by digital terrestrial television. That will ensure that the interests of all viewers—including those in sparsely populated areas—are protected, so I ask the hon. Lady to withdraw her amendment in light of that assurance.

Mr. Dafis

rose—

Madam Speaker

The hon. Gentleman has already spoken on this group of amendments, so I am afraid that I cannot allow him to do so again. I must put the Question.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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