§ Order for Third Reading read.
§ 7.5 pm
§ Mr. Eric Illsley (Barnsley, Central)
I beg to move, That the Bill be now read the Third time.
I repeat the declaration of interests that I made on Second Reading: I contribute to an insurance policy with the Abbey Life company, which is now wholly owned by Lloyds, and my wife contributes to a pension with the Target Life company, which has now also been taken over by that company. I shall try to make my comments as brief as possible, in view of the previous business of the House.
In December 1995, the TSB Group and Lloyds bank, two of the United Kingdom's oldest and best-known financial services groups, came together in a merger that provides their customers with the largest branch network of any United Kingdom high street banking group and a range of products to match. The promoters' principal intention is to transfer TSB bank customer accounts into Lloyds bank. The Bill will spare 7 million TSB customers the inconvenience of signing forms to effect the transfer.
On Second Reading, it was apparent that the main issue surrounding the Bill was one of pensions. In recent months, Lloyds has again corresponded with many hon. Members on pensions issues. With the blessing of the House, I therefore propose to devote my speech to the pensions issues that have been raised, or were raised on Second Reading and have been the subject of exchanges and meetings between hon. Members and the bank. I add, in passing, that the Bill was unamended when it left the Opposed Private Bill Committee.
I have two general points to make first in relation to the pension schemes. The TSB Group pension scheme is among the best in the United Kingdom in terms of the benefits packages that it provides, and it is in the top 10 per cent. of UK staff schemes. A comprehensive framework of statutory, regulatory and fiduciary protection for scheme members is in place, which accords with best practice among UK occupational pension schemes.
I cannot emphasise too strongly that the issue of pensions is in no way affected by the Bill. The Bill's promoters wish me to reassure the House again that the position of all their pension scheme members remains, and will remain, fully protected. The TSB Group pension scheme, which has been the subject of comment by the group calling itself the TSB Hill Samuel action group, provides one of the best packages in the country. In addition to all that, the promoters are unaware of any pensioners receiving benefits that do not properly reflect their legitimate contractual entitlement.
§ Mr. Edward Leigh (Gainsborough)
My constituent, David Ives, who is a senior former staff member of Hill Samuel, has alerted me to heart-rending stories of pensioners who are living on derisory pensions of as little as £1,000 a year. Naturally, that worries me. I wonder whether the hon. Gentleman can today give a commitment, on behalf of the companies, that pensioners 229 who receive such small pensions will be dealt with satisfactorily by way of regular payment, or at least a satisfactory one-off payment.
§ Mr. Illsley
I assure the hon. Gentleman that Lloyds will deal with that matter. It is part of my speech, so I hope that the hon. Gentleman will allow me to make progress. If he had been present on Second Reading, he would know that the issue arose then and was debated extensively. The bank has given assurances to Opposition Members about pensioners on low incomes and has undertaken to conduct a review, to which I shall refer later. The average annual pension for members of the Hill Samuel scheme is £11,700. The average pension under the TSB scheme is £7,800, which compares with a national average for occupational pension provision of £4,800.
Both before and since Second Reading, the promoters have been engaged in active and constructive dialogue with a handful of hon. Members on both sides of the House who have raised pensions-related concerns on behalf of their constituents—as the hon. Member for Gainsborough (Mr. Leigh) has just done. Several hon. Members who initially expressed concerns on behalf of their constituents about the pensions arrangements of Lloyds TSB have now withdrawn their names from the blocking motion against the Bill. I hope that I can provide sufficient comfort to those hon. Members whose names still appear on the blocking motion so that the Bill may be permitted to complete its final parliamentary stage.
§ Mrs. Cheryl Gillan (Chesham and Amersham)
Sadly, I was not able to be in the Chamber for the Second Reading debate. However, several of my constituents have raised matters similar to that mentioned by my hon. Friend the Member for Gainsborough (Mr. Leigh). One issue is TSB's production of the guidelines. I understand that the guidelines are complex and that the exercise must be comprehensive, but the fact that they have not yet been produced is causing great anxiety to my constituents. Will the hon. Gentleman confirm that those guidelines will be produced? I received an undertaking from TSB today that they will be produced within a week or so, but does the hon. Gentleman have further and better particulars? It is essential that the guidelines are produced as quickly as possible, bearing in mind the undertakings that TSB gave to other hon. Members on Second Reading.
§ Mr. Illsley
As I said to the hon. Member for Gainsborough, those issues will be addressed in my speech and, if I am allowed to continue, I shall come to them. As I understand it, the guidelines are a matter of negotiation between the Inland Revenue and Lloyds TSB. Once those negotiations have been completed, the guidelines will be available. If I may make progress, I shall address each issue in turn.
§ Mrs. Gillan
I understand from TSB that the document is in fact with lawyers and trustees of the TSB scheme. 230 Will the hon. Gentleman take further advice on the issue, as I understand from the company that the matter rests not with the Inland Revenue but with the company?
§ Mr. Illsley
I shall refer to that matter when I come to it in my speech—if the hon. Lady will allow me to make progress.
On Second Reading of the Bill, the promoters undertook to put in place a range of measures and initiatives designed to provide comfort to hon. Members, to their constituents who might have concerns and to any other Lloyds TSB pensioners who might be concerned about their pensions. Lloyds TSB has proceeded as fast as practicable, consistent with achieving a reasonable and sustainable outcome. It has adhered to the time scales to which it committed itself. Equally, Lloyds TSB remains acutely sensitive to the necessity of offering help to needy pensioners where appropriate.
Historically, Lloyds TSB has always attached the highest importance to providing additional assistance to needy and elderly pensioners. That is not something new: it reflects Lloyds TSB's responsible attitude towards assisting those who have helped the company in the past. Lloyds TSB provides that assistance through ex gratia payments and a national framework of dedicated pension liaison officers, whose role is to identify cases of hardship and provide appropriate solutions. In this, I understand that Lloyds TSB is unique among United Kingdom companies. The cost of the activity is borne by Lloyds TSB, not by the pension schemes.
In a letter to the hon. Members for Arundel and South Downs (Mr. Flight) and for Aldershot (Mr. Howarth) on the day of the Bill's Second Reading, Mike Fairey, the deputy group chief executive of Lloyds TSB, confirmed that Lloyds TSB intended to undertake a comprehensive review of the position of pensioners on low incomes. The promoters said that they believed that the review would take up to six months to complete, and they intend to honour that commitment.
I am delighted to report to the House that the promoters have embarked on a detailed and meticulous analysis of pensioner records going back over the past 30 years. As the House will understand, that is a complex and time-consuming process. A dedicated team is undertaking that task to ensure that the promoters can properly and expeditiously reach a view about the options open to them to enhance pension values where appropriate, with the agreement of the Inland Revenue.
§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
My hon. Friend will know that I was present for, and spoke during, the Second Reading debate. I have been informed that the number of very needy pensioners is estimated at at least 700 and that, so far, only 100 individuals have been identified. In the light of the assurances that my hon. Friend and Lloyds gave in good faith on Second Reading, we might have expected far faster progress in dealing with the issue.
§ Mr. Illsley
As I have said, it is a time-consuming process: a review that dates back 30 years will obviously take some time. The figures cited by my hon. Friend are new to me and they have not been advanced by the promoters. I am aware of the cases that are classed as anomalous—some 200—but I am not aware of those figures.
231 The issue of representations to the Inland Revenue is particularly important. As I have said, everyone will receive his or her full entitlement from the Lloyds TSB pension schemes. Therefore, it may not be possible for the promoters to enhance the pensions of pensioners on low incomes as appropriate and as they would wish without the risk of breaching the normal Inland Revenue rules on maximum allowable benefits from tax-approved pension schemes. I can report to the House that, since Second Reading, Lloyds TSB has held an initial meeting with the Inland Revenue to see what further latitude may be given.
The Inland Revenue has said that it is not prepared to discuss specific concessions until the promoters are in a position to show more clearly how they would structure possible enhancements to the pensions of individual pensioners or groups of pensioners on low incomes. As the House can imagine, that will be a lengthy and difficult task. None the less, the promoters remain committed to continuing this important and constructive dialogue with the Inland Revenue, with a view to seeking a positive outcome. It is open to hon. Members to make their own separate and parallel representations to the Inland Revenue—it would be helpful if they did so—to encourage it to review its position.
The question of anomalous cases was raised on Second Reading. Lloyds TSB has given an undertaking to the hon. Members for Arundel and South Downs and for Aldershot that it will review any cases of alleged anomalous treatment of its existing and deferred pensioners. The promoters are committed to completing their statement of rules and practices as quickly as practicable, and they intend to publish their review as soon as possible thereafter. To date, they have received 200 letters from pensioners, which represents 0.1 per cent. of the total of 180,000 pensioners. Each case is being investigated as a matter of urgency. I have Lloyds TSB's absolute assurance that as soon as it is possible to provide substantive responses to the pensioners concerned, it will do so. A deadline of 3 September has been set for the receipt of alleged anomalies, which will provide ample time for those pensioners who may have concerns to register them.
The promoters have stated clearly and unequivocally that, if Lloyds TSB is unable to resolve satisfactorily any individual pensioner's concerns, they are willing to go with the pensioner concerned to the pensions ombudsman, whom Parliament has vested with the powers to investigate and decide on complaints relating to occupational pension schemes.
I am happy to confirm, too, that, if, in such circumstances, the ombudsman were to decline jurisdiction—for example, on the ground of the expiry of the three-year time limit—the promoters would be willing to appoint a legally qualified person with pensions expertise to review the complaint, using precisely the same terms of reference as the ombudsman would have employed. Lloyds TSB has said that it would do so at its own cost.
An issue that did not arise on Second Reading relates to a situation in Northern Ireland. As the hon. Member for East Antrim (Mr. Beggs) recently appended his name to the blocking motion, I shall try to reassure him. In addition, the promoters want me to reassure the House 232 and, in particular, those Northern Ireland Members present tonight, that they take seriously the issue of the part-time employees of the TSB of Northern Ireland.
The issue relates to the sale of the TSB of Northern Ireland to Allied Irish Banks by the then TSB Group in 1991. As a result of an administrative error, a number of former TSB of Northern Ireland staff who had transferred their pension entitlements to Allied Irish Banks were subsequently and incorrectly advised that they were eligible for benefits to which they were not entitled. I understand that the matter is now in the hands of the pensions ombudsman. The promoters want me to reaffirm that they regret that error and that they will co-operate fully with the pensions ombudsman.
§ Mr. Roy Beggs (East Antrim)
The hon. Gentleman acknowledges that the TSB of Northern Ireland had more than 100 part-time staff before the merger with Allied Irish. They have been disadvantaged. May I have an assurance that they will benefit from a satisfactory outcome of any review? I am a little surprised that although the matter has been referred to the ombudsman, it has not yet been fully dealt with.
§ Mr. Illsley
I can assure the hon. Gentleman that Lloyds TSB will fully comply with any decision made by the pensions ombudsman. The issue is outside the Bill, but, in view of the hon. Gentleman's concerns, Lloyds TSB wishes me to raise the matter to try to give some reassurance. If the pensions ombudsman asks Lloyds TSB to reimburse individuals, obviously it will comply with that request.
Concern has been expressed on Second Reading and since by a number of hon. Members about the need to ensure that the position of deferred pensioners is fully protected. I am happy to confirm that, on 19 June 1998, the Lloyds TSB board agreed to the appointment of a deferred pensioner, not only to the board of trustees of the TSB Group pension scheme, but to the board of trustees of the Lloyds pension scheme. The promoters are now seeking to put that initiative in place and the trade unions, the retired staff association and the action group have been invited to put forward prospective candidates.
The deferred pensioner appointee to the TSB pension scheme will be a management rather than a member appointee because, at the moment, a management position happens to be vacant on the scheme's board, providing the quickest way of appointing a deferred pensioner to the scheme. However, I reassure the House that all pension scheme board members represent the interests of all members of the scheme, not just one narrow sectional interest.
The promoters have been keen to ensure that all their pensioners, not just hon. Members, have been kept fully up to date on the various initiatives and activities that they have been putting in place and that I have described this evening. All 180,000 Lloyds TSB pension scheme members have received communications by a variety of means, including pensioner and staff magazines and directly mailed letters.
I hope that the House will feel that the initiatives that I have described provide considerable comfort about the way in which Lloyds TSB has sought to address concerns raised by hon. Members.
§ Mr. Gerald Howarth (Aldershot)
I hope that the hon. Gentleman will excuse me if I do not participate later, 233 but the Select Committee on Home Affairs is finalising its report. We welcome the board's decision to agree to the deferred pensioner appointment. I know that it has sought to fulfil the undertakings that it gave to me and my hon. Friend the Member for Arundel and South Downs (Mr. Flight), but the hon. Gentleman will know that the action group is concerned that the appointee, whose appointment lies in the hands of the bank, may not be as ruggedly independent as the pensioners would wish. Can the hon. Gentleman assure the House, on behalf of the Bill's promoters, that the bank will appoint a deferred pensioner from management who will be independent? Concern has been expressed that the Banking, Insurance and Finance Union appointments, although BIFU representatives, may themselves be afraid, at a time when the bank is contracting, of being too robust for fear of finding themselves out of a job. Will the hon. Gentleman deal with that?
§ Mr. Illsley
I am sure that Lloyds TSB will take on board all the comments that have been made about the appointment of the deferred pensioner. As I said, the opportunity arises at this point in time to appoint to the management side of the scheme, simply as a matter of convenience. However, Lloyds asks me to stress clearly that all members of the pension scheme board will act in the interests of all members of the scheme. I am not sure whether that entails anyone acting independently, as the hon. Gentleman would wish, but I am sure that any appointee to the board, because of the rules and duties surrounding trustees, would be obliged to act in the interests of all sides in the pension scheme. Obviously, it remains for pensioners, if they are dissatisfied with the conduct of any appointed trustee, to raise the issue again. I know that Lloyds TSB has given the hon. Gentleman assurances that it will contact him again in future in relation to such matters. The hon. Gentleman will have the opportunity to raise the issue with Lloyds at that stage and to make representations if the appointee does not live up to the assurances given by the bank.
§ Mr. Eddie O'Hara (Knowsley, South)
Is the system proposed by management for the appointment of the trustee not a classic example of advise and consent, and an example of a commitment that could turn out to be worthless? Does my hon. Friend not see that there are some of us who are reluctant for the Bill to be given Third Reading until we have a meaningful commitment? The only such commitment that I can think of would be a commitment to appoint a trustee in the future who would genuinely be an elected trustee of the pensioners.
§ Mr. Illsley
My hon. Friend makes a fair point, which I take on board. I cannot give him that assurance now, because the issue has not previously been raised with me; I can say only that the opportunity arises for a deferred pensioner trustee at this point in time. As I understand it, few pension schemes in Britain have a deferred pensioner trustee on the board. I am sure that my hon. Friend would agree that, in the short time since Second Reading, Lloyds TSB has gone a long way towards meeting concerns expressed by hon. Members and by the action group.
We should also bear in mind the fact that we are talking about a Bill that basically implements a merger that took place two or three years ago. The pensions issues, 234 although relevant and interesting to those hon. Members involved, are not directly related to the Bill. As Lloyds TSB has assured hon. Members, those issues can be taken up outside the Bill's passage and in the future. The bank has given assurances to revisit the issue in due course and I am sure that, at that time, it will seek to ensure that any appointee to the board acts properly and that it will take on board the fact that that person has been appointed to look after the interests of deferred pensioners.
§ Mr. Cousins
Does my hon. Friend accept that, on the night of the Second Reading debate, the decisive event that prevented a vote was the intervention by the hon. Member for Arundel and South Downs (Mr. Flight), who brought to the House a concession made by Lloyds TSB—as my hon. Friend rightly said, such a concession was not covered by the Bill—that a deferred pensioner trustee would be appointed? Is it not the case that, as we debate Third Reading tonight, that still has not occurred?
§ Mr. Illsley
The bank has undertaken to appoint a deferred pensioner as a trustee. As my hon. Friend knows, Second Reading took place on 20 April. The hon. Members for Arundel and South Downs and for Aldershot no longer oppose the Bill. The hon. Gentleman who originally raised the issue in the House has been satisfied by the assurances given by Lloyds TSB in respect of deferred pensioners. As I said earlier, few pension schemes have a deferred pensioner as a member.
§ Mr. Cousins
As my hon. Friend knows perfectly well, the question of the representation of pensioners —of people with preserved rights to pensions—as pensioner trustees in the operation of pension funds is one of the most lively and important issues in pension fund administration at present; indeed, it goes to the heart of all the discussions about flexible labour markets and changing jobs in the course of one's life. If this is an opportunity to address the issue, why not do so?
§ Mr. Illsley
I take on board what my hon. Friend says, but, on 19 June this year, Lloyds TSB agreed at its board meeting to appoint a deferred pensioner trustee in accordance with the wishes not only of Opposition Members but of the Hill Samuel action group; thus the bank has dealt with the issue that was raised.
§ Mr. Illsley
As I said earlier, the bank approached the trade unions, the action group and the retired staff association within Lloyds TSB for suggestions on how the issue could be dealt with. I am sure that the action group and the association will make suggestions similar to those that the hon. Gentleman has made, to decide who becomes the deferred pensioner trustee in the future.
Lloyds TSB has acted quickly. My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) said that there has been insufficient action in the time scale available, but, given that Lloyds TSB has identified a vacancy and sought to fill it with a deferred pensioner trustee, it is moving as quickly as time allows.
§ Mr. Peter L. Pike (Burnley)
Has not the bank given way because it knows that, once the Bill is enacted and it 235 starts to rationalise its branches, which is what the merger was all about, there will be many more deferred pensioners? It therefore hopes that, because it has conceded a place for a deferred pensioner, it will get the redundancies, closures and rationalisation through. Is that not what this is all about?
§ Mr. Illsley
I hear what my hon. Friend says, but, as I said on Second Reading, the bank raised those issues specifically with the trade unions involved. The trade unions had a number of discussions with Lloyds TSB about closures and job losses. I met BIFU to discuss that issue before I even contemplated taking the Bill through the House, because I wanted to be assured on the question of job losses and closures. BIFU assured me that it had received assurances that were sufficient to warrant withdrawing its objections to the Bill. I take on board my hon. Friend's comment about the possibility of further deferred pensioners, but Lloyds consulted the action group, the trade unions and the retired staff association about how the deferred pension issue could be dealt with in the future.
The House should be in no doubt about the importance that Lloyds TSB attaches to the need to resolve those matters as quickly as possible, consistent with the complexities of the issues involved. Lloyds TSB is one of the UK's largest and most successful companies. It has a deep historical understanding of its corporate responsibilities. It plays a leading role in welfare-to-work and new deal issues, and supports a wide range of impressive educational initiatives, including the new teacher awards sponsored by the Department for Education and Employment. On Second Reading, I referred to the work of the Lloyds TSB Foundation, which is the charitable arm of Lloyds TSB. It still hands out £21 million a year, which makes it the UK's largest corporate donor. Its work is focused on communities throughout the United Kingdom.
I hope that I have been able to point out that the promoters of the Bill have provided ample evidence of their responsible, sensitive and inclusive approach to the issues that have been raised throughout our debates on the Bill. I hope that the House will now allow the Bill to make progress following the merger that took place in 1995.
§ Mr. Leigh
I asked this question before, and the hon. Gentleman said that he would deal with it. I have been asked to ask him what figure the company has in mind, as a one-off or regular payment, for the worst-off pensioners? After all this time, it should be possible for the Bill's promoters to reassure the House on this matter, because, once the Bill gets a Third Reading, we shall lose all power over it, and thus all power to help the poorest pensioners.
§ Mr. Illsley
The bank cannot say how much is available until it has agreed with the Inland Revenue what concessions will be available for low-income pensioners. The negotiations with the Inland Revenue will take some time in view of the points that I raised earlier, but the bank is taking the issue seriously.
§ Mr. Howard Flight (Arundel and South Downs)
I originally signed a blocking motion against the Bill, but I have subsequently been satisfied that Lloyds TSB has 236 given reasonable undertakings, which were reported on Second Reading and which it is now embarked on honouring.
I appreciate the frustration of the action group, and the points made by other well wishers, that the Bill is an opportunity to encourage Lloyds TSB to deal with the problems, particularly those of low-income pensioners. That opportunity will be lost once the Bill has passed Third Reading.
May I add to the three areas that have been mentioned my perceptions of the outstanding issues? The issue of poor pensioners has involved Lloyds TSB negotiating with the Inland Revenue. The Inland Revenue has required Lloyds TSB to deal with sample cases of some 600 poor pensioners. The bank has embarked on that task with a staff of 12. It has advised me that it still expects to complete its negotiations with the Revenue within the six-month time scale that it agreed in April. I have corresponded with the Treasury on that matter because I hoped that it could be simplified from on high. Although pension scheme rules must be abided by, some form of blanket guidance should be given to the Revenue when very modest pension incomes are involved.
I am satisfied that raising the issue of poor pensioners with the Revenue has not been a stalling mechanism by Lloyds TSB. It has been in earnest and has been negotiating with the Revenue about what can be done. I understand that it cannot give figures about how much it may be able to give, or say what it may be able to do, until it has completed those negotiations.
§ Mr. Cousins
Why is the hon. Gentleman satisfied and entirely content that Lloyds TSB should have unlimited time within the generous time scale that it gave itself on Second Reading when it has imposed 30 September as the end-date for aggrieved pensioners to make representations?
§ Mr. Flight
First, the undertaking to address poor pensioners was given in respect of a six-month period. Secondly, the hon. Gentleman has forestalled a point that I want to come to. Lloyds TSB has told me that, although 30 September has been widely advertised by it to invite pensioners who think that they have been treated unfairly and anomalously to write in with their cases, it is not a cut-off date. I am advised that Lloyds TSB will continue to pursue anomalies if it is informed of them beyond that date, which is not a shut-off date, but an incentive for people to submit their cases.
I shall deal with my second point at length.
§ Mr. Leigh
Before my hon. Friend raises his second point, will he please explain what complex tax arrangements could possibly relate to pensions of as little as £1,000 a year, involve such delays and prevent the company's sponsor, the hon. Member for Barnsley, Central (Mr. Illsley), from giving hon. Members some idea of what the one-off payments would be? On such low pensions, surely those matters are not complex at all.
§ Mr. Flight
They are relatively complex. Pension funds are bound by two sets of rules—those of the scheme itself and the Inland Revenue rules. The Inland Revenue must make sure that any changes to what is paid out, over and above cost of living adjustments, are in line with its rules 237 and with the rules of a scheme and the discretion permitted under it. In respect of the 600-sample survey, I understand that the Revenue wants to make sure that Lloyds TSB's proposals fall within the discretion permitted to the pension scheme.
The second issue is anomalies. Lloyds TSB advertised widely to scheme members for people who felt themselves to have been unfairly treated to put their case. The issue has arisen of the guidelines by which such anomalies will be assessed. Lloyds TSB has had to go back over 25 years to examine the policies on anomalies, and two particular areas present problems. First, if a company is sold, what are the pension arrangements for the staff who go with it? The second problem is in respect of individuals who take redundancy or are made redundant above the age of 50.
A team of lawyers has worked on producing the guidelines on anomalies, the purpose of which is not to enable anyone to put up a complaint, but to allow those who complain about anomalous treatment to know the rules of the scheme. Such people should be sent of copy of the guidelines. My hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) raised this issue and has been assured by Lloyds TSB that the guidelines will be available by the end of this month, and certainly within a week. I put it to Lloyds TSB that some people may have held back because they did not know the guidelines and that it would be unreasonable for them to have only a month or so to submit their cases. I also asked whether 30 September was a shut-off date and was assured that that was not the case.
§ Mr. Beggs
Does the hon. Gentleman agree that it is a serious anomaly that the Irish Bank Officials Association has had to take up the case of 120 former part-time TSB staff in Northern Ireland? Does he also agree that that should be addressed urgently and that any discrimination against them should be resolved?
§ Mr. Flight
I certainly believe that any discrimination should be resolved. I do not know the details of the problem with the ex-Irish subsidiary, but I understand that the matter has been referred to the pensions ombudsman and believe that, when that happens, an independent and impartial judgment by him is looked for.
More widely, it is fair to say that, until this April, Lloyds TSB was somewhat slow in addressing those issues and that the blocking of the Bill was designed specifically to encourage it to get a move on. I believe that that has been the case, in good faith. Although the delays in respect of the two United Kingdom issues are frustrating, I believe that Lloyds TSB is not stalling, but is bona fide.
The third issue is the appointment of a representative for deferred pensioners. That practice is extremely important, because the number of deferred pensioners in all pension schemes will grow and they should be well represented. Staff representatives were appointed to the TSB scheme following the passing of the Pensions Act 1995. Three were nominated by the Banking, Insurance and Finance Union, the trade union representative, and one by the retired staff association. As required under the 1995 Act, the appointments were circulated to all 238 members of the scheme, which gave them the ability to object. They did not object; in effect, they endorsed. At present, representatives are nominated by the member representative bodies, but formally appointed by the pension fund trust board.
In respect of the Lloyds pension scheme, there is already a voting situation. Although there are arguments that elections are preferable, Lloyds has offered the slot of a management representative to achieve speedy representation of deferred pensioners and has requested that the trade union representatives, the Lloyds action group and the retired staff association propose candidates.
The current arrangements for all staff representatives run until 2002—appointments are for five years—but, given that the Lloyds scheme has an elective basis, it may be better practice and more consistent for Lloyds to consider moving the TSB scheme to an elective basis for all member representatives, as well as for the deferred pensioner representative, by that date. Lloyds has not committed so to do, but it has suggested to me that it will consider the argument and thinks that it may be desirable to move to a consistent basis in this matter for the Lloyds and the TSB pension schemes.
§ Mr. Cousins
I remind the hon. Gentleman that his intervention at a similar point in the debate on 20 April led us to believe that a deferred pensioner trustee would be appointed. From the assurances that he gave, not on behalf of TSB but in a speech similar to this, we had every expectation that that would be the case. Now, that is not the case, and his response is to give us a further set of assurances that some no doubt highly desirable things may happen by 2002.
§ Mr. Flight
With respect, I do not think that the hon. Gentleman quite understands what I am saying. Lloyds TSB will appoint a deferred pensioner representative: it has agreed to do so, it has asked the representative bodies for nominees and it is waiting to receive from BIFU, the action group and the retired staff association the names of candidates that those bodies would like to be appointed.
We are talking about the issue of appointment versus election. If an election process were embarked on immediately, it would still take at least a year to accomplish, because it would involve the period between getting the election organised and the early retirement of existing staff representatives. Lloyds TSB is taking the speediest route open to it to appoint a deferred pensioner representative.
I think that, above all, the deferred pensioner representative should be able to discharge his or her responsibilities. While the elective principle is desirable in the round, it is particularly desirable for an individual representing deferred pensioners to know and understand the issues and problems affecting such pensioners in regard to pension schemes. I do not think that it is not in the spirit of, or not in accordance with, the undertaking given by Lloyds TSB for it to agree to the appointment of a deferred pensioner representative, and it is now asking the representative bodies involved to nominate such a representative.
§ Mr. Peter Brooke (Cities of London and Westminster)
It is possible that there is a misunderstanding between my 239 hon. Friend and the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins)—although that is not the fault of the hon. Gentleman. The concession given to my hon. Friend on 20 April stated:However, in the light of your helpful suggestion, we will also consider the possibility of the appointment of a deferred pensioner to the board of the TSB pension scheme.I do not know whether my hon. Friend agrees with me, but I think that to have achieved the creation of a job within two months constitutes a pretty honourable fulfilment of what began as simply consideration.
§ Mr. Flight
I thank my right hon. Friend for making in such a fluent way the point that I sought to make.
§ Mr. Cousins
It is not the hon. Gentleman's honour that causes me concern; what causes me concern is the progress of events.
§ Mr. Flight
That is what causes us all concern. My point is simply this. The process of putting a deferred pensioner representative on to the board is being dealt with, and the nominations of representatives is awaited; but there is a separate issue—whether all staff representatives of trustees of the pension scheme should be elected for the purposes of the TSB scheme, as with the Lloyds scheme. Lloyds TSB has told me that it is prepared to consider that for the next round in five years' time.
§ Mr. O'Hara
Would deferred pensioners ever have an opportunity to object to someone who might be selected by management?
§ Mr. Flight
I understand that Lloyds TSB is not interested in appointing anyone other than someone with the blessing and support of the three representative institutions. It looks to the unions, the retired staff association and the action group to come up with candidates who have the experience to discharge the obligation, and with whom those representative bodies are happy. It is not thinking of appointing its own candidate.
§ Mr. O'Hara
Is the hon. Gentleman assuring me, on behalf of the company, that it will not ignore nominations of deferred pensioners and choose someone else to appoint?
§ Mr. Flight
I am not a representative of the company, but I asked it precisely that question. It gave me to understand that—as I have said—it looks to a nominee from those bodies, rather than intending to appoint its own nominee, or a nominee with which the representative bodies are not entirely happy.
§ Mr. O'Hara
With respect, "looking to" does not sound as strong to me as a guarantee that that is what Lloyds TSB will do.
§ Mr. Flight
I repeat that I am not in a position to give guarantees on behalf of Lloyds TSB; but, having been involved in similar situations, I believe that the company wants a deferred pensioner representative who has the full support of staff and the various representative bodies, and 240 has set about organising that. I personally feel confident that that is its good-will intent: I do not think that it wants to appoint some stooge.
Although opposition to the Bill has hastened and encouraged discussion of issues that needed to be addressed, I believe that management is honouring the commitment given to my hon. Friend the Member for Aldershot (Mr. Howarth) and me in April. It has taken time to get where we are now, not because of stalling but because of the complexities of the issues. This is an important day, in that, if the Bill is given a Third Reading, the leverage involved will be lost. Hon. Members must make an important judgment when they vote; but I shall vote for Third Reading. I believe that the way to make progress as quickly as possible is to ensure active co-operation between BIFU, the retired staff association, the action group and Lloyds TSB management. They must be encouraged to get a move on, and to implement the commitments that have been given.
§ 7.56 pm.
§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
I regret that we should find ourselves in such an extraordinary situation. The debate should not have been necessary: the matters that were raised in the Second Reading debate of 20 April should have been dealt with conclusively then, or set on a fair course with, demonstrably, no obstacles ahead. If that had happened, this issue would now be being resolved.
Interestingly, during the intervening time other matters directly related to the text of the Bill have remained unclear. For instance, we still do not know how our largest bank network—Lloyds TSB—will deal with the rationalisation of its branches, and the attendant loss of service and employment. We might have hoped for some clarification of that.
Pension issues have rightly dominated this short debate. It is not just a matter of detail affecting a particular group of people; it is a matter of fundamental principle. Whose property is the pension fund surplus? Who is the source of the power that should direct pension funds and their distribution? That will be a fundamental issue in other debates on pensions, and it goes to the heart of tonight's debate.
As the hon. Member for Arundel and South Downs (Mr. Flight) rightly said, one of the few opportunities that Members of Parliament have is to impose blocks to try to force conclusions, and it is regrettable that we have not been able to do that tonight. Before this debate, it occurred to me to wonder how matters such as this came to be dealt with at board level.
Mr. H. R. Freedberg was the leading light in Hill Samuel and was a former director of the TSB. He received £290,461 in compensation for loss of office as a director of the Hill Samuel bank. In addition, £657,000 was paid from a separate fund to enable him to obtain a pension on his earnings that exceeded the maximum pensionable salary allowable under the TSB Group pension scheme. That information is contained in the annual report. Mr. Freedberg did not have to wait. Nobody said to him, "We cannot do anything for you. We have to sort it all out with the Inland Revenue."
Mr. Freedberg's treatment contrasts with the cases that have been brought to me and to other hon. Members. I shall not give names. Mrs. M. had a deferred pension 241 of £375 a year for 17 years full and part-time service. Mrs. N., who is a single parent, received no pension for 15 years' service. Miss F., who was aged 83, was below the poverty line after 29 years' service and was sent to the Bankers Benevolent Fund for a hearing aid.
According to the annual report, Sir Nicholas Goodison, who was the chairman of TSB, received a payment that was equivalent to 22.5 per cent. of his salary. That was in line with Inland Revenue guidelines. He was caught by the guidelines, but not unfavourably, it seems. That payment was to enable him to contribute to a personal retirement annuity plan. If the plan does not provide Sir Nicholas with a pension at the age of 65 that is equal to two thirds of his final salary, the company has undertaken to make up the difference, subject to a maximum annual payment by the company equivalent to 31.67 per cent. of his final salary.
The treatment of some of those who directed TSB affairs, therefore, contrasts with how ordinary pensioners with preserved rights, some of them made redundant many years ago, have been treated. The point of our proceedings is to close that gap and force equity of treatment. The debate should not be necessary because these matters should have been dealt with already.
§ Mr. John Hayes (South Holland and The Deepings)
I am impressed by the passion with which the hon. Gentleman presents his case. He has presented the purpose of our proceedings. Will he go further and say how the Government should be involved? He describes cases, and rightly calls for equity of treatment. Surely the Government have a specific responsibility to bring some of the fat cats that he describes into line. I hope that the Minister will comment on that.
§ Mr. Cousins
I cannot join the hon. Gentleman in saying that the pension review should state how we should address the gap between the pension of Sir Nicholas Goodison who, regrettably, may not achieve two thirds of his final salary even with the extra top-up and may need a further top-up from the company equivalent to 31.67 per cent. of his final salary, and the pensions of others. Sorting out his problems should not be a priority for the Government in considering future stakeholder pensions. Perhaps, though, he provides some kind of benchmark, which I understand is the art term that we are allowed to use when discussing such matters, for judging the treatment of other pensioners.
It was clear on 20 April that legal action was in hand to protect members of the Irish Bank Officers Association in their representations on behalf of former part-time employees of the merged bank. The House was not told about that at the time and the matter came to light only within the past few days. It is regrettable that it, too, has not been addressed.
Lloyds TSB has not stated the figure that it has in mind for a one-off payment to the worst-off pensioners. Some hon. Members, myself included, have been told the likely sums. Perfectly properly, we have been asked not to share that information with the House. However, by now the suggestions and figures should be public knowledge so that the beneficiaries know where they stand.
We still do not have guidelines. We are told that the matter is complicated and that teams of lawyers are working on it, but we are debating one of the greatest of 242 our financial institutions. In heaven's name, if it cannot produce guidelines for a relatively small section of its business and a small number of people over such a period, that is a poor comment on the institution.
§ Mr. Brooke
It has been my understanding, although I realise that the hon. Gentleman has been in frequent touch with the bank, that the guidelines deal with the manner in which the pension scheme has evolved over the past 25 to 30 years, and that they would enable shareholders to determine whether they have sustained anomalies on which they should claim. That is quite different from the review of low-income pensioners.
§ Mr. Cousins
Perhaps significantly, the right hon. Gentleman speaks of shareholders when he means pensioners. That confusion is significant because, in a sense, it goes to the heart of our debate.
§ Mr. Brooke
I am grateful to the hon. Gentleman for picking up a slip of the tongue, if I made one. However, he did not answer my question.
§ Mr. Cousins
No, I did not—and I made a brief debating point for which I hope the right hon. Gentleman will forgive me.
§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. The hon. Gentleman must deal with one intervention before he starts another.
§ Mr. Cousins
I accept your guidance, Mr. Deputy Speaker.
I shall deal with the guidelines. There are a number of pension schemes with different rules. Although pension schemes have not come together, the organisations that support them have joined together over the years. I do not dispute that there may be some intricacies in that, but it is extraordinary that one of our greatest financial institutions cannot resolve these matters even though they have been brought to its attention over many months. I accept that there may be difficulties, but they should not require so much time to resolve; and still we have been given no sign of when they might be resolved. That is extraordinary.
§ Mr. Leigh
Interestingly, the hon. Gentleman said that he had been given some intimation of the one-off payments. He rightly added that he could not share that information with the House. Much has been made of the fact that negotiations are continuing. However, it is not clear why they should be so complex. The Treasury has relaxed its rules on augmenting low pension schemes and presumably it would save money if people could be removed from social security. Could the hon. Gentleman put pressure on his Treasury colleagues to speed matters up; and could he ask why there has so far been no answer?
§ Mr. Cousins
The hon. Gentleman makes a fair point. It is extraordinary that we have had no information on what the sums might be. Such information would 243 illuminate discussions with the Inland Revenue. Evidence from correspondence shows that the Revenue wishes to resolve this matter.
From the Government's standpoint, this is an absurd situation. TSB pensioners are receiving income support and other state benefits, whereas, if this deal were struck, they could be receiving pensions from the pension fund to which they contributed earlier in their working lives, and the Department of Social Security would not have to meet their expenses.
Of course, the Government will not stand in the way of a deal, and there are clear signs that the Inland Revenue is willing to co-operate. The reference to the Inland Revenue is, frankly, an obfuscation. Even if there were continuing administrative difficulties with the Inland Revenue which might not have been resolved, I do not understand why an intimation could not have been given to the pensioners who were the likely recipients. They would then be able to make representations, if they so chose, through their Members of Parliament and to the Inland Revenue.
§ Mr. Brooke
The hon. Gentleman picked me up on the use of the word "shareholder." If the dilemma for the bank is whether ex-gratia payments should be made from shareholders' funds or from the pension fund, which, in turn, is affected by the Inland Revenue's reaction, it seems reasonable for the bank to wait and see what the Inland Revenue's view is. The pensioners might be a great deal better off if the money came from the pension fund.
§ Mr. Cousins
The entirely theoretical point that the right hon. Gentleman makes cannot be resolved until actual figures are known by actual people, who can then arrive at a decision, by themselves or with their advisers, about the proper course of action. The House is entitled to argue that the figures should have been known. On Second Reading, the House was told that they would be known very shortly. We now find, three months later, that there are still no figures.
I am looking at the clock, as I do not want to test the patience of our new regime in the Whips Office unduly. I shall therefore refer quickly to the matter of the deferred pensioner trustee. That issue has been dealt with extensively in the debate, including in my interventions and those of my hon. Friend the Member for Barnsley, Central (Mr. Illsley). Plainly, we are not satisfied, as the matter could not have been dealt with in good faith. We accept that it would have been a management pensioner trustee: that would have been the form. None the less, it would have been possible to achieve, even within that form, far greater progress towards the selection of an individual, on the basis of consensus, who would have been satisfactory to all the interests concerned. That would have met the needs of Lloyds TSB perfectly properly, because it would have contributed one of its management trustee places. I do not deny the necessity to satisfy Lloyds TSB on that point.
The hon. Member for Arundel and South Downs referred to the assurances given. I do not seek to burden him with an obligation to deliver on those assurances, but it is extraordinary that further progress cannot be made.
To whom do these pension funds belong? That is the fundamental point. How can we protect the interests of pensioners with preserved rights who may have been 244 part-time employees for only part of their working lives? Such people will become increasingly common in the pension fund discussions of the future.
Lloyds TSB, which is a great financial institution, may be thoroughly irritated by the fact that it has to go through a parliamentary procedure during which it is criticised for the delays—I am sure that it feels a certain loss of dignity—but the House is entitled to say that these are important principles, and that before we pass this legislation we should be entirely satisfied. If we cannot be completely sure that everything has been done and dusted, we should be sure that it is clearly on course to be done and dusted. Sad to say, that is not the position tonight.
§ Dr. Vincent Cable (Twickenham)
I shall just say a few words, because many of the key points have already been made, particularly in the speech of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) and in some of the exchanges. I spoke against the Bill on Second Reading, and for a while acted as a block on it. I have been briefed and counter-briefed by the two parties, and, like many hon. Members, I have sometimes found it difficult to judge what is fair and reasonable in the progress that has been made.
I have some residual concerns, which have been increased by the fact that the public's interest in this matter—especially my constituents' interest—grows as the delay continues. Until Second Reading, I had received no representations from constituents: I was passing on thoughts from colleagues' constituents. However, within the past 10 days, two difficult cases have shown the importance of the delay that the House has achieved.
The issues have already been dealt with very well, but a few points have not been made. On low-income pensioners, the hon. Member for Barnsley, Central (Mr. Illsley) summarised the state of discussions with the Inland Revenue. It is not clear why, in other cases, such as that of British Coal staff, it was possible to achieve considerable enhancements of benefits for low-income pensioners with the full support and co-operation of the Inland Revenue.
§ Mr. Illsley
The hon. Gentleman referred to the enhancements of benefits under the British Coal superannuation scheme. They were within the rules of the scheme. The Government received a half share of the surplus of that scheme because, at that time, they owned the surplus. They were the employer, having taken over from British Coal after privatisation. Those enhancements to pensions were made under the rules of the scheme.
§ Dr. Cable
I thank the hon. Gentleman for that clarification. One category is particularly disadvantaged by the current arrangements and needs some attention. We are talking not only about low-income pensioners but about older pensioners, particularly people who retired before 1972, which was the crucial date. Some of those people apparently have no pension whatever. A significant number of them need particular attention, and I should be grateful if the hon. Member for Barnsley, Central clarified that point when he replies to the debate.
§ Mr. Flight
>: This is a much bigger issue than merely Lloyds TSB. It was only in 1973 that the law changed 245 to require the preservation of pension rights. Most company pension schemes and individuals employed by government in its various forms who left before pensionable age suffer from this problem. The question is whether the big issue of preserved rights pre-1973, which applies to all pension schemes and is separate from the more particular issues, can and should be addressed.
§ Mr. Cousins
It is perfectly true that the law changed in 1972, and some companies have addressed the problems. Lloyds TSB, with a pension fund surplus of many hundreds of millions of pounds and a pension contribution holiday of 20 years, has elected not to do so.
§ Dr. Cable
That is precisely the point.
Secondly, there are the anomalies. The bank argues that it had a limited number of anomalies, and that it is grinding through them and taking them seriously. There is a circularity in the argument. The banks ask, "If there is such a big problem, why aren't there more anomalies?" The trouble is that many of the people who are on the threshold of difficulty do not know whether they are the subject of an anomaly. That is why there is a search for clarity and a need for guidelines. Unless there are guidelines, many of the anomalies will not surface because people are not conscious of them. Although I accept what the right hon. Member for Cities of London and Westminster (Mr. Brooke) said about the inherent difficulties of producing guidelines and about the long and complex history involved, if we are to get to the bottom of the matter the bank must be a little more forthcoming.
A third point, which we have debated across the Chamber, is the deferred pensioner representative. The issue is no longer the fear that the bank may put up a stooge, but that it may put up someone who, although he may act independently, has been nominated and can therefore be removed if he asks awkward questions. Several hon. Members have made that point. The election process, although more cumbersome, is not only more democratic but would help to lance the boil and deal with the bitterness that lies, at least in part, behind the argument.
My final point relates to what the hon. Member for Newcastle upon Tyne, Central said—it is partly an issue of principle and partly a point of law—about members of the fund having an interest in the surplus and how that interest is to be guaranteed. I understand that legal judgments have already been made which define the extent to which members of pension funds have an interest in the surplus, but it is difficult for pensioners to pursue that. This is not an academic point; it is a legitimate one, because the bank may make new acquisitions and changes. There are press reports, which may be false, to the effect that the bank has been circling around the Nationwide building society. If there are to be changes that will have a major impact on the pension scheme and its surplus, it is important to make the interest that members have in the fund more concrete.
As a new Member, I very much value the opportunity to exercise a limited but important power, which in this case has achieved a substantial objective by bringing the 246 two parties closer together and advancing the cause of pensioners—although I am not fully satisfied that everything that could be done has been done. However, we have achieved something from our combined efforts.
§ Mr. Eddie O'Hara (Knowsley, South)
I shall be brief and try not to cover too much of the ground that has already been covered. I declare a sort of interest as I have been a customer of Lloyds bank for almost 40 years and I have many accounts and arrangements with it.
My concern is for my constituents who are pensioners. It has been said that the question overhanging Third Reading has provided a momentum to the resolution of certain issues. However, as my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) pointed out, there is all the difference in the world between having assurances—no matter in how much good faith they are given—and having matters buttoned down. I am not satisfied that, if the Bill is given a Third Reading, the momentum will not cease; I am not satisfied that the assurances, commitments and concessions will come to fruition. Much hangs on the granting of Third Reading tonight.
The two issues interrelate and I do not think that I need to say more about the issue of the poor pensioners and the anomalies that must be addressed. I would prefer to be able to say that they have been addressed, rather than that they are being addressed, because that would make all the difference in the world.
The pension fund is very buoyant—£1 billion—with 20 years' contributions stretching up to about 2015. The treatment of the victims of anomalies and the poor pensioners is dependent on the future health of the fund. No one is suggesting that the group will raid the fund, but it is vulnerable to weakening and dilution through being merged with the funds of companies that are taken over by the group. There is also concern that the TSB pension fund, in particular, may be managed in the interests of the shareholders rather than the pensioners. That is why the issue that I have raised several times during the debate is crucial.
The pensioners have been assured that their interests are protected under the 1995 Pensions Act. However, if they wish to defend their interests in law, that may involve litigation that is far beyond their means, especially if it is resisted by the bank, with all the resources at its disposal. Therefore, it is crucial that their interests are protected by the trustees. They cannot be confident of that if the trustees are management appointees and current employees—who, as has been suggested by some hon. Members, might feel vulnerable. That is why the appointment of the pensioner trustee is so important.
I shall not repeat my continuing concern about the basis on which the pensioner trustee is to be appointed. I have made my views clear a number of times during this debate. I do not feel able to vote for Third Reading until all the assurances are much more buttoned down, rather than given in good faith.
§ Mr. Edward Leigh (Gainsborough)
Like other hon. Members, I come to the debate because constituents have raised the issue with me. I was chided by the hon. Member for Barnsley, Central (Mr. Illsley) for not having 247 taken part in the Second Reading debate. I apologise for that, but just because someone does not take part in Second Reading does not mean that he or she is not entitled to take part in the Third Reading debate—especially when constituents have raised the issue.
I come new to these matters, like many hon. Members. We are dealing with a large company, and a large and buoyant pension fund of some £1 billion. I was horrified by the appalling hard luck stories of people who had given a lifetime of service, but were receiving derisory pensions, which is why I decided to come here and try to put the company on the spot. As has been said, this is our last opportunity to do that.
It is an important issue, especially for Conservative Members, because although we believe in capitalism and in management being given adequate rewards—I do not want to follow the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) in criticising the top management because no doubt it has been instrumental in building up a successful company and fund—we also believe in the principle of morality. We believe in looking after people who are not part of the top management and who have very little power to wield, but who look to us to protect their interests. It was the appalling stories that provoked my interest in the matter.
I came here tonight with a simple question—will the hon. Member for Barnsley, Central explain the nature of the one-off payment? When he said that that was a fair question, but that difficult negotiations were continuing with the Inland Revenue, I was satisfied. I assumed that those were terribly complex matters which would delay the Treasury for some time. However, the more that I have listened to today's debate, the less I am convinced by those arguments.
The Second Reading debate was on 20 April; we are now at the end of July. I have been informed that the company went to the Inland Revenue only in June to discuss the matters. I am worried that there has been some dragging of feet, although I may be wrong about that. Perhaps the hon. Member for Barnsley, Central can reassure me that that has not happened, and that the company immediately started discussions once the commitments were given in the Second Reading debate. Why did the company even have to wait for the Second Reading debate before starting discussions? Surely the matters must have been considered long ago. Surely Parliament has been considering the Bill for the best part of a year.
Why—at this last gasp—are we still waiting for the figures? The hon. Member for Newcastle upon Tyne, Central has informed the House that he and other hon. Members have been given some intimation of the figures. I have been told by those who briefed me on behalf of the action group that my hon. Friends the Members for Aldershot (Mr. Howarth) and for Arundel and South Downs (Mr. Flight) also have been given some intimation of them. Hon. Members on both sides of the House now tell us, "Of course we cannot share those figures with you." Why is that so? Although I realise that it would be invidious to mention individual cases—people by name, what they receive now and what they might receive in future—I can discern no clear reason why the figures should not now be shared with the House.
We are debating the Bill's Third Reading. Once the Bill is passed, we will have no more power over those matters. Why cannot the information be shared with us now?
248 Why have the negotiations been so complex? I am very conscious that the Paymaster General is in the Chamber and presumably will be replying to the debate. He thoroughly understands the matters that we are debating and is well-respected for that knowledge. As I said in earlier interventions, we are talking about pensioners receiving very small sums under fairly easy-to-understand schemes. We are talking not about great complexity, but about saving public money by getting people off of social security.
The British Coal point was made by the action group in its briefing for hon. Members. The hon. Member for Barnsley, Central dealt with that point, saying that the British Coal scheme was a different type of scheme and that the rules were, therefore, not so complex. However, surely there must have been many other schemes that are similar to the one that we are debating now. Surely similar negotiations have been held in which it has been fairly easy to resolve similar matters.
It is very important that, when the Minister replies to the debate, we should put him on the spot and discover who is delaying a resolution. I have been told that, when Lloyds TSB was asked whether Inland Revenue consent was the only condition precedent to an additional payment for the worst-off, it was stated that it was not, and that the Lloyds TSB. representative—the deputy chief executive, Mike Fairey—was equivocal about what other issues he had in mind.
Either the company should have been able to give us the figures today, but for the fact that the negotiations were continuing, or there have been other reasons why they cannot be given to us. One of those must be right. If there are other reasons, they have not been shared with the House today, which is greatly disappointing.
I very much hope that, in the short time left in this debate, we shall hear from the Minister that the negotiations are progressing satisfactorily and that the Treasury is not in any shape or form delaying them. If the hon. Member for Barnsley, Central is allowed to reply to the debate and catches your eye to speak, Mr. Deputy Speaker, I hope that he will be able to give us some information—before we pass the Bill into law—about how those very worthy people who have given a lifetime of service can be helped by the company.
§ Mr. John Hayes (South Holland and The Deepings)
My hon. Friend the Member for Gainsborough (Mr. Leigh), as ever, has been excessively modest and excessively moderate. He was really saying—I think that this needs to be said, as the context of the debate is important—that, as the Minister knows perhaps even better than my hon. Friend, unbridled and unfettered capitalism is a harlot.
The debate is really about small, ordinary people against the big battalions. The House is at its best when it articulates the needs of small, vulnerable people. What greater or more noble goal can there be for hon. Members than to articulate the needs of the most needy and the case of those who are least able to make their own case? Surely that is the most noble role to which hon. Members can aspire.
There have been unacceptable delays in the matter. I join the debate not because of a specific interest in banking or mergers, but because of a particular interest in 249 the needs of individuals who have approached me, as they have approached hon. Members from both sides of the House, with very painful stories. Hon. Members on both sides of the House have told us some of those individuals' very distressing stories, which—although it would be wrong to repeat them in detail—have moved many hon. Members to take a specific interest in a subject in which otherwise they might not have taken such an interest.
Some specific questions have to be asked. It is all very well to talk about the difficulties of implementing ex gratia payments—I respect the judgment and knowledge of my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke) on the matter—but some notional figures or estimates could have been given and a firm timetable could have been offered. Such information has not been forthcoming since the Second Reading debate.
The Government have a critical responsibility in the matter. I ask the Minister to give three specific assurances.
The hon. Gentleman and other Opposition Members might be under a misapprehension about the Government's role in the Bill's passage. The Government play no role and have no locus in private Bills. It is, therefore, unlikely that the Minister will respond to the issues that the hon. Gentlemen are raising.
§ Mr. Hayes
It would have been helpful if the hon. Gentleman had waited for me to articulate the specific points before he stated the Government's responsibilities. Ministers do have a responsibility to give us a view on the more general issues aired by the specific matter dealt with in the Bill: ownership of pension funds.
§ Mr. Hayes
I shall not give way again, because I want to speak only briefly. It would be surprising if the Minister did not deal in a reply with this general matter, which has been mentioned by so many hon. Members speaking in the debate.
Who is responsible for the delay? We have heard about protracted negotiations with the Revenue, but why were those negotiations so protracted? As my hon. Friend the Member for Gainsborough said, one might have thought that the negotiations should be relatively straightforward for some of the individuals involved. We certainly deserve more than the brush-off of claiming that there are private matters upon which the Government should not take a view.
We have to receive from the Minister at least some commentary and observations. I am not suggesting that the matters are directly within his competence, but I certainly presume that he will want to make known his and the Government's views on them. If he does not do so, it will not bode well for the Government's reputation among the many pensioners who are very appropriately and reasonably seeking redress and answers to queries.
I come to the debate in that spirit, and hope that the assurances that various hon. Members have given will come to fruition. I hope also that we will use this matter as an opportunity to explore the wider and broader issues. 250 I hope that the matter throws some light on those issues, and that the problems will not be repeated in similar situations.
§ Mr. Desmond Swayne (New Forest, West)
I come to the debate late. I must confess that my eye has not been on this ball over the past few months and that my mind has been exercised by other issues. However, I have been alerted to the problem by constituents in recent weeks. As a consequence, I have been in correspondence with Lloyds TSB and had conversations with colleagues on the issue. I have found this evening's proceedings enlightening.
However, I am still in the dark on a fundamental question. I hope that the hon. Member for Barnsley, Central (Mr. Illsley) and those on the Front Benches may cast some light on it. What great injustice is to be avoided by giving the Bill a Third Reading and what great public good is to be lost—what opportunity is to be missed—if the Bill is denied a Third Reading?
§ Mr. Illsley
The issues that we have discussed on pension enhancement and anomalies will not be addressed. If the Bill is not passed, what incentive is there for Lloyds TSB to address those issues again?
§ Mr. Swayne
I am thoroughly mindful of those issues. I want an explanation of that and of what is to be achieved by the Bill. I am in the dark about the primary purpose of the Bill. I should like that to be explored in the winding-up speeches.
§ Sir Geoffrey Johnson Smith (Wealden)
I do not want to go over the ground that has already been covered expertly by hon. Members on both sides. I do not have the deep knowledge of some on the problem. I have been alerted by a distinguished constituent who was a public servant for many years and, on his retirement, became an employee of Hill Samuel. He has written to draw my attention to his case and that of a woman who served Hill Samuel in a more humble capacity for more than 20 years.
While serving with Hill Samuel, the gentleman paid the maximum allowable amount of additional voluntary contributions. When he retired, he was advised that those AVCs should be used to ensure that his pension was index-linked. As his Hill Samuel pension has been upgraded to meet the cost of living increases under the terms of the scheme, it has not been necessary for the trustees to draw on his accumulated AVCs. He considers that he was wrongly advised when he retired at the end of 1991 and requests that the mistake be rectified. It seems straightforward to request that the AVCs should be used to increase his pension, as intended.
My constituent understands that those who retired from Hill Samuel received enhancements to pensions. He has written more than once to find out the basis on which the enhancements were made and why he was not included. That is a legitimate question. Like many who have spoken in the debate, he does not know the reason for the delay.
My constituent's secretary worked at Hill Samuel for 20 years until she was made redundant in 1992. She received a lump sum, but no pension, because she had not reached the age of 50. I do not have the figure of the lump 251 sum, but my distinguished constituent believes that it was not generous, given her long and faithful service. He wants to know why the initial figure that was quoted to her orally was later reduced for no apparent reason. The lady in question has been unable to get a satisfactory answer.
Those two cases—one involving a gentleman who received a pension from his previous service and then another one for which he paid AVCs; the other involving a lady who was employed in a more humble capacity—show that something has gone wrong with the company's pensions.
§ Mr. Peter Brooke (Cities of London and Westminster)
I declared my interests on Second Reading. I shall not declare them again. We agreed on Second Reading that the Bill did not have specific relevance to pensions, although we were allowed to discuss the issue. The concession letter of 20 April to my hon. Friends the Members for Aldershot (Mr. Howarth) and for Arundel and South Downs (Mr. Flight), to which frequent reference has been made, was an imaginative lubrication to the Bill's passage, but it did not speak to the tone and text of the Bill.
I should like to add a personal note to the comments of the hon. Member for Twickenham (Dr. Cable). He and I blocked Third Reading initially with a cry of, "Object." In that respect, we have played some part in bringing this evening's proceedings about.
I would have dwelt on the issues raised by the hon. Member for East Antrim (Mr. Beggs) had he still been here. I have taken the trouble to verify the actuality in the case of the part-time former employees of TSB in Northern Ireland, and satisfied myself that the company has behaved properly. I shall not detain the House on that.
We are addressing three issues, relating to those on low incomes, those with anomalies and the deferred pensioner trustee. I shall dwell on each of those briefly.
Like many great companies, Lloyds TSB has a team, consisting mostly of former employees of the company, who go round visiting pensioners to verify that their conditions are satisfactory. The team reports back on the conditions of those pensioners. Before the Hill Samuel action group was created, Lloyds TSB visited the Inland Revenue to verify whether there were ways in which it could augment those pensions, provided that that augmentation would not be treated simply as a substitute for social security payments, which would be reduced pan passu with the extra pension. The Inland Revenue politely showed the Lloyds TSB team the door, and said that no action could be taken.
The visit of Lloyds TSB to the Inland Revenue in June, which was brought forward, was a response to the commitment to conduct a full review of all those on low incomes. Lloyds TSB said that that would take six months. We were told on Second Reading how long the review would be. With the debate taking place on 20 April, it would go through to 20 October. The Inland Revenue said that there was no point in discussing the issues unless Lloyds TSB came back with its proposals. The Revenue said that it could not discuss anything without specific proposals to consider.
We may feel that fate is being unfair and the Inland Revenue is being unimaginative, but Lloyds TSB is doing its best to deliver in line with the Inland Revenue's 252 request. That request goes back to the issue of ensuring that what is given by Lloyds TSB is not taken away by the Treasury to return to the Department of Social Security.
I may be the only Member speaking tonight who does not know the figure that Lloyds TSB has in mind, so there is no need for anyone to intervene on me to ask what the figure is. I see the hon. Member for Barnsley, Central (Mr. Illsley) saying that he is in the same position.
I should tell those who are concerned that the process should be accelerated that, when Lloyds TSB is in a position to know the outcome of its review, it will in all courtesy want to discuss that with the unions that represent 58,000 people before going public on it, so that the issue is agreed. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) said that people have to know what they might be given before they can make up their minds, but that is not the issue. The issue is what the Inland Revenue rules will be. Until Lloyds TSB knows the Inland Revenue rules, it cannot come forward with a proposition, because it does not know from which pocket of its coffers it would be paying.
As for the anomalies, there has been some criticism about the length of time it is taking to produce the guidelines, although some charity has been exercised in recognising the complexity of the matters concerned. One problem is exactly the same as exists in the context of pensions mis-selling: when pensions were originally granted or arranged, the law of the land did not require the holders of pension funds to keep much of the information that is now required. An enormous amount of archival work therefore needs to be done to examine what circumstances applied to particular individuals at the time. That affects the time it takes to produce guidelines.
My best understanding of the timetable for the issuing of the guidelines marches with that of my hon. Friend the Member for Arundel and South Downs—that, although they are now before the lawyers, they still have to be run in front of the chairman of the pension fund. We are talking about weeks, and I am confident that, although 30 September is the deadline by which people should raise their anomalies, if Lloyds TSB fails to produce the guidelines before the middle of August so as to allow a further six weeks for anomalies to be brought forward, we can expect the company to be flexible. However, I have no direct authority for saying that.
We are all saying that Lloyds TSB is being impatient in terms of the deadlines that it is setting, but it is worth reminding the House that the Hill Samuel action group first approached the bank in November, but did not produce details of a single anomaly before Second Reading. On the Friday—17 April—it sent through the mail a list consisting of a couple of hypothetical anomalies that Lloyds TSB might wish to consider, but those did not reach the company until after Second Reading.
It therefore cannot be said that, in the period leading up to the proceedings on the Bill, the action group was like Blucher rushing towards the field of Waterloo. By 15 May, two anomalies had been submitted; by 25 June, 80 had been supplied; and I understand that, by yesterday, there were 200. The number is accelerating, and I have no doubt that Lloyds TSB will have a lot to look at by the end of September.
The Hill Samuel action group said that it had written to its members on 11 May because Lloyds TSB would not take action itself. However, to be fair to Lloyds TSB, 253 in the concession letter, with reference to what was agreed with my hon. Friends the Members for Arundel and South Downs and for Aldershot, it said:We agreed that the HSAG"—that is, the Hill Samuel action group—would be asked to write to its members requesting those who consider there to have been anomalies in their treatment, to write to a designated person at Lloyds TSB setting out full details of their concerns.So the basis of the concession letter was reasonably straightforward.
Lloyds TSB had a lot to do in sending circulars to everybody, and by 15 May it wasfinalising our communications programme to 180,000 members of the pension schemes within the Lloyds TSB Group".I am going over ground that the hon. Member for Barnsley, Central sketched. Over the next month or so, the bank said, it wouldbe communicating with pensioners through the Group pensioner magazine Stable Companion, to members of staff through the staff magazine Frontrunner, and to deferred pensioners with their annual statements which are due to be dispatched shortly.I find that quite a comprehensive programme to have mounted in 60 days.
§ Mr. Cousins
I should like to be clear in my mind what the right hon. Gentleman is saying. I accept that again, as on 20 April, assurances are being given by Conservative Members, no doubt in perfectly good faith—but not on behalf of Lloyds TSB itself. Is the right hon. Gentleman telling us that Lloyds TSB will circulate all its pensioners, produce the guidelines by the middle of August, and, if the guidelines are not produced by that time, the 30 September date will be suspended—and that, in any event, if people come to light after 30 September, their cases will be individually dealt with in good faith?
§ Mr. Brooke
As always happens with such a Bill, the only person who can give an assurance on behalf of the promoters of the Bill is the hon. Member who is handling it. However, I, like various other hon. Members in the Chamber tonight, including the hon. Member for Newcastle upon Tyne, Central, who has been assiduous in his attention to the issue, have been involved in quite a lot of hard work on behalf of people who have written to us—a fair number have written to me—and in terms of conversations with the bank.
In the end, we have to make our best judgment of what will occur. In the specific terms of the question that the hon. Gentleman has asked me, the sending of circulars has already occurred; as I said, it was foreseen on 15 May. I also said that my own reading was that, if the guidelines were delayed beyond the middle of August, the 30 September deadline would slip.
§ Mr. Illsley
On behalf of the promoters, I can give an assurance in the terms outlined by my hon. Friend the Member for Newcastle upon Tyne, Central.
§ Mr. Brooke
I am extremely grateful to the hon. Gentleman for that intervention. Interventions are not 254 always those that one would have sought, but the hon. Gentleman's intervention on this occasion was almost divine.
I shall now deal briefly with the deferred pensioner trustee. I received the first letter on this subject on 23 March from a constituent of mine who was once a household name in corporate finance. He wrote me a long and reasoned letter, including the words:Our primary concerns are (1) to (4)",after which he listed four concerns. He was writing on behalf of the action group, and, at that time, his primary concerns did not include a deferred pensioner trustee.
Therefore, the conversation that my hon. Friend the Member for Arundel and South Downs had with Lloyds TSB on the day of Second Reading, which produced a suggestion by Lloyds TSB that it would consider the appointment of a deferred pensioner trustee, was somewhat incidental. It was part of the lubrication that I have mentioned, but it was not a central part of the Hill Samuel action group's original proposals.
I finish with a further quotation from my constituent, who wrote to me on 5 May:It is a very good scheme, and well run: but inevitably with the benefit of hindsight, some people are not properly covered—and they are often the ones who don't like to complain.That, and our concern about such people, is exactly the issue with which many hon. Members have been engaged in our debates.
As I said earlier, with the hon. Member for Twickenham, I played a fulcrum role. Indeed, I took longer to remove my block than he did his. I am now satisfied that the company will honour its obligations. For what it is worth, despite my role in the blocking motion, I am, as I said on Second Reading, the Member of Parliament for the constituency in which the headquarters of the institution are situated. In that capacity, I shall myself be concerned that the commitments be met, and I would be astonished—not least in view of the amount of coverage that the events have had over the two debates—if a bank of such a standing did not meet those commitments in a manner of which all of us who have taken part in the debates can be proud.
§ Mr. Geoffrey Clifton-Brown (Cotswold)
I did not intend to speak in the debate, but I rise because a number of anomalies need to be clarified. A number of my constituents—concerned pensioners of the Hill Samuel group—wrote to me, so I added my name to the blocking motion. I did my duty by my constituents: I met Mr. Fairey, the deputy chief executive of the Lloyds TSB group, to seek a number of assurances.
The law on pensions—this has not been mentioned tonight—is one of the most complicated areas of the financial services industry. The Pensions Law Review Committee, whose findings eventually led to the Pensions Act 1995, examined in huge detail the ownership of surpluses in pension funds. Having heard and reviewed a huge amount of complicated evidence, Professor Goode, the chairman of the committee, concluded that a pension fund surplus belonged exclusively neither to the pensioners nor to the employers who had contributed to the fund—it belonged to them both jointly. Trustee deeds show what the trustees are allowed to do in each individual pension scheme.
255 Mention has been made of the pre-1975 pensioners who were in schemes for fewer than five years and so did not qualify for a pension. The law was changed in 1975 by the then Government to entitle those who had served for fewer than five years to a pension, but that did not apply retrospectively. Indeed, I believe that it would have been improper for the trustees to apply that decision retrospectively; if they had, the matter could have been subject to judicial review.
Ever since I have been a Member of Parliament, I have had to deal with cases in which constituents have asked me, after pension law has changed, to request the Government to apply the new law to the state pension scheme retrospectively; in each case, the Government—of whatever colour—have refused to do so.
Interestingly, the Hill Samuel pensioners did not complain when their pensions were taken over by the TSB group, as the reserves of the TSB pension scheme were substantially larger than those of the Hill Samuel scheme. Only now that the TSB pension scheme is being taken over by Lloyds, whose pension scheme has fewer reserves, have the complaints begun to emerge. However, as far as I am aware, those complaints are being made by only 200 or so members of the Hill Samuel action group out of the tens of thousands in the combined TSB and Lloyds scheme. Although the case of even one pensioner who is in any way deprived should be considered, the trustees have a duty to act in the interests of all their pensioners.
The matter of low-income pensioners is far from simple. Someone who has served a similar length of service on a similar salary may seem to be entitled to a similar pension, but that person may have taken a lump sum on retirement, which would considerably affect the payable pension. Alternatively, someone may have retired at an earlier age than someone else who had served a similar length of service; again, that would affect the pension that was eventually payable.
I have investigated this complicated matter at some considerable length—I have corresponded with my constituents and with Mr. Fairey—and I believe that a reasonable balance must be struck between the interests of those pensioners who may be affected and the interests of the pensioners as a whole and of the shareholders. I do not think that the Bill will adversely affect any pensioner over and above what they might have expected in any case under the law of the land.
I have asked Mr. Fairey, the deputy chief executive of the Lloyds TSB group, to examine in particular the case of my constituent Mr. Jones-Bateman, who was a regional director of the Hill Samuel group. Mr. Fairey has full details of the case, and he has undertaken to consider it sympathetically and in detail—I have no doubt that he will keep his word. On the basis of my investigations, I am satisfied that a fair balance has been struck between all the different pensioner groups that are affected by the merger, so I shall not vote against the Bill.
§ 9.3 pm
§ Mr. Illsley
With the leave of the House, Mr. Deputy Speaker, I shall respond briefly to an interesting debate. As on Second Reading, there have been some remarkable contributions, and we have heard some excellent tours de force on pensions law and pensions issues. They did not much relate to what is in the Bill, but they were interesting all the same.
256 I am grateful to the right hon. Member for Cities of London and Westminster (Mr. Brooke) and the hon. Members for Arundel and South Downs (Mr. Flight) and for Cotswold (Mr. Clifton-Brown) who originally blocked the Bill, but have withdrawn their blocking motions and favour progress of the Bill. As the hon. Member for Cotswold said, pensions law has been dealt with by the Goode committee, which dwelt at length on the ownership of surpluses. The hon. Member for South Holland and The Deepings (Mr. Hayes) made the same point. It is a complicated area, but it is not within the remit of the Bill. Perhaps there should be a debate in future, but, the matter having been so recently addressed by the Goode committee, it may be some time before pensions law is further amended.
Let me tell the hon. Member for New Forest, West (Mr. Swayne) that the Bill's purpose is to facilitate the merger that took place two or three years ago between Lloyds and the TSB. All the pensions issues that we have discussed fall outside the Bill. There are anomalies, and there are lower-paid pensioners, but every member of the scheme is being paid his or her entitlement. The bank has given repeated assurances that those issues will be addressed.
My hon. Friends the Members for Newcastle upon Tyne, Central (Mr. Cousins) and for Knowsley, South (Mr. O'Hara) have asked why it is taking so long for the Inland Revenue and Lloyds to reach agreement, but, as the hon. Member for Cotswold said, there are many different reasons why pensioners have low entitlements. Under the TSB scheme, pensioners were obliged to take 50 per cent. of their pensions as a lump sum. That reduced on-going payments, which meant that those people were lower-paid.
The pre-1975 pensioners would have had contributions returned if they had been members for not longer than five years. That is another area in which there will be no payment, and it has come to light only during our debate. Every pension depends on length of service in the scheme, and final salary.
§ Mr. Swayne
Setting aside the anomalies, which I accept are not the subject matter of the Bill, can the hon. Gentleman say what the consequences would be for the merger if the Bill were lost tonight?
§ Mr. Illsley
Lloyds and TSB would have to find a different way to do business in future. The reason for the Bill, as with any bank Bill, is to facilitate the merger without the bank's having to take into account the wishes and views of every account holder and customer, which would be impossible, as there are several million of them. It would be an extremely heavy burden on the banks if they were asked to contact every member for permission for the merger.
I have answered the point made by the hon. Member for Gainsborough (Mr. Leigh) about different categories of people whose pensionable service will have left them with a low-paying pension. Lloyds has addressed that issue. I am not sure whether the hon. Gentleman was in the Chamber when I assured the right hon. Member for Cities of London and Westminster that guidelines will be produced shortly. I hope that the 30 September deadline will be flexible, and that the issues will be addressed.
257 I take on board the points made by the hon. Member for Twickenham (Dr. Cable) who made a comparison with the coal industry's pensions schemes, but that issue relates to the Goode committee and pensions law, and it falls slightly outside the remit of the Bill.
After a longer debate than I had expected, and after considerable debate on Second Reading, I hope that hon. Members will give the Bill a fair wind, and a Third Reading, without the need for a Division.
§ Question put and agreed to.
§ Bill read the Third time, and passed.