HC Deb 11 February 2000 vol 344 cc577-84

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]

2.30 pm
Mr. Russell Brown (Dumfries)

I am grateful for the opportunity to discuss this issue in the House. I know only too well that several right hon. and hon. Members would have been in the Chamber had it not been for constituency engagements. Many colleagues have apologised to me, and they have wished me well in highlighting the long-running issues surrounding the Bus Employees Superannuation Trust and the National Bus pensions fund.

It is important that I move quickly to the matters on which I seek ministerial guidance and support, but it is necessary to outline how I come to be raising the issue today. In 1986, following the privatisation of the National Bus Company, the two employee pension schemes were wound up and the pensions frozen. The Government agreed to meet any liabilities so long as they could receive any surplus. Under management pressure, the trustees amended the BEST winding-up clause to divert any surplus to the employer—that is the Government—rather than share it among the employees, as had always been the rule.

During 1990, a sum of £168 million was paid to the Department of Transport. At that time, angry pensioners and bus company employees suddenly saw their pension fund being raided. One of them was Mr. Frank Wheeler, who now lives in my constituency. Over time, he decided to take the issue to the pensions ombudsman and eventually, in 1996, the ombudsman determined that there had been a breach of good faith and a fraud on a power and that a surplus of £200 million should be repaid to the pension trust. Most people would have said that that was a job well done and a victory for decency, but it was not on this occasion.

Solicitors were employed to fight the case and, just as Frank Wheeler was determined to battle for what was rightly the property of bus company pensioners, the solicitors were intent on making his life a complete misery. He was threatened with High Court action and thereby heavy legal costs against him if he persisted with the case.

The issue dragged on for a number of years, and I know that Frank Wheeler would wish me to thank my hon. Friends the Members for Weaver Vale (Mr. Hall) and for Crewe and Nantwich (Mrs. Dunwoody), who were so supportive to him in a trying and lengthy period. It was only natural that, when I was elected, Mr. Wheeler urged me to help him and, to be completely honest, I had to be careful how I handled his case. I knew that there was a great deal of sympathy for it in Government circles and that my right hon. Friend the Deputy Prime Minister was particularly keen to see the injustice rectified. It became clear to me at an early stage that it was important that the issue did not find its way back into the courts, where it might have been lost for months and might have resulted in the loss of significant sums of money because of legal costs.

To everyone's delight, on 30 September 1998, my right hon. Friend the Deputy Prime Minister said: Look at what happened when the Tories privatised the National Bus Company. They raided the pension funds and refused to recognise the pensioners' claim to millions of pounds of pension surplus. The legal wrangles have gone on for years, while thousands of pensioners have had to wait. Tragically, some have died. I can say today, I have instructed our lawyers to stop the legal fancy dancing. I have told them to open discussions with the pension trustees, to achieve a just out-of-court settlement, as quickly as possible in the coming months, and end this shameful delay. That was more than 16 months ago.

In the middle of June 1999, the Deputy Prime Minister was able to announce that the pension trustees were intending to recommend that the offer of £300 million for the BEST scheme and £55.77 million for the NBPF scheme be accepted. The funds were eventually handed over about six weeks later, at the end of July.

In view of that fair settlement, it was appropriate to press the trustees for payment of Frank Wheeler's out-of-pocket expenses. It has to be borne in mind that Frank is now in his early 70s and has spent 12 or 13 years fighting this injustice. Time that he should have spent enjoying retirement with his wife was spent fighting a battle against bureaucracy and the legal profession. The campaign has taken its toll on Frank's health and he is currently recovering from a stroke that he had towards the end of 1999. I am pleased to be able to say that Frank has, at long last, had his out-of-pocket expenses reimbursed, but that was not without a battle.

There is still, however, the issue of legal costs incurred by Frank Wheeler. Certain costs were recovered, but additional costs arose in the period from mid-August 1998 to early June 1999. The solicitors acting on behalf of the trustees argued that those were unnecessary costs as a result of unnecessary action taken by Frank Wheeler. There is a belief that, without his further action and the pressure that he brought to bear, the settlement may have been only about £200 million, not the £355 million that was eventually agreed.

Some of Frank's time was spent trying to ensure that one legal firm in particular, which had created severe difficulties for him in the past, would not be involved in the latter stages of the settlement.

That preamble brings us to today's position. Almost eight months after the moneys were transferred to the trustees, what have the pensioners received? They have been given two information bulletins, one in July last year and one in December, and no money whatsoever. It is estimated that, as each month passes, the interest accrued on the fund realises just over £1.1 million. The trustees have been working with their legal advisers, Taylor Joynson Garrett, and their administrators, Standard Life Assurance Company, to try to update records. Possible ways of distributing the money have also been under consideration and, as might be expected, there are many different views about what should be done.

Behind all that, however, has been the desire to ensure that pensioners do not find themselves paying large amounts of tax. While the trustees' efforts on taxation have to be applauded, there is a general feeling that they are dragging their heels and that the only people who are getting paid are the solicitors who are providing the legal advice.

The matter of court proceedings continually raises its head, and there is no doubt that the trustees' legal advisers need to ensure that, if those proceedings must be gone through, they do not take up a lot of valuable time. The pensioners now fall into four categories. There are those who were members of the BEST and those who were members of the National Bus pension fund, but each group is split into those who remained in the pension funds—Standard Life pensioners—and those who transferred out. To represent those four groups, four representative beneficiaries have been appointed, and I am delighted that Frank Wheeler, my constituent, is one of them.

There is, however, a serious worry about how this matter is to be dealt with if there are court proceedings. All four representative beneficiaries have been told that one firm of solicitors will represent them all, but there must surely be a conflict of interest. Standard Life pensioners cannot and should not be dealt with in exactly the same way as the transferees. Conflicts of interest have been a problem with this matter from a very early stage. Also at an early stage, there was genuine concern that any possible success with the case would lead to exorbitant costs and that, therefore, it was appropriate to keep costs as low as possible. That is no longer so, and there is every justification now in seeking the services of a second legal firm to deal with the interests of the transferees, thereby eliminating any allegation of a conflict of interest.

I know that many hon. Members have constituents who are affected by this matter, and I am pleased to be able to say that the trustees have agreed to meet me and some of my hon. Friends. However, I must add that this morning I received a letter from the trustees offering several dates on which to meet—some six weeks away. I am sure that, when I relay that information to my hon. Friends, they will be disappointed about that delay.

From his comments in the House earlier this week in reply to a question from my hon. Friend the Member for Doncaster, Central (Ms Winterton), I know that my hon. Friend the Minister intends to meet the chairman of the trustees in the near future. Perhaps it might be a good idea to include my hon. Friends and me in that meeting.

The trustees' legal advisers issued a statement towards the end of last week saying that they intended to make an interim payment to about 8,000 pensioners within the next six or seven weeks and that the remaining Standard Life pensioners would receive an interim payment around July. A court decision on the transferees has still to be made, but I see no reason why proceedings should not run in tandem with all other activities. Regrettably, the statement also mentions a final distribution in spring 2001.

There is a serious question about how pensioners would wish to receive whatever they are entitled to. Although, as I have previously stated, I understand the trustees' endeavours to ensure that as little money as possible is returned to the Treasury in taxation, it is becoming clear that pensioners want a one-off lump-sum settlement and that there is no great support for an increase in the annual pensions payable. The fact that many pensioners have died during this episode and that many more are very elderly leads me to believe that a one-off payment should not be discounted by the trustees with any great haste. As long as recipients are made aware of the fact that taxation may be an issue, trustees can rest easy knowing that they have informed the pensioners.

As I said, I am delighted to have been able to secure this debate. May I quickly re-emphasise the important points for my hon. Friend the Minister? There is a need for Frank Wheeler's additional legal costs to be paid from the fund. After all, his additional effort put an extra £150 million into the trust fund. Another firm of solicitors needs to be appointed to assist representative beneficiaries, thereby eliminating any conflict of interest. Proper support in terms of travel and accommodation costs needs to be given to the representative beneficiaries who come to London for meetings. They are elderly people and cannot be expected to conduct business and travel up and down to the City in the same day. There is also the important need to make all payments to recipients well before spring 2001.

The pensions ombudsman made a determination and it is right that those who were unjustly dealt with should be given what is rightfully theirs. This is an issue not about pensions, trustees or lawyers, but about people—elderly people. In the words of someone from the legal profession, perhaps City-slicker solicitors should hang their heads in shame.

2.44 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill)

The National Bus Company pensions issue has been a matter of concern and contention for a long time. Indeed, it goes back far beyond the lifetime of this Government to how our predecessors handled the privatisation arrangements for the National Bus Company in the mid-1980s.

I congratulate my hon. Friend the Member for Dumfries (Mr. Brown) on his thoughtful and helpful speech, and on raising an issue which I fully understand is of great concern to a large number of former NBC employees. I also congratulate other hon. Members, such as my hon. Friend the Member for Doncaster, Central (Ms Winterton), who have actively pursued the case of the pensioners over the long years through which the matter has been in dispute.

Regardless of their view on the merits of the case, hon. Members will understand that these matters have been complex and difficult to resolve. However, the Government's aim has been to achieve a just and honourable outcome for the many thousands of pensioners affected. We have given a high priority to ensuring a fair settlement for bus pensioners, and that is what we have achieved.

Opening the debate, my hon. Friend the Member for Dumfries outlined the background to the case. I shall not detain the House by describing in detail its long history. Suffice it to say that when the Government took office, legal action was already in process as a result of our predecessors' offer in November 1996 to fund an action by the trustees to pursue recovery of the BEST surplus through the courts. That followed the decision by the pensions ombudsman, to which my hon. Friend referred.

Given that litigation on the much larger BEST scheme was already under way, we extended the offer to cover an action on NBPF—the National Bus pensions fund—the other National Bus Company pension scheme, thus enabling all the outstanding issues to be covered in a comprehensive settlement.

It took the trustees' lawyers considerable time to prepare their formal detailed arguments on both cases. The final part of the claims was not submitted by them until July 1998. We were strongly advised that negotiations on an out-of-court settlement should not be opened until all the complex legal issues and arguments had been fully considered and brought out into the open.

However, as soon as that stage had been reached, my right hon. Friend the Deputy Prime Minister announced in his speech to the 1998 Labour party conference that he had instructed lawyers to open discussions to achieve a just out-of-court settlement as soon as possible.

Those discussions were successful, and the negotiated settlement that we announced last summer was the culmination of our efforts to achieve a just outcome on the pensioners' behalf. As my hon. Friend reminded the House, that resulted in the Government agreeing to a total settlement of £356 million—moneys that were paid over immediately following the endorsement of the settlement by the High Court at the end of July 1999.

That was a full and final settlement of the long-standing claim regarding the two schemes. I know that there was widespread appreciation that the settlement was achieved, and also of the part played by my right hon. Friend the Deputy Prime Minister in particular in ensuring that the case was taken forward and a just settlement reached.

I should make clear at this point that now that the Government have paid over the funds in question, responsibility for distribution of the settlement rests entirely with the trustees. It is the trustees who have, and must have, the legal responsibility for deciding on and implementing the settlement's distribution to individual pensioners.

I should also say a word about the composition and role of the trustees. They are independent of the Government. They are appointed by the Official Solicitor, who acts not for the Government, but in the interests of those for whom, for example, he is acting as judicial trustee or on whose behalf he is conducting litigation. The trustees are chaired by an independent, expert and widely respected pensions trustee, and they include a former NBC bus driver whose name was put forward by the National Union of Rail, Maritime and Transport Workers.

Mr. Brown

That point is the subject of conflict. The bus employee who sits as a trustee is a deferred pensioner. Pensioners do not believe that their best interests are being looked after by that person.

Mr. Hill

I am grateful to my hon. Friend for that information. Like all the other issues, I shall consider it after the debate and raise it in due course with the trustees.

The trustees take the view, and I understand their reasons, that any final distribution of the settlement must be approved by the courts to ensure that it is recognised as fair and equitable to all categories of potential claimant. That clearly limits the scope for an interim distribution ahead of court approval. It should also be recognised that the trustees face a substantial and significant task in taking forward the necessary arrangements for distributing the benefits to pensioners on an equitable basis. There has been a need to set up a comprehensive database of the 50,000 potential claimants and to establish their entitlements to share in the distribution. Significant issues involving tax liability may apply to specific categories of pensioner. That has required detailed discussions between the Inland Revenue and the trustees.

Having said that, it is a matter of considerable concern to us that there has not been more progress in the distribution of the funds. We have received continuing expressions of anxiety from pensioners about the delays. We have made it clear to the trustees in the strongest terms that we share and understand those anxieties. We have also made clear our concern about the lack of information to pensioners on progress. We recently emphasised to the trustees the need to keep pensioners informed as fully and as frequently as possible. The trustees have responded by issuing the first of what I believe is a series of information bulletins.

The most worrying issue is the delay in getting benefits to pensioners. While we acknowledge that it is clearly the trustees' responsibility to take the matter forward, we have nevertheless discussed with them over recent weeks our growing concern about the delays. We have emphasised the increasing concern that that is causing. Indeed, I spoke to the chairman, Sheila Gleig about our anxiety last week.

My hon. Friend suggested that I should meet the trustees to discuss all those matters. I expect to meet them next week, so I have anticipated his kind suggestion. I shall also bear in mind his suggestion for a joint meeting with interested parliamentary colleagues in future if not at next week's meeting. I shall take the opportunity of the meeting to emphasise our dissatisfaction with the delay and to review with the trustees the scope for taking matters forward at a swifter pace. I shall also raise with them the important points that he made in this debate. I intend to pursue those matters in further regular meetings with the trustees.

However, progress is already being made. I was pleased to tell the House earlier this week that the trustees intend, as my hon. Friend acknowledged, to make initial payments to older pensioners in March and April. Some 8,000 pensioners who were in receipt of pensions before April 1986 will benefit by a total of £18 million in the form of an interim pension enhancement and arrears. Those are the oldest pensioners and, of course, the most in need of early payments. The trustees are also urgently investigating the feasibility of making initial payments to other pensioners as soon as possible. I understand that it is their intention to seek court approval of the distribution of the balance of the settlement by the end of this year which should enable a final distribution early in the new year. I shall certainly examine with the trustees whether it need take that long.

My hon. Friend asked whether there should be a change of solicitors by the trustees. I must make it clear that that must be a matter for the trustees rather than the Government. However, I understand that the trustees are reviewing whether they have sufficient legal resources.

A further sign of progress is that I am informed that papers are shortly to be served by the trustees in respect of interim legal proceedings aimed at determining the eligibility of certain categories of potential beneficiaries.

We must hope that those proceedings, and, indeed, those later in the year to endorse proposals for the final distribution, can be brought to an early and successful conclusion. I am sure that all those who have taken an interest in this issue over the years will wish to avoid any unnecessary legal hurdles being placed in the way of the early distribution of what has been widely recognised as the just and full settlement that we made last summer.

Understandably, my hon. Friend spoke about the major role of his constituent, Frank Wheeler over the years. I pay tribute to Mr. Wheeler's contribution and also to those hon. Members who supported him through his dogged endeavours over so many years.

I did not recognise from earlier discussions, of which I have been aware, the issue of additional legal costs that my hon. Friend mentioned. However, I know that Mr. Wheeler has accepted the sum of £20,000 from the trustees in settlement of his claim for compensation for all his efforts and that the trustees understand that there are no outstanding claims from Mr. Wheeler before them. If, indeed, there are further claims I can suggest only that he puts any new information to the trustees. I am sure that they will consider it on its merits.

My Department paid Mr. Wheeler's costs for advice on the negotiated settlement last summer and for representation at the court hearing then to consider approval of that settlement. I am also informed that he has accepted appointment, as my hon. Friend said, as a representative beneficiary in the interim proceedings. The trustees will meet his costs in that regard.

As the House will acknowledge, we are seeing tangible progress and the first benefits will soon reach a significant number of pensioners. The Government will maintain close contact with the trustees to ensure that they do everything possible to minimise the delays for all concerned and that all eligible pensioners can, before too long, enjoy the benefits to which they are entitled. I assure the House that we shall continue to take the closest interest in the trustees' progress in bringing the fruits of the settlement, which we initiated, to those who have had to wait so long for a just outcome to this prolonged dispute.

Question put and agreed to.

Adjourned accordingly at four minutes to Three o'clock.