§ 6. Alan Simpson (Nottingham, South)If he will make a statement on the decision by Network Rail to close its final salary pension scheme. [138859]
§ 11. Mr. David Drew (Stroud)If he will make a statement on the decision by Network Rail to close its final salary pension scheme. [138864]
§ The Minister of State, Department for Transport (Dr. Kim Howells)Network Rail is a private company and its decision about its final salary pension arrangements is a matter for Network Rail itself and the independent corporate trustee of the railways pension scheme.
It is our understanding that there is no intention to breach the arrangements put in place to protect staff pensions on privatisation of the industry. The relevant final salary arrangement will still be open to protected rail industry staff who transfer voluntarily to Network Rail.
§ Alan SimpsonThe Minister will know that Network Rail is a publicly funded company and that that decision will make a large number of its members dependent on means-tested pensions. Will he confirm that the argument advanced by Network Rail for doing that is 605 that its pension bill has doubled to £42 million a year, but that has been as a consequence of the decision in 1994 to cut the contribution rate to the scheme by half.
Will the Minister intervene to ensure, first, that the decision can be reviewed at the earliest possible opportunity and, secondly, that any moneys that the company takes out of workers' pension schemes is not used to pay off companies whose maintenance contracts are being terminated as a result of poor standards of work?
§ Dr. HowellsI am afraid that my hon. Friend has been misinformed about the details of the pension scheme. I do not know where he has got his information from, but it does not square with the reality of the pension scheme. Network Rail has announced that new recruits to Network Rail will not enjoy the shared costs final salary section of the railways pension scheme and that the protection is there for all those members who are part of that section of the scheme.
§ Mr. David Drew (Stroud)Surely my hon. Friend will agree that it looks, certainly from the information that we have received, as though new employees will be somewhat put in jeopardy compared with employees in the previous good scheme. What is somewhat galling is that, at the same time as those employees could be faced with worsening conditions, Network Rail will continue to pay what look like very good bonuses to directors. Does not he agree that that is a somewhat hypocritical, if not contradictory, message to give to the industry?
§ Dr. HowellsI am certainly not in favour of contradictory messages going out, but the question is about the new defined contribution arrangements for the pension scheme, which are as good as any in the private sector. My hon. Friend should realise that some train operating companies have already managed to introduce alternative defined contribution arrangements for new recruits in the industry without any serious dissension. I hope that he accepts that the rights of the many thousands of pensioners in the existing scheme will be protected.
§ Mr. Henry Bellingham ( North-West Norfolk):I have received a number of representations on this, and I shall consider carefully what the Minister said. However, is he aware that 70 leading companies have closed their final salary schemes, affecting roughly 70,000 people? The total cost is about £100 million, but that compares with the £5 billion that the Chancellor has taken from pension funds through the change to tax credit. Does the Minister think that the Chancellor was right to do so?
§ Dr. HowellsI am sure that the hon. Gentleman knows that the Chancellor reduced corporation tax at the same time, and some of the people whom he seeks to represent are glad about that. He knows as well as I do that there have been difficulties with markets and the earnings of pension funds, so companies sometimes have to take such measures. He also knows as well as I do that we have to ensure that pensioners' rights are properly guarded.
§ Mr. Christopher Chope (Christchurch):Does the Minister realise that reducing corporation tax does not 606 help Network Rail, a supposedly not-for-profit company? It has a £200 million pension deficit, so why does he not admit that the truth is that Network Rail's prospective employees will join thousand of others up and down the country who are victims of the Government's vicious pension tax?
§ Dr. HowellsThat was a nice piece of rhetoric, but it will not work. The Government will ensure that the gangster tactics that reigned under successive Tory Governments will not be repeated.
§ Mr. Dennis Skinner (Bolsover)Will my hon. Friend look into the fact that if 70 big business companies refuse to pay proper pensions it is incumbent on those who complain about it to say that they are against big business acting in that way? Moreover, they should tell members of the shadow Cabinet to stop moonlighting and taking £5 million from big business, because they are robbing the pensioners.
§ Mr. SpeakerOrder. I think that the Minister can leave that point.