HL Deb 14 May 1990 vol 519 cc76-92

7. 19 p.m.

Report received.

Clause 1 [Transfer of Property Services Agency and Crown Suppliers]:

Lord Graham of Edmonton moved Amendment No. 1: Page 1, line 7, leave out ("and liabilities") and insert (", liabilities and business").

The noble Lord said: My Lords, I beg to move Amendment No. 1 and it may be for the convenience of the House if I speak also to Amendments Nos. 2, 3 and 4. Three of these amendments are precisely the same, the fourth is tangential. I hope the Minister will take on board something which I failed to make clear in Committee and which concerns the unanimity of the various trade unions whose members are affected by the matters that we are discussing. My noble friend Lord Dean and I will be referring tonight—I referred to this at the previous stage of the Bill —to the fact that, despite the bland assurances of Ministers at times, (they have my greatest respect in other matters) the Government appear not to take fully on board not just the anxieties but also the bitterness of the members of the trade unions who are affected by this measure. Those members have said that they are not being treated with the respect to which they believe they are entitled at a time which is, individually, very traumatic for them.

The trade unions affected by the Bill are the UCATT, the TGWU, the GMB, the AEU, the EETPU, the FTAT, the MSFU—those are the industrial unions—the NUCPS, the IPMS, the CPSA and the FDA. All those trade unions have members, some of whom are certainly affected by the issues we are dealing with and some of whom are like y to be affected by them.

We have again tabled amendments which we tabled in Committee because we honestly believe that they are worthy of an attempt to get the Government to understand the dismay of the Government employees at what the Government are doing. The amendments are perfectly straightforward. We cannot see the sense or, as we say in the North, the mense, of the Government's aim of getting rid of this part of the national empire. Other amendments that we have tabled concern the lack of faith which employees have in the Goverrment's ability to protect their interests once they have been sold on, sold off, or, as I would term it, sold down the river, when this traumatic event takes place. We believe it would be sensible for these amendments to be accepted.

The noble Lord, Lord Reay, has said that the Government cannot see the need for the word "business" contained in the amendments. He said on 23rd April at column 363 of Hansard, We do not believe that the addition of the word "business" … would add anything of significance to the Bill".

That may be the Government's view. However, the trade unions believe that the amendments would improve the Bill from their point of view. Therefore we fail 1.0 see why the Government should not accept the amendments.

When I moved these amendments at an earlier stage of the Bill, I talked of the possibility of the establishment of mini-PSAs. I noted that the noble Lord, Lord Reay, said on 23rd April, at column 364 of Hansard, Clearly departments will be closely aware of the need to achieve value for money and to keep their procurement organisation to the bare minimum".

We believe that is part of the raison d'être of the Government in respect of this measure. We are not talking in terms of undue hardship but we are talking about individuals who have served the nation, their departments and these Ministers well. Those individuals believe they are being shabbily treated at this time. Consultations with trade union representatives have indicated that they are far from satisfied. One of the major trade unions is holding its conference at the moment. It seeks approval from its members for a ballot on industrial action. On Friday of last week the IPMS recommended official strike action to its members. That is an indication of the frustration that trade unions feel as regards persuading the Government to discuss meaningfully the impact of the Bill on their members. I shall have more to say on that on other amendments. I beg to move.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)

My Lords, as the noble Lord, Lord Graham, remarked with regard to three of the four amendments in this group, he moved three identical amendments in Committee. I recognise that fact. In moving these amendments the noble Lord appears to have confused two issues; namely, the process known as "untying", by which Government departments are no longer compelled to place orders for goods and services with the PSA and TCS, and privatisation itself.

Until recently government departments had to place their orders for the full range of services provided by the PSA and TCS with those two organisations. They were not permitted to place their orders elsewhere, even if they believed they would succeed in obtaining better value for money or improved specifications. As part of their financial management initiative, the Government have given departments the freedom to seek the best deal they can in the procurement of their goods and services. This will generally mean the placing of orders by means of competitive tenders.

This process requires departments to decide what they want, rather than relying on the PSA and TCS to tell them what they should or will have. Inevitably, therefore, they will need access to advice in specifying and then procuring the goods and services they require. Naturally departments cannot acquire this expertise for themselves without some cost. But the Government believe that these costs are outweighed by the benefits of obtaining goods and services in competition.

The result of the process of untying is that the PSA and TCS now compete directly with the private sector. Those activities which, for one reason or another need to be kept in Government have been removed from TCS, and are being removed from the PSA. Those that remain will be indistinguishable from ordinary commercial activities. We believe there can be no case therefore for retaining them in the public sector.

The noble Lord, Lord Graham, made reference to the phrase "national empire". This piece of legislation, like many others, has been initiated because the Government do not believe in national empires. That is why we resist the amendments.

Lord Dean of Beswick

My Lords, I listened with great care to what the Minister had to say in reply to my noble friend Lord Graham. His comments were a re-hash of what took place in Committee. However, neither in the earlier stages of this Bill nor in the reply given by the noble Lord, Lord Hesketh, tonight have the Government indicated what has failed in the past which has led them to take this view. I think it is rather sad that the Government appear to be falling back on the old idea that their political dogma must be right on all occasions. The Government are obviously not going to move on these amendments.

It is sad that in any privatisation matter, whether it concerns one of the large public utilities that have been sold off or the Property Services Agency —that is another form of public ownership—the Government appear to discount completely any progressive or objective assessments or suggestions that come from the employees involved. In the past I have been responsible at a local level for running a large building department in local government. Subsequent to that I was involved in running a large housing department in local government. I always believed in testing the market. It would be a fool who did not do so. I never believed in handing out contracts just to keep people in work. I never believed that public departments which employed people were convalescent homes. However, that is the inference that the Government appear to be drawing as regards this rather squalid exercise.

It is time that Ministers—perhaps not those in this House but their bosses in another place—realised that trade unions also have an overwhelming interest in the success of the organisations in which their members are employed. It is no comfort to members of trade unions to find that the Secretary of State for Employment suddenly has a conscience about trade unionists because there has been a series of sad accidents in the Channel Tunnel. That does not cut any ice with trade unionists. The image that comes across is that the Government are blatantly biased against trade unions and against the suggestions that sometimes emanate from their members.

We have only an hour to debate the amendments before us tonight. I fully concur with the comments of my noble friend Lord Graham. It is sad that even at this late stage the Government are not prepared to consider the amendments moved by my noble friend.

Lord Graham of Edmonton

My Lords, I acknowledge that the Minister is not prepared to recognise the concern of the trade unions. He picked me up on my use of the word "empire". The Minister knows that I referred to the public empire that is managed by the state. The employees of that empire are proud of what they do. However, they recognise that this Government no longer want to govern their particular part of the empire. That is as plain as a pikestaff.

I believe that the Government are going down the wrong road. If they want an improved, more efficient and cost-effective public service the trade unions are in the business of listening. I do not believe that the Government have listened very carefully or cleverly to the amendment. I intend to test the opinion of the House.

7. 32 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 23; Not-Contents, 68.

Barnett, L. Jenkins of Putney, L.
Carmichael of Kelvingrove, Lockwood, B.
L. Macaulay of Bragar, L.
Carter, L. Mason of Barnsley, L.
David, B. Murray of Epping Forest, L.
Dean of Beswick, L. [Teller.] Nicol, B.
Dormand of Easington, L. Peston, L.
Ennals, L. Pitt of Hampstead, L.
Fisher of Rednal, B. Prys-Davies, L.
Graham of Edmonton, L. Taylor of Blackburn, L.
[Teller.] Underhill, L.
Hatch of Lusby, L. White, B.
Houghton of Sowerby, L.
Alexander of Weedon, L. Kimball, L.
Ampthill, L. Lauderdale, E.
Arran, E. Long, V.
Auckland, L. Lothian, M.
Belhaven and Stenton, L. Lyell, L.
Beloff, L. McColl of Dulwich, L.
Belstead, L. Mackay of Clashfern, L.
Blatch, B. Macleod of Borve, B.
Boardman, L. Mancroft, L.
Borthwick, L. Mersey, V.
Boyd-Carpenter, L. Milverton, L.
Bridgeman, V. Monk Bretton, L.
Caithness, E. Mottistone, L.
Carlisle of Bucklow, L. Napier and Ettrick, L.
Carnegy of Lour, B. Orkney, E.
Carnock, L. Pender, L.
Colnbrook, L. Pym, L.
Colwyn, L. Rankeillour, L.
Craigavon, V. Reay, L.
Davidson, V. [Teller.] Renton, L.
Denham, L. [Teller.] Renwick, L.
Elles, B. Saltoun of Abernethy, Ly.
Faithfull, B. Sanderson of Bowden, L.
Fraser of Carmyllie, L. Sharples, B.
Glenarthur, L. Skelmersdale, L.
Gray of Contin, L. Stockton, E.
Gridley, L. Strange, B.
Harmar-Nicholls, L. Strathclyde, L.
Henley, L. Strathmore and Kinghorne,
Hesketh, L. E.
Hives, L. Thomas of Gwydir, L.
Hooper, B. Trumpington, B.
Jenkin of Roding, L. Ullswater, V.
Johnston of Rockport, L. Wise, L.
Joseph, L.

Resolved in the negative, and amendment disagreed to accordingly.

7. 39 p.m.

[Amendments Nos. 2 and 3 not moved.]

Clause 2 [Transferred staff]:

[Amendment No. 4 not moved.]

Lord Graham of Edmonton moved Amendment No. 5: Page 2, line 20, leave out paragraph (a) and insert: ("(a) nothing in this section shall prejudice any rights or entitlements of any person arising in connection with any scheme under section 1 of the Superannuation Act 1972;").

The noble Lord said: My Lords, this amendment is crucial and sensitive as it affects the members of whom I spoke earlier. It falls under Clause 2, which deals with the terms under which transfers and redundancies take place and with superannuation, so Clause 2 is crucial.

The employees are unhappy and uneasy at the way in which the Government have explained what they intend to do. For instance, the Government have said that the terms under which the transfers will take place will be comparable. They have used such terms as, "They will mirror". One of the disturbing features is the employees' inability to relate the Government's intentions under this Bill to their intentions under previous Bills. The Minister must understand that the employees are realistic. They realise that some of them will continue to enjoy their present terms and conditions in respect of pay, work, pensions and redundancy. They will not be disturbed when the dust settles, but, sadly, other employees will be t ransferred out —I prefer to say sold on —with that part of the business to a new management buy-ouf team or whatever it may be and they are obviously anxious.

Ministers in another place, Mr. Chris Patten and Mr. Christopher Chope, are well aware, as I am sure are the two Ministers who speak here tonight, of the deep unease about the fact that the trade unions have failed to take advantage of the way in which questions have been handled by Ministers. Perhaps I may read out a paragraph from the ballot paper issued by the Institution of Professionals, Managers and Specialists with regard to the ballot to which I referred earlier. It states: No adequate guarantees have been received that pensions and severance entitlements comparable with and as secure as those in the PCSPS will be provided in the private sector following privatisation despite repeated requests for such guarantees".

I am certain that the Minister will say that there are on-going negotiations, that matters have not yet been resolved and that there are no purchasers in sight. He could put at rest the worries of 20,000 people if he accepted Amendment No. 5 and the other amendments that we propose. The sad fact is that, if the employees whom we are discussing continue to be employed in government, they will feel aggrieved at the way in which they have been treated. If some of them become employees in a new business, they will carry into that business a sense of bitterness towards the Government. If they are neither one thing nor the other—if they are made properly redundant —the terms that they enjoy will not be those that they have enjoyed as civil servants.

I am not here to argue whether those terms are right or wrong, save to say that trade unions negotiate the best terms possible for their members and the Government, as the employer, agree to the best terms as regards the employer. I do not listen to people who talk about generous or cushioned terms because the potential benefits regarding redundancy or retirement are reflected in the modest salaries that are carried in order to enjoy those benefits.

Under the terms of the amendment we want the Government to consider the scheme in as generous a way as possible. The employees' fears can be assuaged and the Government's lot in progressing the matter can be made a great deal easier if they realise that the employees are asking not for an advantage or a benefit but for fair treatment from their employer. I beg to move.

7.45 p.m.

Lord Dean of Beswick

My Lords, perhaps I may intervene briefly at this stage. I understand that under the rules of procedure of the House, apart from the mover of the amendment, no one is supposed to rise in support of it at Report stage. However, I believe that my noble friend Lord Graham has made the case for the amendment.

My mind goes back some two or three years when another privatisation Bill was going through the House. At that time we were graced by the regular presence of the noble and learned Lord, Lord Denning. My noble friend tells me that it was the Dockyard Services Bill. The noble and Learned Lord, Lord Denning, dealt forcefully with the attempt by the Government to alter the terms of engagement which employees had enjoyed over a long period as employees of the dockyards so that they could be varied by a new employer. I believe that I am correct in saying that on that occasion, with the persuasive and forceful powers of the noble and learned Lord, the House indicated clearly that his point, made on behalf of trade unionists, was correct. The basis of the argument was that people employed under a contract should not be sold and traded on the open market without having any say in their future.

My noble friend Lord Graham moved the amendment reasonably. It makes sense and the Government will do themselves no disservice to heed the amendment and perhaps look upon it with more favour than has hitherto been the case this evening.

Lord Hesketh

My Lords, the effect of the amendment would be to delete the existing paragraph (a) of subsection (2) and to substitute a provision whereby staff would effectively be regarded as having been compulsorily retired at the point of transfer. They would therefore be entitled to the benefits that flow from this under the PCSPS, even though they will have retained their jobs and will in no sense be redundant.

As the Government have repeatedly made clear, staff terms and conditions of employment are safeguarded. They will, therefore, be entitled to redundancy compensation if in fact they are made redundant after the transfer. The compensation to which they will be entitled after the transfer will be identical, as far as possible, to that which would have been payable to them under the PCSPS.

Normally, when undertakings in the public or private sector are transferred, there is no question of transferring staff receiving redundancy compensation whilst keeping their jobs. The payment of redundancy compensation in those circumstances would be quite unjustifiable and, as I have explained, it is this anomaly that Subsection (2) (a) seeks to rectify. That paragraph contains standard provisions which have appeared in all recent legislation concerned with the privatisation of organisations whose employees are members of the Principal Civil Service Pension Scheme, and this amendment, if adopted, would introduce into the legislation the unjustifiable situation which I have described previously. That is why we resist this amendment.

Lord Graham of Edmonton

My Lords, the Government rest their case on producing pieces of legislation to eliminate what they consider to be lacunae and anomalies in existing legislation. But it is that existing legislation which forms part of the contract between the Government and the employees. The burden of the employees' argument is that there will be no meaningful consultations. In general, when the Government speak of negotiation they do not mean negotiation with employees but with future employers. Once that has been done there exists a fait accompli and the Government say to the employees, "We have negotiated a very satisfactory deal".

The employees may come to the conclusion that it is a satisfactory deal. The removal of this benefit or part of the contract, for example, may very well be seen by the employees as in totality not unreasonable. But they have not had a chance to look at the total package. They are continually inhibited from reaching what fair-minded trade union negotiators would recognise as a fair deal.

Quite frankly there is an objection. The Minister will move the next amendment. We have a shrewd suspicion as to why the Government are taking advantage of the large majority that they have in the House while the trade unions outside are powerless to intervene. The Minister has given an unsatisfactory answer but I am not in a position to challenge it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hesketh moved Amendment No. 6: Page 2, line 23, leave out paragraph (b) and insert— ("(b) his ceasing to be employed in that service shall not be regarded as an occasion of redundancy for the purpose of the agreed redundancy procedures applicable to persons employed in that service.").

The noble Lord said: My Lords, I am rather surprised by the noble Lord's last remarks with regard to the amendment that I propose to move. I had hoped very much that it was in answer to a clarion call that he made at an earlier stage of the Bill. In Committee the noble Lord, Lord Graham, said that he believed that Clause 2 (2) (b) of the Bill would be in contravention of the Government's obligations under the acquired rights directive. At that time I undertook to consider the issue.

The first point that I should make is that it was never the Government's intention that this Bill should prevent the transfer of any collective agreements affecting the staff of the PSA and TCS. It was designed to ensure that redundancy procedures were disapplied at the point of transfer. We have looked again at the drafting of Clause 2 (2) (b), and we do not believe that it would have the effect suggested at Committee stage by the noble Lord, Lord Graham. Nevertheless, we accept that some clarification is desirable to avoid any suggestion that the paragraph inadvertently goes wider than we intended.

The proposed amendment therefore will put beyond doubt that the redundancy procedures are disapplied only at the moment of transfer. As I said in Committee they need to be disapplied in order to ensure that no confusion is caused by the operation of the redundancy procedures at the point of sale. After the sales the relevant redundancy agreement will continue to apply to the staff of the PSA and TCS in so far as the agreement is capable of operation in the private sector.

I hope that the noble Lord, Lord Graham, will accept that this amendment meets the point that he made in Committee. I hope also that it will be acceptable to the House. I beg to move.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister. At Committee stage he spoke to Amendment No. 14, which sought to: leave out lines 23 and 24 and insert … Article 3 (2) of the Business Transfer Directive (No. 77/187) shall have effect in relation to the agreed redundancy procedures applicable to a person employed in that service". — [Official Report, 23/4/90; col. 384.] I took great care to be clear about this matter and at the end the Minister said that he would take note of it and undertake to consider it before the Bill completed its passage.

I do not mean any disrespect to the Minister and indeed for my edification I ask whether he is telling me that, in response to the point that I raised, he and his advisers consider that this amendment is helpful to the thrust of my intention. This amendment was tabled only last Friday and I was made privy to it only today. Because of its lateness I have had no opportunity to seek advice or guidance. Certainly I shall do nothing to stop the passage of the amendment but I shall need to have some guidance from outside the House in order to confirm whether it is indeed helpful or not helpful to the point.

Will the Minister confirm that this is that undertaking; that is to say, the response to the point that I raised?

Lord Hesketh

My Lords, I went to rather a lot of trouble over this matter. This is the response to the point that the noble Lord made.

Lord Graham of Edmonton

My Lords, the Minister says that this is the response. I tell him that I do not recognise it in terms of the point which I made. I am not an expert in these matters. The Minister is expert in reading a brief that he has helped to prepare which, he said, takes him to the point. Perhaps I may again ask the Minister whether what he said he took a great deal of time to prepare is helpful to the point that I made or whether it is anodyne or even benign.

Lord Hesketh

My Lords, the simple answer to that is as follows. The noble Lord, Lord Graham, raises a good point; namely, that he wishes to discuss this matter outside the House. I can reassure him again. I responded at Committee stage, saying that I very much hoped to be able to respond to the point that he made. Following discussion, I and my advisers believe that this amendment answers the point that he raised. Clearly he may wish to consider this matter further

Lord Graham of Edmonton

My Lords, I accept the sense of those remarks. The Minister is aware that between now and the Third Reading of the Bill on Friday there is not a long period during which it will be in order to table amendments. I think it would be helpful to the Minister if our discussions were to take place as quickly as possible in order to avoid a protracted Third Reading stage of the Bill on Friday. That could very well happen if those whom I shall consult outside the House tell me that his response is not helpful. However, I accept that the Minister sought to be helpful and I am grateful for that.

On Question, amendment agreed to.

Lord Graham of Edmonton moved Amendment No. 7: Page 2, line 24, at end insert: ("() no person shall be transferred by this section other than by mutual consent").

The noble Lord said: My Lords, in essence this is a simple amendment. Quite frankly, although I have a brief I do not need to refer to it. This is a heartfelt cry from the trade unions to the effect that before there is a transfer there needs to be mutual consent on the part of the Government, the new employer and the individual.

We know that in the discussions that took place during the previous stage of the Bill the point was raised—and we recognise it—that there will be circumstances in which an employee declines to be transferred. In such a case there are certain benefits —in this case, redundancy —which can flow from that. We do not wish an employee to be told, "Take it or leave it. You transfer, and if you don't transfer you have in effect made yourself redundant, or you have refused an offer, which denies you redundancy". If the Minister is prepared to accept the amendment, I invite him to tell the House and the employees under what circumstances the Government would acquiesce to and be a party to the transfer of employees against their consent. I beg to move.

8 p.m.

Lord Hesketh

My Lords, your Lordships will recall that we dealt with an identical amendment in Committee. Such an amendment, if passed, would give the staff the opportunity to veto both privatisations. Clearly this would not be acceptable to the Government.

I explained in Committee the extensive measures which the Government were taking to meet the preferences of staff who wish to remain in the Civil Service. I cannot of course give a cast-iron guarantee that all preferences will be met. To do so might mean that the viability of the PSA and TCS would be threatened in the private sector. That would clearly not be in the interests of the organisations themselves, those employees who go with them into the private sector or their customers. The availability of alternative posts in the Civil Service is also a constraint. But the staff have been given an undertaking that the management will use their best endeavours to meet staff preferences.

The PSA preference exercise, covering all staff, has been completed and is being evaluated. With arrangements for the sale of TCS so far advanced, it is more sensible now to wait until the identification of the purchasers is known before asking TCS staff what they want to do.

I should perhaps remind your Lordships that not only will staff have the protection of TUPE in relation to their terms and conditions of employment, but they will also have the protection of the general law in relation to unfair dismissals. In the Government's view, therefore, satisfactory protection is being given to the staff's terms and conditions of service, and as much as possible is being done to meet the staffs preferences. I hope therefore that your Lordships will be able to resist the amendment.

Lord Graham of Edmonton

My Lords, it is interesting that the Government and the Minister have indicated that employees can rest assured that they have the protection of TUPE 81. Perhaps I may read a letter to the House from a body called the Training Business Group of 141 Great Charles Street, Birmingham. It is addressed to a Mr. Gallagher, who is the national officer of the National Union of Civil and Public Servants. It is in connection with the Lambeth Skillcentre. That is one of a number of bodies that are being sold under a management buy-out. The Lambeth Skillcentre is being sold to the Training Business Group. The letter is dated 1st May, and the first paragraph states: As I indicated in my previous letter, we have taken very full legal advice regarding our obligations under the Transfer of Undertakings Regulations. It was on the basis of this advice, alongside all other relevant considerations, that I advised you that we did not consider it appropriate to recognise NUCPS. This is still our position". All too eagerly those who are being prevailed upon by the Government to take the Government's hands off aspects of what I continue to call the public empire are acting in a very provocative, unfair, unjust and, I would say, immoral way. The people about whom we are talking have been members of a trade union. It is sometimes the only protection that they have had. This letter gives an illustration. The other paragraph that I believe is worthy of quoting states: I reiterate again that, faced with a very substantial loss making situation at Lambeth, our objective and commitment is to work with the people at Lambeth to do everything we possibly can to look after their interests". At the end of the day if it is in the interest of the new business to make people redundant it will do so because it is the viability of the business with which it is concerned and not the protection under TUPE or anything else.

That is another illustration where employees in my view will be bitter. The Government can do a great deal to recognise that. One of a series of amendments moved either here or in another place provided that businesses that were not viable and making a profit should not be transferred out of the public domain into the private domain. I believe that I am right in saying that it is probably the first privatisation where the Government have not wished to make sure that it was a good buy. They are just anxious to get rid of it.

The people who will suffer are the employees. No one will buy a business that is not profitable or where he will be denied the restraints which will allow the business to make a profit rather than a loss by taking action against the employees. Before I withdraw the amendment has the Minister anything further to say?

Lord Hesketh

My Lords, the noble Lord, Lord Graham, tries to insinuate that the Government have a policy of creating what he calls a good buy. That is not true. We have a policy of producing a viable and successful future. Part of that policy involves ensuring that the employees who go into the new undertaking are properly protected. That has created cost with both these proposed privatisations. It is purely a matter of good business sense to make sure that they are profitable in the future because they have the right level of morale. The noble Lord cannot have his cake and eat it. The Government and the taxpayer may make less money, possibly because we wish to preserve those standards, but the noble Lord cannot at the same time say, "This is not a good buy". He can have one thing or another but not both.

Lord Graham of Edmonton

My Lords, I would settle for a sweetener. I think that £38 million would be attractive.

When the Minister and his colleagues make their policy decisions on how to get out of running these two highly successful public concerns, there is a range of ways in which they can make a business which may not have looked so attractive on the surface look attractive to the potential buyer.

The Minister and his colleagues are storing up trouble. If matters turn out to be as sour and sad as I am told that they will be, we shall return to the House and make Ministers' lives a little less comfortable than they might otherwise have been. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 8: Page 2, line 24, at end insert: ("() Persons transferring by virtue of subsection (2) above shall be entitled to benefits for retirement on grounds of redundancy, inefficiency or limited efficiency which are comparable to those benefits provided by the principal civil service pension scheme which cover retirement on grounds of redundancy, inefficiency or limited efficiency; and for the avoidance of doubt a benefit or benefits shall be regarded as comparable if, but only if, that benefit or benefits is—

  1. (a) Fully protected by transfer to a trust or fund specially designated and financed so as to secure accrued entitlements to retirement benefits on grounds of redundancy, inefficiency or limited efficiency arising under the terms of the principal civil service pension scheme; or
  2. (b) guaranteed to be met out of Treasury Funds.").

The noble Lord said: My Lords, by this amendment we seek an undertaking from the I Government. When the transfers take place the Government, with the best of intentions, will have settled on the best set of terms and undertakings from the potential purchaser. Nevertheless the worry of the employees is that an employer may well be intent on asset-stripping an aspect of the business. Employees are transferred into the private sector with all the protections that are available. There are not many. They then find that in superannuation, redundancy, sickness and a great many matters, the new employer finds a way of reducing his costs by making changes.

If the Minister sees so much advantage to the public in selling on the business, he can do so more easily by giving the employees the guarantees that we ask for. They are simple. If the terms under which the transfer takes place turn out to be blemished—the Minister may say that there should be a timescale, I am prepared to accept that —by the actions of the new employers, in order to give the new employees the guarantees that they currently enjoy, the amendment asks that Treasury funds make up any shortfall that results. I beg to move.

Lord Hesketh

My Lords, the amendment relates to the redundancy terms for staff who are transferred to the new PSA and TCS companies. It seeks to provide the transferred staff with the same benefits as they have at present and also to provide for the protection of those benefits by means of a trust, a fund or a Treasury guarantee. I dealt at length in Committee with the redundancy terms and assured your Lordships that arrangements will be made to ensure that, after privatisation, redundancy terms will be identical, so far as possible, to those which the staff have at present.

The amendment refers specifically to comparability, but I have already made clear that, on redundancy, transferred staff will be entitled so far as possible to identical terms. All previous privatisations ensured that proper protection was given to staff interests. I and my colleagues in another place are entirely satisfied that this Bill is no exception.

The amendment also raises the question of the security of any redundancy payments made after the privatisations requiring some form of guarantee that, if the new owner defaults on his obligations, the payments will be made from public funds. The giving of a guarantee is under consideration but such a guarantee would be unprecedented in a privatisation of this kind and it is unlikely that the Government will accede to the idea. We believe that, in relation to redundancy, the interests of the staff will be properly safeguarded by the measures outlined during Committee stage.

Finally, it is important to remember that the price that will be achieved reflects the fact that the purchaser accepts the conditions on which he will have to employ the staff. Therefore, the taxpayer will have contributed already to that security in that assessment as the transfer takes place.

Lord Graham of Edmonton

My Lords, I accept the fact that the Government and the new employer will act in good faith. I accept that the new terms struck by the Government and in which the employer acquiesces are agreed in good faith. However, subsequently there may be rotten luck, mismanagement, a change in policy or a thousand things which will force the new employer, or in which he will connive, to change the terms of the transfer. The employees who are transferred do not want to be transferred. At present, subject to keeping their noses clean and being efficient and competent, they will enjoy their present terms until normal retirement.

The Minister used the phrase "shall as far as possible". We are asking whether, in the case of an individual tragedy, the Government will be prepared to accept their responsibilities and underwrite such cases. I am familiar with a Royal Ordnance factory in respect of which the Government gave all kinds of assurances about what would happen to the employees. The local Member of Parliament, who was a Minister of State, was told by the Government what would happen. The factory was bought by British Aerospace, which within a short time decided to close it. The Minister might say that that was the business of British Aerospace. However, previously it had been the Government's business.

The factory having closed, the Enfield council stepped in and assisted in making provisions for the establishment of small businesses. Then, lo and behold, some of the employees of the Royal Ordnance factory who had started small businesses found that their factories were no longer available. They had first enjoyed the terms of employment of the Royal Ordnance factory but were transferred to the employment of British Aerospace. They then started their own small businesses but suddenly found that they had been wiped off the map. That was the history at Enfield during five years.

I do not believe that the Minister is naive but he refuses to acknowledge that circumstances can lead to individuals suffering badly. I hope that those employees will take notice of the fact that, as regards this series of crucial, individual and personal circumstances, the Government have proved to be unthinking and uncaring. They may mean well but that is not good enough. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.15 p.m.

Lord Graham of Edmonton moved Amendment No. 9: Page 2. line 24, at end insert: ("() The person or persons to whom anything is transferred at any lime as a consequence of any scheme made under section 1 above shall provide pensions for persons transferring by virtue of subsection (2) of this section which replicate the provisions of the Principal Civil Service Pension Scheme; and no changes shall be made to those pensions except by agreement.").

The noble Lord said: This is a simple amendment. We ask that the terms under which a transfer takes place shall: replicate the provisions of the Principal Civil Service Pension Scheme; and no changes shall be made to those pensions except by agreement". That is a modest proposal. The Minister has spoken about negotiations and reaching settlements. However, that was not with the employees but with the future employers. Why can the Minister not tell the House that he will insist upon such a condition being carried over? Earlier he said that the price that the Government received for the business would reflect the obligations laid upon the new purchaser. Why do the conditions laid upon the new purchaser not include such reasonable measures? If I were an employer in that situation I should wish to have a copper-bottomed undertaking from a respectable source—as are the Government and the public purse—in order to provide protection. During the next few years there will be an unhappy atmosphere about all such little bits of business. In my view, that will be eased if the Government are sympathetic; not generous or reasonable but merely sympathetic, I beg to move.

Lord Hesketh

My Lords, perhaps I should begin by reminding your Lordships that I made a lengthy and detailed statement in Committee explaining the Government's proposals for pensions in relation to these two privatisations. I do not believe there is anything I can usefully add to what I said then.

The amendment would require purchasers to provide pension schemes which replicate the Civil Service scheme. The Government do not accept the case for doing this. The Acquired Rights Directive and TUPE provide for the transfer of all the staffs terms and conditions of service, except pensions. It would be impracticable to insist that, when undertakings are sold, pension arrangements should remain unchanged. I do not see what justification there can be for treating these two organisations differently from other privatisations involving transferred civil servants or, indeed, from transfers in the private sector.

Of course, the Government recognise the importance of pensions. I explained in Committee the measures which are being taken in order to achieve pensions provisions which are broadly comparable with those in the PCSPS. The staff will, of course, be fully consulted through their trade union representatives about these measures.

In Committee I gave detailed reasons for resisting the noble Lord's amendment. I am sure that he and other noble Lords will forgive me for not repeating them now on Report.

Lord Graham of Edmonton

My Lords, as the Minister knows, I do not wish to be offensive. In Committee he took a great deal of care to present cogent arguments against the amendment. However, even if he repeats them I shall still find them unacceptable. I agree that there is no purpose in doing so.

The argument is comparatively simple; that employees are fearful that they will be disadvantaged in the future. The Government are not guaranteeing that they will not be disadvantaged but are simply saying, "We intend to do our best for you". Employees and trade unions are telling us that their knowledge of some of the potential employers leads them to want stronger guarantees than the Government have seen fit to spatchcock into the Bill.

I certainly agree with the Minister that much information has been put into the Bill. Because of and despite what he said, my trade union friends have asked me to raise this matter again. That is an indication of their unease. I am grateful to the Minister and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 [Transferee companies]:

Lord Graham of Edmonton: moved Amendment No. 10: Page 3, line 3, leave out from ("company") to end of line 4, and insert:

  1. ("(a) until the value of those shares or securities is finally established by the National Audit Office on the basis of properly audited accounts; and
  2. (b) without the consent of the Treasury, and the Treasury shall not consent except that six years' audited accounts are available.").

The noble Lord said: My Lords, this amendment suggests the attitude which the Government should take to the stability, viability and credibility of the manner in which the transfers will take place.

When I raise the issue of the true worth of the sale of a public asset, I need say little to make the House understand that this is a sensitive area. Despite the best intentions—and I say that sincerely—of this Minister and others, recent history is riddled with public assets being disposed of to the disadvantage of the public and to the advantage of the purchaser, and very often to the advantage of one individual.

The Minister can satisfy the public by saying that time is not of the essence and that there is no timescale other than that laid down by the Government. We wish to make sure that the value of assets sold out of the public sector are seen to be fair and reasonable by what I accept is a proper body. I beg to move.

Lord Hesketh

My Lords, I may be naive but I believe that the effect of Amendment No. 10 is to delay the sale of the PSA or TCS companies until the value of the shares has been established by the National Audit Office on the basis of audited accounts. Further, it prevents the sales until the Treasury's consent has been obtained, and requires that their consent be subject to six years' audited accounts being available.

Dealing first with paragraph (a) on the role of the National Audit Office, I have already explained to your Lordships during Committee stage that TCS has full commercial accounts capable of meeting the requirements of the Companies Acts and statements of standard accounting practice issued by the main accountancy bodies, and that PSA is in the process of introducing them. Those accounting systems will of course be subject to proper audit. They will be perfectly adequate for the Government as vendor, and for prospective purchasers, in valuing the business activities of both PSA and TCS.

The value of both these organisations will be based on bidders' assessments of their future profitability when they are freed from public sector constraints. It would be wrong for the National Audit Office to publish their own assessment of the value of the businesses as a going concern before the sales took place, as that would effectively set a ceiling on the purchase price and would clearly not be in the interests of the taxpayer. It is for bidders to make up their own minds on this point.

To delay the sales until six years' audited accounts for the companies were available would mean that neither PSA nor TCS could be sold until at least 1996, which would benefit nobody except their competitors and could cause serious damage both to the interests of the organisations and, more importantly, their staff. I must, therefore, ask your Lordships to resist the blandishments of the noble Lord, Lord Graham, and to reject this amendment.

Lord Graham of Edmonton

My Lords, the Minister denies us this amendment on the basis that it would delay the sale. That is absolutely right. We want that sale to be delayed in order to establish a proper price for the assets sold and a proper price for the viability of the company. What a terrible condition to be laid on a vendor.

The Government want to sell this quick rather than sell it right. They have a proven track record in doing that. We shall find that the time of the Public Accounts Committee and the Select Committees of both Houses will be taken up when, in the fullness of time—and that will not be in six years' time but in the very near future—it is seen that the assets which the Government have sold are sold on for twice the price and that they are divided and again sold for twice the price.

Questions will then be asked. In the future it may be that the Minister will ask from this side of the House a Labour Minister to explain why he was party to such a disgraceful process. The government of the day will be able to say, "It was not our fault. It was your fault". However, it will then be too late because the purchaser will have made the killing and employees will have suffered. Therefore, the public will lose the benefit of the services of reliable men and women who want nothing more than to provide their families with a decent wage and the country with a good, well-run public service.

When I say that the Minister has done his best, that is not very much. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.