Railways Bill

HL Deb 21 July 1993 vol 548 cc715-84

3.37 p.m.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(The Earl of Caithness.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Lord Tordoff moved Amendment No. 125P:

Before Clause 121, insert the following new clause:

("Hybrid instruments

Any draft of an instrument containing an order made under this Act that would be treated for the purposes of the Standing Orders of either House of Parliament as a hybrid instrument, shall be treated as such.").

The noble Lord said: Amendment No. 125P stands in my name and that of the noble Lord, Lord Clinton-Davis. It is a simple amendment. It is self-evident and self-explanatory. So I dare say that it will take us quite a long time to deal with it.

The amendment seeks to remove a curious contradiction which lies in Schedule 10. Amendment No. 125P is a paving amendment for Amendment No. 127, which seeks to delete paragraph 11(2) of Schedule 10. It has been dealt with in this slightly curious way in order for the Committee to have the opportunity to discuss an important matter early in the day, as was requested by a number of noble Lords a couple of weeks ago.

In moving the amendments I have two purposes. The first is to carry out the recommendations of your Lordships' Select Committee on the scrutiny of delegated powers in its fourth report published on 28th June. Perhaps I may say a word or two about the committee. It was instituted as a result of the Jellicoe Committee which felt that it was time your Lordships took more care with Bills containing a lot of secondary legislation. The noble and learned Lord, Lord Simon of Glaisdale, and my noble friend Lord Russell spent a lot of time talking in this House about Henry VIII clauses, and the committee was a direct result of that.

It is a remarkable report and greatly to be commended. The members of the committee worked hard on this complex Bill and came up with a short bu.t I believe pungent report. It is to suggest to your Lordships' House that we should carry out the recommendations clearly contained in the report that I tabled the amendment. It is also to try to protect the rights of pensioners to bring petitions to your Lordships in the case of there being any hybridity in the orders made under the schedule.

I say straight away that there has been confusion in the media that in some way I am seeking to make the Bill hybrid. Nothing is further from my mind and nothing is further from my ability. The fact is that the Bill has come from another place and it has not been declared to be hybrid. On the other hand, however, it is very possible that orders made under the schedule could in certain cases be hybrid. If that were not the case, the Government would not have put this slightly curious phrase in paragraph 11(2): If, apart from the provisions of this sub-paragraph, the draft of an instrument containing an order under this Schedule would be treated for the purposes of the Standing Orders of either House of Parliament as a hybrid instrument, it shall proceed in that House as if it were not such an instrument". That is Alice in Wonderland writ large. Words mean what I say they mean; if something is hybrid, I shall say that it is not hybrid.

This is pointed out very clearly in the report of your Lordships' Select Committee when it says that to put pensions legislation of this magnitude into a schedule is something that the House may wish to consider. The report states: The House may wish to consider whether the obstacles to proper parliamentary scrutiny and control of delegated legislation, including affirmative instruments, are such that the provision for affirmative resolution in this case provides sufficient parliamentary control". I would submit that it is riot, but that is not the issue with which we are dealing at the moment. That is the background. We shall come to that eventually in the period of recommittal when we deal with Schedule 10 itself.

The committee goes on to give a clear view. In bold type, in paragraph 3, the committee states: We therefore urge the House to consider with care whether the arrangements for BR pensions after privatisation can appropriately be left to delegated legislation".

It seems self-evident. The hybrid procedure is there to protect the rights of individuals who may be caught up in legislation which is designed to affect one group of people and has a side-effect of affecting others. This matter was dealt with some years ago by the Joint Committee on Delegated Legislation, known as the Brooke Committee, in 1973. It pointed out, in Conclusion 55: Your committee note that in their memorandum on this subject the Leaders of both Houses"— who incidentally were at that time both Conservatives— recognise in principle the justification for a petitioning procedure in respect of hybrid statutory instruments where such a right would exist if the matter had been dealt with by a private or hybrid Bill. Your committee conclude that this procedure has for nearly 50 years provided valuable safeguards for private interests affected by delegated legislation and should be retained". It cannot be put more clearly than that. This is a protection for the rights of individuals or for groups. The Government, in putting forward paragraph 11(2), are seeking to get round that.

What are the objections to what I am doing or seeking to do? First, there is the objection that this procedure will cause delay and uncertainty and that people will not quite know where they stand with their pensions. It can be a lengthy procedure; but it does not have to be all that lengthy. There are methods of using an expedited procedure which could be written into the Bill. If the Government so wished, I would be prepared to put down an amendment to assist them in that regard. But if we are to privatise different groups in British Rail, and they are to go from one pension situation to another, it is surely right that that should be sorted out before the instrument is laid before your Lordships. There should be consultation with the pensioners and with the pension funds and with those people involved. If that is done properly then the chances of people petitioning are very small indeed. People may suggest that there could be frivolous petitioners. But the rules of your Lordships' House preclude that. It is clear that it is possible to filter out from the list of petitioners those people who have a proper locus and those who do not. So there is no fear in that direction.

The second suggestion—I know that the noble Earl, Lord Caithness, will raise this because yesterday he was good enough to send me a letter from the chairman of the trustees of BR—is that the trustees of the British Rail pension fund are against my amendment. They say that they are quite satisfied that the hybrid procedure would be of no assistance to them and would cause delay. Of course it will not be of assistance to them. They have the whole thing tied up with British Rail and with the Government and there is no chance that the board of trustees will wish to petition.

3.45 p.m.

Lord Clinton-Davis

I am obliged to the noble Lord for giving way. Is he aware that it was the chairman who wrote virtually in a personal capacity and that it was not the trustees as a body who have endorsed this approach? Is he further aware that I have evidence in my hands to indicate that what I have just said is wholly accurate?

Lord Tordoff

I am grateful to the noble Lord. I am aware that he has evidence and I hope that he will put it before your Lordships. Indeed, I have the letter from Mr. Fowler before me and the noble Lord, Lord Clinton-Davis, is correct because Mr. Fowler says: Other than the Trustee Company's Chief Executive, I have not had an opportunity to consult with my fellow directors of the Trustee Company on this matter so the following comments are made without their involvement". He goes on to say that he believes that the procedure I suggest is the wrong procedure. The point I am trying to make is that the board of trustees does not represent the whole list of people who are involved in this matter. Many of the pensioners are not represented directly on the board of trustees. The pensioners and the deferred pensioners, who actually outnumber the contributors to the pension fund, are not directly represented. I am not saying that the board of trustees does not look after their interests but I am saying that it does not necessarily speak for all the pensioners all the time. It seems to me that the fact that the board of trustees opposes this suggestion is not sufficient reason for us not to take it seriously.

Thirdly, there is the question of precedent. Such clauses have been put into Bills before. The Electricity Bill is a case in point. When the present Government Chief Whip was responsible for that Bill he had an exchange with the noble Lord, Lord Renton, and explained that it was perfectly admissible to include such a clause because of the delay that would be caused if it were not included. The noble Lord, Lord Renton, accepted that, matters moved on and the clause was left in the Bill. The only point I would make is that that is a precedent from the days before we had the Delegated Powers Scrutiny Committee. I am sure that if we had had that committee at that time we would have been having this discussion on the Electricity Bill and not on the Railways Bill.

This is perhaps slightly esoteric but it is very important that the report of your Lordships' Select Committee on this important matter should be upheld in your Lordships' House and, quite apart from that, that the rights of pensioners which may otherwise be threatened should be upheld and that they should have the right to petition. I beg to move.

The Earl of Caithness

I hope that it will be helpful to the Committee if I say a brief word now before listening to the rest of the debate. I am grateful for the clarity with which the noble Lord, Lord Tordoff, moved his amendment. I confirm to him that probably all sections of the media completely misunderstood the noble Lord's amendment. It does not make the Bill hybrid and it is not a wrecking amendment. It is a matter of procedure as regards pensioners. It is because of the importance of this issue that I wish to speak very briefly now.

At the outset I express my thanks to your Lordships' Select Committee on the scrutiny of delegated powers for its report on the Bill. As many Members of the Committee know, it is a thorough and carefully considered piece of work. The committee was quite right to draw your Lordships' attention to paragraph 11(2) of Schedule 10 which disapplies the hybrid instrument procedure for orders relating to pensions. It is worth quoting its recommendation: In view of the extent of the powers, the substantial assets involved and the number of people affected, we urge the House to consider most carefully whether, in spite of any precedents, there is sufficient justification for the exclusion of the hybrid instrument procedure in this case". Questions of procedure are not to be taken lightly, especially in your Lordships' House. The hybrid instrument procedure has an important role to play in protecting the special interests of individuals. The Government have no intention of disregarding the procedures of your Lordships' House for mere administrative convenience. But in this case we face a clear conflict of interest between procedure and the interests of pensioners—ironically, the very individuals whom, in other circumstances, the hybrid instrument procedure might be expected to protect.

The noble Lord, Lord Tordoff, mentioned precedents. I shall not go into them at all. I remember using one in connection with the Airports Bill when it was before your Lordships' House. I have looked up the Official Report. The matter lasted all of half a line, which was me moving the amendment. Nobody commented on it at all. But the noble Lord, Lord Tordoff, is right. We are involved with a different procedure now.

There was an amendment on the Marshalled List which would have been helpful to the Committee had I been in a position to move it, but in view of what my noble friend the Chief Whip said, I shall not move that amendment. It was Amendment No. 126ZY. It was an amendment to which the Government gave a commitment in another place to introduce in your Lordships' House. That commitment was given after your Lordships' Committee made its report. It was to make available to your Lordships the views of the trustees. Sadly, that will not now be in the Bill. Whether or not it is at a later stage, we shall stand by our commitment to bring it before this House. Whether or not noble Lords agree it at a later stage is another matter. It was as a result of an amendment moved by the honourable Member for Wrexham in another place.

The main reason that the Government have decided that the hybrid instrument procedure should be disapplied in this case is our concern that the potential for delay implicit in the procedure could create a great deal of uncertainty for pensioners. The procedure is not time-limited and can be protracted. Individuals affected by the order would be able to petition the House. The instrument would then be referred to the Hybrid Instrument Committee which, if it decides that the petitioners have locus, reports on whether there ought to be a further inquiry by a select committee.

Lord Simon of Glaisdale

Perhaps the noble Earl—

The Earl of Caithness

Will the noble and learned Lord allow me to finish? All of what I am saying hangs together. I shall then certainly give way to him. I know that he wishes to speak on this matter. The House may t hen refer the order to a select committee, which can take evidence. Petitioners may be represented by counsel. In the case of railway pensions the number of petitioners is potentially huge—about 340,000 members and pensioners, any of whom could petition. There is great scope for delay and a long period of uncertainty for those whose interests are at stake.

I do not think that I can emphasise strongly enough the potential scale of this exercise; the delay and uncertainty it would cause; and the consequent damaging effect on pension scheme members themselves. I give way to the noble and learned Lord.

Lord Simon of Glaisdale

I am very much obliged to the noble Earl. He has just described the hybrid instrument procedure at its most lengthy. The noble Lord, Lord Tordoff, drew attention to an expedited procedure. There is no question of reference to a select committee. The Hybrid Instrument Committee itself hears any objection, which need not be made by counsel. It is perfectly fantastic, is it not, to suggest that 340,000 petitioners would object? One or two petitioners might object, but if there is proper consultation, the objectors will be alrnost nil. Surely that is the sensible picture to draw rather than the extremely lengthy description which the noble Earl has given.

The Earl of Caithness

I am grateful to the noble and learned Lord, Lord Simon of Glaisdale, for that intervention. Yes, as the Committee knows, there is an expedited procedure. It would be quite wrong of me not to draw to the attention of the Committee the fact that there is also another form of procedure which could equally apply. I certainly do not say that every one of the 340,000 members and pensioners will petition, but I wanted to draw the Committee's attention to the number of members and pensioners who will be in a position to petition.

The Government's concern in this matter is shared by the chairman of the British Rail pension trustees. Mr. Fowler has written to me setting out his views and those of the trustee company's chief executive. I have circulated copies of that letter to a number of noble Lords and I have placed a copy in the Library. For those Members of the Committee who have not seen it, I wish to read two paragraphs: The Chief Executive and I believe that pensioners' interests are protected by the Government proposals for positive resolution in both Houses and a statement of the Trustee's views on those Orders. Indeed, it was following Trustee representations that this process was initiated. The Trustee's fiduciary responsibility to scheme members might be undermined by a process of petitioning and the possibility of long delays in implementing Orders could cause unnecessary uncertainty for scheme members. I would wish to, avoid those implications for the Trustee Company and scheme members". The fiduciary duty—

Lord Shepherd

Perhaps I may—

The Earl of Caithness

The fiduciary duty of the pension trustees is to act in accordance with the trustees and rules of the scheme; the duty to act prudently, conscientiously and honestly and with the utmost good faith; the duty to act in the best interests of the beneficiaries; and the duty obviously to take legal and other professional advice. I have set out the Government's case. I do not know whether the noble Lord wants to intervene.

Lord Shepherd

The noble Earl is being very partial in reading this letter to the Committee. Will he please read the second paragraph of the letter?

The Earl of Caithness

The second paragraph of the letter was read by the noble Lord, Lord Tordoff. He did not read paragraphs 3 and 4, as I did. In answer to the noble Lord, Lord Shepherd, it is absolutely true that the chairman, Mr. Fowler, had not had time to consult anybody other than the trustee company's chief executive. I know that the noble Lord, Lord Clinton-Davis, wishes to speak.

Lord Shepherd

Will the noble Earl please read the paragraph? If he will not, then I shall. It states: Other than the Trustee Chief Executive, I have not had an opportunity to consult any fellow directors of the Trustee Company on this matter so the following comments are made without their involvement". That puts a different aspect on the letter which the noble Earl has read to the Committee.

Lord Clinton-Davis

Before the noble Earl replies to that point, perhaps I may address to him a point which was raised by another trustee, Mr. V. G. Hince, who says, With regard to the question of hybridity this has not to my knowledge been discussed by the trustees".

The Earl of Caithness

I did not particularly want to get into this debate now. I wanted to have this debate at the end. I thought that it might be helpful to the Committee if I set out the Government's position. The noble Lord, Lord Shepherd, was right to read out the second paragraph. I think that he got one word wrong, but that is only a matter of small detail. I look forward very much to hearing what the noble Lords, Lord Shepherd and Lord Clinton-Davis, and the other Members of the Committee have to say.

4 p.m.

Lord Shepherd

I am a member of the Select Committee of the noble Lord, Lord Rippon, which scrutinises delegated legislation. My anxiety has never been on any party political point or related to the policy merits of the legislation as a whole. I believe that the committee performed its duty entirely within its terms of reference, which was the question of whether the powers being taken were appropriate.

I suggest to the Committee that when one considers whether an order is appropriate or, as the Brooke Committee said, whether there is any genuine justification for those powers, one needs to consider three elements. The first is the Government's position, of which we have heard part. The committee, however, had a full summary of the Government's position. Secondly, one has to consider the importance and the ramifications of what is being proposed and the powers that are being sought. Thirdly—this touches on a debate introduced some weeks ago by the noble and learned Lord, Lord Simon of Glaisdale—one has to consider the way in which Parliament is able to scrutinise orders.

We have a convention in your Lordships' House, which is circumvented from time to time by adroit amendments to orders. However, for many years we have never taken the view that we should exercise a vote to reject an order. We are also unable to amend such orders. We rarely conduct debates on such orders on the basis of a line-by-line consideration. In other words, it is broadly a general debate. I suspect that the orders which the Secretary of State has in mind will be highly technical, and I think that they are worthy of being examined on a line-by-line basis.

If our convention and our ordinary processes of dealing with orders are to continue, and one considers, as the Department of Transport itself admits (although it circumscribes its submission to the committee) that members will be significantly affected by any of the orders, we can always question what is significant. As a member's bread and butter supper might have had the addition of a piece of cake if he had had his full pension, I believe that the word "significant" is important.

The noble Lord, Lord Tordoff, spoke about the hybridity rule and reported on the Brooke inquiry, which was a full inquiry into the whole hybrid procedure and the merits of it. We need to remember that the hybridity rule has been in existence for some 70 years. It was first introduced in 1924. That was the reason why the Brooke Committee could not see any reason, after 50 years, for making any changes. I do not believe that there have been any other significant factors that could change the view of this House about having hybridity procedures in our standing orders.

Lord Archer of Sandwell

The noble Lord points out that the hybridity rule goes back some 70 years. Is he aware that the rules relating to Private Member's Bills and instruments go back further in time than the rules relating to public Bills and instruments? Long before the law could be altered by legislation people had the right to petition Parliament for redress of grievances.

Lord Shepherd

The noble and learned Lord is quite correct. But the standing order to which I referred has been one of our standing orders for some 70 years. This is an issue which the Committee has to consider in terms of its past responsibilities and the importance of what is before us. We are talking about 350,000 pensioners and £8.5 billion of pensioners' funds being redistributed. Would the Government countenance redistributing £8.5 billion of their own money by an order or by delegated legislation? I know what would happen if anyone were to suggest it. We would be laughed out of court. But that is what is involved in this case.

I believe that the Committee should examine the provisions very carefully and perhaps return to them when we have a recommittal in late autumn. It seems to me that the issue is this: if we do not accept the amendment and we leave the provision in the schedule, it will appear that this Committee has approved that provision. I think that it should be struck out of the Bill. After further consideration and when we can see the whole schedule in a new shape, perhaps we might then consider such a provision, but there would have to be some justification for removing the hybrid procedure.

I have seen the letter to which the noble Earl referred. It has some relationship with a memorandum which I understand the noble Earl has circulated. I do not know how far he intends to use the memorandum, but if he does intend to use it, I must advise him that I have some 15 pertinent questions about pensioners' rights to ask on behalf of the pensioners. If the noble Earl can give me an undertaking that the memorandum will not be part of his case, I am prepared to leave those questions aside. If, however, the memorandum is to be adopted, that raises some major issues. I must advise the Committee—and it is only a first view —that if it was possible to put the memorandum on the face of the Bill, as it should be, the Bill would then, without question, become hybrid. I see that as a danger for both the Government and this Committee. The Government would be wiser to leave the situation as it is in regard to the hybrid procedure and to allow it to operate.

There is no reason at all under the expedited procedure for any overdue delay. The question is this: yes, there is delay (although not an overdue delay) but if we are to avoid that delay, are we justified in removing the rights of pensioners who have contributed to their pensions through their pay packets and who, in some cases, have made added contributions? I hope that the Committee will support the noble Lord, Lord Tordoff.

Lord Campbell of Croy

I agree with the noble Lord, Lord Shepherd, that the matter needs careful examination. I, too, am a member of the Select Committee which scrutinises delegated legislation. I believe that when there is a proposal in primary legislation such as this to remove hybridity from future statutory instruments, that proposal should be seriously considered, preferably in Committee, as is happening now. If an instrument is hybrid, individuals and bodies can petition and have the possibility of personally giving evidence, with their lawyers, to a Select Committee of this House on that part of the instrument which is private—which affects their private interests. That is not possible in the case of a public Bill or before a Public Bill Committee of Parliament. That right is taken away if there is a blanket removal, as is suggested here, in the primary legislation. That should not be done lightly.

In the present case the question appears to arise whether the delays or uncertainty which may be caused by taking hybrid instruments in the usual way would adversely affect 340,000 pensioners and whether that disadvantage outweighs the other advantage which they would enjoy of being able to petition and, in certain cases, appear personally to provide evidence.

There is a safeguard in the Bill; that is, the use of the affirmative procedure. That means that instruments have to come before your Lordships' House and another place but, as has been pointed out, they cannot be amended and it is the convention in this Chamber that we do not vote against them.

I, too, have seen the letter from the chairman of the trustees but I shall not comment further on that. However, I venture to make a contribution now because as some Members of the Committee will recall, I played a prominent part from the Opposition Front Bench in 1976–77 in finding that the Bill to nationalise the aircraft and shipbuilding industries was hybrid. The noble Lord, Lord Shepherd, was the Leader of the House at that time, so he will remember the duel we had at times. I say straightaway that he handled the matter extremely well and set a very good parliamentary example.

Lord Shepherd

The interesting point is that that Bill was not hybrid in the House of Commons. It only became hybrid when it came to your Lordships' House.

Lord Campbell of Croy

That was because the then Leader of the Commons, Mr. Foot, had by a vote —he had a large majority—waived the standing orders in another place. That meant that the matter could not be referred to the examiners. However, when the Bill came to this House we found what we thought was a hybrid element. I remind the Committee, without digressing too far, that ship repairing had come into the Bill on the tails of shipbuilding and that out of about 100 ship repairing firms, 12 had been chosen. The point was that they had been chosen by criteria which were not evenly applied. That was what was later found by the examiners.

This Chamber stopped the Bill going through because when the ping-pong took place, we kept on resisting amendments and the end of the Session in 1976 occurred. When the Government reintroduced the Bill in the following Session, it went to the examiners before it received its Second Reading in either House. The examiners then found that it was hybrid and the Labour Government of the day decided that it was better to take out ship repairing, apply what were called the Campbell amendments and reintroduce the Bill. Of course, it went straight: through, because under the conventions—the Salisbury doctrine and so on—we were not going to object to the nationalisation of aircraft and shipbuilding. I only say that because I have quite a background, as the noble Lord knows, on the whole question of hybridity and I feel strongly about it.

Lord Ewing of Kirkford

I am grateful to the noble Lord for allowing me to intervene. I wish only to complete the picture that he has painted. The irony of the matter was that after the hybridity argument was all over, the ship repair industry asked the Labour Government to take it into public ownership. After fighting like mad to keep it out of public ownership, the industry asked the Labour Government to take it into public ownership.

Lord Campbell of Croy

I shall not go into the history of the ship repair industry because I am dealing with a parliamentary point. I am glad to say that there are still some ship repairing businesses in private ownership which are doing well. But, of course, there were some ups and downs during that period.

I hope that Members of the Committee will realise that that is a subject about which I feel strongly. Governments wish to avoid hybridity because of the time factor. It is very difficult to get a Bill through in one Session if it is found to be hybrid. When governments are having Bills drafted, they try to avoid any element of hybridity. But here we are dealing with a blanket removal of the proper procedure dealing with hybrid instruments. That is a very serious suggestion.

I shall listen carefully to this debate and to the later debate, if there is one, because I also understand that it may not be in the best interests of the pensioners to have long delays and uncertainty. If that can be avoided, so much the better. I recognise that those people would not bless us in this Chamber if we caused a situation in which they were held up for months or years without knowing what was the position. Therefore, I see both sides of the argument and I shall listen very carefully.

Lord Irvine of Lairg

Perhaps I may endeavour to put this very important issue in the whole context as I see it and as I believe it is seen from these Benches. Schedule 10 confers a number of order-making powers in connection with railway pension schemes upon the Minister. Paragraph 11(2) disapplies the hybrid Bill procedure. The Select Committee of this House on the scrutiny of delegated powers raised two substantive objections to Schedule 10: first, whether it is appropriate for arrangements for British Rail pensions, after privatisation, to be left to delegated legislation; and secondly, whether there is any justification for disapplying the hybrid Bill procedure.

As to the first of those, the provisions currently set out in Schedule 10 are clearly of very great importance and we must consider whether they should be dealt with by primary legislation. The schemes affected have assets of about £8.5 billion and the interests of 340,000 pensioners are engaged. The members of the scheme will naturally be hugely anxious as to how the proposed privatisation of British Rail will affect their pension rights. In those circumstances, it is for serious consideration that those matters should be dealt with by the Bill in the Bill itself so that the maximum degree of certainty as to the future of British Rail pensioners can be achieved at the outset following a debate in this Committee.

It must be said that the number of members affected by the provisions and the sums involved require that the pension provisions receive the fullest degree of parliamentary debate.

I turn now to the disapplication of the hybridity procedures. The Government are seeking to remove the usual procedures. The first question is whether the instruments made pursuant to Schedule 10 are likely to be hybrid instruments. We would say that the answer is plainly yes, and I do not understand the noble Earl to argue to the contrary. Therefore, the real question is whether there is any justification for the removal of those usual procedures. Those procedures provide an important safeguard to individuals whose private rights are affected in that way.

There can be no doubt that many of the orders passed under the schedule will be of a hybrid nature. Why otherwise, as the noble Lord, Lord Tordoff, pointed out, would hybridity have been disapplied?

I turn now to the details of the schedule. Paragraph 1(1) defines the expression "existing scheme" very broadly. It includes any scheme for the provision of pensions for or in respect of persons with service in the railway industry which the Secretary of State by order designates as an existing scheme. And then, as it appears to me most important, paragraph 3(1) enables orders to be made to amend, the trust deed of any existing pension scheme; the rules of any such scheme; or any other instrument relating to the constitution, management or operation of any such scheme". It would be difficult to think of a wider power. Therefore, orders passed under that paragraph will have a significant direct impact upon the private pension rights of individuals who may have been contributing towards their pensions for very many years.

Paragraph 4(1) enables orders to be made transferring the rights of persons who have rights under existing schemes to other schemes altogether. Under paragraph 9(1) the Secretary of State may by order designate any occupational pension scheme to be treated in the same way as the BR pension scheme for the purposes of Part III of the Transport Act 1990.

The net effect of the order-making provisions of Schedule 10 is to provide the Secretary of State with sweeping powers to impose new pension arrangements upon hundreds of thousands of individuals, many of whom under their contracts of employment will have contributed to their pensions throughout the whole of their working lives.

Furthermore, we ought not to lose sight of the fact that the far-reaching nature of the Secretary of State's powers is extended by the Henry VIII clause in paragraph 10 of Schedule 10. It provides: If it appears to the Secretary of State necessary or expedient to do so, in consequence of any provision made by order under this Schedule, he may by provision made in the same manner—

1. (a) repeal or amend, or modify the operation of, any private or local Act of Parliament; or
2. (b) revoke or amend, or modify the operation of, any statutory instrument (whether local or general).".

When one looks at the provisions in a little detail, aside from the specific order-making powers set out in Schedule 10, paragraph 10 gives the Secretary of State a general power to amend other statutory provisions by order. Over all, Schedule 10 in its present form provides the Secretary of State with carte blanche to interfere with the existing pension rights of almost 340,000 pensioners. There can be no doubt that the orders past under the schedule will be of a hybrid nature. The private rights of every member of BR's pension schemes are placed in the hands of the Secretary of State.

I respectfully submit that in those circumstances paragraph 11(2), with its provision for the removal of the disapplication of the hybridity procedures, poses a serious threat to the rights of individual pensioners.

The Government's proposal that the usual procedures should be by-passed is particularly objectionable in the light of the virtually unfettered powers which the Secretary of State will enjoy under Schedule 10. As the schedule stands, the Minister will have the freedom to alter the rights of BR pensioners without the usual safeguards provided by Parliament against any excess of ministerial discretion in a matter affecting private right.

The Department of Transport suggested that the provision is thought necessary to ensure that the making of orders under the schedule is not delayed. It claims that the delay in the making of orders will give rise to uncertainty for those whose pension rights are affected. But if there were a genuine concern about such uncertainty would it not be better for the noble Earl to agree to the pension provisions of the Bill being dealt with in the form of primary legislation? Why would that riot be the course best calculated to remove anxiety and uncertainty?

One is left with a real fear that the only real advantage of paragraph 11(2) will be enjoyed by the Minister and his department who will be free of the inconvenience that is associated with full parliamentary scrutiny. With provisions of such a far-reaching nature as those in Schedule 10, we submit that the parliamentary protection of private rights guaranteed by the hybridity procedures should not take second place to ministerial convenience.

Finally, the department has suggested that as long as there is proper consultation before the orders are made those affected should not need to petition against them. But where individuals' accrued pension rights are at stake the procedures which this House has adopted with regard to hybrid instruments, which it has been pointed out can be expedited, provide the proper forum for those who are affected by affirmative instruments to petition against their provisions. A promise of consultation, which is no more than a promise to listen, provides no substitute whatever for the parliamentary procedures which this House has seen fit to adopt to protect private rights.

It has also been suggested that similar provisions calculated to exclude the usual procedure for hybrid instruments have been enacted in the past. We should note that the precedent cited by the department relates to legislation which is in no way comparable to the present Bill. I shall not take up the time of the Committee by going through those examples. However, it is significant that none of these so-called precedents relates to orders affecting pension schemes. Indeed, none of these so-called precedents relates to orders which may impinge upon existing contractual financial rights which have accrued to individuals over a period of years. I suggest that that is the most important point. Individuals will have made those contractual contributions to pension schemes under the terms and conditions of the existing pensions schemes which were part of their contracts of employment. Their pension rights are major benefits under their contracts of employment. If this Bill passes in its present form the real vice is that contractual rights can be altered retrospectively and prospectively by ministerial diktat.

Lord Peyton of Yeovil

May I, in view of what the noble Lord, Lord Irvine, has said, go on to ask whether we are making heavy weather of this issue and who will benefit from it? The noble Lord, Lord Tordoff, moved the amendment in a commendably brief speech and admitted that the whole question was somewhat esoteric. As someone who has been and is concerned about the welfare of the pensioners, I wonder how much they would benefit if the amendment were passed.

This House has a slight leaning towards complex procedures and it sometimes yields to the temptation to prolong them. Unlike the noble Lord opposite I do not claim to be any kind of expert on hybridity, but I believe that there may be ways of short-circuiting the procedures which are relevant to the issue. However, I wonder whether one could rely on their being used in such an event.

I believe that if the amendment were passed the interests of pensioners certainly would not be benefited and might well be prejudiced. The noble Lord, Lord Tordoff, properly anticipated the objections to his amendment: that the results would be time-consuming; that they would create great uncertainty, which should be dispelled as soon as possible; and that the procedure could involve considerable expense. Let us face it, there would be no one to meet that expense save the pensioners themselves.

I hope that the Government will reject the amendment without much more ado.

Lord Simon of Glaisdale

I rise to support the amendment, which is of the first importance. Obviously, it is of supreme importance to the 340,000 members of the pension scheme with assets of £8.5 billion. It is also of great importance to your Lordships' House as the vigilante of individual interests. As the noble Lord, Lord Irvine, pointed out, it is proposed that the accrued pension rights paid under a contract of employment may be rewritten.

There is no reason to suppose that there will be any intentional unfairness in general. The presumption must be very much to the contrary; but, as always with general schemes, there may be some individuals whose interests are overlooked. That is the reason why the Hybrid Bill and the hybrid instrument procedure was developed. It was not developed, as the memorandum from the department suggested, to vindicate and establish the individual interest against the public interest, but merely so that the individual interest should be considered in the context of the public interest.

It is of great importance to the Committee, because the hybrid instrument procedure is peculiar to this place. It was developed because there were a number of schemes to obviate the Hybrid Bill procedure by putting the hybrid provisions into statutory instruments. It was for that reason that this place, as the watchdog of the constitution and being interested in the rights and interests of individuals, developed the hybrid instrument procedure. As has been quoted, the joint Select Committee of 1972–73, presided over by the late Lord Brooke of Cumnor, recommended the continuance of that procedure as a valuable safeguard for the rights of the individual.

But there is a second reason why this place is peculiarly concerned in this matter, and that is that the scrutiny committee, chaired by the noble Lord, Lord Rippon of Hexham, is again peculiar to this place. Its first report was accepted by this place with acclamation. Its subsequent report on the Education Bill was also widely acclaimed. No one has laid a word of criticism against its report on this Bill. On the contrary, it has been found to be valuable.

The Scrutiny Committee has developed a technique of signalling its views. Obviously, the primary view here is that the pension rights should be enshrined in primary legislation. If that were not done, it would signal even more strongly than any recommendation contained in any of the reports, that the hybrid instrument procedure should be preserved and not obviated, as the Bill seeks to do.

Two questions remain. The first is as to precedent. The precedents that preceded the Jellicoe Committee and the Scrutiny Committee are valueless. The Scrutiny Committee was set up on the recommendation of the Jellicoe Committee, because precedents showed that procedures had been abused; that there was Executive aggrandisement at the expense of parliamentary control. So anything in the past is valueless. Secondly, the Brooke Committee indicated clearly that the only circumstance in which the obviation of the hybrid instrument procedure was justifiable was if there was an alternative method of representation of those whose interests were affected adversely by a public Bill or a statutory instrument.

There is in the present case, as there was not in some of the precedents, no alternative method of representation. There was an alternative method in the most recent example (the Local Government Act of the previous Session) but in this case there is no alternative way in which the individual who may have been overlooked can make his interests felt.

The other matter which the noble Lord mentioned was whether there could be unconscionable delay and uncertainty. If the department acts promptly, there need be virtually no delay. There is no conceivable reason why, if celerity is shown, general orders may not be laid by early next year. Then, as the noble Lords, Lord Tordoff and Lord Irvine, have pointed out, the expedited procedure is available. That takes, in general, only about a month. Having heard the speeches, not least that of a former Leader of the House, it seems to me that the case for the amendment is abundantly made out.

Lord Wigoder

I wish to make just one short observation on this matter. It concerns the parliamentary procedure. It appears to be clear and beyond dispute that the other place has a Hybrid Bill procedure, as indeed we do, but that this place is the only place to have a hybrid instruments procedure. What I venture to ask—and perhaps the Minister will comment upon it when he replies—is whether it is appropriate for another place in those circumstances to send to us a piece of legislation in which it seeks not to deal with its own powers in any way but to remove a power which is exclusive to this place and which gives individuals a right to petition in certain circumstances.

Earl Russell

I can well understand why the hybrid procedure, both in Bills and instruments, is inconvenient to the Executive. The very existence of a Parliament is inconvenient to the Executive and always has been. So, we should not let that argument weigh too much with us. The question is whether the inconvenience gives rise to any compensating advantage. I believe that it does. The hybrid procedure, both in Bills and instruments, is part of the liberties of the subject. Those liberties may be threatened by Parliament as well as protected by it.

In the past few weeks, we have heard a good deal about parliamentary sovereignty. The powers of parliamentary sovereignty are terrifying. The first Lord Burleigh once remarked that an Act of Parliament could make a man a woman. While I think one may say that that is true in law but not in biology, in law I do not believe that it can be disputed. If that power is delegated to the Minister and exercised by regulation, I should have thought that that was an argument for saying that it needed more rather than less possibility of controlling it. If, in some general measure about sex discrimination, we were to insert the proviso that the noble Earl was a woman, I think that he would want to be heard on the matter.

I wish to speak briefly to one sentence in the report of the Delegated Powers Scrutiny Committee as regards the precedents. The report states: The House may wish to consider their relevance in this case". One of the precedents is contained in the Local Government Finance Act 1988. I remember that because I was on the Bench at the time. It was one of those late government amendments on which, if I remember right, the noble Lord, Lord Renton, had something to say. The amendment was bowled out of the back of the Minister's hand late at night. I have tried to apply the test of the Brooke Committee; namely, is this exclusion of the hybrid powers really necessary? The Minister's argument there was that it was necessary because of the impossibility of establishing a free market in railway signal boxes. I found that argument persuasive. I found it also very different from the case made by the noble Lord, Lord Irvine of Lairg, on contractual rights as affected under this provision. I think that these are different cases in terms of gravity and in terms of any excuse for waiving the hybrid procedure.

On that occasion I asked the Minister, who happened to be the noble Lord, Lord Hesketh, if, while having the amendment under discussion let through, he would promise not to make a habit of it. I have given the noble Lord, Lord Hesketh, notice that I wished to quote his words. The noble Lord replied: Perhaps I may put at rest the mind of the noble Earl, Lord Russell. I assure him that we shall not make a habit of it". —[Official Report, 16/6/88; col. 475.] I ask him to keep his promise and let me return to my rest.

Lord Renton

The noble Earl, Lord Russell, and before that the noble Lord, Lord Tordoff, were kind enough to mention things that I had said in previous debates on other Bills. I hope that nothing that I shall say now will be considered inconsistent with what I said then. The first point that I wish to make is that we should all regard—the speeches show that we have regarded this—anything to do with pensions these days as a very sensitive matter, for reasons which I need hardly repeat. Having said that, I think it follows that we must ensure that not only is justice done to the pensioners but that it manifestly appears to be done.

I think that this is a matter in which we ought to be guided to some extent by experience. So far as I know, but I am open to correction, the hybridity procedure when used in the past has not been used in order to protect the interests of a mass of people in a pension scheme. If I am wrong about that, forget it but I do not think I am.

The interests of 340,000 railway pensioners whose pensions are governed by quite a large number of different schemes raise a problem. It would help if my noble friend Lord Caithness could give us an idea of how many schemes there are, because I say in passing that, if we are to have orders, we want one order per scheme. If we have an order covering, say, three schemes, then we might be in a rather difficult position, or at any rate another place will be because they vote on these things and, alas, we do not. Incidentally, I believe that we ought to change our procedure. If we find that there is an order covering three schemes and two of them are acceptable and one is not acceptable, then obviously a slight parliamentary dilemma will arise. If we are going to have orders covering schemes, let there he one order per scheme.

Let me get back to my main theme about being guided by what has happened so far! The Scrutiny Committee very wisely and cautiously said that there were precedents and it referred to one in its report. The noble Lord, Lord Tordoff, referred to another —the Electricity Act—and there are still others. The Airports Act 1986, the Wages Act 1986, the Local Government Finance Act 1988, and for some strange reason which I have not been able to discover, the Official Secrets Act 1989, are also precedents. They are all precedents for existing pension schemes being dealt with—if they have to be transferred, and perhaps varied—by this procedure which the Government are proposing; namely, laying an order to be affirmed by an affirmative resolution and excluding the hybridity procedure.

Lord Clinton-Davis

I am obliged to the noble Lord for giving way. Will he confirm that all the precedents to which he referred were undertaken by the Conservative Government from about 1986 onwards? That is a somewhat doubtful origin, is it not? I wonder what the noble Lord's response would have been if a Labour government had sought to take action of this kind. He would have been outraged and not understanding.

4.45 p.m.

Lord Renton

If I may say so, that is the pot calling the kettle black, if that is not an unlawful expression these days. We all get indignant, when we have an opportunity of doing so, in opposing what other parties have suggested. But perhaps I may get back to the operation of these schemes which in my opinion were wisely introduced by Conservative governments. So far as I know—but again if there is evidence, let us have it—none of the pension rights under those schemes has given rise to a sense of injustice on the part of the pensioners when those schemes have been transferred, even if they have to be altered. So not only are there precedents, albeit Introduced by Conservative governments, but they are precedents which have worked and in which there has been a sense of justice. I say that we ought to be guided by both kinds of experience that I have mentioned.

Putting this matter at its worst, I would say that we have a simple choice of evils, as we often have when legislating. But I think the worst evil would be the hybridity one which involves greater or less delay. The noble and learned Lord, Lord Simon of Glaisdale, to whose wisdom we always pay respect even if we disagree with him, said that the expedited procedure would enable each case to be dealt with within one month. But if there are to be scores of cases under any one scheme, it would mean that the transfer and. if necessary, the amendment—perhaps favourable amendment —of that scheme could be delayed for many months.

Lord Simon of Glaisdale

I hope that the noble Lord will allow me to point out that what I actually said was. that the expedited procedure generally results in a decision in one month. Moreover, as regards whether there are several orders, I can see no reason why all the hybrid provisions should not be put into one order so that the other orders can have immediate effect. I understood from the noble Earl when he was kind enough to discuss it with me that there will be two or three general orders, not an infinite number.

Lord Renton

I think that I must leave it to my noble friend. I hope that I may have the attention of my noble friend on the Front Bench as this is rather an important matter. I think that the point which the noble and learned Lord has just made is one which would be better considered by the Government than that I should give a rough and ready answer although I have one in my mind. In view of what my noble and learned friend Lord Hailsham has just intimated to me, perhaps I had better not give my rough and ready answer.

I believe that we would he doing a disservice to the pensioners, as my noble friend Lord Peyton of Yeovil said, if we failed to realise that there will not be any malevolent intention to interfere with existing schemes. There will obviously be a desire on the part of the Government, the present trustees of the schemes and those who have to operate them in future to see that the pensioners are fairly treated. That is the first point that we should bear in mind.

The second point that we should bear in mind is that if we allow a rather risky procedure of hybridity to take the place of the consultation which will obviously have to take place, and if we allow the goodwill which I mentioned under my first point to be interfered with by delay and uncertainty, we shall have done a disservice to the pensioners.

Lord Wigoder

Before the noble Lord sits down, perhaps I may make one observation. I understood him to say that the various Acts passed in the 1980s, which included the dehybridification clause, related to pension schemes and were working perfectly satisfactorily. As I understand it—and I have just checked the point—there is no question at all of pension schemes in those Acts.

Lord Renton

If it is not a matter of pension schemes, they affected other individual rights. In principle that is the same issue.

Earl Russell

Before the noble Lord sits down perhaps I may answer a question which he asked which deserves an answer. He asked for an example of an occasion when the hybridity procedure had been used to protect the rights of a large class of people. I offer him the Silkworkers Bill of 1626 which, so far as I know, was the first case in which the hybrid procedure was employed by your Lordships' House.

Lord Renton

I am not prepared to say whether that is analogous with the individual rights of pensioners, but I should have thought that the comparison may not be accurate.

Lord Archer of Sandwell

When the fox deprived the chicken of his head he explained that he was acting in the best interests of the chicken because he was protecting the chicken from head colds. The chicken may have wanted an opportunity to consider that bargain.

The departmental memorandum, and the noble Earl this afternoon, explained that the beneficiaries of pension funds are to be deprived of their right to make representations because it will protect them from delays in finalising their rights. That is a bargain which they might want to consider. There is no evidence that they have given any mandate to the trustees to speak on their behalf about it.

Let us consider the right of which they are being deprived. The right to petition Parliament for the redress of grievances, including anticipated grievances, goes back to the very beginning of Parliament. It is older than the legislation which changes the law. What it is proposed to give them under the hybridity procedure is not a compulsion to make representations but a choice. If they think that their interests are adversely affected by making representations then they do not need to make them. But they are being deprived of the opportunity to make such representations. That seems to me to be depriving them of a right which goes back almost to the beginnings of our parliamentary procedures.

The noble Lord, Lord Renton, presided over a committee on the preparation of legislation which reported in 1975. His committee pointed out that there is not necessarily a coincidence between the interests of those who are charged with steering legislation through parliament and those who are affected by the legislation when it takes effect. The noble Lord is nodding in agreement. That is a matter which has been apparent to us on many occasions since. Of course it is a nuisance to give people the right to make representations. Of course it may occasion delay. It complicates a simple argument. It adds to the burdens on busy officials. That is all part of the price which we pay for giving people representation.

The committee presided over by the noble Lord was perfectly clear then as to where the priorities lay. I appreciate that the committee dealt principally with primary legislation, but the same arguments apply to instruments. The committee said: We recommend that in principle the interests of the ultimate users should always have priority over those of the legislators".

Lord Renton

I am grateful to the noble Lord, because it was with the interests of the pensioners in mind that I said what I did.

Lord Archer of Sandwell

Of course. The fox is explaining that its behaviour towards the chicken is in the best interests of the chicken. It wants perhaps to pass that judgment to the chicken and to give the chicken the options.

The blandishments of the fox are again obvious. I hope that your Lordships will not fall for them. There may be a case for departing on a specific occasion from the hybridity principle, which as has been pointed out by the noble Lord, Lord Shepherd, has been with us for 70 years, and the principle which has been with us for very much longer of a right of petition against anticipated grievances. If that is so, the case must be made. Normally it should be made after careful consideration of the procedures of this Chamber and not in a subparagraph in the third schedule to an Act of Parliament.

The Committee may feel that a case has not been made out this afternoon. If it appeared likely that some 340,000 petitions would have to be heard that is a matter which would have to be taken seriously. However, no one believes that that is in the realm of reality. No one believes that the pensioners themselves, whose interests we are considering, would lend themselves to any such procedure. It certainly would not be beyond them to be able to reduce the representations which they want to make within a narrow compass.

I hope that the Committee will not succumb to the blandishments of the fox. If the chicken had been consulted —and there is no evidence that it was—it must have regretted that bargain.

Lord Elton

The simile used by the noble Lord, Lord Archer, is an attractive one, but I believe that it is misleading. The position which we occupy, which the Select Committee occupies and from which my noble friend Lord Renton spoke, is the position of a gamekeeper who is looking to see whether there is a fox there. That is what we are exercised about. If there is no fox then we do not need the procedure. If there is a fox then we do.

As a member of the Select Committee, I remind the Committee that the Select Committee's duty has been discharged. The duty was to draw the Committee's attention to a possible anxiety. It was not to take a position of its own, and it has not done so.

All Members of the Committee will find it easier to take a position once one or two points are clear. The first, as I am sure that all Members of the Committee have realised, is that delay is the principal objection to reintroducing the hybrid procedure. One cannot argue both that the existing consultative procedure is such that there will be no grievance and that there will be delay. If consultation in this transitional period is satisfactory and meets the wishes of the pensioners and their expectations in justice then there will be no objections or delay. If the procedure is imperfect, the more imperfect it is the more injustice there will be, the more protests there will be and the greater the delay. That is precisely its function.

In that respect I shall be interested to hear my noble friend's answer to the point made by my noble friend Lord Renton that an undertaking that there will be only one scheme per order would be reassuring.

I should also like to know, as I am sure would all Members of the Committee, what the effects of the delay would be. Everyone has spoken of delay as though it is a very bad thing. It leads to uncertainty. First, what would happen to the pensions already in payment during the transitional period if there is an objection? Secondly. what will be the effect on pensions due for payment during the procedure if it is protracted? Will payments of those pensions be suspended, or will they, as I suspect, be paid as they would have been paid under the original scheme? If the answer to both those questions is "yes", then it is difficult to see what the disadvantage of delay would he. Therefore, it would be most helpful if my noble friend could answer those questions.

5 p.m.

Lord Taylor of Gryfe

Before my noble friend concludes the debate on behalf of the Opposition, I should like to say a few words. I was a trustee of the fund for 11 years. During my trusteeship, I hope that I was able to speak on behalf of the pensioners. It is true that if one adopts the suggested procedure in order to protect our parliamentary precedents, we would deny the right of individual pensioners to petition. But, at the same time, I should like my noble friend on the Front Bench to give due weight to the letter which is in our hands from the chairman of the trustees. After all, he has not had time to consult his trustees on the particular issue under discussion, but he says that there is certainly the possibility of long delays if we adhere to the precedents—

Lord Elton

The noble Lord speaks of "delays", but exactly what delays does he have in mind? Does he mean delays in payment?

Lord Taylor of Gryfe

I mean delays in the uncertainty created; for example, where does the pensioner stand under such arrangements? That is both a real and important fear. We must weigh in the balance those representations from Mr. Derek Fowler, who was formerly a finance director of British Rail and who is now a pensioner and chairman of the trustees. We must give some weight to the view that he has expressed. I hope that my noble friend on the Front Bench will deal with the question raised by the noble Lord, Lord Peyton of Yeovil. We must decide whether the adherence to the procedures that we are insisting upon (as mentioned by the noble and learned Lord, Lord Simon of Glaisdale, and the noble Lord, Lord Tordoff) outweigh the effect of long delays which would create uncertainty in the position of thousands of pensioners.

If my colleague on the Front Bench can convinoe me that the latter is a bargain worth making, I shall certainly support the amendment. However, I do not believe that we should minimise the fact that Derek Fowler as chairman of the trustees has, in his best judgment and opinion, spoken for the pensioners. After all, he represents the trustees of the pensioners and they have a responsibility to the pensioners. I hope that my noble friend will deal with that point.

Lord Henderson of Brompton

I should like to intervene briefly and make one suggestion. I have listened to the debate and, like the majority Members of the Committee, I realise that, but for the Delegated Powers Scrutiny Committee, vie would not be having such a debate. It is very largely due to its excellent report that this Chamber has been alerted to the possible extinguishment of standing orders in the case of railway pensions and that the issue has come to us in this rather peculiar fashion.

I should like to ask Members of the Committee how they think Members of another place—and I speak in front of a former Speaker of that place—would take an amendment to a Bill starting in this place which sought to limit the powers of the other place by waiving their standing orders by a Bill in statutory form. I do not imagine that that would be received very warmly in another place. I really do not see why, in this case, the powers sought by the Government, but coming through the other place, to disapply our standing orders should be received by us with anything other than the scrutiny which this Chamber has accorded to the proposal.

I believe that the arguments have been deployed very fairly on both sides of the Committee and in a most non-partisan way. Surely it is a House matter and one that should not be decided by the party Whips. I very much hope that that consideration will be borne in mind if and when we come to a vote which I hope, perhaps, will not happen. I hope that the Government will see the value of the amendment and that they will agree to it. Incidentally, it would give them and the trustees a great deal of time in which to consider the matters involved. We are not up against a timetable; what we are considering is the timetable of the pension schemes under delegated legislation. We are not considering the timetable of the Bill. The amendment should not be considered within the constraints of parliamentary time. There is time for sense to prevail.

As we heard—notably, from the noble Lord, Lord Archer—the procedure under discussion is very old; indeed, it is as old as Parliament itself. We should think very clearly and precisely about whether we should agree to any kind of curtailment of such a power. If we do consider it, I suggest that it should be for this Chamber to disapply standing orders in any particular case when they come before us. I ask the noble Earl, Lord Caithness, whether he will consider proceeding in that way; in other words, that he will withdraw the proposal that the disapplication of the standing orders should be enshrined in statute and, instead, agree that each order should be subject, as it perfectly well can be, to a Motion in this Chamber to disapply it.

The whole urgency of the procedure is being objected to on a non-partisan basis. I hope that the arguments put forward will appeal to the Government and that we shall succeed in finding a solution to the matter which will operate both in the interests of the pensioners and in the interests of Parliament. It is intrinsically undesirable that standing orders in either place should form part of an Act of Parliament.

Lord Boyd-Carpenter

I shall not detain Members of the Committee for very long. However, I should like to put forward a suggestion which may, perhaps, alleviate the position and help to prevent the matter being decided by a vote this afternoon, largely upon party lines. In the light of what my noble friend the Government Chief Whip told us earlier today, a great deal of the Committee stage of the Bill will be taken after the Summer Recess. Therefore, would it not be possible during the Recess to have consultations with the people who are really affected; namely, the railway pensioners and their organisations? One could then discover, on the rather neatly balanced issue, whether or not they are prepared to accept the possibility of delay in order to retain the hybridity rights. Surely they could be consulted on the matter. A conclusion could then be reached in the light of the results of such consultation.

Therefore, I wonder whether it would be sensible —although I do not know which way one would leave it—to leave the Bill as it stands at present, without taking a decision on the amendment, and decide the matter on recommitment in the autumn. We shall then be able to come to a decision (it is to be hoped) in the light of a clear indication of the views of the people who are really involved; namely, the pensioners.

Lord Clinton-Davis

I shall, indeed, try to be brief. However, I believe that the last two contributions that we have heard from the noble Lords, Lord Henderson of Brompton and Lord Boyd-Carpenter, deserve very careful consideration. I hope that the Minister will indicate that that will be the case.

One ought always to bear in mind that, although it is a House of Lords procedure, in this context that procedure can govern the interests of large numbers of people and large assets: £8.5 billion. That sum is nothing other than large. I believe that it ought to be dealt with by primary legislation, which is one of the options put forward, rather than by way of statutory instrument. We cannot amend a statutory instrument, it is subject to prior consultation, but we all know that statutory instruments are often found to be defective. The consultations may not necessarily have taken cognizance of important considerations but we cannot amend the legislation.

Therefore, I do not believe that dealing with the matter in the way that the Government suggest, without far greater consideration, is the right way to proceed. As my noble friend Lord Irvine said earlier, what is at stake is that Ministers are able to interfere with crude contractual rights and there is no adequate recourse. We must, therefore, be slow to interfere with a right which has, over and over again, been supported in this Chamber. I can do no better in that context than to quote from the Brooke Committee which stated: It provides valuable safeguards for private interests affected by delegated legislation, and should be retained". My noble friend Lord Taylor asked me a direct question about the letter from the chairman of the trustees. It has been quoted over and over again and I do not propose to read the entire letter again. However, on the chairman's own admission, it was written without the authority of his fellow directors of the trustee company; it was his personal opinion. He said that he had not had time to consult. We have not had time to consult with pensioner interests. The Government have not had time to consult. The memorandum of understanding and the letter to which reference was made were rustled up literally a few hours ago. Consequently, we have to be careful when we take on board someone's opinion—and one does not wish to throw it into the dustbin; it is an important opinion—which is inconclusive. I have a letter from one of the trustees, Mr. Hince, to which I have already alluded. He states: With regard to the question of hybridity this has not to my knowledge been discussed by the trustees". They ought to discuss it before a conclusion is reached by the Government to throw the procedure aside.

I understand that there was no trace of any discussion at a trustee meeting on 7th July when that particular trustee was absent, because the minutes have been perused and that is what has been found. So it is inaccurate to say, as has been said by some in the course of the debate, that that is the trustees' position. It is not.

On the memorandum of understanding, which is not unrelated to what we are talking about, memoranda of understanding can often become memoranda of misunderstandings. I do not think that something so hurriedly brought together, without the consent of all the trustees, should guide us too much tonight in our deliberations on the issue.

It has been suggested that there would be fatal delay to the position of the pensioners, but there is no evidence of that. The floodgate argument is often used in such instances, altogether overlooking the possibility of representative petitions in any event. It is likely that if there are pensioners whose rights are overlooked, they would be overlooked in a similar way. However, there is always the possibility that even when, overall, a situation is achieved which seems to be to the benefit of the overwhelming majority of pensioners, individuals find that their position is prejudiced. That is why we have this procedure. It is quite wrong, in my judgment, therefore, to remove the procedure in the way that the Government suggest.

I believe that the arguments which we have heard in this interesting debate should counsel the Government to go slow on the matter. I hope that the Minister will say that he will consider the issue further and that he will take into account the two propositions which have been advanced by the noble Lords, Lord Henderson and Lord Boyd-Carpenter. If the Minister does not, then I hope that the noble Lord, Lord Tordoff, will divide on the issue tonight.

Basically, in my submission, it comes to this. The question should not be: "How do we subvert the pensioners' rights in this instance?" We should rather ask: "How can we ensure that the rights are buttressed? How can we ensure that the rules are made to work?" Those are the appropriate questions which we should ask, but I suggest that they are not the questions that the Government have asked.

One final point: when some of the trustees considered the matter, I wonder to what extent they understood the difficult issues of hybridity which affect the procedures of this House. In what way could the chairman have come to the conclusion that the delays would be fatal to the interests of pensioners? Who advised him and in what circumstances did the internal debate take place? There is no evidence that any such debate took place, which adds to the difficulties that we are experiencing.

5.15 p.m.

The Earl of Caithness

This has been a most useful discussion. One point which has emerged from all Members of the Committee who have taken part is that there is complete and entire common ground between every single Member of the Committee. None of us has any intention of disadvantaging pensioners. That is why I say to the Committee that we have put Schedule 10 into the Bill and it is aimed at protecting the rights of pensioners.

I can fully understand that the notion of delay as the reason for avoiding the hybrid instrument procedure might seem suspicious to some Members of the Committee. However, let me repeat that there are real dangers in delay. First, as my noble friend Lord Peyton of Yeovil said, uncertainty about pensions causes distress and should he avoided. I know that many Members of the Committee will be aware just how involved my noble friend has been on the question of pensions. If he makes a remark like that, the Committee should listen to it.

Secondly, many of the changes made under paragraphs 2 to 4 of Schedule 10 are required because people will be changing employer on a set date. The Committee will know that the Inland Revenue, for good reasons, will not allow an employee to remain in another employer's pension scheme indefinitely without withdrawing the tax relief entitlements of the scheme. That is why I say to my noble friend Lord Elton that a lengthy delay in making the changes might complicate matters severely.

The delay would not necessarily affect the payment of current pensions to individuals—that would continue to take effect. The delay would create uncertainty over the future payment of pensions. Pensioners would not know where they stood until the new pension arrangements were in place. Then there is the Inland Revenue point. Under the hybrid instrument procedure, the trustees of pension schemes would have to bear the cost of counsel if they themselves decided to petition Parliament or if they were obliged to cross-petition in order to fulfil their fiduciary duty as trustees, following a petition from, say, a group of scheme members.

The hybrid instrument procedure would also apply to orders under paragraph 9, which allows the Secretary of State to designate different pension schemes for the purpose of paying government contributions to them under the Transport Act 1980. Delay could be very serious here too. Substantial sums are paid to railway pension funds under these arrangements.

I should like to make it clear that even with the best will in the world it is not possible at this stage to say how many orders might be affected. Although there will be several transfer schemes involving transfers of staff which may require arrangements to be made for their pensions, it may be possible to deal with the transfers of pension rights in a number of transfer schemes with one order. There will also need to be three or four general orders to establish the joint industry scheme and for the purposes of protecting members, safeguarding what I hope will be their indefeasible rights, when we are allowed to move an amendment to that effect, and .designating for the purpose of making government support payments available. We do not know how many orders we may require to amend existing schemes. Although it is not definite that all these orders would be caught by the hybridity procedure it is possible that any of them might be.

That is the problem that I have with the kind suggestion of the noble and learned Lord, Lord Simon of Glaisdale. He was helpful in suggesting that we should put all hybrid orders into one. The difficulty with that, although it is something I should like to consider, is that we shall not know what is hybrid until the committee looks at it. So we have a difficulty there.

The Government have taken the view that the reorganisation of the BR pension schemes must be as open as possible. The orders relating to pensions under the Electricity Act 1989 were subject to the annulment procedure. If we had adopted that course for the railways, this debate would never have arisen. But we decided, rightly—and I am sure the Committee will support the Government in this view—that since the sums of money were so great arid the powers wide-ranging, the affirmative resolution procedure was the right procedure. I hope that the Committee will welcome that, and the fact that the Government would like to bring forward amendments to the Bill so that the views of the trustees are known before the debate takes place.

Although the disapplication of the hybrid instrument procedure is well precedented, as I said when I spoke earlier, I do not want to go into the details. Many of the precedents, however, relate, like these orders, to financial matters. Indeed, the Wages Act order concerned the remunerations fixed by wages councils. Arguments about financial questions can be reduced to reasonably digestible papers where the issue is clearly set out.

There will always be someone with financial responsibility. In this case, that includes the Government and the trustees, whose duties must be given due weight. We think that there ought to be such debate, as well-informed as we can make it. But we do not think that what amounts to a Private Bill Committee is the right forum. In saying that, I in no way criticise the hybrid instrument procedure as such. It was used successfully for the orders setting up development corporations in London, Bristol and Cardiff Bay. As Erskine May notes, the committees conducted themselves as if they were opposed Private Bill Committees. They would have had to examine plans and possibly engineering proposals. We have always accepted that that sort of inquiry should be conducted upstairs rather than in the Chamber. I put it to the Committee that that sort of procedure is not the one best suited to pensions.

Lord Shepherd

Perhaps I may ask the noble Earl this. He rightly referred to the proposed amendment of the Government in regard to the trustees' views. That certainly deals with some of the anxieties which arose over Schedule 10. But if as a Committee (or a House, as we may then be) we receive the views of the trustees, those views can be presented to this House only through Members of this House. There is no ability to question the trustees in regard to their anxieties. Will the noble Earl consider, between now and after the spill-over, how, if the views of the trustees were at variance with those of the Secretary of State, the House would be aware of that and would be able to question the trustees on the validity or otherwise of their difficulties. If the noble Earl will consider that point between now and the autumn, I think it might be helpful.

The Earl of Caithness

I am grateful for that suggestion. It takes me to the next point that I intended to make. I am grateful also for the suggestions put forward by the noble Lord, Lord Henderson of Brompton. I say to the noble Lord: yes, I would like to consider what he said, as indeed I would like to consider what the noble Lord, Lord Shepherd, has said. But that decision is not in my hands. It is in the hands of the noble Lord, Lord Tordoff. I am quite prepared to consider this and various other points which have been raised between now and another stage if the noble Lord, Lord Tordoff, permits me to do so.

I believe that my noble friend Lord Boyd-Carpenter came out with the right solution. He suggested to the noble Lord, Lord Tordoff, that he might take away this amendment so that we can all consider this very important issue—as indeed we shall consider the Government amendments to Schedule 10 —between now and another time.

I should like to answer one other point made by the noble and learned Lord, Lord Simon of Glaisdale. He said that the expedited procedures would take about one month. With great respect to the noble and learned Lord, who is so much better versed in these matters than I am, I would question that. I do not think that there has ever been a precedent. I do not think that the expedited procedures have ever been used. So, although the noble and learned Lord may be right that it could be one month, it might be longer.

The decision that we are faced with is this. We are all on common ground; we want to do the very best for the pensioners. If there is no delay under the hybrid Bill procedure, nobody will be more pleased than I. But if there were delay, and that delay caused anxiety, distress and considerable concern to pensioners, perhaps the amendment of the noble Lord, Lord Tordoff, with the best will in the world, would not have achieved what was wanted. I therefore support what my noble friend Lord Boyd-Carpenter said. I hope that the noble Lord will withdraw this amendment. The debate has been extremely useful. I should like to reassure the Committee that I will consider each and every point that Members of the Committee have made between now and another stage.

Lord Elton

Before my noble friend sits down, I wonder whether he can elucidate a couple of points. At one stage quite early on in his reply he said that he thought it might be possible to have one order covering many schemes. Did my noble friend mean to say that it might be necessary? What he was being asked to do was to give an undertaking, if he could, that there would be one order per scheme, and one scheme per order.

Secondly, can my noble friend go a little further in elucidating the effects of delay? He said that there would be no cessation of payment of pensions already in payment, but there would be doubt as to the amount or nature of payments to be made in the future. What he did not say was whether there would be any delay in the introduction of a payment. In other words, if I were a pensioner due to start receiving a pension on 1st January 1994, let us say, and the process was still dragging on, would I get a letter saying that it was much regretted that my pension (whatever it was) had not been decided and I would not get anything until later? That is where the shoe pinches. If it is a question of receiving more or less by some pounds a week or month, that is not much of a pinch. But if it is a question of having to wait an indefinite period for any payment, that would not be acceptable at all. That consideration must be relevant to our decision.

The Earl of Caithness

The two points that my noble friend raises are very important. On the first, I know that what I said was slightly different to what he hoped that I would say whereas what he hoped I would say was not in accordance with what some Members of the Committee felt that it was right for me to say in regard to trying to minimise the amount of orders. So we have a very genuine difference among Members of the Committee. Again, the exact implications of that point are another issue that I shall be very happy to consider between now and another stage.

On that point I feel that it might be extremely inconvenient to deal with each scheme in a separate order, given that 1 think—I am relying upon my memory and I stand to be corrected—that there are some 60 British Rail pension schemes at the moment with 340,000 members or thereabouts. One could have a considerable problem. I hope that my noble friend will let me have a look at that, as I hope he will let me have a look at the second point that he raised, rather than giving an off-the-cuff answer now. It is of such import that I would rather give him a correct answer.

Lord Tordoff

I am most grateful to everybody who has taken part in this most interesting debate which has now been going on for nearly two hours. It is an important and serious subject, as has been shown. I do not propose to go backwards and forwards over the arguments and counter-arguments. The Committee has done that for itself and noble Lords probably have a fairly clear idea of where they stand now.

With regard to delay, I have to say that, if there are people in the railway industry who are uncertain about the future of their pensions, there are plenty of people about who are uncertain about their jobs. That is not the fault of my modest amendment but the fault of the Bill as a whole.

It seems to me that two points have emerged. I go back to what I said at the beginning. I moved this amendment for two reasons. One was following the report of your Lordships' Select Committee, to which it is extremely important that we listen and from which we should take advice. On an occasion such as this, when the Select Committee has put its points so strongly, if we completely ignore it (and I do not suggest that this Chamber would ignore or overturn it), we must worry whether there will be an occasion in the future when that Select Committee will ever be of any use to this Chamber. Let me remind the Chamber of what the Select Committee said: In view of the extent of the powers, the substantial assets involved and the number of people affected, we urge the House to consider most carefully whether, in spite of any precedents, there is sufficient justification for the exclusion of the hybrid procedure in this case". It could not have been put more pungently as a Committee of the Whole House without a particular axe to grind on the Bill.

The other reason is the voice of the pensioners. We have heard from the chairman of the trustees and it has been suggested that we should take more time to go and consult the pensioners. I went to some trouble to consult some of the pensioners. One of the problems is that nobody speaks for the pensioners as a whole. Indeed, Sir Bob Reid, in a letter to the former president of the Retired Railway Officers' Society, says: Nevertheless we are at present reviewing the question of pensioner representation, although I cannot say what the result of this review might be. Our problem is, of course, to find a body which represents all pensioners". I do not believe that such a body exists. But the chairman of the Retired Railway Officers' Society has written to me and said: As there is no representation for pensioners on the Trustees or the Management Committee of I he Pension Fund, we would like to be able to petition Parliament on any Orders made under Schedule 10 of the Bill which affects our interests". That is the voice of the pensioners. I believe that we should listen to both the voice of our Select Committee and the voice of the pensioners.

I hear what the noble Lord, Lord Henderson, says and find it a very interesting suggestion. However, I feel that the way to proceed is to expunge this part of the Bill today and, in the period between now and the spillover, the Government can consider putting in expedited procedure or following up the suggestion by the noble Lord, Lord Henderson. I believe that on this accretion on the Bill, put in by another place—which, it has been suggested by at least two noble Lords, has no right to tinker with the Standing Orders in this House—we must divide, unless the Government are prepared to accept my amendment.

5.35 p.m.

On Question, Whether the said amendment (No.125P) shall be agreed to?

Their Lordships divided: Contents, 145; Not-Contents, 151.

Division No. 1
CONTENTS
Addington, L.	Graham of Edmonton, L. [Teller.]
Airedale, L.
Alport, L.	Greene of Harrow Weald, L.
Archer of Sandwell, L.	Greenhill of Harrow, L.
Ardwick, L.	Gregson, L.
Attlee, E.	Grey, E.
Aylestone, L.	Halsbury, E.
Banks, L.	Hamwee, B.
Barnett, L.	Harris of Greenwich, L.
Beaumont of Whitley, L.	Healey, L.
Birk, B.	Henderson of Brompton, L.
Blackstone, B.	Hilton of Eggardon, B.
Bonham-Carter, L.	Hollick, L.
Boston of Faversham, L.	Hollis of Heigham, B.
Bottomley, L.	Holme of Cheltenham, L.
Brimelow, L.	Hooson, L.
Broadbridge, L.	Houghton of Sowerby, L.
Brooks of Tremorfa, L.	Howie of Troon, L.
Callaghan of Cardiff, L.	Hughes, L.
Carmichael of Kelvingrove, L.	Hunt, L.
Carter, L.	Hylton, L.
Castle of Blackburn, B.	Hylton-Foster, B.
Cledwyn of Penrhos, L.	Irvine of Lairg, L.
Clinton-Davis, L.	Jacques, L.
Crook, L.	Jay, L.
Dahrendorf, L.	Jeger, B.
Darcy (de Knayth), B.	Jenkins of Hillhead, L.
David, B.	Jenkins of Putney, L.
Dean of Beswick, L.	John-Mackie, L.
Desai, L.	Judd, L.
Donaldson of Kingsbridge, L.	Kagan, L.
Donoughue, L.	Kennet, L.
Dormand of Easington, L.	Kilbracken, L.
Eatwell, L.	Kilmamock, L.
Ennals, L.	Kinloss, Ly.
Ewing of Kirkford, L.	Kirkhill, L.
Ezra, L.	Lawrence, L.
Falkender, B.	Listowel, E.
Falkland, V.	Llewelyn-Davies of Hastoe, B
Fisher of Rednal, B.	Lockwood, B.
Foot, L.	Longford, E.
Gallacher, L.	Lovell-Davis, L.
Galpern, L.	Macaulay of Bragar, L.
Gladwyn, L.	McCarthy, L.
Glenamara, L.	McGregor of Durris, L.

Mclntosh of Haringey, L.	Russell, E.
Mackie of Benshie, L.	Scanlon, L.
Mallalieu, B.	Seear, B.
Mar, C.	Serota, B.
Marsh, L.	Shackleton, L.
Masham of Ilton, B.	Shepherd, L.
Mason of Barnsley, L.	Simon of Glaisdale, L.
Mayhew, L.	Stedman, B.
Merlyn-Rees, L.	Stoddart of Swindon, L.
Mishcon, L.	Taylor of Blackburn, L.
Molloy, L.	Taylor of Gryfe, L.
Monson, L.	Thomson of Monifieth, L.
Morris of Castle Morris, L.	Tonypandy, V.
Mulley, L.	Tordoff, L. [Teller.]
Murray of Epping Forest, L.	Varley, L.
Nicol, B.	Wallace of Coslany, L.
Ogmore, L.	Walpole, L.
Peston, L.	Weatherill, L.
Pitt of Hampstead, L.	Wedderburn of Charlton, L.
Plant of Highfield, L.	Wharton, B.
Prys-Davies, L.	White, B.
Rea, L.	Wigoder, L.
Redesdale, L.	Wilberforce, L.
Richard, L.	Williams of Elvel, L.
Ritchie of Dundee, L.	Williams of Mostyn, L.
Robson of Kiddington, B.	Wilson of Rievaulx, L.
Rochester, L.	Winchilsea and Nottingham, E
Rodgers of Quarry Bank, L.	Young of Dartington, L.
NOT-CONTENTS
Aberdare, L.	Fraser of Kilmorack, L.
Aldington, L.	Gilmour of Craigmillar, L.
Arran, E.	Gisborough, L.
Astor, V.	Goold, L.
Astor of Hever, L.	Goschen, V.
Auckland, L.	Gray, L.
Barber, L.	Gray of Contin, L.
Belhaven and Stenton, L.	Greenway, L.
Bessborough, E.	Hacking, L.
Blatch, B.	Hailsham of Saint Marylebone, L.
Blyth, L.
Borthwick, L.	Harmar-Nicholls, L.
Boyd-Carpenter, L.	Harmsworth, L.
Brabazon of Tara, L.	Harrowby, E.
Braine of Wheatley, L.	Haslam, L.
Brigstocke, B.	Hayhoe, L.
Brougham and Vaux, L.	Henley, L.
Burton, L.	Hesketh, L. [Teller.]
Cadman, L.	Hives, L.
Caithness, E.	Holderness, L.
Campbell of Alloway, L.	HolmPatrick, L.
Campbell of Croy, L.	Hooper, B.
Carnegy of Lour, B.	Hothfield, L.
Carnock, L.	Howe, E.
Carr of Hadley, L.	Jenkin of Roding, L.
Chalker of Wallasey, B.	Johnston of Rockport, L.
Clanwilliam, E.	Killearn, L.
Clark of Kempston, L	Kimball, L.
Colwyn, L.	Kimberley, E.
Cork and Orrery, E.	Kinnoull, E.
Cox, B.	Lane of Horsell, L.
Cranborne, V.	Lauderdale, E.
Crickhowell, L.	Leigh, L.
Cumberlege, B.	Lindsay, E.
Davidson, V.	Lindsey and Abingdon. E.
Denham, L.	Liverpool, E.
Denton of Wakefield, B.	Long, V.
Derwent, L.	Lucas of Chilworth, L.
Downshire, M.	Lyell, L.
Eccles, V.	Mackay of Ardbrecknish, L.
Elibank, L.	Mackay of Clashfern, L. [Lord Chancellor.]
Elles, B.
Elliot of Harwood, B.	Macleod of Borve, B.
Elliott of Morpeth, L.	Mancroft, L.
Elphinstone, L.	Manton, L.
Faithfull, B.	Marlesford, L.
Ferŕers, E.	Merrivale, L.
Finsberg, L.	Mersey, V.
Flather, B.	Milverton, L.
Fraser of Carmyllie, L.	Montgomery of Alamein, V.

Morris, L.	Savile, L.
Mottistone, L.	Sharpies, B.
Mowbray and Stourton, L.	Skidelsky, L.
Moyne, L.	Stanley of Alderley, L.
Munster, E.	Stewartby, L.
Murton of Lindisfarne, L.	Stodart of Leaston, L.
Nelson, E.	Strange, B.
Nelson of Stafford, L.	Strathclyde, L.
O'Cathain, B.	Strathcona and Mount Royal, L.
Onslow, E.
Orkney, E.	Strathmore and Kinghorne, E. [Teller.]
Orr-Ewing, L.
Park of Monmouth, B.	Swinton, E.
Pender, L.	Teviot, L.
Perry of Southwark, B.	Thomas of Gwydir, L.
Peyton of Yeovil, L.	Trefgarne, L.
Platt of Writtle, B.	Trumpington, B.
Polwarth, L.	Ullswater, V.
Prentice, L.	Vaux of Harrowden, L.
Quinton, L.	Vivian, L.
Rankeillour, L.	Wade of Chorlton, L.
Renton, L.	Wakeham, L. [Lord Privy Seal.]
Renwick, L.
Rodger of Earlsferry, L.	Wedgwood, L.
St. Davids, V.	Windlesham, L.
Saltoun of Abernethy, Ly.	Wise, L.
Sanderson of Bowden, L.	Wynford, L.
Sandys, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.43 p.m.

Clause 121 [Pensions]:

Lord Peyton of Yeovil moved Amendment No. 126:

Page 121, line 32, at end insert:

("(1A) Nothing in Schedule 10 nor in any order made by the Secretary of State under Schedule 10 shall to any extent undermine the current expectations of Railway staff, deferred pensioners and pensioners to index-linked pension payments and to sharing in the benefits of actuarial surpluses declared in respect of Railway pension schemes.").

The noble Lord said: In the Bill now before the Committee the Government are proposing far-reaching changes as to both the ownership and operation of the railways. There are widespread doubts as to the wisdom of their proposals. However, there can be no doubt as to the rightness and determination of your Lordships to ensure that pensioners' rights are not interfered with or undermined as a result of action taken by the Government to which they will never be, in any sense, a party.

In the White Paper on pensions the Government made it clear that privatisation would not affect pensions already being paid from or preserved in British Rail schemes. The White Paper also stated that the arrangements provided a way of, ensuring that the security of rights enjoyed by pensioners and members now is not undermined".

I want to set out the account as briefly as I can. In the event, on 20th May the Government announced in a Written Answer that in their view, it would be impracticable to allocate pensioners to the successor companies and that therefore a closed fund would be set up.

Without some guarantee of solvency, that inevitably meant that pensioners would be dependent upon investment performance. Investment performance could, of course, be subject to certain hazards. For instance, inflation could materially change the situation of the fund; so could any changes in taxation. The fund could also be affected if pensioners lived longer than the actuaries decided that they should. There would be a similar risk from any mistaken strategy on which the trustees embarked.

In present circumstances, without the developments envisaged in the Bill, any deficiency that occurred in the fund would be remedied by the employer—British Rail—and by the present contributors—the employees. I received strong calls from a number of honourable friends in another place, particularly my honourable friend the Member for Eastleigh, who has many railway pensioners in his constituency. He was particularly worried that the Bill should have left another place without any guarantee for the pensioners.

I share those anxieties to the full and, in accommodation with the noble Lord, Lord Marsh, I tabled Amendment No. 126. I do not believe that it would be betraying any confidence or exaggerating in any way if I said that that amendment precipitated some argument in government circles. Happily, that argument ended in a welcome and rather unexpected way yesterday when the memorandum of understanding was signed by the chairman of the pension company, the finance member of the British Railways Board and the Minister of State.

As the Committee will be aware—though I should like to put it on record—it gave an absolute guarantee of solvency for retail prices index-linked payments from the fund of pensions in payment or deferred on 1st October 1994. That was a major step which I am sure receives the Committee's warm welcome. However, it leaves three further questions to which I hope my noble friend on the Front Bench will give further thought between now and Report stage, even if he cannot answer them today.

First, there is the question of increases granted after 1st October 1994. Would it not be appropriate if those, too, were covered by the guarantee? After all, they will have been approved by the government-appointed director and presumably also by the government actuary, who under the agreement will be joint actuary to the fund. I also wonder why the proportion of surplus distributed should be 40:60–40 per cent. to the employees and 60 per cent. to a reserve fund instead of perhaps the other way round. It is a question that I put to my noble friend but to which I do not attach the same degree of importance as I do to the guarantee of solvency.

The Secretary of State appears to have won the argument absolutely hands down. It leads me to wonder why on earth the Government waited so long. Had they taken this step earlier on there is no doubt in my mind that a great deal of the odium and suspicion which have been generated would have been avoided and a great deal of unease on the part of the pensioners need never have occurred. I wish to make it clear at the beginning of the debate that I would not like now to take any step myself which would suggest that the Secretary of State had somehow let the pensioners down when in fact I believe that he has secured their rights in a very impressive manner.

Before I finish I should like to quote from a letter which I received today from Mr. Derek Fowler, the chairman of the British Rail Pension Trustee Company. It is not the same letter as he has written to everyone else. It refers particularly to the amendment that we are now discussing. What I had personally asked him was whether he would get his people to draft an amendment—your Lordships may think that it is an unusual requirement—in very flat-footed terms which your Lordships would find no difficulty in understanding, many of the amendments which come before your Lordships—this is not meant to be in any way offensive—being absolutely way beyond any possibility of comprehension by ordinary people.

The letter states: When we first met on 22nd June we identified three principal objectives:

1. 1. to obtain a Government solvency guarantee for the proposed closed fund and for those scheme members remaining in BR employment.
2. 2. the guarantee to extend index linking of pensions;
3. 3. an opportunity for scheme members to participate in fund surpluses if they arise.

Those were the aims of the original amendment to Clause 121 of the Railways Bill which you tabled in the House of Lords and, I am pleased to say that the Memorandum of Agreement on Security of Railways Pensions, which I signed yesterday, meets those objectives".

I wish to end on one different request which concerns the point that I was making just now. If the Government had reached this decision earlier I do not think anyone would necessarily have expected any expression of it on the face of the Bill. As it is, I very much hope that my noble friend will do more than just consider finding a place for an amendment on the face of the Bill to enshrine the principles which are contained in that memorandum.

This is an important measure and this in itself is an extremely important amendment. It is an extremely important repair to what was a very, very serious weakness in the Bill, and as such I think that it should be on the face of it leaving no doubt as to its importance. I beg to move.

The Earl of Caithness

In view of what my noble friend has said with regard to the Government's position, I hope that it will be to the advantage of the Committee if I outline exactly what it is. My noble friend explained it very carefully. I have writ ten to as many of your Lordships as possible who have an interest in this issue, but I see in the Chamber some noble Lords to whom I have not written. Therefore, perhaps I may set it on the record and then come back at the end of the debate to answer any ,points which your Lordships may have.

In the White Paper published last year the Government gave the following commitment: Privatisation will not affect pensions already being paid from or preserved in British Rail schemes. After privatisation employees will be entitled to preserve pension rights already accrued in these schemes. Alternatively, they will have the opportunity to transfer their accrued pension into a broadly comparable scheme in their new employment. These arrangements will provide a way of ensuring that the security of rights enjoyed by pensioners and members now is not undermined by privatisation'. In January we published a consultation paper on railway pensions after privatisation which outlined' our proposals and invited comments from all interested parties. The ensuing consultation has been both genuine and extremely thorough. In announcing his proposals—which incorporated a number of concessions given as a result of the consultation process—in another place on 20th May, my right honourable friend the Secretary of State for Transport reaffirmed his objective to preserve the security of rights enjoyed by pensioners and members while adopting arrangements to suit the new structure of the privatised industry. He announced that a joint rail industry pension scheme would succeed the present scheme and that existing staff would retain an individual right to remain in the scheme for as long as they are employed in the industry. These arrangements for active members of the BR pension schemes have been welcomed by all concerned.

It is common ground that special arrangements must be made for pensioners. The nature of the railway industry and this privatisation makes it impossible to identify the present pensioners with specific parts of the railway. We therefore proposed that the existing pension fund should be shared between pensioners and active members on a fair—that is, actuarially determined—basis and that the trustees would go on administering the part of the fund allocated to pensioners. The pensioners should have the benefit of any surplus that there might be.

However, when my right honourable friend met the trustees on 24th June—two days after the now well known Peyton meeting—they told him that the Government's preferred option was unacceptable because in their view it did not safeguard pensioners' benefits sufficiently. The trustees asked that the pensioners' funds should have a solvency guarantee from BR, which effectively means from the Government, to underpin index linking and that the pensioners should have an opportunity of real increases if there was surplus in the fund.

In the light of those representations the Government have been giving a great deal of thought to the possibility of a third option for pensioners which would reflect the concern which we share with the BR Pension Trustee Company and the British Railways Board that the pensions of existing, deferred and future BR pensioners should be fully protected after privatisation. Of course, the Government have to protect the interests of taxpayers. We have now reached a joint agreement with the trustees and with the BR Board that will meet our common objectives. Copies of the memorandum of understanding have, as I have said, been made available to a number of Members of the Committee, and have also been placed in the Library.

6 p.m.

Lord Clinton-Davis

Will the noble Earl give way? Again, he has referred here to agreement being reached with the trustees. Is he saying that the trustees have agreed today to the document, or is it simply an agreement which was reached with the chairman of the trustees alone and has not yet been validated by thQ trustees as a whole?

The Earl of Caithness

I shall come back to the precise detail of that. As I understand it, the memorandum of understanding is binding on the trustees as it is binding on the Government and as it is binding on the British Rail Board. We have agreed that a closed fund for the existing and deferred pensioners should be set up with a target date of 1st October 1994. The essential features are as follows: the Government will provide an absolute solvency guarantee for retail prices index-linked payments for pensions already in payment and those which have been deferred. Pensioners may benefit from up to 40 per cent. of any surpluses generated in the fund. Up to 60 per cent. of any surpluses will be held in a special reserve against future deficiencies. That is in the same ratio as contributions to the fund have been divided between the employer and employees in normal circumstances.

The government actuary will be a joint actuary to the fund. The Government will appoint a director of the trustee company whose consent will be required for the distribution of any surplus, strategic decisions on investment policy and other matters which could have a significant impact on the finances of the fund and on any guarantee of benefits granted from a surplus. The government director will also decide on investment of the special reserve.

The Government remain committed, under the Transport Act 1980, to support payments to certain BR pension funds. We will agree the timing of such payments with the trustees, taking account of the absolute guarantee now being provided. The joint actuaries will prepare at least triennially a valuation of the fund together with a statement of any surplus or deficiency and an assessment of the appropriateness of investments.

These arrangements will, for existing and deferred pensioners, underpin the Government's undertaking that the treatment of pensioners after privatisation will be safeguarded. We have been informed by both the chairman of the trustee company and of the BR board that they endorse these proposals which, in their view, satisfy the Government's commitments.

I am extremely grateful to my noble friend Lord Peyton for reading out part of the letter which he received today from Mr. Fowler, the chairman of the trustees, who has said that what we have agreed now meets the three aims that my noble friend's amendment was designed to achieve. Although the Government have made a commitment that they wish to fulfil, I have to admit that my noble friend's amendment was always there in case our performance did not come up to scratch.

The Government's commitment to these arrangements and to making them work is total. Many, if not all of them, will operate within the framework of existing legislation or within the Bill as presently drafted. I say this to my noble friend Lord Peyton: I shall be looking with particular care at the detail to ensure that there is no gap in the legislative provision. If there is such a gap, the Government will move at Report stage such amendments as may be needed to plug it. That sets out the new government position on this very important issue. I look forward to the debate and will come back on any points of detail at the end.

Lord Marsh

Because of the pressure on the Bill it is unfortunate that, on issues of this size, documents are circulated almost in the course of the debate which makes it very difficult sometimes to form a view on quite complex issues. I believe that the misunderstanding—the memorandum of understanding (that was Freudian, but I am quite prepared to accept it) is undoubtedly the best deal that the trustees could have obtained from the Government. I have no doubts about that.

I do not believe that, as currently drafted, it represents a fair deal for the pensioners. I regret that if I am right —I shall be very happy to be wrong obviously—this Committee will allow a significant erosion of the expectations of the present members of the pension fund. At this stage I should declare a personal interest because my only claim to uniqueness in this House is the fact that I believe I am the only Member who is directly affected by this amendment as a member of the British. Rail pension fund. But it is a very small interest which is a significant fact. My British Rail pension has no impact on my lifestyle at all. For the vast bulk of the members of that fund however (175,000), apart from state benefits, it is their only source of income. It is a low-paid industry. Even if one allows for and takes into account the very large number of graduate technicians, accountants, financial people, senior executive staff and top management, the average weekly pension is £40 a week, which is slightly over £2,000 a year. For the benefit of the statisticians in the Committee, if one takes the median, it is £35 a week. Any variation in the small sum of £2 or £3 is virtually the difference between having any kind of small luxury and not having it.

Therefore I make no apologies whatever for harping on the point that in no way should their expectations—based on what they have seen happen over recent years as members of that scheme—be reduced as a result of the transfer which arises through no, action on their part. It arises because the Government of the day strongly believe that the Bill will bring about greater efficiency and financial benefit to the electorate as a whole. Therefore, they are caught up in this. The Government have no alternative. They have produced the Bill and there has to be a closed fund established in this way. Therefore, it is my belief that the pensioners should be protected against any diminution whatever of their expectations.

I am not deeply moved or impressed by the fact that the Government have moved a long way. With the aid of the Opposition in another place, the Government found themselves defending the indefensible. They were hooked on a proposition for the pensioners which was so bad that, if it had been offered in the private sector—I speak as someone who earns his living in the private sector in the field of insurance and financial services—those responsible would have been disciplined by the appropriate regulatory authorities for bad advice. So the Government had to retreat from that.

I see no great wondrousness in giving a solvency guarantee. Of course, morally the Government had to give it because, if there is no stream of contributory income into the scheme, there is no other way of maintaining solvency. No government of the real world would allow a public pension fund to go bust because it had become insolvent.

I stress that I am not wildly enthusiastic about this measure. The changes which have been made and the point at issue have nothing whatever to do with nationalisation, denationalisation or privatisation; nor is it involved in comparisons with any other scheme. From time to time civil servants have been mentioned and comparisons with the Civil Service scheme, which is non-contributory, made. I could list pension schemes which are better than the BR scheme, and others which are worse than the BR scheme. These pensioners are in a scheme and are currently receiving pensions for which they have paid and about which they have certain expectations. They have an expectation that not only will the pension fund meet the index, but that sometimes, when it creates a surplus as it has, they will get real increases in pension. That has happened in the past and it is reasonable for them to expect it in the future. They have an expectation that sometimes there will be surpluses in the fund if it is properly managed, and that from those surpluses they will be able to improve benefits for their dependants by perhaps a couple of pounds a week. All those are expectations of the current scheme.

Let us look at what is proposed. The Minister read from the Government's document, which sets out the basis of the provisions, stating: We have sought throughout to satisfy the following principles: pensions in payment should be secure in real terms". That is inescapable. It is a moral obligation on any employer whose staff are being moved from a pension scheme that already does that.

The document then states that, existing, deferred and future pensioners should have a reasonable opportunity to obtain benefits from any surplus there might be, as they do at present". In my view, under these proposals the pensioners will not be able to do that, as they do at present". I refer to the final and crucial point, the weasel words not only of the Treasury, but of actuaries of the Treasury—an unholy combination of occupation. It states that, the taxpayer's interests should be protected". Taxpayers' interests are not an element of this matter. The Government have to accept the responsibility for the changes that they are making to the pension fund. They must therefore accept the financial consequences that go with it. The one follows the other. If that increases public expenditure, which it will, then that has to happen.

The solvency guarantee is essential. But the Government are demanding that the pensioners pay quite a high price for it. As I understand the very brief outline, the trustees will, on the advice of the actuaries, be able to award real increases in pension when the fund is in surplus, as they do now. That is fine. But that happens now and is therefore part of the pensioners' expectations. Alternatively, the trustees might use the surplus to improve widows' benefits. However, under the present provisions, the Government will first of all demand that 60 per cent. of any of those surpluses shall accrue to a fund which is, as I understand it, to cushion the Government's solvency guarantee. Normal practice in privately run pension funds would be that if those surpluses had to be distributed, they would at least be distributed on a 50:50 basis. However, since the Committee is not discussing the matter in any detail, Members do not realise that in the BR scheme those surpluses have in the past been distributed so that two-thirds have gone to the pensioners. Under the present proposals, however, 60 per cent. will go to the reserves.

But even that is not true. As I understand it—and this is a point upon which I would dearly like to be told by the Minister that I am wrong—if, after taking actuarial advice, the trustees decide to make some additional benefit out of those surpluses to give a real increase in pensions or to give some additional widows' benefits, they will be able to do that after the Government's 60 per cent. has been tucked on one side. But things may change in the years to come due to a slump, adverse economic conditions or government taxation, such as ACT, and the fund may be suddenly hit and go into deficit. The Government have a formula for dealing with that. Members of the Committee will have read it, and it is clear. The formula states that, in the event of a deficiency, the Government guarantee will be called on the basis of the following formula: Benefits payable x Deficiency/Total Liabilities". It may sound gobbledegook, but I think that it is a significant comment. As I understand the formula, it would mean that in the absence of a stream of income (because there is no contribution income) the deficit can only be met by a reduction of the pension. I do not know of any other way in which one could meet the deficit. I should be grateful if the Minister can give me a clear undertaking that I am totally wrong and that there is no way in which that gives the Government, the trustees or the government actuary any powers to reduce the pension.

Lord Clinton-Davis

It is clear that the noble Lord, with his great expertise in this field, has researched the document carefully. I am a little puzzled by the indent in paragraph 2 which states: existing, deferred and future pensioners should have a reasonable opportunity to obtain benefits". Why should it not read, "Existing, deferred and future pensioners should obtain benefits"? I do not understand those words. I wondered whether the noble Lord believes that there may be something sinister in them or whether they are simply otiose.

Lord Marsh

That is exactly the sort of question that I should like the Minister to answer. I have grave anxieties about the document. The noble Lord, Lord Clinton-Davis, pays me too much credit in saying that I have studied the document carefully. I received it at about lunchtime. I have had a quick look at it. If anybody came into my office where we employ actuaries, where we manufacture pension products and where we employ nearly 1,000 people to sell them, and said to me, "We have a new pension scheme, chief executive, and would like to have a quick chat about it. I'll leave it with you for half-an-hour and then come back. Is that OK?", that person would be looking for a new job the next morning. But that is the way in which the Bill is being run. I should like the Minister to answer such questions.

There is no point in continuing in this vein. One can make a number of criticisms and express a number of concerns, but this issue has not been discussed. At 5.30 p.m. yesterday, the chairman and chief executive of the trust were with the noble Lord, Lord Peyton, and myself and at that stage they did not even have a copy of the memorandum of understanding, so I do not know how much consideration can have been given to it.

Finally, I deal with the constant reiteration of the fact that the trustees agree with the provisions. That is rather like the condemned man when he mounts the scaffold. He does not have a great deal of choice. There is not much point in his doing anything else. One of the trustees expressed that to me very clearly when I was waxing somewhat strongly on the subject. He said, "We have no negotiating power with the Government. We have no sanctions. We have no pressures that we can apply. We strike the best deal that we can, but in any case, unlike you, as legislators, we have to live with the machine next year, the year after and for the future." That was the best deal that the trustees could have made. I do not believe that it was the best deal that this Committee could have obtained.

6.15 p.m.

Lord Ewing of Kirkford

I should like to speak to Amendment No. 126AZA which is grouped with the government amendment and with the amendment which was moved by the noble Lord, Lord Peyton of Yeovil. Perhaps, however, I should first advise the noble Lord, Lord Peyton, that I enjoy black pudding. I gathered that the noble Lord wanted an amendment in "black pudding form"—that is what I thought that I heard him say—so that we could easily understand it. I enjoy black pudding. I speak with some feeling on public service pensions. When I came from another place in 1971, having been employed as a civil servant in the Post Office for some years, after the normal five-year period of leave from the Post Office, I wrote and sought to have my Post Office pension transferred to the House of Commons Pension Fund. I received one of those replies that was worth framing. It said: Dear Mr. Ewing, you are regarded as having deserted the service, and therefore you have no pension rights". So when I speak about railwaymen's pensions, it is with some feeling and some pain. But I must first address myself to the amendments standing in my name on the Marshalled List.

Those amendments are designed to prevent franchisees, in their applications for franchises, from making their bids competitive, in the case of passenger train services or any other aspect of the franchises, by offering to their employees, or prospective employees, pensions which would be worse than the pensions being paid by another applicant franchisee; and in the case of the transfer of BR assets to another company, to ensure that that company could not bid for the transfer of those assets by making its bid competitive by offering pensions to its employees which were lower than the pensions being paid to BR's employees.

I hope that the Minister will accept that that is an important aspect of this legislation, because we are now discussing occupational pensions. The Committee will accept, and understand clearly, that that is what we are discussing. We are discussing occupational pensions in an atmosphere, and against a background, where occupational pensions are assuming a greater importance than they have ever assumed in the history of occupational pensions in this country, and for a number of reasons. The Government, the Labour Party and, I suspect the Liberal Democrats also, are looking at the benefits and the way in which they play a part in this country's economy. If any action is taken which diminishes the level of occupational pensions in this country, that will place upon the taxpayer—this is the very thing that the Government are seeking to avoid—an obligation to ensure that the state pension is increased to a level that takes account of the reduction in the occupational pension. Those bidding for the franchise of the passenger services or the transfer of BR's assets should not he allowed to tender a bid which is made competitive purely and simply as a result of lower pensions being paid to their employees. That would be a retrograde step.

I would not want the Committee to think that I am somehow painting an impossible scenario. I shall come to the memorandum of agreement in a minute. I know from a letter written by the Government's Chief Actuary (Mr. Ballantyne) to the Treasury in May of this year, that he describes BR's pension scheme and the employees' indefeasible right to remain in the BR pension scheme as a Trojan horse. He explains to the Treasury that the Trojan horse of the BR pension scheme will deny the Government any benefits from their privatisation programme. It is significant that in the memorandum of agreement that we have been given today, as the noble Lord, Lord Marsh, said, we see that one of the appointees to the board of the closed pension fund, and to the railway industry pension fund (the BR Industry Pension Fund) that is to be set up, is the self same government actuary who described the fund in his letter to the Treasury of 19th May of this year as a "Trojan horse". I have to say with the greatest respect to the government actuary involved that he hardly comes to that position with impartial thoughts on the pension fund.

I am aware that we shall have a further opportunity to discuss the matter in the autumn, because of the Government's decision to recommit Schedule 10 to a further Committee stage before we go on to the Report stage. I am grateful to the Minister and his colleagues for giving us that opportunity, because this issue is crucial. In many ways it is not a party political issue. It is about the pension rights of people who have contributed substantial parts of their earnings for a substantial period of their working life, to ensure that when they retire they have at least a reasonable—the noble Lord, Lord Marsh, made it clear that it is not generous—income with which they could sustain themselves.

In the memorandum with which we have been furnished, the Government propose that a closed fund should be established for existing and deferred pensioners. It is a closed fund without continuing contributions. All right, the Government have given a guarantee of solvency. That, I accept is important, but, like the noble Lord, Lord Peyton, I should like to hear the Minister explain why the decision has been taken to divide the profits, if there should be profits arising from the investment income—the only way that the fund can prosper is from the investment income—60:40, with 60 per cent. of the profits going into the special reserve and only 40 per cent. (the memorandum of agreement says, "up to 40 per cent." and "up to 60 per cent ") of the maximum being allocated to improve the pensions of those who are members of this closed pension fund.

With great respect, I feel that the Committee has missed another important point in the memorandum. The Government are to appoint a director of the closed fund who will have total powers of veto. If the government director of the closed fund decides that a particular investment will not be allowed, then, so be it, that investment will not be allowed. Every action that takes place inside that closed fund is subject to the approval of the government director of the fund. As I understand it, the government director is not the same person as the government actuary, because the government actuary is described in the memorandum as being the joint actuary to the fund, not the government director. He is different from that other appointment with which I am now dealing, and he has those draconian powers.

As a result of the presence of the government director, the Treasury has a stranglehold on the fund. I should like to hear the Minister explain also how on earth the trustee company, on the one hand, and the financial controller of BR signing the document on behalf of BRB, on the other, came to accept such an appointment with such draconian powers. I do not wish to drive a wedge between the chairman of the trustee company and his chief executive and the rest of the board members. That is not part of my policy.

However, I say to the noble Earl and to the Committee that it cannot be claimed that this document has been accepted by the board of the trustee company. It has not been accepted by the board of the trustee company. Not only has it not been accepted, it has not even been discussed. There was a meeting of the board of the trustees on 7th July and this matter was not even on the agenda. Therefore, it cannot be claimed that this document has been accepted by the board of the trustee company. It may be accepted—I do not know what the board will decide when it comes to discuss the matter. However, the one thing that cannot be claimed in Committee today is that the board of the trustee company has discussed the document and accepted it. In fact, it has not. I suspect that the position of the Government on the one hand and the chairman and chief executive of the trustee company on the other hand has been weakened if only as a result of our debate. We have had the opportunity to point out some of the deficiencies in the document.

I turn briefly to the other pension fund because there are two. I have dealt with the closed pension fund and now I move to the future pension fund: the railway industry pension fund, which is to be established to deal with future pensioners and those continuing in the employment of British Railways. The employees will be in the British Railways sector of the railway industry pension fund; that is another new fund. It is interesting to note the powers given to the Secretary of State for Transport in respect of that fund. There is no provision that the Government will make good any deficiency in the fund. There is no provision that the Treasury will make a special contribution to make good the deficiency and sustain the pension fund, as is sometimes the case with such funds. The Bill provides that, if the government actuary and the pension fund actuary jointly sign a certificate declaring that there is or is likely to be a deficiency in the railway industry pension fund, the Secretary of State for Transport will decide how that deficiency is to be made good. In my view it is possible that it will be decided to increase the members' contribution from reasonably low wages. As was said by the noble Lord, Lord Marsh, the railway industry is low paid. The deficiency will be made good by an increase in the employees' contributions.

There are good grounds for saying that. If a franchisee makes a bid for the franchise and is awarded that on certain agreed conditions, I am 99 per cent. certain that one of those agreed conditions will not be that the franchisee will meet any deficiency in the railway industry pension fund. I am the first to accept that progress has been made but a number of points have yet to be addressed. For that reason I am grateful that Schedule 10 is to be recommitted to a further Committee stage in the autumn. Part of the advantage of our debate today is that we can flag the concerns so that the Minister and his officials can take them on board. It is to be hoped that when we return in the autumn we shall have a more cohesive and secure pension fund future for present and future employees of British Railways.

6.30 p.m.

Lord Crickhowell

I have previously taken no part in the discussions. I do so now only because I have the responsibility for the closed fund of the water industry. I am chairman of the National Rivers Authority and chairman of the pensions committee which looks after its fund. I saw the memorandum of understanding for only a few minutes and I intervene only on the basis of what I have heard in the debate. My noble friend Lord Caithness, whose role in Government is ubiquitous, will recall that on another occasion he was sitting on the Government Front Bench dealing with precisely the same issues as regards the water industry. He will recall that he then gave certain undertakings.

The British Railways pensioners have at least one advantage over the water industry in that they have a memorandum of understanding. The water industry still relies on the undertakings given by my noble friend and on certain letters sent afterwards, but those have not been translated into formal agreements. We hope that that will happen soon.

I wish to make only two points arising from that experience. I believe that my noble friend said that when the closed fund is set up there will be an appropriate distribution of assets between the closed fund and the ongoing fund on actuarial principles. Actuarial principles are fine but there is another aspect to the matter. When the distribution happened in the case of the water industry it was made on perfectly appropriate actuarial principles and it happened that the distribution took place at an all-time peak in the stock and property markets. At that time all property investments and all the unquoted investments in the then pension funds of the water industry were transferred to the closed fund. All the property investments and all the unquoted investments were transferred, as I have said, at an all-time peak in the markets. It will not be difficult for people to understand that that created a major problem for those managing the fund.

Managing a closed fund is a difficult operation in any event. A closed fund has no income but substantial pensions must be paid out. It declines in value and eventually disappears altogether. One does not always have a choice about when to sell the assets. One has to distribute resources at a moment when the markets may be down and when the situation may be very uncomfortable. That is the point that I wish to make.

I hope that when the matter is investigated the distribution of assets will not be on actuarial principles alone but also on a fair investment distribution. I would not wish anyone to be lumbered with the task that my organisation has had in trying to protect the interests of pensioners and taxpayers. There is also an undertaking as regards the taxpayer and if that is not fulfilled adequately the Treasury has to step in at the end of the day. I do not want anyone else to have such a difficult task to perform.

Of course, it is not only the taxpayer who will be at risk because we have heard about the way in which certain funds are to be allocated on a 60/40 basis and the protection of those interests. It is clear that if the matter is not properly handled we could have a situation that is detrimental not only to the taxpayers but also to the pensioners. I hope that that matter will be addressed by the Government and that a more satisfactory arrangement will be made on this occasion than was the case with the water industry.

Lord Cochrane of Cults

I congratulate the Minister on achieving a solvency guarantee, which was much needed. However, I listened with great attention to my noble friends Lord Peyton and Lord Crickhowell and to the noble Lords, Lord Marsh and Lord Ewing, who pointed out that the memorandum of understanding, which for a fully understandable reason the noble Lord, Lord Marsh, referred to as misunderstanding, a true Freudian slip, is packed full of potential misunderstandings. It needs to be looked at. At this stage of the game, there is no small grey print on the back of the page but no doubt that will follow.

I should like to bring the matter down to more realistic figures which I can understand. The pension board tells me that the closed fund may easily go on for 85 years. That is a very long time. If we think forward 85 years, that will take us to about the year 2078. It is easier to go back which takes us to 1908. Looking around the Committee, I do not believe that there is anybody here at present who was born before 1908, although earlier in the day the noble Earl, Lord Longford, was present. That demonstrates the scale of the matter.

Earlier the noble Lord referred to the possibility of the fund becoming depleted due to railwaymen living longer than expected, which is a growing trend. I draw the attention of the Committee to the fact that at this very moment there is a railwayman aged 105½ years, a Mr. V. G. Gulliver, whose last place of work was at Gorton Motive Power depot as a shedman. If he had a full railway career, starting at age 14, he probably joined the Manchester, Sheffield and Lincoln Company before it was so ill-advised as to become the Great Central Railway and build an extension—or London branch as it was called—to Marylebone Station. Among the pensioners, there are 3,419 who are already aged over 90 of whom 44 are aged 100 and over--an unsurpassed record of longevity which makes Members of your Lordships' House feel quite young. It certainly does me.

The main catch that I see in this memorandum of understanding is the division of the surplus. It certainly differs from current practice. My noble friend on the Front Bench disagrees with me but perhaps he will let me have my say first. Perhaps he will then be able to refute me. I understand that current practice is that two-thirds or thereabouts of the surplus has been distributed and that 40 per cent. has been the company's contribution. The noble Lord, Lord Marsh, with his vast experience in this field, says that 50 per cent. is regarded more or less as par for the course and that British Rail has done better. I believe that we must have a good explanation from my noble friend as to the 40 per cent. It looks like typical Treasury parsimony and, as I mentioned before, that was the firm which invented green shoots and we have since heard that it was also the firm that cannot run its works canteen.

We must spend a lot of time examining this memorandum and its further details. I was telephoned at half-past six yesterday evening and told that an agreement had been reached and that under the circumstances, the matter was regarded as satisfactory. However, I felt that British Rail pension board representatives were facing rather a glass-eyed opponent. I hope that we can have a good explanation from my noble friend that things are better than they sound as though they will be.

Lord Greene of Harrow Weald

On Second Reading there was mention of the fact that pensions and superannuation funds would be difficult matters for us to discuss. I am delighted to hear today that most of the people who have spoken on the subject have said that they do not wish to see railwaymen any worse off than they are at present. I sincerely hope that that will be carried out.

As regards the amendment tabled by the noble Lords, Lord Peyton of Yeovil and Lord Marsh—the noble Lord, Lord Peyton, was once upon a time my favourite Minister of Transport arid later on, the noble Lord, Lord Marsh, was my favourite chairman of British Railways—

Lord Marsh

You hid it at the time.

Lord Greene of Harrow Weald

I got on very well with both noble Lords. I understood every word that the noble Lord, Lord Peyton, said to me when I went to see him. I am indebted to the amendment in the names of the noble Lords, Lord Peyton and Lord Marsh, because it sets out very clearly what seems to be the view that has been expressed around the Committee today.

I understand from the people of the railway pension fund, who send their letters to me—the British Railways Pension Trustee Company Limited—that at present they are not satisfied with the situation being presented to them by the Government. I understand that in the discussions which took place some time ago two proposals were put forward. One was that an appropriate portion of each fund should be set aside as a closed scheme. The other was that a certain amount of money should be transferred to the Government. I understand that in the end the Government accepted that an appropriate portion of each fund should be set aside as a closed scheme and pensioners would then depend for their security on the future investment performance of the fund since there would be no residual liability imposed on the railway industry employers or any undertaking from the Government. I have no need to mention the other proposal because I understand that the Government will not apply it.

At a meeting with the trustees' fund in May Mr. John MacGregor gave the assurance: When the fund is closed, it will have sufficient funds to secure actuarial calculated liabilities. That is the crucial point for all pensioners. Benefits will be as slated in the rules including index-linking but if the fund does better than expected, further enhancement of pensions may be made". That raises another problem. The assumption is that the fund will be closed. Therefore one asks what will happen in connection with future employees of the railways or future employees of franchisees. One might ask why they cannot be included in the funds. Apparently that is not the wish of the Government. If the fund is closed, that raises the serious position that there will be no income from the members. If there is any difficulty in connection with balances, it will not be possible to adjust the contributions that people are likely to make to the fund. In other words, it will be necessary to depend purely on what is gained from investments. If investments fall short, that will raise a problem, coupled with the fact that it will not be possible to improve the position.

The people of the pension fund say that the Government's proposals still leave pensioners in a less secure position than at present.

Their pensions are at risk in future because of the removal of the present strong protection against any investment shortfall. A solvency guarantee is needed to safeguard current pensions expectations fully.

There will be a problem if the funds are to be closed. That is not really in accordance with what the Government said when they issued this privatisation Bill; namely, that the pensions of railwaymen will be no worse than they are now. My friends at the British Railways Pension Trustee Company Limited are not satisfied at all with the position. If we want to make the position clear, the amendment in the names of the noble Lords. Lord Peyton and Lord Marsh, and the amendment in the name of the noble Lord, Lord Ewing, should be carried. We do not want people to be any worse off under privatisation in terms of their pensions than they are now. I assume that the future employees of the new franchises will not wish to be any worse off than the people who are already employed by British Rail. I sincerely hope that the Minister will take another look at the position. I hope that Amendment No. 126 will be accepted.

Lord Clinton-Davis

This has been a useful debate because it has given us the opportunity to consider the document so recently presented to us. I might add that it was presented in great haste. Obviously that was done with the intention of avoiding government embarrassment today. Clearly many questions have been posed on which the Government need to reflect. I propose to ask a number of further questions.

I am puzzled by the status of this memorandum of understanding. Ciearly, there could have been no opportunity for the trustees to have considered the document as a body. Is the chairman authorised to sign on behalf of the trustees when they have not even considered it? That cannot be right. At the outset of this debate, the Minister said that his understanding was that the document bound the trustees and all the parties. I must question that. I hope that even if the Minister cannot answer all the points that I will raise this evening, he can answer that point as it goes to the heart of the document that has been produced in such great haste.

Lord Finsberg

I am a trustee of a major pension fund in this country. It would not be unusual for the trustees, if they are engaged in negotiation with a deadline ahead, to authorise their chairman to agree something on their behalf and leave it to his discretion. That would not be unusual.

Lord Clinton-Davis

While that may be the case, there is no evidence that it was the situation here. I have heard from two trustees who say they have not considered the document and that no such authority was given to the chairman. Therefore, I must repeat the question that I raised. I am grateful to the noble Lord for his comments because if I am wrong about the matter I am perfectly prepared to resile from the point. However, on the evidence that we have, I believe that that is not the situation. I intend to embark upon some analysis of the document but I wish to know whether it is the Government's intention to introduce this matter somehow or other onto the face of the Bill. I believe that the noble Lord, Lord Peyton, put that point.

Lord Peyton of Yeovil

Perhaps the noble Lord would like me to clear the matter up. What I said was that in so important a matter, where the Government had obviously changed their mind, it was important that there should be a clear reference to this matter on the face of the Bill. My noble friend in reply did not actually meet that point, I must admit. I intended to return to it later. However, he said that he would look carefully at the Bill to see whether, in his opinion, there were legislative gaps. What I am interested in him doing is filling the legislative gap which I see and not the one which he may not see.

Lord Clinton-Davis

I do not need to take the matter any further. The Minister is seized of the point. I am not quite as satisfied with the memorandum of understanding as, it seems, the noble Lord, Lord Peyton, is. I share some of the scepticism that has been bruited by a number of Members of the Committee in the course of the debate. In the course of the excellent speech of the noble Lord, Lord Marsh, I raised a point which worried me. Perhaps I am worrying unduly although I am not sure that that is the case. There is a phrase in the second paragraph of the memorandum of understanding that I simply do not understand. It states: We have sought throughout to satisfy the following principles … existing, deferred and future pensioners should have a reasonable opportunity to obtain benefits from any surplus there might be, as they do at present". What does "have a reasonable opportunity" mean? Why cannot the memorandum simply say that pensioners should obtain benefits from any surplus, as they do at present? Does it mean that the new scheme will be exactly comparable to what exists at present, or will some pensioners perhaps do better than average while others may do worse? If that is the construction, how will those pensioners be protected, and should they not be protected?

I now turn to the question of the director. The document states: the Government will appoint a Director of the Trustee Company". The powers he will enjoy are considerable. His consent will be required, to the distribution of any surplus, strategic decisions on investment policy and other matters which could have a significant impact on the finances of the fund; and to any guarantee of benefits granted from a surplus. The Government director will also decide on the investment of the special reserve". Those are very wide powers. Where do the trustees stand in relation to all that? They are expected, presumably, to cede powers which they would ordinarily have to the director. Will they be required to obtain directions from the court to require them to do that because a memorandum of understanding is not enforceable in any way? It may become enforceable—that remains to be seen—but as it stands at the present time, the trustees are expected to cede considerable powers. I do not know on what authority they can do so.

Is there any precedent for what is being established here? The Minister referred to certain precedents of a dubious character in an earlier debate. Perhaps he can cite some precedents for this extraordinary power that is being devolved upon the director. The trustees have a fiduciary duty to do everything which the director will now do. But to whom is the director responsible? Does he have a fiduciary duty to the beneficiaries, or is his duty to be to the Government? That needs to be made clear.

Then we come to the question of future BR pensions. What happens to those who transfer to another scheme? Will they have the same safeguards? The memorandum states: The Government recognises this safeguard should extend to those who leave BR employment, other than on transfer to another railway pension scheme". What are we talking about here? What other railway pension schemes do the Government have in mind?

Then there is another provision at the bottom of page 2 which states that: The Government, the Pension Trustee Company, and the BR Board recognise that as more staff leave BR and the balance of employees and pensioners changes, special arrangements may be needed to provide the continuing safeguard". Surely that should not be permissive. It should be mandatory. It should be stated that it "shall be" provided. I should like to know why that is not the case, because it is a matter which is of great importance to pensioners. Why has that provision been made permissive and not mandatory?

I turn now to the question of the Government Actuary. I wonder why it should be the Government Actuary and not an actuary from the private sector who is employed here. Professional actuaries are usually very competent. Why have the Government chosen the Government Actuary? There may be a good reason for that, but I thought that they were privatising everything. Who will pay for the Government Actuary's services for the tasks which he has to undertake under this memorandum of understanding?

In the event of joint actuaries certifying the instability of the fund, is the performance of the duty imposed on the Secretary of State to be for him alone? Is he able to say that he is not in a position to afford to do anything in particular circumstances and therefore will take no action? The position is left hanging in the air.

As regards changes in contribution rates, which could affect future pensioners, the present scheme does not require the approval of the Secretary of State. It is a matter for the board and trustees. Therefore, that represents another element of centralising control by the Secretary of State in relation to the fund. It is a change which has not been explained thus far by the Minister.

On the question of the surpluses, the memorandum of understanding states: pensioners may benefit from up to 40% of any surpluses generated in the fund. Up to 60% will be held in reserve (the 'special reserve') against future deficiencies". Why? Why have the figures of 40 per cent. and 60 per cent. been lighted on? That question was asked by my noble friend Lord Ewing earlier in the debate. What will happen to the surpluses? There may he a fluctuating workforce in the future. People may leave the scheme, and they would leave a residue behind. If wages were to be forced down and large numbers of staff left the fund and new employees did not join the fund, what would happen if over the period of two or three actuarial valuations that surplus became a large sum? Would the Government want to acquire it? The Secretary of State might consider that a greater solvency margin was needed. But how are the pensioners to be consulted in all this? I find the situation totally unsatisfactory.

I am not an expert in this field. I readily concede that. However, when I first considered the document I thought that perhaps the Government had done something remarkable. I am very surprised that the noble Lord, Lord Peyton, who is usually so scrupulous about detail, was not far more questioning in relation to these issues. I find that puzzling.

The other points which were raised by my noble friend Lord Ewing are clearly matters which demand answers. In addition, the noble Lord, Lord Crickhowell, put some extremely relevant points to the Minister. I shall be very interested to hear what the noble Earl has to say.

That is enough for the time being. We can return to these matters. I simply wanted to demonstrate that there is still plenty of room for misunderstandings. Perhaps the Minister will be able to correct my misunderstandings. However, when the noble Lord, Lord Marsh, referred to the document as a memorandum of misunderstanding he was not far from the truth.

7 p.m.

The Earl of Caithness

The more I listened to the noble Lord, Lord Clinton-Davis, the more I knew that whatever the Government had brought forward would not have satisfied him. However much we had fulfilled the Government's obligation, however much we had increased opportunities for those involved in such a case as this, I know that the noble Lord, Lord Clinton-Davis, would not have said "Thank you very much for all that hard work". The noble Lord would have gone through it with the fine lawyer's toothcomb with which he has gone through this particular memorandum and raised similar points. I am sorry about that because I had hoped that the enormous amount of effort made by the trustees, the British Railways Board and my right honourable friends the Secretary of State and the Minister for Public Transport to achieve this agreement., which fulfils the Government's commitment, would have deserved slightly better from the noble Lord.

Lord Clinton-Davis

That is an impossible argument to sustain. The Government have acted with some degree of haste with British Rail and one trustee —the chairman—rather than the trustees as a whole. I do not in any way blame the Minister. The Minister and his staff in the department have no doubt done their best, but they have acted under enormous pressure in order to get everything done before today. As the noble Lord, Lord Peyton, said, they had plenty of time. Does the Minister really expect the Opposition to say, "Thank you very much. We shall now go away and we shall not question at all what has happened"? These are serious matters, and the sooner the Minister understands that there are serious questions which go to the heart of the anxieties of 340,000 pensioners the better. He ought to wake up to that fact.

The Earl of Caithness

That is exactly why my right honourable friend the Secretary of State has spent so much time on the matter. If the noble Lord had followed the discussions carefully he would realise the amount of time which the trustees, the British Railways Board and my right honourable friend the Secretary of State have put into the matter. As I said when I spoke earlier, there have been a considerable number of meetings. I really expected something better from the noble Lord. I did not doubt that the noble Lord would want to ask questions, but I merely made the point that whatever I had come up with would not have satisfied the noble Lord.

I turn now to the amendment of the noble Lord, Lord Ewing, because nobody else has commented on it and I feel that I must do the noble Lord justice. I shall deal first with the way in which his amendment affects the current serving staff of BR.

As I said earlier, my right honourable friend the Secretary of State for Transport announced on 20th May in another place that a joint industry pension scheme would be established for the railways. He confirmed that the benefits offered by that scheme to BR staff transferring to new employers would be no less favourable than those in the existing BR scheme. Further, BR staff serving at the time of Royal Assent of the Bill would have the indefeasible right, as it is now known, to remain in the joint industry scheme for so long as they remain in the railway industry.

Amendments Nos. 126ZB and 126ZZ, which I would have liked to introduce today but will introduce at another stage, will provide statutory protection for that right under the orders which my right honourable friend will be empowered to make under Schedule 10 to the Bill. That will be in addition to the no less favourable protection that my right honourable friend is empowered to give under orders made under paragraph 6 of the schedule. Together they will ensure that the present employees of BR are not disadvantaged by privatisation and that any who transfer to a private-sector employer will retain pension entitlements no less favourable than those which they have at present. It follows, therefore, that figures for franchises or purchasers of other parts of the BR undertaking will not be able to provide pensions for any of their former BR staff that are less favourable than those that they currently enjoy and that bids cannot be rendered more competitive by such means.

However, pension rights for the future employees of franchisees and owners of parts of the BR business —for example, those staff who are not transferred from BR but who are recruited after a franchise is let or transfer effected —must remain a matter for negotiation among the new employers, their employees and their representatives. It is not for government to dictate the terms and conditions of employment of new recruits; it must remain a matter for commercial negotiation as is now the case for any private sector operation. I believe that that answers the point made by the noble Lord, Lord Greene of Harrow Weald.

I shall return now to the burden of this afternoon's discussion to which I have listened with great care and which I shall discuss with my right honourable friends at the first available opportunity. First, I noted what my noble friend Lord Crickhowell said. Yes, I remember well discussing, from this same position, water pension rights, airport pension rights and various other excellent measures that this Chamber has approved in the past. I was grateful that my noble friend did not indicate that what I had said had not in fact been implemented. I hope that it can be formalised. However, as it is no longer my territory, I shall say no more. Nevertheless, I noted what he said with regard to the valuation.

It is true that the memorandum of understanding —and this answers a point made by my noble friend Lord Peyton of Yeovil and the noble Lords, Lord Clinton-Davis and Lord Ewing—has not received the formal agreement of the trustee board. But the chairman, rightly, had verbal discussions and agreement with the majority of his fellow directors by telephone prior to signing the memorandum on their behalf.

The noble Lord, Lord Marsh, asked about the proportion of benefits paid out that cannot be funded by the scheme without increasing the deficit and whether they would be met by the government guarantee. The formula to which the noble Lord referred is, as he will recognise, the same as the one employed in the Transport Act 1980 with regard to the Government's support contribution arrangements. The funding of the deficit will, accordingly, not be met by reducing the benefits. I see that the noble Lord wishes to intervene. I give way.

Lord Marsh

I am most grateful to the noble Earl. However, can he explain how it will be funded? As I read the formula—and I am perfectly prepared to accept that I do not understand it—it seems to be saying that the Government will effectively reduce their support by the proportion they identify as attached to the improved benefit. If they do that, it seems to me that it would lead to a deficit which must be filled somehow. If there is no stream of contribution income, I cannot see anywhere else for it to come from apart from reducing the pension drain.

The Earl of Caithness

I hope to deal with that point shortly. I believe that I have a note on it somewhere here in my papers. However, one of the other points raised by the noble Lord, Lord Marsh, and by my noble friend Lord Cochrane of Cults, concerned the 60:40 per cent. split. The information that I have received from the trustees is that surpluses have never been split with 40 per cent. to the employer and 60 per cent. to the employee. The starting point has always been the 60:40 per cent. split reflecting contributions. That is now in the memorandum of understanding. I hope that that satisfies my noble friend. I shall carry out more research in the matter, but all the evidence I have shows that any suggestion that the surpluses have been split by two-thirds is strongly refuted.

The noble Lord, Lord Ewing, raised a point about the BR section of the joint industry scheme. Perhaps I may suggest to the noble Lord that I believe he has misread the memorandum. In the event of a deficit, the situation would be exactly the same as it is now. It can be made good by increasing contributions payable by both employer and employees and, if necessary, by reducing benefits for future pensioners, but not pensions now being paid. The point that the noble Lord misread is that if the joint actuaries certify that the scheme had become unstable—for example, if pensioners swamped the number of remaining serving staff —the Secretary of State will be under a duty to decide what steps to take. It does not refer to a deficiency. I hope that that assists the noble Lord, Lord Marsh. That information was on the note for which I was searching earlier. Moreover, if there is a 10 per cent. deficit in the fund when pensions are paid out, 90 per cent. will come from the fund and 10 per cent. from the government guarantee.

The noble Lord, Lord Ewing, asked about the justification for the power of the government director. It is an important point. If the Government are giving an absolute guarantee which is a major step forward —and it is right that we should do so—we must reserve the right to safeguard the taxpayer's interests by having the opportunity for central, strategic decisions taken by the trustees which could have a significant impact on the future of the fund.

My noble friend Lord Peyton asked me to consider the position with regard to pension increases above RPI granted after October 1994 and whether the payments might be covered by the government guarantee. I am very happy to give my noble friend that assurance. We shall, indeed, consider that point between now and a later stage when we come to deal with Schedule 10.

The noble Lord, Lord Clinton-Davis, asked where the trustees stand in respect of the position of the government director appointed to the fund. The answer is that the chairman of the trustees has accepted his role as set out in the memorandum as appropriate to safeguard the Government's and taxpayer's interests. Having had the opportunity to serve in another place, the noble Lord will realise the importance of a Public Accounts Committee and will also realise the importance of the necessity to safeguard the taxpayer's interests.

Perhaps I may now return to the memorandum. It sought to satisfy the Government's commitment which they made in the White Paper and in the pension consultation document. It says: We have sought … to satisfy [the fact that] pensions in payment should be secure in real terms"— that has been done—and to ensure that, existing, deferred and future pensioners should have a reasonable opportunity to obtain benefits from any surplus that there might be", as is the case at present. I find it difficult to understand why the noble Lord, Lord Clinton-Davis, found that particularly difficult. There is currently no guarantee that a surplus will arise. nor that any surplus will automatically be used to increase the benefit for existing taxpayers. Therefore, the new situation has been put in the same situation as the old one. I see that the noble Lord wishes to intervene. give way.

Lord Clinton-Davis

I am much obliged. The issue is that if such a situation were to arise then, in my submission, a mandatory obligation should follow. That is the point that I was seeking to make.

The Earl of Caithness

I am sorry. That is a different point from the one that I understood the noble Lord to make. A further point of the memorandum was that, the taxpayer's interests should be protected". I turn now to the last paragraph of the memorandum. It is one that is most important for the Committee. It reads: We are confident"— that is, my honourable friend the Minister of State for Public Transport, the chairman of the BR Pension Trustee Company and the BR board member for finance— that the arrangements set out in this memorandum, on which we are agreed, will meet the aspirations of the Pension Trustee Company and the BR Board for their members and of the Government, and that they satisfy the principles set out in the second paragraph". The latter was the paragraph that I read out a few moments ago.

I repeat, an enormous effort has gone in to satisfy the Government's commitment to the pensioners. We believe that we have done that. Obviously, there are certain questions and points which I shall need to discuss with my noble friend Lord Peyton, not least his request to have them on the face of the Bill. Perhaps I may assure him that we have already had discussions on the matter. I had hoped to be a little more specific with him, but, as he will understand, the legal niceties must be considered and the drafters of the legislation must be consulted. They have been consulted, but we have not quite reached the conclusion that we wished and I shall come back to my noble friend on the point.

Lord Marsh

Before the Minister sits down, perhaps I may ask him, in the light of the confusion over the issue which I raised earlier, whether he can give the Committee the assurance that under no circumstances will the Government seek to finance deficits by reducing pensions. That is a simple question.

The Earl of Caithness

I believe that I answered that point and said that existing pensions would riot be cut.

Lord Peyton of Yeovil

What an interesting debate we have had! That is one of the conventional ways of ending a debate in your Lordships' House, but it is not always 100 per cent. truthful. On this occasion, I believe that my noble friend was a little unrealistic in expecting praise from the Opposition. If a government receive praise from the Opposition, there is only one conclusion of which they can be certain: namely, that they have made an awful big mistake! Much of the atmosphere of this debate reminded me of an incident which I am sure most Members of the Committee are not old enough to remember. When Hugh Dalton was Chancellor of the Exchequer in days when the slightest leak, even on an unimportant matter, a few minutes before the Budget, was so awful that he had to resign, Nigel Birch was heard to exclaim: "They've shot our fox!" I was rather reminded of that phrase in the speeches which we have heard from Members opposite today.

I wish to make one point absolutely clear, as the noble Lord, Lord Marsh. referred to it. What the chairman of the trustees said, at least to me, is not that he was glad that he had got the best deal that was available, but that the three demands which we made in the amendment had been met. I believe that to be the case.

It has been said that the Government must accept responsibility for the pensioners. They have now done so. To complain about the purity of the English used in a memorandum of understanding which comes from government sources is terribly unrealistic. Perhaps I may ask Members opposite what on earth grounds they have to suppose that in a comparatively short space of time there will be produced by the government machine, or anything to do with the government machine, a document of limpid, lucid clarity. I never heard such unrealistic stuff. I hope that I shall receive my noble friend's applause for tolerance, understanding and forbearance.

To complain that a government directive will have draconian powers is hardly justified. It will have considerable powers and I think it is just as well that the Minister should have them in view of the Government's responsibilities. Having the Minister and the Government Actuary involved is useful. I quite understand that the other members of the board may not necessarily enjoy every minute of their company, but I believe that there is a great deal to be said for having their fingers squarely in the mangle. One of the techniques which governments often tend to use is: "Oh, we didn't understand quite what was going on. Now, we've got to have second thoughts about it all". But with those two gentlemen present and involved, there will be no possibility of such loophole escapes.

I do not wish to go into the 40-60 percentage again, which has been laboured many times. However, I asked the question originally and I hope that my noble friend will return to it in due course. He said that he would look at the post-October 1994 increases and I hope that in the end he will be able to produce a satisfactory answer.

As to the amendment going on the face of the Bill, my noble friend referred to the matter and the time and effort that has been expended on it. It has now achieved such stature that in my view it ought to be represented on the face of the Bill.

That brings me to a friendly, passing, charitable mention of the parliamentary draftsman. The parliamentary draftsman is the servant of Parliament and not its master. I should like to see an amendment on the face of the Bill. I shall give serious thought to it. If my noble friend, with all the resources available to him—far more than I have—cannot think of a nice amendment to bring forward at Report stage, then I shall have to mobilise my poor and miserable abilities to that end.

I cannot possibly conclude my remarks without a reference to the noble Lord, Lord Greene of Harrow Weald. To be told by him that I was his favourite Minister was sufficient to send me away into the Recess with nothing but joy in my heart and immense gratitude. When he piled one compliment on another and said that he—the General Secretary of the NUR at the time—actually understood every word that I —a Conservative Minister of Transport—said to him, my cup of happiness overflowed.

I said earlier on that it was not my purpose, here and now, to cast my right honourable friend the Secretary of State as the villain of the piece. I do not think that he has been but he has laboured manfully. I am tempted to ask my noble friend, but I shall not, whom we have been fighting. I know that he could not answer, but I have a clear idea. It is because I know that this latter-day St. George struck the undoubted dragon in the teeth that I do not wish to divide the Committee on the amendment. I very much hope that my noble friend will satisfy me on the outstanding points to which I referred. I beg the Committee's leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. I26AZA not moved.]

Clause 121 agreed to.

Schedule 10 [Pensions]:

The Earl of Caithness moved Amendment No. 126ZA:

Page 161, leave out lines 5 to 13.

The noble Earl said: I beg to move Amendment No. I 26ZA and to speak to all the government amendments on Schedule 10. As the Committee will know, that is just for the purposes of information. If, after I have moved the amendments, there is a debate, I shall withdraw them because they will go for recommitment at a later stage.

I merely wish to mention three amendments to the Committee: first, Amendments Nos. 126ZB and 126ZZ. Those amendments are to fulfil the commitment given by my right honourable friend the Secretary of State for Transport in a Written Answer on 20th May in another place that BR's serving staff who transfer to new employers will have the right to remain in the joint industry pension scheme for so long as they remain employed in the railway industry. That is frequently referred to as the indefeasible right. I have mentioned that quite a lot this afternoon, I think it is a great shame that it will not be put on the face of the Bill tonight. It is a government commitment, we have fulfilled or tried to fulfil that commitment, but have been thwarted by the Opposition in trying to bring it forward today.

The other amendment that I wish to mention to the Committee is Amendment No. 126ZY. This amendment provides that the written views of the trustees on a BR pension scheme are to be made available to Members of each House of Parliament in time for informed debate whenever a statutory instrument containing orders amending an existing BR pension scheme or transferring pension rights between schemes is debated under the affirmative resolution procedure.

That is a commitment that we gave to the honourable friend of the noble Lord, Lord Clinton-Davis, the Member for Wrexham, at Report stage. Once again it saddens me that it will not be on the face of the Bill at this present time. The honourable Member is doubtless just as disappointed as I am. I believe that we should have had a better Bill, arid indeed a better discussion at a later stage had I moved all the government amendments. But that is not the agreement, so I beg to move the amendment.

7.30 p.m.

Lord Ewing of Kirkford

I am grateful to the noble Earl for the way in which he has moved these amendments, and for indicating that these are honouring commitments that were made in another place; and indeed some commitments that were made in this Chamber. There is no need to detain the Committee on the matter at this particular stage.

I draw to the attention of the noble Earl the point made by the noble Lord, Lord Shepherd, in an earlier debate on hybridity this afternoon. My noble friend Lord Shepherd asked that, when Schedule 10 returns to this place in the autumn, we see the schedule printed in a form as amended by all these government amendments. That would make much more sense and would certainly lead to a more constructive debate. If the Minister, in his usual helpful fashion, could arrange for that to be done, I for one would certainly be very grateful.

The Earl of Caithness

I will try to make certain that that is available in some form. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Aberdare)

I understand that no further amendments to Schedule 10 are moved.

[Amendments Nos. 126ZB to 127 not moved.]

Clause 122 [Concessionary travel for railway staff etc.]:

[Amendment No. 127ZA not moved.]

Clause 122 agreed to.

Clause 123 [Grants and subsidies]:

The Earl of Caithness moved Amendment No. 127ZAA:

Page 123, line 9, leave out from ("State") to ("which") in line 10 and insert ("or the Franchising Director to make any payments of compensation").

The noble Earl said: In moving Amendment No. 127ZAA I also speak to Amendment No. 127ZAB. These are technical amendments. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 127ZAB:

Page 123, line 12, after ("regulations") insert ("in respect of any obligations imposed on that operator by directions under subsection (6) above,").

On Question, amendment agreed to.

Clause 123, as amended, agreed to.

Clause 124 [Payments by the Secretary of State in respect of track access charges in connection with railway goods services]:

Lord Carmichael of Kelvingrove moved Amendment No. 127ZB:

Leave out Clause 124 and insert the following new clause:

("Freight access charges

—(1) The Secretary of State shall, for the purpose of securing fair competition between carriers of goods by road and carriers of goods by railway, enter into agreements with goods service operators under which he undertakes to make payments to the goods service operator in question in respect of all or any part of the track access charges which may be incurred by the goods service operator in connection with the provision of the services to which the agreement relates.

(2) Any sums required by the Secretary of State for making payments under agreements entered into by virtue of this section shall be paid out of money provided by Parliament.

(3) In determining the proportion of track access charges on which he makes payment, the Secretary of State shall ensure that the net track access charge paid by the operator is no higher than access charges that would have been incurred had the goods been carried by road.

(4) In this section—

• "goods service operator" means a person who operates services for the carriage of goods by railway;
• "track access charge" means any payment required to be made under an access agreement conferring a right to use track;
• "net track access charge" means a track access charge less any payment made by the Secretary of State in respect of that track access charge by virtue of this section;

and expressions used in this section and in Part I above have the same meaning as they do in that Part.").

The noble Lord said: This amendment puts some points to the Government. One of the main arguments put forward by the Government on the new freight structure concerns competition. In their document Rail Freight Privatisation, the Government state that the key task is to determine how arid where the business could be split to provide the maximum degree of competition consistent with retaining the most essential scale economies.

The Government have also stated their objective of promoting the movement of goods by rail rather than by road. The existing Clause 124, which gives grants to rail freight operators, is intended to assist in that objective. However, the Government miss the most fundamental point. Rail freight, however it is organised in the future, has to compete with other forms of transport, as is well known—notably road transport. In the document Rail Freight Privatisation the Government rightly point out that the roads have a significant advantage over rail in that they serve much greater areas and many more locations.

Rail has another massive disadvantage. Road hauliers pay relatively small licence fees, and in return are granted free access to the whole national road network. Rail freight operators, on the other hand, have to pay, and will continue to pay, access charges. That will cause a massive distortion in the freight transport market. It puts the railways at a massive financial disadvantage, despite the economic and environmental advantage of moving certain types of freight by rail rather than road.

New Clause 124 would address that problem by requiring the Government to pay grants to rail operators covering the access charges that they have to pay over and above the access charges that they would have paid had they moved the goods by road. In reality, that means that the Government will reimburse the access charges of freight operators as there are no access charges to the motorways and the road networks other than a licence fee. Rail operators also, of course, have to be licensed. That would ensure a level playing field in the freight transport market and would further the government policy of switching road freight to rail.

The new clause also takes account of the Government's proposed objective of perhaps introducing road pricing. Of course were road pricing to be introduced, payments, say, to rail operators would be reduced in order again to maintain a level playing field. It sounds a little complicated, but taken with the Government's document on freight it is a reasonable proposition to put to the Minister. I look forward to hearing his views. I beg to move.

The Earl of Caithness

I am grateful for that lucid explanation of the noble Lord's amendment. I reiterate that the Government's intention is that applications for the track costs grant for freight operators will be assessed against environmental and other wider benefits which will be gained from reductions in lorry traffic. Schemes will be monitored to ensure that grant does lead to the benefits intended. The cost-effectiveness of the measures will be apparent from the volumes of traffic either new to or retained on rail.

The new clause would require the Secretary of State to pay grants to goods service operators in respect of all or any part of track access charges that they incur. There is no discretion here. No account is taken of the availability of public funds or the environmental benefits which are to be taken into account in assessing the grant to be paid. I am sure that the noble Lord, Lord Carmichael, will understand why I find difficulty with that.

There is a real problem with subsection (3) of the proposed amendment. It is not clear what is meant here when the amendment refers to access charges incurred if goods are carried by road. Road hauliers quote an all-in price to their customers, including fuel taxes and vehicle excise duty, if these are considered as road access charges, and also the cost of maintaining and replacing the vehicle, loading and unloading, staff costs, overheads and so on. There is as yet no such concept as an access charge for roads.

So far as the level playing field argument between road and rail is concerned, it is worth noting that road taxes more than cover the cost of building, maintaining and policing our roads. In the last financial year, vehicles in the private sector and light goods class paid 3.1 times more than the costs they imposed, and heavy goods vehicles paid 1.2 times more. Of course, there are large differences between different vehicles in these categories—that is why a road access charge is so difficult to quantify. But, overall, vehicle owners more than pay for the costs they impose in building, maintaining and policing our roads.

We believe that freight should be transported by rail wherever that makes economic and environmental sense. That belief is embodied in the Bill, both in the general duties of the Secretary of State and the regulator, and in the provisions we are making for grants to rail freight facilities and towards track charges. We have a comprehensive range of policies to promote rail freight, with privatisation and open access to the railway network. That is at the heart of these policies.

Lord Carmichael of Kelvingrove

I am grateful to the Minister for the trouble he has taken to give the Government's view. Rail access charges would be a new concept of charging. Someone will allow access to the track. They would be more understandable and easier to break down.

It has always been known that road transport appears expensive. The figures that were given sounded expensive. But in terms of building roads, much of the cost is carried by the private car. There are an enormous number of private cars on the road. I shall take the Minister's answer away. Perhaps, at a later stage, we shall be able to find something more likely to create his famous level playing field. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 124 agreed to.

7.45 p.m.

Baroness Nicol moved Amendment No. 127ZC:

After Clause 124, insert the following new clause:

("Grants for railways within National Parks

.—(1) The Secretary of State may designate certain railway lines or stations lying within the boundaries of National Parks as of importance to the social, environmental and economic sustainability of National Parks and rural areas.

(2) In exercising his powers under subsection (1), the Secretary of State shall consult with National Park authorities and local authorities within the vicinity of the line or station.

(3) If a request is submitted in writing by any local authority or National Park authority asking the Secretary of State to exercise his powers under subsection (1) in relation to a particular line or station, the Secretary of State shall reply within 28 days giving his decision and reasons for it.

(4) In making a reply to a request submitted under subsection (3), the Secretary of State shall be required to show that he has considered the potential hardship to users of relevant passenger services and the social, environment and economic costs and benefits likely to result from his decision.

(5) The Secretary of State may for the purposes of securing the continuance of passenger and goods services at lines or stations designated under subsection (1), make payments to the owner or owners of such lines and stations.

(6) Any sums required by the Secretary of State for making payments entered into by virtue of this section shall be paid out of money provided by Parliament.

(7) In this section "National Parks" means those areas designated under the National Parks and Access to the Countryside Act 1949 and the Broads Act 1989.").

The noble Baroness said: This amendment returns to the theme of an earlier amendment, Amendment No. 11A, which we discussed on 1st July. In that amendment we sought to put a duty on the Secretary of State to further national park purposes. In his reply, the Minister said: I do not believe that it would be appropriate to refer specifically to national park purposes in the general duties on the Secretary of State and the regulator".—[Official Report, 1/7/93; col. 971.] The Minister went on to say that the general duty to have regard to the effect on the environment was sufficient.

However, I feel that the problems of national parks are real and specific. This amendment is an attempt to meet the difficulties which could arise if the Bill becomes law. I do not wish to repeat all the arguments that I made on the earlier amendment. But I must remind the Committee of some of the pressures on national parks.

The parks are visited by 100 million people every year. They contain our most beautiful and varied landscapes. They are home to many long established local communities and have a rich diversity of wildlife. Closure of railway lines in those areas would be in conflict with the statutory purposes of the national parks as laid down in the national parks and access to the countryside Act 1949, which is to preserve and enhance their natural beauty and promote their enjoyment by the public. The national parks are, I think, the only areas in Great Britain on which there is a statutory duty to promote public enjoyment.

What would happen to those visitors who do not have a car or indeed those residents who have to take the train to work? The loss of rail services must result in art increase in the volume of road traffic, putting extra strain on the small country roads which most of the national parks contain and increasing noise and pollution which many of us visit the national parks to avoid. Inevitably, there would be pressure to build more and bigger roads, which would devastate the landscape and destroy its fragile environment.

I know that the Minister is sympathetic to the needs of national parks, as he is to the needs of rural communities. But sympathy is not enough. The cost of maintaining rural lines is high in relation to the numbers of people using them. But there is a social value to take into account, not to mention the road costs which could arise if those lines are closed.

If vulnerable lines are to be protected, there will need to be sufficient subsidy guaranteed by the Government. The new clause would give the Secretary of State power to designate certain lines within the national parks as being of particular importance to the social, economic and environmental stability and well-being of the parks. In designating those lines, there would be a duty to consult the relevant local or national park authority to ensure that local interests were given due consideration. The Secretary of State may then pay suitable funds from the Government directly to the operators of the railway lines in question to cover the necessary costs of their continued operation. The new clause, or something like it, is essential if all our expectations for national parks are to be fulfilled. I beg to move.

The Earl of Caithness

How nice it is to welcome back the noble Baroness to our Committee stage. I compliment her on the cleverness with which she has been able to bring forward another amendment on national parks at Committee stage, having discussed the issue on day one. As she knows I fully support her wish to protect and improve the quality of life in our national parks, both for visitors and residents. However, I do not believe that it would be appropriate to give special treatment to railways in national parks. We need to frame our proposals in a way which makes them applicable to all parts of the country—urban, suburban and rural. Having said that, we recognise the importance of the environment, particularly in rural areas. That is why we have imposed a requirement in Clause 4(3) (b) for the Secretary of State and the regulator to have regard to the effect on the environment of activities connected with the provision of railway services.

Turning to the amendment itself, the intention of the noble Baroness is that the Secretary of State should be able to step in and pay for the continuance of railway lines and stations in national parks where he has indicated that they are of social, environmental or economic importance to the national park's sustainability. I believe that the provisions in the Bill dealing with closures already meet the noble Baroness's concerns. Let me explain.

Where the operator of a station or a line wishes o discontinue its use for passenger services, the franchising director must decide initially whether he agrees that the proposed closure should go ahead. If he decides that it should not, he becomes responsible for securing its continued provision. The line or station closure will not then proceed. If the franchising director decides that a line or station should close, the closure procedure in Clauses 36 and 37 of the Bill will apply. The closure proposal will be decided upon by the regulator, with provision for an appeal to the Secretary of State. As I said earlier, both the regulator and the Secretary of State are under a duty to have regard to the environment when carrying out their functions under Part I of the Bill, and this duty will be particularly apposite in the case of a proposed closure in a national park. It almost goes without saying drat their other duties under Clause 4—for example, to protect the interests of rail users—will also be relevant when making a decision on a proposed closure.

Where the regulator, or the Secretary of State on appeal, decides not to approve a closure proposal, then the franchising director will be under a duty to continue to secure the provision of the line or station in question. In such circumstances, the Bill already makes provision in Clause 43 for the franchising director to be able to make any payments which are necessary to secure the continued provision of the line or the station. Only if the regulator, or the Secretary of State on appeal, conclude that, in all the circumstances, the proposed closure should be permitted, will the station or line in question close down. I should add that we have consistently said that we shall continue to support socially necessary services which are reliant on subsidy. There is no reason to believe that our proposals will lead to the closure of lines or to reductions in services.

I hope that on this occasion I have made a better fist of trying to convince the noble Baroness that we share her concern but that putting the provision on the face of the Bill is not the right way to go about it.

Baroness Nicol

I am grateful to the Minister for that full answer. I feel that a general environmental duty, admirable though it may be in many cases, will need an extra dimension in national parks. However, I should like to read carefully what the Minister said and look again at the clause. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 125 agreed to.

Clause 126 [Grants to assist the provision of facilities for freight haulage by railway]:

Amendment 127A not moved.

Clauses 126 to 135 agreed to.

Clause 136 [Crown application]:

The Earl of Caithness moved Amendment No. 127AA:

Page 130, line 1, at end insert:

("() sections (Security: power of Secretary of State to give instructions), (Security: enforcement notices) and (Security: inspections), except sections (Security: enforcement notices)(4) and (5) and (Security: inspections)(4) to (6);").

On Question, amendment agreed to.

Clause 136, as amended, agreed to.

Clauses 137 and 138 agreed to.

Schedule 11 [Minor and consequential amendments]:

Viscount Goschen moved Amendment No. 127AB:

Page 174, line 2, at end insert:

("The Regulation of Railways Act 1889

. Section 6 of the Regulation of Railways Act 1889 (which provides that every passenger ticket issued by any railway company in the United Kingdom shall show on its face the fare chargeable for the journey for which it was issued) shall cease to have effect.

The Railway Fires Act 1905

.—(I) In section I of the Railway Fires Act 1905 (liability of railway companies to make good damage to crops caused by their engines), after subsection (2) there shall be inserted—

(2A) Any reference in subsection (2) above to a "company" includes a reference to any person—

1. (a) who holds a network licence, station licence or light maintenance depot licence under Part I of the Railways Act 1993; or
2. (b) who is exempt, by virtue of a licence exemption under section 7 of that Act, from the requirement to be authorised by licence under that Part to be the operator of a network, station or light maintenance depot.

(2B) A person such as is mentioned in subsection (2A) above shall be regarded for the purposes of subsection (2) above as working a railway which consists of the track (if any) comprised in any network, station or light maintenance depot of which he lawfully acts as the operator by virtue of the licence or licence exemption in question.

(2) In section 4 of that Act (definitions and application) after the definition of "railway" there shall be inserted—

The expression "railway company" includes any person—

1. (a) who holds a licence under Part I of the Railways Act 1993; or
2. (b) who is exempt, by virtue of a licence exemption under section 7 of that Act, from the requirement to be authorised by licence under that Part to be the operator of a railway asset;

The expressions "light maintenance depot", "network", "operator", "railway asset", "station" and "track" have the same meaning as they have in Part I of the Railways Act 1993.

The Railway Fires Act (1905) Amendment Act 1923

. In section 2 of the Railway Fires Act (1905) Amendment Act 1923 (conditions precedent to application of the Act of 1905) after the words "any railway company" there shall be inserted the words "(as defined in section 4 of that Act)".

The British Transport Commission Act 1950

. Section 43 of the British Transport Commission Act 1950 (power to supply railway equipment to the Ulster Transport Authority) shall cease to have effect.").

The noble Viscount said: This is a technical amendment. I beg to move.

Lord Ewing of Kirkford

In relation to Amendment No. 127AB and the removal of the obligation to show the cost of the ticket on its face, can the Government say why they have taken that decision?

Viscount Goschen

Perhaps I can help the noble Lord, Lord Ewing of Kirkford. Amendment No. 127AB, repeals Section 6 of the Regulation of Railways Act 1889. That section provides that every passenger ticket issued by any railway company in the United Kingdom shall show on its face the fare for the journey in question. However, that requirement has not applied to British Rail for over 20 years or to London Regional Transport since 1984. It has also been disapplied for Channel Tunnel services by the Channel Tunnel Act 1987.

That is the position and that is why the Government tabled the amendment.

On Question, amendment agreed to.

Viscount Goschen moved Amendment No. 127AC:

Page 174, line 6, leave out ("In that Act-") and insert ("The following provisions shall cease to have effect, that is to say-").

The noble Viscount said: In moving Amendment No. 127AC, I shall speak also to the amendments grouped with it. The group comprises a number of repeals and disapplications of provisions of the Transport Acts 1962 and 1968 in so far as they apply to British Rail. I can assure the Committee that the provisions are either obsolete or have been overtaken by provisions in the Bill. I commend them to the Committee. I beg to move.

On Question, amendment agreed to.

Viscount Goschen moved Amendments Nos. 127AD to 127AH:

Page 174, line 8, leave out ("and").

Page 174, leave out line 11 and insert:

("(c) section 13(3) (saving for section 43 of the British Transport Commission Act 1950), and

(d) section 53 (complaints by operators of coastal shipping about the Board's railway charges).

() In section 12 (power of the Boards to construct and operate pipe-lines), in subsection (1), after the words "the Boards" there shall be inserted the words ", other than the Railways Board,".").

Page 174, line 12, leave out ("of that Act").

Page 174, line 22, leave out ("and").

Page 174, line 26, at end insert ("and

(c) subsection (7) (which confers power on the Boards and the new authorities to provide technical advice and assistance and which is superseded, in the case of the Board, by section 115 of this Act) shall cease to have effect in relation to the Board.").

The noble Viscount said: The amendments have been spoken to. I beg to move.

On Question, amendments agreed to.

Viscount Goschen moved Amendment No. 127AJ:

Page 176, line 7, at beginning insert:

.—(1) Section 2 of the London Regional Transport Act 1984 (provision of passenger transport services for Greater London) shall be amended in accordance with the following provisions of this paragraph.

(2) In subsection (1) (which requires London Regional Transport, in conjunction with the Board, to provide or secure the provision of public passenger transport services in Greater London), before the words "in conjunction with the Railways Board" there shall be inserted the words "(if and to the extent that the Railways Board continues to he under a duty by virtue of section 3 of the Transport Act 1962 to provide railway services in Greater London)".

(3) At the beginning of subsection (3) (duty of London Regional Transport and the Board to co-operate for the purpose of co-ordinating services etc) there shall be inserted the words "If and so long as the Railways Board continues to be under a duty by virtue of section 3 of the Transport Act 1962 to provide railway services in Greater London,".

(4) After that subsection there shall be inserted—

(3A) It shall be the duty of London Regional Transport (either acting directly, or acting indirectly through subsidiaries of theirs) and the Franchising Director to co-operate with one another in the exercise and performance of their respective functions for the purpose—

1. (a) of co-ordinating the passenger transport services for persons travelling within, to, or from Greater London—
1. (i) which are provided by London Regional Transport or their subsidiaries; and
2. (ii) which are provided under franchise agreements, or whose provision is secured by the Franchising Director pursuant to section 26, 32 or 33 of the Railways Act 1993; and
2. (b) of securing or facilitating the proper discharge of London Regional Transport's duty under subsection (1) above;

and to afford to one another such information as to the services mentioned in paragraph (a) above as may reasonably be required for those purposes.

(5) In subsection (4) (power of London Regional Transport and the Board to enter into arrangements for the purposes of the co-operation required by the section)—

• (a) for the words "subsection (3) above" there shall be substituted the words "subsection (3) or, as the case may be, subsection (3A) above—
• (a)"; and
• (b) after the words "the Railways Board" there shall be inserted the words "or
• (b) London Regional Transport and the Franchising Director,".

(6) After that subsection there shall be inserted—

(4A) The references in subsections (3A) and (4) above to the respective functions of London Regional Transport and the Franchising Director shall be taken, in the case of the functions of the Franchising Director, as a reference to—

1. (a) his functions under sections 20 to 27 and (Fares and approved discount schemes) of the Railways Act 1993 (franchising of passenger services); and
2. (b) the duties imposed upon him by sections 32 and 33 of that Act (discontinuance of railway passenger services) to secure the provision of services "

. In section 7 of that Act (planning of passenger transport services for Greater London) in subsection (4) (which specifies the persons with whom London Regional Transport are to consult in preparing statements under that section)—

1. (a) after paragraph (a), there shall be inserted—"(aa) the Franchising Director;"; and
2. (b) for the word "and" at the end of paragraph (c) there shall be substituted—

(cc) such other persons as the Secretary of State may specify in a direction given to London Regional Transport; and".

. In section 31 of that Act (duty of Board to consult London Regional Transport as to fares and services in London) for the words "The Railways Board shall" there shall be substituted the words "If and so long as the Railways Board continues to be under a duty by virtue of section 3 of the Transport Act 1962 to provide railway services in Greater London, the Board shall".

. After that section there shall be inserted—

"Duty of Franchising Director to consult London Regional Transport as to fares and services in London.

31A. The Franchising Director shall from time to time consult with London Regional Transport as to—

1. (a) the general level and structure of the fares to be charged for the carriage of passengers by railway on journeys wholly within Greater London on services—
1. (i) which are, or are to be, provided under franchise agreements; or
2. (ii) whose provision the Franchising Director is under a duty to secure, by virtue of section 26, 32 or 33 of the Railways Act 1993; and
2. (b) the general level of the provision to be made for such journeys."").

The noble Viscount said: Amendment No. 127AJ and the amendments grouped with it are consequential amendments to the London Regional Transport Act 1984. Their main purpose is to provide for co-operation, co-ordination and consultation between the franchising director and London Regional Transport, based on the existing provisions in the Act applying to British Rail and London Regional Transport. I beg to move.

On Question, amendment agreed to.

Viscount Goschen moved Amendments Nos. 127AK to 127AM:

Page 176, line 7, leave out ("the London Regional Transport Act 1984") and insert ("that Act").

Page 177, line 14, at end insert:

(". In section 59 of that Act (which confers power on London Borough Councils and the Common Council to enter into certain agreements with the Board) for the words "the Railways Board" there shall be substituted—

1. "(a) the Railways Board,
2. (b) the Franchising Director, or
3. (c) any person who is the holder of a passenger licence, a network licence or a station licence, within the meaning of Part I of the Railways Act 1993,".

. In section 68 of that Act (interpretation) the following definitions shall be inserted at the appropriate places—

1. (a) ""franchise agreement" has the same meaning as in Part I of the Railways Act 1993;"; and
2. (b) ""the Franchising Director" means the: Director of Passenger Rail Franchising;".").

Page 177, line 41, leave out ("Director of Passenger Rail Franchising") and insert ("Franchising Director").

On Question, amendments agreed to.

Viscount Goschen moved Amendment No. 127AN:

Page 179, line 5, at end insert:

("The Channel Tunnel Act 1987

. In Schedule 6 to the Channel Tunnel Act 1987, in paragraph 2 (sections 4 and 6 of the Regulation of Railways Act 1889 not to apply to Concessionaires and through service operators, within the meaning of that Act), for the word "Sections" there shall be substituted the word "Section".").

On Question, amendment agreed to.

Viscount Goschen moved Amendment No. 127AP:

Page 179, line 29, at end insert:

("The Water Resources Act 1991

. In the Water Resources Act 1991 (subsection (2) (d) of section 204 of which provides that the general restriction contained in subsection (1) of that section on the disclosure of certain information obtained under or by virtue of that Act does not apply in relation to disclosures facilitating the performance by persons mentioned in Part I of Schedule 24 to that Act of their functions under the provisions listed in Part II of that Schedule), in Schedule 24—

1. (a) in Part I, after the entry relating to the Director General of Electricity Supply, there shall be inserted the entry— "The Rail Regulator"; and
2. (b) in Part II, after the entry relating to the Electricity Act 1989, there shall be inserted the entry— "The Railways Act 1993".").

The noble Viscount said: I can assure the Committee that Amendment No. 127AP is not controversial. It simply enables information obtained under the Water Resources Act 1991 to be passed to the rail regulator where that is necessary for him to carry out his functions under the Bill. Schedule 11 already contains a large number of provisions which allow such disclosures of information obtained under other Acts. The amendment simply fills the gap. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 127B to 127D had been withdrawn from the Marshalled List.]

Schedule 11, as amended, agreed to.

Schedule 12 [Transitional provisions]:

The Earl of Caithness moved Amendments Nos. 127E to 127J:

Page 180, leave out line 9 and insert ("pursuant to paragraph (a) or (b) of subsection (1A) of section 68 of this Act for the purposes of subsection (1) of that section.").

Page 180, line 17, leave out ("section 68(1) (c) of this Act") and insert ("subsection (1) of section 68 of this Act by virtue of subsection (1A) (c) of that section.").

Page 181, line 22, leave out ("under section 69(1) (a) or (b) of this Act") and insert ("pursuant to paragraph (a) or (b) of subsection (1A) of section 69 of this Act for the purposes of subsection (1) of that section.").

Page 181, line 31, leave out ("section 69(1) (c) of this Act") and insert ("subsection (1) of section 69 of this Act by virtue of subsection (1A) (c) of that section.").

Page 182, line 13, leave out from ("Act") to end of line 43.

The noble Earl said: Amendments Nos. 127E to 127J have already been spoken to. I beg to move.

On Question, amendments agreed to.

The Earl of Caithness moved Amendment No. 128:

Page 182, line 13, at end insert:

("Proposed closures

2A.—(1) This paragraph applies in any case where—

1. (a) notice of a proposed closure has been given pursuant to subsection (7) of section 56 of the 1962 Act before the relevant date, but
2. (b) the Minister has not, before that date, either given or refused his consent to the proposed closure.

(2) Where this paragraph applies, subsections (7) to (10) and (13) of section 56 of the 1962 Act (and, accordingly, section 54 of the 1968 Act) shall, notwithstanding anything in section 42(1) of this Act, continue to have effect in relation to the proposed closure in question, but with the substitution—

1. (a) for any reference to an Area Committee of a reference to a consultative committee, and
2. (b) for any reference to the former Central Committee of a reference to the Central Committee,

and the closure provisions of this Act shall not have effect in relation to that proposed closure.

(3) In this paragraph—

• "the 1962 Act" means the Transport Act 1962;
• "the 1968 Act" means the Transport Act 1968;
• "Area Committee" means an Area Transport Users Consultative Committee, established under section 56 of the 1962 Act, and includes a reference to the London Regional Passengers' Committee in its capacity as such a Committee by virtue of section 41 of the London Regional Transport Act 1984;
• "the Central Committee" has the same meaning as in Part I of this Act;
• "the closure provisions of this Act" means sections 32 to 42, (Proposals to close passenger networks operated on behalf of the Franchising Director) and (Proposals to close passenger railway facilities operated on behalf of the Franchising Director) of this Act and Schedule 4 to this Act;
• "consultative committee" has the same meaning as in Part I of this Act and includes a reference to the London Regional Passengers' Committee in its capacity as consultative committee for the Greater London area, within the meaning of section 2 of this Act;
• "the former Central Committee" means the Central Transport Consultative Committee for Great Britain, established under section 56 of the 1962 Act;
• "the Minister" has the same meaning as in section 56 of the 1962 Act;
• "proposed closure" has the same meaning as in section 56 of the 1962 Act;
• "the relevant date" means the date on which the closure provisions of this Act come into force.").

The noble Earl said: In moving Amendment No. 128, I shall speak also to Amendments Nos. 130 and 131. They are technical amendments and I shall be happy to deal with them in detail if any Member of the Committee requires me to do so. I beg to move.

On Question, amendment agreed to.

Schedule 12, as amended, agreed to.

Schedule 13 [Repeals]:

The Earl of Caithness moved Amendments Nos. 128ZA to 128ZD:

Page 183, line 3, at end insert:

("52 & 53 The Regulation of Section 6.")

Vict. c. 57. Railways Act 1889.

Page 183, line 25, at end insert:

("14 Geo. c. 1iii. 6 The British Transport Commission Act 1950. Section 43.")

Page 183, line 38, column 3, at end insert:

("Section 13(3).Section 53.")

Page 183, line 39, column 3, at end insert ("and (2).").

The noble Earl said: Amendments Nos. 128ZA to 128ZD have already been spoken to. I beg to move.

On Question, amendments agreed to.

The Earl of Caithness moved Amendment No. 128A:

Page 183, line 41, column 3, after ("(3),") insert ("in subsection (5), the words from the beginning to "section; and", and subsections").

The noble Earl said: In moving Amendment No. 128A I shall speak also to Amendment No. 130ZB. They are technical amendments. I beg to move.

On Question, amendment agreed to.

The Earl of Caithness moved Amendments Nos. 129 to 130ZC:

Page 183, line 42, column 3, at end insert ("Section 56A.").

Page 183, line 50, column 3, at end insert ("Section 54.").

Page 184, line 29, at end insert:

("1971 c. The British Railways Section 34.")

xlv. Act 1971.

Page 184, line 42, at end insert:

("1981 c. 32. The Transport Act The whole Act.") 1962 (Amendment) Act 1981.

Page 184, line 48, column 3, at beginning insert ("Part II.").

The noble Earl said: Amendments Nos. 129 to 130ZC are amendments to Schedule 13 and have been spoken to before. I beg to move.

On Question, amendments agreed to.

[Amendment No. 130/1 had been withdrawn from the Marshalled List.]

The Earl of Caithness moved Amendments Nos. 131 to 131B:

Page 185, line 9, column 3, at end insert ("In section 42, subsections (3), (4) and (5).").

Page 185, line 9, column 3, at end insert ("In Schedule 6, paragraph 2.").

Page 185, line 10, at end insert:

("1987 c. 53.

The Channel Tunnel Act 1987

In Schedule 6, in paragraph 2, the words from "and 6" to "the fare)".")

On Question, amendments agreed to.

Schedule 13, as amended, agreed to.

Clause 139 agreed to.

Clause 140 [Short Title, commencement and extent]:

The Earl of Caithness moved Amendments Nos. 132 to 134:

Page 133, line 5, at end insert:

("() section 121;").

Page 133, line 12, at end insert:

("() Schedule 10;").

Page 133, line 13, after ("13,") insert ("other than those relating to—

1. (i) section 6 of the Regulation of Railways Act 1889,
2. (ii) the Railway Fires Act 1905, and
3. (iii) the Railway Fires Act (1905) Amendment Act 1923,").

The noble Earl said: Amendments Nos. 132 to 134 have been spoken to before. Finally, we have come to the end of the sixth day of a fascinating Committee stage. I am grateful to the noble Lords, Lord Clinton-Davis, Lord Carmichael of Kelvingrove, Lord Ewing of Kirkford and Lord Tordoff. I wish all those who participated in the Committee stage a happy Recess and look forward with great anticipation to recommitment.

Lord Clinton-Davis

From these Benches I thank my noble friends who participated in the debates, particularly my noble friends Lord Carmichael and Lord Ewing. I am grateful also for the friendly relations we have had throughout—there were a few spats but nothing serious—with the noble Lord, Lord Tordoff, and the Government Ministers.

The noble Earl, Lord Caithness, has a heavy burden to bear in this Chamber. It is not easy to undertake not only these duties, but also those relating to the Treasury. We are grateful to him overall—I stress the word "overall"—for the tolerance that he shows and to the noble Viscount, Lord Goschen, for his help. Altogether, I think that we have had a pretty friendly Committee stage thus far.

8 p.m.

Lord Tordoff

As we seem to he making the speeches that are normally made by the Whips next Wednesday, I should like to join in. It has been a Committee stage in the true spirit of transport debates where there is always a closed circle of people who work together in spite of differences. I, too, wish the noble Earl, Lord Caithness, and the noble Viscount, Lord Goschen, and also my friends—if l cannot call them noble friends—on the Labour Front Bench a very good Recess.

On Question, amendments agreed to.

Clause 140, as amended, agreed to.

House resumed: Bill reported with amendments.