Railways Bill

HL Deb 20 October 1993 vol 549 cc571-630

3.14 p.m.

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

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(The Earl of Caithness.)

On Question, Motion agreed to.

Clause 130 [Pensions]:

Lord Peyton of Yeovil moved Amendment No. 289ZA:

Page 133, line 10, at end insert—

("() Nothing in this Act shalt relieve the Secretary of State of the duty, imposed under paragraph 7B and 7C of Schedule 10 to this Act, to guarantee the funding of occupational pension schemes.").

The noble Lord said: My Lords, I rise to move the: first amendment standing in my name and that of the noble Lord, Lord Marsh. Amendment No. 289ZC paves the way for Amendment No. 289C. The amendment. deals with the question of whether the Government should guarantee the closed fund which will be set up as a result of their own initiative. We are concerned with the pension rights of about 175,000 pensioners for a period of up to 50 years. It stands to reason that the: arrangements should not be informal. They should be indefeasible with firm guarantees. I say that with particular emphasis because during the years the question has been repeatedly visited by Parliament and. government and it is important that the pensioners should know exactly where they stand. We are dealing with existing, deferred and future pensioners of British Rail.

A closed fund is of its very nature vulnerable. It: cannot draw reinforcements from the employer or the employees—there is none. There are only pensioners and trustees. The fund which those trustees administer gains no refreshment in this instance, save from the Government or from the payment of dividends on its investments. Inflation, increases in taxation affecting; dividends, pensioners living longer than actuaries expected—and they have every right to do that

Noble Lords

Hear, hear!

Lord Peyton of Yeovil

And, my Lords, errors or bad luck in making investments can wound the closed fund It is of elementary justice that, as the fund is being set up on the Government's own initiative, the least they can do is to guarantee it against those risks, which are in no way the fault of pensioners or their trustees.

The Government have greatly contributed to their own misfortunes. During the early stages of the Bill in another place they set out to defend the indefensible. was only during the Bill's proceedings in this House that there was a change and a memorandum of understanding was produced in a hurry. However, at least the part relating to this matter is clear in words and intent. It may be helpful if I read the relevant excerpt. It is not long and there are difficulties in obtaining a copy of the memorandum. The paragraph with which I am concerned reads as follows: the Government will provide an absolute solvency guarantee for retail price index (RPI)-linked payments from the fund (in line with the provisions of the Pensions (Increase) Act 1971 and the Social Security Act 1975) of pensions already in payment and those which have been deferred". One could not want clearer words than those. The difficulty is that they are not binding on anyone. While I welcomed this move at the time, I suggested that it was most unsatisfactory, particularly against the background which I have sought to describe, unless it received a statutory guarantee; in other words, unless there was on the face of the Bill a duty imposed upon the Secretary of State to guarantee the solvency of the fund and its index-linking. At the time, my noble friend, who does not always have a very happy time with these Bills, did his best. He was forced to temporise. He said that he would take the matter away and see what could be done. I do not see any point in expanding my remarks on this particular amendment; the arguments have already been well ventilated. I await my noble friend's reply with a great deal of interest.

The Earl of Caithness

My Lords, it may be for the convenience of the House if I say something at this stage. My noble friend Lord Peyton has recapped on the discussions that we have had in the past. There is no doubt that my noble friend has an important point. He reminded the House that I undertook last week to come back to the House with an amendment which gave the Secretary of State power to direct the board to guarantee pension schemes. At that stage, the House indicated that it wanted the Government to go further. It was agreed that I and my right honourable friend the Secretary of State for Transport would further talk this matter through with my noble friend Lord Peyton. I can now tell your Lordships the result of those discussions.

My right honourable friend the Secretary of State and the Minister for Public Transport and I had a meeting this morning with my noble friend to discuss this issue. We assured him that we had given a great deal of thought, and indeed new thought, to the matter; and that we had considered that we should now put on the face of the Bill a duty for the Secretary of State to give a guarantee to a closed fund containing pensioners and deferred pensioners. We have conceded the point that my noble friend Lord Peyton asked us to concede—

Noble Lords

Hear, hear!

The Earl of Caithness

My Lords, we have gone further. We shall also take power so that we can give a guarantee to the BR section of the joint industry scheme if, as the memorandum of understanding acknowledges, it becomes seriously unstable. I hope that my noble friend and the noble Lord, Lord Marsh, accept that that is an appropriate power. We cannot know when and in what precise circumstances it might be exercised. That is the difficulty of foreseeing the unforeseeable.

We are working at this very moment on the text of an amendment which I propose to put before the House at Third Reading. I should like to recap to the House that we have fully conceded my noble friend's point. I believe that we have met his concern 100 per cent. in this important issue. We will put on the face of the Bill a guarantee for pensioners and deferred pensioners, and we will also take powers for a guarantee for the future.

Lord Peyton of Yeovil

My Lords, after that I can just manage to find the strength to rise to my feet. It was something of a shock. I am very grateful. I believe that the Government have done what is right. I shall not spoil the occasion by mixing my thanks with any regrets that it did not happen before.

I should particularly like to say to my noble friend on the Front Bench how much throughout this argument I have appreciated his unfailing courtesy and understanding and to express appreciation of the fact that those who sit behind him and raise these points really mean them. I am grateful both to him and to his right honourable friend the Secretary of State for the comprehensive way in which they have met this very important point. I believe it will do quite a lot to change the climate.

Baroness Turner of Camden

My Lords, before the noble Lord sits down, perhaps I may say from these Benches how grateful we are to the noble Lord, Lord Peyton, for raising these issues and for pursuing them in such an assiduous way. We are also very pleased to hear this afternoon from the Minister that the Government have conceded the points that have been raised and which have been supported from this side of the House.

Noble Lords will be aware that many individual pensioners have been very concerned about whether or not their pensions would have security. The fact that we are now to have a funding guarantee written on the face of the Bill will, I feel sure, give them the guarantees that we have all wanted them to have. From this side of the House I am very grateful.

Lord Marsh

My Lords, without wishing to introduce a churlish note into the proceedings, perhaps I may ask the noble Earl a question. On this matter there are three related issues. So far as the solvency guarantee is concerned and the placing of it on the face of the Bill, I think that everybody will be grateful for that. However, I do not think that that is a great step forward. It is rather like someone coming along and stealing your wallet and your car. He hands you back your wallet, and says, "I do wish you would stop being tiresome about the car".

Secondly, to what extent, apart from the solvency guarantee, which is now pretty clear, do the exchanges of view on the matters that the noble Earl is looking at—I realise the difficulties, but we have had no opportunity to discuss or think about them—meet the problem of the memorandum of understanding in terms of the trustees' consent having to be sought as opposed to having matters discussed with them? The third issue is the scheduling of payments.

The Earl of Caithness

My Lords, with the leave of the House perhaps I may reply to the noble Lord on the particular points that he raises. Yes, those are important points. They relate to amendments that we shall come to. They are separate from this particular issue. I have to say to the noble Lord that I thought his analogy was perhaps not quite what it could have been. I think that the Government have moved a huge way to meet the will of the House, and I should like to pay tribute to what my noble friend Lord Peyton has done in this regard.

Lord Tordoff

My Lords, these Benches also join in congratulating the noble Lord, Lord Peyton of Yeovil, on what is an important success. We also thank the noble Earl, Lord Caithness, for his part in inserting sense into this part of the Bill. He has been in a difficult position—as Ministers often are—with the Secretary of State somewhere in the gloomy background. But I am glad that, at last, common sense has prevailed and this guarantee is to be written into the Bill.

On a procedural matter, perhaps I may seek to clarify whether we intend to proceed with Amendments Nos. 289ZB and 289ZC. There is a matter that I wish to raise on the first of those two amendments. I think that congratulations are in order all round.

Lord Peyton of Yeovil

My Lords, it just remains for me to say that I am very sorry that I did not get the total agreement of the noble Lord, Lord Marsh, with everything that I said. I thought that the noble Lord was a little ungenerous. I personally seize any opportunity to be more generous than that to the Government. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Peyton of Yeovil moved Amendment No. 289ZB:

Page 133, line 10, at end inser—

("() Nothing in this Act shall relieve the Secretary of State of any duty imposed by section 520(1A) of the Transport Act 1980.").

'The noble Lord said: My Lords, this amendment can be moved very briefly, though it deals with a rather more difficult thorny problem. I should like to say to noble Lords how difficult I found the whole of these negotiations. Pensions are very complicated and I could best describe the process in the following way. As I understand it, the Government have been trying to put an intention into words. They have found it extremely difficult. I therefore find it more difficult to understand an intention which could not be put into words. That is a slightly double-Dutch way of putting it but it is a fair commentary on the difficulties which I have experienced. It was stated very clearly in the memorandum of understanding, to which I have already referred. I should like to quote the relevant paragraph: the Government remains committed to support payments to certain BR pension funds. The timing of such payments will be agreed with the Trustees and will take account of the absolute guarantee now being provided".

The guarantee has been made absolute, and we are content with that. But the question is whether the word "agreed" can be understood possibly to mean just to involve consultations. I do not think that such a change of meaning is in any way possible. I understand that there are these difficulties.

When they are in a corner, governments are wont to fall back upon all sorts of constitutional difficulties which I am not always able to understand. I understand that trustees ought not to be given power to pre-empt a decision of Parliament, but I do not see why trustees should not be consulted about the contents of a statutory order before it is laid.

I hope that my noble friend will deal with that point. If he finds the difficulty so impossible to overcome in the way that I have suggested—I have made the point before at Committee stage—perhaps he could come forward with some other alternative but formal arrangement which will make certain that there are not merely consultations but that the trustees are content with what is proposed. That does not happen at the moment. It was the intention in the memorandum of understanding. That was very clear.

I am in some difficulty. I know that my noble friend is too but I hope that he will be able to help us on this matter. I beg to move.

3.30 p.m.

Lord Tordoff

My Lords, I should like to take up the remarks of the noble Lord, Lord Peyton, as I indicated a few moments ago because I have a clifficulty in this situation. Noble Lords will remember that before the recommittal proceedings of Schedule 10 a week yesterday, there was considerable discussion in this House about the large number of government amendments that had been tabled at short notice. Various assurances were given, and as we proceeded various other assurances were given to the effect that many of the amendments were of a technical nature. Some of them were huge. I draw attention in particular to Amendment No. 65 which was moved by the noble Earl, Lord Caithness, on that occasion. It takes us back again to the memorandum of understanding. The noble Earl said: During our earlier discussions in July I undertook to consider whether to incorporate the provisions of the memorandum of understanding on the face of the Bill … We have concluded that it is neither necessary nor practicable to incorporate the memorandum in Schedule 10 to the Railways Bill".—[Official Report, 12/10/93; col. 101.1 Later he said: The Government's Amendment No. 65 has been tabled because we need the cover of primary legislation to implement the particular provision of the memorandum with which it deals". Two sentences later he went on: However, I can assure the House that it is our firm intention to abide by the memorandum of understanding … I should say that the Government regard the memorandum of understanding as binding. I make it absolutely clear that the Government regard it as binding".—[col. 101.] I am sure that when he uttered those words the noble Earl meant precisely what he said. I impute no bad motives for what seems to have happened since. The memorandum of understanding—in the paragraph prior to the one which the noble Lord, Lord Peyton, mentioned a few moments ago—stated: the Government will appoint a Director of the Trustee Company ("the Government Director"), whose consent will he 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". So the House came to Amendment No. 65, just after 7 o'clock a week last Tuesday. The noble Earl, Lord Caithness, moved Amendment No. 59 and spoke to Amendments Nos. 65 and 68. Amendment No. 65 took up more than three full columns in Hansard.At the end of his explanation the noble Earl said: The new Section 52D includes provisions relating to various directions contained in Sections 52A and 52C and the orders contained in Section 52B. The Committee will note that orders under Section 52B will be subject to the negative resolution procedure in common with the other order-making power in Part III of the 1980 Act. However, Section 52D requires prior consultation with the trustees on any such order".—[Official Report,12/10/93; col. 155.] That is, not consent but "consultation". He continued (at col. 156): Turning now to the remaining government amendments … as I indicated earlier, they are technical amendments following on from Amendment No. 65". Towards the end of his speech the noble Earl said: I believe that these government amendments fairly meet the understanding reached in the memorandum relating to changes in the arrangements for making government support contributions to new guaranteed schemes and also protect the position of the taxpayer. I commend them to the Committee".—[col 156] The noble Lord, Lord Clinton-Davis, then indicated that it was rather difficult in the circumstances to take on board all the detail of the amendments as they had been moved, and he asked the noble Earl to give a resume, which he sought to do. Again, he said: There is a new Section 52D, which provides for consultation with the trustees and for such orders to be subject to the negative resolution procedure".—[col. 157.] There is a world of difference between consultation and consent. It is quite clear from the press release issued this morning that the trustees feel that they have been badly treated. Referring to the proposal to suspend statutory contributions, it says: This proposal coupled with the Secretary of State's decision to change the provisions of the memorandum of understanding in relation to current payments to certain BR pension funds under the 1980 Act from agreement with the Trustee to consultation with the Trustees undermines the confidence of the Trustees in Government intentions towards the Funds". I cannot put it plainer than that. There are two points to raise. First, I believe that the noble Earl said what he said in good faith. I believe that he was misguided and misadvised in so saying. But in the promises that were given to this House—first that the memorandum of understanding was binding and secondly that the amendments that were being put through were of a general technical nature (because there was no reference in any of the speeches to a change in the memorandum of understanding)—I believe that this House has been misled. More seriously, I believe that the trustees of the pension fund have been misled. I ask the Minister what steps the Government intend to take to put that. right.

Lord Shepherd

My Lords, perhaps I may ask the noble Lord one question. Is he saying to the House that the Government said that the memorandum of understanding was binding and yet apparently unilaterally they have changed it? Is that my understanding?

Lord Tordoff

My Lords, that is my understanding from the trustees of the fund. I may be wrong, but that is my understanding at the moment.

Lord Shepherd

In that case, my Lords, how can that memorandum of understanding be binding on the Government?

Lord Marsh

My Lords, following the noble Lord, Lord Tordoff, if the English language has any meaning or preciseness, it is a complete volte face.This is the problem which, with the greatest respect, the noble Earl fails to take on board—that the Government started from a point, in terms of the transfer of these pension funds, which was indefensible on the part of any reasonable employer. They have moved a long way, slowly and narrowly, fraction by fraction. But they started from a position in which no respectable employer would have been in the first place.

If one remembers the whole history of this subject, it has gone along with questions asked, great indignation, then suddenly a promise that the matter would be looked at and, without time to think about it and examine it, suddenly we have a new situation. On 20th July, when this issue was coming up for debate on 21st July, all of a sudden the memorandum of understanding appeared. Why it appeared at that date is pretty obvious. Nothing had changed in the problem. The problem of transferring pension funds from one employer to another is well known. The problem of transferring pension funds from a nationalised industry to a privatised industry is well known. The Government left it to the very last moment that they possibly could. They got the trustees together in the evening—when I say the "trustees", they met the chairman of the trustees. I do not think that the chief executive of the trustees was present but he was also involved. But at six o'clock that evening, both those gentlemen, when that memorandum of understanding was still being discussed, were with the noble Lord, Lord Peyton, and myself, and at that stage all they had was a draft of the memorandum of understanding, which was subsequently changed. By lunch time the next day it had appeared. The whole debate on that issue centred around the memorandum of understanding.

It is now a pretty open secret to anyone who has been involved in this issue that the chairman of the trustees had a very difficult time with the other trustees. When they began to think about it they said that they had not been consulted and he quite rightly said, "I was over a barrel"—he probably chose different language—"There was nothing else I could do if I was to get anything. The only thing that was on offer was the memorandum of understanding, so I signed it". They said, "Fine, but we'll take legal advice just to be sure". They took legal advice and they found that the memorandum of understanding, which had been argued before this House as the solution to the problem, had no legal validity at all. The noble Earl, in answer to a question, was good enough to accept that, because it is a statement of fact.

The problem throughout this issue has been threefold. I believe that the other place, in discussing this issue and talking about the Government doing a "Maxwell" and stealing the pension funds, were misdirecting the whole debate. It is not about that. But as the noble Lord, Lord Peyton, said some time ago, Maxwell happened. Ordinary people in pension funds are frightened when their pension funds move. That is why they have been anxious. I have said in the House on three occasions that the trustees got the best deal they could because there was nothing else on offer. No one can provide the security they require other than this House. No one else. If one wants a brutal answer, no one trusts anything that is not in the Bill.

We do not know what the long term future of the British Railways Board is. Who can say what it will be? It will be fragmented. I am not arguing the virtues of the Bill. There are people who passionately believe in it. The Government do, and no one could accuse them of being motivated by a desire for political popularity or the hope of re-election. They are totally committed to it. But other people are not. It has nothing to do with the merits of the issue of privatisation. It has nothing to do with public expenditure. Not a penny is involved. The crucial issue is that people started off very concerned with the strange happenings of the memorandum of understanding which they were virtually forced to sign. They then discovered that it had no legal validity and then subsequently discovered that the Government did not really like the wording of it and changed it a little on the way without any consultation.

Unless these things are made mandatory upon the Government, these people will not have confidence in their future. One simply cannot properly do that to 350,000 people who are asking Parliament for nothing more than that they get a guarantee not just of the solvency but of everything connected with the fund.

3.45 p.m.

Lord Clinton-Davis

My Lords, I join those noble Lords who have expressed deep concern about the situation which has arisen. The noble Lord, Lord Marsh, is absolutely right in summarising the issue in the terse way that he did and saying that no one believes assurances unless those assurances are written on the face of the Bill. Indeed, that has been our case throughout. It is only today that the Government have made in relation to the earlier amendment an important concession. But they need to go much further.

I should like to take the House back to that day when we discussed the memorandum of understanding, having been given such short notice that the agreement had been reached. On that occasion the noble Lord, Lord Peyton, said that apparently the fox that I was pursuing had been shot. I am not sure that he was right in retrospect, because on that occasion I raised a number of points without any effective information from experts—points that were, raised by the noble Lord, Lord Marsh, and the noble Lord, Lord Tordoff. The House will recall from that occasion that time and time again the Minister, perhaps inadvertently, kept on saying that the agreement had been reached with, inter alia, the trustees. I sought to correct that because it was not consonant with the facts. The fact of the matter was that, on his own admission, the chairman of the trustees had had totally inadequate time even to consult all the trustees. It was a rather serious omission. We now know from the press release, but more than that, from the letter that was sent to the Secretary of State by the chairman of the trustees on 15th October, that there are deep prevailing concerns about the situation, concerns which the Government have not yet begun to address.

The noble Lord, Lord Marsh, is right in saying that the chairman of the trustees was put in a thoroughly invidious position. One would not want to blame him for the fact that he did not have sufficient time or could not possibly have consulted with his colleagues. But he had a pistol at his head. The Government were basically saying, "This is better than nothing, so you had better accept that which is measurably better than nothing". But that is all it was. It was full of holes, a point which the Minister was unwilling to concede at that time.

So much for the history. We now know that the Secretary of State, faced with another significant defeat, has retreated, in part at least, from that appalling prospect for him, as the Bill moves towards another place in its final stages. But I think that they will be tested again. Against that backcloth one needs to look at the abiding concerns of the trustees as expressed by the chairman. He says that he wants to record his, grave concern, and that of the Trustee Board, at your [the Secretary of State] decision to change the provisions of the Memorandum of Understanding in relation to support payments to certain BR pension funds under the 1980 Act from agreement with the Trustee to consultation with the Trustee. First, the change undermines confidence iu the status of the Memorandum which we have been at pains to generate since it was signed on 20th July"— a point made forcefully by the noble Lord, Lord Tordoff. That is precisely what it does and precisely the point made by the noble Lord, Lord Marsh; that is, that there is no confidence in anything unless it is in the Bill. The chairman continues, Second, it is inconsistent with the Minister of State's statement to the House of Lords on 12th October when he said that the Government regard the Memorandum as binding"— a point already made. He goes on, Third, your proposals, as presently stated, will effectively eliminate any possibility of actuarial surpluses & rising. This is contrary to one of the basic principles underlying the Memorandum of Understanding". That is three highly significant points made by a person of great authority, the chairman of the trustees, Mr. Derek Fowler. The Government must meet those points. I hope we shall not be told that there must be more meetings. The meeting with the noble Lord, Lord Peyton, was rewarding. But this is a point which is of equal, if not greater, importance to the point which the Government have conceded.

We feel strongly about the matter. We believe that the trustees should be supported. After all, this is the kernel of the case made by the Government: that trustees are there to be supported. That is what 'was said in relation to the memorandum of understanding. In the light of what they are saying now, we say that deep anxiety is expressed and the trustees need the support of the House. There is no other recourse. The interests of hundreds of thousands of pensioners need the support of your Lordships. It is not a party point. It is a point raised by the noble Lord, Lord Peyton, whom we greatly admire, and the noble Lord, Lord Marsh. The points demand attention by the Government. I hope therefore that the Minister will not resort to simple words of assurance. They will not suffice. I hope that he will concede this point, as he did the other.

The Earl of Caithness

My Lords, the debate has developed from a narrow point moved by my noble friend Lord Peyton in the form of Amendment No. 289ZB into a much wider debate on pensions generally. Therefore I hope that the House will bear with me while I answer not only the specific point with regard to the amendment, but also take the House further into the general question of pensions.

I shall deal first with Amendment No. 289ZB and advise my noble friend that it is unnecessary because of the new Section 52D of the Transport Act 1980. The duty that my noble friend seeks is already imposed by that section and therefore the amendment is unnecessary.

I turn to the crucial issue on which the noble Lords, Lord Tordoff and Lord Marsh, focused; that is, converting what is in the memorandum of understanding onto the face of the Bill. Amendment No. 289B seeks to impose a duty on the Secretary of State to secure the prior written agreement of the trustees of the scheme that it is appropriate in the circumstances to lay an order under Section 52B of the Transport Act 1980, substituting for the current government support payments the new obligations introduced by Section 52B.

The amendment would give to the trustees a power of veto over government expenditure under the Transport Act 1980 in respect of payments to the guaranteed BR pensioners' scheme. I accept that the memorandum provides for their agreement. But as I said in our earlier discussions on recommitment on 12th October, to put it in the Bill is unacceptable for this reason. It would be wrong for an outside party such as the trustees to have an effective veto over matters relating to government expenditure. That would not only be wrong, but would also be quite unprecedented. I must strongly emphasise that point.

The situation now is that the pensioners of the British Rail pension funds will be a great deal more secure than they are under the existing scheme. The Government have provided a copper-bottomed guarantee not just in the memorandum of understanding, but, as I said on the last amendment, on the face of the Bill. That guarantee, which relates to the rules of the scheme, is a guarantee of taxpayers' money. In addition to that, not only will the pensions be index linked, but they will be entitled to a share of the surpluses to 40 per cent. They may have had shares of the surplus before because the trustees happen to manage their investments extremely well. As the noble Lord, Lord Marsh, will know, the 1980s was a good time for pension funds; many pension funds did rather better than had been expected. But is it safe to say the same in regard to the 1990s?

If the pension fund does not perform to the same degree as it did in the 1980s, new pensioners under British Rail could have their pensions reduced. The existing pensioners cannot, but new ones could. That has been overtaken by the Government's guarantee of taxpayers' money. Not only is there a guarantee, but there is a share of surplus. It is an amazing deal for the pensioners and one which the Government are rightly proud to have agreed.

Lord Peyton of Yeovil

My Lords, perhaps my noble friend would allow me to interrupt. I did not hear him clearly. Can he say precisely where the duty is laid upon the Government to consult and secure the agreement of the trustees? I do not know whether he said Section 52B or Section 52D. Can he say precisely where it occurs?

The Earl of Caithness

My Lords, the point I was making is that it comes under Section 52D.

I wish to turn to the point made by the noble Lord, Lord Tordoff, on the memorandum of understanding; it is an important point. I want to make absolutely clear that the Government do not consider the memorandum of understanding itself to be legally binding on the signatories. As the noble Lord, Lord Marsh, said, and I confirmed at recommitment, it does not have the force of contract. But I can confirm that the Government regard the memorandum as morally binding and firmly intend to implement it, just as the chairman of the trustees confirmed to us this morning that that is exactly how he interpreted it and he would wish to remain bound by the terms of the memorandum of understanding. I believe that that answers the second point raised by the noble Lord, Lord Clinton-Davis, in the letter from Mr. Fowler.

I want to make it perfectly clear that we are not trying to change the provisions of the memorandum of understanding in any way whatever. We intend to fulfil it. We regard it as morally binding. But the big question of whether it can or indeed should be translated into primary legislation is quite separate.

I know that my noble friend Lord Peyton will understand the difficulties of a third party having control and an effective veto over government expenditure. I know also that the noble Lord, Lord Marsh, from his earlier experiences in another place, will feel exactly the same. We intend to reach agreement with the trustees and we are consulting with them. We had another meeting this morning and there was a meeting yesterday. We very much believe that, in the full spirit of the memorandum of understanding, we shall get that agreement. Putting it on the face of the Bill creates the very important problem which I have raised.

4 p.m.

Lord Tordoff

My Lords, I ask to speak with the leave of the House. I hope that noble Lords will understand that we are in some considerable difficulty procedurally because we are now at Report stage and we are not supposed to speak more than once, but in the, circumstances I hope that the House will be lenient. I do not believe that the noble Earl has answered his noble friend's question about where consent is contained in the Bill. It is certainly not contained in Section 52D. In fact it has been changed to "consulting" in that section, which is the point which I deliberately sought to make in an amendment which the noble Earl moved on Tuesday of last week.

I still await an explanation as to why, if the Government are so concerned to stick to the memorandum, that change has been made and, furthermore, why it was made without being drawn to the attention of your Lordships' House.

Lord Clinton-Davis

My Lords, perhaps the Minister will respond to that.

The Earl of Caithness

My Lords, I was about to respond, but I saw the noble Lord come to his feet so I sat down again quite happily. The point which the noble Lord, Lord Tordoff, has made is that in the new Section 52D it requires consultation with the trustees before orders are made. What the memorandum of understanding says—which we consider to be legally binding, as does the chairman of the trustees—is that we wish to reach agreement. I say to the noble Lord, Lord Tordoff, that that is exactly what any prudent government in this position would seek to do, as indeed would the trustees. But we have the difficulty of putting it on the face of the Bill for the very reason which I have stated and which I cannot stress strongly enough—that is to say, the veto by a third party over government expenditure.

Lord Clinton-Davis

My Lords, with the leave of the House. I believe that we are having procedural difficulties as the noble Lord, Lord Tordoff, said. This is an extremely significant matter and I am sure that the Minister will concede that. When he says that the trustees are content with the position, does he really mean to say that? Is he saying that all the trustees have concurred in that position and that they are all happy just with the memorandum of understanding? That is not my understanding of the situation. We would like some clarification from the Government as to that point.

As regards the second point concerning the Government's moral obligations, they are all very fine, but they are imprecise. In any event, the Government are not in a position to bind their successors. Moral obligations are all very well. I am not impugning the Minister's intentions here, but having regard to what has happened, moral obligations are not adequate.

I am sure that the Minister is already aware of it, but I wish to draw to his attention and to that of the House, the legal advice on which the trustees have acted in this matter. There was advice enshrined in the letter dated 15th October from the solicitors advising the trustees. I shall quote it. I do not offer my own resume. These are the words of the solicitors: The specific criticism given by the Minister [Official Report,12/10/93; col. 139.] is that 'the amendments cause us difficulty because they would give to the trustees a power of veto over Government expenditure under the 1980 Transport Act to the guaranteed BR Pension Scheme'". That argument was rehearsed again today. He continued: 'It would be wrong for an outside party—in this case the trustees—to have an effective veto over legislation relating to matters of Government expenditure'. Our interpretation is that the new sections give to the Government a far greater degree of flexibility than is envisaged in the memorandum, [that is, Sections 52B to 52D]. Under Section 52B(6) a substitution order may specify the date on which substitution payments are to be made and the circumstances in which they are to be made. These powers are very broad. Our amendment seeks not only to reflect the Memorandum in a way which does not offend the doctrine of Parliamentary sovereignty but also to provide some degree of control in the hands of the trustees to ensure that these new and very much more flexible powers are not exercised to the detriment of the scheme members. The trustees are not seeking to veto legislation relating to matters of Government expenditure. Only Parliament can do that, but Parliament can constrain Government's powers through primary legislation". Of course that is right. The letter continues: The Government's control over public expenditure only exists because Parliament has given it the necessary powers through legislation. Parliament can therefore impose restraints on those powers. Because the Government now seeks to go far beyond what the Memorandum envisaged, we consider it is appropriate for the trustees to ask Parliament to impose constraints on those powers. … Even if the amendment were to give rise to constitutional difficulty"— Of course, they are not admitting that— the problems lie with the Government in having to table amendments which reflect the Memorandum and give adequate protection to scheme members through some form of control exercisable by the trustees. Not only has the Government gone beyond what the Memorandum envisaged … but it has also failed to able amendments covering either the Trustees' Agreement to the timing of payments or RPI increases and the solvency guarantee. In part that has been cured. It was only on the basis of the Government's commitment in this behalf that the Trustees gave their consent to the possible variation in the timing of payments under the Transport Act 1980". Those are points with which the Government have to deal. All the trustees have to be satisfied and not just through a meeting with the chairman. It has to be to the satisfaction of all the trustees. I do not believe that all the trustees are satisfied or could be satisfied with what the Minister has said today.

The Earl of Caithness

My Lords, we seem now to be focusing on Amendment No. 289B, which is not the amendment which my noble friend Lord Peyton moved. Perhaps I may at once correct something which I said a moment ago. By a slip of the tongue I am told that l; said that the memorandum of understanding was legally binding. If I said that, I believe that the House will understand that that is not what I meant to say. I said that it was not legally binding, but that we considered it to be binding and that we were morally obligated to it and, indeed, the chairman of the trustees confirmed to us this morning that he was of a similar disposition.

I say to the noble Lord, Lord Clinton-Davis, that the board of directors of the trustee company has endorsed the memorandum of understanding as signed by their chairman, but I would not go as far as to say that the trustees are entirely happy. If they were, we would not be having this discussion. We have certainly met them on one of their points of concern, which is to put the guarantee on the face of the Bill. I have explained in full why we do not believe that we can fully interpret the wording in the memorandum of understanding and put that on the face of the Bill.

As regards the scheduling of payments, perhaps we can wait until we come to Amendment No. 289B before I respond to the noble Lord, Lord Clinton-Davis. However, I would like to respond to the third point which he raised from Mr. Fowler's letter to my right honourable friend the Secretary of State.

Lord Clinton-Davis

My Lords, the amendments are all grouped.

The Earl of Caithness

My Lords, the noble Lord raised a third point which was that Mr. Fowler claimed that our proposals, as presently stated, will effectively eliminate any possibility of actuarial surpluses arising. I have to say, on professional advice from the Government Actuary, that that is simply not the case. Our proposals do not eliminate any possibility of actuarial surpluses arising. It might be so if we were eliminating government contributions altogether, but we are certainly not doing that. They remain a liability for the Government and an asset for the fund. It is our intention to ensure that the value of that asset is maintained when the closed fund is established.

We do not disagree with the way in which the noble Lord, Lord Clinton-Davis, has analysed the situation; but the point is that the Government would not be able to introduce an order providing for public expenditure without the consent of a third party—that is, the consent of the trustees—and that is why the amendment is inappropriate.

I turn now to the scheduling of the payments. Again, I know, that that matter causes anxiety to the trustees; but the question of the power of veto is the overriding point—

Lord Clinton-Davis

My Lords, before the noble Earl sits down, as he has challenged some of the points that I made, perhaps I may put these points to him. First, as we are dealing with a number of amendments that are grouped, the Minister cannot seriously say that he cannot deal with the amendment in question now.

Secondly, when the Minister says that the trustees endorsed the memorandum of understanding as signed by the chairman, that is perfectly right; but is it not a fact that they subsequently rehearsed further arguments, which I have sought to represent to the House this afternoon, expressing their very deep anxiety about the situation? The trustees were far from being satisfied or even nearly satisfied with the position, hence the letter that was subsequently sent by the chairman to the Secretary of State.

Thirdly, today is the first time that we have had an opportunity to discuss the question of the actuarial surpluses. This is what the trustees have to say, and I can do no better than quote again from the letter. I did not quote from this part before, but feel that I must now provide the particulars. The letter states: If payments under the 1980 Act cease and are substituted by a non-marketable Government IOU, the implications for the Fund would be very serious indeed. We calculate that in 10 years' time the capitalised Transport Act payments would represent some 25 per cent. of the assets of the closed fund. 10 years later in (2013) over 70 per cent. of the assets might be represented by the Government IOU, thus moving close to an unfunded scheme, guaranteed by Government. In other words, a fund on lines envisaged in paragraph 37(ii), page 11, of the Government's Consultation Document. An option which you withdrew on the grounds that it attracted little support". I am certain that those arguments are not based only on the thoughts of the chairman or any individual trustee. They are based on actuarial opinion which is in conflict with the Government's actuarial opinion, yet these are matters which we are embracing for virtually the first time today. That is why it is so inappropriate that we are dealing with this matter according to the rules of Report. These are matters on which the Minister has blithely said, "We have had an opinion. That should satisfy the House". It cannot possibly have satisfied those advising the trustees, and they are acknowledged actuaries in their own right. There appears to be a major conflict here.

The Earl of Caithness

My Lords, with the leave of the House, I rise to speak again because I know that we have stretched the rules enormously today. I have done so deliberately in order to try to encourage a full debate and to give a full answer. I have already explained and answered the noble Lord, Lord Clinton-Davis, on the point about which the trustees are not entirely happy. However, I must point out that Mr. Fowler's letter is based on a misunderstanding of the situation. We are in discussion with the trustees as to the question of payments. But let us not forget that the whole situation has changed because the Government have given the guarantee that was not there before. That is what the trustees wanted. That is what the trustees have got. They have got that guarantee. It is on the face of the Bill.

There is also the question of the surpluses in the memorandum of understanding. That puts the pension fund—and the future of the pensioners—in a much more secure position than is the case under the existing rules of the scheme because of the fluctuations that can come from valuations. If an actuarial valuation finds the fund to be unstable, then the government guarantee is called. That government guarantee can be called before or after a payment of surpluses has been made. Therefore, in addition to getting 40 per cent. of the surpluses, if at the next valuation the trustees say that they need some money from the Government, they can get that money. At the moment, if the trustees had an actuarial valuation which showed a surplus, and if they envisaged difficult times ahead, the trustees would be quite entitled to say, "We are not distributing any of that surplus. We are putting it back into the fund to cater for the difficult times ahead that we foresee". That is no longer the case. If there is a surplus, 40 per cent. will go to the pensioners. If difficult times occur in the future, the trustees can push the button and the government guarantee is there. That is a totally different and much improved position for the pensioners.

4.15 p.m.

Lord Peyton of Yeovil

My Lords, I find myself in very great difficulty. I have no desire to add to the Government's difficulties on this matter, and—I hope that my noble friend will take note of this because I mean it—I would very much prefer not to divide the House but I must have some grounds for withdrawing the amendment.

Our difficulties are enormously added to and exacerbated by the fact that discussions on a highly technical, complicated and very sensitive subject are taking place at the time that we are attempting to pass an Act of Parliament. That makes understanding a complicated subject even more difficult than would normally be the case.

My noble friend has said fairly that the point that is covered by my amendment—other noble Lords have gone wider than I have—is a very narrow one. I quite agree. But that does not mean that it is not an important one. The Government have stated on a number of occasions that they honour and will be bound by the memorandum of understanding. The passage of the memorandum which I quoted earlier to your Lordships makes it clear that the agreement of the trustees is required. The difficulty here is that whatever the Government's intentions and whatever the Government have done (and I am extremely grateful for what they have done), the fact is—and it is difficult to get round this—that in saying that they are bound, the Government seem to me (and to outsiders) to mean that they regard themselves as bound by the memorandum except when it becomes inconvenient.

Amendment No. 289ZB, which stands in my name and that of the noble Lord, Lord Marsh, seeks to do no more than to reflect the paragraph in the memorandum of understanding which I have quoted. If the wording is offensive and if the Government can improve upon it, I shall withdraw the amendment without hesitation.

I should, however, like my noble friend to deal with a point that I have put to him previously. Why can there not be consultation with the trustees on the contents of a possible statutory instrument before it is laid? Surely that would get us round the problem of putting the trustees in a position where they would be pre-empting Parliament.

My next point is one upon which I should like to express some sympathy with the trustees. In the very much changed climate that we now have, and in the light of legislation that the Government introduced recently, which placed added heavy burdens upon trustees, surely they deserve an effective voice in the fund. The arrangements for government support constitute an immensely important part of the fund. If the trustees are going to be merely informed or consulted, without agreeing, they will be reduced considerably in status, and they will feel very uncomfortable about it.

My last point—I am deeply worried about this—is that I want to know where in new Section 52D are the words which make my amendment unnecessary. At one stage just now my noble friend—I am anxious to know whether I understood him correctly—used words to the effect that the Government could not introduce a statutory instrument without the consent of the trustees. Did he say those words? If he did, that is satisfactory. I should like to hear whether he did say that.

Lord Tordoff

My Lords, before the noble Lord sits down perhaps I may clear up one point. Is the noble Lord, Lord Peyton, speaking to his paving amendment and to the other two amendments?

Lord Peyton of Yeovil

My Lords, I am speaking to the amendments which are grouped together. I am sorry if I did not make that clear.

The Earl of Caithness

My Lords, that was a helpful intervention from the noble Lord, Lord Tordoff. It has cleared up that point, because some of your Lordships might not have realised where we were on this complicated and technical issue.

I believe that I can satisfy my noble friend's concern. I have explained why we cannot go as far as the trustees would like, and put this provision on the face of the Bill. We have tried wherever possible to meet the trustees and the concerns that they have raised. That was proven by the previous amendment. On this amendment, we cannot go as far as the trustees would like. My noble friend wanted an assurance on consultation. The new Section 52D of the 1980 Act requires consultation with the trustees. Let me read Section 52D(1): Any power to make an order under section 52B shall be exercisable by statutory instrument made by the Minister after consultation with the trustees of the guaranteed pension scheme to which the order relates". There is the requirement for consultation.

Moreover, I would go further. I can assure the House that the Government intend not just to consult but to seek and obtain agreement on such matters with the trustees. That is what is in the memorandum of understanding. Surely it is in the interests of the parties concerned to reach that agreement.

Lord Peyton of Yeovil

My Lords, I am sorry, but I find myself in a real difficulty here. What I understood my noble friend to say was that the contents of new Section 52B made my Amendment No. 289B unnecessary. Section 52B includes the words: after consultation with the trustees". My amendment reads that the: Secretary of State shall not lay before Parliament a statutory instrument containing an order under section 52B unless he has first obtained the written agreement of those trustees". There is a cardinal difference between the two.

I asked at an earlier stage whether my noble friend could undertake to introduce on Third Reading some formal alternative. If he finds the, I believe, not unreasonable amendment that I have moved unacceptable, is it not possible to introduce a formal and binding alternative which will make the agreement of the trustees unnecessary? My fundamental point is that all parties engaged in serious discussions agreed on the wording of the memorandum of understanding. The Government have said repeatedly that they are bound by it. It now seems—this is the appearance of it, and I cannot escape it—that the word "consult" is to be substituted for "agreement". I find that extremely difficult to accept. I hope that my noble friend will understand that.

The Earl of Caithness

My Lords, with the leave of the House, it would be wrong of me to say that I could go away and do what my noble friend asks me to do, because I do not believe that I can do that. When I have said that I would take things away to consult upon and discuss and, hopefully bring back amendments, I have meant that and, by and large, I have done so. We have given this matter enormous thought, but I do not believe that I can say that.

I return to the point. I could reach an agreement with my noble friend Lord Peyton. Then I could say to him, "Could you put that in writing?". He says, "No, I am not going to put it in writing". That is an effective veto. That is what my noble friend is saying in his Amendment No. 289B. It is an effective veto by a third party over government expenditure. That is what we find unacceptable.

Lord Peyton of Yeovil

My Lords, I understand my noble friend's difficulty, but it is not possible to say what I have said on this amendment without taking the opinion of the House. It would render meaningless everything I have said. I do so with great regret.

4.27 p.m.

On Question, Whether the said amendment (No. 289ZB) shall be agreed to?

Their Lordships divided: Contents, 153; Not-Contents, 123.

Division No. 2
CONTENTS
Addington, L.	Archer of Sandwell, L.
Airedale, L.	Ardwick, L.
Alport, L.	Ashley of Stoke, L

Attlee, E.	Jenkins of Putney, L.
Avebury, L.	John-Mackie, L.
Barnett, L.	Judd, L.
Beaumont of Whitley, L.	Kagan, L.
Birk, B.	Kennet, L.
Bonham-Carter, L.	Kilbracken, L.
Boston of Faversham, L.	KirkhiU, L.
Bottomley, L.	Kirkwood, L.
Brimelow, L.	Lawrence, L.
Brooks of Tremorfa, L.	Layton, L.
Bruce of Donington, L.	Listowel, E.
Callaghan of Cardiff, L.	Llewelyn-Davies of Hastoe, B.
Carmichael of Kelvingrove, L.	Lock wood, B.
Carnock, L.	Longford, E.
Carter, L.	Lovell-Davis, L.
Castle of Blackburn, B.	McCarthy, L.
Clinton-Davis, L.	McIntosh of Haringey, L.
Cobbold, L.	McNair, L.
Cocks of Hartcliffe, L.	Mallalieu, B.
Craigavon, V.	Marsh, L.
Croham, L.	Mason of Barnsley, L.
David, B.	Merlyn-Rees, L.
Dean of Thornton le Fylde, B.	Molloy, L.
Donoughue, L.	Monkswell, L.
Dormant) of Easington, L.	Monson, L.
Dundonald, E.	Morris of Castle Morris, L.
Eatwell, L.	MuUey, L.
Ennals, L.	Nicol, B.
Falkender, B.	Ogmore, L.
Falkland, V.	Pitt of Hampstead, L.
Feversham, L.	Plant of Highfield, L.
Fitt, L.	Ponsonby of Shulbrede, L.
Foot, L.	Prys-Davies, L.
Gallacher, L.	Rea, L.
Geraint, L.*	Redesdale, L.
Gladwyn, L.	Rochester, L.
Glasgow, E.	Rodgers of Quarry Bank, L.
Gould of Pottemewton, B.	Sefton of Garston, L.
Graham of Edmonton, L.	Serota, B.
Greenhill of Harrow, L.	Shannon, E.
Grey, E.	Shaughnessy, L.
Hanworth, V.	Shepherd, L.
Harris of Greenwich, L.	Simon of Glaisdale, L.
Harrowby, E.	Stallard, L.
Haskel, L.	Stedman, B.
Healey, L.	Stoddart of Swindon, L.
Henderson of Brompton, L.	Strabolgi, L.
[Teller.]	Taylor of Blackburn, L.
Hilton of Eggardon, B.	Thomson of Monifieth, L.
Hollick, L.	Tordoff, L. [Teller.]
Hollis of Heigham, B.	Turner of Camden, B.
Hooson, L.	Varley, L.
Houghton of Sowerby, L.	Wallace of Coslany, L.
Howell, L.	Wedderbum of Charlton, L.
Hughes, L.	Wharton, B.
Hutchinson of Lullington, L.	White, B.
Hylton-Foster, B.	Williams of Elvel, L.
Jay, L.	Williams of Mostyn, L.
Jay of Paddington, B.	Winchilsea and Nottingham, E.
Jeger, B.
NOT-CONTENTS
Aberdare, L.	Brougham and Vaux, L.
Abinger, L.	Bruntisfield, L.
Aldington, L.	Butterworth, L.
Allenby of Megiddo, V.	Cadman, L.
Annaly, L.	Caithness, E.
Archer of Weston-Super-Mare, L.	Caldecote, V.
Arran, E.	Campbell of Alloway, L.
Astor, V.	Camegy of Lour, B.
Astor of Hever, L.	Chalker of Wallasey, B.
Auckland, L.	Chelmsford, V.
Barber, L.	Chesham, L.
Birdwood, L.	Chilver, L.
Blatch, B.	Clanwilliam, E.
Boardman, L.	Clark of Kempston, L.
Boyd-Carpenter, L.	Craigmyle, L.
Brabazon of Tara, L.	Cranborne, V.
Braine of Wheatley, L.	Crathome, L.
Brigstocke, B.	Cumberlege, B.

Davidson, V.	Merrivale, L.
Dean of Harptree, L.	Mersey, V.
Denton of Wakefield, B.	Miller of Hendon, B.
Dixon-Smith, L.	Milverton, L.
Donegal 1, M.	Monk Bretton, L.
Dudley, E.	Montgomery of Alamein, V.
Elibank, L.	Mottistone, L.
Elliott of Morpeth, L.	Mowbray and Stourton, L.
Elphinstone, L.	Moyne, L.
Faithfull, B.	Munster, E.
Fanshawe of Richmond, L.	Murton of Lindisfarne, L.
Ferrers, E.	Newall, L.
Finsberg, L.	Oppenheim-Bames, B.
Flather, B.	Orkney, E.
Fraser of Carmyllie, L.	Park of Monmouth, B.
Gisborough, L.	Pearson of Rannoch, L.
Goschen, V.	Peyton of Yeovil, L.
Granard, E.	Pike, B.
Gray, L.	Prentice, L.
Hacking, L.	Renton, L.
Haig, E.	Renwick, L.
Hailsham of Saint Marylebone, L.	Rodger of Earlsferry, L.
Harlech, L.	Romney, E.
Harmar-Nicholls, L.	St. Davids, V.
Harmsworth, L.	Seccombe, B.
Hayhoe, L.	Sharpies, B.
Hemphill, L.	Skelmersdale, L.
Henley, L.	Stodart of Leaston, L.
Hives, L.	Strathcarron, L.
Holderness, L.	Strathclyde, L.
HolmPatrick, L.	Strathmore and Kinghome, E.
Hood, V.	[Teller.]
Hooper, B.	Sudeley, L.
Hothfield, L.	Swinfen, L.
Howe, E.	Tebbit, L.
Knutsford, V.	Teynham, L.
Lauderdale, E.	Thomas of Gwydir, L.
Lindsay, E.	Trefgame, L.
Liverpool, E.	Trumpington, B.
Long, V.	Ullswater, V. [Teller.]
Lucas, L.	Vaux of Harrowden, L.
Lyell, L.	Vivian, L.
Mackay of Clashfem, L.	Wakeham, L.
(Lord Chancellor)	(Lord Privy Seal)
Macleod of Borve, B.	Whitelaw, V.
Melville, V.

On Question, amendment agreed to.

Resolved in the affirmative, and amendment agreed to accordingly.

4.38 p.m.

Lord Peyton of Yeovil moved Amendment No. 289ZC:

Page 133, line 10, at end insert—

("() Nothing in this Act shall relieve the Secretary of State of any duty to make payments in accordance with the provisions of the Transport Act 1980.").

The noble Lord said: My Lords, this amendment concerns the timing of the payments made by the Secretary of State to the closed fund. One point that I should like to make at the commencement of my remarks is that under the 1980 Act, the cash-flow reflects precisely the liabilities. Payments are made into the fund, as required, to meet the liabilities. That is a source of satisfaction and comfort to the trustees. They would very much like to see that sustained.

It is not the first time in recent years that the question of timing of payments by the Secretary of State has come before Parliament. The 1974 Railways Act tidied things up. I believe that it could properly be described as an all-party Act. It was initiated and prepared under a Conservative Government; and modesty forbids me to mention the name of the Minister at that time. The 1980 Transport Act carried the matter further and provided what the Minister then responsible—now the Chancellor of the Exchequer—described as a once-andfor-all final settlement.

As recently as May of this year, my right honourable friend the Secretary of State used the following words in a Written Answer in another place: The Government will continue to make the contributions to BR pension funds fixed by the Transport Act 1980."—[Official Report, Commons, 20/5/93; col. 238.]

The memorandum of understanding was equally clear on that point. It stated that the, timing of such payments will be agreed with the Trustees and will take account of the absolute guarantee now being provided".

The Government now propose a quite different set of arrangements in the new schedule which is now before the House. Various ideas have been put forward. One of the difficulties, to which I previously referred, has caused great embarrassment to the Government. I refer to the fact that discussions are taking place at the same time that we are trying to settle what the law should provide. It is a most difficult situation. I hope that my noble friend will deal with the point.

I heard a story that all payments into the fund were to be suspended until the year 2000, after which substitute payments would be made. I do not believe that to he remotely true, although it may have been aired during the course of the discussions. I mention it only as an indication 'of the sort of difficulties which arise as a result of present procedures.

The trouble here is the same as that with which we dealt when discussing the previous amendment. It would appear that unilateral changes are being made based simply on the Government saying, "We will do what is convenient for us to do and when it is convenient". I do not believe that that is the Government's full intention. I believe that Parliament is facing a very real difficulty when it is asked to legislate on the grounds of good intentions which the Government are unwilling or unable to put into the Bill. To take intentions for granted and expect them to endure over a period of 50 years, as mentioned earlier, is quite unrealistic and very unsatisfactory.

I have one further point to make. It relates to the question of surpluses. Again, the memorandum of understanding was very clear on the point. Perhaps I may quote the relevant paragraph, which reads: Pensioners may benefit from up to 40% of any surpluses generated in the fund. Up to 60% of any surpluses will be held in reserve".

The requirement here—and I hope that my noble friend will deal with it—is to make it quite clear that, under the arrangements which the Government now propose, far from being diminished, the prospects of a surplus arising will be changed for the better. I hope that my noble friend will be able to deal with that point. I do not see any need to expand any further on my remarks. The arguments have already been very well aired. The basic argument is that the timing of the payments must be of crucial interest of the trustees. Any alteration in that timing should surely be a matter of agreement. I say that with particular force as that was the intention of all of the parties to the memorandum of understanding. I beg to move.

4.45 p.m.

The Earl of Caithness

My Lords, noble Lords will recall that we trod similar ground on the last amendment, which took us considerably wider than the issue under discussion. Indeed, I answered many of my noble friend's concerns at that stage. However, perhaps I may readdress the situation. I have to tell my noble friend Lord Peyton that I just do not understand Amendment No. 289AA. I really do not understand why my noble friend seeks to remove the new Section 52A of the Transport Act 1980. I find that very difficult. It is a provision which is not new to the Bill. It was introduced in Committee in another place and is necessary to enable the Government to make final payment in discharge of their existing liabilities on unfunded pension benefits for new or amended pension schemes. It is intended to use it to pay off liabilities to small schemes early.

Sections 52B, 52C and 52D of the 1980 Act—which terminate the existing arrangements for support payments in respect of the Government's liabilities for unfunded benefits acquired by any new schemes and provide for substitution payments to be made in circumstances to be prescribed by order—-were, of course, introduced later on Recommitment in this House. We must be clear why the arrangements are necessary. The Government do not intend to extinguish their liabilities to unfunded BR pensions. The sections were introduced as a direct consequence of the solvency guarantee offered in respect of the closed fund which I have now agreed to put on the face of the Bill. If that solvency guarantee and the commitment on the distribution of future surpluses are to stand, the new sections of the 1980 Act are required to protect the interests of the taxpayer. It would be wrong to continue the supply of public funds under Section 52 of the Transport Act as if nothing had happened.

The point that I should like to reiterate—and, sadly, I cannot seem to get this through to my noble friend—is that we believe we are bound by the provisions of the memorandum of understanding. We regard it as morally binding on us. We intend to fulfil it. We have explained in some considerable detail to the trustees our very real difficulty in accepting the transposition from the memorandum of understanding to the face of the Bill.

I should also like to confirm what I said as regards the previous amendment. We have had it on professional advice from the Government Actuary that it is simply not the case that our proposals must eliminate any possibility of actuarial surpluses arising. That might be so if we were eliminating government contributions altogether, but we are not. They remain a liability of the Government and an asset to the fund. It is our intention to ensure that the value of the asset is maintained when the closed fund is established.

On the question of surpluses, perhaps I may answer the point raised by my noble friend Lord Peyton. For the very reasons that I gave when responding to the last amendment, pensioners are a great deal better protected under the proposals of the Government than they are under the existing scheme. If there is a surplus on an actuarial valuation, at present the trustees do not have to hand over that surplus. They can retain 100 per cent. of it and say they need it to protect against bad times in the future. That is not the position under the Government's proposal and under the memorandum of understanding. There will be a guarantee under the rules of the scheme that 40 per cent. of the surplus will go to the pensioners. There will be a Government guarantee. It is a case of belt and braces. Whereas other pensioners will have to face the vagaries of an actuarial valuation and the decision of the trustees, the pensioners in the case we are discussing are a great deal better protected and stand to gain.

My noble friend will be aware that we are presently in discussion with the trustees over a system of substitution payments equitable to both the trustees and the taxpayer. We are certainly not suggesting that payments should be postponed sine die.We have put an initial proposal to the trustees for them to consider. We await their response. We intend to reach agreement. That is the way things should be done.

My right honourable friend the Minister for Public Transport met the chairman of the trustees this morning. We entirely understand his concerns to protect beneficiaries of the fund. He mentioned the key elements of any agreement. We recognise the same key questions. I gee no reason why we should not reach agreement on this matter which involves difficult technical problems. However, time is required. We, and I hope the trustees, want to work within the spirit of the memorandum of understanding—certainly the chairman does. Parliament will, of course, have an opportunity to consider the outcome of this part of the package on pensions because it will be enshrined in a statutory instrument. That is, if I may say so, rather more than an uncashable government IOU, as it has been described.

I should add one other point. My noble friend repeated the words used by my right honourable friend the Secretary of State in May. I know that on reconsideration my noble friend will consider that that was not perhaps the most apt quote. He quoted the comments of my right honourable friend the Secretary of State in May of this year before we gave the government guarantee. It is the issue of the government guarantee and taxpayers' money that has changed the situation so markedly.

Lord Peyton of Yeovil

My Lords, I start by asking my noble friend one simple question. I hope he will intervene if he has any comments to make. I understood him to say that he could not understand my amendment because he thought it would be damaging to the pensioners. I should be grateful if he would explain that. I am more than capable of tabling amendments that do not mean what I want them to mean, and that has been done by others before now. However, in this particular instance, I thought that both the paving amendment, Amendment No. 289ZC, and Amendment No. 289C meant exactly what I wanted them to mean. Is my noble friend saying that they are somehow damaging?

The Earl of Caithness

My Lords, it is Amendment No. 289AA that is grouped with this amendment. I could not understand why my noble friend tabled that amendment because I do not understand why he wishes to delete new Section 52A.

Lord Peyton of Yeovil

My Lords, I do not think it would be particularly helpful if I were to pursue the argument. My noble friend has made it clear that discussions are still continuing with the trustees and that it is the intention of the Government—I think I got him right—to pursue those discussions until they can find a mutually acceptable arrangement. If I am right in that understanding, I shall withdraw the amendment. But I should like my noble friend to make it quite clear that I have not misinterpreted him.

The Earl of Caithness

My Lords, with the leave of the House, I repeat that it is certainly our intention to reach an agreement. That must be the sensible thing to do, as I have already said on this amendment and on the previous amendment. That is why we are discussing the matter with the trustees. There was a meeting this morning and there will be further meetings in the future.

Lord Shepherd

My Lords, I understand the negotiations are proceeding and they will clearly be confidential. Can the noble Earl give any indication of when he expects an agreement or a conclusion to those negotiations? If we have not received that notice by Third Reading, there is no way in which the measure the noble Lord, Lord Peyton, is trying to achieve can be achieved. I believe there are strong feelings in the House on this issue. If the noble Earl were to allow this amendment to be included in the Bill, it would mean that, if a satisfactory arrangement was reached between now and when the Bill returns to another place for reconsideration, the measure we are discussing may be unnecessary, in which case the amendment which the House could be invited to include in the Bill could be removed. It seems to me from the point of view of the House that, unless we seek to include this amendment in the Bill now, we may have lost any other opportunity of doing so. Is it not really a question of the time factor as regards the conclusion of the consultations?

The Earl of Caithness

My Lords, I should say, with the leave of the House—I believe we have again stretched the rules of the House quite considerably but I did not intervene while the noble Lord, Lord Shepherd, was speaking as this is an important point—that that is probably the wrong way of legislating in your Lordships' House. I believe I have given a full answer to my noble friend. Obviously he must decide what he wishes to do with the amendment. I cannot tell the noble Lord, Lord Shepherd, when we will reach an agreement with the trustees as there are two parties to that agreement. I can only say that the Government wish to reach an agreement as soon as possible.

Lord Peyton of Yeovil

My Lords, this is a difficult matter but my feeling is that it would not be reasonable to ask my noble friend to give an assurance that an agreement will be reached because that would be to tie his hands hopelessly behind his back. I know from my noble friend, his right honourable friend the Secretary of State and from the chairman of the trustees that detailed discussions are proceeding. I do not believe that they would be helped by a Division on this amendment in your Lordships' House, and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Henderson of Brompton moved Amendment No. 289ZD:

After Clause 130, 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 for 40 days beginning with the day on which it is laid before that House.").

The noble Lord said: My Lords, in moving this amendment, which stands in my name and that of others, I wish to speak also to Amendments Nos. 289D to 289F. This issue concerns whether or not the Standing Orders of the House should be disapplied, and being disapplied would disallow individual people or groups of people who are concerned in the pension arrangements from petitioning. In effect, the Government introduced their Bill with a prohibition which took away a protection from those who have pension rights but who feel aggrieved—those who are particularly affected as individuals or as a group—as against the great majority of pensioners for whom the provisions have been made.

This Bill removes a fundamental protection. It was described by the noble Earl, Lord Russell, on 21st July as a matter of civil liberties. I believe that he is right. Although this is a minor matter, it affects the petitioning rights of a small number of people. We do not know how many will be affected, but we know that certainly some will be. They should be considered no less than the majority.

It is on those grounds that I put forward the amendments today. Their purpose is to restore the Standing Orders of the House so that they shall be operative, as they would be without the Government provisions in the Bill, and thus to protect the privileges of the House as well as preserving the privileges of individuals who feel that they are particularly affected.

Perhaps I may go over the ground again as briefly and as fairly as I can. I do so, and I move the amendment, on an entirely non-party basis. I very much hope that we can come to an agreement on all sides of the House, and that the Government will see that there is a case for retracting their original provision for disapplying our standing orders and allowing matters to proceed normally as they would if they had not made that disposition in the first place.

We were fortunate enough to have a report from our Select Committee on the scrutiny of delegated powers. That committee quite properly asked the House to consider whether there is sufficient justification for the exclusion of the hybrid procedure in this case and on this highly sensitive subject of pensions. In its first memorandum to the Select Committee, the department emphasised that the orders to be made under Schedule 10 are particularly important and as such are subject to the affirmative resolution procedure, which alone in the Bill attracts the hybrid procedure. In its second memorandum to the Select Committee the Department of Transport sought to justify the disapplication of standing orders on the grounds that it was: thought necessary to ensure that the making of orders under Schedule 10 is not delayed",

and that, delay in the making of orders would give rise io uncertainty for those whose pension rights are affected".

In Committee on 21st July the noble Lord, Lord Tordoff, moved to restore the status quo, principally on the grounds that there were many others apart from r.he trustees of the British Rail pension fund, whether groups or individuals, who ought to have the right of petition denied them by the Bill, as drafted. Accordingly, he sought to reinstate the standing orders disapplied by the Bill. When he pressed the matter to a Division, he lost by a small margin. In the proceedings on that amendment, the noble Earl, Lord Caithness, more or less repeated the arguments of the departmental memorandum from which I have already quoted. Therefore, I shall not refer to them in detail.

There then ensued the Recess. In Committee on Re-Commitment on 12th October my noble and learned friend Lord Simon of Glaisdale sought to substitute the accelerated hybrid procedure to meet the Minister's arguments about delay. However, that was not acceptable to the Minister on additional grounds that the Government were providing an alternative means for representations in the Bill. However, my noble and learned friend Lord Simon could not agree with the Minister that the hybrid instruments procedure was not appropriate to these particular circumstances. His amendments were withdrawn, but he said that he would revive them at Report stage.

My noble and learned friend and the other signatories to the amendments have asked me to move the amendments today. I do so in the sincere hope that they will be received in a non-partisan manner. That is certainly how I am offering them to the House. It is important that all matters concerned with procedure should be guarded jealously and approached sensitively by all, and in particular by the Government. In principle it is the case that each House is the guardian of its own procedure. It follows that neither House should interfere in the procedure of the other House. It also means that by and large it is intrinsically undesirable that the Government should seek to change procedures of either House by statute, although I can cite exceptional circumstances in which that can and has been done.

I think it fair to say that neither the department in its memoranda nor the Minister in speaking to the House have justified to general satisfaction the drastic: proposal in the Bill to deny possible petitioning rights to individuals or groups of individuals who may be affected. It is very hard to understand why they should disapply the well-tried and truly tested procedures of the House which protect that right of individual liberty and substitute a guarantee that the cases of individuals who are particularly affected will be duly considered by Ministers in accordance with the provisions of the Bill.

If, as is granted, there may well be petitions, that alone amply justifies leaving the petitioning procedures of this House to be available for those who wish to make use of them and prove that they have a locus standi. If, on the other hand, all the arrangements made by the Government are so satisfactory that no petitions arise, the Government have nothing to fear. Therefore, in either case it is necessary that the petitioning procedures of the House should be restored. It is better to leave a tried and trusted procedure alone, at least until the House has had an opportunity to consider the matter at leisure in the Procedure Committee when a consensus may be achieved on whether to leave the matter as it is or to make the changes which the Government seem to wish to be made. It should not be done in a single case as is proposed by the Government in this Bill.

I suggest that the plea for exceptional treatment for pension schemes has not been made out and should not be enacted in this Bill. Meanwhile, until the reference to the Procedure Committee has been made, I ask the Government and the House to accept the amendments, or pcssibly a variant on them which I am sure my noble friends would be happy to discuss with the Government, which would go a long way to meet the Government's anxieties about delay, providing as they do a cut-off point for the length of time taken by the hybrid procedures. The cut-off point is 40 parliamentary days from the date of the laying of any draft orders under Schedule 10.

This is no small matter. We should be reluctant in the extreme to dispense with or suspend anything of such parliamentary importance as the rights of individuals to be heard on petition, just as we should not dispense with or suspend habeas corpus except in an extreme emergency such as the prevention of terrorism provisions. The hybrid procedures of this House are, as was said by the noble Earl, Lord Russell, part of the liberties of the subject. I ask the House to assist me and my noble friends in protecting them. I beg to move.

5.15 p.m.

Lord Simon of Glaisdale

My Lords, my noble friend, with his unexampled knowledge of procedure, and in particular the procedure of this House, has made out an overwhelming case. The Government should not be allowed to set aside a standing order of your Lordships' House. That standing order was established for the protection of individual interests where they might not properly be considered in a general scheme in a Public Bill. Moreover, the procedure was specifically endorsed by the Joint Select Committee on Delegated Legislation of 1972–73 whose recommendations were accepted by both Houses. In fact, the report was debated in your Lordships' House on two occasions. The then Leader of the House, the noble Earl, Lord Jellicoe, and on a separate occasion his deputy, the noble Lord, Lord Aberdare, accepted the report. I shall cite in a moment the crucial recommendation.

I am glad that my noble friend put the matter as one of justice and of the machinery and responsibilities of your Lordships' House in the face of what I am bound to say is an act of bureaucratic invasion. Originally that invasion was thought to be justified on the grounds that the hybrid instruments procedure would cause delay. That argument has disappeared and was barely adverted to by the noble Earl when the matter was discussed on recommitment. It has disappeared for two reasons. The first is that we are now concerned with the expedited hybrid instruments procedure. The second reason is that the noble Earl, no doubt rightly, claims to have a scheme which will cause no disadvantage to any individual. I took down his words; he repeated them on several occasions. If no hardship is caused to any individual, the Hybrid Instruments Committee will not report that there is any grievance for consideration and the matter will proceed in the ordinary way as an affirmative resolution order. So that argument has gone.

The only other argument put forward in the departmental memorandum and by the noble Earl when the matter was first discussed was that there were precedents. Again, that argument has disappeared because on investigation there is only one precedent for the use of the expedited procedure. Moreover, the fact that on several occasions—on all too many occasions—bureaucracy has tried to obviate the procedure of your Lordships' House, instituted for the protection of individual citizens, will make your Lordships more wary that on this occasion now that we have the Delegated Powers Scrutiny Committee there may be an attempt to establish a new precedent.

It is incumbent to call to mind why the hybrid instruments procedure—which is a procedure peculiar to your Lordships' House—was instituted. As is known to every Member of this House, there are Public Bills which are introduced by a Member of either House and which affect the public generally. There are Private Bills which are introduced by way of petitions from outside Parliament. They do not affect the public generally; they affect some particular interest which is, generally speaking, to aggrandise in some respect the interests of the petitioner who is seeking to promote the Bill and thereby to derogate from the interests of other persons who can petition against the Bill.

It came to light long ago that there were hybrid Bills in which a Public Bill affecting the public in general might, nevertheless, in some particular affect adversely an individual. Therefore, the hybrid Bill procedure was instituted. As regards the interests of the private individual, the Bill was considered as if it were a private Bill with the Minister as promoter and the individual adversely affected voicing his grievance.

That was most inconvenient to the Executive. Administrators like to lay down broad schemes in which individual interests may be a considerable nuisance. They are liable to be brushed aside in the interests of the general line. So what was discovered ingeniously in Whitehall was to evade the hybrid Bill procedure and instead to put the hybrid provisions into a statutory instrument under the Bill. That thereby evaded the procedure which examined the hybrid Bill. That drew the response from your Lordships' House to set up the Hybrid Instruments Committee at the beginning of every Session to examine hybrid instruments in the same way a hybrid Bill is considered. The matter was expressly considered by the Joint Select Committee to which I referred. It stated: 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 said "should be retained", not swept away, as in this Bill, whenever it may be inconvenient to Whitehall. That is what is at stake here: an institution of your Lordships' House, exclusive to your Lordships' House, which is, for no good reason, being swept away.

I mentioned that the two arguments originally put forward seem now to have disappeared. Instead, at a late stage on recommittal, the noble Earl put forward a new argument: namely, that those individuals who might be adversely affected had trustees who could speak for them. There is not a word in the report of the Select Committee about the procedure being inappropriate where there are trustees. There was one circumstance in which the Select Committee held that it might be justifiable to dispense with the procedure. That was when there was an alternative method of inquiry. That is not the case with trustees. The committee knew all about trustees. Its chairman, the late Lord Brooke of Cumnor, had great experience of trusteeship and other fiduciary relationships and responsibilities. So that argument will not do either.

In the end, the matter comes down to what was said by my noble friend Lord Henderson. If the Government are right and no individual pensioner will, in any circumstances, be adversely affected, the Government lose absolutely nothing by not intruding on the normal procedures of your Lordships' House. The Hybrid Instruments Committee will report, in effect, that there is nothing to consider.

If, on the other hand, some individual pensioners can show a real grievance that demands reconsideration, then the hybrid instruments procedure is necessary. The Hybrid Instruments Committee will so report and the usual procedure then is for the Government to withdraw the order and lay a new order. I shall support the amendment moved by my noble friend.

Lord Boyd-Carpenter

My Lords, like most sensible Members of your Lordships' House, I am hesitant about entering into any discussion on points of procedure with either the noble and learned Lord, Lord Simon of Glaisdale, or the noble Lord, Lord Henderson, who are acknowledged to be the two great experts on the subject in this House. Therefore, it is with some diffidence that I venture to put two points on the amendment.

The first is that the noble Lord, Lord Henderson, indicated—I think rightly—that the subject matter of the amendment might well be considered by your Lordships' Procedure Committee. But, by introducing the amendment at this late stage, it becomes impossible to get the views of the Procedure Committee before your Lordships' House decides on the amendment. If, therefore, it had been thought wise to bring it forward, with the advice of our Procedure Committee, surely the amendment should have been put down in our own Committee stage a long time ago.

Lord Simon of Glaisdale

My Lords, it was. I am obliged to the noble Lord for giving way. We have already obtained the views of our own Select Committee, the Delegated Powers Scrutiny Committee. There would really be little point on this Bill in seeking a further opinion from the Procedure Committee. Moreover, it was always open to the Government to refer the matter to the Procedure Committee if it was thought that that was the appropriate course to take.

Lord Boyd-Carpenter

My Lords, I see that the noble and learned Lord is in disagreement with his noble friend Lord Henderson on the reference to the Procedure Committee. So there are two views on the point among the supporters of the amendment. I therefore leave it, as being clearly a matter on which there is a division of view.

The other point is that it seems to me that the amendment seeks not only to apply changes to the procedure of your Lordships' House—which, of course, we are perfectly entitled to do—but also to intervene in the procedures of another place. I should have thought that that was quite unusual and likely to be rather critically received in another place if the amendment were put into the Bill. I should have thought that we should confine ourselves to our own procedures.

Lord Henderson of Brompton

My Lords, perhaps I may intervene for one moment. The drafting by the Government of the original amendment forces one to put down the amendment in the form in which it has been proposed. It will not interfere with the procedures of another place. It does not have that procedure.

Lord Boyd-Carpenter

My Lords, the noble Lord would, however, agree that, on the face of it, the amendment appears to apply to the procedures of another place. I suggest that that is not very good from the point of view of the relationship between the Houses.

Lord Henderson of Brompton

My Lords, I quite agree. But the same applies to the Government. The noble Lord's criticism applies to the Government. In order to be able to amend the Government's Bill, one has to follow their amendment.

Lord Boyd-Carpenter

My Lords, we are not discussing the Government's proposals; we are discussing the amendment.

Lord Tordoff

My Lords, I think that the noble Lord, Lord Boyd-Carpenter, is, unusually, mistaken. In fact, the boot is on the other foot. By putting into the Bill in another place something which seeks to prevent your Lordships' House fulfilling a standing order—namely, to deal with hybrid instruments in a particular way—it is another place which is interfering with the standing orders of your Lordships' House. That is a fact.

I do not wish to add much to what has been so ably said by the noble Lord, Lord Henderson of Brompton, and the noble and learned Lord, Lord Simon of Glaisdale. As the noble Lord, Lord Boyd-Carpenter, said, they are supreme in the House on matters of procedure and in defence of public and private liberty. It is a matter of liberty—the liberty of the individual to come before the court of Parliament to petition in those cases where his or her rights are being undermined, as they could be in certain circumstances.

There have been suggestions in the past—I merely reiterate something that I said at an earlier stage—that the trustees are quite satisfied with the situation as it is. However, as I sought to show previously, the trustees do not represent all the pensioners. They may do their best to represent the views of the pensioners, but there are no pensioner representatives on the board of trustees. That may come as something of a surprise to noble Lords, but it is a fact.

Therefore, it could quite easily be that some groups of pensioners or some individual pensioners who do not feel themselves represented by the trustees in certain cases may feel the need to come before your Lordships' House on a hybrid instrument. Therefore it seems to me—and has seemed to me and my colleagues all the way through—that it is wrong to remove this safeguard for individual liberty. Only this House can do anything about it; only this House has the procedure capable of coping with that situation. I am most grateful to the noble Lord, Lord Henderson of Brompton, for moving this amendment so eloquently today. I hope that noble Lords on all sides will support him.

5.30 p.m.

Lord Clinton-Davis

My Lords, I wish to associate myself and my noble friends with the remarks that have been made by the noble Lord, Lord Henderson, and the noble and learned Lord, Lord Simon. I should like very briefly to add one or two points.

When the noble Earl the Minister indicated that the trustees have accepted this, I wonder—this was the point that he made at the very outset when we considered these matters in Committee—whether they have given further consideration to these issues; and who has explained the issues of hybridity to them? They are essentially matters which are highly germane to the procedures of this House, and uniquely so. I do not in any event see how the fiduciary duties of the trustees carrying out their duties as a generality for the pensioners will be adversely prejudiced by what we propose here. Indeed, I think it is a completely wrong connotation to put on the matter. There could well be individual pensioners who feel aggrieved, who feel that they may be prejudiced, and who would be without an effective remedy. I do not believe that what the Government have suggested represents an effective remedy for individuals.

The Government have raised two contradictory arguments: first, that the House will be inundated with petitions—they seem to have run away from that point now; secondly, that pensioners are so protected that we are not likely to be troubled. Those are somewhat contradictory arguments. I do not believe that the Minister can sustain what is a very serious breach of the procedures of this House; not for the sake of the territoriality of this House—that is not a matter of any great consequence—but because it is a matter of great consequence to individuals in the protection, as the noble Lord, Lord Tordoff, put it, of their civil liberties. The Government should not lightly dispose of the very powerful arguments.of the Select Committee. It is not as though the Committee considered the issues in general; it considered this specific point. I do not accept from this side that the hybrid procedures as suggested by the amendments are at all inappropriate. Indeed, they should be sustained.

The noble and learned Lord, Lord Simon, put it very well. It may be inconvenient for the Executive. But, in the nature of things, we are there to make life difficult for the Executive from time to time, whatever sort of government are in power; to make sure that basic rights and liberties are not removed. That is how we view the matter.

The Minister has rehearsed his arguments. We all have. But I hope that he will not have found that the arguments of the noble Lord, Lord Boyd-Carpenter, on this occasion were at all relevant. They were not. The noble Lord misunderstood the procedure that had been accepted in this House. We had discussed these matters. We were not at all late in introducing an amendment here. The amendment was occasioned by the fact that the Government had decided to remove the hybrid procedure. The noble Lord said that we should not interfere with the procedures of another place. We are not interfering with the procedures of another place. It is only this place which is concerned with this particular procedure. Therefore, with the greatest respect, I think that the noble Lord was wrong—uncharacteristically so; I have a great deal of admiration for the noble Lord, as he very well knows—and that the arguments were irrelevant on this occasion. I hope that we shall get a positive response from the Government.

The Earl of Caithness

My Lords, I have listened carefully again to the arguments advanced in support of these amendments. As has been said, we discussed these issues exhaustively in Committee. We even voted on them then. We discussed them again at recommitment on 12th October, and we are now covering the ground for the third time. For two important reasons, which will be familiar to your Lordships, the Government remain unconvinced that any form of hybrid instrument procedure is appropriate for orders under Schedule 10.

The first is the appropriateness of the procedure, and the second is the delay, and thus the uncertainty, that would result from applying even the expedited hybrid instrument procedure.

The noble and learned Lord, Lord Simon of Glaisdale, prayed in aid the Brooke Report. So do I. Paragraph 72 of that report of July 1973 recognised that there are circumstances where to exclude the procedure would be justified. I put it to noble Lords that such an exclusion is genuinely justified in this case.

First of all, and to refer to paragraphs 70 and 71 of the Brooke Report, that committee concluded that the purpose of the criteria against which to judge the need for a Select Committee inquiry under Standing Order 216—which in the terms of Standing Order 216A also applies to an inquiry under the expedited procedure—is, to obviate further enquiry in the case of orders the content of which have already been the subject of an adequate local, departmental or other enquiry". It seems to me that there will have been "adequate other enquiry". Under the provisions introduced by the Government at Committee stage on 12th October, the pension fund trustees are required to be consulted by the Secretary of State about the proposals contained in the order in question. And the Secretary of State is obliged to lay before Parliament any comments they make on the order in question. My Lords, it seems to me that the trustees are best equipped and placed to ascertain and express the views of members and other beneficiaries.

In considering that, noble Lords should take into account the protection available to individual scheme members under pension law generally. That protection should be sufficient in that the relationship between the trustee and the individual pensioner is a stronger one than that of mere representation.

In further considering paragraphs 70 and 71 of the Brooke Report, it is worthwhile to observe that the committee commented that the criteria used to help determine whether further inquiry was necessary were, more appropriate to orders affecting interests in land than to other types of orders. Inquiries about orders affecting land are often about reconciling public interests with those of private interests. But the orders that we are concerned with today are those safeguarding pension arrangements. The majority of the problems that are likely to arise relate to reconciling the private interests of those involved with the pension scheme, and I do not believe that inquiry by this House under the hybrid instrument procedure is the means to deal with that.

I repeat what I said on recommitment. If there is a petition from t group of beneficiaries, and they succeed, it will almost certainly be at the expense of other beneficiaries or employers.

The conclusion which we draw from all this is that the hybrid instruments procedure, and its expedited version which is derived from the Brooke Report, was not intended to cover the case of orders such as these. I believe that the hybrid instrument procedure is ill-suited to arty disputes which may arise between private interests.

I have already made clear that it is the fiduciary duty of trustees to represent the interests of all the contributors and beneficiaries of a pension scheme. This House would be providing a further route in addition to the courts for dissenters within a pension scheme to circumvent the trustees and their representations made on behalf of all contributors and beneficiaries.

I turn now to the question of delay. I would say to the noble and learned Lord, Lord Simon of Glaisdale, who has disappeared, that this is not a problem. We are still concerned at the uncertainty and worry that this delay could cause pensioners. As I said on 12th October, so far as we can establish, the expedited procedure appears only once in a statute—the Offshore Petroleum Development (Scotland) Act 1975—and has never been used. We are therefore wholly in the dark as to how it would work in practice. The amendment specifies a period for consideration of 40 days. But I have to return to what I said in committee on 12th October: would it stop there? Would 40 days be sufficient in practice? Is there not a chance that the committee would find that 40 days were indeed insufficient, because from that 40 days, 10 days are lost for petitioning, plus short adjournments, plus' a further unspecified period for representations and counter-representations, if they were to be allowed? The temptation would be to let the procedure continue until the Government have heard the committee's report. As noble Lords well know, that is not an impossible outcome. I do not want to dwell overly on delay, but I want to warn the House what might happen in practice.

Therefore, while delay is an important factor, we believe that the use of the hybrid instrument procedure, even the expedited procedure proposed by this amendment, is the wrong process. Your Lordships' House maintains its right fully to examine legislation that appears to intervene between public and private interests. But I believe that will not usually be the case here. Moreover, we are providing an alternative means for representations. The BR pension trustees will report each and every time an order amending a scheme or transferring pension rights is I o be debated in the House. Your Lordships will therefore have an adequate opportunity to consider the views of those responsible for representing the interests of the pension schemes.

Lord Henderson of Brompton

My Lords, I cannot help but be disappointed by that reply. I had hoped that the noble Earl would take into consideration the seriousness of disapplying long-standing Standing Orders of the House. I submit that it is no way to approach the delicate relationships between the Government and the two Houses of Parliament by putting this matter in a Bill on a take it or leave it basis instead of putting it directly to the House through the proper channel, which is the Procedure Committee. Then there would have been due consideration at leisure instead of this shotgun approach.

I still hope that the noble Earl will take back the matter in view of the great trouble in which the Government find themselves over their presentation of the Bill. They could have got rid of one source of disagreement and discontent by meeting us on this essential House point, in which the House has expertise and the Government have not.

However it would not be profitable to argue this matter on the Floor of the House. It is not the proper place. I hope that the whole matter will go to the Procedure Committee, whatever results from this amendment, and that it will give due regard to the Government's view, having just heard it from the Minister. I merely say that there is no prospect of the accelerated procedure being obviated in the way that the Minister suggested. The 40 sitting days, if put into the Bill, represent a statutory limitation. They cannot be exceeded. That is a fear which is totally non-existent.

In conclusion, in view of the Minister's attitude I am forced to ask the opinion of the House. I very much regret it, but I feel that I have no alternative.

5.46 p.m.

On Question, Whether the said amendment (No. 289ZD) shall be agreed to?

^*Their Lordships divided: Contents, 123; Note Contents, 124.

[^*The Tellers for the Contents reported 123 names, the Tellers for the Not-Contents 124 names. The Clerks recorded 124 and 124 names respectively.]

5.52 p.m.

Schedule 10 [Pensions]:

Baroness Turner of Camden moved Amendment No. 289ZE:

Page 2, line 34, at end insert ("who may include persons whose employment in the railway industry commences after the date of the passage of the Act.").

The noble Baroness said: My Lords, Amendment No. 289ZE is designed to provide some form of pension provision for employees who join the railway industry after the date of the passage of the Bill. Your Lordships will be aware that in Committee I argued for a living industry-wide pension fund which all employees of the industry would be eligible to join.

As we know, the Government have chosen the path of a closed fund, designed to protect those already in employment at the date on which the Bill becomes law or people who have been in employment in the industry and have therefore built up some kind of entitlement. I am not happy about that. It will create a two-tier workforce with different and possibly better pension provision for those employed prior to the passage of the Bill, with those who come later having different arrangements. It is bad as it creates a situation in which those with better protected entitlement could be vulnerable. In a market situation there may be a temptation for some private employers to undercut. Redundancies could therefore affect those with superior protected conditions and they could find themselves having to leave first.

It is clear from the correspondence that I and I am sure other noble Lords have received that existing employees feel that anxiety quite keenly. I know that we have already rehearsed these arguments. However, my amendment tackles the issue a little differently. As it stands, the Bill gives the Secretary of State powers to establish new pension schemes and sets out precisely who would be eligible for such schemes. It makes it clear that new employees joining the railway industry after the passage of the Bill could be eligible. They do not have to join. There is no compulsion either on employers or employees. But the amendment writes into legislation some entitlement to consideration for new employees for pension purposes. It may encourage the development of schemes to look after their interests. I beg to move.

The Earl of Caithness

My Lords, I do not believe that there is a great deal between the noble Baroness and the Government on this point. Perhaps I can refer the noble Baroness to the definition of "eligible persons" in paragraph 1(1) of the schedule which applies to the whole of the schedule including paragraph 2. It makes clear that the definition of "eligible persons" already covers future employees of the railway industry. The definition does not limit such persons to those in service at the passing of the Act and provides for any person to be a member provided that their membership would not prejudice Inland Revenue approval of the scheme.

I believe that covers what the noble Baroness is trying to do, unless I misunderstood her amendment.

Baroness Turner of Camden

My Lords, I am obliged to the Minister for his explanation. I thought it necessary to table the amendment because there has been some confusion on the point among people who have been corresponding with us. As I indicated, there is a desire that there should not be a two-tier workforce in the future and that new employees should have some entitlement to provision. In view of what the noble Earl says, it would appear that to some extent that is covered in the new schedule. That being so, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 289ZF:

Page 3, line 29, leave out ("after consultation with") and insert ("with the consent of').

The noble Baroness said: My Lords, I am not certain whether or not Amendment No. 289ZF is necessary in view of the fact that we have already had a successful vote—from our point of view—on the matter of the consent of the trustees. When I framed the amendment, I was aware that the section that I was seeking to amend included important issues like providing for persons who are not eligible to become members of the scheme; decisions which could deprive a member of the scheme of accrued rights; determining contracting out for the purposes of the Pension Schemes Act, and so forth.

In most pension schemes those would be matters entirely determined by the trustees. As the Bill stands, the Secretary of State would have to consult the trustees; but if they are not happy he could presumably still go ahead with whatever he wanted to do. Since Is framed the amendment, we have had a vote on another area of the Bill in which there is a rather more sweeping requirement in relation to the consent of the trustee;. I shall be grateful if the Minister will give me his view on the matter, in view of the fact that we have just had a vote and my amendment may be unnecessary. I beg to move.

The Earl of Caithness

My Lords, the Division that took place altered the Bill in a way that the Government did not recommend the House to accept. The noble Baroness is probably right in what she says. I have not looked at the matter in detail but to a large extent what she is seeking to do has already been achieved.

Baroness Turner of Camden

My Lords, I thank the Minister for that statement. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 289ZG:

Page 5, line 9, after ("favourable") insert ("in every circumstance").

The noble Baroness said: My Lords, Amendment No. 289ZG is grouped together with Amendment No. 289ZH. I believe they are rather more substantial amendments. It is true that similar amendments were moved in Committee. At that time I explained that the intention was to write into the Bill what had been agreed in the memorandum of understanding, which provides that anyone retiring from the railway industry will do so on terms no less favourable than hitherto. I gave an example of a situation in which, without that firm guarantee, it would be possible for an individual retiring from the industry in the future to do so on a less advantageous basis than hitherto. I gave as an example the case of someone entitled to a lump sum on retirement. I should like to spell out a little more clearly what could happen in such a case because I have since received further information in that regard.

As I understand it, the BR pension scheme provides accruals on the basis of one-sixtieth per annum for pension and one-fortieth per annum for a separate lump sum, each of which is based on final salary. Under the proposed arrangements the pension will still be based on final salary for all service. However, a member having two or more railway employers will find that his lump sum has been adversely affected. Instead of the lump sum being based on all eligible service it will be divided into periods of service with the various different employers. Only the lump sum for the last period of service will be based on final pay at retirement, The lump sum for all previous periods of service will be based on the service and the final salary at the point of terminating that service, and then index-linked to retirement date.

Members' retirement lump sums will not therefore fully reflect their final salary and service, first, because wages move ahead of prices by approximately 2 per cent. per annum and, secondly, because the value of increased wages and salaries derived from promotion with subsequent employers will not be fully reflected. This is one instance where individuals could land up being worse off than before privatisation. The addition of the words in my amendment "in every circumstance" might meet this situation and give a further guarantee to prospective pensioners that their rights have been fully protected.

I recall that during the discussion in Committee a number of us found that the Minister's responses on the "no less favourable" point were rather unsatisfactory. We therefore said that we would come back to the matter on Report. I hope that this time round, with slightly different wording, the Minister will accept the validity of what we are saying and will be prepared to accept the amendment. I beg to move.

6 p.m.

The Earl of Caithness

My Lords, I am grateful to the noble Baroness for the effort that she has made to meet the concerns that I raised at an earlier stage. I regret to have to say that I find this wording almost even worse than the previous wording. There is not much between us in trying to protect the pension rights for the pensioners and to make them no less favourable. The point that concerns me on this amendment is the wording "in every circumstance". The purpose seems to be to ensure that every single benefit or entitlement which makes up the relevant protected pension rights of protected persons is protected. If that is what the noble Baroness has in mind I am not persuaded that such provision would be in the interests of all protected persons. I would put it to her that the fairer way is to look at the overall package of benefits and entitlements and to protect them in the round. That is what we have sought to do. Indeed, if protected persons were to gain an advantage because of their particular mix of benefits or pension entitlements, it might have repercussions for contribution rates.

I think that the amendment would not allow flexibility on such matters except for the flexibility to top up and to pay more. I wonder whether on reconsideration that is not quite the intention that the noble Baroness wanted and will not be to the benefit of the pensioner in the way that she thought it might.

Baroness Turner of Camden

My Lords, I am not certain that I understand what the Minister is getting at. It seems to me that an individual in the circumstances that I have described, comparing himself perhaps with someone who retired earlier and had retired as a BR employee with a lifetime's work for BR, coming to retirement after several different employments within the railway industry, would feel that a guarantee that there would be no less favourable conditions had not been applied to him.

The Minister says that it is not appropriate or correct that individuals should have every single benefit regarded as protected. I am certain that individuals in this situation would regard a no less favourable guarantee as requiring that they would have the benefits that they were expecting prior to privatisation protected in every aspect. If that is not the situation I do not think that they will be very happy in the future.

However, I do not see myself making much progress with the amendment at this stage. I shall look in Hansard tomorrow at what the Minister has said. I know that a number of people have written to me, particularly the people who gave me the example that I quoted to your Lordships. They still feel rather unhappy about the nature of the guarantee that they are receiving. Nevertheless, I shall not press the matter at this point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 289ZH and 289ZJ not moved.]

Baroness Turner of Camden moved Amendment No. 289ZK:

Page 6, line 14, at end insert:

("() where—

1. (a) an occupational pension scheme established under paragraph 2 above or amended under paragraph 3 above provides pension benefits exclusively for pensioners and deferred pensioners who are protected persons; and
2. (b) the scheme's actuary determines on a valuation of the scheme that the assets of the scheme exceed its liabilities by an amount ("the surplus"), the Secretary of State shall by order provide that no less than 40% of that surplus unless otherwise agreed with the Trustees shall be available for application by the Trustees of the Scheme for the benefit of the pensioners and deferred pensioners, in such manner as the Trustees may in their discretion decide.")

The noble Baroness said: My Lords, this amendment deals with a matter which we discussed at Committee stage, although we did not make a great deal of progress with it. It relates to how the surplus is divided. As we discussed earlier on the basis of amendments from the noble Lord, Lord Peyton, the issue of the surplus has been a very difficult one for pensioners and prospective pensioners. For all kinds of reasons, not least the Maxwell scandal, people feel very touchy about surpluses. The BR pensioners are no exception.

That is not surprising because I understand that in the BR scheme it has been customary for there to be discretionary payments as well as RPI indexation paid from the surplus. It has to be understood that the pensions we are talking about—this has been mentioned in previous discussions—are often not very large ones. Basic pay in BR is not all that great, but a lot of overtime is worked. Pensions, when they are paid, relate to the basic salary or basic wage. In the past surpluses have been used in this way. Moreover, as we know—the noble Earl himself has made reference to it—there is in the memorandum of understanding an acceptance that 40 per cent. of the surplus could be set aside to be utilised for a type of share out after privatisation.

When we moved this amendment last time round there was some objection to the wording. It was felt that "no less than 40 per cent." was far too rigid. This time round there has been an alteration to the wording. The amendment states: no less than 40c of that surplus unless otherwise agreed with the Trustees".

In other words, it would be a matter for the trustees. If less surplus is available, or they think that the surplus should be otherwise utilised, they are not bound to utilise the 40 per cent. referred to in the amendment.

We have received strong representations from representatives of the workforce—the unions and so on. They are very concerned about writing into the Bill the requirement that the surplus can be used and that the same kind of considerations in regard to the share out of the surplus should apply after privatisation as have occurred hitherto. In view of the statements that have been made this afternoon, and in view of the fact that the noble Earl has referred to this matter when responding to earlier amendments, I hope that this time he will accept that it would be sensible and an instance of the Government's desire to ensure that people are satisfied and feel secure in their pension entitlement and that he will agree that this amendment can be written onto the face of the Bill. I beg to move.

The Earl of Caithness

My Lords, this amendment seeks to make available, subject to the discretion of the trustees, not less than 40 per cent. of any surplus for the benefit of pensioners and deferred pensioners. It raises difficulties of definition and application which, as I will explain, confirm my view that the Government's commitment to such pensioners is best dealt with, as we originally proposed, through giving effect to the memorandum of understanding in the scheme rules.

So it is not a question of principle, but how we achieve the end result. The noble Baroness and I have our eyes fixed on that point. But there is a difference between the way in which the noble Baroness wishes to reach that point and how I wish to do so.

The noble Baroness asks that not less than 40 per cent. of the surplus determined by the scheme's actuary should, unless otherwise agreed with the trustees, be available for the benefit of pensioners and deferred pensioners in such manner as the trustees in their discretion decide. But that raises exactly the same problem as I put to the noble Baroness at an earlier stage. On what basis would the scheme's actuary determine the surplus? It would appear to be the total surplus by which assets of the scheme exceed liabilities. But would such an amount take into account future index-linking, as is normal? Would it be reduced to take account of any anticipated additional call on resources (or a slump in investment return) before the next revaluation? Are the trustees indeed obliged to consider distribution if, for example, the costs of doing so would be disproportionate or when not all beneficiaries could benefit because of tax requirements?

For those reasons—and there are many other questions which I could pose on the problem—I remain unconvinced that it is right to attempt to circumscribe in primary legislation the means of dealing with such complex matters. Uncertainties in the definition could present difficulties for all concerned, not least the trustees in the exercise of their fiduciary duties. That is no doubt why there are, I believe, no precedents.

I put it to the House that it would he better for the rules of the scheme to make provision for the distribution of the surplus. This House will have sight of those rules when the order establishing a scheme under paragraph 2 of Schedule 10 or an order amending a scheme under paragraph 3 are put before it. That is the appropriate time for such matters to be considered. It is also the appropriate way in which to seek to achieve what we have set out to do, as defined in the memorandum of understanding.

Baroness Turner of Camden

My Lords, again it is not my intention to press this issue to a Division tonight. But I still do not understand why the Minister has difficulty over how to define a surplus. We are thinking in terms of a surplus defined in normal actuarial terms where the actuary makes his report and the trustees—as they would do in a private scheme—make their decisions utilising the discretion which they normally have. I do not see the difficulty to which the noble Earl referred.

The noble Earl has not changed his view that this is not a matter appropriate for legislation. He has said that the House will have sight of the rules when I suppose that we can look at the matter again. In those circumstances, and in view of the fact that we have already had several votes this evening, I do not intend to press the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.15 p.m.

Baroness Turner of Camden moved Amendment No. 289ZL:

Page 7, line 7, after ("broken") insert ("ex cepr. where the person's employment remains within the railway industry, when paragraph (9) below shall apply").

The noble Baroness said: My Lords, the part of the schedule which this amendment seeks to amend deals with protected persons who therefore have an entitlement to pension provision. However, paragraph 6(8) (a) makes provision for orders in that respect to cease to have effect if the continuity of the period of employment is broken. However, the person concerned may have worked for a series of different employers within the railway industry. Had there been no privatisation, he probably would have continued all his life with the one employer; namely, BR. But now his career may take him, while still remaining in the industry, into the employment of a series of different employers. The purpose of the amendment is to try to ensure that such a person would be no worse off than if privatisation had not taken place. His periods of employment with different employers in the industry will count as if he had worked just for the one employer and his continuity of employment would be completely preserved. I hope that the Minister will acknowledge that that is reasonable and that he will accept the amendment. I beg to move.

The Earl of Caithness

My Lords, there will be two cases where a pension scheme member at the time of Royal Assent subsequently moves between jobs within the railway industry: where the undertaking in which he works is transferred to another owner, and where he decides to move of his own accord, perhaps in order to advance his career.

In the first type of case, it is our intention that the employee should continue to be covered by the relevant protection order made under paragraph 6. Subparagraph (9) of that paragraph will enable us to prescribe such circumstances as ones which shall be disregarded when continuity of employment is broken.

In the second sort of case, I believe that it is reasonable that the protection order should cease to apply. The person concerned will be moving voluntarily, taking into account all of the benefits and disadvantages of his present and future jobs. Pensions will be one aspect that he will consider. His future employer may offer a better deal, or he may not. If he does not, no doubt there will be compensating advantages in the employment terms which he is offering. But the decision is for the individual employee. We should not oblige him to continue to retain his status as a protected person when he may prefer to have a different combination of employee benefits from his future employer. We meet the noble Baroness on 'one point. As regards the person who leaves voluntarily, we have a difference of view. We have had that in the past and it remains today.

Baroness Turner of Camden

My Lords, I thank the noble Earl for his comments as regards the first category of person. However, I still maintain that if someone moves around voluntarily but remains within the same industry, it is reasonable to regard him as not having broken service so that all his service within the industry counts towards ensuring that his pension provision is protected. I am sorry that we have been unable to persuade the Minister that that is a reasonable view. I am certain that we shall not be able so to persuade him at this late stage of the Bill.

I can only hope that people who want to move around within the industry in future are well advised that they may very well be losing out and damaging their pension prospects if they do so. That is a great pity and does not augur well for future industrial relations within the industry generally. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 289A and 289AA not moved.]

Lord Peyton of Yeovil moved Amendment No. 289B:

Page 18, line 25, at end insert:

("(IA) Secretary of State shall not lay before Parliament a statutory instrument containing an order under section 52B unless he has first obtained the written agreement of those trustees that it is appropriate in the circumstances for the order to be made.").

The noble Lord said: My Lords, this is a consequential amendment. I beg to move.

[Amendments Nos. 289C, 289D, 289E and 289F not moved.]

Clause 131 [Concessionary travel for railway staff etc.]:

Lord Clinton-Davis moved Amendment No. 290:

Page 133, line 21, at end insert:

("() The conditions referred to in subsection (1) above shall include a requirement upon the licence holder to provide free travel and travel at concessionary rates to employees of transport undertakings within the United Kingdom and abroad who enjoyed such facilities under agreements made with the Board at the date upon which this Act was passed.").

The noble Lord said: My Lords, the amendments in this group deal with questions relating to staff travel facilities. I am aware that Amendment No. 294, which has been tabled by the Minister, also covers this area and perhaps it would be convenient if I discuss not only Amendments Nos. 290 to 293, but also Amendments Nos. 294 and 294A, the latter standing also in the name of the noble Lord, Lord Tordoff. I shall deal with my Amendments Nos. 290 to 293 in numerical order.

Amendment No. 290 is designed to establish that railway employees will not suffer any reduction in their free and privilege travel facilities by reason of the enactment of this Bill. Reciprocal travel facilities exist between railway administrations in this country and overseas. It is important to safeguard those facilities, which have been agreed over a considerable period of time. It is possible, for example, for BR employees to travel on London Underground at privilege rates, and vice versa. There is also heavily discounted travel on British Rail for employees of overseas railway administrations. Quite a large number of such travellers visit the United Kingdom—in excess of 57,000 in 1991—and they bring money into this country. Therefore, the loss of such reciprocal facilities would represent a blow to our tourist industry for no very good reason.

Amendment No. 291 seeks to deal with the real anxiety among BR employees and their families that even if privilege travel facilities continue to be offered by railway employers, their actual use could be restricted by train operators to off-peak travel. That could have severe implications for railway workers who use their privilege facilities for travel to work. There could also be hardship for the families of railway workers who use their free or privilege tickets for travel to holiday destinations if such facilities were prejudiced. There is no point in being able to travel to work only before 7 o'clock in the morning, for example, and in being able to return home only after 8 o'clock in the evening. There is no point in being able to visit Cornwall only between November and February. It is true that BR already imposes a limited number of restrictions on the use of free and privilege tickets, but the anxiety is that those restrictions could well grow after privatisation.

It is fair to add that the Government have endeavoured to give reassurance on this issue. I should like to incorporate into the record the contents of a letter that was sent to my honourable friend Mrs. Gwyneth Dunwoody on 17th September by the Minister in another place. It states: As I have explained in earlier letters, after privatisation franchised passenger rail service operators will be obliged, through the terms of the franchise contracts that they will have with the Franchising Director, to provide staff concessionary travel on their services. This will be subject to similar restrictions on times of travel, etc., that British Rail presently apply. As you may know, currently BR revises the availability of staff concessionary travel twice-yearly in the light of commercial demand. It would be wrong to state that there will be no changes to travel concessions as exact details will have to be arranged by the Franchising Director who might, for example, wish to raise the documentation to be had in future by the beneficiaries. However, it will be important that the entitlement remains broadly as usable, to all intent and purpose as it is now. In future, the Franchising Director will co-ordinate restrictions applied by the franchisees in order to satisfy himself that the requirements he makes in franchise contracts about the provision of staff concessionary travel are not eroded".

I am glad that that was a helpful reply, but we are seeking to give such assurances statutory force.

Amendment No. 292 deals with the implications of TUPE for travel facilities. On 25th March, Mr. Steve Norris, the Minister for Transport in London, said that TUPE would apply to staff travel facilities, stating: It is beyond argument that those rights are earned in the course of employment. As hon. Members have pointed out, clause 82 makes it clear that TUPE applies. Employees therefore carry those rights with them. Those rights enjoy exactly the same protection as other rights afforded by TUPE".—[Official Report,Commons, Standing Committee B, 25/3/93; col. 992.]

That was a significant move forward in an industry in which employers had argued for decades that travel facilities were a concession granted through generosity on their part rather than a condition of service enjoyed by right. Unfortunately, doubts have recently emerged concerning the validity of the Minister's remarks. The experience of negotiations surrounding the privatisation of London Transport Advertising is an example of that.

Employers have made certain difficulties as a result of making certain observations with which I shall not weary the House at this stage. It may be that the Government have tabled Amendment No. 294 as a result of what the employers have said, but the Minister will explain that later. If I may anticipate a point relating to Amendment No. 294, the trouble with that amendment is that it is couched in terms of obligations on the train operator to accept privilege tickets rather than on the railway employer to provide them. My amendment dispels any doubts concerning employers' obligations.

Amendment No. 293 complements Amendment No. 292 by ensuring that train operators will be under an obligation to accept the privilege tickets of railway employees, pensioners and dependants. It also complements Amendment No. 291, forbidding the imposition of restrictions on the use of those facilities.

I should like to colour what I have said by referring to what has happened on previous occasions in relation to the privatisations of British Rail's subsidiary companies which has given rise to the sort of anxieties that I have expressed. British Rail had told employees who were to be transferred that the free and reduced-rate travel facilities that they enjoyed would be safeguarded following transfer to the private sector. It tried to do that by writing into the sale agreement a requirement that the new company should purchase those facilities from BR for a per capita sum each year. Travel over other railway systems—for example, continental railways—would also have to be provided and purchased directly by the new owners. It was made clear that any general improvements to travel facilities granted to BR employees in the future would not apply to ex-BR employees of the new company—neither would new entrants to employment in the privatised organisation receive any travel facility concessions at all.

In practice, that meant that BR transferred the cost and responsibility for providing those facilities to the new owners, and BR now maintains that it has no obligations towards its former staff. Many of those staff have long railway service. The obligation is reneged upon when things go wrong.

A number of situations have arisen, post-privatisation, which have meant that former BR employees have lost their entitlement to such facilities or have found that it has been reduced. British Rail has told the trade unions that entitlements are frozen at the time of sale and in all recent privatisations has refused to alter the terms of the sale agreement beyond that. Employees had personal expectations of improved facilities, such as more free passes and first-class: travel based on completion of service or on promotion. That is now being denied to employees who are transferred and their personal entitlement is frozen at its level at the time of sale. It seems as though BR has reneged on its word and on the obligation that it had sought to imply.

That situation is very unfair to the staff. Moreover, it is illogical because single employees will continue to receive an extension of the facilities which they enjoy in their own right to their spouses in the event of their marrying after privatisation. The same applies to any dependent children born to that marriage.

Other conditions of service—for example, entitlement to annual leave—are unaffected by the transfer of the contract of employment. Staff can look forward to extra days' leave after a qualifying period of service. A further irony is that any improved personal entitlement to travel facilities which arise from service or promotion does not cost the private company any extra in buying the facilities from BR, because that is done by means of a standard per capita amount, irrespective of the grade of the employee.

A further discrepancy is that in certain earlier privatisations—for example Sealink, and British Transport Advertising to which I alluded earlier—a progressive entitlement applies, but not for the staff of ABB Transportation (previously BREL) or Travellers Fare. BRB has made it clear that staff transferred as a result of impending privatisations of Red Star Parcels, BR Savings Company, and Meldon Quarry are riot to have personal progressive entitlements.

Those are serious matters which do not put BR in a good light when dealing with such matters. I could quote other examples; for example, Parkfield Castings, where the parent company, Parkfield Group, went into liquidation. That is a small organisation which was sold separately from British Rail Engineering. Redundant and retired staff lost all their BR facilities because there was no organisation to continue the payments to BRB. Unfortunately, BRB declined any responsibility for such employees, even though many had already qualified for facilities in retirement on their past. BR service alone. Of course compensation receivedl through the liquidator was minimal.

There is the case of Wightlink Services. The passenger steamers on the Solent were owned and operated by Sealink as a wholly owned subsidiary of BRB. Sealink was privatised in 1984; but in 1990 the parent company, Sea Containers Limited, sold its cross-Channel and Irish Sea services to the Stena Line. Sea Containers Limited, however, retained the ports of Newhaven and Heysham, and, in particular, the Isle of Wight services owned by the Sea Containers subsidiary, Passro Limited, operating under the name of Wightlink. Agreements between BR and Sealink on the reciprocal exchange of travel facilities passed to Stena Line, but BRB and Passro became involved in a dispute which resulted in Passro refusing to honour BRB's travel facilities documentation on its Wightlink services. Subsequently, Passro agreed to facilities for retired BR staff, but the present position means that active BR staff are still denied leisure travel at free or concessionary rates on the Wightlink steamers.

There is then the question of BREL. BREL unilaterally altered redundancy arrangements and intimated in November 1990 that the BREL redundancy arrangements no longer contained provision for redundant staff to retain travel facilities; that is to say, staff who retire in the normal course continue to receive facilities. That ruling by BREL has meant that many long-serving staff who already have the age and service qualifications on BR service even before the sale of the company have been denied facilities as a result of being forced out of employment just a few years before normal retirement.

In the light of those examples, we are not convinced that relying on TUPE is enough. Something should be done within the Bill to make watertight the assurances that have been received. I beg to move.

6.30 p.m.

The Earl of Caithness

My Lords, I have listened with care to what the noble Lord, Lord Clinton-Davis, said on Amendments Nos. 290 to 293. In due course, I should like to comment upon the Government amendment (Amendment No. 294) which solves many of the noble Lord's anxieties.

Let me begin by making one thing absolutely clear. The Government stand by the commitment given in the White Paper in July 1992, and repeated by my honourable friend the Minister for Transport in the other place on 25th May, 1993, that staff concessionary travel arrangements for those who are entitled to them will be safeguarded. The Government understand the principles which are being advanced in the amendments of the noble Lord, Lord Clinton-Davis, and do not in general disagree; but we believe that there are better ways of dealing with them.

Some explanation will be helpful. First, it is one of the terms of employment of BR staff that they and their eligible dependants are entitled to travel on BR's services at free and concessionary rates. That entitlement is an established right and is part of the employment conditions of BR's employees. The entitlement will therefore transfer with them if and when they are transferred to a new employer. The terms of the Transfer of Undertakings (Protection of Employment) Regulations 1981 which implement the EC acquired rights directive in the UK, require that. However, it will be open for new employers to negotiate with their ex-BR employees any changes thereafter, if they wish.

The entitlement survives retirement, and in certain cases, also redundancy. Retired staff and their eligible dependants therefore retain the entitlement as a condition of the employment contract they enjoyed before retirement. Amendment No. 292 is therefore unnecessary. TUPE already ensures that terms and conditions of employment will transfer from one employer to the next where employees are transferred as part of an undertaking. Therefore new employers inheriting staff from BR will be under an obligation to provide the same entitlement to travel facilities, unless of course they reach some other agreement with employees.

Lord Clinton-Davis

My Lords, I am grateful to the Minister for giving way. Will he explain how, in those other instances of BR subsidiaries being sold, those TUPE obligations appear to have been breached or ignored? That is the anxiety that I have been trying to convey.

The Earl of Caithness

My Lords, I have listened to the noble Lord describe his anxieties. I hope that I shall be able to allay them as I continue to answer his amendments and speak to the Government amendment. The entitlement as at the date of subsequent transfer will pass to successor companies, and so on.

Amendment No. 292 would require new or successor employers to continue to provide the entitlement, as it stood at the time of passing of the Act, for their employees who had been transferred to them from BR. It would remove the ability of new employers to negotiate with their employees about the entitlement. The House will not agree that that is right. That cannot be right. The details of terms and conditions of employment are something between employees and their employers and it is not for legislation such as this to seek to determine that certain travel facilities must be part of a remuneration package. In one past case of privatisation of a part of BR, for example, the employees who were transferred agreed to replace part of their concessionary travel entitlement with private medical insurance. We should retain that flexibility. I do not know whether that answers one of the noble Lord's concerns. It shows that another side of the argument can be put in each and every case.

As I say, TUPE provides the necessary protection for employees. It remains only for provision to be made to ensure that future passenger service operators will be obliged to allow all those entitled to travel at free or concessionary rates on their services. This is where I turn to the government Amendment No. 294.

At the moment, BR provides travel on its services at free and reduced rates for its staff and for those of other bodies with whom BR has contracts or reciprocal arrangements. For the future, the Franchising Director will take over BR's obligations to arrange the provision of such travel to those entitled. He will contract with BR and franchisees to provide travel at free and concessionary rate; to all those entitled. In return, he will undertake to arrange the provision of such concessionary travel for their own eligible employees on the services of others. He will inherit by transfer scheme the rights and obligations under BR's existing concessionary travel agreements with other bodies, whether on a repayment or reciprocal basis. And he will be able to promote and enter into similar new agreements with other employers who need to provide the entitlement to their employees.

Amendment No. 294 therefore introduces a new clause to replace Clause 131. It retains the previous provision that passenger licence conditions can include conditions in respect of the provision of staff concessionary travel. But it adds further powers to ensure that the franchising director is able to carry out the functions that I have just described. Subsections (2) to (14) of the new Clause 131 are intended to remove any doubt about the franchising director's powers to include the appropriate conditions in franchise agreements.

In addition, because he may need to enter into completely new agreements with employers and other service providers, the new clause ensures that he is able to promote staff travel facilities generally. The clause further provides that any sums required by the franchising director in making these arrangements will be provided by Parliament and that receipts will be paid into the Consolidated Fund.

Accordingly, we envisage that franchisees will be obliged, by means of a condition of their franchise, to provide travel at free or concessionary rates to those presently entitled to them. The franchising director will be able to enforce the terms of that contract.

I believe that the government amendment which I have now explained to your Lordships covers many anxieties of the noble Lord, Lord Clinton-Davis.

Lord Tordoff

My Lords, I speak now to Amendment No. 294A, which is an amendment to the government amendment to which the noble Earl has spoken. In doing so, I am in no way questioning the Government's good faith and the House will be grateful to the noble Earl for having reinforced what has been said before both in the White Paper and by Mr. Norris in another place.

However, we must ask how the arrangements will be safeguarded and what the franchising director will do. What does the promise of safeguarding mean? My amendment simply deals with those points and builds on the government amendment, which will undoubtedly be welcome.

The amendment is designed to ensure that the franchising director acts in such a way that the arrangements into which he enters are no less favourable to individuals than the existing BR arrangements. They may not be precisely the same. One should not build that degree of rigidity into a Bill of this kind. As I understand it, the current arrangements allow a considerable amount of flexibility by BR. But the travel concessions would not be safeguarded if the franchising director had the option, in performing his functions, to seek a reduction of the facilities overall. That is where we enter into the realms of the "may" and "shall" argument. The Government always say that "may" means "shall" until we actually come to it, and then it means "may".

It is possible that a franchisee may go to the franchising director arguing that he should be relieved of some or all of his obligations in certain economic circumstances. If the franchising director were able to agree—I am not saying that he would do so—then staff travel would not have been safeguarded in a way in which a reasonable person might consider the meaning of that word. To a certain extent, that takes us hack to some of our earlier discussions in terms of the meaning of words.

Safeguarding does not and should not mean that nothing can ever change. My amendment allows for that. Provided that proper negotiations take place between employer and employee, they can together negotiate changes. Therefore, I am not trying to lock this completely into concrete.

The Government may well say that because the Secretary of State will give the franchising director instructions, then what I have suggested will not happen. But what exactly will those instructions say? There is nothing about staff travel in the draft objectives which were issued to a committee in another place earlier this year. It may be that the instructions would say the same as that which is in my amendment. But even if they do, I ask the Minister how binding those instructions will be and for how long they will last. If they are to be different, perhaps we can be told how different they will be.

The Minister may say that all the details have not yet been worked out. In that case, I submit that the sooner there is a statutory duty on the face of the Bill, the better, so as to set out the broad skeleton of what is required by your Lordships.

It may be said that such arrangements would be extremely complicated and that there would need to be agreements with other railway operators as well as with the franchisees. It may be difficult for the franchising director to decide what arrangements might be less favourable. But if the Government really want travel concessions to be safeguarded, safeguarding must mean "no less favourable". Therefore, the franchising director must decide what arrangements will deliver that safeguard.

If there is difficulty as regards the franchising director achieving that safeguard, perhaps the Minister will tell us today what that difficulty is so that the concessionaires will know the position.

Will the Minister confirm that the statement in the Notes on Clauses on the original or previous Clause 122 is correct that: Conditions in licences will only be needed where a non-franchised passenger operator is to provide services which BR provide at the moment"? Will there be payments by the franchising director to the franchisees for providing free or reduced-rate travel?

I ask all those questions because they are clearly relevant to safeguarding and to my amendment. We need to be satisfied that the franchising director will be forced to make arrangements which are no less favourable.

The amendment may be totally inadequate, but again we have had very little time to consider government amendments in the period since they were set down. Therefore it is difficult to know precisely how to amend those amendments. I am advised by people who are intimately involved in this matter of concessions, and the questions which I have asked and the propositions which I have put forward stem largely from their anxieties. Anything which the Government can do this afternoon to allay those anxieties would be of the greatest possible interest. I do not propose to press my amendment this evening, but I believe that it is an opportunity for the Government to allay some of the anxieties which still exist among people working for British Rail at present.

6.45 p.m.

Lord Mountevans

My Lords, I have a great deal of sympathy for some of the amendments in this group, in particular the amendment tabled by my noble friend as modified by the noble Lord, Lord Tordoff, which takes the matter further. I welcome also the restated commitment, although I hope that we may hear it repeated a little more strongly, to the White Paper undertaking which my noble friend made in his opening remarks on this group of amendments.

I do not overlook what the noble Lord, Lord Clinton-Davis, pointed out; namely, that international and long-standing commitments are involved in this regard. However, I am concerned, in particular, with the staff of British Rail. We must do all that we can to make sure that staff are reassured that the existing facilities will be safeguarded and preserved.

We are all aware that on 1st April, the existing staff of British Rail will face what can only be called a big bang. Many things will change. I listed them when speaking to the amendment of my noble friend Lord Peyton which concerned British Rail bidding for franchises. I was delighted to see that my noble friend Lord Goschen quoted them, although he did not attribute them to me, when discussing one amendment last Wednesday. There will be a big bang and some of the existing staff will go eventually to franchisees and the MEBO, and they will have all manner of incentives. Others will go to Railtrack where such incentives are not immediately apparent because we know that Railtrack will remain in the public sector for no short time. Others will remain with residuary BR. Yet others will become staff of the franchising director or the regulator. Others will leave. Whatever they do, we must do all that we can to motivate them and to preserve their morale. That word has not been used so far in the discussions on this group of amendments.

Whatever one believes about the Bill before the House, one must remember that, although we make policy in Parliament, at the end of the day it is for the staff on the ground to carry it out after 1st April. Therefore, I believe that a properly motivated staff is essential if all the changes of my "big bang", are to have any chance of succeeding. That is why I believe that the preservation of morale is vitally important. I also believe that preservation of existing facilities for present staff and their dependants is vitally important.

As I have argued, it seems to me that staff must be motivated. I believe that travel facilities are a part of that motivation. The situation is not unique to railways; indeed, many people go to work for ferry companies and, especially, for airlines because of the travel facilities which they perceive, like pensions, wage or salary, as part of the total remuneration package. I believe that that may be only a small part of the remuneration package, but we must do all we can to ensure that existing staff—that is, the staff who will have to do the work after 1st April—are reassured about their ongoing privileges.

Many is the time that I have declared an interest in the British Rail context in the House. Those noble Lords who, to coin a phrase, "read behind the lines", will realise that I obviously know many BR people at all levels. It is their concern about travel privileges which I am seeking to articulate tonight. I very much hope that we shall find a way of reassuring them in that respect; that is, a way that is readily understandable. As I said, I heard and enjoyed what my noble friend said in his opening remarks. However, I hope that he will be able to go further in his concluding speech.

The Earl of Caithness

My Lords, perhaps I may, first, say a word about the amendment tabled in the name of the noble Lord, Lord Tordoff, which seeks to amend my amendment, Amendment No. 294. Its purpose is to impose an express duty on the franchising director to perform his functions under the new Clause 131 in such a way as to secure that staff concessionary travel arrangements for those entitled at the passing of the Bill continue on a no less favourable basis, unless a person and his employer agree otherwise. An express duty is not needed because the franchising director will already inherit liabilities with respect to the provision of staff travel.

I put it to the noble Lord, Lord Tordoff, that what are needed are powers. That is what the new clause supplies. The amendment presents real difficulties because, as the noble Lord knows, the precise details of the concessions vary from time to time. In our view, such a duty on the franchising director would impose an unreasonable strait-jacket and put the beneficiary in a position of being able to dictate terms. We believe, rather, that TUPE can be relied upon to safeguard the employee's interests, while still allowing a degree of flexibility—as now—to recognise operational considerations.

I turn now to a further point in respect of the remarks made by the noble Lord, Lord Tordoff. He did not mention it by name, but covered it in a different way. I refer to open access operators. Such operators will generally be operating services which were not previously provided by British Rail. Travel facilities will not be available on such new services—BR did not previously provide the service and, therefore, BR employees or those of other parties contracted to BR could have no reasonable expectation of using them. However, there may be cases where open access operators will be providing services which were previously operated by BR. In those cases, it is only right that such services should be available to persons using their staff travel concessions. Therefore, because the services concerned will not be provided under franchise contracts, it will be necessary to include staff travel facility conditions in operating licences in respect of those services only. That was the original intention of Clause 131, and is the purpose of subsection (1) of the new Clause 131. The subsection is deliberately permissive because such conditions will not be required in all licences.

I hope that that explanation will go a long way towards meeting the concern of my noble friend Lord Mountevans. He was concerned that all staff should be aware of the true situation, especially regarding whether or not the continuation of their travel concessions would be guaranteed. I believe that it is guaranteed by TUPE. Indeed, TUPE does protect the employee. I also think that my noble friend will be reassured by what I said about open access operators. It will give the added bit of protection and the added boost to morale that he seeks for those services which are presently provided by BR but which will be operated by an open access operator and will include other services.

Lord Clinton-Davis

My Lords, I thank the Minister for his reply. I shall certainly consider most carefully what he said. I am a little concerned to note that TUPE has not protected employees in the instances that I cited. Therefore, I think that we are put on inquiry about its effectiveness. The Minister adverted to only one area of previous privatisations, where he said that some flexibility had been required and that that would not have been possible if the amendments that I moved today had been put in place.

However, despite the fact that he puts such emphasis on TUPE, it is very clear that it had no major effect on protecting the interests of employees in such respects. I believe that we need to look carefully at what the Minister said. Perhaps he will find it possible between now and Third Reading to reflect on my remarks on the specific instances to which I referred, and let me have his comments. That would enable us to be in a position, if necessary, to raise the issue further at the next stage. Of course, that means that I am putting the Minister under some pressure, because such a reply would be needed by the end of this week to enable us to do so—-or, at least, by Monday morning at the latest. Even then, I appreciate that it would be quite difficult.

I do not wish to cast any doubt upon the Minister's bona fides in the matter. I hope that he will accept that fact. I am merely trying to explore what happened in the past in order to see how it relates to the present as regards the permissive approach adopted by the Government in the new clause. I also welcome the opportunity to take advice during the next few days on the effectiveness of the new clause. It is possible that my anxieties will be allayed in that way.

I am sure that the noble Lord, Lord Mountevans, is right to emphasise the importance of staff morale. Whatever happens to the Bill, staff morale is a matter of the highest significance in running the railways in terms of safety, of reliability and of all the duties that railways have to undertake. However, over all, I rather agree with the noble Lord, Lord Tordoff, that, effectively, duties are rather better than powers in such instances. That argument has connotations elsewhere. Nonetheless, I agree with the noble Lord's approach.

We have had a most useful debate. Indeed, we have ventilated many issues which are not party political but which are germane to the point made by the noble Lord, Lord Mountevans; namely, the morale of the staff. We must not do anything to prejudice such morale. Having regard to what has been said during the debate, and while thanking the noble Lords who participated in it, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 291 to 293 not moved.]

The Earl of Caithness moved Amendment No. 294:

Leave out Clause 131 and insert the following new clause:

Concessionary travel for railway staff etc

(" .—(1) The conditions that may be included in a passenger licence include conditions in respect of arrangements for the provision of staff concessionary travel.

(2) The Franchising Director may promote the provision of staff concessionary travel.

(3) The Franchising Director may enter into agreements or other arrangements concerning the provision of staff concessionary travel.

(4) Franchise agreements may include conditions with respect to the provision of staff concessionary travel.

(5) Agreements or arrangements under section 47 or 48 above may include provisions with respect to the provision of staff concessionary travel.

(6) The Franchising Director may perform any of his functions—

1. (a) under or by virtue of subsections (2) to (5) above, or
2. (b) under any agreements or arrangements entered into, or conditions or provisions included, by virtue of those subsections,

by entering into agreements or arrangements under which other persons (in this subsection referred to as "sub-contractors") are to perform the function in question; and subsections (2) and (3) of section 47 above shall apply in relation to agreements or arrangements under this subsection as they apply in relation to agreements or arrangements under subsection (I) of that sect ion, but taking references to sub-contractors, within the meaning of that subsection, as references to sub-contractors, within the meaning of this subsection.

(7) Without prejudice to the generality of subsection (3) above, the agreements or arrangements that may be made under that subsection include agreements or arrangements under which the Franchising Director undertakes to secure the provision of staff concessionary travel (as well as agreements or arrangements under which some other person undertakes to provide, or to secure the provision of, staff concessionary travel).

(8) Subsection (7) above applies, with the necessary modifications, in relation to—

1. (a) the conditions mentioned in subsection (4) above, and
2. (b) the provisions mentioned in subsection (5) above, as it applies in relation to the agreements and arrangements mentioned in subsection (3) above.

(9) This section is without prejudice to the generality of—

1. (a) the conditions which may be included in licences, or
2. (b) the provision which may be made in franchise agreements or in agreements or other arrangements under section 47 or 48 above,

whether or not with respect to free or concessionary travel; and subsections (4) and (5) above are without prejudice to the generality of subsection (3) above.

(10) Any sums required by the Franchising Director for making payments under or by virtue of this section shall be paid by the Secretary of State out of money provided by Parliament.

(11) Any sums received by the Franchising Director under or by virtue of this section shall be paid into the Consolidated Fund.

(12) Any reference in this section to the provision of "staff concessionary travel" is a reference to the provision of free travel, or travel at concessionary rates, for, or for some class or description of, persons, or dependants of persons, who are or have at any time been employed by—

1. a person carrying on a business of providing railway services; or
2. a person providing welfare or health care services to persons employed by a person falling within paragraph (a) above.

(13) In the application of subsection (12) above in relation to any such agreement, arrangements, conditions or provisions as are mentioned in this section, it is immaterial whether or not the provision of free travel, or travel at concessionary rates, mentioned in that subsection extends, in the case of the agreement, arrangements, conditions or provisions in question, only to persons falling within that subsection or to such persons and others; and the reference in subsection (2) above to promoting the provision of staff concessionary travel shall be construed accordingly.

(14) Expressions used in this section and in Part I above have the same meaning in this section as they have in that Part.").

[Amendment No. 294A not moved.]

Clause 132 [Grants and subsidies]:

The Earl of Caithness moved Amendment No. 295:

Page 134, line 28, leave out ("of a general nature").

The noble Earl said: My Lords, I am sure that noble Lords will be pleased to know that we now move on to somewhat easier territory. The above is a technical amendment. I beg to move.

The Earl of Caithness moved Amendment No. 296:

Page 134, line 48, leave out (" The obligations imposed by any directions under subsection (6) above") and insert ("Without prejudice to any right which the Secretary of State or the Franchising Director may have under this Act to bring civil proceedings in respect of any contravention or apprehended contravention of any directions under subsection (6) above, the obligations imposed by any such directions").

Clause 133 [Payments by the Secretary of State in respect of track access charges in connection with railway goods services]:

The Earl of Caithness moved Amendment No. 297:

Page 135, line 32, leave out ("a") and insert ("any permission or").

Clause 134 [Grants and other payments towards facilities for public passenger transport to and from airports, harbours etc.]:

The Earl of Caithness moved Amendment No. 298:

Page 135, line 37, at end insert ("shall be amended in accordance with the following provisions of this section.

(2) After subsection (2) there shall be inserted—

"(2A) Where a relevant local authority proposes to make payments under subsection (2) of this section in respect of any facilities, that authority may enter into an agreement with the Franchising Director under which the Franchising Director undertakes to exercise franchising functions of his, or to exercise such functions in a particular manner, in relation to the use of the facilities in question.

(2B) In subsection (2A) of this section, the following expressions have the following meanings respectively, that is to say

"the Franchising Director" means the Director of Passenger Rail Franchising;

"franchising functions", in relation to the Franchising Director, has the same meaning as it has in relation to him in section 50 of the Railways Act 1993; "relevant local authority" means—

1. (a) a non-metropolitan county or district council in England or in Wales;
2. (b) a London borough council or the Common Council of the City of London; or
3. (c) a regional or islands council in Scotland; and any reference to a relevant local authority shall be taken to include a reference to any two or more such authorities acting jointly."

(3) That section").

7 p.m.

Clause 139 [Regulations and orders]:

The Earl of Caithness moved Amendment No. 299:

Page 139, line 1, leave out from beginning to first ("different") in line 2 and insert:

("() Any power under this Act to make regulations, and any power of the Secretary of State under this Act to make an order, may be exercised—

1. (a) in relation to all cases to which the power extends, or in relation to those cases subject to specified exceptions, or in relation to any specified cases or classes or descriptions of case;
2. (b) so as to make, as respects the cases in relation to which it is exercised").

The noble Earl said: My Lords, this is another technical amendment. I beg to move.

Clause 140 [Directions]:

The Earl of Caithness moved Amendment No. 300:

Page 139, line 14, at end insert:

("and a Passenger Transport Executive shall, in particular, comply with and give effect to any direction under section (Re-negotiation of section 20(2) agreements as a result of this Act) or section 31(14) above, notwithstanding any duty imposed upon the Executive by section 9A or 20 of the Transport Act 1968.

("() Without prejudice to any right which any person may have to bring civil proceedings in respect of any contravention or apprehended contravention of any direction given under this Act, compliance with any such direction shall be enforceable by civil proceedings, by the person by whom the direction was given, for an injunction or interdict or for any other appropriate relief.").

Clause 144 [Service of documents]:

The Earl of Caithness moved Amendment No. 301:

Page 140, line 39, leave out ("registered") and insert ("constituted under the law of a country or territory").

Clause 145 [Crown application]:

The Earl of Caithness moved Amendments Nos. 302 and 303:

Page 141, line 14, after (" 16") insert ("(Access agreements: contracts requiring the approval of the Regulator), (Access agreements: contracts for the use, on behalf of the Franchising Director, of installations comprised in a network)and 17").

Page 141, leave out line 15.

The noble Earl said: My Lords, Amendments Nos. 300 to 303 have already been spoken to. I beg to move.

The Earl of Caithness moved Amendment No. 304:

Page 141, line 18, leave out (", 86,") and insert ("to").

The noble Earl said: My Lords, in moving Amendment No. 304 I wish, with the leave of the House, to speak to Amendments Nos. 305, 308 and 309. These amendments concern the Crown application. They are essentially technical and I commend them to the House. I beg to move.

The Earl of Caithness moved Amendment No. 305:

Page 141, line 18, at end insert:

("() subject to, and in accordance with, section 48 of the Health and Safety at Work etc. Act 1974, section 116 (other than subsection (5)) so far as affecting or relating to provisions of, or regulations under, Part I of that Act which bind the Crown;").

The Earl of Caithness moved Amendments Nos. 306 to 309:

Page 141, line 21, at end insert:

("() section (Statutory authority as a defence to actions in nuisance etc.);").

Page 141, line 23, at end insert:

("() Schedule (Access agreements: applications for access contracts);")

Page 141, leave out line 24 and insert:

("(j) Schedule 5, to the extent that it applies, amends or modifies the operation of provisions of the Insolvency Act 1986 which bind the Crown so far as affecting or relating to the matters specified in paragraphs (a) to (e) of section 434 of that Act;

(k) Schedule 6;

(1) Schedule 7;

(m) the amendments and repeals made by Schedules 11 and 13, to the extent that the enactments to which they relate bind the Crown.").

Page 141, line 32, at end insert:

("(4) No person with whom the Franchising Director enters into an agreement or arrangement pursuant to section 47 above shall be regarded, by virtue of that agreement or arrangement, as a servant or agent of the Crown, or as having any status, immunity or privilege of the Crown.").

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

Clause 146 [General interpretation]:

The Earl of Caithness moved Amendments Nos. 310 to 314:

Page 141, leave out lines 35 to 39 and insert:

(""body corporate" has the meaning given by section 740 of the Companies Act 1985;

"company" means any body corporate;").

Page 142, leave out lines 4 and 5.

Page 142, line 20, leave out from (""securities"") to end of line 22 and insert ("has the meaning given by section 142 of the Financial Services Act 1986").

Page 142, line 45, leave out subsection (4).

Page 143, line 7, at end insert:

("S.I. 1981/1794

() Nothing in this Act affects the operation of the Transfer of Undertakings (Protection of Employment) Regulations 1981, in their application in relation to the transfer of an undertaking, or part of an undertaking, within the meaning of those Regulations.").

The noble Earl said: My Lords, these amendments have already been spoken to. I beg to move.

Schedule 11 [Minor and consequential amendments]:

The Earl of Caithness moved Amendment No.315:

Page 185, line 6, at end insert:

("() Section 45 of that Act (duty of the Board periodically to review its organisation) shall cease to have effect.

() Section 48 of that Act (which confers power on the Boards and the new authorities to undertake activities including manufacture for sale) shall cease to have effect in relation to the Board.").

The noble Earl said: My Lords, this amendment has; already been spoken to. I beg to move.

Baroness Stedman moved Amendments Nos. 316 and 317:

Page 185, line 17, at end insert:

(3A) In section 55 of that Act (amendments concerning Transport Consultative Committees under section 56 of the Transport Act 1962), in subsection (1) (services and facilities in relation to which Consultative Committees' duties are to apply)—

1. (a) for the words "the Consultative Committees established under that section" there shall be substituted the words "the Central Committee and the consultative committees, within the meaning of that section,", and
2. (b) the following shall be omitted, namely——
1. (i) in paragraph (a)., the words from "or provided" onwards,
2. (ii) paragraph (b),
3. (iii) paragraphs (i) and (iii), and
4. (iv) the words from "and for the purposes" onwards, and subsections (2), (3) and (4) (duties of Consultative Committees in relation to certain services and facilities provided in Scotland, and provision as to office accommodation for, defrayment of expenditure incurred by, and certain payments to members of, Consultative Committees) shall cease to have effect.").

Page 185, line 41, at end insert:

("The Railways Act 1974

In the Railways Act 1974, section 9 (which provides for an alternative basis of remuneration for chairmen of Consultative Committees set up under section 56 of the Transport Act 1962) shall cease to have effect.").

The Earl of Caithness moved Amendments Nos. 318 and 319:

Page 186, line 14, at beginning insert:

In section 11 of the Competition Act 1980, in subsection (3) (public bodies and other persons who may be the subject of a reference to the Monopolies Commission under that section), after paragraph (a) there shall be inserted—

"(aa) any publicly owned railway company, within the meaning of the Railways Act 1993, which supplies network services or station services, within the meaning of Part I of that Act; or".

(1A)").

Page 186, line 14, leave out ("the Competition Act 1980") and insert ("that Act").

Baroness Stedman moved Amendments Nos. 320 to 322:

Page 188, line 23, after ("(4),") insert ("there shall be omitted

(a) the words "Subject to subsection (6) below,"; and (b)")

Page 188, line 25, leave out ("shall be omitted.").

Page 188, line 33, leave out sub-paragraph (5) and insert:

("(5) Subsection (6) (which precludes the committee from considering charges for services and questions relating to the discontinuance or reduction of railway services) shall be omitted.").

The Earl of Caithness moved Amendments Nos. 323 and 324:

Page 191, line 2, at end insert:

("The Insolvency Act 1986

In section 413 of the Insolvency Act 1986, at the end of subsection (2) (which imposes a requirement to consult with the Insolvency Rules Committee, except in the case of certain provisions there specified) there shall be added the words "or by any of sections 57 to 63 of, or Schedule 5 or 6 to, the Railways Act 1993."").

Page 191, line 35, at end insert:

("The New Roads and Street Works Act 1991

In section 10 of the New Roads and Street Works Act 1991 (application of the Fair Trading Act 1973 etc in relation to persons authorised by virtue of that Act to charge tolls for the use of roads), in subsection (2), paragraph (b) (which provides that, for certain purposes, section 51(3) of the Fair Trading Act 1973 is to have effect as if the Secretary of State for Transport were among the Ministers listed in that provision, and which is superseded by the amendment made by section 64(2) of this Act), and the word "and" immediately preceding it, shall cease to have effect.").

Schedule 12 [Transitional provisions]:

Baroness Stedman moved Amendment No. 325:

Page 195, line 38, at end insert:

("Saving for section 41 of the Channel Tunnel Act 1987

—(1) Section 41 of the Channel Tunnel Act 1987 (which applies certain statutory functions of consumer committees to complaints about international railway passenger services as they apply in relation to services and facilities provided by the Board and its subsidiaries) shall continue to have effect as if section 76(1) of this Act and paragraphs 6(3A) (b) and 17(3) to (8) and (10) of Schedule 11 to this Act had not been enacted.

(2) In the application of subsection (5) of section 40 of the London Regional Transport Act 1984 by virtue of section 41 of the Channel Tunnel Act 1987, for the words in that subsection from "those services or facilities are within the competence of the Committee" onwards there shall be substituted the words "those services or facilities are provided within the area which is for the time being "the Greater London area" for the purposes of section 2 of the Railways Act 1993."").

Schedule 13 [Repeals]:

The Earl of Caithness moved Amendments Nos. 326 and 327:

Page 196, line 47, column 3, at end insert:

("In section 92(1), in the definition of "subsidiary", the words "(taking references in that section to a company as being references to any body corporate)".").

Page 196, line 53, column 3, leave out ("45(6) (b) and (c)") and insert ("45").

Baroness Stedman moved Amendments Nos. 328 and 329:

Page 196, line 55, column 3, at end insert ("In section 55, in subsection (1), in paragraph (a), the words from "or provided" onwards, paragraph (b), paragraphs (i) and (iii) and the words from "and for the purposes" onwards, and subsections (2) to (4).").

Page 197, line 36, column 3, at end insert ("Section 9.").

The Earl of Caithness moved Amendment No. 330:

Page 197, line 44, column 3, leave out ("and 2") and insert ("2 and 4").

Baroness Stedman moved Amendment No. 331:

Page 198, line 4, column 3, leave out ("in subsection (6), paragraph (b);") and insert ("subsection (6);").

The Earl of Caithness moved Amendment No. 332:

Page 198, line 20, column 3, at beginning insert ("Section 33(11).").

Baroness Stedman moved Amendment No. 333:

Page 198, line 20, column 3, at beginning insert ("In section 41, in subsection (3) (b), the words "and section 41(3) and (5) to (7)", and subsection (5).").

The Earl of Caithness moved Amendment No. 334:

Page 198, line 22, at end insert:

("1991 c. 22.

The New Roads and Street Works Act 1991.

In section 10(2), para—graph (b) and the word "and" immediately preceding it.").

Clause 148 [Power to make consequential modifications in other Acts, etc.]:

The Earl of Caithness moved Amendment No. 335:

Page 143, line 23, after ("Act") insert (", or of any instrument made under or by virtue of this Act,").

Clause 149 [Short title, commencement and extent]:

The Earl of Caithness moved Amendment No. 336:

Page 144, line 18, leave out ("and (6)") and insert ("(6) and (6A)").

The noble Earl said: In moving the amendment I wish to thank all your Lordships who have taken part in this Report stage of the Bill. I also wish to thank all the officials and clerks for their help. I beg to move.

Lord Clinton-Davis

My Lords, I echo what the Minister has just said. It has been an interesting Report stage and the Minister has acquitted himself well despite the criticisms I have made of his department. I have tried to divorce him from those criticisms, stern though they have been from time to time. He and his noble friends have been extremely courteous to the House. They have listened intently to what has been said and they have been forthcoming in some of their responses, although not in all of them by any manner of means. I wish to thank my noble friends on this side of the House who have participated in the debates, notably the noble Baroness, Lady Turner of Camden, and the noble Lord, Lord Carmichael of Kelvingrove.