HL Deb 30 October 1995 vol 566 cc1283-91

Read a third time.

Clause 3 [Supplementary provisions as to the Authority's powers]:

Lord Peston moved Amendment No. 1:

Page 3, line 20, at end insert— ("( ) The Authority shall not have the power to dispose of any undertaking unless provided for by a transfer scheme.").

The noble Lord said: My Lords, I hope to speak very briefly to this amendment. On reflection, I should probably have raised it at the Bill's previous stage in this House, but did not feel that I wanted to do so at that time. It looks rather odd to raise the point now, but as this is my only opportunity to deal with the matter, I shall do so.

My concern is that, almost separately from this Bill, the United Kingdom Atomic Energy Authority also seems to be selling off other parts of itself. I find that in any case rather odd, but I gather that all kinds of bits of it are available for sale within what is called the government division. Typically, the sections being sold are small. The numbers of people involved range from one in something called the book drying group (I have not yet discovered what it is) through to the Dounreay engineering squad, which involves 90 people.

It seems to me that there is a serious point of principle here. First, it is not clear on what basis UKAEA is able to divest itself of these bits of its own business without a transfer scheme and in a sense without any further consideration by its ultimate owners. Secondly, there are certainly safety reasons behind my concern about parts of the business being sold off. If possible, will the Minister comment on that?

I am also worried about a matter that arose when we first debated this whole subject; namely, fragmenting the business and selling off bits and pieces. Assuming that the business as a whole is worth more than the simple sum of its parts, selling it in this fragmented way will not achieve the maximum gain for the taxpayer. I should certainly therefore like the Minister, if possible, to say a word or two on the taxpayers' interest in the commercial side of the selling off.

Finally—again I reveal my normal ignorance of these matters—I am not very clear what the process of selling off is or will be. Will it be a matter for competitive tender, therefore guaranteeing that the very best price is achieved; or will it be by negotiation, in which case the best price is not necessarily achieved? I apologise again for delaying your Lordships by raising these matters, but I believe they are worth some ministerial comment.

Lord Ezra

My Lords, I feel that the noble Lord, Lord Peston, has raised an important issue. One of the main points raised during earlier stages of the Bill was that AEA Technology, with which the Bill is mainly concerned, should be sold off as a whole. It now appears that some parts of AEA Technology as well as the government division may be disposed of otherwise. It would be most helpful to have some elucidation of this issue.

The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)

My Lords, when a comparable amendment was moved in Committee I hoped that I had provided a sufficiently full and satisfactory response. But perhaps I may take a moment now to go over some of the ground and clarify matters further.

A transfer scheme is the most effective and economical way of dealing with the many varied and complex issues involved in separating out AEA Technology from the authority. Most disposals by the authority, however, involve the sale of small operational units with few assets and a handful of staff. In those cases, sale by normal commercial contract is all that is required. As I advised the noble Lord, Lord Haskel, in Committee, using a transfer scheme to give effect to such sales as this amendment would require would be to make something of a mountain out of a molehill. It would not prevent such disposals being made but would unnecessarily increase the administrative cost of making them. I can confirm that all sales in these matters will be on a competitive basis.

So far as AEA Technology is concerned, the divestments which have taken place or which are envisaged contain only a handful of employees. The areas involved are clearly outside the core activities of AEA Technology. It is not true that their sale would in a sense damage the synergy of the sale value of AEA Technology. I do not depart from anything that I said at an earlier stage of the Bill.

I suspect that what lies behind this concern is that, while AEA Technology is being sold off in the way that I described earlier, there are other small parts that are being disposed of that are not part of the core. But if the noble Lord is concerned to ensure that the Secretary of State should retain control over other disposals by the authority, perhaps he will be satisfied when I tell him that the Secretary of State already has extensive powers of control over the authority, including the power, under Section 3(2) of the Atomic Energy Authority Act 1954, to issue directions. Disposals by the authority are already subject to control under such a direction which restricts disposal without approval of the Secretary of State.

We do not seek to operate a completely different system but those early disposals—maybe future disposals—which were made fall rather differently out of the core of the AEA Technology business which, as I indicated last time, we intend to sell off in a single sale.

Lord Peston

My Lords, I thank the Minister for that answer, which was particularly enlightening. I assumed that the statement that he made during Report stage still held. He reassured your Lordships that the Government's preferred option was to sell AEA Technology as a whole. I had not thought that the Government were back-tracking on that.

What I find most helpful—I pause to look at the Minister when I say this to make sure that he nods in agreement—is that in all these cases the Secretary of State has an involvement. Let us take the simplest possible case: selling off the book drying section employing one person. If we were to say that it is fundamental to this Government's policies that book drying in the United Kingdom Atomic Energy Authority remains in the public sector, the Secretary of State would at least have a locus to do that. I take it that that is what the Minister has said. With that reassurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [Transfer schemes: supplementary provisions]:

3.45 p.m.

Baroness Turner of Camden moved Amendment No. 2:

Page 15, line 25, at end insert—

("Redundancy

.—(1) If any employee of the Authority is transferred to a new employer by a transfer scheme or otherwise and is declared redundant—

  1. (a) the Authority's redundancy rules and benefits applicable to that employee at the date of the transfer shall apply unless the trade unions or other bodies representing the employees transferred by the transfer scheme have agreed to their modification for such employees; and
  2. (b) the redundancy rules shall apply as if the Authority were the employer and all employees transferred from the Authority's employment by transfer schemes were employees of the Authority.

(2) This paragraph shall have effect for employees transferred on or after 1 March 1995.").

The noble Baroness said: My Lords, the Minister may feel that we have been over this ground before. Certainly we attempted to persuade him earlier in the Bill that further steps were necessary to provide protection for employees in the event of redundancy as a result of privatisation. The present amendment, as will be seen, includes an element of backdating in that it attempts to protect the rights of those involved in the sales of FSD (as I think it is called) and the sale of seven people to EMS Medical.

The Minister has always argued that this is an unnecessary amendment because the employees will have the protection of the TUPE regulations. That is absolutely true. The Minister has also said that before changes could be made to contractual redundancy terms the agreement of the members or that of their unions would be required. There is wording to that effect included in the amendment before the House this afternoon.

However, as we have always pointed out, TUPE protects only at the point of transfer. Afterwards, changes can be made, and often are, frequently to the detriment of the employees. I received some further information since the last time that this issue was discussed. It shows exactly why employees are so concerned and why they feel that simply relying on TUPE will not give them sufficient protection.

I understand that 950 employees were involved in the sale by UKAEA to Procord Limited, a subsidiary of Johnson Controls Incorporated of Wisconsin, on 31st March 1995. The managing director of Procord wrote to the prospective new employees on 7th March saying: Procord will take over and honour all your employment rights, including redundancy entitlements—and has no redundancy plans".

The managing director of UKAEA Services Division on 31st March said: We are … confident that the sale offers excellent prospects to our colleagues who are now joining Procord".

Procord's human resources director repeated on 27th July that there were no redundancy plans.

However, Procord announced 150 redundances to its ex-UKAEA workforce on 10th August, citing as the reason misleading assurances as to non-guaranteed work given by UKAEA during the sale. Despite the earlier assurances, Procord now say that it plans to worsen terms and conditions of employment, including the redundancy terms, when the current redundancy programme is complete.

The Procord employees, therefore, need the protection of their redundancy terms offered by this amendment. Making any redundancy exercise cover both Procord and UKAEA will ease the process, as there will be greater possibilities for redeployment; and, as we have said on past occasions, the redundancy agreement existing for UKAEA employees lays great emphasis on the need for redeployment.

For those reasons, I again put these amendments before the House, even though, as I indicated, we have already been over this course substantially before. But I must emphasise that feedback from employees through their unions shows that there is great concern about the prospects of redundancy following privatisation and a belief that once privatisation has taken place, the employees will cease to have the protection that they had under their former redundancy terms. I beg to move.

Lord Fraser of Carmyllie

My Lords, this is an issue which, although important, we have discussed both in Committee and at Report stage. I had hoped that on previous occasions I had succeeded in reassuring the noble Baroness that AEA Technology employees would have all the protections in respect of redundancy provided for by the TUPE regulations and that any modifications to contractual redundancy rights will require the consent of employees.

As I explained at Report stage, the width and retrospective effect of this amendment seemed to us entirely inappropriate. I repeat that our concern in the Bill is with the privatisation of AEA Technology and not with any other divestment that the authority has carried out or may carry out in the future under its existing powers. So far as concerns other divestments, the authority is in the same position as any other public enterprise. Notwithstanding what the noble Baroness said, I do not consider that there is an argument which justifies treating authority staff differently from other public servants. Indeed it would be inequitable to do so.

TUPE ensures that employees join their new employer on the same terms and conditions as they left their old one. As the noble Baroness previously suggested, it is the case that the new employer can change those terms and conditions with the employee's consent, but the same, of course, is also true of the old employer.

I cannot agree that the exceptional arrangements in this amendment are justified in the circumstances. It would be beyond the terms of the Bill to go over what Procord did or did not say. If it is intending to bring about redundancies or seek voluntary early retirement from employees, that is a matter for the company and not for me.

Baroness Turner of Camden

My Lords, I am not entirely surprised at the Minister's response, though I find it slightly disappointing. He says that there is no reason to treat these employees differently from any other employee. We made it clear in previous discussions on the Bill that we are talking of groups of people who went to work for a public authority—UKAEA—believing that it held the prospect of security for the future both in regard to pension provision and employment. Those hopes have been frustrated as a result of the Government's privatisation plans and therefore, through no fault of their own, those employees cease to have the element of security that they once had. That has been made even more clear by what is happening to Procord.

It was for those reasons that we felt that there was an obligation on the Government to make exceptional arrangements in regard to a group of employees whose security had been put at risk in their eyes as a result of government legislation and policy. However, we have failed yet again to convince the Minister that it is right and proper to accept the amendment. I regret that; but, at this late stage of the Bill, I have no alternative but to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 4 [Pensions]:

Baroness Turner moved Amendment No. 3:

Page 29, line 36, at end insert— ("(4A) No person who, in consequence of a transfer of an undertaking ceases to be an employee of the Authority (in this paragraph referred to as a "divested employee") and who immediately before ceasing to be an employee of the Authority is a participant in an Authority pension scheme, shall cease to be a participant in that scheme by reason only that he has ceased to be employed by the Authority. (4B) No divested employee who, immediately before ceasing to be an employee of the Authority, is not a participant in such a pension scheme, but—

  1. (a) is eligible to become such a participant; or
  2. (b) would have become eligible to become such a participant on attaining an age or fulfilling a condition specified in the scheme;
shall be precluded from being or, as the case requires, becoming eligible for participation in that scheme by reason only that he has ceased to be employed by the Authority. (4C) Sub-paragraphs (4A) and (4B) above shall have effect for transfers of undertakings occurring on or after 1 March 1995.").

The noble Baroness said: My Lords, we are revisiting this matter finally at Third Reading, mainly because the feedback we had from the organisations representing the staff is to the effect that they remain extremely concerned about the position of those who cease to be employed by the authority as a result of privatisation. The Minister will know that much of that anxiety centred upon what will happen in regard to pension rights.

It is true that, on Report, the Minister made some substantial concessions, particularly in regard to index linking. We are grateful for those and I emphasise that this afternoon. However, anxieties remain about those divested of employment rights other than under the transfer scheme provisions of the Bill.

The amendment would make entitlement retrospective to 1st March 1995. I am advised that two groups of employees were involved in sales on 31st March 1995. They are the facilities services division with 950 people involved in the sale to Procord and Harwell Dosimeters and seven people involved in the sale to EMS Medical Group. In each case a different non-index linked pension scheme was imposed.

The Government will no doubt claim, as they have done on previous occasions, that the pension packages are broadly comparable, which I understand to be the view of the Government Actuary. However, an independent actuary consulted by the unions disagreed, mainly because the GAD assumed an average rate of inflation of 5.5 per cent., whereas the experience of the 30 years from 1964 to 1994 was an average of 8.2 per cent.

The unions therefore believe that the people concerned have suffered a worsening of terms and conditions. While we all hope that inflation will not escalate, nobody can be sure. We therefore return to this issue in a final attempt to persuade the Government that it would be in everyone's interest—including taxpayers—for those people to remain in the UKAEA pension scheme. The Government argue that changing the terms of the sales would be a breach of faith with the purchasers. My information is to the effect that the purchasers were well aware of the unresolved pension issues at the time the sales were completed. I beg to move.

Lord Fraser of Carmyllie

My Lords, I am grateful to the noble Baroness for acknowledging what I said during the Report stage of the Bill. However, it will not surprise her to hear that what she now proposes in Amendment No. 3 is unacceptable as it would bring within the scope of the Bill all transfers of undertakings by the authority and make retrospective provision back to 31st March 1995.

The Bill deals with the privatisation of AEA Technology. It has been specifically designed to deal with that privatisation. I made it clear that it is unacceptable to the Government to allow employees who have moved to the private sector to continue to participate in the authority's pension schemes. It is for the private sector employer to devise arrangements which are appropriate for its employees and the operation of its business.

But let me say that the employees of other parts of the authority which may be divested need not be concerned about their future pension arrangements. It is the authority's clear policy, irrespective of employment law, that employees who move to the private sector should be able to join a pension scheme which is broadly comparable with the authority pension scheme. Indeed, to do otherwise might mean that employees had a claim for constructive dismissal.

We also discussed in Committee the question of employees who have already left the authority's employment being allowed back into the authority's schemes. I explained then and repeat that it would be wholly unacceptable as it would re-open the basis on which the businesses were sold earlier this year, subsequent to the date I mentioned.

To change the basis on which parts of the authority have already been sold would create substantial uncertainty for the employees involved and potentially put their jobs at risk. Such uncertainty was in the forefront of our minds at Report stage. In fact, the noble Lord, Lord Peston, and I agree that we should not add to the uncertainty of employees. That would be one of the effects of this amendment and one reason why it is unacceptable.

With that brief explanation, I hope the noble Baroness understands why, for reasons of retrospective features if nothing else, the amendment is unacceptable.

Baroness Turner of Camden

My Lords, I thank the noble and learned Lord for that explanation. As I said earlier, we have been over this ground several times before and my reason for revisiting it was because my information was that people are still concerned about their future prospects, particularly in the area of pensions. However, I note what he says about the general principles being unacceptable to the Government. I am sorry about that. As I said earlier in connection with Amendment No. 2, people's expectations have been damaged or frustrated and uncertainties imported into their employment situation as a result of government legislation. There is therefore an obligation on the Government to do the best they can to ensure that those uncertainties are put at rest.

As we have said repeatedly, people join this kind of organisation, this type of public service, believing that they have the prospect of security of employment and of pension entitlement. During the passage of the Bill we have done our best on this side of the House to try to ensure that those fears are put at rest, at least to the best of our ability. Unfortunately, we have not always been able to persuade the Government that something needs to be done, though we are grateful to the Minister for the assurances that we received at various stages of the Bill, and in particular when we discussed pension entitlement at Report stage. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4 p.m.

Lord Fraser of Carmyllie

My Lords, I beg to move that the Bill do now pass.

At earlier stages of the Bill there were full discussions both of its content and of some of the wider issues surrounding it. I was not a participant in the earliest stage but I am grateful to those on the Front Bench opposite for the way in which the Bill has been taken forward and the care with which the various issues have been debated. I also extend my gratitude to other noble Lords who participated in our discussions.

Our debates have been notable for the fact that there has been agreement on all sides of the House that AEA Technology is an important national asset with the potential to make a significantly greater contribution to United Kingdom competitiveness. Where there has been disagreement, it has been over how best to realise that potential and take forward the development of the business in a way which best serves the interests of its staff and the taxpayer. The disagreements have, in turn, provided a basis for a constructive examination of the Bill, through which the House has gained—and I have certainly gained—a better understanding of what it and the sale of AEA Technology entail.

Our main objective in bringing the Bill before Parliament has been to promote the commercial development of the business and set it on a path from which it can take full advantage of the many opportunities open to it. That is in all our interests. The more successful AEA Technology is, the more it will be able to contribute to the United Kingdom economy. Privatisation will offer AEA Technology the opportunity to build on its already impressive track record by stimulating the drive for new business, enforcing market disciplines and offering genuine commercial freedom unencumbered by the demands of government. It is not only the best way forward for the business; it is the best way forward for its customers and the staff. With those brief thanks, I commend the Bill to the House.

Moved, That the Bill do now pass.—(Lord Fraser of Carmyllie.)

Lord Peston

My Lords, I thank the noble and learned Lord for his kind remarks. I had the opportunity to congratulate him only a few days on how admirably he guided us through the Gas Bill. I repeat with great sincerity those same remarks in congratulating him on how admirably he has guided us through the Atomic Energy Authority Bill.

The Bill has not been to everyone's taste in the sense that to my recollection it has been largely dealt with by the Front Benches. It does not seem to have attracted the interest of many other noble Lords. One or two have joined us occasionally. However, that does not make the Bill any less important or any less interesting. The Minister has done an excellent job. I also congratulate the noble Lord, Lord Ezra, from the Liberal Democrat Front Bench, on his part. As always, I thank my noble friends Lord Clinton-Davis, Lord Haskel and Lady Turner, and repeat the point that, as compared with the Minister, whenever the going got tough, I turned to them and let them take over.

I was opposed to the Bill. I felt that its basis was ideological, and my view has not changed. But I have to say that as the Bill will become an Act and AEA Technology will be sold into the private sector, I would not then be curmudgeonly. My hope is then—it will be the Minister's hope as well—that the new business will succeed. Setting ideology on one side, the country depends on our businesses succeeding, and this is certainly one where the prospects are excellent. Although I would not have done it in the first place, so to speak, if we are going to do it, then I want it to work.

I have one final remark to make. We have scrutinised the Bill in detail and with our usual precision. It has been an excellent example of how noble Lords do their job. But if I could harp back to some remarks made an hour or so ago on ministerial and other salaries, when I think of the effort we have all put into the Bill, I wish occasionally that we received something more by way of material reward. I am told that I may be thanked in heaven, but occasionally there are bills to be paid as well. Leaving that frivolous note on one side, I repeat my thanks to the Minister and look forward to whatever we do in the next Session.

Lord Ezra

My Lords, I wish to join in the remarks made by the noble and learned Lord the Minister and the noble Lord, Lord Peston. This is an important measure. I believe that it has been dealt with extremely constructively and sympathetically from the Government Front Bench. Right from the start there seemed to my mind to be one overriding issue. AEA Technology, about which the Bill is mainly concerned, has been established as a very successful and highly developed consultancy body. The fear, which was expressed from all sides of the House at Second Reading and was taken up at the Committee stage, was the risk that, according to the wording of the Bill, the Government had reserved the right to dispose of it either in whole or in part. There was grave anxiety that to dispose of this admirable body in part would seriously weaken its future activities and set at nought what it has achieved so far. The Minister agreed at the Committee stage that he would come back on that point and he gave us very firm assurances on Report that it was now the Government's intention to dispose of AEA Technology as a whole. For that we are very pleased. All I can say in conclusion is that I wish it very well in its new phase of life.

On Question, Bill passed.