HC Deb 29 October 1985 vol 84 cc886-902

Lords amendment: No. 81, in page 43, line 13, after "Company" insert or any subsidiary of theirs".

Mr. David Mitchell

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

With this it will be convenient to take the following Lords amendments:

No. 82, in page 43, line 13, at end insert "or any such subsidiary".

No. 83, in page 43, line 17, leave out from "employment" to the end of line 18.

No. 88, in clause 53, page 49, line 3, after "maintenance" insert ", to any extent,".

No. 89, in page 49, line 4, leave out from "by" to "or" in line 6 and insert— (i) any person who is or has been employed by the Company (or any subsidiary of theirs); or (ii) a member of such a person's family;".

No. 90, in page 49, line 9, after "loss" insert "reduction or limitation".

No. 91, in page 49, line 11 at end insert— (6A) Without prejudice to the generality of section 47(1)(c) of this Act, the arrangements there mentioned may include provision for the making by the Company of payments in compensation for any loss, reduction or limitation of any such concession, benefit or privilege as is mentioned in subsection (6) above to the extent that provision in respect of the loss, reduction or limitation is not made by virtue of that subsection.".

Amendment (a) to proposed Lords amendment No. 91, in line 3, leave out 'may' and insert 'must'.

Amendment (b) to proposed Lords amendment No. 91, in line 6, leave out from 'privilege' to end of line 8 and add `and must include provision for the maintenance of pension rights of equal value to those existing prior to implementation of the disposal programme'.

7 pm

Mr. Roger Stott (Wigan)

It is understandable that we have become a little confused, because of the rapid rate at which we are moving through the amendment paper. It might be as well if we slowed that pace and examined precisely what the other place has been doing in other major areas of concern.

Mr. Speaker's selection list has caused us some difficulty with respect to amendment No. 83, which is in this group of amendments. The Opposition are attempting to disagree with the Lords in the said amendment, but, because of the time factor, and because of the ludicrously tight guillotine, I do not intend to pursue our arguments on amendment No. 83, but will deal more specifically with our arguments on amendments (a) and (b) to proposed Lords amendment No. 91.

Our intentions are obvious. The pension provision for people in the National Bus Company is causing concern. There have been broadly two approaches to pension funds in privatisation plans—both maintaining some version of "no worsening" plans. In my industry, in British Telecom, privatisation meant that the entire pension fund was paid over en bloc. When the predecessor of the present Secretary of State decided to sell off Sealink, the staff remained in the British Rail pension scheme.

In the case of the NBC there will be no company left, because it is to be broken into smaller units, in line with the Government's competition theories. This means that there will be no large company with the resources to underwrite the current pension funds.

So long as the Government's predictions on inflation and investment returns are exactly correct, for the next 40 or more years, there will be no problem. The Government appear to want NBC staff to believe that this is possible. However, if in any one year there is a shortfall, pensions will have to be topped up from some other source. There are two possible sources. The new staff of NBC paying into the fund is one source. That will end w hen NBC closes, thus turning the National Bus pension fund and BEST into "closed" funds.

The other guarantee was a straight payment from NBC. That will also go. We heard recently that the Government intend using some insurance companies to assist them in this dilemma. At present, 15,000 former employees and 10,000 staff dependants receive funds from the NBC pension fund. In addition, NBC had 51,000 staff at the end of April 1983. All those people who have been paying into the pension funds believe that their pensions will be cut and that the provisions will no longer be forthcoming.

Mr. David Mitchell


Mr. Stott

The hon. Gentleman might say that that is nonsense, but he will have the opportunity later, if he catches your eye, Mr. Deputy Speaker, to assuage some of the fears of people in the industry. In spite of what he may say, he has not yet done that. If he had done so, perhaps we would not have had the strike by bus men, which is the only way in which they could demonstrate their rejection of his pension proposals.

The amendments which were tabled in the other place provide for a guarantee by the Secretary of State that at normal retirement date, employees of the NBC or its subsidiaries will receive pensions no less than those which they were entitled to receive on the day the NBC was privatised. Lord Belstead said that this was calling for a guarantee which the Government could not give. He said: It would be an open-ended commitment of taxpayers' money and in that respect it would go further than NBC does already." —[Official Report, House of Lords, 14 October 1985; Vol. 467, c. 347.] I remind the Secretary of State of the two examples that I quoted, I remind him of the employees in British Telecom who were former civil servants, then former public servants, and who now work for a private company. Their pension provision, from Civil Service status to public service status to private status, has been maintained and guaranteed, so the principle has been established. The people who were employed by Sealink are still members of British Rail's pension fund, so there has been no worsening of their position.

What does the Secretary of State propose to do with the employees' pension provisions in British Airways when it is sold to private enterprise? I understand that the Secretary of State has given a nod and a wink to the idea that their pension provisions will be secured and they will be looked after. If so, why will only people in the transport industry — the bus men and bus women who have worked in the industry all their lives—see their pensions at risk? That is why we have tabled these amendments.

I understand that in the case of NBC the Government propose to hand over the entire assets of the BEST pension fund to the Standard Life Assurance Company, which proposes to reduce the benefits already earned.

Mr. David Mitchell


Mr. Stott

The hon. Gentleman may say that that is nonsense. We shall have to see on closer examination whether he can persuade us that that is the case. I remind him that sitting next to him is the Minister of State—the hon. Member for Wallasey (Mrs. Chalker)—who has been quoted on a number of occasions on this matter. She claimed that staff pensions would not be worsened by the provisions of the Transport Bill 1982 and that it would be "wrong if it did". In 1985 that pledge has been broken. I do not know whether the hon. Lady can justify those claims, which were made when the position was put to her by not only the Labour Front Bench but by members of the transport industry.

These amendments on the pension fund issue are our last chance to put this matter right. Throughout the whole year of discussions on this wretched Bill there has been an acceptance of certain technical and drafting amendments. These amendments were "technical" and "drafting" to facilitate the lunacy of the Secretary of State. They were not in any sense a response to the sensible and orchestrated opposition to the Bill from almost every section of society. If the Secretary of State has any doubts about that, I can supply him with a Marplan poll concerning his proposals. He would get a big shock on seeing what people think about the ruination of co-ordination of transportation.

We are at the eleventh hour—it is almost midnight for the Bill. If we do not get any movement on the question of pension schemes for NBC staff, this will be to the immense electoral disadvantage of the Secretary of State and his party at the general election. I spent the summer travelling around the country talking to people employed in the transport industry. I talked to bus men and bus women in their garages and on their buses. I had big meetings in Dover and in Chippenham. I had meetings in the south of England, in the good underbelly of Tory Britain. The bus men were worried.

Mr. Ridley

What did the hon. Gentleman tell them?

Mr. Stott

I told them that their trustees did not accept the Government's scheme. The trustees of the NBC's pension scheme have rejected the Government's proposal.

Mr. Ridley

They do not know what they are talking about.

Mr. Stott

The Secretary of State says that they do not know what they are talking about. The right hon. Gentleman has the habit of leading with his chin. I hope that Hansard has got that intervention for posterity and that it is there for all to see. Sometimes I despair when I am trying to plead with the Secretary of State for common sense to prevail. We are asking for acceptance of amendments (a) and (b) to Lords amendment No. 91 which we believe are in the spirit of what the hon. Member for Wallasey meant when she said that it would be wrong if there was a worsening of the position.

In Committee I said that people employed by the NBC had arrived at a point where their pensions were secure. Their pension entitlements have been negotiated by the trade union with their employer. It is not the employer or the trade union, but the Government who are moving the goal posts. The Government are changing the scene. It is not the fault of the NBC or the TGWU, but the fault of the Secretary of State. He has moved the goal posts and muddied the waters. If he has changed the ball game, he should accept responsibility to ensure that the pension rights are maintained.

Mr. Stephen Ross

I wish to support amendments (a) and (b) to Lords amendment No. 91. Even at this late hour, I hope that we will have an explanation from the Government of whether the points just made from the Opposition Front Bench are right. I have read the debates in the other place. Unfortunately, by four votes the final effort to pass something similar to the amendments was lost.

Lord Shepherd is a former chairman of the NBC and was no doubt briefed by the company. In the other place he said: at the present moment the advisers to the trustees take the view that what the Government are proposing does not rank in any way equivalent to what the members themselves have subscribed for and would have expected to receive on the dissolution of the National Bus Company."—[Official Report, House of Lords, 14 October 1985; Vol. 467, c. 350.] Is that right?

I am briefed by the manager of Southern Vectis, who, incidently, is a supporter of privatisation and is not completely opposed to the Bill. In a letter to me he said: In the case of NBPF,"— that is, the National Bus pension fund ten major insurance companies have been approached by the Department of Transport but none would agree to carry on the existing basis of linking pensions to individual salary increases, and we in the Group feel that this is essential if existing pension rights are to be preserved. In all other cases where nationalised companies have been privatised guarantees have been given by the Government to secure the pensions of current employees and existing pensioners. I believe that we received that assurance in the other place, but I hope that it will be confirmed.

The letter from the manager of Southern Vectis continues: I note from Lord Shepherd's speech on 14 October that Mrs. Lynda Chalker has said that it would be quite immoral for the government in any way to take such action as would reduce the benefits of a scheme. The present proposals of the Government simply do not go far enough as they do not rank in. any way equivalent to what we ourselves have subscribed for and would have expected to receive on the dissolution of National Bus Company. What we are asking is that the government gives guarantees that are equivalent to guarantees at present given by the Trustees of the pension funds of the National Bus Company. As I understand it, that is what the amendments seek.

I have had experience of what happens when companies are privatised. I am still suffering from the privatisation of Sealink. The latest problem is that pensioners' travel cards issued by British Rail are not being honoured by Sealink, although its competitors are allowing pensioners to travel free. Pensioners from the Isle of Wight have to pay to travel on Sealink although they can travel free on trains at either end of the boat journey. The manager of Sealink has taken a retrograde step about which I have complained bitterly.

That is the sort of thing that has happened, and that will no doubt happen again when the National Bus Company is broken up into smaller companies. The employees of the smaller companies should have priority to enable them to buy shares and take over the companies themselves. That was done with the National Freight Corporation. If it is not done with the National Bus Company, it will be disastrous. Some people want to get their hands on bus companies, not to provide a service to the public, but merely to make a profit. The managers and employees of the bus companies are entitled to a guarantee from the Government that their pensions are safe. We have not yet had that guarantee.

7.15 pm
Mr. Parris

At the end of the day, NBC employees will receive a fair deal, but the Government seem to have tied themselves into a Jesuitical knot so that they may give them that deal. As I understand it, for ideological reasons, the Government are unwilling themselves to offer an open-ended, "no worsening", guarantee to a private company. The Government are convinced that there will be no worsening. They want to arrange for the trustees of the pension fund to insure against there being any worsening. The premium for that insurance will have to be paid by the Government.

If insurance proves necessary, apparently it is to come out of the employers' contribution. If so, to the extent that that costs the employers money and commits them to future costs, it will reduce the price for which the National Bus Company can be sold, because it must be sold with the commitment to pay out of the employers' contribution a premium for an insurance scheme against any worsening of the pension scheme. In the end, through its reduced receipts on the sale of NBC, the Government will pay for an insurance policy to provide a guarantee which they themselves are unwilling, partly for ideological reasons, to provide.

If the Government are convinced that there will be no worsening and that the pension scheme is not threatened in any way, it would be cheaper for them to provide the guarantee themselves than to pay a private insurance company to provide it. They will be paying not only for the guarantee but for the BMWs owned by the directors of the insurance companies. All insurance is irrational, except insurance based on the belief that the insurers have incorrectly assessed the risks that are being insured against. If they succeed in persuading the NBC trustees to seek a guarantee privately, the Government will have tied themselves, as I said, into a Jesuitical knot.

Nor am I sure that the trustees will be right in purchasing the premium. Better use of the trustees' funds might be to put them straight into the pension scheme. If the trustees are convinced that the funds are not under threat, it is not right to use them to insure against a threat. It would be better for them to put the money towards the payment of pensions. At the end of it all I do not think that NBC employees have anything to worry about, so I shall support the Government.

Mr. Gordon Oakes (Halton)

On most of the Bill, especially on the whole idea of privatisation, the Government have thrust upon us ideological views which we do not like, but we must accept that they have a majority.

The amendments suggested by my hon. Friend the Member for Wigan (Mr. Stott) seek to prevent the Government using bus men and bus women and their pension funds as pawns of the Government's political will. There is great anger among bus men and bus women about this. The Government will correct me if I am wrong, but I have never known a national strike, as today's action has been, about pensions.

As my hon. Friend the Member for Wigan has said, what can bus men and bus women do when no one will listen to them, their unions or their employers? The Government will not even listen to the employers, who have valiantly put the case for the preservation of existing pension rights. My hon. Friend the Member for Wigan has pointed out that it is not the bus men and bus women, the NBC or even the trustees of the pension funds, but the advisers to the trustees — actuaries and accountants versed for a lifetime in pension matters — who have stated categorically that the Government's proposals are worse than the existing scheme.

It is no answer for the Secretary of State to say, as he did, that those advisers do not know what they are talking about. I see the Under-Secretary of State nodding, but I am sure that all Members in the parliamentary pension fund would listen if I, as a trustee, told them what our advisers were saying, as opposed to what the Government's advisers were saying. The NBC and its employees feel exactly the same about what their advisers say.

The amendment merely seeks to ensure that bus men and bus women—drivers, conductors, inspectors, garage staff, the tens of thousands of people in the industry—should receive no worse treatment than the Government have provided when other industries have been privatised. There is no political polemic in this. We are simply fighting for present pension funds and levels of benefit to be preserved.

My hon. Friend the Member for Wigan referred only to the NBC, perhaps due to lack of time. I wish to refer briefly to the PTEs and municipal companies. Their worry is expressed as follows: The current Transport Bill makes provisions for PTEs and municipal transport undertakings to be set up as PLCS which will be deemed to be admissible bodies for inclusion in the Local Government Superannuation Fund. However, as the deeming option is not mandatory and is merely permissive there can be no guarantees that employees being transferred into their new companies will maintain future pension rights. As a Member sponsored by the Transport and General Workers Union, I realise that that case bears no comparison with that of the NBC employees, who are really done down by this option. I do not suppose that the Secretary of State will take any notice of the words of Lord Shepherd, a former chairman of the National Bus Company, who has stated without any hesitation that the attempted Standard Life scheme based on a guarantee of RPI plus 1.5 per cent. bears no comparison with the skilful management of the existing scheme, which is based on current wage levels.

If the Government cannot accept our amendments on this last day of term—I appreciate the difficulty in that respect—I plead with them to bring in legislation in the next Session to achieve justice and equity for people who have paid into pension schemes, many of them in private companies even before the NBC was set up, but whose pensions are now in jeopardy because the Government will give no guarantee that their position will not worsen as a result of the Bill.

The Conservatives know that they deal with pensions at their peril. When the Chancellor made noises and flew kites last year about attacks on pension schemes, all of us, and especially Conservative Members, were inundated with letters from people who feared that their pensions might be affected. When the present Secretary of State for Social Services says that he intends to review the state earnings-related pension scheme, the reaction from the country is enormous. The bus men and bus women of this country know that the Government may be tampering with their pension scheme. I must tell the Government that they do that at their peril.

Mr. Peter pike (Burnley)

I support the amendments because they seek to do what we have sought to do throughout the proceedings on the Bill—to secure a fair deal for people working in the bus industry.

The action taken by people in this industry today shows their clear belief that even at this late stage the Government have not provided the guarantee of fairness to which those employees are entitled. Last night's Lancashire Evening Telegraph quotes Mr. Marshall, general manager of the Burnley and Pendle area, on the subject of the strike. Like most of the employees, whether in management or on the buses, he is cynical about the Government's actions. He is reported as saying: I believe the whole protest is futile and The Government will simply not commit the new bus companies to expensive pension schemes. The article continues: Mr. Marshall added that all pension payments made to the date of the introduction of the new bus companies next year would be fully safeguarded. We are concerned not just about existing pensions, but about the future pension rights of people in the industry. The hon. Member for Derbyshire, West (Mr. Parris) said that the provision that we seek would reduce the selling price of the industry, but why should people working in the industry suffer so that the Government can obtain the maximum price? That is wrong and entirely unacceptable to Labour Members. Those employees should have the guarantees that we have sought for so long.

When the Bill is passed, the bus companies will have to go out to tender and they will face competition from people who do not have to comply with any conditions of employment or service. They will have to face competitors who do not provide adequate pensions, sick pay and all the other benefits to which workers are entitled. It stands to reason, therefore, that the NCB, the PTEs and the municipal undertakings will not be able to win tenders and to remain in business if they do not compete on equal terms. Indeed, the NBC has already withdrawn from the National Joint Council for the Omnibus Industry because it knows that it will have to worsen the conditions of its employees.

7.30 pm

Pensions are important, and more and more people are taking this issue extremely seriously. We know that if the state earnings-related pension scheme is abolished or phased out, the two categories hardest hit will be women and manual workers. People in the bus industry will lose in two ways. They will not have the benefit of a backup from SERFS and a guaranteed minimum pension, and they will also lose their existing scheme. We must take notice of what the trustees and advisers have said, and we must recognise that the trustees have a statutory duty to ensure that the maximum benefit is preserved for the people whom they represent—the employees, those who are already on pension and those who will be on pension in the future.

The amendment is reasonable and fair. Even at this late stage the Government should wake up and accept it. In Committee, a number of hon. Members expressed sympathy, and made all the right sounds, but when it came to the vote they supported the Government. I fear that they will do the same today. I shall be surprised if the Secretary of State for Transport says that he is prepared to accept the amendment, however fair and justified it may be. He is not a reasonable man, and I cannot believe that he will accept the amendment.

Mr. Bob Clay (Sunderland, North)

I echo the remarks of my hon. Friends when I say that these are unique circumstances. The House, as I understand it, will for the first time be effectively passing legislation which will worsen people's pension prospects. However objectionable previous privatisations may have been, at least pension rights were secured.

My hon. Friends are correct to say that today's industrial action reflects the anger and incredulity which has built up over the last few months among many people in the bus industry. They were opposed to many aspects of the Bill and were staggered by the inanity of much of it. They were opposed to privatisation, but they nevertheless believed that it would be inconceivable for the Government not to leave their pensions "no worse off". Even in the past few days, while the Bill was in another place, it dawned on people that the Government are seriously and cynically not prepared to protect those pensions.

People in the bus industry have expressed anger and incredulity; they do not know what has hit them. They feel outraged that they have been robbed. They are being robbed of all they have contributed over many years—over a whole lifetime in the industry in many cases—by the Government's refusal to creat a "no worse off' position.

Those circumstances are not unique to pensions. I am not sure whether the Secretary of State and his colleagues sincerely believe the nonsense that they have talked about the protection of pensions, and other matters, throughout the Bill's long and sordid history. When the Secretary of State replies I shall ask myself whether he believes the nonsense—the Jesuitical nonsense as the hon. Member for Derbyshire, West (Mr. Parris) described it in a Jesuitical speech—that in some obscure way there is protection.

It is extraordinary, as my hon. Friends have said, that the trustees can say that there is no protection, and that the National Bus Company management, from the most senior to the most junior level up and down the country, and everyone involved can say that the assurances given are meaningless and do not create a "no worse off' position.

The Secretary of State has the arrogance to say that the experts do not know what they are talking about and that the whole world does not know what it is talking about. That statement is made by a man who has been in and out of the courts in the past few months and who has been found to have acted illegally on one occasion after another in his job as Secretary of State for Transport It is extraordinary that someone who has had such a career in the courts with so many judgments against him has the audacity to come here tonight and say that the pension fund trustees do not know what they are talking about when they advise National Bus Company employees.

As my right hon. Friend the Member for Halton (Mr. Oakes) said, this matter involves not just the NBC. I have an interest in the matter. I am glad that when I came here, I opted to transfer my service as a previous PTE employee in the local government superannuation scheme into the House pension fund. If I had not done that and had retained my service, I should be worried about what would happen. A clause which states merely that something "may be" held in a local government superannuation fund is nothing like the same as a clause which says that it "must be" held.

The Secretary of State must be aware that local managers in various parts of the country, not just in the NBC but in PTEs and municipalities, are already saying informally and, in some cases, formally, to their trade unions, "You know that we shall be unable to maintain the value of pensions. We are not certain that the future company will stay in the local government superannuation scheme. It will depend upon the competition. If we are competing with people who do not provide that kind of pension, how do you expect us to provide it?" That gives the lie to the assurances that are being given by the Government. They must be aware of that, and of the fact that those things are being said.

The Government must also be aware that all the nonsense that was talked about the Bill creating employment has already been given the lie because Northern General Transport, even before the Act has received the Royal Assent, has formally told its trade unions that it will dismiss 25 per cent. of its staff. That is a most extraordinary example of how all the nonsense that was discussed in Committee and on Report is contradicted by what is already taking place.

I recall the hon. Member for Wellingborough (Mr. Fry) making a long and detailed speech on Report in which he took apart every detail of the misleading impressions being given by the Under-Secretary and others. He quoted chapter and verse. He said that many of the things that the Minister claimed that he had said or written were untrue. The hon. Member said that the only way he could conclude that what was happening was not fraud was to assume that it was gross incompetence. That came from a Conservative Member. He was listened to by two or three other Conservative Members, two of whom voted with the Opposition, as did the hon. Member for Wellingborough. However, when the Bell rang, the Lobby fodder came flooding through to defeat the Opposition amendments. No doubt the same will happen tonight.

Bus men, bus women and many other workers will notice the House's final disgusting hypocrisy. It has its own pension scheme, which must be one of the best available to anyone anywhere. In July 1983, the House improved that pension scheme but it is apparently not going to find itself able tonight to prevent the Government from robbing NBC, PTE and municipal employees of their pension rights.

Mr. Ted Leadbitter (Hartlepool)

We do not need a nasty turn of mind to consider what the Secretary of State has in store for the transport workers. Wherever he goes there is despondency, unhappiness and misery. The workers tremble whenever the Prime Minister suggests a new office for him. There is heartache in the country because the people know his state of mind. We do not need a nasty approach because there is the record.

It is the Secretary of State's Bill. He listens to no one. All the advice that has been made available to him has been swept aside. He has arbitrarily deprived transport industry workers of their pension expectations and rights. He has a responsibility to tell the House what is inhibiting him from acting reasonably. What is stopping him from applying a provision for the maintenance of pension rights for transport workers in the same way as it has been accorded to other people who have gone into the private sector? What actuarial basis is there for his resistace to what is reasonable?

How many Conservative Members will go to their constituencies this weekend—there is plenty of time, as we prorogue tomorrow — and address the transport undertakings that will be privatised? Will they say to them, "We fought for your pension rights," or "We spoke in Standing Committee," or "We spoke in the House of Commons"? Will they say that they put the case sympathetically on their behalf? But they will omit to say that they went into the wrong Lobby.

What is the position of the Conservative party—the caring party, as they like to tell the nation, but the uncaring party, as the nation has learned? Having taken that arbitrary action, is not the Secretary of State conscience striken that he has not taken the opportunity that was there for other people transferred from the public sector to private enterprise? The opportunity to do what is right for transport workers is there, but for some reason he is not taking it.

The House is entitled to know the position. Either there are some strong arguments that we have not yet heard that support his view or there is a doctrinal, rigid or dogmatic approach, in which the Secretary of State has shown no sensitivity. We have reasonable men and women working in the transport industry and some of the highest standards of transportation in the public sector. I remind the right hon. Gentleman of the havoc that will come from privatisation.

There is an employment problem for the workers in the transport industry, apart from their pension problem. All at once the Conservative Government have decided that there must be a state of unsettlement in the transport industry and a state of denial for the workers. Is some spite or prejudice being exercised here? Although I do not agree with the principle of privatisation, why is the favourable, sustainable, and reasonable treatment for one section of the public service that has been transferred to the private sector not applied to another? Why are the Government behaving differently towards so many thousands of people who provide an excellent public service for their community?

Let me put in a caveat. Privatisation has caused problems on our roads. There is an inquiry going on, so I cannot comment on it, but we must bear in mind the consequences of the transport measures we have had in the past two or three years. We not only have congestion on the roads but the Government's expression of concern is constipated. The Government will not respond to reasonable submissions in Standing Committee and elsewhere, to get the best out of the Government's overall principle, that come hell or high water they will privatise. The Minister could get his own way on privatisation, but he must respond to the consequences, and if he believes that some people will suffer when he does not intend them to suffer, let him say so.

Will the Secretary of State tell the House those things now, because Conservative Members have to go to their constituencies? I hope that all the transport workers will nobble them. Two years after the vote, they might have got over it. Conservative Members are entitled to learn from the Secretary of State what is the case for not giving the transport workers their pension rights, no more or less than before. We are not asking for any hand-outs. We are asking for nothing other than what has been actuarially decided upon — a valuable pension scheme, to be sustained when the Secretary of State hit transport workers out of the public sector into the private sector.

Will the Secretary of State spell out the reasons why he cannot allow us to have this reasonable amendment? Are there any practical difficulties, or has he decided, meaning that that is the end of the matter?

7.45 pm
Mr. Phillip Oppenheim (Amber Valley)

I shall be extremely brief, because the arguments on both sides have been more than adequately rehearsed and because I am sure many hon. Members will be keen to get off to their supper.

I appreciate the points made by my right hon. Friend the Secretary of State in his correspondence to me on this subject. Despite that, rightly or wrongly, much concern has been expressed in my constituency over the pensions issue. Bus men from depots in Langley Mill and Alfreton have taken a great deal of trouble courteously to explain and put their fears to him. I accept, although there are strong arguments on both sides, that their concern is genuine and not politically motivated. I feel that my right hon. Friend should have given the same guarantees to National Bus workers as were given to workers after previous denationalisations. Therefore, I shall not support the Government in this case, although I must say that the specious arguments of Opposition Members nearly made me change my mind.

Mr. David Marshall (Glasgow, Shettleston)

It is absolutely astounding that some hon. Members should give their supper a higher priority than workers' pension rights. However, I am grateful for the fact that the hon. Member for Amber Valley (Mr. Oppenheim) has decided that he cannot support the Government on this issue.

The points against the Government have all been made by my hon. Friends. It is scandalous for any Secretary of State to treat any group of workers in this fashion, particularly considering that many thousands of transport workers have given a lifetime of loyal service to the public transport industry. It is scandalous that they will not even be allowed to retire with the guarantee of a decent pension. In some areas, with certain provisions, they might have the pension rights that we are seeking to guarantee, but that will be left to local variants, and in many cases they might not have proper pension rights.

I should like to re-emphasise the points made by my right hon. Friend the Member for Halton (Mr. Oakes) and my hon. Friend the Member for Sunderland, North (Mr. Clay) in respect of PTE employees. I welcome the fact that the PLCs that will be set up will be deemed to be admissible for inclusion into the local government superannuation scheme. However, the failure to make that mandatory is unjust and heartless to the extreme. If it is worth while to include the provision in the Bill, why not make it mandatory? I appeal to the Secretary of State, even at this late hour, to make it mandatory. If he cannot do it tonight, will he take steps to do it as soon as possible? If not, why not? How can he justify such a cruel decision? Can he not change his mind at the last minute and make the provision mandatory?

Mr. Ridley

I want to make it clear that I thoroughly share the views of all hon. Members that this is a very important matter, which has been rightly discussed at every stage during the Bill's progress both in the House and in another place. I want to try once more to persuade Opposition Members that they have not entirely grasped what is going on and that they are wrong in many of their allegations.

The right hon. Member for Halton (Mr. Oakes) and the hon. Members for Burnley (Mr. Pike) and for Glasgow, Shettleston (Mr. Marshall) referred to local government pensions. It is clear that they do not understand that any accrued rights of bus men employed in local government are safeguarded. Accrued rights for past service will remain in the local government scheme up to the time of seperation.

The hon. Member for Sunderland, North (Mr. Clay) was wrong when he said that he had been wise to move his pension into the House of Commons scheme. It. would have been equally safe in the local government scheme. We are discussing future arrangements for local government pensions, not accrued rights. That is an illustration of how some hon. Members have not grasped the point.

Future benefits in the National Bus Company are a different issue. The debate has been about accrued rights in the NBC scheme. It is not our policy to affect any existing pension rights—that is, pension entitlements that employees have already earned and paid for through their contributions. The Bill contains nothing that would have that effect, and it would be wrong if it did." — [Official Report, Standing Committee F, 18 March 1982; c. 345.] Since many hon. Members have quoted my hon. Friend the Minister of State, I should tell the House that that is a quotation from her speech on the 1982 Bill. I feel that I am justified in repeating it in this debate.

I shall take a little time to go through what has happened, because I am sure that hon. Members mean it when they say that they want to be reassured. Throughout I have stressed the importance of ensuring that the assets of the funds are adequate to meet their liabilities. It is the Government's clear undertaking to ensure that any deficiencies in the funds are eliminated at the time of privatisation following a fresh actuarial valuation on a prudent and reasonable basis. In Committee, many hon. Members and trustees did not think that that was sufficient assurance. They argued that something further should be done so that trustees would have more security to offer their members. Always helpful, I proposed that private sector insurance of the fund should be examined. I did that on Report, and not recently, as the hon. Member for Wigan (Mr. Stott) alleged.

That insurance is not in some way purchased by the Government, as the hon. Member seemed to suggest. It is a way by which the trustees could seek to ensure that their funds are adequate for their responsibilities for many years to come. Throughout the summer recess my Department and the trustees of the NBC and their advisers pursued these matters with insurance companies. The result has been that private sector insurance is available to assure present funds at a price within their reach. In other words, it should be possible for the trustees to provide for members one or more of the household names in the insurance industry as security for the benefit that members have built up. That option is now available.

Nevertheless, the trustees faced further difficulties. They might want to purchase the insurance now, which would have the effect that the House wants, but how could they be sure that they could also cover by insurance the extra benefits that would accrue in the scheme over the next few years until privatisation is completed? Indeed, it might also be difficult to buy insurance straight away because some of the pension funds' assets, particularly property, might be difficult to realise and to turn quickly into cash to pay to the insurance company. Those difficulties were encountered during the summer.

However, the Government met the problem by making an offer to the trustees through the NBC and proposed that the company should make cash available to the trustees, in the form of a bridging loan, so that they could purchase insurance now if they wished, although they may not have sufficient liquid assets to do so.

We further proposed that the NBC should make available, through the employer's pension contributions, such further finance as may be necessary to ensure insurance cover over the next few years up to the end of the disposal programme. In this way, the trustees can now offer their members the certainty that has been asked for by hon. Members throughout our proceedings on the Bill. It is now available to the trustees to offer as they wish.

I take exception to the hon. Members who have alleged that accrued rights will be cut down, eroded or threatened. Worse still, Mr. Bill Morris of the Transport and General Workers Union was asked on Radio Four last week: But they won't lose the benefits that they've already accrued? He replied: Yes, in some instances there will be massive reductions of the pension benefits already earned by people employed in the National Bus Company. That is not so, as I have demonstrated. It cannot be so. When the leader of the union says that there will be massive reductions in benefits, I do not find it surprising that great alarm, fear and despondency have been stirred up among bus men about their pensions.

Mr. Stott

I am listening closely to the Secretary of State. The kernel of the issue is whether the trustees, who are charged with the responsibility of ensuring that the NBC pension fund is adequate for the purposes for which it was set up, accept what the right hon. Gentleman says about the new plan that he has devised.

Mr. Ridley

I will answer that question, but I wish first to refer to the speech of my hon. Friend the Member for Derbyshire, West (Mr. Parris). In a sense, he is right, in that the commitment to buy insurance will cost something, which will increase the financial exposure of the NBC and thus of the Government. However, I have always made it clear that the Government were prepared to ensure that sufficient money was made available to ensure the adequacy of the pension fund. This is the form in which such a pledge will be implemented if that is what the trustees decide to do.

My hon. Friend's argument is faulty, because if the Government gave a guarantee at the taxpayers' expense, that would save the insurance premium, but the saving would go not to the Government, but to the fund and, therefore, it would be an unequal transaction.

We think it right to propose that the benefits in one of the schemes, which are currently linked to average national earnings, should instead be linked to the rise in retail prices plus 1.5 per cent. and not just to the rise in the retail price index, as Mr. Morris and some Opposition Members seem to think.

I have had an analysis done of which has been better over the past 10 years—the earnings index or retail prices plus 1.5 per cent. In five of the years, one was better and in the other five years, the other was better. I believe that the difference is equivalent. It would make the insurance more cost effective and it would give the fund member the certainty of a fixed percentage over and above prices. The benefits to be obtained from the insurance option are at least equivalent, therefore, and in many circumstances could be said to be better. One of those circumstances would be if we ever had the disaster of an Alliance or a Labour Government. I am certain that we would all rather have 1.5 per cent. more than RPI, than earnings under them. There could be many times when it would be wiser to go for RPI plus 1.5 per cent.

8 pm

The right hon. Member for Halton (Mr. Oakes) referred to the advisers to the pension fund trustees. I think that he was trying to make the point that the Department's suggestion on how to secure insurance might lay them open to legal challenge. I can only tell him that my legal advice is that that is not so. I do not know of advice other than that which they have received, but I can say that this basic choice exists for the trustees, because it is they who are responsible for these funds and for paying the pensions, the accrued rights. They can take some form of insurance option to give that extra security which many hon. Members have sought, my hon. Friend the Member for Amber Valley (Mr. Oppenheim) prominent among them.

Or the trustees will be able to say, "We are better fund managers and we can be sure that the funds that we have set up will be adequate to provide that security because we believe that we are cleverer than an insurance company." Then they will have taken the responsibility to themselves. The responsibility in this matter lies not with the Government but with the trustees of the pension funds.

This brings me to all the examples quoted by the hon. Gentleman on the Opposition Benches — British Telecom, British Airways, Sealink and many other firms that have been or will be privatised. In not one single case has a Government guarantee been given to the pension fund. It has always been recognised that the trustees are the people who are responsible. In no case has a Government guarantee be given nor will it be given in the future. The hon. Member for Hartlepool (Mr. Leadbitter) is therefore quite wrong. These employees are receiving treatment which is identical to that given to the pension assets of every other group of privatised workers.

I could say that we have gone far further in relation to the bus men's pensions than with any other group of privatised workers because we have taken immense trouble to facilitate the provision of insurance, if they wish it, and to make sure that the funds will be adequate to buy that insurance, if that is what the trustees prefer.

An occupational pension is not a pension produced or guaranteed by Government, not even in the nationalised industries. Even if the National Bus Company were to remain in the public sector, the Government would not guarantee its pension funds. There is, therefore, a complete difference between what the Opposition are seeking, which is a Government guarantee of a private pension fund, and the reality of security, which is what the bus men actually want.

The measures that I have outlined give the option of that very full security. I should have thought it more likely that some of the great insurance companies of this country would still be solvent long after the country had gone bankrupt under a Labour Government. I would rather have a guarantee from the Standard Life company than from any conceivable Labour Government. If we are talking about security, that is where security comes. I will therefore ask Opposition Members to stop trying to frighten the bus men, to make them fear for their own pensions, in order to make these cheap political points against the Bill. I ask the House to reject their amendments.

Mr. Stott

Although this has been a very interesting debate, sadly we have made little progress in persuading the Secretary of State of the very genuine fears in the industry regarding pension provisions. The hon. Member for Derbyshire, West (Mr. Parris), to use his own phraseology—turned round on him by my hon. Friend the Member for Sunderland, North (Mr. Clay)—made a very Jesuitical speech. Those of us who have served on Standing Committees with him over the past few years are used to his making that kind of speech. He is a past master at walking on barbed wire. According to my hon. Friend the Member for Glasgow, Maryhill, (Mr. Craigen), he is the only person who could talk himself out of his own arguments. There was more than a grain of truth in what the hon. Gentleman said, and in his approach to this serious matter he demonstrated the way in which, in conscience, he ought to vote on this issue.

Not so his hon. Friend the Member for Amber Valley (Mr. Oppenheim) who is taking the middle road out of all this. He believes neither the Secretary of State nor me, so he will not support either of us. He will sit on his hands. If he thinks that that is going to save him from ignominious defeat at the next election, I must tell him that it will not because there is a great deal of resentment among people in the transport industry.

Mr. Phillip Oppenheim (Amber Valley)

If the hon. Member is a sporting man, I will be quite happy to take a bet on his statement.

Mr. Stott

We will see about that. I assure the hon. Gentleman that I have as much concern, or more concern, with this matter and the other matters that we will debate before 10 o'clock, when I have to go to my supper.

The Secretary of State has outlined the way in which he has moved. I concede that he has moved on this matter. He has moved because he has been forced to do so, because we have highlighted the difficulties and the seething resentment about this matter in the transport industry. Yet the Secretary of State has still not got the message. I will put a forthright question: do the trustees of the National Bus Company's pension fund accept what he says and agree with him? They do not. They do not believe that what he proposes will be beneficial to the members of the pension fund.

The Secretary of State had the audacity to say that he had taken legal advice. This is the man who has been before the courts of this country, not once, not twice, but three times, on the legal advice of his officials, and been found guilty on every count of being irrational and irresponsible and of acting illegally. Even today, the High Court has overturned his own legal advice on an appeal against the GLC lorry ban. We cannot take seriously the Secretary of State's legal advice or the way in which he interprets these matters.

We have tried persuasion. We have tried argument. We have tried to put forward the views expressed to us by the thousands of people who will be affected by this legislation. The Secretary of State has taken no notice of the most important issue concerning them. I am left with no option but to invite my hon. Friends to come into the Lobby with me and vote in favour of the amendment.

Mr. Deputy Speaker (Sir Paul Dean)

Perhaps it would be helpful if I remind the House that we are now dealing with Lords amendment No. 81. I will ask the hon. Gentleman, when we get to amendment (a), which will be after the Lords amendment No. 90, to move the amendment formally for a Division.

Question put and agreed

Lords amendments Nos. 82 and 83 agreed to.

Lords amendment: No. 84, in page 44, line 38, after "under" insert "the preceding provisions of'.

Mr. David Mitchell

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker

With this it will be convenient to take Lords amendment No. 85, in page 44, line 38, at end insert— (12) The Secretary of State may by order dissolve any company which is a subsidiary of the Bus Company and incorporated by local Act or by an order under the Light Railways Act 1896. (13) An order made under subsection (12) above may provide for the disposal of any remaining property, rights or liabilities of the company dissolved and may contain such supplementary, incidental and consequential provisions (including the repeal of any statutory provision) as appear to the Secretary of Stare to be necessary or expedient.

Mr. Mitchell

The amendment deals with some remnants of history. It provides the Secretary of State with an order-making power to disolve subsidiaries of the NCB that are statutory companies constituted under local Acts of Parliament or an order under the Light Railways Act 1896. There are three such NCB subsidiaries. All are dormant companies, and it is highly unlikely that any private purchaser would want to acquire them, particularly as at least one of them would have a duty to provide certain services. The preferred solution is therefore to dissolve them by order.

Question put and agreed to.

Lords amendment No. 85 agreed to.

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