Standing Committee E
Thursday 3 February 2000
(Afternoon)
[Part II]
[Mr. Roger Gale in the Chair]
4.30 pm
On resuming—
Mr. Paterson: I had congratulated the right hon. Member for Edinburgh, East and Musselburgh for the clarity of his amendment, which states:
``A scheme must not have an adverse effect on the pension entitlement of past or present employees of any of the undertakings involved in the scheme.''
I had then moved on to a quotation from the response to the public consultation. The first line of paragraph 62 states:
``Almost all the employee responses expressed strong concern about their pensions . . . In addition, they expressed concern that potential investors might remove the surplus from their pension funds.''
That is exactly the topic that has been raised by Labour Members with reference to bus company pensioners and by Conservative Members with reference to Maxwell pensioners. The response continued:
``Employees also felt that the shares they would receive would not compensate them for the potential decrease in their pension.''
That is covered by the amendment.
The nub of the matter is that uncertainty about future pensions has an impact on the morale of those employed in air traffic control. There is no doubt about that. We have discussed continuity and the need to ensure that the change is made smoothly. It is worth quoting from a letter, which we have all received and which is the most recent indication of the mood among employees. Mr. Paul Noon, general secretary of the Institution of Professionals, Managers and Specialists wrote to me outlining its concerns about the Government's proposals, because pensions will have a major impact on morale. Under the heading ``Disruption and morale''—``The impact of pension changes'' would be an equally relevant heading—the briefing states:
``The reality is that the safe provision of air traffic control in the UK is finely balanced. NATS and its staff need stability to cope with 1.8 million aircraft movements a year in ever more complex airspace and to bring new systems on line. In many areas they are struggling with outdated equipment, controller shortages, and severe training and development pressures. To this picture can be added the upheaval and disruption that would flow from privatisation.''
The key clause is:
``The oft-quoted mantra that demotivated staff cannot operate to the best of their abilities has real application to air traffic control.''
An interesting example then follows:
``For instance, following a disagreement over contracts earlier this year, the simulator performances of an entire batch of student controllers went down markedly. This would be a disturbing prospect if it was translated to operational ATCOs following privatisation. To quote the Royal Aeronautical Society's evidence to the Commons transport sub-committee last year: `Safety must always be paramount but low morale amongst controllers, for whatever reasons, is in itself a flight safety hazard.' ''
On those grounds alone, apart from our obligations to those who, as the right hon. Member for Edinburgh, East and Musselburgh said, worked so hard to build up what is the best air traffic control system in Europe—the right hon. Gentleman said that it was one of the best, but I believe that it is the best, bar none—this simple amendment should have the support of both sides of the Committee. My right hon. Friend Member for Kensington and Chelsea (Mr. Portillo) has moved on to greater things, sadly for the Committee. His contributions were most interesting, as he has such deep experience of all the Bills that have gone through the House in the past 10 or so years. He said that every now and then it was worth the Government's while giving a little on an amendment. I should have thought that the amendment contained something that would please all sides. I want to know what the Government's reasons are for not supporting it, in view of the spirit in which it has been discussed and the concern expressed by both sides of the Committee—buses on one side and Maxwell on the other—that morale would take a major dive.
Mr. Jenkin: I was listening carefully to the comments that my hon. Friend read from the brief given to us by the IPMS. Will he confirm that the institution is concerned that the pension rights of existing employees and pensioners are at risk from the current process, despite the assurance that Ministers have given? Will he agree that this is a superb opportunity for the Ministers to put their assurances into the Bill to reassure those concerned?
Mr. Paterson: That is a valid point. There is no specific reference to pensions in the brief, but I have cited the institution's concerns about disruption and the impact on morale, and I tried to explain before the break that public service employees cherish their privileged pension rights as against those in the private sector. That surely is one of the advantages for people working in the public sector. My hon. Friend the Member for North Essex has a good point when he says that pensions are integral to this matter.
I should be fascinated to know why the Government cannot support the amendment now, that it has broad support on both sides of the Committee. It is in the interests of those who will be entitled to pensions in their own right, but there is also a major element in that it would help to make the changeover smoother. There will be great uncertainties for those who will be affected, because they will have genuine worries about the new management coming in, the new arrangements and how the whole public-private function will work. They can perhaps look to their compatriots who work for a privatised British Airways or a privatised British Gas. They know what it is like to work in a private company, but no one knows what it will be like to work in this strange, amorphous new creation under new Labour.
I should have thought that the amendment would give the air traffic controllers confidence and will mean that there is one less reason for their morale to take a dip. As far as I can see, there is unanimous concern in the Committee about the dangers of pension funds being misused. To go back to the point made by my right hon. Friend the Member for Kensington and Chelsea, it would be good for the Committee to show that we are not being steamrollered by the Government's majority and are not going through a farcical process of discussing each amendment at length and then throwing it out. It would be a worthwhile exercise for the Minister to listen to the Committee and accept the amendment. I look forward to his arguments with great pleasure.
Mr. Jenkin: I congratulate the right hon. Member for Edinburgh, East and Musselburgh and thank him for tabling the amendment. He will see from the amendments that are grouped with his that the pension issue worries us too, although I am the first to admit that his amendment more succinctly addresses our crucial concern. It does not simply say that any liability to a relevant pension fund should be honoured, which in any case would be a legal obligation for the Government or any of its subsidiaries. It goes further and requires the Government to honour any obligation to maintain the outputs of the pension funds in question. That is clearly an important consideration when we are debating these matters.
We have had a good debate, which has drawn the Committee together, despite our diverse history. Maybe this is what new politics is all about—that we should all share the same concerns.
Mr. Snape: Give us a hug.
Mr. Jenkin: I very much regret that I missed what the hon. Gentleman said.
Mr. Snape: I hate the idea of this being put on the record, but what I said in response to the hon. Gentleman's projection of a new caring, sharing image was, ``Give us a hug''. [Hon. Members: ``Answer!'']
Mr. Jenkin rose—
Ms Claire Ward (Watford): Will the hon. Gentleman give way?
Mr. Jenkin: The hon. Lady can give me a hug whenever she wants.
Ms Ward: I am certainly not offering to do that.
The hon. Gentleman's comments and his recent performance at the palace of varieties have shown a side of him that I have never seen before.
Mr. Jenkin: It just shows that Tories are much friendlier than they look.
There is genuine concern throughout the Committee on the issue of pensions. While we are in repenting mood, I want to put on the record that, whatever the shortcomings of decisions that led to the retention of the bus company pension fund surplus, it was legal, above board and regarded as unacceptable only because of changing attitudes throughout the pensions industry towards surpluses.
Mr. Tony Clarke: While the hon. Gentleman is in a repentant mood, will he consider what happened to British Telecom employees after its privatisation in 1991–92? Current employees were allowed by the Government to have their pensions index linked, but those employed after the transfer were not. New employees thus lost many thousands of pounds in future pension rights. Will the hon. Gentleman repent on that subject as well?
Mr. Jenkin: That is a question that the hon. Gentleman needs to ask members of his own Front Bench. The matter is their responsibility as much as ours. The arrangements that he is likely to vote for in this Committee would have exactly the same effect in that regard. I confess that I do not know whether the Civil Aviation Authority fund is currently index linked—perhaps the Minister can enlighten us. Once NATS is in the private sector, I very much doubt whether new employees will get an index-linked pension. Contractual arrangements on employment—
Mr. Paterson: Paragraph 66 of the response to the public consultation is quite clear. It states:
``These arrangements will not necessarily apply to employees taken on by the PPP after it is established. Their pension arrangements will be determined on the basis of the usual negotiations between management and the Trade Unions.''
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