| Employment Relations Bill
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Mr. Bellingham: I beg to move amendment No. 6, in
The Chairman: With this it will be convenient to discuss the following: Amendment No. 36, in
(a) an occupational pension scheme . . . or (b) a personal pension scheme''.
Column Number: 70 much more elaborate. In spite of all the pension crises, this would not be the right way to try to solve the problem. That was the essence of the discussion on Second Reading, although some Government Back Benchers were understandably pushing Ministers on the matter.Pensions are a red hot issue. A company in my constituency, a former subsidiary of Albert Fisher Group plc, Fisher Frozen Foods, went into liquidation and was bought from the receiver by a Belgian company. We had the perverse situation in which people who retired when the company went into receivership were entitled to their full pension, even though they were only in their early 50s, while the pensions of those who stayed on with the company are being cut by about 40 to 50 per cent. It is perfectly obvious that there are real problems. The T and G and I have discussed that matter at some length. Even the T and G takes on board the point that, if pensions were brought into the whole collective bargaining process, it would be complicated. It is difficult to see how it could be achieved in a way that was completely fair. Mr. John Lyons (Strathkelvin and Bearsden) (Lab): Does the hon. Gentleman accept that there is widespread support among employees for including pensions in bargaining because it is seen as nothing more than deferred pay? There is genuine concern that employers have been raiding pension schemes all over the country. That is building pressure locally, too. Mr. Bellingham: The hon. Gentleman will have to persuade the Minister of that. I can understand where he is coming from. I do not in any way want to play down the severity of the situation. We all have constituents who are adversely and seriously affected by that. It is undoubtedly destroying family lives. The question is whether it should be brought into the collective bargaining process. We would say no. On the other hand—the hon. Member for Strathkelvin and Bearsden (Mr. Lyons) will be quite pleased about this—the clause holds the door perhaps slightly ajar. New paragraph 171A(2) states:
Some hon. Members, like you, Mr. Forth, are assiduous in their duties. They are hawk-eyed in looking out for examples of a Government using the procedure to change legislation. We feel that this is not the right way of going about it. It is such an important area. By removing this part of the clause, we will reduce any likelihood of the Government Column Number: 71 being tempted to do so. It will force them to come to the House to make their case through proper legislation.
4.30 pmMalcolm Bruce: This is an important section of the Bill and I suspect that one or two Labour Members may be tempted to contribute. The Government have come to a compromise and said, in a sense, ''We are aware of the problem, so we will take the power to do something about it, but we won't do it yet. In fact, we are not quite sure what we are going to do or when we are going to do it.'' I do not support the amendment but I, like some Labour Members, want a stronger section. There are recent historic reasons for examining the issue, and the hon. Member for North-West Norfolk has acknowledged the problem. First, we must recognise that, over the past 10 to 15 years, many previously well-funded pension schemes—often final salary schemes—have hit difficulties. That is not only because of the fall in the stock market, but because of the pension holidays that were voted for when the going was good. If pensions had been a part of the bargaining process, would that have been as easy to do? Those running the schemes would have had to get the consent of the trustees, including representatives of the employees, but they would not have had to negotiate specifically with employees. Those pension funds might have been saved and employers might have avoided subsequent embarrassment. It may have been embarrassing for the directors not to be able to maintain the pension fund, but for many pensioners it caused a substantial decrease in their quality of life and expectations in retirement. As well as pension fund holidays, I have a further concern about many institutions in the City that operated pension funds for companies that bought out their own funds instead of managing them. Those institutions secured permission from the Government to release and pay out orphan funds. Those funds have never been quantified, although figures in excess of £50 billion have been mooted; indeed, Prudential Assurance alone acknowledged £15 billion of such funds. It is sad that that money, which could have plugged the gap that has opened up because of the market downturn over the past few years, has been dissipated in a way that has not secured the future. The impact of changes has sometimes been obtuse and unfair. Currently, there is a controversy at Clydesdale bank, which hon. Members may know is owned by an Australian bank but is one of the four major high street banks north of the border. It used to be known as the Clydesdale and North of Scotland bank, and in my part of Scotland it was the most prolific bank in terms of branches and customers. In that case the policy for staff was changed arbitrarily. Until recently, men and women were allowed to retire early on a full pension, but men have now been excluded from that option. I am surprised that that does not fall foul of anti-discrimination legislation, but legal advice suggests that it does not.
Column Number: 72 I use that case as an example in which employees regard their pension as an integral part of their working conditions, pay and terms. In the context of the Clydesdale bank, those employees are long-serving members of staff and specifically branch managers. Clydesdale bank is sufficiently old-fashioned still to have branch managers; other banks are beginning to think that they should bring them back. It is increasingly difficult to argue against the idea that, whether through the consultation or negotiation process, pensions should be regarded as part of people's negotiated package of pay and conditions. A pension is more than just deferred pay. It is usually contributory, so some pay is taken now, and then invested in trust for an agreed long-term benefit.The first thing to ensure is that the benefit offered is protected; that people at least get what they were promised. It is particularly unacceptable if the pension is adjusted in a way that people do not get what they were promised. Secondly, we must avoid a situation where certain members—namely the older, established members of staff—have one pension and newer employees a different one. Some companies are resolving problems in that way; a sure recipe for friction in a company. I am not only reluctant to support the amendment. I considered tabling my own amendment to do what the Government say they will one day do. I concluded that while I might have felt good about having the debate, I was unlikely to get the amendment passed. I want to say to the Government—I encourage some Labour Members to back me up—that if they recognise that they need to do something about this matter, they must tell us in more detail when and what they might do. There are an awful lot of people out there who have a direct interest in this. It is not just trade unionists or shop-floor workers; it goes from top to bottom, involving anyone who is other than self-employed. The experience of the last 10 or 15 years suggests that that would be in the interests of the taxpayer in the long run, because it would ensure that people retired on good pensions and were not forced back on top-up benefits. It will ultimately be in the interest of well-managed pension funds to recognise that such a thing as raiding orphan funds or awarding pension holidays is a short-term bonus with negative long-term consequences, which is bad for industrial relations, bad for the morale of individual employees and, ultimately, not a very good deal for the taxpayer. Mr. Lyons: I agree with much of what the hon. Member for Gordon has said in this debate. There is increasing pressure; in my surgery, I meet people all the time who have spent 20 and 30 years working for a company but have been suddenly robbed of benefits that they were promised on the day they started in that organisation. They have faithfully paid the contribution and expected a return; then, quite suddenly, the trustees make changes. A person's life can be ruined by that change at retiral age. There is a crisis in the pensions industry and not just in occupational pensions. It is bad enough that it should happen there, but someone in an occupational scheme can face changes in parallel. There might also Column Number: 73 be major changes to a saving with Equitable Life, or with someone else. Again, plans that have been made for a whole lifetime suddenly have to be put on hold because neither the occupational pension nor some of the supplementary pensions are delivering what was promised. Regularly, people will come to my surgery to explain the situation.There is an issue in terms of bargaining, but we are finishing up with a two-tier work force when it comes to pensions. We have people who have been established in a company for 10, 20 or 30 years and might well be in a final salary scheme. Then there are employees in exactly the same job who have only recently started; they are told that they are valued employees, but they cannot get the pension rights of the person who has been here five, 10, 15 or 20 years. Pressure is building up in the work force and in organisations all over the country. People will quite rightly say that all of us are valued employees and part of a partnership, but that we should not be undervalued when it comes to pensions. They will want to be treated just as fairly and just as properly as someone with a bit of previous service in the organisation. We need to face up to this issue, and deal with it. It is not going to go away. People—I support them—will want to drag that matter on to the bargaining agenda. They will demand that trade unions make an issue of it. They will not be prepared to work without knowing what security they will have at the end of 10, 15 or 20 years. They want to be secure and know that they can promise their family and friends that they will be doing something for their retirement. They will want to know what money they are getting and what is missing. That is why it is important for us to drive this matter on to the bargaining agenda as soon as possible.
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