Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Fraser of Carmyllie: I appreciate the desire of the noble Baroness to allow employees to remain in the authority's pension scheme. However, I am bound to say that there can be no question of employees staying in such schemes once they are in the private sector. Standard practice in transfers of employees from the public sector, whether in privatisations or contracting out, has been to end public service scheme membership on the move to the private sector. Given her expertise in such matters, I am sure that the noble Baroness knows (whether she likes it or not) that that practice has been consistently followed.

Government policy is clear. We do not believe that it would be appropriate to allow private sector employees to remain as members of a pension scheme that was set up for members of the authority. The authority, as an employer, has devised its public service scheme to provide what it considers to be appropriate pensions for its employees. It is for the private sector employer to develop arrangements appropriate for its employees and for the operation of its business.

I understand that the core of the concern expressed by the noble Baroness is whether there should be index-linking. I must advise the noble Baroness that nothing in the Bill rules out index-linking, but although it is common for private sector schemes to provide some element of index-linking—your Lordships will be aware that the Pensions Bill will impose some minimum requirement—it would be wrong of me to suggest that full index-linking was a common feature of private sector schemes.

17 Jul 1995 : Column 94

Obviously, I cannot say at this stage what terms an employer may wish to propose, but whatever happens the terms must be no less favourable overall. In coming to a view on whether or not the scheme is no less favourable employee representatives have to be consulted. I have no doubt that at that time they will make their views known on all of the features of the package. I say to the noble Baroness that if full index-linking was included in the new scheme it would reduce the scope for increasing other benefits. As she has pre-empted me, it is interesting to note that when last offered the opportunity, the overwhelming majority of Amersham's employees decided to join Amersham's own scheme, even though that scheme did not guarantee full index-linking.

We have moved a long way since the introduction in 1981 of the legislation relating to the pensions of Amersham's employees. We have written statutory safeguards into the Bill, to which we shall turn later. We shall ensure that employees can join a scheme that overall is no less favourable than the authority's scheme. Therefore, employees should have no fear about their future pension scheme.

Amendment No. 46 also suggests that employees who have already left the authority's employment should be allowed back into the authority's schemes. That is considered to be wholly unacceptable. It would reopen the basis on which the businesses were sold earlier. It would be a substantial breach of faith with the purchasers who bought the authority's operations on one basis only to be told several months later that, with regret, it would have to be rewritten. It would also create substantial uncertainty for the employees involved and potentially put their jobs at risk.

I have no doubt that the noble Baroness wishes to see the staff treated fairly. That is a desire which I endorse. However, given the range of options available, it would not appear to me to be the outcome of this amendment.

Lord Clinton-Davis: Is the Minister aware that in relation to the sales the situation was not resolved? The purchasers were under no illusion about that. They understood that this was a matter that Parliament had to consider and there was a possibility of the situation being resolved in a different direction from that which the Minister might prefer. They have gone into it with their eyes open. Consequently, I suggest to the Minister that that argument is not open to him tonight. Though I do not charge him with bad faith, my information is as I have recorded it.

Lord Fraser of Carmyllie: I am grateful to the noble Lord for not accusing me of bad faith in this matter, but what I seek to convey is the principle at the centre of what we want to do. While there are certain fixed points which we believe cannot be offered, such as full indexation, we shall ensure that employees who join any scheme find that overall the scheme is no less favourable than the authority's scheme. Clearly, if such a scheme is put forward, there will be full consultation.

Lord Peston: Happily, I am not in the position in which these employees will find themselves. I have an index-linked pension. I would be horrified if anything happened to take that away from me. One of the things

17 Jul 1995 : Column 95

I was told by my late mother when I started my career was that I should get a job with a good pension. It reminds one of the standards that applied in the old days when pensions were index-linked. One does not think about it when one is a young person, but the time comes when one finds that one draws a pension. This is a matter of serious concern to the individuals involved.

The Minister, his predecessor and his honourable friend in another place have all used expressions like "equivalent to or no less favourable than". If I were an individual employee of AEAT and believed that my pension was not equivalent or less favourable, whom would I sue? Would I take legal action against the successor body or the Government? Perhaps that is not an easy question to answer from the Dispatch Box at this time, but the employees may be quite interested to know the answer. It will be noted that I ask what an individual employee will do if he takes that view.

Lord Fraser of Carmyllie: The idea that following the change there will be an opportunity for each individual member of the pension fund to engage in a discussion about it and have an opportunity to sue, seems to be unrealistic. I have indicated, I hope not too harshly but clearly enough, that matters have moved on since the Amersham scheme. What I sought to do in drawing that parallel was to give broad reassurance to those who might be deeply suspicious, like the noble Lord's mother, that if any change was made it must necessarily be to the individual's disadvantage. I believe that approximately 90 per cent. of those in the Amersham case, when given the choice, selected the Amersham scheme. I believe that that ought to be a matter of reassurance and that when words such as "broadly", "comparable", "no less favourable than", or whatever it may be, are used, though they may not be identical, once the various benefits are looked at, individuals will not have serious cause to complain.

Lord Clinton-Davis: I ask the Minister to reflect on the fact that the Amersham International case is now quite considerably removed in time. I believe that it occurred in 1981. I differ from him on the interpretation of Amersham; but let us leave that aside. During the course of the passage of the Railways Bill, the Minister, although he did not participate in it, may well recall the furore that accompanied the discussion on pensions. I believe that the Government had to make concessions far wider than the provision made in this Bill. The Minister may say that one privatisation has nothing to do with another, but I believe that the employees of this enterprise may well ask why railway workers should achieve a better result, simply because Members of this House primarily were absolutely amazed by the way in which the Government went about it at the very beginning. Your Lordships on all sides in effect drummed into the Government the necessity to change their view.

I am convinced that the provision that is to be made for these employees is materially less good than that accomplished for the railway industry. That is not equitable. I believe that the Minister ought to look again at the situation which arose in the course of those

17 Jul 1995 : Column 96

debates and use his best endeavours to ensure that the people employed in this industry are not treated differently from employees in the railway industry. I believe that is a perfectly fair proposition to make. The Minister has been very fair this evening. Though he has not made concessions, he has said that he will look at various matters. All I ask him to do now is look again at this situation in the light of the debates which then took place. It would be wrong to differentiate between one group of workers, albeit far fewer in number in this instance, and those engaged in the railway industry. The Government had to give a great deal of thought to that. I am not satisfied that the end result was even proper in that case. However, the Government made one concession after another, and the result was infinitely better than that which could have been imagined at the beginning. I ask the Minister not to be hidebound by what appears in the Bill at the present time and to say that the Government will look at it again, without any commitment, to ensure that justice is done to these employees.

Lord Fraser of Carmyllie: The noble Lord, Lord Clinton-Davis, has the advantage of me. I confess that I do not have intimate knowledge of the details of the pension arrangements under the Railways Bill. The employees of AEA Technology have a proper concern that if they move from one pension scheme to another, what they receive at the end of the day is no less favourable than that which they enjoy at the moment. Paragraph 6 of Schedule 4 imposes a duty upon the Secretary of State or the authority to ensure that just that is secured.

I said previously that perhaps no one could sue, but I am advised that I may have mis-stated that point. Should an individual be dissatisfied, there might be a redress against the Secretary of State, or the authority, as appropriate. I give the undertaking to the noble Lord, Lord Clinton-Davis, that I shall look at what he said about the Railways Bill, because I do not know enough about it. I rest with the broad proposition that when one is looking at pension schemes, people moving from one to another should be allowed to see what they enjoyed previously and what they will enjoy, rather than looking at a different group of prospective pensioners.

9 p.m.

Baroness Turner of Camden: I thank the Minister for that response. We are glad that he has given an undertaking to look at what was agreed in relation to the Railways Act, because, as my noble friend Lord Clinton-Davis said, many concessions were obtained from the Government during the passage of that Bill. As a result, the railway employees on whose behalf we were speaking were much more satisfied than they were when the Bill first started.

The Minister says that the terms offered will be no less favourable. That is not necessarily the same as we are seeking. My noble friend Lord Peston made it clear that indexation matters a great deal to people in this situation. Public service employees value highly the fact that, generally speaking, their pensions are subject in payment to full indexation relative to the RPI. That does

17 Jul 1995 : Column 97

not apply generally throughout the private sector. However there are private sector schemes where it does apply.

In any event, I understand that under the TUPE regulations there is a commitment to provide comparable benefits. A comparable benefit must be that people have protection against inflation when their pensions are in payment. However we are obviously not going to press this matter at this time of night. We shall look forward to hearing what the Minister has to say on Report. It is to be hoped that by that time he will have had the opportunity to consider the arguments mounted tonight and to look at the situation with regard to the Railways Act. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 42 to 46A not moved.]

Next Section Back to Table of Contents Lords Hansard Home Page