House of Commons Hansard Debates for 4 Apr 1989

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House of Fraser

Mr. Speaker : Before calling upon the hon. Member for Dagenham (Mr. Gould) to ask a private notice question relating to the publication of the inspectors' report on the House of Fraser, I wish to make it clear that quotations from the text of the report would contravene our sub judice rules. [Interruption.] Order. An appeal on this matter is to be heard in the House of Lords on 10 April. I am aware that the court has varied an injunction so that our proceedings may be reported, but that does not relieve us of the obligation to respect our own rules, and the Chair will not allow the use of alleged texts of the report while questions on its publication remain sub judice.

3.32 pm

Mr. Bryan Gould (Dagenham) (by private notice) : To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the publication of the DTI inspectors' report into the affairs of the House of Fraser.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Anthony Newton) : Inspectors were appointed to investigate the affairs of House of Fraser Holdings plc in April 1987. They reported to my right hon. and noble Friend on 23 July 1988. Their findings disclosed evidence of wrongdoing such that my right hon. and noble Friend felt it right to refer the report to the serious fraud office and the Director of Public Prosecutions. The prosecution authorities' inquiries are well advanced, and are proceeding as swiftly as possible under the superintendence of my right hon. and learned Friend the Attorney-General.

Our consistent view has been that publication of the report before those inquiries were completed would interfere with the principle that all citizens of this country are entitled to a fair trial of any criminal charges that may arise from it, and would prejudice the inquiries themselves. The Court of Appeal has unanimously agreed that it was reasonable for my right hon. and noble Friend to decide not to publish the report for the time being. The court's judgment is, however, the subject of a further appeal by Lonrho, which will be heard by the House of Lords next Monday.

In the meantime, as the House is aware, Lonrho is understood to have come into possession of a copy of the report on about 23 March, and The Observer newspaper, owned by Lonrho, published substantial extracts from it in a special edition on 30 March, coinciding with Lonrho's annual general meeting. Both Lonrho and The Observer are fully aware that only my right hon. and noble Friend has the lawful authority to publish the report ; that Lonrho's copy was improperly given to it and improperly used by it ; and that use by Lonrho and The Observer would amount to a grave breach of confidence and of Crown copyright and might prejudice next week's legal proceedings in the House of Lords.

For all these reasons, my right hon. and noble Friend sought and obtained an injunction on 30 March restraining The Observer and Lonrho from any further publication of the special edition. He is also seeking an order for the return of the remaining copies of the report, and urgent and thorough inquiries are being made to seek to establish how the report came into Lonhro's possession.

My right hon. and noble Friend has made it abundantly clear that the report will be published at the earliest

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possible moment consistent with the even- handed administration of justice. The first principle in this matter must be to safeguard the proper investigation of possible criminal charges and the fair conduct of any trial should such charges be brought. I cannot believe that anyone in this House would wish to undermine that principle, or encourage others to do so.

Mr. Gould : What conceivable purpose can now be served by a continued refusal to publish the report? Is it not clear that the report has already been substantially published, that its contents are known to all those involved and affected, and that, rather than allow further publication to take place piecemeal and by drip-feed, with only the public kept in the dark, it would be better to come clean now? Is it not also clear that the Government's excuses simply do not stand up? How do they square with the admission by counsel for the Attorney-General that publication would not prejudice criminal investigations? If there were truly any substance in the argument that a fair trial would be prejudiced, bearing in mind the fact that any such trial may be years away, why did that not occur to the High Court when it considered the question? Has the Secretary of State himself not prejudiced the issue already by his admission on the radio this morning that the report discloses serious wrongdoing? Is not the real reason an attempt to hide from the public the fact that the investigation of important takeover bids was in the hands of officials and Ministers who were incompetent and whose slap-happy attitude was no match for those who were determined to lie to them? If the inspectors' conclusion is that that sort of muddle must not be allowed to occur again, how can it be avoided without the benefit of the report and its recommendations? What confidence can we have in a Government who, instead of making amends for spectacular incompetence by coming clean, prefer to compound their errors by further incompetence and an all-too- typical recourse to cover-up?

Mr. Newton : If there were any wish to cover up, my right hon. and noble Friend would not have referred the report to the serious fraud office within a matter of days of having received it. When the hon. Gentleman suggests that there is no question of prejudicing a fair trial because the High Court made a finding in that respect, it seems to me to call into question the whole basis of the way in which we administer justice, in that three judges in the Court of Appeal subsequently found differently. That is the position at the moment. As to the issue of serious wrongdoing, it is absolutely clear that, if there had not been evidence of wrongdoing in the report, it would not have been necessary or right to refer it to the Serious Fraud Office. Lastly, the hon. Gentleman asked me what purpose was to be served in view of what has happened. I will tell him what purpose is to be served. It is to seek to protect the fair administration of justice and the rule of law in this country. The Government cannot be absolved from that, nor should the House wish to be absolved from that, by the irresponsible behaviour of those who published the report in the way that they did.

Mr. Ivan Lawrence (Burton) : Does not my right hon. Friend agree that the prior publication of evidence, for no better reason than to sell a newspaper or to pursue a personal vendetta, should never be a substitute for the proper prosecution of persons who are alleged to have

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committed criminal offences? Is it not disgraceful how often Opposition Members side with those arrogant portions of the media who seek to place themselves above the law of the land?

Mr. Newton : I very much agree with the general tenor of my hon. and learned Friend's remarks. I must say fairly and squarely to the Opposition Front Bench that I do not believe that they would wish to prejudice the administration of justice. I hope that they will consider carefully the extent to which they may do so.

Mr. Gerald Bermingham (St. Helens, South) : Perhaps the Minister will be kind enough to explain to me why, if the trial or potential trial of the Al-Fayeds could be prejudiced by the publication of the report, the same argument was not used in the case of the Guinness scandal or in the case of Mr. Ryan?

Mr. Newton : The issues arising from such a report must be considered in the context of the circumstances of each report, and they have been so considered. The issue of prejudice does not relate merely to proceedings on criminal charges should they be brought, but also to the hampering of current inquiries. Only last week there were signs that the publication of the report might make it impossible for inquiries to continue.

Mr. Jonathan Aitken (Thanet, South) : Will my right hon. Friend confirm that, under section 437 of the Companies Act 1985 the Secretary of State has an unfettered discretion to publish the report? If that is the case, does my right hon. Friend believe that it was wise for the noble Lord, Lord Young, to rely yesterday in the House of Lords on the statement that the prosecuting authorities would have to stop their inquiries if the report was published, when counsel for the Attorney-General said on the record in the Court of Appeal hearing that it was not true that prosecutions would have to be stopped as a result of publicity? Are we not in some confusion and in danger of entering into a second "Carry On, Spycatcher" saga?

Mr. Newton : The statement made by my right hon. and noble Friend in the House of Lords yesterday about the position of the prosecuting authorities was based on the latest statements which they had made to him and to the Department about what they thought would be the likely outcome of publication. I do not think that my right hon. and noble Friend can or should be absolved from taking that into account as a very important factor in exercising the discretion referred to by my hon. Friend.

Mr. Stuart Bell (Middlesbrough) : Will the Chancellor of the Duchy not accept that there is a discrepancy between what he is telling the House today and what the noble Lord, Lord Young, told the House yesterday? The noble Lord made no reference to the prejudice to inquiries connected with criminal investigations ; he simply said that there could not be a proper jury trial if the report was published. Is the Chancellor of the Duchy accountable to the House or to the Director of Public Prosecutions? Is the Chancellor telling the House that the report will not be published while criminal proceedings are pending, if the proceedings begin and if there are appeals? Is he telling the House that there is no prospect of forming a jury from all our citizens of jury age and status to hear the evidence in this case who have not read the report on the Fayeds' case?

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Mr. Newton : I am saying to the House that it is not my right hon. and noble Friend's view that the report should be published in circumstances in which it could hamper inquiries, prevent inquiries being pursued or prejudice a fair trial following the outcome of those inquiries. That remains the position. With regard to the first part of the hon. Gentleman's question, I am afraid that he simply has not studied the statement made in the other place yesterday. My right hon. and noble Friend referred to the danger of inquiries being hampered and to the risk, at worst, that they might be brought to a halt by publication.

Mr. Richard Page (Hertfordshire, South-West) : While one has to admire the determination of Mr. Rowland, does my right hon. Friend agree that as the noble Lord, Lord Young, has referred the matter to the serious fraud office, there is no intention of covering things up or putting them under the carpet? Does he also agree that to give in to the pressure to publish would set a precedent which others would follow when the Government's time scale does not suit their purpose?

Mr. Newton : Yes, I do, and I believe that that is the real issue which the House should address.

Mr. Charles Kennedy (Ross, Cromarty and Skye) : Is it not ironic that a company which was once branded as the "unacceptable face of capitalism" has now, through its immense power and wealth, been able to further confirm what many people now regard to be the unacceptable face of the Government--a combination of shabby secrecy and downright inadequacy where the rigours of the marketplace are concerned? Far from hiding behind all the rhetoric about justice, is it not the case that, were it not for the fact that Lonrho could devote so many millions of pounds and call on its considerable influence and power in this country, many of the details would not have emerged in the first place? Where does individual justice in this country stand in that context?

Mr. Newton : The hon. Gentleman is simply not right to suggest that the details in this report will not at some stage emerge. The only issue is at what stage it is appropriate to publish a report in a way which is consistent with the basic principle of the fair administration of justice. If the hon. Gentleman does not adhere to that, I do not know what he is doing here.

Mr. Teddy Taylor (Southend, East) : Will the Minister make it abundantly clear whether it is the intention of the Government to publish this report after the serious fraud office inquiries, which may be a few weeks, or the determination of any possible trials and appeals, which may be four or five years? Will the Minister also say, in view of the magnitude of the lies and deception referred to in the report, how he can possibly justify not referring this again to the Monopolies and Mergers Commission which was alone in having the right to recommend this investment? Finally, does he not think the points he makes about a fair trial undermine the very fair points the Government made, with the full support of this House, to Belgium and Eire, in exactly the contrary directions about Father Ryan?

Mr. Newton : My hon. Friend will be aware that my right hon. and noble Friend made a statement at the time that he decided not to refer the matter to the Monopolies and Mergers Commission and gave indications of why that

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would not be appropriate. He also indicated, though, that it might be appropriate in due course for other steps to be taken in the light of the inspectors' report.

Mr. Brian Sedgemore (Hackney, South and Shoreditch) : How does the Minister respond to the statement of Lord Justice Dillon that there is a public interest in knowing that the principal shareholders of the House of Fraser are fraudulent rogues, and a public interest in knowing how Ministers came to be deceived in 1985? Does the Minister intend to invite the Governor of the Bank of England to censure Kleinwort Benson for negligence, to invite the Law Society to censure Herbert Smith for incompetence, to invite Ministers to censure civil servants for naivety and to invite the Prime Minister to censure Ministers for negligence, incompetence and naivety?

Mr. Newton : The basic public interest in this matter is in the proper investigation of any offences such as the hon. Gentleman assumed had taken place, for proper decisions to be taken about whether criminal charges should be brought, and the proper hearing of those criminal charges should they be brought. That is what the Government are seeking to bring about.

Mr. Ian Gow (Eastbourne) : Since this exceptionally well-researched and detailed report has been in the possession of the police and the Attorney-General for more than seven months, when may we expect a decision to be taken on whether or not there is to be a prosecution?

Mr. Newton : I cannot be absolutely sure about that. The inquiries are being undertaken jointly by the serious fraud office and the Director of Public Prosecutions, with the help of the Metropolitan police. It is well known that investigations of this kind can take a great amount of time. I am encouraged, however, by the evidence that already exists that the establishment of the serious fraud office has significantly speeded these things up by comparison with what would have happened in earlier periods.

Several Hon. Members rose

Mr. Speaker : Order. I remind the House that this is a private notice question and we have a busy day ahead of us, with a Bill under a guillotine ; I will therefore allow two more questions from either side.

Mr. D. N. Campbell-Savours (Workington) : Is it not true that in 1976 Tiny Rowland and Lonrho went begging to the Department of Trade and Industry asking that the report on sanctions-busting and bribery in the case of Lonrho be not published? Why is it that the Lonrho broadsheet has refused to publish that particular information at this stage? Secondly, what business was it

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of the DTI inspectors to examine the family background of the Al-Fayeds? Surely their terms of reference only related to whether they had the money to purchase the store. Is it not true that, despite all the discussion in the Lonrho broadsheet, Mr. Tiny Rowland and Mr. Donald Trelford have not produced one shred of evidence to date that the money to buy the House of Fraser was not the property of the Al-Fayeds alone? They have not produced that evidence. Indeed the report that was published equally states that the inspectors were unable to establish what the facts were. Does the Minister agree that that is the case?

Mr. Newton : The first half of the hon. Gentleman's question should be addressed to Lonrho rather than to a Minister at the Dispatch Box. The rest of the hon. Gentleman's question--I understand why--clearly seeks to draw me into commenting on what the hon. Gentleman says are the contents of the report. He will understand that, for reasons inherent in my statement, I am not prepared to be drawn into such comments.

Sir Anthony Grant (Cambridgeshire, South-West) : Is not the disturbing aspect of the affair not so much the unsavoury shenanigans about the ownership of a shop as the fact that it is yet another dismal example of dishonesty or gross negligence by the public servant who leaked the report? Does my right hon. Friend have the smallest hope that his inquiries will lead to the culprit?

Mr. Newton : The appropriate inquiries are well in train. I am afraid that I am not prepared to speculate about the timing or nature of the outcome.

Mr. Doug Hoyle (Warrington, North) : The Chancellor talks about prejudice, but does he agree that the Secretary of State for Trade and Industry prejudiced the case by saying that the report contained evidence of wrongdoing? Will he stop hiding behind a smokescreen, publish and be damned, whatever may be the consequences for former Ministers or officials?

Mr. Newton : No, I do not for a moment accept that. As I said earlier, if it were not plain that the findings of the report show possible wrongdoing there would have been no need to refer it to the serious fraud office and the DPP in the first place. That is clear.

Mr. James Arbuthnot (Wanstead and Woodford) : Is my right hon. Friend aware that the view of many, including myself, who read last week's special edition of The Observer is that it showed a surprising lack of objectiveness? Does he agree that, even on The Observer's own account, there was nothing in the report for the Monopolies and Mergers Commission, but there may have been something in it for the serious fraud office, and that is the department which is now considering it?

Mr. Newton : Yes, my hon. Friend makes a fair point.

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Helicopter Crash (Report)

3.52 pm

Mr. Frank Doran (Aberdeen, South) : I beg to ask leave to move the Adjournment of the House under Standing Order No. 20 for the purpose of discussing a specific, urgent and important matter, namely, "the statement made by the Secretary of State for Transport or his Department yesterday that he intends to delay, at the request of the Boeing company, the publication of the report of the inquiry into the Chinook helicopter disaster".

In that disaster, 45 men were killed. It was the worst civil air disaster involving a helicopter and the delay in the publication of that report has caused extreme concern, particularly to those of my constituents with relatives who were involved in the disaster. There has been no explanation for the delay in the publication of the report except the fact that Boeing has made its request because it appears to feel that it prejudices certain legal proceedings that are under way. I find that difficult to accept, for a number of reasons.

First, the majority of the facts in the case which were the subject of the investigation were canvassed in the Aberdeenshire court on the hearing of the fatal accident inquiry into the disaster in 1987. Secondly, the delay in publication prejudices the implementation of the report's findings. Some 30,000 men work in the North sea and travel to work by helicopter. If there are lessons to be learned, we want the report to be published so that those lessons can be implemented immediately.

Considerable anguish has been caused to relatives. I have spoken to one of those relatives, a constituent of mine, who lost her husband in the disaster. She is involved in legal action, both in this country and in the United States, against Boeing--together with all the other relatives who lost a loved one in the disaster. Those legal proceedings have caused considerable trauma. Part of the reason for the increase in that trauma is the failure to publish the report. The publication date of 5 April has been known for many months, and legal proceedings have been further delayed as a result of the delay in the report's publication, causing considerable anguish. When I spoke to that lady this morning, she found it very difficult to believe that the only reason for non-publication is pressure from a multinational company. We have heard already today

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about the suppression of reports and of the concern that that causes to the House and to the country at large. This appears to be another example of pressure from a multinational causing delay. We all appreciate that inquiries and reports must be respected, believed and accepted by the general public, and that their integrity is extremely important. In this case, pressure from a multinational company to delay publication of a report must lead us to question its integrity. For all those reasons, the matter is of sufficient importance and urgency for me to request the Adjournment of the House to debate the matter.

Mr. Speaker : The hon. Member for Aberdeen, South (Mr. Doran) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,

"the delayed publication of the report of the inquiry into the Chinook helicopter crash in the Shetlands in November 1986. I listened with great care to the hon. Gentleman. As he knows, my sole duty in considering an application under Standing Order No. 20 is to decide whether it should be given precedence over the business set down for this evening or for tomorrow. I regret that the matter raised does not meet the requirements of Standing Order No. 20, so I cannot submit his application to the House.

Point of Order

Mr. Dennis Skinner (Bolsover) : On a point of order, Mr. Speaker. You will know that a new parliamentary building is being prepared across the road from the House. I wonder what jurisdiction you have in that respect, because it was reported to me that, in order to celebrate 40 years of NATO, somebody hung up a banner proclaiming "Get out of NATO. No nukes here"

which I thought was pretty good for a start. I wondered whether you, Mr. Speaker, had authorised that banner to be hung up, or whether it has something to do with honouring Gorbachev's visit.

Mr. Speaker : I have a pretty good view from my residence.

Mr. Skinner : Did you see that banner, Mr. Speaker?

Mr. Speaker : No, I did not see it.

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Re-Enfranchisement of the People

3.57 pm

Mr. Harry Barnes (Derbyshire, North-East) : I beg to move, That leave be given to bring in a Bill to restore a full franchise.

Signs that electoral registration is not as healthy as it ought to be come from three sources : first, an examination of recent returns from electoral registration officers ; secondly, comments from the Office of Population Censuses and Surveys--although I shall mention only one of them now ; thirdly, an assessment of the impact and purposes of the poll tax legislation. Those combined sources show that we are heading for a democratic and constitutional crisis over the state of the franchise.

As to the evidence from electoral returns, in Scotland--where the poll tax has been a serious issue since the 1987 general election, causing the Tories to suffer many crushing defeats in that election--there has been an alarming drop in electoral registration. In each year from 1979 to 1987, there was a steady increase in the size of the Scottish electorate, yet 62,000 names have disappeared from the registers since 1987. That includes a drop of 25,000 in Glasgow, or 4.4 per cent. in the number previously registered. The loss of electors in Scotland seems to have little to do with demographic factors such as the balance between the death of electors and new 18-year-old electors being added to the register. Commenting on the loss of electors between 1987 and 1988, when there was a loss of 27,500 in Scotland, the Office of Population Censuses and Surveys, in its "Electoral Statistics", published in 1988, said :

"this does not appear to have arisen from demographic causes", such as I have already mentioned. There has been little change in the number of 18- year-olds coming on to the register and no dramatic fall in the total population.

England and Wales have not yet been subjected to massive agitation on the poll tax but, with poll tax registration starting, that concern will dominate the coming county council and European elections. A drop in registration in England and Wales could follow. A recent MORI survey in Manchester showed that up to 10 per cent. of the people would refuse to register electorally as the poll tax and electoral registers are seen as linked, and are in fact linked. But even now, there could be something to hide about the 1989 electoral registration figures. Given that district council registration figures are to be published at the end of this month and constituency figures at the end of May, why can the House not be supplied with at least the district figures which are shortly to be published and which have been available locally since 15 February?

I raised this matter during business questions on 16 March and in a question for written answer on 28 February, when no information was supplied. It is also a matter that I have since pursued with the Leader of the House with no success. There are indications in areas such as Liverpool of serious worry about the number of people appearing on the electoral register, with perhaps as many as 10 per cent. having disappeared in the past year. This information is available and should be published and made available to the House so that hon. Members can examine its implications.

The main purpose of my Bill is to separate the poll tax register from the electoral register, making it illegal for poll

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tax registrars to make use of electoral registers. This will only partly overcome the problem that I have highlighted, for poll tax registrars and electoral registrars can be the same persons, carrying information from each register in their heads. Only a full repeal of the poll tax legislation, which would be a major money Bill, can remove the evil of the inevitable link between the poll tax register and the electoral register.

The whole aim and purpose of the poll tax has been to attempt to fiddle the democratic and constitutional structure of this country. It has pushed poorer people off the register and continues to do so. It is taxing people to qualify them to vote, something which we have not seen since universal franchise was established here in 1918 and 1928--although before those dates there were such things as 40-shilling freeholds in the nineteenth century. It will destroy local government and civil liberties and will manipulate local government election results. It contains a centralising power of an outrageous kind. It taxes people against the norms of all western democratic systems, which is itself an abuse of democratic and constitutional government.

It is utterly disgusting that forms filled in for electoral registration purposes should be used for purposes not included on those forms. That principle extends beyond the poll tax, so my Bill will also outlaw the sale of electoral registers for commercial purposes or for any reasons other than electoral purposes. Many people add notes to their electoral registration forms, asking for their names to be kept away from commercial interests, but there is nothing that a returning officer can do about such requests. The law should respect that wish for all people, without their needing to ask for a special dispensation.

Past Government policy on local government finance and the current poll tax legislation also hit at the funds available for electoral registration officers to conduct their essential work. My Bill will ensure that registration officers receive adequate back-up facilities in terms of canvassing provisions to contact potential voters and assist them to complete their electoral returns.

Further encouragement can be given by positive leading advertising campaigns for registration by the Home Office, and my Bill will provide for that. Let us compare the limited advertising poster campaigns and leafleting on electoral registration with the campaign being conducted by Abbey National to get people to vote on turning the company into a plc. Let us compare the Government's expenditure on advertising the poll tax, the Education Reform Act and numerous other measures with the amount spent on extending the franchise. Money is often spent on measures before they become law. Let us compare the advertising expenditure on privatisation-- for instance, on softening up the market for water and electricity--with what we spend on encouraging people to have the right to vote. Should not advertising the franchise be given similar attention?

I ask all democrats to support by Bill, which seeks to establish a universal franchise as far as is currently possible. To achieve its full aim, however, another Bill will have to be added to it, for the repeal of the poll tax--and its time will come.

Question put and agreed to.

Bill ordered to be brought in by Mr. Harry Barnes, Mr. Martin Redmond, Mr. Max Madden, Mr. Eric S. Heffer,

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Mr. Ken Livingstone, Mrs. Alice Mahon, Mr. Chris Mullin, Mr. Bernie Grant, Mr. Dennis Skinner, Mrs. Maria Fyfe, Mr. Jimmy Wray and Mr. Harry Cohen.

Re-enfranchisement of the People

Mr. Harry Barnes accordingly presented a Bill to restore a full franchise : And the same was read the First time ; and ordered to be read a Second time upon Friday 5 May and to be printed. [Bill 110.]

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Orders of the Day

Water Bill

[3rd Allotted Day]

As amended (in the Standing Committee), considered

Clause 163

Payments to existing pension fund

4.7 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Colin Moynihan) : I beg to move amendment No. 89, in page 162, line 20, after who', insert

(a)'.

Mr. Speaker : With this we may take Government amendments Nos. 90 to 93.

Mr. Moynihan : The purpose of the first two amendments, Nos. 89 and 90, is to secure the future of pension payments of former officers or employees of the Water Research Centre, the Water Authorities Association, the Water Industry Training Association, British Water International Limited, the International Association on Water Pollution Research and Control and the International Water Supply Association, known collectively as "the admitted bodies". As has already been announced, the water authorities superannuation fund will be administered from the transfer date by the National Rivers Authority, and this arrangement includes the second fund for the admitted bodies. The amendments proposed to clause 163 allow the Secretary of State to make orders designating the admitted bodies so that the powers and duties of the Secretary of State under that clause are extended to apply to their fund.

The purpose of the other three amendments in the group is to allow discretionary payments made by water authorities by analogy with pension payments and the unfunded pensions administered by the Severn-Trent water authority to be continued after privatisation of the water industry. These unfunded payments can be divided into three categories.

In addition to their obligations under the local government superannuation scheme, water authorities currently pay certain non-funded discretionary awards including gratuity awards, injury allowance, retirement compensation, added years pension enhancement, and a number of other benefits and associated pension increase payments to their own former employees and to employees of antecedent bodies.

They are also responsible for pensions and pension increase benefits to former National Water Council employees and board members and former water authority chairmen and members. These payments, except for a small proportion of non-funded discretionary awards, are administered by the Severn-Trent water authority and the cost recharged to each authority according to the incidence of payment or according to a statutory formula.

The second category is that of pension payments made directly by water authorities. Some pension payments are

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made directly by water authorities, unlike those in the previous category which are administered by the Severn-Trent water authority, and the costs shared between authorities.

Then there is the important group of payments made by local authorities. Local authorities currently pay pensions increases, allowances and gratuities in respect of former employees whose employment functions were transferred to the water industry in 1974, and then recharge the cost to the water authorities.

Our objective in these amendments is to ensure that no pensioner is disadvantaged by the act of transfer of liability from a water authority to its successor company and that the responsibility for payment is clear both to the recipient and to the body which will be responsible for payment.

The amendments therefore provide broad powers to make regulations to encompass all people or classes of people in respect of whom such pensions and discretionary payments are made, and to impose a duty on the National Rivers Authority and on successor companies or nominated holding companies to continue to make payments awarded by water authorities.

Regulations which impose requirements on companies may be met only while the companies are wholly owned by the Crown. The administration for the first category of payments--that is, discretionary awards largely administered by Severn-Trent and unfunded pensions administered by Severn- Trent--will be transferred to the National Rivers Authority.

The amendments provide that the Secretary of State will be responsible for providing the funds, out of money supplied by Parliament, for payments made by the NRA, and the administration costs. In the other two categories-- where local authorities make payments in respect of former employees and then recharge the cost to water authorities, and where water authorities are making pension payments directly to pensioners--the responsibilities for payment are clear to those concerned.

I see no reason to disturb those arrangements. On transfer date, those responsibilities will pass to the successor companies under schemes made under schedule 2 to the Bill. These amendments are designed to ensure that no pensioner is inadvertently disadvantaged by the transfer of liabilities.

Mr. Peter L. Pike (Burnley) : The Minister is making the position clear for existing pensioners. Does he agree that it is equally important for the Bill to include provisions to ensure that existing and future employees enjoy the same protection? That will not be the position.

Mr. Moynihan : I disagree with the hon. Gentleman's conclusion. He wants the Government to introduce proposals which will secure pension arrangements for those who retire in the future as good as the current pension arrangements under the local government superannuation scheme. We have repeatedly given assurances that a mirror image scheme, which we discussed at length in Committee, will not be approved by the Secretary of State unless it gives proper effect to the Government's commitment to provide employees with the same benefits.

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I think that the hon. Member for Burnley (Mr. Pike) would like these arrangements to have statutory backing for the future. We have made it clear that we do not believe that, in the context of privatisation, such statutory backing would be appropriate. It is via the trustees that we intend to pursue pension arrangements for the future. Given the commitment that I have given on behalf of the Secretary of State, I can absolutely assure the hon. Gentleman that the trustees will, almost by definition, have a duty to pensioners. They could be sued for breach of trust if they did not, through the mirror image schemes, provide for pensioners in the future the same position as is accorded under the current arrangements.

4.15 pm

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