House of Commons Hansard Debates for 29 Jun 1992

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published DTI reports. It is also the auditor to British Coal and the British Coal pension scheme, which is in direct contravention of the recommendation of the Select Committee on Social Security that it is improper for any organisation to be the auditor of both company accounts and pension scheme accounts.

Mr. Redmond : So that we are sure on this, will my hon. Friend tell the House which party was in power when those criticisms were made?

Mr. Dobson : I must confess to my hon. Friend that I do not have the date of all six of the reports into Ernst and Young.

The distinguished company of James Capel had only one advisory contract during the process of electricity privatisation but was criticised in the case of Consolidated Gold Fields. Kleinwort Benson, which was the Government's principal adviser on electricity privatisation and had four other contracts, was criticised, as everybody who was a Member of Parliament at the time will remember, in the House of Fraser DTI report.

Peat Marwick McLintock, the accountants, had three electricity advisory contracts and was criticised in the Alexander Howden Holdings case and the Orbit Holdings case. Price Waterhouse, another firm of city accountants, had no fewer than 23 advisory contracts on electricity privatisation, and it has been criticised in the public reports of two DTI inspections, into Norwest Holst and Raymor Investments. Spicer and Oppenheim, its predecessor, which had five advisory contracts on electricity privatisation, was criticised over the Aldermanbury Trust. Smith New Court, of which Lord Walker, who has been mentioned already, is a director, had three advisory contracts on electricity privatisation and was criticised, along with James Capel, over the Consolidated Gold Fields case.

Lest any Conservative Members suggest that these might be trivial or glancing criticisms, I will quote one or two examples of the criticisms levelled at companies that have been on the Government's list up to now, because I do not think that they are trivial. In the Consolidated Gold Fields case, the inspectors said :

"We consider that Smith New Court seriously hindered the company's attempt to pursue its right under section 212, with a view to identifying who had been buying a substantial number of its shares." It went on to say, and this is probably the most damning aspect : "Moreover, we consider that Smith New Court did not understand their responsibilities under the Act and did not make any serious attempt to take proper legal advice."

No organisation criticised in that way should be supervising any pension scheme or be involved in any way. Similar criticisms were levied at James Capel.

Mr. Stephen Milligan (Eastleigh) : The hon. Gentleman lists the shortcomings of these advisory companies, but will he add to the list the name of Mr. Arthur Scargill who, during the miners' strike, shifted money from one account to another with great freedom? Perhaps it would not be a good idea if, as suggested in the new clause, the National Union of Mineworkers had a prime role in giving advice in the future.

Mr. Dobson : To the best of my knowledge, Mr. Arthur Scargill will not be appearing in court, which is something

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that distinguishes him from a large number of people who were involved in the Maxwell scandal, and who, if there were any justice in the world, would be appearing in court.

The DTI said about Ernst and Young :

"In our view, the auditors failed to carry out their

responsibilities as auditors."

The company had been appointed as auditors and was criticised for not carrying out its duties. Such auditors should not be allowed anywhere near the miners and railway workers pension schemes. The report of the investigation into Raymor Investments said : "Price Waterhouse's conduct as regards the non-executive directors and the incoming auditors is indefensible."

Should any organisation whose conduct described as indefensible be further employed by the Government, by British Coal or by British Rail? We would not want them supervising our pensions and we should not want them involved, in any way, in looking after someone else's. 5 pm

In the case of the House of Fraser and the al-Fayeds, there is probably no more damning statement to be found in any Department of Trade and Industry report than the comment that was made not just about Kleinworts and Herbert Smith, Government advisers, or Lazard's, Government advisers, or Morgan Grenfell, Government advisers, than the words :

"So far as we know, not one of the advisers appears to have inquired at all critically into the Fayeds' background and bona fides."

There could be no worse criticism of people appointed to look into things critically and to advise than that they never did their job. We believe that none of these organisations should be allowed anywhere near the giving of any advice about the privatisation of either the coal industry or the electricity industry. What is more, we wonder who maintains this list of advisers and what criteria are applied before people's action, or inaction, is so bad that they are removed from the list. What do they have to do? Get involved in shifting money from Hong Kong into Tory party funds and then losing the money, or something like that? That appears to be the only thing that might prompt the Government to think that they were not up to their job.

Mr. Redmond : My hon. Friend wonders how advisers come to be removed from the list. If they stop contributing to the Tory party, they are removed.

The president of the National Union of Mineworkers has been mentioned. Perhaps he ought to be one of the advisers. Arthur would want to ensure that miners had adequate pensions. Despite the vilification, the president of the National Union of Mineworkers has been completely exonerated of any dirty tricks. The House ought to be aware that he has been completely exonerated of any fiddling of pension funds or NUM money. The so-called pension advisers in the City ought to have a look at Arthur's track record with a view to achieving the standards that he has set for himself.

Mr. Dobson : I can say only that if advisers were to look into a situation, it is unlikely, on the basis of what I have just read out, that they would notice anything.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) : I have been listening very carefully to the comments of my

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hon. Friend. I am not sure that he quite understands the reasons behind the privatisation, and that concerns me slightly. One of his problems, I think, is that he seriously suspects that advice is taken from private firms in order to facilitate the movement of assets from the state system into private pockets. The point is that there should be an ever more rapid movement of money from the state to the friends of the Conservative party. The view that these people are employed to give independent advice does not correspond with the facts.

Mr. Dobson : I have to confess that I have always had the old- fashioned view that the public business of the country should be conducted with honesty and in the interests of the people of the country rather than for the benefit exclusively of the Conservative party and its friends. However, I have become more and more disillusioned over the years.

In view of everything that has appeared in print or has been heard on television and radio. it is clear that any sensible miner or any sensible person working for British Rail must be concerned about what has happened to his pension fund. These people have read about Maxwell, about Imperial Tobacco and about Belling. Today I received a letter from someone who works for British Telecom. That person tells me that it looks as though the company is into contribution holidays and changes in schemes, to the advantage of the shareholders and the disadvantage of the pensioners and people paying in. I have not had time to investigate the ins and outs of the matter, but I am quite prepared to believe that these changes have been made.

Our new clauses are intended to secure from the Government agreement that no one will be appointed to advise on the pensions of the miners or the railway workers unless the Governments and the companies get the consent of the representatives of the work force--and I mean the entire work force.

Our amendments would provide that any change in a pension scheme required the consent of Parliament. Conservative Members have been fairly willing to agree to almost anything in recent times. I live in hope that if our proposal is accepted, or if the Government bring forward an amendment of their own, even the present Conservative party will be unwilling, up front, to vote for something that is to the total disadvantage of pensioners.

I hope that the Government will accept either the amendments or the spirit of the amendments. I come back to a point that I made at the beginning : it will be no good if, in three or four years' time, people come here and bleat about pensioners being robbed, as that could be stopped by action taken today. Bleating afterwards is not good enough any more. Any group of pensioners is entitled to the protection of this House, and that is what should be provided tonight.

Mr. Max Madden (Bradford, West) : On a point of order, Madam Deputy Speaker. I regret having to intervene with a point of order at this stage, but I seek your advice. Today an all-party delegation from the West Yorkshire passenger transport authority met the Minister for Public Transport, the hon. Member for Kettering (Mr. Freeman), to discuss the West Yorkshire electrification scheme. The main problen associated with the scheme arises from the anxiety of financial institutions about the effect of privatisation on the transport authority and about

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whether, if they were to underwrite a leasing agreement for new rolling stock, they would be able to secure repayment of any loans. I should like to know whether it would be in order for hon. Members, in the debate on new clause 5, to make brief comments on this matter, in the hope that the Minister for Public Transport would be able to report to the House on the present situation. That new clause refers to rights and liabilities. Or would it be more suitable for brief interventions to be made during the Third Reading debate, which, I understand is to take place later tonight?

Madam Deputy Speaker : We have not yet reached new clause 5. I shall consider the points that the hon. Member has made, but there is no need to give an immediate answer.

Mr. Redmond : As this is the first opportunity I have had to do so, Madam Deputy Speaker, I congratulate you on your election to the Chair. I am confident that you will do an excellent job. Indeed, it is widely accepted in the House that you are doing an excellent job. It was said during the Second Reading debate and in Committee, and it must be said again, that there ought to be two Bills--one dealing with British Rail and one with British Coal. But we are quite used to the manipulation of Ministers with a view to shoving business through as quickly as possible. The Minister's approach has been that the Government and the Opposition agree in principle with regard to the proposals in the Bill. For a long time, I have not accepted that, when we agree in principle, we can sort out the details later. I am confident that the Minister's office thinks that that applies to this privatisation legislation. If that is so, it should have been discussed on Second Reading and in Committee, and certainly it should be discussed this evening. The problem is that the Minister simply sits back. He has an outline structure--possibly even the details--of the proposed privatisation, yet hon. Members on both sides of the House are fishing in the dark trying to understand what is happening.

I oppose the holiday that British Coal is taking from the pension scheme. It was agreed to on the casting vote of the Union of Democratic Mineworkers. The National Union of Mineworkers was opposed to it and did not participate. I do not understand why the Minsiter is not using his good offices in this matter. He gives assurances that future pension rights will be protected and that there is no need to worry because everything is wonderful, yet he is taking part in a manipulation by British Coal of the pension fund that will rob many of my constituents, who are ex-members of the coal industry, of many pounds. He should step on the toes of British Coal's chairman and bring their cosy relationship to an end.

I think it appropriate to mention the Coal Industry Social Welfare Organisation. It came about through a venture between the workers and British Coal. Over the years, the workers contributed tuppences and threepences week in, week out to bring facilities to mining villages--not just for the enjoyment of the miners and their family, but for the enjoyment of the whole community. Because of that, many mining villages have excellent facilities.

We are a little concerned about what will happen to CISWO's assets if British Coal is privatised. It must be remembered that those assets belong not to British Coal, but to the community. I hope that today the Minister will

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give a categoric assurance that CISWO lands and schemes--be they cricket, bowling, football or welfare--will not be sold, but will be transferred free of charge to local authorities. I am sure that the Minister is aware that many local authorities are strapped for cash and are having a heck of a job trying to maintain statutory services. They will not have the money to purchase CISWO's lands and schemes from British Coal.

The point should be made that it is not just British Coal that has contributed to the schemes--over the years, the lads and lasses have brought those facilities to the communities for the enjoyment of the people. From British Coal's actions so far, it seems that it will want to exploit those schemes for the benefit of the new private owners. British Coal has a large amount of land, but when members of the public want to purchase any of it, British Coal charges property development prices--that is, if it is prepared to sell at all. I am sure that the same thing will happen with coal privatisation as happened when the water industry was privatised. There was a piece of land in Warmsworth village where people had tended allotments for many years. Suddenly, the water board wanted them off that land, because it thought that it could get planning consent for development. The same may happen with British Coal. Instead of benefiting the nation and the lads and lasses who spent many years in the coal industry, the new owners will want to dispose of the land to make fat profits for its board and the shareholders. That has happened in other privatised industries. I hope that the Minister will assure us this afternoon that that will not happen with the coal privatisation.

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Concessionary coal is part of the right of the lads and the lasses in the coal industry. Six pits in Yorkshire have protected rights. They include Rossington, which is my patch, and Caeleby--which is closed--in the Don valley constituency. They have protected rights over and above the usual concessionary coal agreement. Will the Minister give an assurance that irrespective of who owns the industry, those rights will be protected? I hope that no one--for example, Fairclough or Monktonhall--will try to take on the industry as a single venture. Unless there are long-term markets, there is no long-term security.

Those six pits in Yorkshire have a right to the same protection as they had prior to privatisation. I hope that any agreement on privatisation will give the lads and lasses of those pits full protection under the law against exploitation. I hope that the Minister will bear in mind the points that I have made.

Mr. John Heppell (Nottingham, East) : I declare an interest as, at some stage in the future, I may have the opportunity to benefit from a railway pension. I am therefore pleased that my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) is looking after my interests so well.

I am disappointed by the Bill. My first reason is on political grounds, as I do not like the idea of privatisation, whatever it might mean for the railways. Nevertheless, I recognise reality. The Tories won the election and they are committed to privatisation. Unfortunately, the Bill is not clear about anything else. What does it tell hon. Members, the management of British Rail, the work force and the passengers? Alas, it is very little.

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My second reason for disappointment is that, in the absence of a White Paper, the Bill is causing confusion and uncertainty throughout the country and especially among the work force and pensioners of British Rail. The Bill is not a blank sheet, it is a blank cheque--but for the benefit of the Government, not the pensioners. That is shown by the catch-all phrase in clause 1 that British Rail be given "the power to do anything which in their opinion is appropriate for the purpose of facilitating the implementation of"

the Government proposals.

That means that it can do exactly as it likes. The Bill suggests that private locomotives and wagons could run on BR track, but that already happens. I am therefore confused about the Bill's purpose. If it confuses me, it must confuse even more BR's existing work force and pensioners. The work force will have to make the changes work--once it is known what those changes are. At present, they do not know whether those changes will include restructuring, after 10 years of restructuring, or whether they will conflict with the Government's present proposals. Neither do the work force and many pensioners know whether their present travel concessions will be protected. Employees are uncertain whether their promotion prospects will be damaged. If they are, their pensions will also be harmed. There are many previous instances of that happening.

The work force and existing pensioners are worried about what will happen to their existing pensions. I do not rely on my pension, because I realised a long time ago, after I entered local government service, that my BR pension would not be sufficient to live on. However, many rely wholly on their BR pension for their future income.

Experience has shown that privatisation has not helped pensioners. The privatisations of British Rail Engineering Ltd, British Transport Hotels, Sealink and Travellers Fare produced pension schemes that were supposed to offer equal benefits and to mirror BR schemes. In fact, many of the new schemes closed, stagnated or offered only marginal improvements. In any event, they have not kept pace with BR schemes, while offering contribution holidays to employees, who pay nothing, while the pensioners receive less.

There is in people's minds today the spectre of Robert Maxwell. That case has concentrated the thoughts of those working in the railway and mining industries about the future of their pension funds. We have read much in the newspapers about the losses made by names at Lloyd's and suggestions that they ought to be compensated. I do not believe that they should. I have no more sympathy for names than I do for those who lose money on the stock exchange or by gambling on horses. Damon Runyon said that all those who play the horses die broke. One takes a risk, and enjoys the profits when one wins--so one must accept the losses when one loses. However, pensioners are not like that. They pay money to provide for their future security.

In the light of the Maxwell fiasco, the Government have an opportunity-- which they should not miss--to send out a clear message to those who would con, cheat, rob, and steal from pensioners that such behaviour will not be tolerated. They can also send out to pensioners the message that their pension funds will be protected. The Government can do that today by ensuring that special

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protection is built into the process of privatisation. If they agree to new clause 1, they can make the minium concession that they should to pensioners.

Mr. McCartney : As a member of the Select Committee on Social Security in the previous Parliament, I spent a great deal of time investigating this issue. As a Member of Parliament, I represent a coal mining community ; my grandfather and grandmother both worked in a coal mining community, and my Scottish uncle died of pneumoconiosis at an early age. I therefore have some affinity with the new clause. It is necessary, historically and legally, to protect pensioners in coalfield and railway communities. It will also ensure a Government commitment to achieving equity.

In 1984, my hon. Friend the Member for Bolsover (Mr. Skinner) challenged the then Secretary of State for Trade and Industry, Mr. Cecil Parkinson, over the Government's commitment to British Telecom's pensioners on the privatisation of that public service. Mr. Parkinson replied that BT employees would have constitutional rights in respect of their pension scheme--yet two years after BT's privatisation, The Times reported on 22 August 1984 that the Opposition's fears about future employees might have been justified. The article reported that British Telecom intended to introduce a new pension scheme in 1986 that would deny future employees the right to automatic index-linking of pensions--but that it would apply only to people joining British Telecom after 1 April 1986. In other words, British Telecom changed the rules after privatisation, and tens of thousands of pensioners lost the rights that were promised to my hon. Friend the Member for Bolsover, other hon. Members, and the Union of Communication Workers.

In the latter part of last year, the Social Security Select Committee took evidence in respect of the Government's intentions in regard to the pension schemes of nationalised and privatised industries. I quote from the Committee's second report, published on 4 March 1992. We took evidence from a former employee of the National Bus Company who had written to the Committee expressing concern about the effect of privatisation on the fund from which his pension was paid. The report states, in paragraphs 268 to 269 :

"The National Audit Office investigated the sale of the National Bus Company, a company which by 1985 accounted for almost half the national bus mileage in England and Wales. The Government in 1984 had proposed the deregulation of the bus industry, and as part of this programme the NBC was to be returned to the private sector in smaller free standing parts. The 1985 Transport Act set the framework for the sale, and required disposal of the company by January 1989. The proceeds of the sale amounted to £324.2 million. Net receipts to the Exchequer amounted to £165.4 million, of which £120 million was an estimated net surplus on pension funds. Before tax the surplus was £200 million."

The National Audit Office found that the Government had on privatisation asset-stripped the National Bus Company's pension fund, and in doing so were able to present a far rosier picture of the company's resources at the time of its sale. Paragraph 270 adds : "The Public Accounts Committee in its investigation asked the Department why the pension fund surplus had been claimed as a net receipt from the sale. The Department responded that the figure of £120 million was part of the estimated net receipts following the sale."

The Department offered no satisfactory explanation as to why the assets were used in that way. Current and future

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pensioners of British Coal and British Rail schemes are well warned about the Government's promises, attitudes and actions.

I ask the House to consider other cases involving pensioners who lost out through privatisation. BREL pensioners in my constituency were formerly employed by Parkfield Castings and their pensions were lost when that company went bust. They also lost their travel allowances, and were not entitled in law to any recompense. A more recent case, again notified to the Select Committee late last year, is that of the British Airways helicopter pilots. During negotiations with British Airways at the time of its privatisation, Robert Maxwell and his companies bought British Airways companies and responsibility for helicopter operations in the North sea and the highlands and islands of the United Kingdom. Shortly after the sale, an agreement was reached between Maxwell's companies and British Airways. Employees were told that, as part of their contract of employment, they had agreed to move out of the British Airways pension scheme and into the new British International Helicopters scheme.

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From then on, neither the Occupational Pensions Board nor the City regulators made any effort to take account of what was happening to the pension fund. Now, their pension fund having been looted, the pensioners are bereft of resources, and the Government have only belatedly produced a rescue package that may assist them in the short term. The House did nothing to protect pensioners at the time of the British Airways privatisation.

At the time of the privatisation of the National Freight Corporation, agreements were reached as a result of which the Government still make a small contribution to the pension fund. In every other case of privatisation, however, the Government have failed lamentably to take account of the consequences. That can be seen clearly when we examine the history of corporate takeovers in the 1980s. Most of the companies targeted by Hanson and others were targeted not because of their performances in regard to exports or investment, but purely because of the tangible assets held by their pension funds and the ease with which corporate raiders could get their hands on those assets. In the 1980s, the self-regulatory system in the City failed again and again to accommodate the rights of pensioners.

In legal terms, the most important case so far has been that involving Hanson and the tobacco industry. The Select Committee took a good deal of evidence about the consequence of Hanson's attempt to raid the pension funds. I have not raised the subject of Hanson because I see him as a bogeyman in relation to the new clause. It is likely that Hanson and his companies--such as Peabody's Coal Company--will try to purchase parts of the British coal industry, and that they will have a direct influence on, and interest in, the consequences of the break-up of British Coal and the future of the assets of its two major pension funds. Those assets amount to more than £12 billion. Hanson's history is vital in this connection, and the Government should be required to include in the Bill clauses to take account of the court ruling on the subject.

In both his summing up and his written judgment, the judge in the Hanson case said that he could not understand why the trustees representing the employees had immediately been made redundant when they raised

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objections to the attempt to manipulate pension fund assets. The trustees who replaced them had done the same, and they, too, had been made redundant. The judge suggested that Hanson had used intimidating tactics to ensure that he could place on the board of trustees people who would simply rubber-stamp his intentions. Luckily, the court and, eventually, the House of Lords made arrangements for the funds to be protected, but it took tens of millions of pounds of pension fund assets for that to happen. Moreover, Hanson did not meet the costs of legal advice ; the pensioners met the cost from the pension funds. The Government must write into the Bill clear commitments in respect of pensioners' rights.

The Bill has come at an embarrassing time for the Government. They will probably publish tomorrow their response to the report on occupational pension funds, published--as I said earlier--on 4 March 1992. Until 3.30 pm tomorrow, we shall not know what that response will be, but one thing is certain : no one can doubt the inadequacy of trust law in protecting pensioners, whether it applies to takeovers, privatisations or the general run of investment policies. The most important aspect of the new clause is the need to ensure that professional advisers are independent of both the Government and management. Time and again, evidence to the Select Committee has make it plain that the main problem is the failure of warning systems to operate effectively, or at all. In almost every instance of the plundering or potential plundering of pension funds, professional advisers have been tied hand and foot to the companies employing them.

That does not apply only to Maxwell. Believe it or not, the Select Committee has received abundant evidence of corruption on both a large and small scale, and of unhelpful practices by employers. Some of those practices, although morally indefensible, are entirely legal, such as stock lending--lending to oneself a large proportion of investment funds as though a free banking system were in operation, or taking large pension holidays at the expense of future pensioners, as British Coal is currently doing. I hope that the Government will do something about that.

Apart from the professional advisers, everyone who has given evidence to the Select Committee--solicitors, barristers, private-sector advisers to the pensions industry, trade unions, pensioners' organisations and deferred pensioners' organisations--has said, "For God's sake, bring in legislation to protect us from advisers who are representing the company on one hand and, on the other hand, are responsible for advising trustees about the investment and the movement in and out of the portfolio of hard cash or assets belonging to pensioners." The Maxwell case is a fine example. A total of £1.8 million was taken out of the Maxwell pension funds in the space of a few months at the end of last year to pay the professional advisers. Maxwell did not pay them ; the pensioners had to. That was rubbing salt in the wound--making the pensioners pay advisers who had never advised them.

An adviser in one firm of solicitors was paid more than £40,000 from the pension fund for writing a single letter on behalf of Maxwell and his fellow directors. The letter was a carefully constructed lie in response to complaints that had been received about the manipulation of funds. That solicitor still practises in the City. He admitted to the Select Committee that for writing a letter he had received more than £40,000--it had taken him more than six weeks

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to construct the letter--from the very pensioners who had asked him to investigate corrupt practices. That is entirely unacceptable. During that critical 12-month period when the auditors were licensed by the Investment Management Regulatory Organisation to regulate their own investments, they literally closed their eyes and their books and walked away. As they did so, hundreds of millions of pounds were taken out of the fund and are now to be found in various parts of the world. That is what might happen to British Rail's pension fund and to the mineworkers pension funds. These pension funds will be at greatest risk after privatisation. The City cannot wait to get its hands on them.

It is essential, therefore, that the Government should put on to the face of the Bill clear and precise arrangements that take account of the Select Committee's inquiry into pension fraud. The Government must also take into account what the industry, the managers' associations, the Union of Democratic Mineworkers and the National Union of Mineworkers have said to them. If the Government are not prepared to do so, history will be repeated. The asset-rich pension funds of British Coal and British Rail will be part and parcel of the sell-off. They will be the only reason for the sell-off. One only has to consider what happened after electricity privatisation. Under the contract arrangements, British Coal has been run into the ground. British Coal's only tangible asset is coal in the ground and its pension fund.

The Government must give commitments if they are to end the sincere worry of those employed in the industry and of the hundreds of thousands of pensioners and future pensioners. Unless the Government give those commitments, we shall have to divide the House and, by campaigning, make people aware of the fact that, despite Maxwell and the Select Committee's report, the Government are still prepared to gamble with the assets of public-sector pensioners.

Mr. Eric Clarke (Midlothian) : I echo what has already been said by my hon. Friends, in particular by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). I worked in the coal mining industry and was the mineworkers' trade union representative until I was made redundant. Active and retired mine workers, and also their wives and widows, are extremely worried. I make no apologies for repeating that fact. We are talking about ordinary people and many honest individuals who have given their lives and their health to the industry. Some of them lie awake at night wondering what is going to happen. I appeal again to the Government, as I appealed to them in Committee, to look at what is going to happen to the fund. It is difficult not to repeat what others have said, but I shall try my best to consider this matter from another angle. CIN, a highly respected organisation, runs the pension fund. It is even respected in the City. Its investments on behalf of miners, their widows and others, are second to none. It makes investments throughout the world. I represented the trade union side on the fund for four years. The people who administer the pension fund are tough. I want to know what the Government intend to do about the fund.

If the industry is privatised, miners will not necessarily find that their pension fund investments are made by that organisation. I am asking for continuity. If doubt is cast

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on its future, the headhunters in the City of London and elsewhere will take away its top people. In addition, between 290 and 300 people administer the fund in Sheffield and elsewhere. They earn their livelihood by looking after the pensioners' interests. I want to know what is going to happen to these people. They have done a good job. This is a good organisation. It would be a crime if it were to be split up after privatisation.

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Some pension fund money has been put into works of art. That may be a great way of increasing the amount of cash, but it is not working for anyone. The works of art are either in museums or vaults. The money that is in this fund is working for people and has been invested in this country. I took a great deal of pleasure from the fact that money was lent to people who were starting up on green field sites or were pursuing other activities.

It is internationally accepted that this country is at the top of the league when it comes to new ideas. The silicon chip and many other inventions were the result of work done in learned institutions and technical colleges in this country, but they were developed and manufactured by other countries. The conservative attitude in the City of London and in our finance houses leads them to look for a return on their money yesterday. Six months is too long ; a year is impossible. However, our Japanese competitors talk about getting a return in 10 or 12 years and of having a monopoly over any invention.

This organisation, however, waits for a return for anything up to six years. It does not have rose-tinted glasses ; it does not give money to non -starters. It has been so successful that British Rail has asked it to take on its investments. That encourages intitiative and provides jobs for people in mining areas and elsewhere. It leads to investment in the know- how and initiative of the British people, which is second to none. That fact alone should lead to the Government allowing this fund to stay alive and the investment experts together. Risk capital is one of the particular strengths of this organisation.

We cannot, however, just sit back and say that everything is all right with this fund. One has to bear in mind the Maxwell nightmare. The fund must be well organised. Its assets must not be handed over to anybody else.

I ask the Minister to take on board my arguments on behalf of the mining communities who have invested their wealth and health in this country. The miners were never seen to be wanting when it came to campaigning against fascism. They fought for this country in two world wars. I do not want a Maxwell scandal to come out of this. There should not even be the hint of a Maxwell scandal here. I want a guarantee from the Minister that the cash that has been built up for their pensions by people who have created wealth for this country will be preserved.

I am not talking about City or stock exchange manipulations, or about somebody walking away with millions of pounds. I am talking about hard work to create wealth, generating power and energy for industry, commerce and domestic use. Without the coal industry, we would be in a poor position. Many countries envy our energy assets, but I am worried that they will be stripped before privatisation. I want a moratorium on some of British Coal's activities. My hon. Friend the Member for Don Valley (Mr. Redmond) mentioned land being sold off. Two

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anthracite mines are being sold in south Wales. I want to know about the other deals that are going on. We cannot stop them dead in their tracks, but I want the Minister to ensure that, before the Bill takes effect, he analyses any asset pertaining to the sale. Asset stripping may occur before privatisation. I do not trust some of the people who are running British Coal--and one person in particular, who hon. Members know all about.

The Government might get up to some of their old tricks by selling off assets to their friends or someone else before privatisation. Those assets belong to the industry and to the people of this country. I do not want any funny deals to be done before privatisation. That goes for pit closures as well. Premature pit closure can be detrimental asset stripping. I hope that the Minister will considerthat.

I shall close there--I know that we shall debate other amendments later-- but that does not mean that I am not interested in safety, concessionary coal or the other organisations that have been mentioned. However, it is important that we concentrate on pension funds.

Mr. Malcolm Bruce (Gordon) : I want briefly to support the new clause and to ask the Minister to take on board the fact that this is not just a ritual debate on privatisation. I have served on several privatisation and enabling Bills, in which, properly, there have always been debates on pensions.

The Minister must accept that what has happened in the past year has brought into sharp focus the concerns of thousands of people who are affected by the proposed privatisations. The hon. Member for Makerfield (Mr. McCartney) referred to British International Helicopters, whose operational headquarters are in my constituency. At the time of the proposed privatisation of British Airways, the work force of British Airways Helicopters, as it then was, were assured that their pension funds would be safe and that they would continue to be full members of the British Airways pension fund. Even when it became apparent that British Airways' management, having said that it had no intention of selling the company, was in negotiations to do so, the work force were told that they would be safeguarded as continuing members of the pension fund.

The Minister will understand, therefore, how sick and cynical those people now feel. They are victims of the Maxwell fraud and, as I understand it, they do not know whether they will benefit from the Secretary of State's rescue fund. As of a few days ago, two employees who had reached pensionable age since the winding-up of the Maxwell pension fund had not received any payment from the Mirror Group, which does not accept responsibility, or from the Secretary of State's rescue fund.

That sad example shows the dangers of fragmenting pension funds at the point of privatisation. In his detailed proposals to privatise rail and coal, will the Minister consider whether pension funds continue to exist as single entities rather than their being frozen and new pension funds being set up for each new company that is privatised? For example, if British Rail's employees were to transfer to one of the franchised companies, or if the coal industry were sold on a regional group basis or pit by pit, whereby employees were transferred to, for example, Yorkshire Collieries Ltd., would the Minister ensure that they did not cease to be members of their previous pension

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funds and were not moved into a smaller and, by definition, more vulnerable pension fund that did not have the benefit of accumulated assets?

The hon. Member for Holborn and St. Pancras (Mr. Dobson) made a powerful point about contribution holidays. It would be ironic if such employees found that their new employer did not offer the benefit of the accumulated successfully managed fund and had to start from scratch without receiving a contribution that would bring the fund up to the same competitive level from which they had benefited up to that point and which they might have hoped to continue until full retirement age.

The anxieties of pension fund contributors are bound to have been sharpened by what has happened in the past year. The lack of clarity in the Government's plans on how British Rail and the railways will be operated under their new proposals and how the coal industry will be privatised add to that uncertainty. It would be helpful if the Minister said that existing pension funds will not be frozen or broken up and that some mechanism will be found to ensure that payments continue.

The Secretary of State for Social Security is reviewing pension law. If the law has not been amended to take on board the concerns that have been expressed in the debate, will the Minister undertake to ensure that the legislation for the privatisation of the coal and rail industries will enhance the guarantees and protections that are being sought for those pension fund holders and to give serious consideration to ensuring that pension funds are not broken up?

Mr. McCartney : It might be helpful if the Minister were prepared to introduce an arrangement similar to that for electricity privatisation. The Department of Social Security proposed regulations to ensure that when the regional companies took over on vesting day the pension funds were protected. The machinery was complicated, but the Government introduced it because of the pressure that was put on them.

Mr. Bruce : The Minister will have heard that pertinent observation. To some extent, we do not seem to have learnt fully ; we continue to reinvent the wheel and each new privatisation creates its own problems.

The Minister will have heard many powerful and specific speeches, articulating concerns and asking him particular questions. I hope that he will recognise that this is not just a token gesture for which a token assurance will be acceptable and that he must show that the Government take on board the seriousness of people's concerns. He must assure hon. Members that the Government will address those concerns under general pension legislation--and, I suggest, under the privatisation Bills that will be introduced--and that existing funds will continue and will be safeguarded.

Mr. Michael Clapham (Barnsley, West and Penistone) : I support what my hon. Friend for Holborn and St. Pancras (Mr. Dobson) said in moving the new clause. A number of important issues have been raised in the debate. I want to concentrate my comments on the mining industry and its pension schemes. At present, four pension schemes operate. The first is the mineworkers contractors pension scheme, which provides the same benefits to sub-contract workers as is provided under the mineworkers pension scheme for industrial workers. The second

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pension scheme is that of the British Association of Colliery Management ; the third is for supervisory workers and the fourth is the mineworkers' pension scheme.

The accumulated funds of the four schemes are well in excess of £12 billion, which is a great attraction to an asset stripper. Therefore, it is essential that we are able to ring-fence the schemes. The Minister has already made promises about what he is prepared to do, but we must go beyond promises. We need copper-bottomed guarantees in the form of legislation, perhaps part of the Bill, to ensure that the mining communities have the necessary protection.

Miners are already beginning to suffer anguish. For example, on Saturday two constituents came to my surgery to ask whether their pensions would be guaranteed, and I am sure that the same has happened to many of my hon. Friends.

6 pm

My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) referred to the pensions holiday which has been in existence since 1987. The Minister will be aware that British Coal took £300 million out of the first surplus. The second sum taken from the surplus was £435 million, making a total of £735 million taken from the mineworkers' pension scheme to provide a contributions holiday. That has been an enormous help for British Coal, but it has been detrimental to the pensioners.

British Coal will not now make a contribution to the scheme until the year 2001. That is ironic at a time when we are talking about selling the industry. Companies that we could call sharks are circling the industry, ready to move in, and will be able to take advantage of the contributions holiday which, as I said, will last to the year 2001.

In giving copper-bottomed guarantees, I hope that the Minister will be able to examine how the pension scheme will operate in the future. Perhaps he will be prepared to consider a national pension scheme for all the industry's workers, irrespective of the shape that the future privatised industry may take, so that a man working for subcontractors who are further subcontracted will not have a worse pension than any other payroll worker. We need a uniformity of pension provision throughout the industry, and I sincerely hope that the Minister will take that suggestion on board.

At the same time, we must consider how employees can be guaranteed rights when they transfer from one employer to another within a national pension scheme. If they are part of national pension scheme, it must be guaranteed that their pension will remain in that scheme without the same transferred values as there would otherwise be, especially if the industry has perhaps seven or eight different employers.

New clause 3 is essential because it will provide the protection which the mining communities require. New clause 7 requires consultation with those representing mineworkers, such as those on management committees of pension funds. I hope that the Minister will guarantee open consultation and that new clause 7 will be accepted. I was interested in what my hon. Friend the Member for Don Valley (Mr. Redmond) said about new clause 9 and land. New clause 9 also refers to colliery welfare organisations. The Minister will be aware that the Coal

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