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Mr. Prescott : The Department of Transport has already been involved in the very process of raiding pension funds. When the National Bus Company was privatised, the pension fund was broken up in a similar manner and the Department made it clear in evidence to the Public Accounts Committee that the sale price of £200 million was made up of about £150 million taken from the pension fund, a surplus which went directly to the Treasury. The Government have already done it. Perhaps the hon. Gentleman was not watching. He could have prevented it but it did happen.
Mr. Cormack : But the hon. Gentleman knows as well as I do that no pensioner has suffered as a result of--
Mr. Cormack : No, I do not think that that is the case. No individual pensioner has suffered. The point that I am seeking to make can stand any challenge. I of course want to hear what my right hon. Friend the Minister will say when he replies to the debate, but I repeat that no Government, Conservative or Labour, would get away with raiding the individual pensions of any of our constituents, and we do those constituents a disservice by fuelling their anxieties at a time like this.
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Mr. John Denham (Southampton, Itchen) : The hon. Member for Staffordshire, South (Mr. Cormack) has put one version of the history of the past year's debate on the pension scheme. That is the version that the Government would like us to accept ; the version that says that a valiant band of honest men and women have been struggling against great obstacles, legal problems, Inland Revenue difficulties and parliamentary procedures in order to guarantee the future interests of British Rail pensioners.
An alternative view of the history of the past 12 months' debate is that the Government's main objective has been to confuse and to defuse the anger that arose among British Rail pensioners as a result of this move, while at the same time achieving their fundamental objective--a devalued pension scheme which will pay less than would have been the case under the existing scheme, and which brings financial benefits to the Treasury. I believe that time will show that that is the correct view of the past 12 months.
By the time that the Bill reached Committee, I had received, either directly or through my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), more than 800 letters from railway pensioners in the Southampton area expressing concern about the Government's proposal and supporting the continuation of the existing scheme. That concern continued to mount during the summer months, until the memorandum of understanding was agreed between the Government and the British Rail trustees.
The memorandum of understanding was given wide publicity. I seem to recall that a letter was sent to every individual member of the fund from the trustees outlining its main terms. When that letter was received, the anger collapsed and the momentum of the campaign against the scheme was diffused.
Although those who looked at the scheme closely knew that the scheme on offer was less good than the maintenance of an industry-wide scheme which new entrants to the railway industry would continue to join, they did have a letter from the chairman of the trustees of the British Rail pension fund saying that a satisfactory deal had been reached.
Those pensioners and tens of thousands of others thought that that agreement with the Government was the guarantee. They thought that the agreement was the result of the letters that they had written to their Members of Parliament, and that it would secure their futures in the pension fund. So in July the Government had achieved their primary objective of the past 12 months, which was to stop the wave of anger throughout the country by leading pensioners to believe that their futures were secure.
11.30 pm
That explains the tone of the correspondence between the chairman of the pension trustees and the Secretary of State, to which several hon. Members have referred this evening. In a letter to the Secretary of State dated 26 October, Derek Fowler said :
"I saw the Memorandum of Understanding as a milestone on the way towards securing Government objectives to secure BR Pensions. The steady erosion of what I thought had been agreed seems to justify the sceptical approach taken by many of my colleagues and others to the Memorandum".
It is not for me to put words into the mouth of the chairman of the pension fund trustees, but it seems to me that, in the publicity surrounding the memorandum of understanding in July, the chairman of the trustees was asked to put his good name and reputation to what has since been used
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cynically by the Government to defuse pensioner and public opposition to the move. I regard that action as unjustified. There are major problems with what is now proposed. They have been highlighted by other hon. Members. If IOUs are substituted for cash payments, as the chairman of the fund points out, that will "accelerate the realisation of marketable assets to pay pensions. It is only on those assets that the Trustees can earn real increases."The Bill provides no protection which would prevent the timing of the payments being so phased or delayed as to force the fund to realise marketable assets faster than would have occurred under the existing arrangements.
Every time that the trustees are forced to sell investments which they currently hold, a transfer of the assets of the fund has been achieved, to the saving and the benefit of the Treasury.
Mr. Nigel Spearing (Newham, South) : Does not the whole affair have the fingerprints of the Treasury all over it? The hapless Ministers are in the hands of the Treasury. If the principles of the hon. Member for Staffordshire, South (Mr. Cormack) are to be put into practice--we all wish they would be--surely the Government must come back with another Bill to return to the status quo. That is the only way in which the criteria of the hon. Gentleman can be observed.
Mr. Denham : I agree with my hon. Friend. He refers to Conservative Members. To those Conservative Members who are feeling secure about their pensioners because they have received a briefing note or letter from the Secretary of State, I point out that in the same letter to the Secretary of State, Mr. Derek Fowler said :
"The letter to your colleagues dated 22 October heightens my concern."
That is what the chairman of the trustees said about the party political propaganda which has been circulated to Conservative Members and is undoubtedly intended for them to reproduce and send to their constituents who are British Rail pensioners. I hope that any right hon. or hon. Member who intends to do that will ensure that he includes the comments of the chairman of the trustees when he writes to his constituents. To do less would not be entirely honest. At the outset of this exercise, the Government proposed nicking the assets of the pension fund in one go. That gave rise to a howl of outrage, so the Government said that they would not. We knew that they would. They knew that we knew that they would. They knew that we did not quite know how they would do it, so they continued to say that they would not, but they continued to know that they would. Now they are, and they know that they are, and we know that they know that they are, but still they say that they are not. It is clever, but it is cynical and wrong, and for hundreds of thousands of pensioners, it is robbery.
Mr. Stevenson : Having sat through most of the two-day debate without contributing to it, I hesitated to do so at this late hour, but was prompted to intervene by the speech of the hon. Member for Staffordshire, South (Mr. Cormack).
Many of my hon. Friends, and some Conservative Members, have said that the Government do not understand what is happening. Having listened to the debate, I believe that they fully understand what is happening. They know exactly what they are doing. They know the principles that they are establishing in this rotten
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Bill. If there is a pension fund that the Treasury can get its hands on, the Government will establish the principles, under whatever comouflage or subterfuge afforded by their amendments, to allow that to happen legitimately. My hon. Friends have established that beyond any doubt. The giggling and smiling that I have witnessed from some Tory Members will not camouflage that.The Secretary of State said that he wanted to clarify the apparent contradiction between the contents of the memorandum of understanding, which was signed in July, and the Government's amendment, which changes the word "agreement" to "consultation". I know that many Conservative Members think about such matters carefully, as the hon. Member for Staffordshire, South said. There is a great deal of difference between the two words. I do not want to rehearse the points made by my hon. Friends, who have adequately and starkly shown the difference between the two.
In attempting to clarify the situation, the Secretary of State caused more confusion. Which is it to be? Is it to be agreement or consultation? He said that there would be negotiations between him and the trustees of the fund, and if they are to be based on the memorandum of understanding, in all good faith--I ask Tory Members to think about that--they will have to be based on agreement. The tragic irony is that, if Tory Members troop through the Lobby in favour of the amendment, they will break faith with the memorandum of understanding. They simply cannot have it both ways. That is a fundamental principle.
Before the Division is called, the House will need a clear statement from the Secretary of State on which word is right. Is it to be the memorandum of understanding or the amendment? Will it be agreement or consultation? I see the hon. Member for Langbaurgh (Mr. Bates) shake his head. I recognise that I am not a public school person, but the thousands of pensioners who will be listening to the debate with great interest will understand clearly that, no matter how you try to camouflage it, you cannot have it both ways. It must be agreement or consultation.
If Conservative Members support the amendment in the Lobby they will have broken faith for party and trust.
Madam Deputy Speaker : Order. I remind the hon. Member that he should be addressing the Chair.
Mr. Stevenson : I apologise, Madam Deputy Speaker. I am relatively new to the House and am grateful for your guidance.
The comments of the hon. Member for Staffordshire, South touched on the issue of trust and faith. In response to an intervention by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), he mentioned the National Bus Company employees. My hon. Friends the Members for West Bromwich, East (Mr. Snape) and for Nottingham, East (Mr. Heppell) said that they were British Rail pensioners. I suspect that I am one of the few Members who used to belong to the Bus Employee Superanuation Trust, to which thousands of bus workers contributed year after year. When the Government privatised it, they gave £150 million of our money to the Treasury, which reduced my entitlement. The Bus Employee Superannuation Trust is now all but destroyed as a direct result of legislation supported by the hon. Member for Staffordshire, South.
If hon. Members want evidence, they need not wait for the film but can read the book. It is all there for them to see.
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The case has unquestionably been made that the Government intend to act in the same way again, and I urge all Conservative Members with a conscience to support us in the Lobby.Mr. Wilson : It is fitting, and a metaphor of our proceedings, that we should end tonight's debate with a contrast between fantasy and realism. The hon. Member for Staffordshire, South (Mr. Cormack) made a characteristic, Vicar-of-Bray contribution, in which he tried to show the world that all was well. But I fear that anyone who is counting on the happy consensus which he envisaged, based on Conservative Members suppressing party loyalty while they safeguard the interests of pension funds and the national good, will be deeply disillusioned.
As my hon. Friend the Member for Stoke-on-Trent(Mr. Stevenson) pointed out, and as the hon. Member for Staffordshire, South clearly did not understand, we have seen this scenario before. He told us that Conservative Members would put aside party loyalties--all the matters which we pray about--and carefully guard pension funds, and that no Government of any complexion would lay their hands on a pension fund, heaven forfend. But it happened with the National Bus Company. The gains to the Treasury from the net receipts from winding up pension funds amounted to £120 million. And one of the people directly involved in it has cast some realism on the debate. However, tonight we are discussing not £120 million but big bucks. We are discussing money that makes a serious dent in the public sector borrowing requirement. We are discussing the scale of precedent that could be applied to the coal pension fund, the Post Office pension fund and, I suppose, every other pension fund on which the Government have set their eyes.
If we are waiting for the hon. Member for Staffordshire, South and his men of no fixed allegiance to pass among us ensuring that none of that ill is visited upon society, few of the thousands of pensioners who have written to hon. Members on both sides of the House will regard that as much of a guarantee. They would prefer a guarantee in the Bill to a verbal guarantee by the hon. Member for Staffordshire, South.
Ministers have conspicuously refused to give a guarantee in the Bill at every stage of the proceedings because they intend to get the Treasury's hands on the surplus of the British Rail pension fund. The mystery may never be solved. We may never know the answer to my earlier question about which came first to these malevolent minds. Was it rail privatisation or getting their hands on the pension fund? Did the Government think of rail privatisation and then realise what they could do with the pension fund? Rail privatisation is a disruption of our national railway system, a threat to the whole network through privatisation and fragmentation. Is that the by-product of the grand scheme of getting their hands on the pension funds? That is the $64,000 question, or perhaps it is the £4 billion question.
11.45 pm
The only reason for the fear in the minds of pensioners about what is being done is the Bill to privatise British Rail. If there were no Bill to fragment BR, there would be no insecurity in the minds of railway pensioners. Everything that has been visited upon those pensioners over the past few months is a by-product of the Bill. The responsibility for that uncertainty and concern, which are
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manifested in the correspondence, demonstrations and petitions, rests with the Government because of what they have set about doing to the railways.The Government could have set about privatising the railways and still maintained a single pension fund. That could have been done if it were not the Government's intention to get this vast sum for the Treasury. Their only reason for fragmentation is to serve their wider political agenda.
This document in my hand will haunt Ministers and Conservative Members who support the amendment. It is the letter from the chairman of the British Rail Pension Trustee Company Ltd. What I and other hon. Members say is of limited relevance, but this letter is an indictment, because it charges the Government with cheating, giving false guarantees and reneging. With a bit of luck in the other place, the House might have to return to these matters tomorrow. I shall read the indictment. It states :
"I very much regret the need to have written to you three times in less than three weeks on fundamental differences of view between the Government and the British Rail Trustees. I saw the Memorandum of Understanding as a milestone on the way towards securing Government objectives to secure BR pensions. The steady erosion of what I thought had been agreed seems to justify the sceptical approach taken by many of my colleagues and others to that Memorandum."
In order to win the vote in the Lords, the man who was prepared to give Ministers the benefit of the doubt while his colleagues were not, said less than a week ago, on 26 October, "I was wrong and they were right." That is an indictment of Ministers and we shall pursue this issue at every stage.
We hope that hon. Members such as the hon. Member for Staffordshire, South will remember this night and will not say in three or four years, "We are your guardians." Now is the time to be guardians, and if they fail in that duty no pension fund will be safe, because this is the greatest potential robbery in the history of pension funds. The Members who support the Government in the Lobby will bear a heavy responsibility.
Mr. Freeman : The performance by the hon. Member for Cunninghame, North (Mr. Wilson) was dramatic, but it was at variance with the facts. [Interruption.] The hon. Gentleman spoke about the fear in the minds of pensioners. The Opposition, not the Bill, have put that fear there. I shall deal with the six substantive points raised in the debate, because I appreciate that the matter is likely to go to the other place and it is important that the facts are on the record. I agree with the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) that this is a sensitive subject for all pensioners. That is why it should be dealt with properly, soberly and rationally, so that we do not incite unnecessary fears in the minds of pensioners.
When the Bill left Committee, we were not speaking about a state guarantee for the pension fund. We were talking about a closed fund for the pensioners--part of the joint industry scheme that had its own assets and trustees. It was at the request of the trustees ; it was not my right hon. Friend the Secretary of State for Transport who summoned them. They came to the Government and said, "We are not happy with the Bill as it came out of the Standing Committee ; we want a state guarantee for the index-linked pensions." That was not part of what we discussed in the Standing Committee and that changed circumstances entirely.
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Does the hon. Gentleman not realise that a state guarantee for index-linked pensions is of great significance to the public sector? Who has to honour that commitment? It is the Treasury.Mr. Prescott : The Treasury guaranteed it in the first place.
Mr. Freeman : The hon. Gentleman is quite wrong ; the pensioners were not guaranteed by the state. There was no Government guarantee for the pensioners.
Both Opposition Front-Bench Members raised a number of issues. Let us be clear about the answers. First, we are talking about payments to the closed funds and not to the other open funds ; therefore, we are talking not about £70 or £80 million but about £50 million. The cash payments will continue to be made to the other funds that are not subject to a state guarantee.
Secondly, we have made it quite clear that the liabilities that continue to accrue under the Transport Act 1980 will be capitalised at the point at which the new scheme is created. The present value of the scheme of future payments will be calculated not by the Secretary of State for Transport, but by the actuaries. That will come to a substantial sum of several hundred million pounds.
Mr. Freeman : That will be calculated when the fund is set up on 1 October 1994. That is the intention. That asset will be on the balance sheet of the pension fund. I accept that we have to ensure that it is properly valued and not worthless ; that it has the value that the actuaries put on it for the purposes of calculating the surplus in the pension funds which, up to a certain proportion, can be distributed to the pensioners.
Thirdly, it was agreed by the trustees--the hon. Member for Kingston upon Hull, East (Mr. Prescott) seeks to divide the chairman of the trustees from the others. All the trustees agreed that the memorandum of understanding signed by the chairman was right and proper. They gave him their support and it was quite clear in the memorandum of understanding that, in return for the state guarantee on index-linked pensions, there should be payments from the Government under their accruing liabilities only when there was proven need.
The hon. Gentleman asked who is going to establish when that need arises. The answer is that the actuaries have to value the fund. They measure the assets and liabilities every three years. It is not my right hon. Friend the Secretary of State ; it is the actuaries. Fourthly, I look forward to a resumption of discussions as soon as possible in which we will seek to reach agreement with the trustees on the scheduling of any payments that may be made under the 1980 Act, irrespective of need. The trustees want not only cash payment when there is need, but specific maturities of the amount that has been capitalised and put on the balance sheet.
My right hon. Friend the Secretay of State and I will seek to reach agreement with the trustees not only about the scheduling of the payments but about the specific interest rate that is to apply. I know that we will be able to
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reach agreement and, as my right hon. Friend has said in any case we have to lay before both Houses orders which are a direct result of those negotiations.Fifthly, the hon. Member for Cunninghame, North talked about the proportion of the fund that these capitalised assets, the accrued liabilities being paid by the Government, accruing from the Government under the 1980 Transport Act might represent of the fund. The hon. Gentleman quoted a example of 70 per cent. We do not recognise that figure ; the actuarial advice to the Government is that the proportion will be closer to 20 per cent.--a normal proportion of any pension fund represented by gilt-edged securities. The hon. Gentleman also raised the issue of the 60 per cent. of the fund-- [Interruption.] Of course it is true. That will be retained in the fund.
In any pension fund, and certainly the BR pension fund in the past, the 60 per cent. that was not distributed to the pensioners, who usually had 40 per cent. of the benefit of any surplus, went back to the employees and the employer. It left the fund and went to British Rail. The hon. Member for Nottingham, East (Mr. Heppell), when he was a member of the Staff of British Rail, shared in a contributions holiday. That is an example of where the 60 per cent. went. We are now saying that the 60 per cent. will stay in the fund.
The hon. Member for Cunninghame, North said that the pensions surplus was stolen from the National Bus scheme. However, that was a balance-of-costs scheme, so--unlike BR--it was not entitled to the surplus. That is the difference. The hon. Gentleman's charge was completely out of order.
Mr. Prescott : In view of the time, I thank the Minister for giving way. He gave the impression that he wanted to get the facts straight for the benefit of the other place. Derek Fowler, chairman of the trustees, wrote to the Secretary of State saying :
"I certainly did not envisage the cash payments would cease indefinitely when I signed the memorandum, hence its reference to the retiming."
That is contrary to what the Minister has just told us.
Mr. Freeman : It is not contrary-- [Interruption.] It is not. We have made it quite plain that we are not talking about an indefinite cessation of payments. I explained that a few minutes ago, and I repeat it now.
We are grateful to my hon. Friend the Member for Staffordshire, South (Mr. Cormack) for what he said. He was right to say that the pensioners have not only a state guarantee of index-linked pensions but a share in the surplus. They have a separate, discrete pension fund, managed by trustees under independent management. That is an excellent deal for the pensionerled by my right hon. Friend, will honour the commitment to reach agreement with the trustees and to come back to the House with orders that will entirely discharge those responsibilities. I commend the motion to the House.
Question put, That this House doth disagree with the Lords in the said amendment :--
The House divided : Ayes 316, Noes 284.
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Division No. 383] [11.57 pmAYES
Ainsworth, Peter (East Surrey)
Aitken, Jonathan
Alexander, Richard
Alison, Rt Hon Michael (Selby)
Allason, Rupert (Torbay)
Amess, David
Ancram, Michael
Arbuthnot, James
Arnold, Jacques (Gravesham)
Arnold, Sir Thomas (Hazel Grv)
Ashby, David
Aspinwall, Jack
Atkins, Robert
Atkinson, David (Bour'mouth E)
Atkinson, Peter (Hexham)
Baker, Rt Hon K. (Mole Valley)
Baker, Nicholas (Dorset North)
Baldry, Tony
Banks, Matthew (Southport)
Bates, Michael
Batiste, Spencer
Beggs, Roy
Bellingham, Henry
Bendall, Vivian
Beresford, Sir Paul
Biffen, Rt Hon John
Blackburn, Dr John G.
Body, Sir Richard
Bonsor, Sir Nicholas
Booth, Hartley
Boswell, Tim
Bottomley, Peter (Eltham)
Bottomley, Rt Hon Virginia
Bowden, Andrew
Bowis, John
Boyson, Rt Hon Sir Rhodes
Brandreth, Gyles
Brazier, Julian
Bright, Graham
Brooke, Rt Hon Peter
Brown, M. (Brigg & Cl'thorpes)
Browning, Mrs. Angela
Bruce, Ian (S Dorset)
Budgen, Nicholas
Burns, Simon
Burt, Alistair
Butcher, John
Butler, Peter
Carlisle, John (Luton North)
Carlisle, Kenneth (Lincoln)
Carrington, Matthew
Carttiss, Michael
Cash, William
Channon, Rt Hon Paul
Chapman, Sydney
Churchill, Mr
Clappison, James
Clarke, Rt Hon Kenneth (Ruclif)
Clifton-Brown, Geoffrey
Coe, Sebastian
Colvin, Michael
Congdon, David
Conway, Derek
Coombs, Anthony (Wyre For'st)
Coombs, Simon (Swindon)
Cormack, Patrick
Couchman, James
Cran, James
Currie, Mrs Edwina (S D'by'ire)
Curry, David (Skipton & Ripon)
Davies, Quentin (Stamford)
Davis, David (Boothferry)
Day, Stephen
Deva, Nirj Joseph
Devlin, Tim
Dicks, Terry
Dorrell, Stephen
Douglas-Hamilton, Lord James
Dover, Den
Duncan, Alan
Duncan-Smith, Iain
Dunn, Bob
Durant, Sir Anthony
Dykes, Hugh
Elletson, Harold
Evans, David (Welwyn Hatfield)
Evans, Jonathan (Brecon)
Evans, Nigel (Ribble Valley)
Evans, Roger (Monmouth)
Evennett, David
Faber, David
Fabricant, Michael
Fairbairn, Sir Nicholas
Fenner, Dame Peggy
Field, Barry (Isle of Wight)
Fishburn, Dudley
Forman, Nigel
Forsyth, Michael (Stirling)
Forsythe, Clifford (Antrim S)
Forth, Eric
Fowler, Rt Hon Sir Norman
Fox, Dr Liam (Woodspring)
Fox, Sir Marcus (Shipley)
Freeman, Rt Hon Roger
French, Douglas
Fry, Peter
Gale, Roger
Gallie, Phil
Gardiner, Sir George
Garel-Jones, Rt Hon Tristan
Garnier, Edward
Gill, Christopher
Gillan, Cheryl
Goodlad, Rt Hon Alastair
Goodson-Wickes, Dr Charles
Gorman, Mrs Teresa
Gorst, John
Grant, Sir A. (Cambs SW)
Greenway, Harry (Ealing N)
Greenway, John (Ryedale)
Griffiths, Peter (Portsmouth, N)
Grylls, Sir Michael
Gummer, Rt Hon John Selwyn
Hague, William
Hamilton, Rt Hon Archie (Epsom)
Hamilton, Neil (Tatton)
Hanley, Jeremy
Hannam, Sir John
Hargreaves, Andrew
Harris, David
Haselhurst, Alan
Hawkins, Nick
Hawksley, Warren
Hayes, Jerry
Heald, Oliver
Heathcoat-Amory, David
Hendry, Charles
Higgins, Rt Hon Sir Terence L.
Hill, James (Southampton Test)
Hogg, Rt Hon Douglas (G'tham)
Horam, John
Hordern, Rt Hon Sir Peter
Howard, Rt Hon Michael
Howarth, Alan (Strat'rd-on-A)
Howell, Rt Hon David (G'dford)
Howell, Sir Ralph (N Norfolk)
Hughes Robert G. (Harrow W)
Hunt, Rt Hon David (Wirral W)
Hunt, Sir John (Ravensbourne)
Hunter, Andrew
Hurd, Rt Hon Douglas
Jack, Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
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