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Lord Lester of Herne Hill: My Lords, I am most grateful to the Minister and all noble Lords who have taken part in this short but important debate. My starting point is that of course there should be effective consultation. I am glad to hear that there has been. I am also glad to hear that the authorities in the Isle of Man have shifted in the way outlined. However, the Channel Islands remain. They have already caused this country to be held to be in breach of the convention in one case. When one is talking about fundamental human rights and freedoms anchored in an international treaty where the UK has international responsibility for breaches of the rights of British citizens in the Channel Islands, as well as in the Isle of Man, I can see no answer to the point that there is a difference of treatment made in the protection of access to courts for enforcing convention rights as between the islands and the mainland.

I turn now to the arguments about distinct traditions and local circumstances. This is an argument which one has heard time and again in the human rights field in this country and beyond. Indeed, we heard that argument in Northern Ireland in the Dudgeon case where the UK was forced to change the criminal law so as to give equality of treatment to homosexuals. We had the same argument with regard to corporal punishment in Scotland; namely, that there was a different tradition there. In each case the UK Parliament was compelled to legislate, and the same would apply to breaches in the Channel Islands.

I turn now to the courts in the Channel Islands which, in answer to the noble Lord, Lord Henley, would not have the power under my amendments to strike down Acts of the Westminster Parliament, any more than the Scottish courts will have the power to do so under the devolution legislation. I have not heard any arguments to suggest that those courts are not capable of providing effective remedies for breaches of the convention. As the rights of British citizens are at stake, it seems to me that the same rights and obligations should apply across the mainland and the offshore islands.

I have quoted the Royal Commission under the chairmanship of the late Lord Kilbrandon indicating that where an international agreement is concerned special considerations are involved. It is in respect for the

19 Jan 1998 : Column 1310

citizens of those islands, and not through any disrespect to them, that I believe they should have equal protection. For that reason, I wish to test the opinion of the House.

7.28 p.m.

On Question, Whether the said amendment (No. 18) shall be agreed to?

Their Lordships divided: Contents, 32; Not-Contents, 176.

Division No. 1


Addington, L.
Beaumont of Whitley, L. [Teller.]
Brookes, L.
Calverley, L.
Carlisle, E.
Dholakia, L.
Falkland, V.
Geraint, L.
Goodhart, L.
Hamwee, B.
Harris of Greenwich, L.
Hooson, L.
Lester of Herne Hill, L.
Ludford, B.
McNally, L.
Maddock, B.
Newby, L.
Nicholson of Winterbourne, B.
Ogmore, L.
Razzall, L.
Redesdale, L.
Rochester, L.
Rodgers of Quarry Bank, L.
Russell, E.
Sandberg, L.
Smith of Clifton, L.
Thomas of Gresford, L.
Thomson of Monifieth, L.
Thurso, V.
Tope, L. [Teller.]
Tordoff, L.
Wallace of Saltaire, L.


Acton, L.
Alexander of Tunis, E.
Alton of Liverpool, L.
Amos, B.
Anelay of St. Johns, B.
Ashbourne, L.
Bassam of Brighton, L.
Belhaven and Stenton, L.
Berners, B.
Biddulph, L.
Blackstone, B.
Blaker, L.
Blatch, B.
Blease, L.
Borrie, L.
Brentford, V.
Bridgeman, V.
Brooke of Alverthorpe, L.
Brooks of Tremorfa, L.
Burlison, L.
Burnham, L.
Cadman, L.
Carmichael of Kelvingrove, L.
Carnegy of Lour, B.
Carnock, L.
Carter, L. [Teller.]
Chandos, V.
Chelmsford, V.
Chesham, L.
Clinton-Davis, L.
Cocks of Hartcliffe, L.
Coleraine, L.
Colville of Culross, V.
Colwyn, L.
Cope of Berkeley, L.
Courtown, E.
Craig of Radley, L.
Cross, V.
Currie of Marylebone, L.
David, B.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Dixon-Smith, L.
Donegall, M.
Dormand of Easington, L.
Eatwell, L.
Elliott of Morpeth, L.
Elton, L.
Evans of Parkside, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Fookes, B.
Gallacher, L.
Gordon of Strathblane, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Gregson, L.
Grenfell, L.
Haddington, E.
Hanworth, V.
Hardie, L.
Hardy of Wath, L.
Harris of Peckham, L.
Haskel, L. [Teller.]
Hayhoe, L.
Hayman, B.
Hemphill, L.
Henley, L.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
HolmPatrick, L.
Home, E.
Hooper, B.
Hope of Craighead, L.
Howie of Troon, L.
Hoyle, L.
Hughes, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Hunt of Wirral, L.
Hylton, L.
Iddesleigh, E.
Irvine of Lairg, L. [Lord Chancellor.]
Islwyn, L.
Jay of Paddington, B.
Jeger, B.
Jenkin of Roding, L.
Jenkins of Putney, L.
Kennedy of The Shaws, B.
Kennet, L.
Kilbracken, L.
Kingsland, L.
Kirkhill, L.
Knight of Collingtree, B.
Lawson of Blaby, L.
Leigh, L.
Liverpool, E.
Lofthouse of Pontefract, L.
Longford, E.
Luke, L.
McIntosh of Haringey, L.
Mackay of Drumadoon, L.
Marlesford, L.
Masham of Ilton, B.
Merlyn-Rees, L.
Mersey, V.
Milner of Leeds, L.
Molloy, L.
Molyneaux of Killead, L.
Monkswell, L.
Monro of Langholm, L.
Monson, L.
Montague of Oxford, L.
Montgomery of Alamein, V.
Morris of Manchester, L.
Napier and Ettrick, L.
Newall, L.
Nicol, B.
Norfolk, D.
Northbrook, L.
Northesk, E.
Orme, L.
Palmer, L.
Perth, E.
Peston, L.
Pitkeathley, B.
Platt of Writtle, B.
Prys-Davies, L.
Puttnam, L.
Ramsay of Cartvale, B.
Randall of St. Budeaux, L.
Rawlings, B.
Rea, L.
Rendell of Babergh, B.
Rennell, L.
Renton, L.
Renwick of Clifton, L.
Richard, L. [Lord Privy Seal.]
Ripon, Bp.
St. John of Bletso, L.
Sefton of Garston, L.
Selborne, E.
Sewel, L.
Shaw of Northstead, L.
Shepherd, L.
Simon, V.
Simon of Highbury, L.
Smith of Gilmorehill, B.
Soulsby of Swaffham Prior, L.
Southwell, Bp.
Stallard, L.
Stewartby, L.
Stone of Blackheath, L.
Strabolgi, L.
Swinfen, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Gryfe, L.
Thomas of Gwydir, L.
Turner of Camden, B.
Ullswater, V.
Vivian, L.
Walker of Doncaster, L.
Waterford, M.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
Wharton, B.
Whitty, L.
Wilberforce, L.
Williams of Mostyn, L.
Winston, L.
Young, B.
Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

19 Jan 1998 : Column 1311

7. 38 p.m.

Lord Hoyle: My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, perhaps I may suggest that Report stage does not begin again before 8.38 p.m.

Lord Simon of Glaisdale: My Lords, perhaps I may ask how late we are expected to sit this evening.

Lord Hoyle: My Lords, the answer is that we do not know at this stage.

Lord Simon of Glaisdale: My Lords, perhaps I may ask how soon the noble Lord will know.

Lord Hoyle: My Lords, when we adjourn depends to a large extent on your Lordships. At this stage we cannot give any indication.

Moved accordingly, and, on Question, Motion agreed to.

19 Jan 1998 : Column 1312

Lloyds TSB Bill [H.L.]

7.40 p.m.

Baroness Hooper: My Lords, I beg to move that this Bill be now read a third time.

Since the merger between the TSB Group and Lloyds Bank in December 1995, the banking activities of the two organisations have been carried on separately. The need to have a Private Bill arises out of the fact that the bank may not transfer a customer's money to another body without the consent of the customer. Only through this means can a bank's operations be merged without going through the massive administrative task and the uncertainty of seeking the agreement of each customer individually in order to transfer his or her account from one entity to another. In this way, and in this particular case, some 8 million customers are also therefore spared the accompanying inconvenience. This is the usual and recognised way of dealing with this particular task. An average of one bank Bill each parliamentary Session attests to that. However, it must be said that usually such Bills, like most Private Bills, pass through all their stages without discussion.

Nevertheless, the Lloyds TSB Bill has been making steady progress through this House since its first Reading in January last year and its Second Reading in March last year. At Second Reading we had an interesting and wide-ranging debate. Then, following the general election and the Summer Recess, the Unopposed Bill Committee stage took place on 27th November last year.

As some noble Lords may be aware, the Lloyds TSB Group undertook exhaustive and free-ranging discussions about its future relationship with the Banking Insurance and Finance Union (BIFU) and the Lloyds TSB Union, the LTU. It did so as soon as the merger was announced. It successfully concluded agreements with both BIFU and the LTU to the satisfaction of each of the parties during last year's Summer Recess.

The most significant and relevant features of those agreements were: to give equal recognition rights to BIFU and the LTU up to the same level in both TSB and Lloyds banks; to reaffirm that compulsory redundancy would continue to be very much a policy of last resort; to provide improvements when harmonising terms and conditions of contracts of employment and guarantees as to how the new terms will apply to individual members of staff; further, to agree a process for proposed branch reductions and to reaffirm the assurances previously given regarding the TSB Bank in Scotland.

Certain questions were also raised at earlier stages of the Bill in regard to pensions. The Bill does not have an impact in any way upon any of the schemes within the Lloyds TSB Group. Nevertheless, I am assured that the Lloyds TSB Group takes its responsibilities in this area most seriously. In particular, the schemes in the group are well-funded and provide an excellent package of benefits to pensioners. In addition to strength of funding, the schemes enjoy a comprehensive framework of statutory, regulatory and fiduciary safeguards for their

19 Jan 1998 : Column 1313

beneficiaries which are in line with best practice among major corporate pension schemes throughout the United Kingdom. Against the background of the agreements reached with the unions and the assurances given to them, the unions withdrew their petitions against the Bill, which enabled us to have an unopposed Committee stage.

I understand that the noble Lord, Lord St. John of Bletso, wishes to raise again the issue of pensions, albeit at this very late stage. Unfortunately, I have been unable to ascertain the concerns of my noble friend Lord Northbrook, but I look forward with interest to hearing the remarks of both noble Lords. I beg to move.

Moved, That the Bill be now read a third time.--(Baroness Hooper.)

7.45 p.m.

Lord St. John of Bletso: My Lords, while I in broad terms welcome this Bill and the potential benefits to shareholders and customers of Lloyds and TSB, I should like briefly, as the noble Baroness mentioned, to express my concern for the pension rights of the ex-employees of TSB, Hill Samuel and the other companies whose pension funds were amalgamated into the TSB group pension scheme, which currently has a large surplus.

I know that the noble Lord, Lord Northbrook, will be elaborating on the concerns of the TSB Hill Samuel Action Group, representing those ex-employees. The group has over 50,000 members, of whom, at the date of the last accounts, more than 20,000 were current employees; 20,000 were deferred members; and under 9,000 were pensioners.

The Bill draws reference to the,

    "transfer to, and vesting in, Lloyds ... of the undertakings of TSB ... and Hill Samuel".

In essence, I would like to see improved safeguards being put in place to ensure that the surplus pension assets in the TSB pension scheme are used to improve the benefits of existing and former members to the maximum level permitted by Inland Revenue requirements. I was encouraged by the remarks of the noble Baroness, Lady Hooper, who said that Lloyds TSB takes its pension responsibilities very seriously.

There has been a certain amount of press coverage, citing TSB and Noble Lowndes as mis-selling pensions. I also understand that Noble Lowndes advised some of the group's redundant employees of their entitlements, and that they were not happy with the quality of that advice. I should like to know to what extent such cases have been resolved by Lloyds TSB.

In conclusion, I reaffirm my support for the Bill, but hope that my concerns for the rights of the pensioners can be addressed when the undertakings of TSB and Hill Samuel are "transferred to, and vested in", Lloyds.

7.48 p.m.

Lord Northbrook: My Lords, I thank the noble Baroness, Lady Hooper, for her detailed explanation of the background to the Bill. I seek to express some of the concerns of the TSB Hill Samuel Action Group, whose

19 Jan 1998 : Column 1314

members are ex-employees of the TSB, Hill Samuel or other companies whose pension funds have been amalgamated into the TSB group pension scheme. They are not opposed in principle to the Lloyds TSB Bill. They recognise that it will bring substantial benefits to the promoter. However, they believe that, in view of those benefits, certain anomalies in the protection available to pensioners and in the treatment of redundant and other ex-employees must be remedied by the promoter before the Bill is passed. In default of such remedy, they will petition the Bill in another place.

As the noble Lord, Lord St. John, has already given details of the current membership of the TSB group pension scheme, I should like to focus on the other ex-employees transferred out of the scheme on terms which, at least with hindsight, were insufficiently generous, so contributing to the large surplus in the fund. From the figures it is apparent that large numbers of employees do not remain for long enough to reach the minimum pensionable age of 50. In view of the continuing staff reductions in the retail banking sector, and at Lloyds TSB in particular, the number of deferred members of the pension scheme can be expected to increase, both in absolute and relative terms. Therefore, bearing in mind that the employees of the Trustee Savings Bank were in many cases relatively lowly paid, that many older pensioners have had their entitlements eroded by inflation and that many of the members will have left before pensionable age, frequently through being made redundant, a significant proportion of the members of the scheme are, or will be, receiving relatively low incomes.

As has been mentioned, there is a substantial surplus in the TSB group pension scheme of at least £850 million, or 48 per cent., at the date of the last accounts, enabling the employer to anticipate a contribution holiday until the year 2015.

In detail, the action group has two major and interrelated concerns: protection of potential benefits out of the fund surplus for the actual and deferred pensioners and equity in distribution to the beneficiaries in general and the poorest pensioners in particular.

As regards the first issue, the action group is concerned about what will happen if there are future mergers between the TSB scheme and other, less well-funded schemes, as well as the consequences of the present planned merger of the undertakings of Lloyds Bank, TSB and Hill Samuel, particularly as the potential cost to the fund of remedying anomalies does not seem to have been addressed. The action group believes that Clause 8 of the Bill, which makes provision for retirement benefit schemes, does not provide sufficient protection for the interests of the members. The rules of the TSB scheme offer no protection if there is alteration to the benefits payable to the members without their consent, to the detriment of those members. Similarly there is no provision that would even prevent the ending of the TSB scheme. The action group believes that protection should be incorporated into the documents which constitute the TSB scheme to ensure that the interests of present and future pensioners are unaffected

19 Jan 1998 : Column 1315

by the consequences of the proposed merger. Such protection is needed before the Bill is allowed to pass into law.

The action group is anxious to ensure that the TSB scheme funds should not be used to pay benefits to the members or former members of other pension schemes operated by merged banks which might follow an amalgamation of the schemes. The action group is also determined to ensure that such protection should be extended to any future merger proposed by Lloyds TSB. It is also concerned that no part of the TSB scheme funds should be returned to Lloyds following any winding up of the scheme after the transfers of operations contemplated in the Bill. For these reasons, the action group believes that adequate safeguards should be put in place to ensure that the surplus assets in the TSB scheme are used to improve the benefits of the existing and former members to the maximum levels permitted by Inland Revenue requirements, as stated by the noble Lord, Lord St. John.

The action group is particularly concerned to ensure effective protection of the pension fund surplus. It understands that in the past few years TSB has transferred such surplus to companies acquiring its non-core subsidiaries so that they in turn can enjoy contribution holidays in respect of the staff transferred. It believes that it has not received satisfactory explanations of the numbers of and reasons for several of these transfers which would persuade them that the pension fund surplus was reasonably transferred without detriment to the members.

Moving on to the action group's second major concern, equity in distribution to beneficiaries in general and to poorest pensioners in particular, the action group is particularly concerned by the unsatisfactory explanations it received after it queried apparently unfair and unequal treatment of different groups and categories of pensioners. On the one hand, it is evident from the Lloyds TSB 1996 accounts that certain favoured individuals received substantial exceptional enhancements to their pension entitlements. On the other hand, some pensioners are receiving income support. The action group requires full details of all anomalies for the benefit of all the individuals affected, and not just for those lucky or well enough advised to have discovered discrepancies operating to their own disadvantage. The action group therefore seeks explanations of the numbers of individuals and amounts involved. Without a satisfactory explanation, confirmation will be sought in the other place that all such anomalies have been rectified.

We are not talking about a rerun of the Maxwell situation. However, the concerns of the action group are serious and require a more detailed and satisfactory response than has hitherto been given. If that does not happen, I anticipate further reaction to the Bill in another place.

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