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Lord Brabazon of Tara: Perhaps I may presume to give the Minister a little advice on the matter. I sat through the proceedings on many privatisation Bills during the time of the previous government. As the noble Lord, Lord Brett, said, pensions were an issue in every one of them. We always had to give way on pensions at the end of the day. Moreover, I believe that we nearly always had to do so in this Chamber. Therefore, in order to save the Minister and the Committee a lot of time, I urge the noble Lord to take that advice.

Lord Brooke of Alverthorpe: I shall be brief at this time of night. On behalf of noble Lords on this side of the Committee, I was most grateful to hear those few words of support from the noble Lord, Lord Brabazon. In my previous incarnation as General Secretary of a Civil Service union, I had some experience of dealing with strategic partnerships, and forms of privatisation. Now we have PPPs. Invariably we run into two major issues. This is understandable with the transfer of staff. The first issue is that of job security. It is difficult to get the kind of long-term guarantees and security that staff want when they are being moved in that way.

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The second major issue is invariably pensions. Public servants enter into employment with the public service with an expectation of what their pensions will be. They contribute indirectly towards their pension during the course of their careers and, no matter what happens, they expect--and they have a right to do so--that that will go with them throughout the rest of their working lives.

Every time that we have a privatisation, or a PPP, we run into this kind of difficulty. Although there are clearly problems as regards job security and certainly on pensions, I hope that the Labour Government will listen sympathetically to these proposals. I join my noble friend Lord Brett and the noble Lord, Lord Brabazon, in urging the Government to seek a more sensible and civilised way forward. If the Treasury constitutes the obstacle, it should have been required to propose an alternative mechanism which avoids this conflict which always arises when such partnerships are proposed. I again urge that the Treasury should be asked to propose a measure which is novel, innovative and which protects pensions without the need for an argument about whether it should be on the face of the Bill or in the partnership documents. I hope that the Minister will consider that point.

In the meantime, a group of staff are extremely concerned about their future. I am sure that the Government will say that there is no difference between what they are offering and what the staff want. There are alternative and innovative proposals to be explored but, if there is not time for that, the appropriate measure should be included on the face of the Bill. I hope that this matter will be addressed in a sensible way. In the words of the noble Lord, Lord Brett, a confidence builder is needed so that staff work together to make a success of the change that is proposed.

Lord Hoyle: It is not often that I urge my noble friend to take the advice that has been proffered from the Benches opposite. However, in this case I hope that he will. As has been rightly said, the staff are extremely concerned about job security and about their pensions. An appropriate pensions measure would build up their confidence. Ministers have given verbal assurances on this matter which have pleased the unions. However, we are trying to put some rock solid foundations into those verbal assurances. Reference has been made to the electricity privatisation. We ask that similar provision be made for NATS employees in this regard. That has been done with regard to London Transport staff. It may be inconvenient but I urge my noble friends to resubmit the matter to the Treasury and include an appropriate measure on the face of the Bill.

Lord Clinton-Davis: I support what my noble friends have said. I do not want there to be a disparity of any real strength between the pilots and NATS employees. I speak uncharacteristically briefly but that is all I want to say.

Lord McIntosh of Haringey: The noble Lord, Lord Brabazon, invites me to give way gracefully and

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quickly for fear that I may have to give way less gracefully and less quickly later. However, I do not see that as my role. I do not see myself, in responding to the amendment, as resisting or giving way, nor do I do see myself as giving verbal assurances, according to the phrase that has been used. In responding to the amendment I seek to show that the concerns which my noble friends have about the pension scheme are not justified. I seek to show that not through verbal assurances but through detailed exposition of the position in which we find ourselves.

At present, pensions for NATS employees, and also Civil Aviation Authority employees, are provided by the Civil Aviation Authority Pension Scheme (CAAPS). After the PPP, CAAPS will remain the source of pensions for staff employed by NATS at the time of the PPP, but there will need to be some amendment to CAAPS to reflect the requirements of the Pension Scheme Office of the Inland Revenue. The Pension Scheme Office permits groups of companies to participate within the same pension scheme on either an associated or non-associated basis. At the moment the CAA and NATS are associated employers, while Highlands and Islands Airports Ltd is a non-associated employer within CAAPS.

In technical terms, all that will happen is that the principle of non-association is to be extended to NATS to comply with the requirements of the Inland Revenue. What does that mean in practice? Where the Inland Revenue requires the relationship to be one of non-association, cross-subsidy is not permitted--in other words, the concerns of the noble Lord, Lord Brett, about sufficient funds are met. The assets must be separately identifiable. Employer contribution rates must be set by reference to the characteristics of each of the non-associated employers considered separately. No other changes are required by the change of status of NATS from associated to non-associated employer. In particular, nothing about that change of status requires any change to the benefit structures of what, following public/private partnership, will be the separate CAA and NATS sections of CAAPS.

The mechanics to achieve non-association can be dealt with within the existing trust deed and rules of CAAPS and therefore without the requirement for legislation. I shall refer to that in detail as I deal with each of the parts of Amendment No. 96. If that were not so, it would not have been possible to change the status of the Highlands and Islands Airports Ltd. from associated to non-associated employer some years ago.

It also follows from this that the current obligation under the CAAPS trust deed and rules to increase pensions in line with the Retail Prices Index will continue to apply to both the CAA and NATS sections. Furthermore, the deed contains a very restrictive power of amendment. There is, therefore, no realistic prospect of the benefits, including index-linked pension increases, being reduced after PPP for staff in employment with NATS at the time of the PPP.

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Therefore, I can assure the Committee that current NATS employees will remain members of the Civil Aviation Authority Pension Scheme and the new private sector partnership will be obliged to continue as a continuing condition of the partnership. That condition is an essential part of the deal and will be written into the strategic partnership agreement.

Amendment No. 96 is based on a misunderstanding of the current and proposed arrangements relating to CAAPS. To accept the amended clause as proposed would be unnecessarily to burden the PPP with a bureaucratic framework duplicating existing and proposed protective arrangements which are achieved by the existing trust deed and rules with its unusually restrictive power of amendment; the general protection provided by the statutory pension framework, especially the Pensions Act 1995, and the relevant provisions in the strategic partnership agreement.

Perhaps I may turn to the details of Amendment No. 96. The noble Baroness, Lady Thomas, will forgive me but I shall not spend any time on Amendment No. 95 because of the manner in which she moved that amendment. I turn to the definition in the proposed new subsection (1) of protected beneficiary. Paragraph (b) could be thought to be overly protective given the use of the class. Paragraph (c) is implied in any event and (d) and (e) are unaffected by the PPP and remain in the CAA section of CAAPS.

The proposed new subsection (2) is not required because that will happen in any event and requires no special provision. Subsection (3) is also unnecessary: the trust deeds of CAAPS have a fiduciary duty when considering the allocation of assets between the various sections of CAAPS or on the transfer to another scheme. Subsection (4) will become unnecessary once CAAPS becomes a non-associated scheme. There is no doubt that non-association can be achieved. CAAPS is already non-associated in respect of Highlands and Islands Airports Ltd.

A company described in subsection (5) under non-association should be able to participate in the NATS section or, if necessary, a separate section within that. What I said about subsection (3) also applies to subsection (6). As regards subsection (7), once the scheme is non-associated, an employer with no connection with the NATS business could become a participating employer. The protection should not extend to somebody who moves to a quite different job. Under subsection (8) a provision of this kind may sit uneasily with the statutory provisions for member nominated trustees as required by the Pensions Act 1995.

On subsection (9), a very prescriptive contribution rate may well prove inappropriate in practice. Subsection (10) would impose on the relevant NATS employer a greater obligation than the existing sophisticated statutory framework relating to the preservation of pensions or under the existing trust deed of CAAPS. With regard to subsection (11), a

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provision of this type would fetter the discretion of the trustees of CAAPS to an unacceptable degree. On subsection (12), the CAAPS deed already provides for this; and subsection (13) simply duplicates the existing terms of the CAAPS trust deed.

I am not expecting my noble friends to be content with every part of that explanation, but I hope it is clear that we have considered every single issue in these complicated amendments.

I have been asked about the comparison with the railways or London Underground. The position in regard to London Underground and the railways is much more complex. The Government made provision for statutory protection of London Underground staff because we expected a restructuring of the business. We expected it then--and we still expect it--to be much more complex than will be the case with NATS. Experience of Railtrack privatisation suggests that many of the staff transferring to the PPP Infracos will be subcontracted early on--possibly several times--and be subject to mergers within the "mainstream" railway industry.

It might have been possible to have ensured that London Underground staff were adequately protected using a contractual mechanism of the kind proposed for NATS, but since the employers on whom the obligation to participate in the pension scheme would be laid might be at several levels of remove following this multiple subcontracting and reorganisation, we felt that such a contractual obligation would be difficult to enforce. That is certainly not the case here.

Noble Lords on all sides of the Committee regard pension provision as an important issue. The Government have not taken any of these decisions lightly. If my noble friends still have concerns, I have a duty to reflect further on the points made and to discuss the issues with them between now and a later stage. On the perceived need for legislative protection for NATS staff, if after discussion it is agreed between us that there is a case for coming back to the issue at a later stage of the Bill, I am of course prepared to do that.

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