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The member-nominated trustees have this confidentiality responsibility. That is why the second part of the amendment would require consultation with members if benefits are changed. The reference to Section 259 of the Pensions Act 2004 is a reference to the provision that says that members must be consulted if benefits are amended. It would not give members a power to veto any change or even to delay changes.
I ask noble Lords to note that those two proposals go no further than what is required in every other private sector scheme and what currently applies to the Royal Mail pension plan. I ask the Committee to carefully consider and support the amendment, which I beg to move.
Lord De Mauley: The noble Lord, Lord Clarke, returns to the question of the Secretary of State amending the RMPP without the trustee’s consent. The Minister has dwelt on the close consultation that the Government are already engaged in, but I have not detected that he has made clear what would happen if any disagreements remained at the end of that consultation. Indeed, the whole matter is rather complicated by the possibility of plan B, which the Minister also went into on the last day of Committee on 31 March.
If the Government were unable to gain the necessary permissions to take over the old liabilities directly and were forced to sectionalise the old RMPP under Clause 17, there would presumably be much more government interference in the day-to-day running of that section and so even more scope for disagreements to come up between the Secretary of State and the RMPP trustee. Having said that, I have a hunch that the Minister will tell us that he has quite a bit more work to do on this whole area and, if he does, we will clearly need to come back to it in some detail on Report. I very much hope that the noble Lord, Lord Clarke, will not feel the need to press his amendment today.
Lord Hoyle: I support what my noble friend said. He is right to draw attention to what has happened in the past in relation to the chairman and the strange behaviour that took place. It is no wonder that there are some suspicions, which no doubt my noble friend can clear up for us. Again, there is the question of where we are going to draw the line and there is the question of the responsibility of the trustee. At the end of the day, we are trying to make sure that the members are protected in the best way possible. That is why we are saying,
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I hope that my noble friend can throw some light on this and on the role of the trustee in the future because, at the end of the day, we are trying to get rid of the fog, the mist and the mistrust that appear to exist at the moment with the members of the pension scheme.
6.15 pm
Lord Whitty: I will intervene in the debate with a word of advice to the Government. If they want to avoid some of the mistrust to which my noble friend referred, which relates not only to the pension scheme but to the total package before us in the Bill, the full details of which are not yet clear, they would be as well, either by adopting my noble friend’s amendment or in some other way, to indicate that the Government do not have any intention of altering the terms of the pension scheme by Secretary of State decree.
I am not sufficiently informed to know whether my noble friend’s wording is the correct way to do this, but it seems to me that in Clause 19 we have made it clear that transfer would not immediately adversely affect any person in the scheme. However, the suspicion remains that the Secretary of State may have a power to change subsequently the entitlement of a member of the scheme and that therefore the guarantee in Clause 19 is not sufficient for the members of the scheme to feel safe that things would not be changed subsequently. As my noble friend Lord Clarke has said, the normal way of changing the terms of a scheme remains, which would have to involve consultation and eventually consent and agreement at the trustee level with the employer or, in this case, the Government.
I am not sure that the Government would lose anything by accepting the amendment, but they would remove a suspicion that the intention is to dilute or adversely alter the nature of the scheme some way down the line and thereby avoid expenditure by the Government. We should not avoid putting this in a broader context. We know that the Government and the Opposition have made some rumbling noises about public sector schemes in general. This is about to become a public sector scheme more explicitly than previously and it would be appropriate for the Government to give some reassurance to postal workers on this front, which may help them in their general dealings with the postal workers and their unions over the total package.
Lord McKenzie of Luton: This has been an interesting, if somewhat compacted, debate. Let me try to unpick one or two issues. My noble friend Lord Clarke raised several points about the communications between the chair of the trustees and what had transpired. Forgive me that I have no briefing on that. I have a copy of the letters. If there is a way in which we can add further clarification, I am happy to take that away.
My noble friend Lord Whitty asked for an assurance about the Government’s intentions going forward. He is right to say that there are clear protections for the RMPP members at the point that the scheme is effectively split into two. I will come onto that in a little bit of detail in a moment So far as the new public sector scheme is concerned, the Secretary of State would
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The other principle is that the Government take responsibility for accrued liabilities going forward for the operation of the pension scheme, which is the routine, normal manner of the Royal Mail Group and Post Office Ltd in respect of their action, and that the protections that are currently available generally in pension legislation would continue to apply. The Government have no particular powers in the Bill to seek to amend the scheme, as far as I am aware, and I will certainly write if the contrary proves to be the case. The Secretary of State does not have that power going forward. The operation of the slimmed-down scheme will be a matter for Royal Mail Group, as should be the case. We have made that policy clear from the start.
More specifically, the amendment raises a number of issues regarding consultation that we touched on in our discussions on earlier amendments. I appreciate the importance of the issues raised by noble Lords and I hope that my response to these amendments will address any remaining concerns.
The first part of the amendment requires the consent of the RMPP trustee to be obtained where an order is made that adversely affects any relevant pension provision contained in the RMPP. In other words, although the general requirement under Clause 24 is that the Secretary of State must consult with the trustee before any order is made under Part 2 which affects the RMPP, the effect of the amendment would be to require the consent of the trustee in circumstances where pension provision within the RMPP was adversely affected as a result of an order being made.
I question how, given the existing protections in the Bill—this comes back to my earlier point—the circumstances to which this amendment is addressed would arise. Under Clause 19(2), an order by the Secretary of State to establish a new scheme, transfer qualifying accrued rights to the new scheme, sectionalise the RMPP or amend it cannot be made unless relevant pension provision for RMPP members is, in all material respects, at least as good immediately after the exercise of the power as it was immediately before. As I explained in response to an earlier amendment, the definition of “relevant pensions provision” at Clause 19(3) is broad in its effect.
These provisions in Clause 19 are a significant constraint on the powers of the Secretary of State and reflect the importance that the Government attach to protecting members of the RMPP from being detrimentally affected by the Government’s proposals. The clause explicitly rules out the possibility that the Secretary of State would amend the RMPP in a way that had a material adverse effect on relevant pension provision. Accordingly, I cannot see circumstances in which the amendment, if accepted, would serve any purpose. By definition, if there is no possibility of an order being made that had a material adverse effect on
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Turning to the final part of the amendment, subsection (1C), I should make it clear that it is indeed important that members of the scheme, both current and former employees, should be made aware of what changes are being made and the effect of the changes particularly in terms of issues such as administration. The Government have already met representatives of current employees and pensioners to explain the proposals in the Bill. The Government intend to keep those organisations informed as the Bill progresses and we move towards implementation.
As I mentioned earlier this month, we are also discussing with the trustees and Royal Mail on how they should best engage with current employees and other scheme members as the proposals are developed. While this legislation is progressing through Parliament, it is right that member engagement is the responsibility of the trustees and not the Government. But we are rightly maintaining a close interest and have discussed with the trustees appropriate communications that would meet the needs of the scheme members, stressing the strength of feeling expressed in this House during our earlier debates in Committee.
I now turn to the proposed application of the consultation requirements set out in the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, which are the regulations made pursuant to Section 259 of the Pensions Act 2004, as is envisaged by this amendment. Those regulations require employers with more than 50 employees to consult affected employees about a proposed significant change, known as a listed change, to their pension scheme for at least 60 days before implementing the change. Listed changes include closing the scheme to new members, changing the accrual rate in a defined benefit scheme, changing a defined benefit scheme to a money purchase scheme, reducing employer contributions and increasing member contributions. The requirement to consult gives affected employees the opportunity to have their say about future changes to the pension scheme. It ensures that affected employees are fully aware of the changes and the implications for their future pension provision.
The key point is that the Government are not proposing any such changes to the RMPP. Members’ pension entitlements accrued up to the cut-off date—the qualifying time—are not changing as a result of the Government’s proposals. Members’ future accruals in the RMPP will remain, as at present, a matter for the Royal Mail and the trustees. The Government are not proposing any changes. Were Royal Mail or Post Office Ltd to propose changes to the scheme, as employers they would be subject to the obligations under the regulations that I have described. However, no such changes are proposed as a result of the measures set out in the Bill, so the requirements under those provisions are not relevant here.
I hope that the explanation has provided some reassurance. I accept that my noble friend may wish to dwell on the precise wording, because it is important that we provide reassurance to people and make clear
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Lord Clarke of Hampstead: I thank my noble friend for that very informative response to this short debate. He started by saying that it was interesting; it was certainly interesting to me once again to see that the willingness to talk about consultation and transparency is there in the Minister’s mind. I welcome that. It is another thing not to see that in the Bill.
It is said that the Government are not proposing any changes at the moment. We cannot live on the basis that it will always be “at the moment”, because at a different moment different people will be administering different things. That is why throughout these debates I have said there is a need for trust, consultation and accountability so that people can understand the situation.
There is not very much wrong with the first part of the clause. My noble friend is saying that there is no need to require the consent of the trustees. Over the years, consent in pension schemes has been as my noble friend Lord Whitty described; when a change is proposed, whether on an investment policy, the benefits structure or the administration of the scheme, there has been consultation. As I said at the time of the first deficit of £1.18 billion in the scheme in 1973, which was accumulated after only four years of the scheme, common sense prevailed and the parties came to an agreement.
All that this amendment says is you have to have the consent of the trustees. They are not out to try to hoodwink the employer or the Government; they represent the members. The trustees are looking after members’ money and investing on their behalf. It could be agued that some of the trustees may have not done that very well in the past few years, but I have explained time and time again that that was a direct result of the policies of former Governments and the present Government in allowing that almost obscene pensions holiday to take place, whereby the money accumulated from members’ contributions, not from the employer. At the same time money was pumped into the Exchequer from the external finance limit. So you could say that in the past the trustees may not have done their job as well as they might have done.
The noble Lord, Lord De Mauley, asked me not to test the opinion of the Committee this evening. I got the impression that he may want to bring something back to make this issue clearer. As I have said—now for the third time—if we do not get on the face of the Bill a clear and concise commitment to consultation, I shall, without any shadow of a doubt, support any amendment that states that there should be consultation. I know that consultation is provided for in other parts of the Bill, but when people read legislation, they want to see it wherever it is necessary. My amendment states that it should occur on this matter.
Lord McKenzie of Luton: I think that sometimes in this discourse we are in danger of interchanging consent and consultation. I refer my noble friend to Clause 24, which makes it absolutely clear that the Secretary of
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6.30 pm
Lord Clarke of Hampstead: I thank my noble friend for that comment. He draws attention to Clause 24, which deals with orders and regulations. If it is good enough to put that in the orders and regulations, why not put it in here? If it is a principle worthy of putting into a later clause, why not put it into this one?
I look forward with great interest to the letter that I think will come regarding my comments on the relationship between the chairman of the existing pension fund trustees and the Secretary of State. I wish that the Secretary of State were here so that I could say this to his face but I shall say it once again anyway. I believe that there was some scaremongering in the department that sought to frighten decent people regarding the future of their pensions.
Lord McKenzie of Luton: I have not been involved in the detail on this but I have certainly been in the presence of the Secretary of State—I think that it may have been said in this very Chamber—when he has made it clear that he published the letter and did not leak it. He published it because he believed that it was a significant issue that should be taken account of in the deliberations that were then under way. I do not think that it is fair to attribute to my noble friend any underhand or devious motivation, which I do not believe was present.
Lord Clarke of Hampstead: My old employers used to say that that sort of argument was the salami treatment, cutting one slice off at a time, but we have gone a bit further than that. My point is that we have not yet had a public explanation of why the chairman of the trustees has, in effect, withdrawn her comments regarding the Hooper review in relation to pensions. Some of those things had nothing to do with pensions; they were to do with quality of service and administrative matters relating to Royal Mail. That is the answer that I will continue to try to get. Why was it necessary for someone of as high standing as the chairman of the pension scheme to write to all the members assuaging their fears?
I am sure that we will come back to that when my noble friend has had a chance to have the drains up and has had a good look round and seen the sequence of events relating to the letter written on 18 February and published on the 23rd, and later when, following lurid headlines, some of the comments in that letter
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Clause 28 : Duty to secure provision of universal postal service
80: Clause 28, page 14, line 17, at end insert—
“( ) In carrying out its functions in relation to postal services, OFCOM shall have regard to the interests of—
(a) individuals who are disabled or chronically sick;
(b) individuals of pensionable age;
(c) individuals with low incomes;
(d) individuals residing in rural areas;
(e) small and medium size enterprises;
but that is not to be taken as implying that regard may not be had to the interests of other descriptions of users.”
Lord Clarke of Hampstead: We now move on to a series of amendments dealing with the duty of the future regulator. Amendment 80 seeks to reinsert into legislation the duty that was previously imposed on Postcomm—without me getting too excited about the way that it has helped to bring the Post Office to this parlous state—in the Postal Services Act 2000. That duty meant that Postcomm had to consider, in relation to the postal industry, the specific problems facing people with particular needs. I refer to the disabled, the chronically sick, pensioners, the poor and people living in the countryside. Of course, it can be said that Postcomm did not display any great energy in defending the needs of such people, but that must not be an excuse to ignore their needs in the new Bill.
There is no reason why Ofcom should have fewer obligations than Postcomm. Changing the regulator does not change the circumstances of the users of Royal Mail. I am pleased that the Bill restates the need to maintain a service for blind people but it is not clear whether the deletion of those additional duties on the regulator is due to oversight or deliberation. If it is an oversight, I expect the Government to accept this amendment. If it is a deliberate exclusion, we must have an explanation from the Secretary of State. After all, the current recession is, in part, a result of Governments around the globe deregulating services to excess.
The market does not provide solutions to many problems. Left to the market, postal companies see only higher costs in providing rural services; left to the market, the disabled, the low paid and pensioners find themselves with a bad bargain. It would be a great
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set out in Clause 52. Such guidelines should supplement the permanent concerns covered by the amendment.
In the interim report published by Richard Hooper in May 2008 entitled The Challenges and Opportunities Facing UK Postal Services, we find a fine observation:
“The postal service enables daily communications across all 28.4 million business and household addresses in the UK, regardless of the location, and beyond. It helps social cohesion by linking rural communities with more densely populated areas of the country, and ensures that older people and those with disabilities have an accessible, reliable means of communication and the capacity to send and receive physical goods”.
Unless your Lordships accept this amendment, that statement by Richard Hooper’s team will no longer be true, for those elements of social cohesion referred to in the report will be removed with the passage of the Bill as it stands. I cannot for one moment believe that this House wants to see, for example, a deterioration in the service offered to rural communities by the universal service provider.
There is an important difference between the duties listed in my amendment and those outlined in the Postal Services Act 2000. In this instance, I have added the category of small and medium-sized enterprises. I omitted them in my first submission on this clause and am now pleased to say that they feature as part of this amendment.
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