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My Lords, my starting point now, as...: 26 Oct 2000: House of Lords debates (TheyWorkForYou.com)
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Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour) |
Hansard source
My Lords, my starting point now, as at Committee stage, is entirely consistent with what the noble Lord, Lord Whitty, said at Second Reading. Nobody can value the staff of NATS more than we do; nobody can feel more strongly than we do that they deserve proper treatment in every respect, not just as regards pensions.
However, they deserve proper protection in particular for their pensions.
We have reflected on the points made in Committee. I can assure noble Lords that we have done so in great detail. Pensions affect us all. I can well understand why the issue is so important to NATS employees.
We fully support the need to protect the pensions of NATS staff and we would not do anything to put them at risk.
I understand the issue of confidence to which the noble Lord, Lord Brett, refers; namely, that these fears were very real throughout the privatisations of the 1980s and early 1990s. If I were the noble Lord, Lord Brabazon, I would not refer to them in quite such a cheerful way. During those years tens of thousands of public servants passed from the public sector to the private sector without adequate reassurance about how their pensions would be protected. Sometimes they were denied access to a pension scheme as good as the one they were leaving. Sometimes they were confronted by invidious choices about what to do with their accrued service in the public sector pension scheme, which meant that one way or the other they would loose.
In three privatisations--coal, electricity and rail--the previous administration used primary legislation to give statutory protected person rights to employees in those industries regarding their access to occupational pension schemes after transfer to the private sector. In every other case no such protection was given and the range of outcomes was extremely variable. Noble Lords will remember the privatisation of London Buses. I take that as a particular example of the bus industry generally to which the noble Lord, Lord Berkeley, referred. London Transport staff were forcibly separated from their pension scheme with no effective safeguards as to the quality of its replacements.
That was the legacy we inherited in 1997. We set to work on reform. In 1998 interim new guidance was issued by the Cabinet Office under the title "Better Quality Services". This re-emphasised the importance of protecting staff pensions in restructuring involving private sector partners and required that the quality of that protection should be a factor in assessing bids for partnership. Then, in June 1999, the "wicked" Treasury issued definitive guidance under the title "A Fair Deal for Staff Pensions" which was subsequently incorporated into broader guidance on the treatment of staff by the Cabinet Office at the beginning of the year.
The object of these reforms was perfectly simple: to take the fear out of public sector reform and sales as far as pensions were concerned and to set a common standard of protection which all projects should pass. What we have now is a comprehensive framework of protection which represents a huge improvement in the standard of treatment of staff. It is a fair deal not only for the staff, but also for the private sector businesses bidding to enter into partnership to deliver public services.
That is the background against which we have looked at the NATS employees. Our common goal is to reassure NATS staff about the pensions they have a right to expect in their retirement. I believe that I can give the reassurance which is needed without the need for amendments to the Bill.
Perhaps I may explain how. The Civil Aviation Authority Pensions Scheme is to be amended in order to make it possible for staff employed by the PPP to remain members of that scheme. Technically, the CAAPS is already a centralised scheme for non-associated employers because Highlands and Islands Airports Limited is a non-associated employer within it. Amendments to the scheme are necessary to reflect requirements such as the elimination of cross-subsidy which is now much more relevant given the much greater size which the NATS PPP section would have within CAAPS.
That means that staff will continue to enjoy the benefits that they currently receive. They will be able also to enjoy such new benefits as are agreed from future surpluses.
They may also draw some comfort from belonging to an excellent public sector scheme, one that is very comfortably funded. For example, at the most recent evaluation of CAAPS on 31st December 1998, the minimum funding ratio was in excess of 190 per cent. Since the MFR represents what I might call the statutory floor for the funding of pension schemes, a funding ratio of 190 per cent represents a substantial excess.
As regards benefits, pensions in payment are index-linked and pension benefit is calculated not just on base salary, but includes overtime and certain other fluctuating remuneration.
Perhaps I may digress to cover the position of current pensions and deferred pensioners. I can assure the House that the position of those two groups will remain unaffected by the PPP. They will remain in CAAPS; they will be in the CAA section of the scheme, which will also include current CAA staff.
They will continue to receive benefits in the same way as they do now.
Returning to the NATS public/private partnership, we have made it very clear to all those bidding to be our strategic partner in the PPP that securing that current staff can continue to participate in CAAPS is a fundamental condition of being considered for that role.
In addition, we will put into the strategic partnership agreement a binding commitment, enforceable at law, that guarantees the continuation of that right on terms at least as favourable as those now existing.
Then there is the protection of pensions that exists under the law of the land, such as the pensions Acts of 1993 and 1995. These provide, among other things, protection for accrued benefits and funding levels.
A further level of protection exists in the CAAPS trust deed and rules to which my noble friends have referred. These are unusually restrictive and protective of members' interests. Although it may not always have been the case, it is now universally accepted and buttressed by statute that accrued rights--that is to say, the pension which an individual has earned by each day at work--cannot be adversely affected by amendments to pension schemes.
By contrast, it is entirely usual for the sponsoring employer of a pension scheme to have the ability to reduce the level of benefits for future service such as prospective benefits. However, no employer who participates in CAAPS has that power because of the restrictive power of amendment in the trust deed which provides that amendments cannot be made to reduce accrued or prospective benefits. When this restrictive power is allied to the continuing interest of the Government in the PPP as shareholder, quite apart from the express contractual provisions in the strategic partnership agreement, I believe that the House will agree that there is a very substantial set of protections for the current NATS staff.
Lots of talk about not reducing current members benefits - so what exactly is the RPI + 0.5% cap? A reduction in our pension benefit....