Provisions Supplementing Sections 15 to 17

Orders of the Day — Transport Bill – in the House of Commons at 9:45 pm on 28th July 1981.

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Lords amendment: No. 26, in page 49, line 29, leave out "continued"

Photo of Kenneth Clarke Kenneth Clarke The Parliamentary Under-Secretary of State for Transport

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker:

I draw the attention of the House to the fact that privilege is involved in the amendment.

Photo of Kenneth Clarke Kenneth Clarke The Parliamentary Under-Secretary of State for Transport

This is a technical amendment to enable a pension to be paid to the chairman of the National Ports Council, Sir Arthur Peterson. At present the Bill provides only for the continued payment of pension to former council members who have pension schemes by analogy, as it were, to the NPC staff pension scheme.

When Sir Arthur Peterson was appointed chairman last summer, my right hon. Friend the Secretary of State offered him a by-analogy pension scheme if he so wished. It has taken a considerable time to resolve Sir Arthur's pension position. It seems to have taken a surprisingly long time, but the period that has elapsed is not unusual. The taking of advice on an individual's pension arrangements can produce unbelievable complexities. However, Sir Arthur has decided to accept the offer made to him by my right hon. Friend. We are proceeding on that basis. The Civil Service Department has given approval as required by the Harbours Act 1964.

The amendment is a mere technicality. It deletes "continued" from paragraph 9(3)(b) to allow for new pension payments to be made to Sir Arthur when the council is wound up. My right hon. Friend thought it right to make the amendment to enable him to honour the commitment that he gave to Sir Arthur when he was appointed chairman.

Photo of John Prescott John Prescott , Kingston upon Hull East

The amendment is technical and I think that the hon. and learned Gentleman needs to be more forthcoming. It is clear that the amendment was moved in another place for the very issue of privilege that was mentioned by you, Mr. Deputy Speaker. I realised that the word "continued" was relevant when I understood that the chairman is not presently in receipt of a pension and, as I understand it, could not be paid a pension by the Secretary of State if no amendment had been made.

Why is it necessary for Sir Arthur Peterson to have a pension? Sir Arthur was a civil servant for 40 years. Presumably he retired on a full Civil Service pension. Following that career, he became chairman of the Mersey Docks and Harbour Company for some years. Presumably he received some form of remuneration and possibly a pension.

Sir Arthur was the chairman of the National Ports Council for 18 months at the very outside. He is a pensioner in another job and presumably he is receiving another pension. He is past pensionable age. What is the reason for giving a pension to a member of the board? I understand that officials and employees of the NPC will be in receipt of a pension. That is required and is in accordance with pension protection following the abolition of the council. As I understand it, the Secretary of State has to agree that a pension be paid to a chairman of the board and presumably to any other board officer. There have been about five or six chairmen of the National Ports Council, and not all of them have necessarily received pensions—or can the Minister confirm whether they all received pensions for their period of office? If not, why have two chairmen been selected to receive a pension? It is not an automatic requirement. So why solely two? If criteria are used, why are they used for a person who has done the job for only 18 months, presumably at a time when the House will be giving him compensation because we are abolishing the National Ports Council?

Sir Arthur Peterson is on full pension from a previous Civil Service occupation, and, he having moved to another occupation, chairman of the National Ports Council, presumably we are now prepared, in a special clause of the Bill, agreed by the Secretary of State, to give him another pension—on top, presumably, of compensation, another golden handshake, for 18 months' service. The Minister will have to give us more information to justify the inclusion of a special clause in the Bill to give Sir Arthur Peterson another pension and, no doubt, a golden handshake. Will the Minister elucidate a little further on the technicality?

Photo of Kenneth Clarke Kenneth Clarke The Parliamentary Under-Secretary of State for Transport

I am sure that the hon. Member for Kingston upon Hull, East (Mr. Prescott) is not suggesting that there has been any secrecy about the matter. I agree that, on the face of it, it is impossible to see what the amendment is about. The hon. Gentleman discovered what it was about, I hope, with the help of the notes that we sent to him explaining the purpose of the amendment.

Photo of John Prescott John Prescott , Kingston upon Hull East

I thought that I had said that it was the advice notes that gave me the first indication that the clause was about a pension. The Minister will see that the advice notes are very brief, and all the information about whether it is normal for chairmen of the National Ports Council to be given pensions had to be obtained by research in a sensitive area in a very short time. That was not available in the notes.

Photo of Kenneth Clarke Kenneth Clarke The Parliamentary Under-Secretary of State for Transport

I accept that, and the hon. Gentleman was ahead of me in his research until a moment ago. I confirm that one previous chairman received a pension. Another previous chairman received a lump sum. Two previous chairmen did not receive any pensions or lump sums. I do not know whether anyone can recall why that happened. I can only assume that they were wealthy men.

We have not introduced a new policy in appointing Sir Arthur Peterson last year. The Secretary of State's power to determine pension arrangements is in the Harbours Act 1964, and the policy that my right hon. Friend has followed continues the previous policy for board members that pensionability is offered to those who serve two days a week or more, as Sir Arthur does. The pension arrangement is usually the same as that for the staff of the body concerned, but a board member may not normally be a member of the staff scheme because he would then be in a position to enhance his own pension arrangements. A board member's scheme is therefore generally a separate arrangement by analogy with the staff scheme, but he may opt to retain the pension terms of a previous employment. In either case. the revised terms are subject to ministerial approval.

When Sir Arthur Peterson was appointed as chairman in June 1980, the Secretary of State followed that policy and offered him a pension arrangement by analogy with the staff scheme. As would be the case with any other member of the board, it was open to Sir Arthur to choose instead to continue with the insurance-based pension taken out while he was with the Mersey Docks and Harbour Company. He had the choice of which kind of pension provision he wished.

Some of the hon. Gentleman's remarks implied that it was wrong for Sir Arthur to get any pension entitlement for his service, because he already has his full Civil Service pension. I suppose that that is arguable, but there is no reason why someone should not continue to have a pension arrangement that would normally be expected to go with that work to continue to enhance his pension expectations. People in most walks of life who continue working are entitled to expect to continue to accrue further occupational pension rights as they move from job to job. There is no reason why Sir Arthur should not do that, as long as the pension arrangements are reasonable and not out of proportion to his work.

Sir Arthur was offered a choice by my right hon. Friend, entirely in line with the long-established policy on board pensions. It required detailed consultation, no doubt, for Sir Arthur and his advisers, and also for the Department, to finalise this continuation arrangement with the Mersey Docks and Harbour Company's pension scheme.

When the matter had been fully examined, it became clear that the more attractive option for Sir Arthur—he was entitled to choose the more attractive option—was to take up my right hon. Friend's offer of a so-called analogy arrangement. Unfortunately, by the time that decision had been taken, the Bill had been drafted. We are about to put matters right to match the option. That will require a change in the legislation to introduce the new arrangement that will give Sir Arthur his new pension arrangements.

The 1980 premium due in respect of the insurance arrangement for the insurance-based pension with the Mersey Docks and Harbour Company has already been paid. That arrangement will stand for the first part of Sir Arthur's appointment. It is to be replaced by an analogy arrangement from 1 April 1981. We shall be dealing with a short period of service and a minor enhancement of pension rights. The cost is small, and Sir Arthur will be making a contribution. It is not a matter of enormous significance.

The offer was quite properly made by my right hon. Friend to Sir Arthur when he appointed him last summer. There is nothing improper in Sir Arthur taking this long to resolve the matter, because it is extremely complex. It is only right that my right hon. Friend and the Government should seek to amend the Bill to enable them to honour the undertaking to Sir Arthur. He will not receive an out-of-proportion pension. Once in payment, Sir Arthur's pension will be increased in line with any future pension increase orders made under current legislation. It will be an index-linked, public sector pension that will provide a very small addition to Sir Arthur's pension rights.

Sir Arthur will not receive a golden handshake when his term of appointment expires and when the NPC ceases to exist. That was made clear to him when he was first appointed. At that time the Government were already contemplating the abolition of the NPC. It was quite obviously an interim arrangement, and no offer was made of future compensation. Sir Arthur knew that perfectly well and never expected to be compensated when his appointment came to an end. We are talking about a small addition to a pension arrangement. The arrangement was made while pursuing an established policy which had been adopted in the case of Sir Arthur's predecessor. It would be wrong to refuse the amendment that would allow my right hon. Friend to put the full arrangement into effect.

Photo of John Prescott John Prescott , Kingston upon Hull East

With the leave of the House, Mr. Deputy Speaker, I will reply to the debate. This is a complex area. I have not suggested that anything improper has been carried out by the Minister or Sir Arthur. I have been attempting to understand exactly what arrangement has been reached. As a special clause is to be included in the Bill to deal with it, the House is entitled to know what it is voting for. I fully accept that Sir Arthur will not receive compensation because of the short period of time that he has been involved. Presumably, the pension requirement must be taken into account.

The judgment as to whether a small amount is involved is a matter of detail. I wonder whether it is a small amount when compared to that received by the ordinary pensioner. If it is index-linked, it is probably far better.

Sir Arthur is a pensioner receiving another pension. Civil servants are given very attractive rates on retirement because it is considered that their retirement may well mean retirement. I think that Sir Arthur retired as a permanent secretary, a post which provides an attractive pension. Therefore, we question the judgment in regard to the appointment. If we had had more notice of the matter, we might have opposed the amendment. However, with events as they are, we must let the matter lie—but not without recording our dissatisfaction.

Question put and agreed to. [Special Entry.]