Transferred Staff

Orders of the Day — Property Services Agency and Crown Suppliers Bill – in the House of Commons at 8:30 pm on 12th February 1990.

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Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow 8:30 pm, 12th February 1990

I beg to move amendment No. 3, in page 2, leave out lines 20 to 24 and insert 'the transferee shall

  1. (a) provide pension rights and benefits which are comparable to those presently arising out of the principal Civil Service pension schemes; and
  2. (b) provide so far as possible, redundancy compensation rights which are identical to those presently arising out of the principal Civil Service pension scheme, and no rights arising by virtue of this subsection shall be regarded as identical unless they are adequately funded and guaranteed.'.
I move this amendment on behalf of my hon. Friend the Member for Hammersmith (Mr. Soley) and my other colleagues.

There is great concern about the issues of the terms of severance.

On 8 February the Minister wrote to me about matters of policy and administration not covered by the Solicitor-General's written replies to questions raised in Committee. In the fourth paragraph of his letter, the Minister stated that a statement of terms of employment would be sent to staff while they were in the employment of the Government-owned company. He went on to say that this statement would then be binding on the purchasers of the shares in the company and would be enforceable against him by the staff.

How will that statement bind the eventual purchaser?

Does the Minister agree that the new owner will only be bound by the normal application of the rules of the law of contract?

Does he agree that the terms referred to may be changed by a new employer giving notice of alteration of those terms?

Does the Minister agree that in such circumstances the only options available to staff will be to accept the new conditions or refuse to accept them by quitting employment and claiming unfair dismissal?

Does he agree that the maximum compensation available under such a claim is limited to little more than £14,000? That is not adequate compensation for the loss of severance entitlements which may easily be worth in excess of £100,000.

The Minister should accept that a new employer who is constrained only by the normal rules of contract law is not bound in relation to terms. He must face up to the fact that the terms are easily changed by the new employer and the arrangements proposed in the third paragraph of his letter do not bind the new employer in any meaningful sense of the word.

Does the Minister agree that none of the arrangements proposed in the third paragraph of his letter protects the staff in the event of the new company being put into liquidation? In paragraph 4, the Minister says: If the new owner failed to pay the agreed redundancy terms the employee could sue…for breach of contract, and ask for summary judgment. The damages could be quantified because they could be ascertained from the statement of redundancy terms issued to staff. In that paragraph the Minister describes one of the few circumstances in which a breach of contract could result in the recovery of damages approximating to severance entitlements. Those circumstances are limited. A redundancy payment would have to be under the terms of a transferred contract that had not been altered by the new employer.

Does the Minister agree that no prospect of recovering damages exists when no redundancy exists, an employer has given notice to vary the terms and no actual redundancy arises during the course of that notice or when the employer gives no notice to vary redundancy terms and the individual is not affected by redundancy during the period of notice that should have been given?

Will the Minister admit that a large variety of circumstances could arise in which staff could not take action for damages?

As a constituency Member of Parliament, I am extremely reluctant to advise any constituent to go to law unless he or she has an absolute cast-iron assurance of legal aid. In the cases that I have described legal aid might not be forthcoming.

Does the Minister agree that the only sure means to ensure that staff retain a practical course of action for damages is by making severance terms a statutory right? In any other case, terms may be varied and staff would have no means of redress except unfair dismissal.

Does the Minister agree that severance terms are at risk in the private sector? Will he propose some means to minimise that risk? That could be done by the Treasury underwriting the terms, as with the ordnance factories and dockyards, giving staff a statutory right to redundancy terms or setting up some kind of trust fund.

Does the Minister believe that there are no risks in the private sector? The furniture and furnishings trade is in deep recession at present and the Crown Suppliers is making a loss of £2 million.

Will the Minister admit that there is a risk that severance terms may not be honoured in the private sector? Where there is such a risk, it is incumbent on the Government to admit that severance pay might be at risk in some circumstances and protect staff when necessary.

The staff at the Property Services Agency and the Crown Suppliers regard the security of their pensions and their redundancy compensation as crucial. They are alarmed at the Government's refusal to provide any protection other than that contained in the transfer of undertakings in the Transfer of Undertakings (Protection of Employment) Regulations 1981, about which we had so much to say in Committee. I shall tell the House why.

This privatisation is unique, in that the PSA and the Crown Suppliers are neither monopolies nor established businesses. Both organisations are Government functions and as such are highly unsuitable for privatisation. The Crown Suppliers prove the point. Its main furnishings activity is in ruins. For 1989, its audited accounts will show a loss of about £9 million.

So bad are its prospects that the Minister has been begging other Departments to guarantee it work. In particular, he has pleaded with the Ministry of Defence to sign contracts which would have the Crown Suppliers provide exclusively all furnishing needs for the next two years. Without guaranteed work from the Government the management buy-out will lose its financial backing and other prospective purchasers will lose interest. The privatisation would collapse. How rich in irony it is that this Minister, the great advocate of open competition who so loudly has proclaimed that the customer must have the greatest possible choice, has performed a U-turn and is now imploring his fellow Ministers to forgo competition and guarantee the Crown Suppliers work.

Has the Minister suddenly become worried about what might happen to the Crown Suppliers' staff? The problems of a collapsed privatisation are serious. Guaranteed work over a limited period might satisfy bankers, but it does not satisfy the staff. The staff want a guarantee but of a different kind. They want their redundancy entitlements and their pensions guaranteed against future change imposed by the new owner. If accepted, the amendment would give them just that.

The Minister has come under great pressure on pensions and redundancy payments from staff and their trade unions. He recently sent me a letter seeking to provide further assurances about redundancy compensation. He said that the purchaser would be required to provide redundancy terms by sending a statement of the terms to the staff while the company in question is in Government ownership. That statement would then be binding on the purchasers of the shares in the company and would be enforceable against him by the staff. As to the actual payment of redundancy compensation, if the new owner failed to pay the agreed redundancy terms the employee could sue…sfor breach of contract and ask for summary judgment. The damages could be quantified because they could be ascertained from the statement of redundancy terms issued to staff. That might sound helpful, but I am advised that the assurances are not worth the paper they are written on, because the new owner can give notice of changes to the redundancy terms from day 1 of the sale and after an extremely short period of notice can then impose new terms.

The Minister is trying to pull the wool over our eyes. The notion that the letter drafted by the Crown Suppliers privatisation unit provides any meaningful protection is as fanciful as the notion that the Crown Suppliers privatisation unit knew nothing about the Crown Suppliers' extended contracts long before Second Reading of the Bill. The only real protection is through ensuring by statute that redundancy terms and pensions cannot be varied by the new owner without the agreement of staff.

The Minister has often said that the future for the PSA and the Crown Suppliers is bright. If that is so, the new owner will not be concerned by the amendment.

9.15 pm

I must return to the episode with the Prime Minister and Downing street. The Prime Minister cannot think that the future is bright because she virtually guaranteed that it would be rather dim. On 24 January she went to the Tate gallery to see its £1 million revamp and said: I know, because they"— the Tate gallery management— have told me, that since they didn't have to go to PSA they have got a lot more value out of the money they've had. And, of course, I must tell you that we have found the same in No. 10 Downing Street. That is not exactly a wonderful advertisement for the sale of the PSA; what a kick in the teeth it is for the staff of the PSA. Of course, the Prime Minister was not right. The Tate gallery did not invite the PSA to bid for the work, and No. 10 has had no work undertaken in which a cost comparison between PSA and private firms has been made. The right hon. Lady was wrong, but because she made those remarks, and because her Ministers and civil servants will be forced to make excuses, other Government Departments and potential customers in the private sector will believe her and will be less inclined to go to the PSA.

The right hon. Lady should admit the truth, and as compensation for the effect of her remarks she should instruct the Minister to agree to guaranteed severance and pensions by accepting this amendment.

The position on pensions is worse. The Minister has said that he will invite purchasers to provide broadly comparable pensions and that he will insist on it. He has also said that if the purchaser's pension scheme is inferior, the Government Actuary will be asked to assess the difference and to recommend a compensatory amount. However, the amount will not be sufficient to buy a pension equivalent to a Civil Service pension. It will merely be an amount to acknowledge the loss—in other words, to recognise that staff have suffered detriment and it will not compensate staff for the loss.

The Minister's intention is even nastier. He has said that the Government Actuary will take into account overall differences between the terms that staff now have and those offered by the purchaser. Therefore, if the purchaser offers more pay, a company car or better leave, the Government Actuary will put a value on those extras and deduct it from the compensation. If the new owner withdraws the better conditions soon after the sale, staff will have no entitlement to seek extra compensation from the Government.

There is no point in the Minister going on about breach of contract. The new owner merely has to give notice of a change, and once that notice has expired he or she is free to impose new terms. Even if the new owner does not give notice, the amount of damages that a court might award would be only the sum of the calculated loss during the notice period. The law is no friend of the employee in this matter.

The PSA and the Crown Suppliers staff believe that the Minister is prepared to swindle them out of thousands of pounds of hard-earned severance and pensions, and they have said as much in letters to hon. Members and by their actions. Recently the technical staff at the Crown Suppliers were asked whether they wanted to stay with the Crown Suppliers or to take early retirement or redundancy. More than two thirds said that they wanted to get out, but only one third will be allowed to leave.

My hon. Friend the Member for Hammersmith and I had the privilege of addressing many of the Crown Suppliers staff who came to a rally at the Central hall, in Westminster. There can be no doubt that they are loyal Government employees who feel considerable dissatisfaction. The PSA's employees' unions have skilfully manipulated the Minister to agree to ask the staff whether they want to stay, to move to other posts in the Civil Service, or to take early retirement or redundancy. This preference exercise will take place in March. The exercise is eminently sensible since the Minister is not prepared to play fair with their future conditions of service. However, the Minister, who says that he is a great proponent of free choice, will allow staff to leave only if they are not needed. If they are needed, he and the PSA's new get-rich-quick controllers will force staff to remain. I ask the Minister to tell the House the terms of the preference exercise, and the results when they are known.

I say bluntly to the House that Ministers are abusing their power. Their actions and intentions are undemocratic, hostile to the work force and add up to a good reason for voting Labour, as 23,000 staff will find when it comes to casting their vote.

Some of us have, perforce, put a quick legal case. Even if the Bill passes into law, my hon. Friends and I who were on the Committee will use every procedure of the House to monitor what happens to the Crown Suppliers and the Property Services Agency staff. The matter will not go away. The severance terms for loyal staff who have served successive Governments are an absolute disgrace to our society.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings and Rye

My hon. Friend the Minister well knows the many concerns that I have expressed over several months about procedures for the privatisation which, in principle, I support. I hope that he does not think that I am being too hard on him when I say that as this is not the first privatisation by the Government, I would have expected to see a rule book to which he and my right hon. Friend the Secretary of State would have had access so that there would not be tumult and concern among so many of my constituents.

The PSA is the largest single employer in my constituency. Over 1,000 staff work at Ashdown house andmy hon. Friend the Member for Bexhill and Battle (Mr. Wardle) also has constituents employed by the PSA. All the concerns that have been raised by my constituents could have been alleviated by clear declarations on Second Reading or before about the intention of Government in relation to the future terms and conditions of those employed by PSA after privatisation. There are precedents for that which I am sure are well known. On Second Reading of the Ordnance Factories and Military Services Bill, the Under-Secretary of State for Defence Procurement said the new company pension scheme … will provide benefits for transferred employees comparable to those that they currently enjoy, including the continuation of index-linking."—[Official Report,16 January 1984; Vol. 52, c.104.] On Report Lord Trefgarne said: the Government have undertaken that the company will provide for transferred employees a pension scheme which is comparable to the Principal Civil Service scheme … the benefits of the scheme will be comparable to those of the principal Civil Service pension scheme and will be index-linked in line with the 1971 Act."—[Official Report, House of Lords,16 October 1984; Vol. 455, c. 954–55.] All that could have been made clear at the beginning. I have received many thousands of letters and met many delegations, and people are rightly concerned that having chosen a life in the Civil Service, which included a pension scheme to which they contributed, it should be secure at all times. Doubt has been the source of concern and that has besieged me, quite correctly, as the Member for Hastings and Rye.

These good people have loyally served the Crown. As the Minister has said, the PSA will not be privatised for two and a half years. Therefore, with three years of anticipation of privatisation I should have thought that an assurance would be in the mind of the Government rather than to allow doubts to dwell and grow.

I am grateful to Sir Gordon Manzie who, with his senior staff, visited Hasting in December. I pay tribute to him for the many years of loyal service that he gave to the PSA and to the Government service before that. He will be sadly missed. He was probably surprised at the way in which the needs of the employees of the PSA have not been considered in the higher echelons of that organisation. I hope that the Minister will be able to put those doubts to rest once and for all. I was grateful for a letter that I received from him on Friday in which he gave an assurance that I am sure he would like me to quote. He said: On pensions the government has given very firm assurances and is certainly not seeking to escape from its commitment. We have said that the Government will expect staff to be offered arrangements for pensions that are broadly comparable to those they now enjoy. If the purchaser's proposed pension arrangements are different from the PCSPS, then the scheme will be evaluated by the Government Actuary. That was mentioned by the hon. Member for Linlithgow (Mr. Dalyell). The Minister continued: If he concludes that it is not broadly comparable, the Government will seek in negotiation to improve the pension terms, or to compensate in some other way, for example by improving other terms and conditions of employment. Finally, but only if all those routes proved impossible, the Government would compensate the staff for any remaining pensions disadvantage. I am delighted to hear that, but, with respect to my hon. Friend, that could have been made clear from the start. I hope that he will clear up those doubts and offer a commitment that can be included in the Bill to show that the Government accept their duty.

My second point—and I trust that I will not deviate from the amendment on redundancy and compensation rights—is about the future employment of staff. It has been said that this privatisation is three years away. A letter was circulated to Government Departments by the PSA suggesting that up to 800 staff of the establishment of 1,200 in Hastings would lose their jobs because it could not be foreseen what work they would do. That was the essence of that letter—I have not been privy to a sight of it—and it got back to the employees in some form or another. Two thirds of the people in that establishment believed that their jobs would be wiped out, yet that wiping out was many years away.

These people are loyal civil servants. I cannot speak for all of them, but they probably want to remain civil servants. Some of them are mobile, but some are not. Their future should have been made clear to them, rather than it having to be left to their Member of Parliament, who is eager to represent their interests, to say, "What will you do about these 800 people who will lose their jobs?"

The canvassing for job replacement should have begun much earlier. If 800 of the 1,200 staff were thought likely to lose their jobs, one wonders who will do the work that they have been doing. I have been reassured by my hon. Friend the Minister, who has told me in the past week that the efforts to attract other Government work to Hastings are starting to bear fruit. I am delighted to be able to report to the House that he has said that Customs and Excise has confirmed that it expects to open a new VAT office in Ashdown house, Hastings in the autumn and that he will maintain pressure onotherGovernment Departments.

Good employer-employee relationships rely on employees expecting their employer—and in this case it will be the Government for the next two and a half years—to put loyalty to the employee first and foremost.

I have made clear that my constituent's concerns can be laid to rest by the Minister, and I trust that he will not fail to do so.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

The hon. Member for Hastings and Rye (Mr. Warren) gave one of the main reasons why we cannot support the Bill. The PSA has 21,000 employees, and national estimates show that up to half of them could lose their jobs.

Amendment No. 3 at least provides pension rights and benefits comparable to those under the principal Civil Service pension scheme. During the privatisations of the royal ordnance factories and the royal dockyards, concrete assurances were given in the House and in the other place that such rights would be offered to the satisfaction of employees. Why cannot the Government offer the employees of the PSA and the Crown Suppliers the same guarantees? That does not seem unreasonable.

The other part of the amendment, which refers to redundancy compensation rights which are identical to those presently arising out of the principal Civil Service pension scheme", is also essential.

We are asking for common decency in the treatment of these employees. Ministers have not given employees the cast-iron guarantees that we would want to be provided. The amendment provides a minimum requirement, so it is not asking a great deal. Employees deserve that provision. They are loyal civil servants who have carried out their tasks and who are prepared to change their type of work and even to work in different places as needs be. It will be poor recompense if, in two and a half years when the PSA may be privatised, they do not have a just pension or redundancy scheme. We are asking for the minimum and the Minister should respond positively to our demands.

Photo of Mr Michael Stern Mr Michael Stern , Bristol North West 9:30 pm, 12th February 1990

One would not think from the contributions of the hon. Members for Linlithgow (Mr. Dalyell) and for Brecon and Radnor (Mr. Livsey) that the detailed assurances that they rightly seek on behalf of existing employees of PSA and the Crown Suppliers were given and discussed in great detail by my hon. Friend the Minister in Committee. They are asking for direct repetition of what was said in Committee, but the amendment goes further and asks us to quantify the unquantifiable.

We have heard from the hon. Member for Linlithgow something that started and expanded in Committee. He attempted—I do not think that he will wish to dissociate himself wholly from this charge—to talk down the business of the Crown Suppliers, and I use that as an example. No reliable figures are available yet, but when the supposed loss of the Crown Suppliers was first mentioned in Committee it was estimated to be £1 million. We have heard tonight that it is £9 million. We have heard tonight that the supposed redundancies among employees of the Crown Suppliers and PSA have risen from one third to one half of the work force. Such exercises by the Opposition may well be advisable politically, but they do no favours to the staff and the future of those organisations.

I should like to refer to one aspect that makes the amendment look even more out of line. Let us forget its exact wording. I gently chide those Opposition Front-Bench Members who tabled the amendment. We are dealing not with an amendment in Committee tabled for discussion purposes but with an amendment to a Bill that will soon leave the House for another place as a legislative proposal. We owe it to the other place and to our constituents to ensure that such legislation is workable, yet paragraph (b) states that it will be a matter of law to provide pension rights and benefits which are comparable to those presently arising". Apples and pears are comparable, but comparison does not have great meaning. I am not sure that it does the Opposition any credit to propose words so loosely chosen as to be meaningless. The media tell us that the Opposition have ambitions one day to form a Government. All I can say is that if that is the sort of law that they are going to propose they are clearly a long way from enabling us to take their ambition with any seriousness.

As we said in Commitee, what the amendment asks is impossible to implement and, in many instances, undesirable. I would not wish any married woman, divorcee or recent widow to be forced to accept the pension scheme standards currently operating in the Civil Service, and the amendment would make matters even worse by leaving the Government free to determine which Civil Service pension scheme should be used for the purpose of comparison.

Any pension scheme represents a compromise between the rights of different employees at different stages in their careers. In any scheme some classes of employee will do well and some badly. Surely it is right for us to adopt the Government's approach and offer employees an overall valuation of any alternative pension that is offered, with compensation where necessary, rather than laying down a rigid rule that would ensure that those who do badly under the present pension scheme also do badly under any future scheme.

Photo of Mr Peter Griffiths Mr Peter Griffiths , Portsmouth North

My hon. Friend the Member for Bristol, North-West (Mr. Stern) may well be right in saying that the amendment is not ideally worded; I am not a lawyer, so I do not know. What I do know is that I wish that the amendment has been part of the original Bill. It could then have been amended in Committee according to my hon. Friend's wishes and with all the details that he requires, and we would have known whether we were talking about apples or pears.

Failing that, I wish that this had been a Government rather than an Opposition amendment. Despite my hon. Friend's comment that firm assurances have been given at each stage of the Bill, the fact is that PSA staff in my constituency—and, I am sure, elsewhere—are not convinced of the adequacy of the assurances that they have been given. I say that as a supporter of the principle of the Bill: I have told my PSA constituents that I consider it good and sensible.

The hon. Member for Linlithgow (Mr. Dalyell), to whose contribution I listened very carefully, said that he could draw on examples that suggest that the PSA does not necessarily offer the best value for money. I am not sure whether his examples are well chosen, although I assume that he has chosen them with his customary care. I have suggested to the PSA employees in my constituency that there are advantages in being in the private sector, where the pressures of competition will ensure that the new firm offers a service that gives value for money, but they remain concerned about their redundancy payments and pension rights.

The Minister—who is a not-too-distant neighbour of mine—will probably know one reason why that is particularly true in Portsmouth, where many employees are experiencing privatisation for the second time, having been employed in the royal naval dockyard. They have every reason to say not only that for the second time in a supposedly secure Civil Service lifetime they have been faced with upheaval, but that on the first occasion they were given clear assurances about the establishment and guaranteeing of their future. This time, for some reason, the Government's promises have been wrapped up in jargon that they do not understand.

I appeal to my hon. Friend the Minister when he replies to recognise that for good or ill there are employees—loyal civil servants—who are greatly concerned about the future of their redundancy payments if they become redundant. The trouble is that none of those employees know whether they will be made redundant. Neither are they aware whether they will be allowed to take early retirement. They are also not aware of what pension conditions will apply if they remain with the privatised company. No wonder they are worried.

As my hon. Friend the Member for Bristol, North-West said, perhaps assurances have been given. However, the assurances that I have read would not allow me to say to my constituents, "Look at that. There's the answer. Go away and don't worry." Some of my constituents visited the House a few weeks ago and they told me that they were very concerned about these issues.

When my hon. Friend the Minister replies, I hope that he will spell out in words of two or three syllables—as redundancy cannot be encompassed in words of one syllable—what guarantees exist for my constituents. Some of my constituents have already suffered redundancy and moved from the royal naval dockyards to the PSA. What guarantees do they have that in two years' time they will not face worse redundancy or pension terms than they would have had if the PSA remained in the public sector?

If my hon. Friend the Minister can provide assurances, I promise him that I will tell my constituents that they will benefit from the Bill. The Government have every reason to offer such assurances tonight. They would then be setting the tone for the debates in another place which, again, must be to the advantage of the Government as well as for those who are worried about their future. The PSA employees have served us well and I hope that the Minister will consider them tonight.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I am pleased to be able to respond to this very good debate which has covered the all-important issue of terms and conditions of service for PSA staff. As several hon. Members have said, the PSA is blessed with good and loyal staff and the Government are as aware as anyone of the need to ensure that the PSA staff are well looked after. I want to deal with the effects that the amendment would have and explain why the Government cannot accept it. In doing that, I will respond to the points raised by my hon. Friends the Members for Portsmouth, North (Mr. Griffiths) and for Hastings and Rye (Mr. Warren) on behalf of their constituents. I will also pray in aid of some of the points made by my hon. Friend the Member for Bristol, North-West (Mr. Stern). I will also deal with some of the points raised by the hon. Member for Linlithgow (Mr. Dalyell).

The hon. Member for Linlithgow wanted to have it both ways. On the one hand he suggested that the privatised companies would be in such dire financial straits that they would not be able to meet their redundancy obligations. On the other hand he said that those companies would be controlled by, as he put it, get-rich-quick controllers. No controller will get rich very quickly if the business does not flourish. I hope that the hon. Gentleman's reference to that is an acceptance that the businesses will be able to flourish in the private sector and that all the employees, whether in a management or a subsidiary role, will be able to share in the fruits of the success of the enterprises.

The amendment would have several effects. It would require the new owners of the PSA and the Crown Suppliers to provide the staff with a pension scheme comparable to the principal Civil Service pension scheme. It would also require the new owners to provide the staff as far as possible with identical redundancy terms to those that they have at present. It also appears to require redundancy terms to be guaranteed out of public funds. It will also delete paragraphs (a) and (b) of clause 2(2).

On pensions, the Government have no doubt that the Transfer of Undertakings (Protection of Employment) Regulations 1981 will apply to the sales. As hon. Members know, the regulations give effect to the European Community's acquired rights directive. The regulations ensure that staff contracts of employment are not terminated by the sale of a commercial undertaking. They also have the effect of transferring unchanged all their existing terms and conditions of employment, with the exception of those relating to pensions. That omission is because, given the diversity of pension schemes, it would be unreasonable to require purchasers exactly to reproduce the existing scheme.

That is not to say that employees' pensions provisions are unprotected. It may be helpful if I quote what my right hon. and learned Friend the Solicitor-General said in Committee. At one stage, Opposition Members cast doubt on whether the TUPE regulations were to apply to PSA staff. From what my right hon. and learned Friend said, it is quite clear that the TUPE regulations apply. He said: in the case of a person transferred, under TUPE the transferor and the transferee must so arrange things that the pension rights enjoyed by staff after the transfer are broadly comparable with those enjoyed before. That is the legal requirement". He went on: If they do not, or cannot, the Government and the Crown will need to ensure that staff are compensated for any disadvantage."—[Official Report, Standing Committee D, 18 January 1990; c. 202.] I assure hon. Members that the Government accept those legal obligations and will comply with them.

9.45 pm

My hon. Friend the Member for Hastings and Rye referred to assurances that were made to staff, irrespective of the privatisation of the royal ordnance factories and the royal dockyards. Those privatisations were more advanced when the assurances were given. As the sales of the Crown Suppliers and the PSA proceed, it should be possible to give firmer assurances about the comparability of pensions terms. Obviously, until we know who is to purchase the business, it is not possible to know what the purchaser's pension arrangements are and what he is offering. In cases such as the royal ordnance factories, when the Bill was before the House and was being considered by hon. Members, it was clear who was to be the purchaser and what his pension terms would be. That is why there is an inevitable distinction between what happened in that case and what happens with the PSA.

On redundancy, the amendment falls into two parts. The first part concerns the redundancy terms themselves. The amendment would require the new owners to provide redundancy terms that, as far as possible, are identical to those that they have at present. That is precisely the commitment that the Government have given the staff. Hon. Members will have realised that, on pensions and redundancy terms, the amendment would do no more than the Government are already seeking to achieve. Those are requirements that arise from existing United Kingdom law and from the Government's obligations arising from our membership of the European Community. I believe that it is unnecessary, and indeed undesirable, to clog up the statute book with provisions that merely repeat existing requirements. My hon. Friend the Member for Portsmouth, North asked why the Government did not put that provision into the Bill. The reason is that it is unnecessary and superfluous. It is already the law of the land, and the Government will comply with the law of the land.

The second part of the amendment dealing with redundancy refers to guarantees. The trade unions concerned and Opposition Members have made clear their views on the need for guarantees from public funds. That is an important point on which the unions have made representations, and I can assure the House that their views are being considered. Of course, their fears are greatly exaggerated. During the sale competitions we shall give preference to potential purchasers who demonstrate a willingness and ability to run the businesses as going concerns and also have the necessary financial robustness to do so. It is not the Government's general experience that firms act unscrupulously or in bad faith by contriving redundancies for which they cannot or will not pay. It is not easy for employers to avoid their obligations, and they generally prove very reluctant to damage their reputations in the marketplace and with their staff. One of the criteria for selecting the purchasers will be an assessment of their ability to finance any redundancies that become necessary after privatisation, and I do not believe, therefore, that there is any need for guarantees of public funds.

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

I shall give way to the hon. Gentleman in a moment. I am referring to the various allegations that he made about the effect on terms and conditions if an employer who purchased the business changed those terms and conditions. I cannot accept the hon. Gentleman's statement. Much of the material that he used as his source was issued by the trade unions and suggests that there is no protection for an employee if the new employer wishes to impose changes in the terms and conditions after privatisation. An employer cannot do that. The general principle of law is that fundamental terms and conditions cannot be changed without the agreement of the employees. If, therefore, an employer tries to impose changes in the terms and conditions, such as those relating to redundancy, the employee merely has to inform the employer that he does not accept the new terms and if the employee is then made redundant after a period of notice, he can insist on the payment of his old redundancy rights. The hon. Gentleman seemed to think that the employee would be limited to his statutory rights, but I repeat that such an employee would be entitled to his old redundancy rights on a contractual basis.

I accept that if the purchaser went into liquidation, an action for damages might fail to achieve redress, but we shall be at pains to choose purchasers who are financially robust.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

When the Minister and his advisers have had an opportunity to reflect on my speech in print, may I expect a letter of clarification on the points raised?

Photo of Christopher Chope Christopher Chope Parliamentary Under-Secretary (Department of Environment)

If, after reading my speech in print, the hon. Gentleman feels that any further clarification is necessary, perhaps he will write to me and I shall deal with the matter.

There has only been one Civil Service case in which the Government have agreed to pay redundancy costs. That was Devonport dockyard. It was justified in that case because of the Government's own decision to run down the work load there. We expect the Crown Suppliers and PSA to succeed commercially, which is why the cases are different.

The fourth and final effect of the amendment would be to delete paragraphs (a) and (b) of clause 2(2). These provisions, which have appeared in all recent Acts for privatisations involving members of the principal Civil Service pension scheme, are to deal with a quirk in the terms and conditions of employment of civil servants. Because their redundancy terms are included in the pension scheme, and because when they are transferred out of the Civil Service they must cease to be members of the pension scheme, they would automatically become entitled to redundancy compensation as well as their jobs. The staff will, of course, in no real sense be redundant when PSA and the Crown Suppliers are sold. They will have their jobs, their existing terms and conditions of employment, and pensions and redundancy terms as I have just described. To expect the taxpayer to pay what would amount to very substantial sums in redundancy compensation for all staff transferred could not possibly be justified in these circumstances. That point was accepted in Committee.

In conclusion, I advise my hon. Friend the Member for Hastings and Rye that I am well aware of the concern in his constituency about the rundown in the number of staff employed by the PSA. However, that is not a consequence of privatisation. It is a consequence of untying, of reorganisation and of a cost-effectiveness exercise. As I stated in the letter to my hon. Friend to which he referred, we—not only myself, but other Government Departments—are doing all that we can to ensure that alternative employment opportunities are available in Hastings. I have already visited Hastings once and have made arrangements to visit the town again soon. I hope that I shall have the opportunity of meeting the staff there and of allaying their concerns.

For the reasons that I have outlined, I hope that the House will reject the amendment.

Amendment negatived.

Amendment made: No. 1, in page 2, line 25, leave out subsection (3).—[Mr. Chope.]

Order for Third Reading read. [Queen's Consent, on behalf of the Crown, signified]

Photo of Mr Chris Patten Mr Chris Patten , Bath 9:54 pm, 12th February 1990

I beg to move, That the Bill be now read the Third time.

When I moved the Second Reading, I said that, although short, the Bill was significant. I am glad that it received thorough scrutiny in Committee. The Committee's proceedings exceeded 26 hours, of which more than 20 hours were devoted to the first two of the Bill's six clauses. The debates on those clauses concentrated mainly on the effect of the Bill on the Government as a customer of the PSA and the Crown Suppliers and on the position of the staff.

The Government are convinced that the PSA and Crown Suppliers face a better future in the private sector. We also believe that the customers of the two organisations will benefit from the change. Naturally, the Government accept that some of the activities undertaken in the past by the PSA and the Crown Suppliers are not suitable for privatisation. Those parts of the Crown Suppliers that fall into that category have already been moved to other Departments and similar arrangements are being made for the PSA.

Anxieties have been expressed about the consequences for staff of the two privatisations. We have been at pains to point out that the Bill does not affect the employment rights of staff. Those rights were protected and transferred under the Transfer of Undertakings (Protection of Employment) Regulations 1981. As I explained in Committee, where they are not covered by those regulations they are protected by United Kingdom employment law.

I hope that the House will acknowledge the care with which the Government have addressed the issue of staff employment rights. I repeat the assurance already given to employees and to the House that the staff of the PSA and the Crown Suppliers will not be disadvantaged as a result of privatisation. I believe that the staff will gain from the measure and that the PSA and Crown Suppliers face a much better future in the private sector.

I hope that with those brief remarks I have demonstrated to the House that customers, Departments and staff of the PSA and the Crown Suppliers have nothing to fear from privatisation and much to gain.

I am grateful to my hon. Friend the Under-Secretary of State for the skilful way in which he has piloted this important Bill through its various stages. I have no hesitation in commending it to the House.

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith 9:57 pm, 12th February 1990

We regard the Bill as the pursuit of ideology for its own sake. There will be many mini-PSAs. No doubt they have already been set up in the Foreign and Commonwealth Office. We shall have to re-invent the PSA in years to come, and we all know it. If the Bill has not been enacted by the time that Labour takes office, we shall stop it and rebuild what has been destroyed.

We have had lengthy and detailed debates about the security aspects of the Bill. We are far from happy about it. I do not accept, and the House does not accept, that privatisation of Ministers' cars and the security of their homes should be exempt from privatisation while the means of security of our forces and their families and of senior civil servants should be privatised. There must be something wrong with that, and we all know it.

Security in Northern Ireland is even more important. When private contractors are threatened with being shot or have to withdraw from contracts because of such threats, it cannot be right to transfer activities to the private sector.

I was interested to note that we received the support of a couple of Conservative Back-Bench Members on pensions and redundancy. If all Conservative Members had 2,000 employees in their constituency, perhaps we should have better pension and redundancy schemes.

It is clear from a leaked document from the Department that jobs will be lost as a result of the measure. We know that. The hon. Member for Portsmouth, North (Mr. Griffiths) referred to the insecurity of the work force in his constituency which has already suffered the privatisation of the royal dockyard. The same could happen again.

Finally, there is the danger of sweeteners, which occurred with the Rover and British Aerospace deals. We shall watch out for that carefully because we know that in the past the Government have used taxpayers' money to persuade the private sector to buy an undertaking that should not have been sold in the first place. That is our position, and why we shall vote against the Bill tonight.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor 9:59 pm, 12th February 1990

The principle of the Bill is worthy of consideration. It falls down because we are looking at the privatisation of the Crown Suppliers, which is making a loss, at a Government service and a completely new principle of privatisation. Costs will undoubtedly increase to Government Departments and the estimate for consultancies is an increase of 20 per cent.

The issue of pension rights is absolutely crucial and we have not received sufficient assurances about them. Two reports from within Government, one in 1985 and the other in 1987, said that this is a bad idea.

It being Ten o'clock, the debate stood adjourned.

Ordered,That, at this day's sitting, the Property Services Agency and Crown Suppliers Bill may be proceeded with, though opposed, until any hour.—[Mr. Nicholas Baker.]

Question again proposed.

Photo of Mr Richard Livsey Mr Richard Livsey , Brecon and Radnor

The decision for privatisation has not been substantiated in our debates. The arguments about the proposals to privatise the PSA and the Crown Suppliers have not been sustained convincingly. For that reason, we are not prepared to support the Bill on Third Reading.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 233, Noes 200.

Division No. 72][10 pm
AYES
Adley, RobertColvin, Michael
Aitken, JonathanConway, Derek
Alison, Rt Hon MichaelCoombs, Anthony (Wyre F'rest)
Amery, Rt Hon JulianCormack, Patrick
Amess, DavidCouchman, James
Amos, AlanCran, James
Arbuthnot, JamesDavies, Q.(Stamf'd & Spald'g)
Arnold, Jacques (Gravesham)Day, Stephen
Ashby, DavidDevlin, Tim
Aspinwall, JackDicks, Terry
Atkins, RobertDorrell, Stephen
Atkinson, DavidDouglas-Hamilton, Lord James
Baker, Nicholas (Dorset N)Dover, Den
Banks, Robert (Harrogate)Dunn, Bob
Batiste, SpencerDurant, Tony
Beaumont-Dark, AnthonyDykes, Hugh
Bellingham, HenryEggar, Tim
Bendall, VivianEmery, Sir Peter
Bennett, Nicholas (Pembroke)Evennett, David
Benyon, W.Fairbairn, Sir Nicholas
Bevan, David GilroyFavell, Tony
Body, Sir RichardFenner, Dame Peggy
Bowden, Gerald (Dulwich)Field, Barry (Isle of Wight)
Bowis, JohnFinsberg, Sir Geoffrey
Boyson, Rt Hon Dr Sir RhodesFishburn, John Dudley
Brandon-Bravo, MartinForman, Nigel
Brazier, JulianForsyth, Michael (Stirling)
Bruce, Ian (Dorset South)Forth, Eric
Buck, Sir AntonyFowler, Rt Hon Sir Norman
Budgen, NicholasFox, Sir Marcus
Burns, SimonFreeman, Roger
Burt, AlistairFrench, Douglas
Butler, ChrisGardiner, George
Butterfill, JohnGarel-Jones, Tristan
Carlisle, John, (Luton N)Gill, Christopher
Carlisle, Kenneth (Lincoln)Glyn, Dr Sir Alan
Carrington, MatthewGoodhart, Sir Philip
Carttiss, MichaelGoodlad, Alastair
Channon, Rt Hon PaulGoodson-Wickes, Dr Charles
Chapman, SydneyGorman, Mrs Teresa
Chope, ChristopherGorst, John
Clark, Hon Alan (Plym'th S'n)Gow, Ian
Clark, Sir W. (Croydon S)Grant, Sir Anthony (CambsSW)
Clarke, Rt Hon K. (Rushcliffe)Greenway, Harry (Ealing N)
Griffiths, Peter (Portsmouth N)Miller, Sir Hal
Grist, IanMills, Iain
Grylls, MichaelMiscampbell, Norman
Hague, WilliamMitchell, Andrew (Gedling)
Hamilton, Hon Archie (Epsom)Moate, Roger
Hannam, JohnMontgomery, Sir Fergus
Hargreaves, A. (B'ham H'll Gr')Mudd, David
Hargreaves, Ken (Hyndburn)Neale, Gerrard
Harris, DavidNeedham, Richard
Haselhurst, AlanNelson, Anthony
Hawkins, ChristopherNewton, Rt Hon Tony
Hayward, RobertNicholls, Patrick
Hicks, Mrs Maureen (Wolv' NE)Nicholson, Emma (Devon West)
Hicks, Robert (Cornwall SE)Norris, Steve
Higgins, Rt Hon Terence L.Onslow, Rt Hon Cranley
Hill, JamesOppenheim, Phillip
Hind, KennethPage, Richard
Hogg, Hon Douglas (Gr'th'm)Paice, James
Holt, RichardParkinson, Rt Hon Cecil
Hordern, Sir PeterPatnick, Irvine
Howard, Rt Hon MichaelPatten, Rt Hon Chris (Bath)
Howarth, Alan (Strat'd-on-A)Pattie, Rt Hon Sir Geoffrey
Howarth, G. (Cannock & B'wd)Pawsey, James
Howe, Rt Hon Sir GeoffreyPeacock, Mrs Elizabeth
Howell, Rt Hon David (G'dford)Porter, Barry (Wirral S)
Howell, Ralph (North Norfolk)Porter, David (Waveney)
Hughes, Robert G. (Harrow W)Portillo, Michael
Hunt, Sir John (Ravensbourne)Price, Sir David
Hunter, AndrewRaison, Rt Hon Timothy
Irvine, MichaelRenton, Rt Hon Tim
Jack, MichaelRhodes James, Robert
Jackson, RobertRiddick, Graham
Janman, TimRowe, Andrew
Johnson Smith, Sir GeoffreySackville, Hon Tom
Jones, Robert B (Herts W)Sainsbury, Hon Tim
Jopling, Rt Hon MichaelShersby, Michael
Key, RobertSkeet, Sir Trevor
Kilfedder, JamesSmith, Tim (Beaconsfield)
King, Roger (B'ham N'thfield)Speller, Tony
Kirkhope, TimothySpicer, Sir Jim (Dorset W)
Knapman, RogerSquire, Robin
Knight, Greg (Derby North)Steen, Anthony
Knight, Dame Jill (Edgbaston)Stern, Michael
Knowles, MichaelStradling Thomas, Sir John
Lamont, Rt Hon NormanTaylor, Ian (Esher)
Lang, IanTaylor, Teddy (S'end E)
Latham, MichaelTemple-Morris, Peter
Lee, John (Pendle)Thompson, D. (Calder Valley)
Leigh, Edward (Gainsbor'gh)Thompson, Patrick (Norwich N)
Lennox-Boyd, Hon MarkThornton, Malcolm
Lester, Jim (Broxtowe)Thurnham, Peter
Lightbown, DavidTracey, Richard
Lilley, PeterTredinnick, David
Lloyd, Sir Ian (Havant)Trippier, David
Lloyd, Peter (Fareham)Twinn, Dr Ian
Lord, MichaelVaughan, Sir Gerard
Luce, Rt Hon RichardWalden, George
Macfarlane, Sir NeilWalker, Bill (T'side North)
MacKay, Andrew (E Berkshire)Waller, Gary
Maclean, DavidWardle, Charles (Bexhill)
McLoughlin, PatrickWarren, Kenneth
McNair-Wilson, Sir MichaelWatts, John
McNair-Wilson, Sir PatrickWells, Bowen
Madel, DavidWhitney, Ray
Malins, HumfreyWiddecombe, Ann
Mans, KeithWinterton, Nicholas
Maples, JohnWolfson, Mark
Marland, PaulWood, Timothy
Marshall, John (Hendon S)Woodcock, Dr. Mike
Martin, David (Portsmouth S)Young, Sir George (Acton)
Maude, Hon Francis
Mawhinney, Dr BrianTellers for the Ayes:
Maxwell-Hyslop, RobinMr. Michael Fallon and
Mayhew, Rt Hon Sir PatrickMr. John M. Taylor
Meyer, Sir Anthony
NOES
Abbott, Ms DianeAnderson, Donald
Allen, GrahamArcher, Rt Hon Peter
Alton, DavidAshdown, Rt Hon Paddy
Ashley, Rt Hon JackHealey, Rt Hon Denis
Ashton, JoeHeffer, Eric S.
Banks, Tony (Newham NW)Hinchliffe, David
Barnes, Harry (Derbyshire NE)Hoey, Ms Kate (Vauxhall)
Barron, KevinHogg, N. (C'nauld & Kilsyth)
Battle, JohnHome Robertson, John
Beckett, MargaretHood, Jimmy
Beith, A. J.Howarth, George (Knowsley N)
Bennett, A. F. (D'nt'n & R'dish)Howells, Geraint
Bermingham, GeraldHowells, Dr. Kim (Pontypridd)
Bidwell, SydneyHoyle, Doug
Blair, TonyHughes, John (Coventry NE)
Blunkett, DavidHughes, Robert (Aberdeen N)
Boateng, PaulHughes, Simon (Southwark)
Boyes, Rolandlllsley, Eric
Bradley, KeithIngram, Adam
Bray, Dr JeremyJanner, Greville
Brown, Gordon (D'mline E)Jones, Barry (Alyn & Deeside)
Brown, Nicholas (Newcastle E)Jones, Ieuan (Ynys Môn)
Bruce, Malcolm (Gordon)Jones, Martyn (Clwyd S W)
Buchan, NormanKinnock, Rt Hon Neil
Buckley, George J.Lambie, David
Caborn, RichardLeadbitter, Ted
Callaghan, JimLeighton, Ron
Campbell, Menzies (Fife NE)Lestor, Joan (Eccles)
Campbell, Ron (Blyth Valley)Lewis, Terry
Campbell-Savours, D. N.Litherland, Robert
Canavan, DennisLivingstone, Ken
Carlile, Alex (Mont'g)Livsey, Richard
Clarke, Tom (Monklands W)Lloyd, Tony (Stretford)
Clay, BobLofthouse, Geoffrey
Clelland, DavidLoyden, Eddie
Cohen, HarryMcAllion, John
Cook, Robin (Livingston)Macdonald, Calum A.
Corbett, RobinMcFall, John
Cousins, JimMcKelvey, William
Crowther, StanMcLeish, Henry
Cryer, BobMcWilliam, John
Cummings, JohnMadden, Max
Cunliffe, LawrenceMahon, Mrs Alice
Cunningham, Dr JohnMarek, Dr John
Dalyell, TarnMarshall, David (Shettleston)
Darling, AlistairMarshall, Jim (Leicester S)
Davies, Rt Hon Denzil (Llanelli)Martin, Michael J. (Springburn)
Davies, Ron (Caerphilly)Martlew, Eric
Dewar, DonaldMeacher, Michael
Dixon, DonMeale, Alan
Dobson, FrankMichael, Alun
Doran, FrankMichie, Bill (Sheffield Heeley)
Duffy, A. E. P.Moonie, Dr Lewis
Dunnachie, JimmyMorgan, Rhodri
Dunwoody, Hon Mrs GwynethMorley, Elliot
Eadie, AlexanderMorris, Rt Hon A. (W'shawe)
Ewing, Harry (Falkirk E)Morris, Rt Hon J. (Aberavon)
Ewing, Mrs Margaret (Moray)Mowlam, Marjorie
Fatchett, DerekMullin, Chris
Faulds, AndrewMurphy, Paul
Fearn, RonaldOakes, Rt Hon Gordon
Field, Frank (Birkenhead)O'Brien, William
Flannery, MartinO'Neill, Martin
Flynn, PaulOrme, Rt Hon Stanley
Foot, Rt Hon MichaelPatchett, Terry
Foster, DerekPendry, Tom
Foulkes, GeorgePike, Peter L.
Fraser, JohnPowell, Ray (Ogmore)
Fyfe, MariaPrescott, John
Galloway, GeorgePrimarolo, Dawn
Garrett, John (Norwich South)Quin, Ms Joyce
Garrett, Ted (Wallsend)Radice, Giles
George, BruceRandall, Stuart
Godman, Dr Norman A.Redmond, Martin
Golding, Mrs LlinRees, Rt Hon Merlyn
Gordon, MildredReid, Dr John
Gould, BryanRichardson, Jo
Griffiths, Nigel (Edinburgh S)Robertson, George
Griffiths, Win (Bridgend)Robinson, Geoffrey
Grocott, BruceRooker, Jeff
Hardy, PeterRoss, Ernie (Dundee W)
Hattersley, Rt Hon RoyRowlands, Ted
Haynes, FrankRuddock, Joan
Sedgemore, BrianTurner, Dennis
Sheerman, BarryWalley, Joan
Sheldon, Rt Hon RobertWardell, Gareth (Gower)
Shore, Rt Hon PeterWareing, Robert N.
Short, ClareWatson, Mike (Glasgow, C)
Skinner, DennisWelsh, Michael (Doncaster N)
Smith, Andrew (Oxford E)Williams, Rt Hon Alan
Smith, C. (Isl'ton & F'bury)Williams, Alan W. (Carm'then)
Smith, Rt Hon J. (Monk'ds E)Wilson, Brian
Smith, J. P. (Vale of Glam)Winnick, David
Snape, PeterWise, Mrs Audrey
Soley, CliveWorthington, Tony
Spearing, NigelWray, Jimmy
Steel, Rt Hon Sir DavidYoung, David (Bolton SE)
Steinberg, Gerry
Strang, GavinTellers for the Noes:
Taylor, Matthew (Truro)Mr. Ken Eastham and
Thompson, Jack (Wansbeck) Mr. Allen McKay.

Question accordingly agreed to.

Bill read the Third time, and passed.