Bus Employee Pensions

– in the House of Commons at 6:39 pm on 25th January 2001.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Touhig.]

Photo of Russell Brown Russell Brown Labour, Dumfries 7:01 pm, 25th January 2001

When I raised the vexed issue of the bus employees superannuation trust in February last year, I really believed that, almost a year on, the entire matter would have been drawing to a close. Regrettably, that is not the case. Looking at the previous debate, I smiled ironically to myself at certain comments that were made on that occasion. For example, I said: It became clear to me at an early stage that it was important that the issue did not find its way back into the courts, where it might have been lost for months and might have resulted in the loss of significant sums of money because of legal costs. I also said: The matter of court proceedings continually raises its head, and there is no doubt that the trustees' legal advisers need to ensure that, if those proceedings must be gone through, they do not take up a lot of valuable time.—[Official Report, 11 February 2000; Vol. 344. c. 577–79.] Here we are, almost at the end of January, and the matter is heading back to the courts, albeit for a reason different from that to which I referred previously. Precious time has been spent and lost, and more than £880,000 has been spent in legal fees.

I know that, when this matter was last debated, the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Streatham (Mr. Hill), hoped that any court approval for completion of the distribution of the settlement would be possible by the end of 2000, thereby enabling payments to be made early this year. No doubt, like many right hon. and hon. Members and me, he will be dismayed at the current situation.

Correspondence that I and other Members have received from many of the pensioners who may be entitled to a share of the settlement shows the anger and frustration that they rightly feel about the delay in settling this affair. They are elderly people; many of them are not in the best of health and, as I said in the previous debate, some of them have even passed away, never having received what was rightly theirs. Even the trustees for the two funds in question indicated by way of the information bulletins that are issued from time to time that they hope to complete the process by the early part of this year.

Regrettably, the November-December 2000 bulletin, looking at the question of how long the court proceedings will take, could state only: We cannot say, at the moment, how long these proceedings will take. However, the issues involved are complex and so the proceedings are likely to take many months. Those comments are essentially no different from what was said in the early bulletins, except that the time scale is slipping.

During the previous debate, I explained the two different categories of pensioners: those who remained in the pension funds after privatisation, known as Standard Lifers, and those who transferred out—transferees. I felt at that time that the interests of the two groups would not and could not be best served by one firm of solicitors. I believe that a second firm should be appointed in order to avoid any conflict of interest that may arise. I know only too well that many people have questioned the sanity of introducing yet another team of solicitors into the equation, on the basis of cost and especially of time, as any court proceedings could be protracted.

I am aware that some interim payments were made to different categories of pensioners during last year, amounting to a total in excess of £35 million. I would appreciate it if my hon. Friend the Under-Secretary could give some detail of those payments, perhaps with special reference to taxation, which has been one of the problems.

The other main problem has obviously centred on the legal entitlement of certain groups and, in particular, the status of transferees. Standard Life beneficiary representatives are arguing that the transferees are not eligible to receive any surplus. As one might expect, that view is not taken by the transferees, who were told that all fund surplus would go to the National Bus Company. They maintain that they would not have transferred if they had known that that would not happen.

Although all that I have said so far indicates that the pension trustees are responsible for resolving all those matters, I am pleased that the Government have rightly taken a close interest. This debate offers my hon. Friend the Under-Secretary an opportunity to bring the House up to date on the current state of affairs. I hope also that he will give his perspective on why matters have not yet been resolved.

For the record, I remind the House that it was in September 1998 that my right hon. Friend the Deputy Prime Minister commented on the raiding of the pension funds. At that time, he instructed lawyers to stop the legal fancy dancing. It is more than 18 months since the Government settled the litigation. What is at stake here? At the last count, there were almost 54,000 pensioners, of whom 44,000 are already of pensionable age and on relatively low incomes. The Government, and the introduction of the minimum income guarantee for pensioners, should not be making up for the sins of the previous Administration, who imposed the current problems on all the people involved.

My hon. Friend the Member for Doncaster, Central (Ms Winterton) is disappointed that she cannot be here to participate in the debate. In her absence, I pay tribute to her for her excellent work on this issue and for the support that she has given me. She has passed me a copy of a letter that she received from Jack Gibson, the branch secretary of the Transport and General Workers Union retired members association in Barnsley. The letter is dated 20 December last. She asked me to refer to two ex-work colleagues that Jack mentions in his letter. He wrote: I can refer to two out of a large number of my ex-workmates. One was an inspector when I joined Yorkshire Traction in 1950 as a bus driver, he would then have been in the staff pension fund, known as the London Pension Fund. On the formation of National Bus Company, that became the National Bus Pension Fund, into which like others in the Fund, he contributed seven and a half per cent of his salary. He became an Area Superintendent and retired in 1987. He died in June this year, his wife in a nursing home at the time, died in September this year. What did they get out of this money? Jack went on: My colleague Eddie Wignall, we have worked together on this issue since September 1996 following the Ombudsman's decision. Demonstrating at the D.o.T., House of Commons, appearing on BBC 2, Channel 4, speaking on national and local radio and speaking at fringe meetings arranged by the T&G. We were both recommended to become BEST trustees, but were unsuccessful. Now Eddie, who was made redundant in February this year, and was 62 in June has not received any interim payments. Sadly he is being treated for a serious illness. How much and when will he receive any payments from this money? He continues: The Trustees and their legal advisers will be getting well paid for their job, it just isn't on, and they are simply not in touch. Those are only two examples. Some would say that they were not typical. However, I believe that the delay is leading more and more pensioners to fall into that heartbreaking predicament.

The Transport and General Workers Union believes that all former National Bus Company workers who contributed to the two funds should benefit from the distribution of the money that the Government returned. That view is based on the fact that when National Bus Company was privatised and the funds were wound up, there was a considerable delay before the Standard Life buy-out was completed. During that period, the work forces in the separate companies were given differing advice about where to transfer their pensions. That advice was based on the knowledge that there was no surplus in the funds—the Government had taken it—and that a better long-term deal might be obtained elsewhere. That applied to workers who had potentially 20 or more working years ahead. Transfer decisions appeared to be taken en bloc and approximately 30 per cent. took that route.

Pensioners are rightly seeking answers to many different questions. All too often, they are, sadly, met with a wall of silence. There is anxiety about the administration costs of the funds and the exact size of the current balances. I am led to believe that, even after interim payments and all other costs, the totals are about the same as were handed over in July 1999. If the Minister can confirm that, all those pensioners would greatly appreciate it.

Unanswered questions frustrate the pensioners, and the circumstances have led Lord Justice Robert Walker to comment: Pension Trustees would in my view be well advised in almost all circumstances to adopt a policy of utmost openness. Secrecy breeds suspicion. Does the fault lie with lawyers dragging their feet? I know that my hon. Friend the Under-Secretary has seen a note dated 21 November 2000 and prepared by Ian Croxford QC. It clearly raises the question whether swifter progress could and should have been made.

Does the problem lie with the representative beneficiaries who speak for the Standard Lifers and the transferees? Is it down to their advisers? Is it perhaps due to a simple disagreement about sharing out the settlement? It would be a tragedy if the delay centred around the amount to which the different categories of pensioners were entitled.

I urge the representative beneficiaries, including my constituent, Frank Wheeler, who has done so much excellent work over many years, to reach an agreement soon to ensure swift court approval.

I hope that the Under-Secretary can give an assurance that the Government are doing all they can to ensure that all involved parties and interests appreciate the urgency of bringing the tangled and sorry tale to a successful conclusion without further delay.

Photo of Keith Hill Keith Hill Parliamentary Under-Secretary, Department of the Environment, Transport and the Regions 7:13 pm, 25th January 2001

I wish, most sincerely, to congratulate my hon. Friend the Member for Dumfries (Mr. Brown) on securing this debate on the National Bus Company pension schemes. I shall reply in writing to those questions that I do not tackle in my speech.

This is the second occasion on which my hon. Friend has initiated an Adjournment debate on the subject. That is a clear demonstration of his personal commitment. Many other hon. Members have also expressed their concerns to the Government about lack of progress on the NBC pensions. However, I want to join my hon. Friend in recognising the outstanding role of my hon. Friend the Member for Doncaster, Central (Ms Winterton), who has persistently raised her anxieties on the Floor of the House, in correspondence and in other representations. I believe that Parliament, and I go so far as to say the country at large, owes both my hon. Friends a large debt of gratitude.

We are dealing with a matter of fundamental social justice for more than 50,000 of our fellow citizens. Most of them are not very well off, many are now elderly and some of them are, alas, deceased without receiving their just desserts.

In 1990, under a previous Administration, in the aftermath of bus privatisation, those people were wrongly deprived of their entitlement to a share in the surpluses of the NBC pension funds. In 1996 after a protracted campaign to right this wrong, the pensions ombudsman found in their favour in a historic decision. In July 1999, the Government paid nearly £356 million in settlement of their claims. We did so willingly because we had long recognised the justice of their cause and, like the beneficiaries, we looked forward to the distribution of the surpluses in a reasonably short period of time. Beyond that hope and expectation, the Government had, and have, no direct role. In accordance with the law, it is for the trustees and their advisers to manage the distribution of this considerable sum of money.

I want to mark my recognition of the fact that the trustees have managed so far to make interim payments, in a combination of enhanced pensions and lump sums, to about 20,000 NBC pensioners whose pensions were secured with Standard Life. That began in April last year with interim payments to older pensioners and continued later in the year with payments to all those former NBC employees currently in receipt of a Standard Life pension. The later payments were in the form of tax-free lump sums.

Court approval had to be obtained for those payments, because there were legal uncertainties about whether the rules allowed lump-sum payments. The need for discussions with the representative beneficiaries delayed the application to the court for this approval, but that application was successfully made. I am pleased to say that the trustees now plan further interim payments this tax year for the Standard Lifers and that those payments are now being discussed with the Inland Revenue.

Regrettably, however, it remains the case that, 18 months after the summer of 1999, only £35 million of the £356 million has been distributed in interim payments to the Standard Life beneficiaries, and £1 million has been spent on legal and administrative costs. I say in all candour to the House that that is simply not good enough. I emphasise that the Government totally share the frustration of the beneficiaries—I say that as a Minister who, over the past year, has held meetings with the trustees almost monthly to try to push the matter along faster.

Of course, I acknowledge the complexities of the tasks facing the trustees. The two NBC schemes together had some 50,000 members. To determine how much should be paid to each of them, many thousands of individual records—all manual, uncomputerised records—have had to be updated and computerised on the basis of information provided by the potential beneficiaries. The trustees have also had to negotiate with the Inland Revenue about the current tax status of the schemes and of any payments to be made. Potential tax liability has been another reason why individual records have had to be updated.

It should also be recognised that the trustees have seen the need to proceed rather cautiously through a legal minefield. It has always been their view—I fully understand why that is so—that the distribution of the settlement must be approved by the courts so that it would be beyond subsequent legal challenge. A distribution that could not be fully implemented, or that had to be put into reverse because of a subsequent challenge, would clearly be of little use to beneficiaries.

However, a major impediment to more rapid progress has undoubtedly been the dispute as to whether the Standard Lifers and the transferees should both receive a share of the settlement. The Standard Lifers are the 40,000 members and dependants whose pension benefits were secured with Standard Life at the end of the privatisation period. The transferees are the 14,000 former NBC scheme members who made other arrangements, often with the pension schemes of newly privatised bus companies. Representative beneficiaries have been appointed to look after the interests of both those groups, and they also have their own legal representation. I understand that it has now been decided that there is a further class of transferees, with their own set of legal representatives.

The nub of the problem is that the representatives of the Standard Lifers are saying that their view is that the transferees are not eligible to receive a share of the distribution. Not surprisingly, that is not the view of the transferees. The trustees have therefore had to prepare legal proceedings to determine that basic issue and other matters on eligibility, and proceedings were commenced in October 2000.

In an effort to insert more urgency into the process, the trustees sought to bring all the parties together in a case management conference, in December. It is very much to be regretted that that conference had to be adjourned because not all the parties were ready to participate. A further case conference is now to be held on 9 February, and the parties have been given until next Friday to serve their evidence in the proceedings. That is why this debate is so timely and important.

It is not, of course, for the Government to seek to determine the issues of eligibility. However, I would say with all the force and emphasis at my command to all the representative beneficiaries involved, and to those who advise and represent them, that these issues must be urgently tackled and resolved. If they can be and if all those involved approach the issue in a properly reasonable way, I understand that there is the prospect of court approval for an agreed distribution and for final payments being made this spring. If not, we face the very grim prospect of protracted legal action stretching perhaps into next year—in other words, further intolerable delay in delivering justice to those thousands of NBC pensioners.

The responsibility and the choice rest with all those who are involved with that conference on 9 February. I urge all of them to respond accordingly. In case there are any doubts that I am addressing them and their clients directly, it is appropriate for me to list the names of all the legal firms involved. The trustees are represented by the solicitors Taylor Joynson Garrett; the representative beneficiaries for the Standard Lifers and the transferees are represented, respectively, by Baker & McKenzie and by Nabarro Nathanson; and the new category of transferees that I mentioned will be represented by Macfarlanes. I say to all of them, quite simply, that further delay in resolving these matters will only add to the distress of NBC pensioners and would be an intolerable protraction of settling their just claims.

Further delay will also reflect no credit on the legal profession, which, very evidently from the correspondence that I and other hon. Members have received on the issue, has understandably already been the object of so much criticism and odium.

I address those last remarks not only to the solicitors already involved, but to those who might be tempted to carve a role for themselves in further legal proceedings. I am thinking particularly of the firm of Halsey Meyer Higgins, which has been a most active correspondent on the issue. Again, quite simply, the issue does not need more lawyers; it needs an appropriate sense of urgency and a will to reach agreement.

I close by addressing, through the House, one of the key—perhaps the key—figure in all the 15 years of the issue. He is of course Frank Wheeler, a constituent of my hon. Friend the Member for Dumfries and one of the representative beneficiaries for the Standard Lifers. I am second to none in my admiration and respect for his pursuit of the issue over all the years. However, I ask him very directly whether it is not now right to put his influence and weight behind early agreement with the transferees. Such agreement is now the only way of completing the distribution and delivering justice to all his fellow former employees of the NBC. No one—least of all the battalion of lawyers; and not even the redoubtable Frank—should stand in the way of that much sought-after, much hoped-for outcome.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past Seven o'clock.