Let me deal with that. Incidents such as insolvency are often not predicted by Government. So what happens when a policy is advocated that involves a very straightforward commitment given by Ministers? Let me, if I may, read out a statement made by the then Secretary of State for Transport John MacGregor in May 1993 at the time of the debates on the privatisation of British Rail in response to a specific discussion on the British Rail pension scheme and its future. The Secretary of State said:
“My objective remains to preserve the security of rights enjoyed by pensioners and members while adopting arrangements to suit the new structure of the privatised industry. The proposals I am announcing today meet this objective.
I have decided that there should be set up, under the powers granted in the Railways Bill, a joint industry pension scheme for the railways. This will be broadly on the basis set out in the consultation paper ‘Railway Pensions After Privatisation’ issued in January. The governance and administration of the joint industry scheme will continue to involve both the employers and employees in the industry. We shall be discussing the detailed arrangements with interested parties…Existing employees’ rights will be protected by statutory orders made under the Railways Bill. The benefits offered to employees must be no less favourable than those in the existing scheme. There will be no penalties for involuntary breaks in employment. The present schemes under which the employer matches additional voluntary contributions made by employees…will continue subject to the existing right of the employer to withdraw matching for new or increased contributions.
Employees should be reassured by the statutory protection of these benefits…It is both natural and right that pensioners, pension scheme members and trustees should express their concerns and seek reassurance about pension arrangements in the privatised railway. The consultation document gave them the opportunity to do so: these decisions address those concerns and provide that reassurance.”—[Official Report, 20 May 1993; Vol. 225, c. 236W.]
John MacGregor was an honourable man who believed that he was giving every possible assurance that the existing pensions arrangements would be protected. Are we now saying that, just because there is no specific reference to insolvency in that statement, no such assurance was given in relation to those rights? If we did that outside this place, we would be accused of mis-selling a scheme.
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The employees opposed rail privatisation tooth and nail, but they were reassured by the Government that their pensions would be protected and, although they did not support the policy, they went away confident that at least their pensions would be protected. What has happened now? I think that a lot of the responsibility lies with Network Rail over how it treated Jarvis, but that is a debate for another time. It has been demonstrated that the statutory protection that workers in the railway industry thought would guarantee their pensions has proved to be illusory in the event of an employer’s insolvency. That is what the Jarvis case has demonstrated.
New clause 7 would simply restore the protection in the specific case of insolvency. It would add a new paragraph to schedule 11 of the 1993 Act, which would apply only to an “insolvency event” within the meaning of the Pensions Act 2004. It would protect only “relevant pension rights”—namely, the rights that the member had accrued in the British Rail pension scheme and the
rights that he or she had accrued as an employee of a successor employer, post-privatisation, but only to the extent that he or she had had no choice as to the section of the railways pension scheme in which they were accrued. If a member moves voluntarily from one employer to another, the rights accrued after that move are not protected. This relates to the involuntary movement of people when franchises are shifted and new contracts are issued.
Obviously, we have to address the practical question of who would pay, given that the former employer would not be in a position to do so. Promises were made by the Government, and they should have been enshrined in the three orders to which I have referred. They were made to convince people that privatisation could work, and to convince employees that there would be a smooth privatisation process in which their pension rights would be protected. Having made those promises, the Government should honour them. It is the role of Parliament to hold the Government to account and to ensure that they keep their word to the electorate. This was a special commitment that was given to that group of workers during the privatisation of the rail industry.
I do not necessarily think that the measure should be paid for by the taxpayer. The Government might think it appropriate to require all the railway employers to meet the cost of providing the protection by creating a mini-pension protection fund scheme, alongside the national scheme. Such a scheme could be funded by a levy paid only by railway employers. They have made the profits from privatisation, and they should share the liabilities that arise. The legislation passed at the time of privatisation gives the Secretary of State powers that are wide enough to enable this to happen.
The new clause stands in its own right. It is a relatively minor amendment to the legislation, and I should like to hear a positive response from the Government. When privatisation took place, there was immense opposition to it, and immense fear among the work force about what would happen to their jobs, their conditions of work and their rates of pay. Pensions are also a critical issue for workers. Some people have referred to them as deferred pay. That is true, but they also represent a deferred sense of security in retirement and old age, and Members should not underestimate the strength of feeling among people who wish to protect their pensions. When privatisation was debated, it was understandable that Ministers seeking a smooth passage for their legislation wanted to reassure the workers in the industry that their pensions would be protected. That is why such categorical assurances were given at the time.
Perhaps people did not think there would ever be an insolvency in the railway industry so it may not have been spelt out in the detail of the assurances the Secretary of State gave. What was certainly understood by everyone in this House listening, and by every railway worker out there, was that, no matter what happened under privatisation, at least people’s pensions would be protected.
I believe that this House should ensure that the Government honour their commitments. I know that one Government cannot bind another and that we cannot introduce retrospective legislation—or, at least, it is frowned on—but there is a moral duty to the people
who worked within the industry. Some have suffered badly enough as it is. As I said, they have been laid off and, as a result of intervention by Network Rail, put in contracts with Jarvis—we have called for an inquiry into that. Some people lost employment for a long period, had to scour the country to pick up work and now their pensions are affected as well.
I urge the Government to look sympathetically on my new clause—not to look for some loophole or lack of clarity in previous debates, but to recognise that people are suffering as a result of commitments and previous Government promises not being adhered to. I do not think that is too much to ask. I also believe that we are advocating a cost-free approach. Employers in the industry would have to rise to their responsibility to protect the workers’ future pensions, and I think that would provide a morale boost to people working within the industry. As my hon. Friend the Member for North Ayrshire and Arran said, it would send out a message that, whatever happens—whether it be Government policy, privatisation, bringing services back in house or whatever—we could at least protect people’s pensions, if nothing else.