Orders of the Day — National Minimum Wage Bill

House of Commons, 28 July 1998.

New clause

EXCLUSIONS

Ian McCartney (Labour, Makerfield)

I beg to move, That this House does disagree with the Lords in the said amendment.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this, it will be convenient to discuss Lords amendments Nos. 5 to 7.

Ian McCartney (Labour, Makerfield)

We have no hesitation in asking the House to resist the new clause introduced in another place—but, before doing so, I pay tribute to my noble Friends Lord Clinton-Davis, Lord Falconer and Lord Haskel, who dealt with the Bill in a professional and effective way in that place. For the life of me, I cannot understand or accept the sight of hereditary peers—the descendants of robber barons and cattle thieves—trying to deny people the national minimum wage. It is even more undignified when the Tories and their Whips arrange for people to come to the House of Lords, probably for the first and only time this year—some did not even turn their engines off while they went to vote before leaving the House again—for one simple reason: to pass a wrecking amendment to try to damage fatally the introduction of the national minimum wage for 2 million of the most vulnerable and lowest-paid workers in Britain. The issue was further complicated by the Liberal Democrats, who should be ashamed of themselves for siding with sweatshop owners and backstreet exploiters. Let us look at what happened in the House of Lords. We expected the Conservatives to try everything in a last-ditch attempt to get rid of the national minimum wage, and the Government were defeated by 58 votes. Of the 161 peers who voted for the new clause, 84 were hereditary—67 Conservatives, eight Liberal Democrats, eight Cross Benchers and one other. Counting the votes of life peers alone, the Government would have won the vote by 88 to 77—a majority of 11. Some of those who voted against the Government were among the largest landlords and the wealthiest people in Britain. They came in to deny groups of workers the opportunity to have a national minimum wage from 1 April next year.

Tim Boswell (Conservative, Daventry)

Will the Minister not concede that, whatever took place in their lordships' House with hereditary peers, the amendments now under discussion would not require any derogation from the national minimum wage? They would merely provide the Secretary of State—who is now sitting at his left hand; we are pleased to see him in his place—the power to derogate if he considered it desirable.

Ian McCartney (Labour, Makerfield)

The hon. Gentleman talks nonsense; he talks out of the side of his mouth. The amendments would allow a future Conservative Secretary of State—if such a thing ever befell the nation, which I doubt—to exclude areas such as Cumbria, the north-west, the north-east, Scotland or Wales. He or she could also exclude sectors, so all the hairdressers in Britain—the lowest-paid workers in the land—could be excluded from the minimum wage. A Secretary of State could also exclude firms of different sizes, so all the hairdressers in small companies could be excluded. When we read the amendments in the context of what I am saying, we see that the proposals are designed to wreck the possibility of millions of workers in Britain benefiting from the national minimum wage. For the sake of expediency, at the whim of a Secretary of State and without further reference to Parliament, whole areas of the country could be excluded from receiving the minimum wage. The clause does not improve the Bill. It does not make it operate better. It will not help a single worker to benefit. The amendments serve only to illustrate the lengths to which the Opposition party—indeed, in the House of Lords, the two Opposition parties—will go to undermine the principle of the introduction of the minimum wage.

John Redwood (Conservative, Wokingham)

Will the Minister explain why the Minister of State, Lord Simon, did not attend to vote on that occasion? Does that not give the lie to his idea that all the problems arose from Conservative hereditary peers? Surely Ministers in the Department of Trade and Industry could have offered some support.

Ian McCartney (Labour, Makerfield)

Surely the right hon. Gentleman can come up with something better than that. My noble Friend Lord Simon, like all Ministers in the Department, goes out and does work on behalf of the Government, and that is what he was doing—unlike the right hon. Member for Wokingham (Mr. Redwood), who, when he was a Minister at the DTI, spent his time trying to close down British industry. Our job—that of my fellow Ministers, including my right hon. Friend the new Secretary of State—is to rebuild industry and refashion it out of the shambles that the right hon. Gentleman left us after the election.

John Redwood (Conservative, Wokingham)

Can the Minister explain why that vote was treated as so unimportant that the Minister of State did not need to attend to ensure that the Government won it?

Ian McCartney (Labour, Makerfield)

Wriggle as the right hon. Gentleman might, the truth is that the Conservatives brought people to the House of Lords in their Ferraris, their Mercedes, or whatever other transport they may have had, to wreck a Government Bill for which we have a national mandate and which the whole of Britain, including two thirds of Conservative voters, supports. The right hon. Gentleman must live with the consequences of the Lords action of inserting into the Bill a new clause that undermines the whole concept of a national minimum wage.

David Winnick (Labour, Walsall North)

Why should we complain about Conservative opposition to a national minimum wage? Should we not welcome it, at least from the party point of view, and wrap it around the Tories' necks at the next election?

Ian McCartney (Labour, Makerfield)

I am happy to wrap things around the necks of the Tories between now and the next election. Why miss the opportunity? The point was made during a recent debate when the right hon. Member for Wokingham and I had a short intercourse on issues relating to—

John Bercow (Conservative, Buckingham)

I think that the Minister means "a short exchange of views".

Ian McCartney (Labour, Makerfield)

No, I choose my words carefully. That evening, the right hon. Gentleman made a fundamental comment about how the Conservatives, in this Parliament and in the run-up to the next election, will deal with the new employment rights that the Government provide for vulnerable people in Britain. He made it clear that he will go into the next election on a policy of the abolition of the national minimum wage. What he is offering millions of people in Britain is, "Vote Conservative and take a wage cut." The right hon. Gentleman also said that he would review all the other minimum standards and new employment rights that the Government are introducing—with the support, I may add, of large parts of British industry, sick and tired of the Tories' low-pay, low-investment economy, and looking to an ultra-modern economy with good standards of pay, good conditions and investment in the workers, in employment rights and in standards of skill. In that debate, the right hon. Gentleman had the opportunity to show once and for all that the Conservatives accept the fact that the British people overwhelmingly want good minimum standards in the workplace, and do not expect Her Majesty's Opposition to threaten them with withdrawal of those rights, especially when some of them will have a significant pay increase under the national minimum wage, because they are now being paid as little as £1.20, £1.30 or £1.40 an hour. For the right hon. Gentleman—who, for a part-time, two-days-a-week job receives £12,000 a year—to stand at the Dispatch Box and try to deny the minimum wage to low-paid workers is nothing short of a personal scandal. Under no circumstances can he wriggle out of the decision taken in another place—a decision clearly calculated to assist his campaign to ensure that the national minimum wage is not implemented by 1 April next year. We have no hesitation in opposing the new clause and the other amendments. We were elected to introduce a national minimum wage, and that is what we shall do. We made the Government's position clear in earlier debates, and I shall not weaken now, at the final hurdle. The new clause would provide the Secretary of State with wide-ranging powers to make exemptions whenever he or she felt it expedient. That approach challenges the fundamentals of the policy behind the Bill. The House will appreciate that the Bill has been designed in a way that rules out the possibility of exemptions according to sector, region, size of firm or occupation. It permits, in specific circumstances, exemptions or modifications according to age. We received recommendations on that from the Low Pay Commission, which we accepted and which we shall implement. The new clause proposes something completely different from the limited range of exemptions or modifications in clauses 3 and 4, and opposing it presents me with the opportunity to reiterate the Government's commitment to a single national minimum wage that will be universal in its application. Our approach is diametrically opposed to the direction suggested in the amendment. We want an inclusive policy; we do not want to exclude whole swathes of people. The idea is to provide a floor across the board so that we can get rid of poverty pay. We also want to provide a level playing field, so that companies can compete fairly on the basis of quality, not on the basis of excessively low wages. Hon. Members know what our inheritance was after the general election. Whether in the regions of England, in Scotland, in Wales or in Northern Ireland, people suffered as a result of endemic low pay—2 million people earned £2.50 an hour or less. Some people, having worked full time for a week, had to suffer the indignity of having to claim additional benefits simply to live or to make ends meet.

Jim Cunningham (Labour, Coventry South)

Is my hon. Friend aware that when, two years ago, one of my constituents raised the issue of his pay—which was £1 an hour—he was told to apply for family supplement?

Ian McCartney (Labour, Makerfield)

We know that the Conservative Government encouraged such Arthur Daley employers. We remember the advertisements, such as the one for a night shift security guard job, offering 50p an hour and saying: "Bring your own dog and uniform." That was the reality of Britain under the Tories. They made this country the sweatshop capital of Europe, and they were proud of it. They boasted about it across the world, saying: "Come to Britain and pay your workers £1.20 or £1.30 an hour." Thank goodness inward investors came to Britain for different reasons; they pay their employees good wages and provide good working conditions. We do not want to go back to the Tory years, in which there was a downward spiral of wages. The Tory policy was not to create an economy of high-quality goods and services, in which people's employability is based on the quality of their training and knowledge. The Tories undermined good companies and good company practice; they made companies compete against one another on the basis of a free-for-all downwards wages spiral. Tory Ministers at the Department for Education and Employment defended the advertisement of jobs at as little as £1 an hour. The Tory Government, of which the right hon. Member for Wokingham was a member, took away the last vestiges of protection for home workers. The Department of Trade and Industry received evidence that women working for home working organisations were earning as little as 38p an hour. That was not in 1888; it was in the last year of the Tory Government. That is the legacy that the Tory party left this Government to clear up, and we have no intention of allowing the new clause to damage our capacity to do so. The limitations in clauses 3 and 4—which the new clause would remove—are necessary. They defend the integrity of the national minimum wage. Despite the widespread acceptance of, and support for, our policy from business and from the electorate as a whole, and despite the broad acceptance of the Low Pay Commission's recommendations, I regret to say that the policy still seems to need defending against Conservative Members, who are hanging on to the idea that we in Britain can somehow succeed by paying people as little as 38p an hour. What an outlook for Britain in the new millennium! It beggars belief that the right hon. Member for Wokingham and his colleagues actually ran the economy. The nightmare years are ended—we shall introduce the national minimum wage, and we shall do so on 1 April next year, as we said we would. We have made it clear several times that variations of rate by sector, region, size of firm or occupation would be unfair and unworkable. The same applies even more strongly to exemptions on those grounds, which is what the new clause would provide a power to make. There is no doubt about the inevitable unfairness and inequity of the new clause. It is deliberately designed to remove from the Bill's protection the very people whom the minimum wage would most help. The Opposition should be ashamed of themselves, as everybody else is ashamed of them. The whole purpose of the Bill is to introduce, for the first time in this country, a national minimum wage that is truly national and that will make a difference to the many workers who strive to exist on poverty pay. It marks an historic step to bring rights to British workers that many of their counterparts in other countries have enjoyed for decades. The Bill's fundamental approach is inclusive, but the new clause attacks head-on that approach and the Government's philosophy, which the electorate fully supported. I urge the House to save the Bill, and to reject the amendments.

John Redwood (Conservative, Wokingham)

I urge the House to keep the very sensible amendments that were made in the other place. Once again, the Minister has been extremely disappointing. He has not listened to any of our arguments in the House or in Committee. He dramatically misrepresents the Conservative position. I have never said that we shall abolish the minimum wage; I have said that we shall review the whole raft of regulations and legislation that we inherit, and then decide what needs changing to create more jobs and more prosperity in our country. I have never said that we want low pay. We want people to be well paid and to have a good standard of living. It is most important, however, that people are not moved from low pay to no pay—that is the main point that we have urged on the House. The new Secretary of State for Trade and Industry, the hon. Member for Hartlepool (Mr. Mandelson), is well aware of that point.

Alasdair Morgan (Scottish National Party, Galloway and Upper Nithsdale)

The right hon. Gentleman says that he has not stated categorically that a future Conservative Government will abolish the minimum wage. Will he give a guarantee that they will not abolish it?

John Redwood (Conservative, Wokingham)

Of course not. We shall review it, to establish what is best for the country. The minimum wage will do most damage on its introduction. That is why we have opposed it. On its introduction, bad employers may decide to sack people rather than to pay them extra. I do not think that the Minister will enjoy meeting people across the country who have lost low-paid jobs as a result of the Bill. Moreover, there may be a wages explosion when the Bill is implemented, as better-paid people will demand large increases to maintain differentials. The Chancellor of the Exchequer warns about job losses arising from wage inflation, yet the Minister is introducing legislation that will trigger it.

Ian McCartney (Labour, Makerfield)

The right hon. Gentleman knows that the Government have taken account of economic circumstances, and are introducing the minimum wage sensibly. That is why the overwhelming majority of employers and those involved in British industry support the concept of a minimum wage. Perhaps the right hon. Gentleman will explain an historical point. Is it not the case that, after the Conservative Government abolished the wages councils, removing basic employment rights that ensured minimal standards and a minimal floor in the labour market, unemployment rose to 3 million?

John Redwood (Conservative, Wokingham)

That is not cause and effect. The Minister's attempt to make an historical point has misfired. Unemployment rose to too high a level at one point under the Conservative Administrations because we adopted the exchange rate mechanism policy that was strongly recommended by the Labour party, even though it was a mistake. The Minister and I have often debated that point, and I think that I should be straying out of order if I went further into the matter. We are not urging lower standards. We want better pay and better standards of living. The debate is about how that can be achieved. We believe that it can be achieved by more flexible markets, not by more Government. We are certainly not out to deny workers fair pay; we want them to keep their jobs. In a previous debate, the Minister grotesquely misrepresented my personal financial affairs. I notified him of that privately, in the hope that he would have the decency to correct the record. I live in hope that he will, as it does not do justice to debates in the House to mislead people in such a way. I am grateful that the hon. Member for Hartlepool is in the Chamber to hear this debate, although I should have liked to hear him, rather than the Minister, move the motion. I offer my hearty congratulations on his appointments to the Privy Council and as Secretary of State for Trade and Industry. His arrival at the Department will be welcomed by many, as many people felt that the outgoing President of the Board of Trade—as the job was known—let down British business in a big way, and came forward with a large number of bad proposals, including the proposal for a national minimum wage. Business is desperately in need of a change of policy. I had hoped that the new Secretary of State, who arrives at his Department well briefed on the minimum wage because of his active participation in policy discussions in his previous job, would tell us that he welcomed the Lords amendments, which, as we know from leaked correspondence and from his confessions to The Guardian, are precisely the type of amendment for which he argued when he was Minister without Portfolio. I imagine him arriving at the Department of Trade and Industry, elated at achieving his life's ambition of joining the Cabinet, clutching his model of the dome—where the Secretary of State goes, the dome goes too—but nervously asking why the previous incumbent had had such a short stay. We have all read in today's newspapers authoritative briefings saying that the Secretary of State has arrived to win back the business support lost by the previous incumbent. In particular, the trade union and minimum wage reforms proposed by the outgoing President of the Board of Trade must be modified, said the briefings, in order to win back business support. 6.30 pm Why is the Secretary of State not standing before us to offer proposals that would modify the impact of a Bill that many in the business community think will do more harm than good? Why has he not come to welcome Lords amendments that would give him the very flexibility in his new role that he formerly sought for someone else in all his interesting correspondence? The House may wish to be reminded of what the hon. Gentleman said when he debated these matters from his previous vantage point. In his letter to The Guardian, which explained leaked Government correspondence, he stated: The point I raised in correspondence on this issue with colleagues was a practical one, as to whether the draft Bill as worded allowed ministers sufficient flexibility to refine policy in the light of experience with the actual functioning of the National Minimum Wage. I open my dealings with the new Secretary of State in precise agreement with him. I find myself urging the very case that he urged when he was Minister without Portfolio. The Secretary of State's letter went on to imply that flexibility was necessary in case jobs were lost. He said that he wanted a lower rate of pay for young people—in those days that meant everyone under 25, although the age has come down to 18 in subsequent discussions. As Minister without Portfolio, the hon. Gentleman saw the point that young people, those without skills and those who needed further training, might be thrown out of their jobs if the minimum wage were introduced in the wrong way. He felt that it would be better to allow flexibility so that they could get a decent start on the ladder of opportunity and employment, and, if necessary, top up their inadequate remuneration with benefits. I have often debated that point with the Minister of State, who attacked the previous Conservative Government for saying that low pay should be topped up with benefits. We felt that policy only reasonable, because some rates of pay could not sustain decent family life. Now we discover that the Government have invented a far bigger and more expensive system for doing exactly the same thing—the working families tax credit. On the Minister's own admission, he and the Government propose to subsidise what he calls poverty pay.

Ian McCartney (Labour, Makerfield)

Let us get one thing straight. The previous Government proposed benefits instead of pay. We propose a package of measures that make work affordable. There is an important difference. The previous Government drove down pay, first by eliminating people's entitlement not to be paid below a certain rate through their abolition of the wages councils, and, secondly, by manipulating the benefits system and allowing high levels of unemployment. They drove people to take wages lower than £1 an hour in many cases. That is the legacy that we have had to deal with, and that is why we have introduced a range of measures to make work affordable. The difference between us and the Conservatives is that we want a minimum wage to be part of the package, while the right hon. Gentleman wants no level to be set, and would use the benefits system to subsidise poor-paying employers.

John Redwood (Conservative, Wokingham)

The Minister can rant all he likes, but this Government, like the previous one, admit that there will be people whose pay is not adequate for their family circumstances. We can see from the Chancellor's forecasts that they admit that, even after the minimum wage has come in, large sums will have to be paid as tax forgone or as actual benefits, or as a combination of the two, to top up wages. The Minister protests too much. There is not as much difference between Conservative policy and Government policy as he pretends. Both major parties know that, in a free-enterprise market, not everyone will get adequate remuneration for their family circumstances for all their working lives. It is a duty of a civilised society that taxpayers should top up or contribute to incomes in those circumstances. The row tonight is about whether the Minister of State and his new-found hon. Friend the Secretary of State are taking too many risks with too many jobs. We submit that, without the Lords amendments, the risk is too great. The Minister would lose nothing by accepting the amendments. The Secretary of State would be given the power to make a judgment. If he judged in future that my right hon. and hon. Friends and I were wrong, and that no jobs had been lost, he would not need to make a move. If we were right, however, and the amendment was included in the Bill, it would be easier for him to make the changes necessary to avoid the loss of so many jobs.

John Bercow (Conservative, Buckingham)

My right hon. Friend has helpfully reminded the House of earlier contributions to the minimum wage debate by the Secretary of State in his previous capacity as Minister without Portfolio. Does my right hon. Friend agree that if the Secretary of State has a shred of self-respect, he will speak at the Dispatch Box before the debate ends to explain whether he now believes that there is no justification for exemption from or variation in the rate of the minimum wage by age, sector, region or size of undertaking. What has caused the hon. Gentleman suddenly and spectacularly to change his mind? Why has he not felt it necessary to explain his thinking to us?

John Redwood (Conservative, Wokingham)

It is quite extraordinary that the Secretary of State has not done so. It is even more extraordinary in the light of spinning in the press to the effect that the new Secretary of State will be business-friendly in a way in which the outgoing President of the Board of Trade is admitted not to have been. I trust that the hon. Gentleman did his own spinning. We have not been told whether he remains spin doctor extraordinaire as well as Secretary of State, or whether he will have to rely on others to do his spinning. Whoever did it today, the intention was clear. Downing street has not denied that the Secretary of State is appointed to go to war with his Minister of State, and to overrule him. He is appointed to put a little common sense into the minimum wage and into trade union reforms. The Secretary of State sits there, looking as if he has not a care in the world, grinning benignly, but quite unable to intervene decisively at the very moment at which he has his last chance to improve the Bill to give him the flexibility that the spin doctors tell us he will need and will achieve. Does he really think it amusing that many people may lose their jobs as a result of the policy that he and his hon. Friends intend to rubber-stamp through the House? Has he thought at all about the wise words—on this occasion—of the Chancellor about wages? The Chancellor has spelt it out to all and sundry that, if wages go up too much over the next two or three years, jobs will be lost. For once, I agree with the Chancellor, and I suggest that the Secretary of State might do so, too—a rare event. If the Chancellor is right, what action will the Secretary of State and his colleagues take to make sure that people do not put in a large number of differential pay award requests for those on earnings much higher than the minimum wage? How will he sort out the mess that Labour policies are already creating? There is a huge gap between the rate of increase in private sector earnings—up 16.4 per cent. since 1995, and accelerating under the Labour Government—and public sector earnings that have gone up by only 8.5 per cent. in the same time. The gap is growing wider under the Labour Government. Does the Secretary of State accept that the point will soon come at which public services are short of labour in many parts of the country because wages have fallen too far behind? Will not the minimum wage help to trigger a whole series of differential, catch-up and comparability pay increases as it unravels before us? That will undoubtedly destroy jobs. The golden economic legacy of the previous Government will be frittered away on higher wage inflation, and the minimum wage will partly be the reason. I therefore urge the new Secretary of State to agree with the Chancellor on this matter, to disagree with the rest of the right hon. Gentleman's economic strategy in the name of standing up for manufacturing and business, which are being throttled and killed by the current economic policy mix, and to come to the Dispatch Box before this short debate concludes and say that he still believes what he claimed to believe when he was Minister without Portfolio. I also urge him to be grateful to the Conservative Opposition in another place—for thinking of him and helping him out of the his difficulty by offering him greater flexibility—and to overrule his Minister of State before No. 10 tells him to do just that.

David Chidgey (Liberal Democrat, Eastleigh)

The Minister of State's remarks—I should use a stronger word to describe them—had a touch of "holier than thou" about them as he set out what he considered to be the arguments advanced by the Liberal Democrats. We debated the issues long and hard in Committee and on Second and Third Reading, and while it may be a habit of politicians to rewrite history, it is surprising to find it being rewritten quite so soon. The record clearly shows the arguments that we put forward at great length and with great thoroughness to demonstrate our concern at some aspects of this legislation. The Minister well knows that we have never disagreed in this place about the principle of a national minimum wage. Our argument has concerned how and where it should apply.

Ian McCartney (Labour, Makerfield)

I think that the hon. Gentleman believes in a national minimum age, but does he not accept that it was a gross error of judgment to support a Conservative amendment that would wreck the whole concept? It is one thing to say that one proposes regionalisation and another to put one's name to an amendment that would prevent millions of low-paid workers from getting the wage.

David Chidgey (Liberal Democrat, Eastleigh)

I thank the Minister for that intervention, as it brings me to my next point. Throughout many weeks of debate in this place and the long, or extended, Committee stage—which, on occasion, ran through the night to the next lunchtime—the Government, who claim to have consulted and to consult all and sundry, have refused to listen to any of our arguments. I think that I am right in saying that, throughout those deliberations, the Government accepted only one amendment. Is it surprising, then, that, when our arguments for flexibility and variation were totally ignored, they should have been put forward again in their lordships' House to give the Government one last chance to rethink their views? I can understand the frustration that was felt in the other place, which led it to make us deal with those issues again. One aspect that is so frustrating is that, although the Government claimed to be consulting by setting up the Low Pay Commission, they failed to take on board its full recommendations when it reported. The Government cherry-picked what proposals to accept. As the Minister knows, I asked him time and again, in questions in the House and in interventions, whether the commission would be a fully independent, permanent body, able to monitor and implement recommendations, but he never answered me directly. I am therefore not at all surprised at the frustration that has been felt in Parliament as a whole. I was glad to see the Secretary of State on the Front Bench. Sadly, he has left us already—perhaps he has already found the task a little too demanding—but nevertheless, he will know, I trust, having done his research and read the reports of our debates on the minimum wage in the months that have gone by, that the Liberal Democrats have long argued for variations and flexibility in the introduction of a national minimum wage. He also knows that we are extremely concerned about low pay, as he is, but we are also concerned about employment. Those arguments are on the record—one does not have to rewrite history, as they are there and they are clear. Our arguments have not been confounded by the Government. To summarise, we have long argued that the Low Pay Commission should have the freedom to examine the issues. It should be a permanent body, and the Government of the day should listen to it and accept what it says. That is the true measure of consultation and of understanding the concerns of those who seek and deserve decent wages and those who employ them. I shall continue to press the Government to recognise those points and allow us to ensure that the secondary legislation that follows the Bill, which will presumably become an Act, starts to listen to the people who matter.

Alasdair Morgan (Scottish National Party, Galloway and Upper Nithsdale)

I shall be brief, and I am sorry to take some of the Minister's time for his reply. Tonight we have simply heard a reiteration of what we heard every day in Committee and on Second and Third Reading. The arguments have not changed—we have merely had Conservative attempts to undermine the fabric and principle of the Bill. We did not get much in the way of argument tonight—at least in Committee, we had arguments ad nauseam. Today, we merely had the bald statement that the minimum wage would cause unemployment, and the Conservatives certainly know all about how to do that. The arguments that we are meant to accept would drive a coach and horses through the Bill. They would allow a future Conservative Administration—should this country ever be unfortunate enough to suffer again from that—to destroy the Bill piece by piece in every profession and every part of the country.

John Redwood (Conservative, Wokingham)

Is the hon. Gentleman saying that he disagrees with the Chancellor of the Exchequer when he says that higher wages mean fewer jobs?

Alasdair Morgan (Scottish National Party, Galloway and Upper Nithsdale)

I disagree with the Chancellor about many things, as the right hon. Member for Wokingham (Mr. Redwood) will not be surprised to learn. I certainly concur with the proponents of this Bill that the way to create employment is not by running a sweatshop economy. Low wages do not create jobs; they mean that we will end up with the sort of economy that we should not be seeking. The Government's case would have been even stronger had they grasped the nettle and allied any reduced or second rate for young people to training, instead of the compromise that they produced after the Committee stage. That apart, we must reject the Lords amendments. This Session, many unfortunate amendments have been agreed in the Lords, and these, like most of them, should be consigned to the dustbin.

Ian McCartney (Labour, Makerfield)

The hon. Member for Eastleigh (Mr. Chidgey), speaking for the Liberal party—

David Chidgey (Liberal Democrat, Eastleigh)

The Liberal Democrats.

Ian McCartney (Labour, Makerfield)

Yes, I do realise that there is a difference, on occasions. The hon. Gentleman cannot get away with arguing, as he has done—he has been defeated intellectually and on economic grounds on each occasion—that certain people should get less than others in another region. He did not set out in any detail why a hairdresser five miles inside one region should be paid less than another hairdresser five miles down the road in another region. Secondly, the hon. Gentleman gave no indication of what regionalisation would mean for the benefit system and for those in the regions. It is one thing to table an amendment to put one's case, but it is another to sign up to some of the biggest landowners in Britain and their allies, who come to the House of Lords with no mandate and vote to smash this Bill. The hon. Gentleman cannot have it both ways. He has a responsibility to low-paid workers, and his party failed that test in the House of Lords. Tonight, he has a chance to apologise and to reverse that decision, by joining the Government.

David Chidgey (Liberal Democrat, Eastleigh)

I am grateful to the Minister for giving way, as I know he wants to proceed, but I must remind him that, in Committee, I gave some convincing evidence of the differing costs of employment in different parts of the country. As he knows—it is on the record—independent research has shown the different costs to businesses and small firms of different levels of pay. The argument is sound, and the evidence is there.

Ian McCartney (Labour, Makerfield)

The hon. Gentleman tries hard, but his proposals are flawed. Since the publication of the report by the Low Pay Commission, business after business and company after company have supported the recommendations that it put forward and the Government have accepted. Those organisations and companies range from the CBI to convenience stores and those in the hospitality sector. Across the economy, employers in low-paying sectors support the Low Pay Commission's proposals and want to ensure that they are implemented effectively and fairly. Once again, the right hon. Member for Wokingham (Mr. Redwood) has shown his true colours. He could not bring himself, even once, to be on the side of low-paid workers. He has pontificated since the election. The debate reveals one simple fact—the Tories have learnt nothing from their defeat and nothing about why they were defeated. One reason why people voted them out is that they are the party of the few, and do not give a damn or a whit about the life style of millions of low-paid workers. Thank goodness the right hon. Gentleman is on the Opposition Benches and we are on the Government Benches, because the Government's motion to disagree with the Lords amendment means that low-paid workers will at last get justice.

Lloyds TSB Bill [Lords] (By Order)

Eric Illsley (Labour, Barnsley Central)

I beg to move, That the Bill be now read the Third time. I repeat the declaration of interests that I made on Second Reading: I contribute to an insurance policy with the Abbey Life company, which is now wholly owned by Lloyds, and my wife contributes to a pension with the Target Life company, which has now also been taken over by that company. I shall try to make my comments as brief as possible, in view of the previous business of the House. In December 1995, the TSB Group and Lloyds bank, two of the United Kingdom's oldest and best-known financial services groups, came together in a merger that provides their customers with the largest branch network of any United Kingdom high street banking group and a range of products to match. The promoters' principal intention is to transfer TSB bank customer accounts into Lloyds bank. The Bill will spare 7 million TSB customers the inconvenience of signing forms to effect the transfer. On Second Reading, it was apparent that the main issue surrounding the Bill was one of pensions. In recent months, Lloyds has again corresponded with many hon. Members on pensions issues. With the blessing of the House, I therefore propose to devote my speech to the pensions issues that have been raised, or were raised on Second Reading and have been the subject of exchanges and meetings between hon. Members and the bank. I add, in passing, that the Bill was unamended when it left the Opposed Private Bill Committee. I have two general points to make first in relation to the pension schemes. The TSB Group pension scheme is among the best in the United Kingdom in terms of the benefits packages that it provides, and it is in the top 10 per cent. of UK staff schemes. A comprehensive framework of statutory, regulatory and fiduciary protection for scheme members is in place, which accords with best practice among UK occupational pension schemes. I cannot emphasise too strongly that the issue of pensions is in no way affected by the Bill. The Bill's promoters wish me to reassure the House again that the position of all their pension scheme members remains, and will remain, fully protected. The TSB Group pension scheme, which has been the subject of comment by the group calling itself the TSB Hill Samuel action group, provides one of the best packages in the country. In addition to all that, the promoters are unaware of any pensioners receiving benefits that do not properly reflect their legitimate contractual entitlement.

Edward Leigh (Conservative, Gainsborough)

My constituent, David Ives, who is a senior former staff member of Hill Samuel, has alerted me to heart-rending stories of pensioners who are living on derisory pensions of as little as £1,000 a year. Naturally, that worries me. I wonder whether the hon. Gentleman can today give a commitment, on behalf of the companies, that pensioners who receive such small pensions will be dealt with satisfactorily by way of regular payment, or at least a satisfactory one-off payment.

Eric Illsley (Labour, Barnsley Central)

I assure the hon. Gentleman that Lloyds will deal with that matter. It is part of my speech, so I hope that the hon. Gentleman will allow me to make progress. If he had been present on Second Reading, he would know that the issue arose then and was debated extensively. The bank has given assurances to Opposition Members about pensioners on low incomes and has undertaken to conduct a review, to which I shall refer later. The average annual pension for members of the Hill Samuel scheme is £11,700. The average pension under the TSB scheme is £7,800, which compares with a national average for occupational pension provision of £4,800. Both before and since Second Reading, the promoters have been engaged in active and constructive dialogue with a handful of hon. Members on both sides of the House who have raised pensions-related concerns on behalf of their constituents—as the hon. Member for Gainsborough (Mr. Leigh) has just done. Several hon. Members who initially expressed concerns on behalf of their constituents about the pensions arrangements of Lloyds TSB have now withdrawn their names from the blocking motion against the Bill. I hope that I can provide sufficient comfort to those hon. Members whose names still appear on the blocking motion so that the Bill may be permitted to complete its final parliamentary stage.

Dame Cheryl Gillan (Conservative, Chesham and Amersham)

Sadly, I was not able to be in the Chamber for the Second Reading debate. However, several of my constituents have raised matters similar to that mentioned by my hon. Friend the Member for Gainsborough (Mr. Leigh). One issue is TSB's production of the guidelines. I understand that the guidelines are complex and that the exercise must be comprehensive, but the fact that they have not yet been produced is causing great anxiety to my constituents. Will the hon. Gentleman confirm that those guidelines will be produced? I received an undertaking from TSB today that they will be produced within a week or so, but does the hon. Gentleman have further and better particulars? It is essential that the guidelines are produced as quickly as possible, bearing in mind the undertakings that TSB gave to other hon. Members on Second Reading.

Eric Illsley (Labour, Barnsley Central)

As I said to the hon. Member for Gainsborough, those issues will be addressed in my speech and, if I am allowed to continue, I shall come to them. As I understand it, the guidelines are a matter of negotiation between the Inland Revenue and Lloyds TSB. Once those negotiations have been completed, the guidelines will be available. If I may make progress, I shall address each issue in turn.

Dame Cheryl Gillan (Conservative, Chesham and Amersham)

I understand from TSB that the document is in fact with lawyers and trustees of the TSB scheme. Will the hon. Gentleman take further advice on the issue, as I understand from the company that the matter rests not with the Inland Revenue but with the company?

Eric Illsley (Labour, Barnsley Central)

I shall refer to that matter when I come to it in my speech—if the hon. Lady will allow me to make progress. On Second Reading of the Bill, the promoters undertook to put in place a range of measures and initiatives designed to provide comfort to hon. Members, to their constituents who might have concerns and to any other Lloyds TSB pensioners who might be concerned about their pensions. Lloyds TSB has proceeded as fast as practicable, consistent with achieving a reasonable and sustainable outcome. It has adhered to the time scales to which it committed itself. Equally, Lloyds TSB remains acutely sensitive to the necessity of offering help to needy pensioners where appropriate. Historically, Lloyds TSB has always attached the highest importance to providing additional assistance to needy and elderly pensioners. That is not something new: it reflects Lloyds TSB's responsible attitude towards assisting those who have helped the company in the past. Lloyds TSB provides that assistance through ex gratia payments and a national framework of dedicated pension liaison officers, whose role is to identify cases of hardship and provide appropriate solutions. In this, I understand that Lloyds TSB is unique among United Kingdom companies. The cost of the activity is borne by Lloyds TSB, not by the pension schemes. In a letter to the hon. Members for Arundel and South Downs (Mr. Flight) and for Aldershot (Mr. Howarth) on the day of the Bill's Second Reading, Mike Fairey, the deputy group chief executive of Lloyds TSB, confirmed that Lloyds TSB intended to undertake a comprehensive review of the position of pensioners on low incomes. The promoters said that they believed that the review would take up to six months to complete, and they intend to honour that commitment. I am delighted to report to the House that the promoters have embarked on a detailed and meticulous analysis of pensioner records going back over the past 30 years. As the House will understand, that is a complex and time-consuming process. A dedicated team is undertaking that task to ensure that the promoters can properly and expeditiously reach a view about the options open to them to enhance pension values where appropriate, with the agreement of the Inland Revenue.

Jim Cousins (Labour, Newcastle upon Tyne Central)

My hon. Friend will know that I was present for, and spoke during, the Second Reading debate. I have been informed that the number of very needy pensioners is estimated at at least 700 and that, so far, only 100 individuals have been identified. In the light of the assurances that my hon. Friend and Lloyds gave in good faith on Second Reading, we might have expected far faster progress in dealing with the issue.

Eric Illsley (Labour, Barnsley Central)

As I have said, it is a time-consuming process: a review that dates back 30 years will obviously take some time. The figures cited by my hon. Friend are new to me and they have not been advanced by the promoters. I am aware of the cases that are classed as anomalous—some 200—but I am not aware of those figures. The issue of representations to the Inland Revenue is particularly important. As I have said, everyone will receive his or her full entitlement from the Lloyds TSB pension schemes. Therefore, it may not be possible for the promoters to enhance the pensions of pensioners on low incomes as appropriate and as they would wish without the risk of breaching the normal Inland Revenue rules on maximum allowable benefits from tax-approved pension schemes. I can report to the House that, since Second Reading, Lloyds TSB has held an initial meeting with the Inland Revenue to see what further latitude may be given. The Inland Revenue has said that it is not prepared to discuss specific concessions until the promoters are in a position to show more clearly how they would structure possible enhancements to the pensions of individual pensioners or groups of pensioners on low incomes. As the House can imagine, that will be a lengthy and difficult task. None the less, the promoters remain committed to continuing this important and constructive dialogue with the Inland Revenue, with a view to seeking a positive outcome. It is open to hon. Members to make their own separate and parallel representations to the Inland Revenue—it would be helpful if they did so—to encourage it to review its position. The question of anomalous cases was raised on Second Reading. Lloyds TSB has given an undertaking to the hon. Members for Arundel and South Downs and for Aldershot that it will review any cases of alleged anomalous treatment of its existing and deferred pensioners. The promoters are committed to completing their statement of rules and practices as quickly as practicable, and they intend to publish their review as soon as possible thereafter. To date, they have received 200 letters from pensioners, which represents 0.1 per cent. of the total of 180,000 pensioners. Each case is being investigated as a matter of urgency. I have Lloyds TSB's absolute assurance that as soon as it is possible to provide substantive responses to the pensioners concerned, it will do so. A deadline of 3 September has been set for the receipt of alleged anomalies, which will provide ample time for those pensioners who may have concerns to register them. The promoters have stated clearly and unequivocally that, if Lloyds TSB is unable to resolve satisfactorily any individual pensioner's concerns, they are willing to go with the pensioner concerned to the pensions ombudsman, whom Parliament has vested with the powers to investigate and decide on complaints relating to occupational pension schemes. I am happy to confirm, too, that, if, in such circumstances, the ombudsman were to decline jurisdiction—for example, on the ground of the expiry of the three-year time limit—the promoters would be willing to appoint a legally qualified person with pensions expertise to review the complaint, using precisely the same terms of reference as the ombudsman would have employed. Lloyds TSB has said that it would do so at its own cost. An issue that did not arise on Second Reading relates to a situation in Northern Ireland. As the hon. Member for East Antrim (Mr. Beggs) recently appended his name to the blocking motion, I shall try to reassure him. In addition, the promoters want me to reassure the House and, in particular, those Northern Ireland Members present tonight, that they take seriously the issue of the part-time employees of the TSB of Northern Ireland. The issue relates to the sale of the TSB of Northern Ireland to Allied Irish Banks by the then TSB Group in 1991. As a result of an administrative error, a number of former TSB of Northern Ireland staff who had transferred their pension entitlements to Allied Irish Banks were subsequently and incorrectly advised that they were eligible for benefits to which they were not entitled. I understand that the matter is now in the hands of the pensions ombudsman. The promoters want me to reaffirm that they regret that error and that they will co-operate fully with the pensions ombudsman.

Roy Beggs (UUP, East Antrim)

The hon. Gentleman acknowledges that the TSB of Northern Ireland had more than 100 part-time staff before the merger with Allied Irish. They have been disadvantaged. May I have an assurance that they will benefit from a satisfactory outcome of any review? I am a little surprised that although the matter has been referred to the ombudsman, it has not yet been fully dealt with.

Eric Illsley (Labour, Barnsley Central)

I can assure the hon. Gentleman that Lloyds TSB will fully comply with any decision made by the pensions ombudsman. The issue is outside the Bill, but, in view of the hon. Gentleman's concerns, Lloyds TSB wishes me to raise the matter to try to give some reassurance. If the pensions ombudsman asks Lloyds TSB to reimburse individuals, obviously it will comply with that request. Concern has been expressed on Second Reading and since by a number of hon. Members about the need to ensure that the position of deferred pensioners is fully protected. I am happy to confirm that, on 19 June 1998, the Lloyds TSB board agreed to the appointment of a deferred pensioner, not only to the board of trustees of the TSB Group pension scheme, but to the board of trustees of the Lloyds pension scheme. The promoters are now seeking to put that initiative in place and the trade unions, the retired staff association and the action group have been invited to put forward prospective candidates. The deferred pensioner appointee to the TSB pension scheme will be a management rather than a member appointee because, at the moment, a management position happens to be vacant on the scheme's board, providing the quickest way of appointing a deferred pensioner to the scheme. However, I reassure the House that all pension scheme board members represent the interests of all members of the scheme, not just one narrow sectional interest. The promoters have been keen to ensure that all their pensioners, not just hon. Members, have been kept fully up to date on the various initiatives and activities that they have been putting in place and that I have described this evening. All 180,000 Lloyds TSB pension scheme members have received communications by a variety of means, including pensioner and staff magazines and directly mailed letters. I hope that the House will feel that the initiatives that I have described provide considerable comfort about the way in which Lloyds TSB has sought to address concerns raised by hon. Members.

Gerald Howarth (Conservative, Aldershot)

I hope that the hon. Gentleman will excuse me if I do not participate later, but the Select Committee on Home Affairs is finalising its report. We welcome the board's decision to agree to the deferred pensioner appointment. I know that it has sought to fulfil the undertakings that it gave to me and my hon. Friend the Member for Arundel and South Downs (Mr. Flight), but the hon. Gentleman will know that the action group is concerned that the appointee, whose appointment lies in the hands of the bank, may not be as ruggedly independent as the pensioners would wish. Can the hon. Gentleman assure the House, on behalf of the Bill's promoters, that the bank will appoint a deferred pensioner from management who will be independent? Concern has been expressed that the Banking, Insurance and Finance Union appointments, although BIFU representatives, may themselves be afraid, at a time when the bank is contracting, of being too robust for fear of finding themselves out of a job. Will the hon. Gentleman deal with that?

Eric Illsley (Labour, Barnsley Central)

I am sure that Lloyds TSB will take on board all the comments that have been made about the appointment of the deferred pensioner. As I said, the opportunity arises at this point in time to appoint to the management side of the scheme, simply as a matter of convenience. However, Lloyds asks me to stress clearly that all members of the pension scheme board will act in the interests of all members of the scheme. I am not sure whether that entails anyone acting independently, as the hon. Gentleman would wish, but I am sure that any appointee to the board, because of the rules and duties surrounding trustees, would be obliged to act in the interests of all sides in the pension scheme. Obviously, it remains for pensioners, if they are dissatisfied with the conduct of any appointed trustee, to raise the issue again. I know that Lloyds TSB has given the hon. Gentleman assurances that it will contact him again in future in relation to such matters. The hon. Gentleman will have the opportunity to raise the issue with Lloyds at that stage and to make representations if the appointee does not live up to the assurances given by the bank.

Edward O'Hara (Labour, Knowsley South)

Is the system proposed by management for the appointment of the trustee not a classic example of advise and consent, and an example of a commitment that could turn out to be worthless? Does my hon. Friend not see that there are some of us who are reluctant for the Bill to be given Third Reading until we have a meaningful commitment? The only such commitment that I can think of would be a commitment to appoint a trustee in the future who would genuinely be an elected trustee of the pensioners.

Eric Illsley (Labour, Barnsley Central)

My hon. Friend makes a fair point, which I take on board. I cannot give him that assurance now, because the issue has not previously been raised with me; I can say only that the opportunity arises for a deferred pensioner trustee at this point in time. As I understand it, few pension schemes in Britain have a deferred pensioner trustee on the board. I am sure that my hon. Friend would agree that, in the short time since Second Reading, Lloyds TSB has gone a long way towards meeting concerns expressed by hon. Members and by the action group. We should also bear in mind the fact that we are talking about a Bill that basically implements a merger that took place two or three years ago. The pensions issues, although relevant and interesting to those hon. Members involved, are not directly related to the Bill. As Lloyds TSB has assured hon. Members, those issues can be taken up outside the Bill's passage and in the future. The bank has given assurances to revisit the issue in due course and I am sure that, at that time, it will seek to ensure that any appointee to the board acts properly and that it will take on board the fact that that person has been appointed to look after the interests of deferred pensioners.

Jim Cousins (Labour, Newcastle upon Tyne Central)

Does my hon. Friend accept that, on the night of the Second Reading debate, the decisive event that prevented a vote was the intervention by the hon. Member for Arundel and South Downs (Mr. Flight), who brought to the House a concession made by Lloyds TSB—as my hon. Friend rightly said, such a concession was not covered by the Bill—that a deferred pensioner trustee would be appointed? Is it not the case that, as we debate Third Reading tonight, that still has not occurred?

Eric Illsley (Labour, Barnsley Central)

The bank has undertaken to appoint a deferred pensioner as a trustee. As my hon. Friend knows, Second Reading took place on 20 April. The hon. Members for Arundel and South Downs and for Aldershot no longer oppose the Bill. The hon. Gentleman who originally raised the issue in the House has been satisfied by the assurances given by Lloyds TSB in respect of deferred pensioners. As I said earlier, few pension schemes have a deferred pensioner as a member.

Jim Cousins (Labour, Newcastle upon Tyne Central)

As my hon. Friend knows perfectly well, the question of the representation of pensioners —of people with preserved rights to pensions—as pensioner trustees in the operation of pension funds is one of the most lively and important issues in pension fund administration at present; indeed, it goes to the heart of all the discussions about flexible labour markets and changing jobs in the course of one's life. If this is an opportunity to address the issue, why not do so?

Eric Illsley (Labour, Barnsley Central)

I take on board what my hon. Friend says, but, on 19 June this year, Lloyds TSB agreed at its board meeting to appoint a deferred pensioner trustee in accordance with the wishes not only of Opposition Members but of the Hill Samuel action group; thus the bank has dealt with the issue that was raised.

Roy Beggs (UUP, East Antrim)

Did not the action group seek to have the trustee elected by ballot, rather than appointed by Lloyds TSB?

Eric Illsley (Labour, Barnsley Central)

As I said earlier, the bank approached the trade unions, the action group and the retired staff association within Lloyds TSB for suggestions on how the issue could be dealt with. I am sure that the action group and the association will make suggestions similar to those that the hon. Gentleman has made, to decide who becomes the deferred pensioner trustee in the future. Lloyds TSB has acted quickly. My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) said that there has been insufficient action in the time scale available, but, given that Lloyds TSB has identified a vacancy and sought to fill it with a deferred pensioner trustee, it is moving as quickly as time allows.

Peter Pike (Labour, Burnley)

Has not the bank given way because it knows that, once the Bill is enacted and it starts to rationalise its branches, which is what the merger was all about, there will be many more deferred pensioners? It therefore hopes that, because it has conceded a place for a deferred pensioner, it will get the redundancies, closures and rationalisation through. Is that not what this is all about?

Eric Illsley (Labour, Barnsley Central)

I hear what my hon. Friend says, but, as I said on Second Reading, the bank raised those issues specifically with the trade unions involved. The trade unions had a number of discussions with Lloyds TSB about closures and job losses. I met BIFU to discuss that issue before I even contemplated taking the Bill through the House, because I wanted to be assured on the question of job losses and closures. BIFU assured me that it had received assurances that were sufficient to warrant withdrawing its objections to the Bill. I take on board my hon. Friend's comment about the possibility of further deferred pensioners, but Lloyds consulted the action group, the trade unions and the retired staff association about how the deferred pension issue could be dealt with in the future. The House should be in no doubt about the importance that Lloyds TSB attaches to the need to resolve those matters as quickly as possible, consistent with the complexities of the issues involved. Lloyds TSB is one of the UK's largest and most successful companies. It has a deep historical understanding of its corporate responsibilities. It plays a leading role in welfare-to-work and new deal issues, and supports a wide range of impressive educational initiatives, including the new teacher awards sponsored by the Department for Education and Employment. On Second Reading, I referred to the work of the Lloyds TSB Foundation, which is the charitable arm of Lloyds TSB. It still hands out £21 million a year, which makes it the UK's largest corporate donor. Its work is focused on communities throughout the United Kingdom. I hope that I have been able to point out that the promoters of the Bill have provided ample evidence of their responsible, sensitive and inclusive approach to the issues that have been raised throughout our debates on the Bill. I hope that the House will now allow the Bill to make progress following the merger that took place in 1995.

Edward Leigh (Conservative, Gainsborough)

I asked this question before, and the hon. Gentleman said that he would deal with it. I have been asked to ask him what figure the company has in mind, as a one-off or regular payment, for the worst-off pensioners? After all this time, it should be possible for the Bill's promoters to reassure the House on this matter, because, once the Bill gets a Third Reading, we shall lose all power over it, and thus all power to help the poorest pensioners.

Eric Illsley (Labour, Barnsley Central)

The bank cannot say how much is available until it has agreed with the Inland Revenue what concessions will be available for low-income pensioners. The negotiations with the Inland Revenue will take some time in view of the points that I raised earlier, but the bank is taking the issue seriously.

Howard Flight (Conservative, Arundel and South Downs)

I originally signed a blocking motion against the Bill, but I have subsequently been satisfied that Lloyds TSB has given reasonable undertakings, which were reported on Second Reading and which it is now embarked on honouring. I appreciate the frustration of the action group, and the points made by other well wishers, that the Bill is an opportunity to encourage Lloyds TSB to deal with the problems, particularly those of low-income pensioners. That opportunity will be lost once the Bill has passed Third Reading. May I add to the three areas that have been mentioned my perceptions of the outstanding issues? The issue of poor pensioners has involved Lloyds TSB negotiating with the Inland Revenue. The Inland Revenue has required Lloyds TSB to deal with sample cases of some 600 poor pensioners. The bank has embarked on that task with a staff of 12. It has advised me that it still expects to complete its negotiations with the Revenue within the six-month time scale that it agreed in April. I have corresponded with the Treasury on that matter because I hoped that it could be simplified from on high. Although pension scheme rules must be abided by, some form of blanket guidance should be given to the Revenue when very modest pension incomes are involved. I am satisfied that raising the issue of poor pensioners with the Revenue has not been a stalling mechanism by Lloyds TSB. It has been in earnest and has been negotiating with the Revenue about what can be done. I understand that it cannot give figures about how much it may be able to give, or say what it may be able to do, until it has completed those negotiations.

Jim Cousins (Labour, Newcastle upon Tyne Central)

Why is the hon. Gentleman satisfied and entirely content that Lloyds TSB should have unlimited time within the generous time scale that it gave itself on Second Reading when it has imposed 30 September as the end-date for aggrieved pensioners to make representations?

Howard Flight (Conservative, Arundel and South Downs)

First, the undertaking to address poor pensioners was given in respect of a six-month period. Secondly, the hon. Gentleman has forestalled a point that I want to come to. Lloyds TSB has told me that, although 30 September has been widely advertised by it to invite pensioners who think that they have been treated unfairly and anomalously to write in with their cases, it is not a cut-off date. I am advised that Lloyds TSB will continue to pursue anomalies if it is informed of them beyond that date, which is not a shut-off date, but an incentive for people to submit their cases. I shall deal with my second point at length.

Edward Leigh (Conservative, Gainsborough)

Before my hon. Friend raises his second point, will he please explain what complex tax arrangements could possibly relate to pensions of as little as £1,000 a year, involve such delays and prevent the company's sponsor, the hon. Member for Barnsley, Central (Mr. Illsley), from giving hon. Members some idea of what the one-off payments would be? On such low pensions, surely those matters are not complex at all.

Howard Flight (Conservative, Arundel and South Downs)

They are relatively complex. Pension funds are bound by two sets of rules—those of the scheme itself and the Inland Revenue rules. The Inland Revenue must make sure that any changes to what is paid out, over and above cost of living adjustments, are in line with its rules and with the rules of a scheme and the discretion permitted under it. In respect of the 600-sample survey, I understand that the Revenue wants to make sure that Lloyds TSB's proposals fall within the discretion permitted to the pension scheme. The second issue is anomalies. Lloyds TSB advertised widely to scheme members for people who felt themselves to have been unfairly treated to put their case. The issue has arisen of the guidelines by which such anomalies will be assessed. Lloyds TSB has had to go back over 25 years to examine the policies on anomalies, and two particular areas present problems. First, if a company is sold, what are the pension arrangements for the staff who go with it? The second problem is in respect of individuals who take redundancy or are made redundant above the age of 50. A team of lawyers has worked on producing the guidelines on anomalies, the purpose of which is not to enable anyone to put up a complaint, but to allow those who complain about anomalous treatment to know the rules of the scheme. Such people should be sent of copy of the guidelines. My hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) raised this issue and has been assured by Lloyds TSB that the guidelines will be available by the end of this month, and certainly within a week. I put it to Lloyds TSB that some people may have held back because they did not know the guidelines and that it would be unreasonable for them to have only a month or so to submit their cases. I also asked whether 30 September was a shut-off date and was assured that that was not the case.

Roy Beggs (UUP, East Antrim)

Does the hon. Gentleman agree that it is a serious anomaly that the Irish Bank Officials Association has had to take up the case of 120 former part-time TSB staff in Northern Ireland? Does he also agree that that should be addressed urgently and that any discrimination against them should be resolved?

Howard Flight (Conservative, Arundel and South Downs)

I certainly believe that any discrimination should be resolved. I do not know the details of the problem with the ex-Irish subsidiary, but I understand that the matter has been referred to the pensions ombudsman and believe that, when that happens, an independent and impartial judgment by him is looked for. More widely, it is fair to say that, until this April, Lloyds TSB was somewhat slow in addressing those issues and that the blocking of the Bill was designed specifically to encourage it to get a move on. I believe that that has been the case, in good faith. Although the delays in respect of the two United Kingdom issues are frustrating, I believe that Lloyds TSB is not stalling, but is bona fide. The third issue is the appointment of a representative for deferred pensioners. That practice is extremely important, because the number of deferred pensioners in all pension schemes will grow and they should be well represented. Staff representatives were appointed to the TSB scheme following the passing of the Pensions Act 1995. Three were nominated by the Banking, Insurance and Finance Union, the trade union representative, and one by the retired staff association. As required under the 1995 Act, the appointments were circulated to all members of the scheme, which gave them the ability to object. They did not object; in effect, they endorsed. At present, representatives are nominated by the member representative bodies, but formally appointed by the pension fund trust board. In respect of the Lloyds pension scheme, there is already a voting situation. Although there are arguments that elections are preferable, Lloyds has offered the slot of a management representative to achieve speedy representation of deferred pensioners and has requested that the trade union representatives, the Lloyds action group and the retired staff association propose candidates. The current arrangements for all staff representatives run until 2002—appointments are for five years—but, given that the Lloyds scheme has an elective basis, it may be better practice and more consistent for Lloyds to consider moving the TSB scheme to an elective basis for all member representatives, as well as for the deferred pensioner representative, by that date. Lloyds has not committed so to do, but it has suggested to me that it will consider the argument and thinks that it may be desirable to move to a consistent basis in this matter for the Lloyds and the TSB pension schemes.

Jim Cousins (Labour, Newcastle upon Tyne Central)

I remind the hon. Gentleman that his intervention at a similar point in the debate on 20 April led us to believe that a deferred pensioner trustee would be appointed. From the assurances that he gave, not on behalf of TSB but in a speech similar to this, we had every expectation that that would be the case. Now, that is not the case, and his response is to give us a further set of assurances that some no doubt highly desirable things may happen by 2002.

Howard Flight (Conservative, Arundel and South Downs)

With respect, I do not think that the hon. Gentleman quite understands what I am saying. Lloyds TSB will appoint a deferred pensioner representative: it has agreed to do so, it has asked the representative bodies for nominees and it is waiting to receive from BIFU, the action group and the retired staff association the names of candidates that those bodies would like to be appointed. We are talking about the issue of appointment versus election. If an election process were embarked on immediately, it would still take at least a year to accomplish, because it would involve the period between getting the election organised and the early retirement of existing staff representatives. Lloyds TSB is taking the speediest route open to it to appoint a deferred pensioner representative. I think that, above all, the deferred pensioner representative should be able to discharge his or her responsibilities. While the elective principle is desirable in the round, it is particularly desirable for an individual representing deferred pensioners to know and understand the issues and problems affecting such pensioners in regard to pension schemes. I do not think that it is not in the spirit of, or not in accordance with, the undertaking given by Lloyds TSB for it to agree to the appointment of a deferred pensioner representative, and it is now asking the representative bodies involved to nominate such a representative.

Peter Brooke (Conservative, Cities of London and Westminster)

It is possible that there is a misunderstanding between my hon. Friend and the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins)—although that is not the fault of the hon. Gentleman. The concession given to my hon. Friend on 20 April stated: However, in the light of your helpful suggestion, we will also consider the possibility of the appointment of a deferred pensioner to the board of the TSB pension scheme. I do not know whether my hon. Friend agrees with me, but I think that to have achieved the creation of a job within two months constitutes a pretty honourable fulfilment of what began as simply consideration.

Howard Flight (Conservative, Arundel and South Downs)

I thank my right hon. Friend for making in such a fluent way the point that I sought to make.

Jim Cousins (Labour, Newcastle upon Tyne Central)

It is not the hon. Gentleman's honour that causes me concern; what causes me concern is the progress of events.

Howard Flight (Conservative, Arundel and South Downs)

That is what causes us all concern. My point is simply this. The process of putting a deferred pensioner representative on to the board is being dealt with, and the nominations of representatives is awaited; but there is a separate issue—whether all staff representatives of trustees of the pension scheme should be elected for the purposes of the TSB scheme, as with the Lloyds scheme. Lloyds TSB has told me that it is prepared to consider that for the next round in five years' time.

Edward O'Hara (Labour, Knowsley South)

Would deferred pensioners ever have an opportunity to object to someone who might be selected by management?

Howard Flight (Conservative, Arundel and South Downs)

I understand that Lloyds TSB is not interested in appointing anyone other than someone with the blessing and support of the three representative institutions. It looks to the unions, the retired staff association and the action group to come up with candidates who have the experience to discharge the obligation, and with whom those representative bodies are happy. It is not thinking of appointing its own candidate.

Edward O'Hara (Labour, Knowsley South)

Is the hon. Gentleman assuring me, on behalf of the company, that it will not ignore nominations of deferred pensioners and choose someone else to appoint?

Howard Flight (Conservative, Arundel and South Downs)

I am not a representative of the company, but I asked it precisely that question. It gave me to understand that—as I have said—it looks to a nominee from those bodies, rather than intending to appoint its own nominee, or a nominee with which the representative bodies are not entirely happy.

Edward O'Hara (Labour, Knowsley South)

With respect, "looking to" does not sound as strong to me as a guarantee that that is what Lloyds TSB will do.

Howard Flight (Conservative, Arundel and South Downs)

I repeat that I am not in a position to give guarantees on behalf of Lloyds TSB; but, having been involved in similar situations, I believe that the company wants a deferred pensioner representative who has the full support of staff and the various representative bodies, and has set about organising that. I personally feel confident that that is its good-will intent: I do not think that it wants to appoint some stooge. Although opposition to the Bill has hastened and encouraged discussion of issues that needed to be addressed, I believe that management is honouring the commitment given to my hon. Friend the Member for Aldershot (Mr. Howarth) and me in April. It has taken time to get where we are now, not because of stalling but because of the complexities of the issues. This is an important day, in that, if the Bill is given a Third Reading, the leverage involved will be lost. Hon. Members must make an important judgment when they vote; but I shall vote for Third Reading. I believe that the way to make progress as quickly as possible is to ensure active co-operation between BIFU, the retired staff association, the action group and Lloyds TSB management. They must be encouraged to get a move on, and to implement the commitments that have been given.

Jim Cousins (Labour, Newcastle upon Tyne Central)

I regret that we should find ourselves in such an extraordinary situation. The debate should not have been necessary: the matters that were raised in the Second Reading debate of 20 April should have been dealt with conclusively then, or set on a fair course with, demonstrably, no obstacles ahead. If that had happened, this issue would now be being resolved. Interestingly, during the intervening time other matters directly related to the text of the Bill have remained unclear. For instance, we still do not know how our largest bank network—Lloyds TSB—will deal with the rationalisation of its branches, and the attendant loss of service and employment. We might have hoped for some clarification of that. Pension issues have rightly dominated this short debate. It is not just a matter of detail affecting a particular group of people; it is a matter of fundamental principle. Whose property is the pension fund surplus? Who is the source of the power that should direct pension funds and their distribution? That will be a fundamental issue in other debates on pensions, and it goes to the heart of tonight's debate. As the hon. Member for Arundel and South Downs (Mr. Flight) rightly said, one of the few opportunities that Members of Parliament have is to impose blocks to try to force conclusions, and it is regrettable that we have not been able to do that tonight. Before this debate, it occurred to me to wonder how matters such as this came to be dealt with at board level. Mr. H. R. Freedberg was the leading light in Hill Samuel and was a former director of the TSB. He received £290,461 in compensation for loss of office as a director of the Hill Samuel bank. In addition, £657,000 was paid from a separate fund to enable him to obtain a pension on his earnings that exceeded the maximum pensionable salary allowable under the TSB Group pension scheme. That information is contained in the annual report. Mr. Freedberg did not have to wait. Nobody said to him, "We cannot do anything for you. We have to sort it all out with the Inland Revenue." Mr. Freedberg's treatment contrasts with the cases that have been brought to me and to other hon. Members. I shall not give names. Mrs. M. had a deferred pension of £375 a year for 17 years full and part-time service. Mrs. N., who is a single parent, received no pension for 15 years' service. Miss F., who was aged 83, was below the poverty line after 29 years' service and was sent to the Bankers Benevolent Fund for a hearing aid. According to the annual report, Sir Nicholas Goodison, who was the chairman of TSB, received a payment that was equivalent to 22.5 per cent. of his salary. That was in line with Inland Revenue guidelines. He was caught by the guidelines, but not unfavourably, it seems. That payment was to enable him to contribute to a personal retirement annuity plan. If the plan does not provide Sir Nicholas with a pension at the age of 65 that is equal to two thirds of his final salary, the company has undertaken to make up the difference, subject to a maximum annual payment by the company equivalent to 31.67 per cent. of his final salary. The treatment of some of those who directed TSB affairs, therefore, contrasts with how ordinary pensioners with preserved rights, some of them made redundant many years ago, have been treated. The point of our proceedings is to close that gap and force equity of treatment. The debate should not be necessary because these matters should have been dealt with already.

John Hayes (Conservative, South Holland and The Deepings)

I am impressed by the passion with which the hon. Gentleman presents his case. He has presented the purpose of our proceedings. Will he go further and say how the Government should be involved? He describes cases, and rightly calls for equity of treatment. Surely the Government have a specific responsibility to bring some of the fat cats that he describes into line. I hope that the Minister will comment on that.

Jim Cousins (Labour, Newcastle upon Tyne Central)

I cannot join the hon. Gentleman in saying that the pension review should state how we should address the gap between the pension of Sir Nicholas Goodison who, regrettably, may not achieve two thirds of his final salary even with the extra top-up and may need a further top-up from the company equivalent to 31.67 per cent. of his final salary, and the pensions of others. Sorting out his problems should not be a priority for the Government in considering future stakeholder pensions. Perhaps, though, he provides some kind of benchmark, which I understand is the art term that we are allowed to use when discussing such matters, for judging the treatment of other pensioners. It was clear on 20 April that legal action was in hand to protect members of the Irish Bank Officers Association in their representations on behalf of former part-time employees of the merged bank. The House was not told about that at the time and the matter came to light only within the past few days. It is regrettable that it, too, has not been addressed. Lloyds TSB has not stated the figure that it has in mind for a one-off payment to the worst-off pensioners. Some hon. Members, myself included, have been told the likely sums. Perfectly properly, we have been asked not to share that information with the House. However, by now the suggestions and figures should be public knowledge so that the beneficiaries know where they stand. We still do not have guidelines. We are told that the matter is complicated and that teams of lawyers are working on it, but we are debating one of the greatest of our financial institutions. In heaven's name, if it cannot produce guidelines for a relatively small section of its business and a small number of people over such a period, that is a poor comment on the institution.

Peter Brooke (Conservative, Cities of London and Westminster)

It has been my understanding, although I realise that the hon. Gentleman has been in frequent touch with the bank, that the guidelines deal with the manner in which the pension scheme has evolved over the past 25 to 30 years, and that they would enable shareholders to determine whether they have sustained anomalies on which they should claim. That is quite different from the review of low-income pensioners.

Jim Cousins (Labour, Newcastle upon Tyne Central)

Perhaps significantly, the right hon. Gentleman speaks of shareholders when he means pensioners. That confusion is significant because, in a sense, it goes to the heart of our debate.

Peter Brooke (Conservative, Cities of London and Westminster)

I am grateful to the hon. Gentleman for picking up a slip of the tongue, if I made one. However, he did not answer my question.

Jim Cousins (Labour, Newcastle upon Tyne Central)

No, I did not—and I made a brief debating point for which I hope the right hon. Gentleman will forgive me.

Edward Leigh (Conservative, Gainsborough)

Will the hon. Gentleman give way?

Jim Cousins (Labour, Newcastle upon Tyne Central)

Of course.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. The hon. Gentleman must deal with one intervention before he starts another.

Jim Cousins (Labour, Newcastle upon Tyne Central)

I accept your guidance, Mr. Deputy Speaker. I shall deal with the guidelines. There are a number of pension schemes with different rules. Although pension schemes have not come together, the organisations that support them have joined together over the years. I do not dispute that there may be some intricacies in that, but it is extraordinary that one of our greatest financial institutions cannot resolve these matters even though they have been brought to its attention over many months. I accept that there may be difficulties, but they should not require so much time to resolve; and still we have been given no sign of when they might be resolved. That is extraordinary.

Edward Leigh (Conservative, Gainsborough)

Interestingly, the hon. Gentleman said that he had been given some intimation of the one-off payments. He rightly added that he could not share that information with the House. Much has been made of the fact that negotiations are continuing. However, it is not clear why they should be so complex. The Treasury has relaxed its rules on augmenting low pension schemes and presumably it would save money if people could be removed from social security. Could the hon. Gentleman put pressure on his Treasury colleagues to speed matters up; and could he ask why there has so far been no answer?

Jim Cousins (Labour, Newcastle upon Tyne Central)

The hon. Gentleman makes a fair point. It is extraordinary that we have had no information on what the sums might be. Such information would illuminate discussions with the Inland Revenue. Evidence from correspondence shows that the Revenue wishes to resolve this matter. From the Government's standpoint, this is an absurd situation. TSB pensioners are receiving income support and other state benefits, whereas, if this deal were struck, they could be receiving pensions from the pension fund to which they contributed earlier in their working lives, and the Department of Social Security would not have to meet their expenses. Of course, the Government will not stand in the way of a deal, and there are clear signs that the Inland Revenue is willing to co-operate. The reference to the Inland Revenue is, frankly, an obfuscation. Even if there were continuing administrative difficulties with the Inland Revenue which might not have been resolved, I do not understand why an intimation could not have been given to the pensioners who were the likely recipients. They would then be able to make representations, if they so chose, through their Members of Parliament and to the Inland Revenue.

Peter Brooke (Conservative, Cities of London and Westminster)

The hon. Gentleman picked me up on the use of the word "shareholder." If the dilemma for the bank is whether ex-gratia payments should be made from shareholders' funds or from the pension fund, which, in turn, is affected by the Inland Revenue's reaction, it seems reasonable for the bank to wait and see what the Inland Revenue's view is. The pensioners might be a great deal better off if the money came from the pension fund.

Jim Cousins (Labour, Newcastle upon Tyne Central)

The entirely theoretical point that the right hon. Gentleman makes cannot be resolved until actual figures are known by actual people, who can then arrive at a decision, by themselves or with their advisers, about the proper course of action. The House is entitled to argue that the figures should have been known. On Second Reading, the House was told that they would be known very shortly. We now find, three months later, that there are still no figures. I am looking at the clock, as I do not want to test the patience of our new regime in the Whips Office unduly. I shall therefore refer quickly to the matter of the deferred pensioner trustee. That issue has been dealt with extensively in the debate, including in my interventions and those of my hon. Friend the Member for Barnsley, Central (Mr. Illsley). Plainly, we are not satisfied, as the matter could not have been dealt with in good faith. We accept that it would have been a management pensioner trustee: that would have been the form. None the less, it would have been possible to achieve, even within that form, far greater progress towards the selection of an individual, on the basis of consensus, who would have been satisfactory to all the interests concerned. That would have met the needs of Lloyds TSB perfectly properly, because it would have contributed one of its management trustee places. I do not deny the necessity to satisfy Lloyds TSB on that point. The hon. Member for Arundel and South Downs referred to the assurances given. I do not seek to burden him with an obligation to deliver on those assurances, but it is extraordinary that further progress cannot be made. To whom do these pension funds belong? That is the fundamental point. How can we protect the interests of pensioners with preserved rights who may have been part-time employees for only part of their working lives? Such people will become increasingly common in the pension fund discussions of the future. Lloyds TSB, which is a great financial institution, may be thoroughly irritated by the fact that it has to go through a parliamentary procedure during which it is criticised for the delays—I am sure that it feels a certain loss of dignity—but the House is entitled to say that these are important principles, and that before we pass this legislation we should be entirely satisfied. If we cannot be completely sure that everything has been done and dusted, we should be sure that it is clearly on course to be done and dusted. Sad to say, that is not the position tonight.

Vincent Cable (Liberal Democrat, Twickenham)

I shall just say a few words, because many of the key points have already been made, particularly in the speech of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) and in some of the exchanges. I spoke against the Bill on Second Reading, and for a while acted as a block on it. I have been briefed and counter-briefed by the two parties, and, like many hon. Members, I have sometimes found it difficult to judge what is fair and reasonable in the progress that has been made. I have some residual concerns, which have been increased by the fact that the public's interest in this matter—especially my constituents' interest—grows as the delay continues. Until Second Reading, I had received no representations from constituents: I was passing on thoughts from colleagues' constituents. However, within the past 10 days, two difficult cases have shown the importance of the delay that the House has achieved. The issues have already been dealt with very well, but a few points have not been made. On low-income pensioners, the hon. Member for Barnsley, Central (Mr. Illsley) summarised the state of discussions with the Inland Revenue. It is not clear why, in other cases, such as that of British Coal staff, it was possible to achieve considerable enhancements of benefits for low-income pensioners with the full support and co-operation of the Inland Revenue.

Eric Illsley (Labour, Barnsley Central)

The hon. Gentleman referred to the enhancements of benefits under the British Coal superannuation scheme. They were within the rules of the scheme. The Government received a half share of the surplus of that scheme because, at that time, they owned the surplus. They were the employer, having taken over from British Coal after privatisation. Those enhancements to pensions were made under the rules of the scheme.

Vincent Cable (Liberal Democrat, Twickenham)

I thank the hon. Gentleman for that clarification. One category is particularly disadvantaged by the current arrangements and needs some attention. We are talking not only about low-income pensioners but about older pensioners, particularly people who retired before 1972, which was the crucial date. Some of those people apparently have no pension whatever. A significant number of them need particular attention, and I should be grateful if the hon. Member for Barnsley, Central clarified that point when he replies to the debate.

Howard Flight (Conservative, Arundel and South Downs)

>: This is a much bigger issue than merely Lloyds TSB. It was only in 1973 that the law changed to require the preservation of pension rights. Most company pension schemes and individuals employed by government in its various forms who left before pensionable age suffer from this problem. The question is whether the big issue of preserved rights pre-1973, which applies to all pension schemes and is separate from the more particular issues, can and should be addressed.

Vincent Cable (Liberal Democrat, Twickenham)

Surely the bank had the option of dealing with this issue generously—and had the surplus to do so.

Jim Cousins (Labour, Newcastle upon Tyne Central)

It is perfectly true that the law changed in 1972, and some companies have addressed the problems. Lloyds TSB, with a pension fund surplus of many hundreds of millions of pounds and a pension contribution holiday of 20 years, has elected not to do so.

Vincent Cable (Liberal Democrat, Twickenham)

That is precisely the point. Secondly, there are the anomalies. The bank argues that it had a limited number of anomalies, and that it is grinding through them and taking them seriously. There is a circularity in the argument. The banks ask, "If there is such a big problem, why aren't there more anomalies?" The trouble is that many of the people who are on the threshold of difficulty do not know whether they are the subject of an anomaly. That is why there is a search for clarity and a need for guidelines. Unless there are guidelines, many of the anomalies will not surface because people are not conscious of them. Although I accept what the right hon. Member for Cities of London and Westminster (Mr. Brooke) said about the inherent difficulties of producing guidelines and about the long and complex history involved, if we are to get to the bottom of the matter the bank must be a little more forthcoming. A third point, which we have debated across the Chamber, is the deferred pensioner representative. The issue is no longer the fear that the bank may put up a stooge, but that it may put up someone who, although he may act independently, has been nominated and can therefore be removed if he asks awkward questions. Several hon. Members have made that point. The election process, although more cumbersome, is not only more democratic but would help to lance the boil and deal with the bitterness that lies, at least in part, behind the argument. My final point relates to what the hon. Member for Newcastle upon Tyne, Central said—it is partly an issue of principle and partly a point of law—about members of the fund having an interest in the surplus and how that interest is to be guaranteed. I understand that legal judgments have already been made which define the extent to which members of pension funds have an interest in the surplus, but it is difficult for pensioners to pursue that. This is not an academic point; it is a legitimate one, because the bank may make new acquisitions and changes. There are press reports, which may be false, to the effect that the bank has been circling around the Nationwide building society. If there are to be changes that will have a major impact on the pension scheme and its surplus, it is important to make the interest that members have in the fund more concrete. As a new Member, I very much value the opportunity to exercise a limited but important power, which in this case has achieved a substantial objective by bringing the two parties closer together and advancing the cause of pensioners—although I am not fully satisfied that everything that could be done has been done. However, we have achieved something from our combined efforts.

Edward O'Hara (Labour, Knowsley South)

I shall be brief and try not to cover too much of the ground that has already been covered. I declare a sort of interest as I have been a customer of Lloyds bank for almost 40 years and I have many accounts and arrangements with it. My concern is for my constituents who are pensioners. It has been said that the question overhanging Third Reading has provided a momentum to the resolution of certain issues. However, as my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) pointed out, there is all the difference in the world between having assurances—no matter in how much good faith they are given—and having matters buttoned down. I am not satisfied that, if the Bill is given a Third Reading, the momentum will not cease; I am not satisfied that the assurances, commitments and concessions will come to fruition. Much hangs on the granting of Third Reading tonight. The two issues interrelate and I do not think that I need to say more about the issue of the poor pensioners and the anomalies that must be addressed. I would prefer to be able to say that they have been addressed, rather than that they are being addressed, because that would make all the difference in the world. The pension fund is very buoyant—£1 billion—with 20 years' contributions stretching up to about 2015. The treatment of the victims of anomalies and the poor pensioners is dependent on the future health of the fund. No one is suggesting that the group will raid the fund, but it is vulnerable to weakening and dilution through being merged with the funds of companies that are taken over by the group. There is also concern that the TSB pension fund, in particular, may be managed in the interests of the shareholders rather than the pensioners. That is why the issue that I have raised several times during the debate is crucial. The pensioners have been assured that their interests are protected under the 1995 Pensions Act. However, if they wish to defend their interests in law, that may involve litigation that is far beyond their means, especially if it is resisted by the bank, with all the resources at its disposal. Therefore, it is crucial that their interests are protected by the trustees. They cannot be confident of that if the trustees are management appointees and current employees—who, as has been suggested by some hon. Members, might feel vulnerable. That is why the appointment of the pensioner trustee is so important. I shall not repeat my continuing concern about the basis on which the pensioner trustee is to be appointed. I have made my views clear a number of times during this debate. I do not feel able to vote for Third Reading until all the assurances are much more buttoned down, rather than given in good faith.

Edward Leigh (Conservative, Gainsborough)

Like other hon. Members, I come to the debate because constituents have raised the issue with me. I was chided by the hon. Member for Barnsley, Central (Mr. Illsley) for not having taken part in the Second Reading debate. I apologise for that, but just because someone does not take part in Second Reading does not mean that he or she is not entitled to take part in the Third Reading debate—especially when constituents have raised the issue. I come new to these matters, like many hon. Members. We are dealing with a large company, and a large and buoyant pension fund of some £1 billion. I was horrified by the appalling hard luck stories of people who had given a lifetime of service, but were receiving derisory pensions, which is why I decided to come here and try to put the company on the spot. As has been said, this is our last opportunity to do that. It is an important issue, especially for Conservative Members, because although we believe in capitalism and in management being given adequate rewards—I do not want to follow the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) in criticising the top management because no doubt it has been instrumental in building up a successful company and fund—we also believe in the principle of morality. We believe in looking after people who are not part of the top management and who have very little power to wield, but who look to us to protect their interests. It was the appalling stories that provoked my interest in the matter. I came here tonight with a simple question—will the hon. Member for Barnsley, Central explain the nature of the one-off payment? When he said that that was a fair question, but that difficult negotiations were continuing with the Inland Revenue, I was satisfied. I assumed that those were terribly complex matters which would delay the Treasury for some time. However, the more that I have listened to today's debate, the less I am convinced by those arguments. The Second Reading debate was on 20 April; we are now at the end of July. I have been informed that the company went to the Inland Revenue only in June to discuss the matters. I am worried that there has been some dragging of feet, although I may be wrong about that. Perhaps the hon. Member for Barnsley, Central can reassure me that that has not happened, and that the company immediately started discussions once the commitments were given in the Second Reading debate. Why did the company even have to wait for the Second Reading debate before starting discussions? Surely the matters must have been considered long ago. Surely Parliament has been considering the Bill for the best part of a year. Why—at this last gasp—are we still waiting for the figures? The hon. Member for Newcastle upon Tyne, Central has informed the House that he and other hon. Members have been given some intimation of the figures. I have been told by those who briefed me on behalf of the action group that my hon. Friends the Members for Aldershot (Mr. Howarth) and for Arundel and South Downs (Mr. Flight) also have been given some intimation of them. Hon. Members on both sides of the House now tell us, "Of course we cannot share those figures with you." Why is that so? Although I realise that it would be invidious to mention individual cases—people by name, what they receive now and what they might receive in future—I can discern no clear reason why the figures should not now be shared with the House. We are debating the Bill's Third Reading. Once the Bill is passed, we will have no more power over those matters. Why cannot the information be shared with us now? Why have the negotiations been so complex? I am very conscious that the Paymaster General is in the Chamber and presumably will be replying to the debate. He thoroughly understands the matters that we are debating and is well-respected for that knowledge. As I said in earlier interventions, we are talking about pensioners receiving very small sums under fairly easy-to-understand schemes. We are talking not about great complexity, but about saving public money by getting people off of social security. The British Coal point was made by the action group in its briefing for hon. Members. The hon. Member for Barnsley, Central dealt with that point, saying that the British Coal scheme was a different type of scheme and that the rules were, therefore, not so complex. However, surely there must have been many other schemes that are similar to the one that we are debating now. Surely similar negotiations have been held in which it has been fairly easy to resolve similar matters. It is very important that, when the Minister replies to the debate, we should put him on the spot and discover who is delaying a resolution. I have been told that, when Lloyds TSB was asked whether Inland Revenue consent was the only condition precedent to an additional payment for the worst-off, it was stated that it was not, and that the Lloyds TSB. representative—the deputy chief executive, Mike Fairey—was equivocal about what other issues he had in mind. Either the company should have been able to give us the figures today, but for the fact that the negotiations were continuing, or there have been other reasons why they cannot be given to us. One of those must be right. If there are other reasons, they have not been shared with the House today, which is greatly disappointing. I very much hope that, in the short time left in this debate, we shall hear from the Minister that the negotiations are progressing satisfactorily and that the Treasury is not in any shape or form delaying them. If the hon. Member for Barnsley, Central is allowed to reply to the debate and catches your eye to speak, Mr. Deputy Speaker, I hope that he will be able to give us some information—before we pass the Bill into law—about how those very worthy people who have given a lifetime of service can be helped by the company.

John Hayes (Conservative, South Holland and The Deepings)

My hon. Friend the Member for Gainsborough (Mr. Leigh), as ever, has been excessively modest and excessively moderate. He was really saying—I think that this needs to be said, as the context of the debate is important—that, as the Minister knows perhaps even better than my hon. Friend, unbridled and unfettered capitalism is a harlot. The debate is really about small, ordinary people against the big battalions. The House is at its best when it articulates the needs of small, vulnerable people. What greater or more noble goal can there be for hon. Members than to articulate the needs of the most needy and the case of those who are least able to make their own case? Surely that is the most noble role to which hon. Members can aspire. There have been unacceptable delays in the matter. I join the debate not because of a specific interest in banking or mergers, but because of a particular interest in the needs of individuals who have approached me, as they have approached hon. Members from both sides of the House, with very painful stories. Hon. Members on both sides of the House have told us some of those individuals' very distressing stories, which—although it would be wrong to repeat them in detail—have moved many hon. Members to take a specific interest in a subject in which otherwise they might not have taken such an interest. Some specific questions have to be asked. It is all very well to talk about the difficulties of implementing ex gratia payments—I respect the judgment and knowledge of my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke) on the matter—but some notional figures or estimates could have been given and a firm timetable could have been offered. Such information has not been forthcoming since the Second Reading debate. The Government have a critical responsibility in the matter. I ask the Minister to give three specific assurances.

John Hayes (Conservative, South Holland and The Deepings)

It would have been helpful if the hon. Gentleman had waited for me to articulate the specific points before he stated the Government's responsibilities. Ministers do have a responsibility to give us a view on the more general issues aired by the specific matter dealt with in the Bill: ownership of pension funds.

Eric Illsley (Labour, Barnsley Central)

rose—

John Hayes (Conservative, South Holland and The Deepings)

I shall not give way again, because I want to speak only briefly. It would be surprising if the Minister did not deal in a reply with this general matter, which has been mentioned by so many hon. Members speaking in the debate. Who is responsible for the delay? We have heard about protracted negotiations with the Revenue, but why were those negotiations so protracted? As my hon. Friend the Member for Gainsborough said, one might have thought that the negotiations should be relatively straightforward for some of the individuals involved. We certainly deserve more than the brush-off of claiming that there are private matters upon which the Government should not take a view. We have to receive from the Minister at least some commentary and observations. I am not suggesting that the matters are directly within his competence, but I certainly presume that he will want to make known his and the Government's views on them. If he does not do so, it will not bode well for the Government's reputation among the many pensioners who are very appropriately and reasonably seeking redress and answers to queries. I come to the debate in that spirit, and hope that the assurances that various hon. Members have given will come to fruition. I hope also that we will use this matter as an opportunity to explore the wider and broader issues. I hope that the matter throws some light on those issues, and that the problems will not be repeated in similar situations.

Desmond Swayne (Conservative, New Forest West)

I come to the debate late. I must confess that my eye has not been on this ball over the past few months and that my mind has been exercised by other issues. However, I have been alerted to the problem by constituents in recent weeks. As a consequence, I have been in correspondence with Lloyds TSB and had conversations with colleagues on the issue. I have found this evening's proceedings enlightening. However, I am still in the dark on a fundamental question. I hope that the hon. Member for Barnsley, Central (Mr. Illsley) and those on the Front Benches may cast some light on it. What great injustice is to be avoided by giving the Bill a Third Reading and what great public good is to be lost—what opportunity is to be missed—if the Bill is denied a Third Reading?

Eric Illsley (Labour, Barnsley Central)

The issues that we have discussed on pension enhancement and anomalies will not be addressed. If the Bill is not passed, what incentive is there for Lloyds TSB to address those issues again?

Desmond Swayne (Conservative, New Forest West)

I am thoroughly mindful of those issues. I want an explanation of that and of what is to be achieved by the Bill. I am in the dark about the primary purpose of the Bill. I should like that to be explored in the winding-up speeches.

Sir Geoffrey Johnson Smith (Conservative, Wealden)

I do not want to go over the ground that has already been covered expertly by hon. Members on both sides. I do not have the deep knowledge of some on the problem. I have been alerted by a distinguished constituent who was a public servant for many years and, on his retirement, became an employee of Hill Samuel. He has written to draw my attention to his case and that of a woman who served Hill Samuel in a more humble capacity for more than 20 years. While serving with Hill Samuel, the gentleman paid the maximum allowable amount of additional voluntary contributions. When he retired, he was advised that those AVCs should be used to ensure that his pension was index-linked. As his Hill Samuel pension has been upgraded to meet the cost of living increases under the terms of the scheme, it has not been necessary for the trustees to draw on his accumulated AVCs. He considers that he was wrongly advised when he retired at the end of 1991 and requests that the mistake be rectified. It seems straightforward to request that the AVCs should be used to increase his pension, as intended. My constituent understands that those who retired from Hill Samuel received enhancements to pensions. He has written more than once to find out the basis on which the enhancements were made and why he was not included. That is a legitimate question. Like many who have spoken in the debate, he does not know the reason for the delay. My constituent's secretary worked at Hill Samuel for 20 years until she was made redundant in 1992. She received a lump sum, but no pension, because she had not reached the age of 50. I do not have the figure of the lump sum, but my distinguished constituent believes that it was not generous, given her long and faithful service. He wants to know why the initial figure that was quoted to her orally was later reduced for no apparent reason. The lady in question has been unable to get a satisfactory answer. Those two cases—one involving a gentleman who received a pension from his previous service and then another one for which he paid AVCs; the other involving a lady who was employed in a more humble capacity—show that something has gone wrong with the company's pensions.

Peter Brooke (Conservative, Cities of London and Westminster)

I declared my interests on Second Reading. I shall not declare them again. We agreed on Second Reading that the Bill did not have specific relevance to pensions, although we were allowed to discuss the issue. The concession letter of 20 April to my hon. Friends the Members for Aldershot (Mr. Howarth) and for Arundel and South Downs (Mr. Flight), to which frequent reference has been made, was an imaginative lubrication to the Bill's passage, but it did not speak to the tone and text of the Bill. I should like to add a personal note to the comments of the hon. Member for Twickenham (Dr. Cable). He and I blocked Third Reading initially with a cry of, "Object." In that respect, we have played some part in bringing this evening's proceedings about. I would have dwelt on the issues raised by the hon. Member for East Antrim (Mr. Beggs) had he still been here. I have taken the trouble to verify the actuality in the case of the part-time former employees of TSB in Northern Ireland, and satisfied myself that the company has behaved properly. I shall not detain the House on that. We are addressing three issues, relating to those on low incomes, those with anomalies and the deferred pensioner trustee. I shall dwell on each of those briefly. Like many great companies, Lloyds TSB has a team, consisting mostly of former employees of the company, who go round visiting pensioners to verify that their conditions are satisfactory. The team reports back on the conditions of those pensioners. Before the Hill Samuel action group was created, Lloyds TSB visited the Inland Revenue to verify whether there were ways in which it could augment those pensions, provided that that augmentation would not be treated simply as a substitute for social security payments, which would be reduced pan passu with the extra pension. The Inland Revenue politely showed the Lloyds TSB team the door, and said that no action could be taken. The visit of Lloyds TSB to the Inland Revenue in June, which was brought forward, was a response to the commitment to conduct a full review of all those on low incomes. Lloyds TSB said that that would take six months. We were told on Second Reading how long the review would be. With the debate taking place on 20 April, it would go through to 20 October. The Inland Revenue said that there was no point in discussing the issues unless Lloyds TSB came back with its proposals. The Revenue said that it could not discuss anything without specific proposals to consider. We may feel that fate is being unfair and the Inland Revenue is being unimaginative, but Lloyds TSB is doing its best to deliver in line with the Inland Revenue's request. That request goes back to the issue of ensuring that what is given by Lloyds TSB is not taken away by the Treasury to return to the Department of Social Security. I may be the only Member speaking tonight who does not know the figure that Lloyds TSB has in mind, so there is no need for anyone to intervene on me to ask what the figure is. I see the hon. Member for Barnsley, Central (Mr. Illsley) saying that he is in the same position. I should tell those who are concerned that the process should be accelerated that, when Lloyds TSB is in a position to know the outcome of its review, it will in all courtesy want to discuss that with the unions that represent 58,000 people before going public on it, so that the issue is agreed. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) said that people have to know what they might be given before they can make up their minds, but that is not the issue. The issue is what the Inland Revenue rules will be. Until Lloyds TSB knows the Inland Revenue rules, it cannot come forward with a proposition, because it does not know from which pocket of its coffers it would be paying. As for the anomalies, there has been some criticism about the length of time it is taking to produce the guidelines, although some charity has been exercised in recognising the complexity of the matters concerned. One problem is exactly the same as exists in the context of pensions mis-selling: when pensions were originally granted or arranged, the law of the land did not require the holders of pension funds to keep much of the information that is now required. An enormous amount of archival work therefore needs to be done to examine what circumstances applied to particular individuals at the time. That affects the time it takes to produce guidelines. My best understanding of the timetable for the issuing of the guidelines marches with that of my hon. Friend the Member for Arundel and South Downs—that, although they are now before the lawyers, they still have to be run in front of the chairman of the pension fund. We are talking about weeks, and I am confident that, although 30 September is the deadline by which people should raise their anomalies, if Lloyds TSB fails to produce the guidelines before the middle of August so as to allow a further six weeks for anomalies to be brought forward, we can expect the company to be flexible. However, I have no direct authority for saying that. We are all saying that Lloyds TSB is being impatient in terms of the deadlines that it is setting, but it is worth reminding the House that the Hill Samuel action group first approached the bank in November, but did not produce details of a single anomaly before Second Reading. On the Friday—17 April—it sent through the mail a list consisting of a couple of hypothetical anomalies that Lloyds TSB might wish to consider, but those did not reach the company until after Second Reading. It therefore cannot be said that, in the period leading up to the proceedings on the Bill, the action group was like Blucher rushing towards the field of Waterloo. By 15 May, two anomalies had been submitted; by 25 June, 80 had been supplied; and I understand that, by yesterday, there were 200. The number is accelerating, and I have no doubt that Lloyds TSB will have a lot to look at by the end of September. The Hill Samuel action group said that it had written to its members on 11 May because Lloyds TSB would not take action itself. However, to be fair to Lloyds TSB, in the concession letter, with reference to what was agreed with my hon. Friends the Members for Arundel and South Downs and for Aldershot, it said: We agreed that the HSAG"— that is, the Hill Samuel action group— would be asked to write to its members requesting those who consider there to have been anomalies in their treatment, to write to a designated person at Lloyds TSB setting out full details of their concerns. So the basis of the concession letter was reasonably straightforward. Lloyds TSB had a lot to do in sending circulars to everybody, and by 15 May it was finalising our communications programme to 180,000 members of the pension schemes within the Lloyds TSB Group". I am going over ground that the hon. Member for Barnsley, Central sketched. Over the next month or so, the bank said, it would be communicating with pensioners through the Group pensioner magazine Stable Companion, to members of staff through the staff magazine Frontrunner, and to deferred pensioners with their annual statements which are due to be dispatched shortly. I find that quite a comprehensive programme to have mounted in 60 days.

Jim Cousins (Labour, Newcastle upon Tyne Central)

I should like to be clear in my mind what the right hon. Gentleman is saying. I accept that again, as on 20 April, assurances are being given by Conservative Members, no doubt in perfectly good faith—but not on behalf of Lloyds TSB itself. Is the right hon. Gentleman telling us that Lloyds TSB will circulate all its pensioners, produce the guidelines by the middle of August, and, if the guidelines are not produced by that time, the 30 September date will be suspended—and that, in any event, if people come to light after 30 September, their cases will be individually dealt with in good faith?

Peter Brooke (Conservative, Cities of London and Westminster)

As always happens with such a Bill, the only person who can give an assurance on behalf of the promoters of the Bill is the hon. Member who is handling it. However, I, like various other hon. Members in the Chamber tonight, including the hon. Member for Newcastle upon Tyne, Central, who has been assiduous in his attention to the issue, have been involved in quite a lot of hard work on behalf of people who have written to us—a fair number have written to me—and in terms of conversations with the bank. In the end, we have to make our best judgment of what will occur. In the specific terms of the question that the hon. Gentleman has asked me, the sending of circulars has already occurred; as I said, it was foreseen on 15 May. I also said that my own reading was that, if the guidelines were delayed beyond the middle of August, the 30 September deadline would slip.

Eric Illsley (Labour, Barnsley Central)

On behalf of the promoters, I can give an assurance in the terms outlined by my hon. Friend the Member for Newcastle upon Tyne, Central.

Peter Brooke (Conservative, Cities of London and Westminster)

I am extremely grateful to the hon. Gentleman for that intervention. Interventions are not always those that one would have sought, but the hon. Gentleman's intervention on this occasion was almost divine. I shall now deal briefly with the deferred pensioner trustee. I received the first letter on this subject on 23 March from a constituent of mine who was once a household name in corporate finance. He wrote me a long and reasoned letter, including the words: Our primary concerns are (1) to (4)", after which he listed four concerns. He was writing on behalf of the action group, and, at that time, his primary concerns did not include a deferred pensioner trustee. Therefore, the conversation that my hon. Friend the Member for Arundel and South Downs had with Lloyds TSB on the day of Second Reading, which produced a suggestion by Lloyds TSB that it would consider the appointment of a deferred pensioner trustee, was somewhat incidental. It was part of the lubrication that I have mentioned, but it was not a central part of the Hill Samuel action group's original proposals. I finish with a further quotation from my constituent, who wrote to me on 5 May: It is a very good scheme, and well run: but inevitably with the benefit of hindsight, some people are not properly covered—and they are often the ones who don't like to complain. That, and our concern about such people, is exactly the issue with which many hon. Members have been engaged in our debates. As I said earlier, with the hon. Member for Twickenham, I played a fulcrum role. Indeed, I took longer to remove my block than he did his. I am now satisfied that the company will honour its obligations. For what it is worth, despite my role in the blocking motion, I am, as I said on Second Reading, the Member of Parliament for the constituency in which the headquarters of the institution are situated. In that capacity, I shall myself be concerned that the commitments be met, and I would be astonished—not least in view of the amount of coverage that the events have had over the two debates—if a bank of such a standing did not meet those commitments in a manner of which all of us who have taken part in the debates can be proud.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I did not intend to speak in the debate, but I rise because a number of anomalies need to be clarified. A number of my constituents—concerned pensioners of the Hill Samuel group—wrote to me, so I added my name to the blocking motion. I did my duty by my constituents: I met Mr. Fairey, the deputy chief executive of the Lloyds TSB group, to seek a number of assurances. The law on pensions—this has not been mentioned tonight—is one of the most complicated areas of the financial services industry. The Pensions Law Review Committee, whose findings eventually led to the Pensions Act 1995, examined in huge detail the ownership of surpluses in pension funds. Having heard and reviewed a huge amount of complicated evidence, Professor Goode, the chairman of the committee, concluded that a pension fund surplus belonged exclusively neither to the pensioners nor to the employers who had contributed to the fund—it belonged to them both jointly. Trustee deeds show what the trustees are allowed to do in each individual pension scheme. Mention has been made of the pre-1975 pensioners who were in schemes for fewer than five years and so did not qualify for a pension. The law was changed in 1975 by the then Government to entitle those who had served for fewer than five years to a pension, but that did not apply retrospectively. Indeed, I believe that it would have been improper for the trustees to apply that decision retrospectively; if they had, the matter could have been subject to judicial review. Ever since I have been a Member of Parliament, I have had to deal with cases in which constituents have asked me, after pension law has changed, to request the Government to apply the new law to the state pension scheme retrospectively; in each case, the Government—of whatever colour—have refused to do so. Interestingly, the Hill Samuel pensioners did not complain when their pensions were taken over by the TSB group, as the reserves of the TSB pension scheme were substantially larger than those of the Hill Samuel scheme. Only now that the TSB pension scheme is being taken over by Lloyds, whose pension scheme has fewer reserves, have the complaints begun to emerge. However, as far as I am aware, those complaints are being made by only 200 or so members of the Hill Samuel action group out of the tens of thousands in the combined TSB and Lloyds scheme. Although the case of even one pensioner who is in any way deprived should be considered, the trustees have a duty to act in the interests of all their pensioners. The matter of low-income pensioners is far from simple. Someone who has served a similar length of service on a similar salary may seem to be entitled to a similar pension, but that person may have taken a lump sum on retirement, which would considerably affect the payable pension. Alternatively, someone may have retired at an earlier age than someone else who had served a similar length of service; again, that would affect the pension that was eventually payable. I have investigated this complicated matter at some considerable length—I have corresponded with my constituents and with Mr. Fairey—and I believe that a reasonable balance must be struck between the interests of those pensioners who may be affected and the interests of the pensioners as a whole and of the shareholders. I do not think that the Bill will adversely affect any pensioner over and above what they might have expected in any case under the law of the land. I have asked Mr. Fairey, the deputy chief executive of the Lloyds TSB group, to examine in particular the case of my constituent Mr. Jones-Bateman, who was a regional director of the Hill Samuel group. Mr. Fairey has full details of the case, and he has undertaken to consider it sympathetically and in detail—I have no doubt that he will keep his word. On the basis of my investigations, I am satisfied that a fair balance has been struck between all the different pensioner groups that are affected by the merger, so I shall not vote against the Bill.

Eric Illsley (Labour, Barnsley Central)

With the leave of the House, Mr. Deputy Speaker, I shall respond briefly to an interesting debate. As on Second Reading, there have been some remarkable contributions, and we have heard some excellent tours de force on pensions law and pensions issues. They did not much relate to what is in the Bill, but they were interesting all the same. I am grateful to the right hon. Member for Cities of London and Westminster (Mr. Brooke) and the hon. Members for Arundel and South Downs (Mr. Flight) and for Cotswold (Mr. Clifton-Brown) who originally blocked the Bill, but have withdrawn their blocking motions and favour progress of the Bill. As the hon. Member for Cotswold said, pensions law has been dealt with by the Goode committee, which dwelt at length on the ownership of surpluses. The hon. Member for South Holland and The Deepings (Mr. Hayes) made the same point. It is a complicated area, but it is not within the remit of the Bill. Perhaps there should be a debate in future, but, the matter having been so recently addressed by the Goode committee, it may be some time before pensions law is further amended. Let me tell the hon. Member for New Forest, West (Mr. Swayne) that the Bill's purpose is to facilitate the merger that took place two or three years ago between Lloyds and the TSB. All the pensions issues that we have discussed fall outside the Bill. There are anomalies, and there are lower-paid pensioners, but every member of the scheme is being paid his or her entitlement. The bank has given repeated assurances that those issues will be addressed. My hon. Friends the Members for Newcastle upon Tyne, Central (Mr. Cousins) and for Knowsley, South (Mr. O'Hara) have asked why it is taking so long for the Inland Revenue and Lloyds to reach agreement, but, as the hon. Member for Cotswold said, there are many different reasons why pensioners have low entitlements. Under the TSB scheme, pensioners were obliged to take 50 per cent. of their pensions as a lump sum. That reduced on-going payments, which meant that those people were lower-paid. The pre-1975 pensioners would have had contributions returned if they had been members for not longer than five years. That is another area in which there will be no payment, and it has come to light only during our debate. Every pension depends on length of service in the scheme, and final salary.

Desmond Swayne (Conservative, New Forest West)

Setting aside the anomalies, which I accept are not the subject matter of the Bill, can the hon. Gentleman say what the consequences would be for the merger if the Bill were lost tonight?

Eric Illsley (Labour, Barnsley Central)

Lloyds and TSB would have to find a different way to do business in future. The reason for the Bill, as with any bank Bill, is to facilitate the merger without the bank's having to take into account the wishes and views of every account holder and customer, which would be impossible, as there are several million of them. It would be an extremely heavy burden on the banks if they were asked to contact every member for permission for the merger. I have answered the point made by the hon. Member for Gainsborough (Mr. Leigh) about different categories of people whose pensionable service will have left them with a low-paying pension. Lloyds has addressed that issue. I am not sure whether the hon. Gentleman was in the Chamber when I assured the right hon. Member for Cities of London and Westminster that guidelines will be produced shortly. I hope that the 30 September deadline will be flexible, and that the issues will be addressed. I take on board the points made by the hon. Member for Twickenham (Dr. Cable) who made a comparison with the coal industry's pensions schemes, but that issue relates to the Goode committee and pensions law, and it falls slightly outside the remit of the Bill. After a longer debate than I had expected, and after considerable debate on Second Reading, I hope that hon. Members will give the Bill a fair wind, and a Third Reading, without the need for a Division.

National Minimum Wage Bill

DETERMINATION OF HOURLY RATE OF REMUNERATION

Ian McCartney (Labour, Makerfield)

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

Michael Martin (Deputy Speaker, Glasgow Springburn)

With this, it will be convenient to discuss Lords amendments Nos. 3 and 4.

Ian McCartney (Labour, Makerfield)

The amendments deal with a specific technicality, which became apparent following the Low Pay Commission's recommendations and initial work on drafting the regulations. The general effect of the three amendments is to extend slightly the flexibility of the power to calculate the rate. We want to be absolutely confident that the clause provides us with the power that we need to deliver through the regulations what the Low Pay Commission has recommended regarding the treatment of home workers who are paid by the piece. Let me remind the House how clause 2 works. Hon. Members should note that it deals with the determination of the hourly rate of remuneration. The clause was drafted flexibly to enable us to reflect, as far as could be envisaged, whatever the Low Pay Commission might recommend in its report regarding the calculation of the hourly rate for national minimum wage purposes. Basically, it is a technical clause, but one which is important to the flexible operation of the Bill. It provides the flexibility for a wide range of possible permutations in determining what elements of pay can be included or excluded—for example, overtime, bonuses, benefits and holiday pay. It enables a wide range of working situations to be taken into account, including piece work, payment of standard wages at a regular rate and payments on commission or at different rates over different periods. Since receiving the report, we have been considering the practicalities of putting into effect the Low Pay Commission's recommendations. In particular, we have been considering those workers who work away from the office and are paid by output, rather than time worked. For that particular case, it has become apparent that the clause may not be quite flexible enough. In particular, the commission's recommendations suggest that piece workers should be entitled to the hourly minimum wage for every hour worked regardless of the piece rate, and that employers of home workers should be able to demonstrate that piece rates have been evaluated to confirm compliance. The fairest and least bureaucratic way to do that is to ensure that there can be agreement between worker and employer about the maximum hours to be worked and the output expected. We need to ensure we have the vires to do that under clause 2. Therefore, we are proposing three amendments to the clause, the third of which is purely consequential. Lords amendment No. 2 deals with subsection (3), which relates to how working time is to be treated for minimum wage purposes. The amendment ensures that the regulations can prescribe those times for which a worker can be treated as working. The amendment is a technical rewording to ensure that we have the vires to prescribe in regulations that, where piece workers work at home with no agreed hours, the worker and employer may together agree the maximum hours that are to be worked and claimed. Lords amendment No. 3 deals with the same subsection and makes explicit the power to prescribe that an agreement may be reached regarding the maximum or minimum time that a person shall be treated as working. As with Lords amendment No. 2, that change is necessary in the case of the piece worker working at home with no present limit on the hours to be worked. In the interests of legal certainty, it ensures that we have sufficient flexibility to implement the Low Pay Commission's recommendations regarding piece workers and home workers through the regulations. The clause was drafted flexibly, but needs to be supplemented by means of those technical amendments to ensure the practical implementation of the LPC's recommendations on piece workers working from home. I ask the House to support the amendments.

Tim Boswell (Conservative, Daventry)

I am grateful to the Minister for tabling the amendments and explaining them. Indeed, his explanation was consistent with—or almost precisely in the same terms as—that of his noble Friend and former colleague in another place. It is almost six months to the day since the Minister of State—who we are glad is still around to conclude these proceedings—my colleagues and I locked horns in a couple of momentous all-night sessions in detailed consideration of the Bill. The need for detailed consideration remains and it is right that we should study some of the amendments and not merely pass them on the nod. I do not want to agitate the hon. Gentleman unduly by suggesting that it will be necessary to continue our deliberations all night, although it is fair to say for the record—particularly as I suspect that my colleague from the Whips Office would want me to be shown to be earning my keep—that 32 of the 36 amendments under consideration emanate from the Government. The whole message of the Bill has been that, although the concepts have been relatively simply, the devil is inevitably in the detail and it is extremely important, in the interests of employers and their employees and of the Government and Ministers, that they get it as right as is humanly possible. That brings me to consideration of the amendments. I shall not advise my hon. Friends to object to them, unless a new point arises beyond what the Minister has said. First, I am slightly concerned in one respect about what the Minister said and what his noble Friend said in another place. The Minister emphasised that the amendments provide greater flexibility. That is entirely consistent with the arguments for flexibility that my hon. Friends and I were advancing throughout the Committee proceedings. I do not understand from the Minister's explanation in which direction the flexibility will operate. He said in response to the Low Pay Commission that piece workers should be entitled to the hourly minimum wage for every hour worked, regardless of the piece rate, and that employers of home workers should be able to demonstrate that piece rates had been evaluated to confirm compliance. He said that that would have to be achieved by agreement between employers and piece workers. Agreement might be reached, but what would happen if the agreement did not coincide with the facts? For example, piece workers might work all the hours that they claimed to have worked but not produce the number of pieces that they agreed to produce. Conversely, piece workers might turn out more pieces than had been agreed but not receive greater remuneration. There are potential problems in those cases. I take it that the Minister is saying that, in the interests of legal knock for knock, there should be a functional arrangement and the two parties should come to an agreement. I do not object to that in principle, although, given the points that the Minister made so vigorously in response to my right hon. Friend the Member for Wokingham (Mr. Redwood) about the lot of piece workers—I share some of the Minister's concern for their position—it is not always clear that such an agreement would be made on all fours between equal parties. I presume that the amendments concern a privilege that the Minister will want to monitor carefully. My second concern for the House is that the proposal for a more flexible agreement needs to be considered alongside the provisions for what might loosely be termed the normal cases of employers and employees who are paid by the hour, week or month. The Low Pay Commission, whose report we did not have in our deliberations in Committee, considered all those points carefully. It came to a conclusion on the pay reference period that the Minister said is highly technical, but which exercised us because of the potential for error. The commission's recommendation is that the averaging period for the National Minimum Wage should be the normal pay period, as agreed between worker and employer"— so the element of agreement is included— up to a maximum of one calendar month. We believe this is long enough to capture most fluctuations in earnings. The report goes on to say that there could be a case for low-paid workers who are covered by annualised hours arrangements. For the sake of completeness, I remind the House of the point that I made about my employee who works on my farm. He is salaried and receives an even rate whether he works for long hours during harvest or for shorter periods in the middle of winter. The commission's recommendation for a one-month maximum could lead to average hourly pay for employees working the longer hours pattern falling below the national minimum wage. The commission recognises that in such circumstances employers and workers may need to …restructure their pay systems. That precisely encapsulates the concern which we expressed in Committee that, for all the efforts to reproduce the flexibility and complexity of economic arrangements and systems for the payment of remuneration in this country, inevitably, the introduction of the national minimum wage would create a need for some systems to be changed, even if they were the most sensible form of payment for the parties concerned. In concluding my remarks on the clutch of amendments before us, I tell the Minister that I may not need to intervene on all the groups of amendments, but I wish to raise several points on later groups. We understand that home workers are an especially sensitive group. We understand that piece workers—who are not necessarily exactly the same as home workers but have some similarities—will need to be given some flexibility in working out their pay in relation to their output and the number of hours worked, and thereby in working out whether the employer or the employment arrangement complies with the national minimum wage. However, that requirement must not provide an inside track, giving those workers a privileged flexibility that is not available to other, perfectly reasonable, employers and employees who wish to make arrangements that are consistent with the spirit of the Bill. In a sense, one vital card is still unplayed; until the Bill becomes an Act and for a time afterwards, the Minister will be unable to give us draft regulations to explain how matters will be dealt with in the normal case. Only then shall we get flesh on the bones of other situations and know whether the provisions are sensible and flexible enough. It is right to put down those markers now. Obviously, they have nothing to do with the principle of the Bill, but they are designed to ensure that it operates fairly. I would welcome the Minister's response.

David Chidgey (Liberal Democrat, Eastleigh)

I am sure that the Minister would agree that the amendments—which I am sure are eminently sensible—try, to a degree, to clarify what we mean by "working time". I therefore ask him to clarify a specific point. Shortly, legislation implementing the working time directive will come before the House. I should like the Minister, if he can, to clarify whether subsequent legislation on the working time directive will use the definition of "working time" used in the Bill, or whether we may have two definitions in two pieces of legislation.

Ian McCartney (Labour, Makerfield)

I thank the hon. Member for Daventry (Mr. Boswell) for his kind remarks. I thank him also because I understand that he petitioned the Prime Minister to ask for me to remain in this job—as did the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses. They are all behind me. The hon. Gentleman's personal warmth and appreciation of my being here is taken in the spirit in which it was intended. The hon. Gentleman and I have spent a considerable part of the last year of our lives dealing with these issues. In Committee and on the Floor of the House—despite our sometimes rumbustious debates—I have welcomed the fact that he has often been more than fair in the way in which he has drawn attention to issues. The questions that he asked tonight were well made and well intended. The agreement would concern the hours worked and to be claimed; it would not be about the rate, because the rate will be effected in regulations. We are trying to ensure that there is some capacity for the employer, at the outset of the work to be carried out, to have an agreement with the worker that gives some clarity about the hours and the nature of the work to be carried out within a time scale. That is important because, if we are to give—as we shall do—the right to be paid the minimum wage for all hours worked, it is important that the employer does not have an open-ended arrangement by which someone gets paid for 13 hours' work when there is only two hours' work to be done. It is important that flexibility works in two ways. There must be good practice, which is not always the case with piece workers or home workers. Employers may turn up and say, "Here is the work to be done; we will come back in the morning and, if it is not completed, we may or may not pay you the following rate." The legislation will ensure good practice and it will mean that the employer must reach an agreement with the employee at the outset about the nature of the work and the hours of work. That will protect the employer from a totally open-ended commitment and from having to pay for work that was not done. It will also create some clarity for the employee, who will have an absolute guarantee of receiving at least the national minimum wage. It may mean a different calculation at the end of the reference period. For example, if a worker is entitled to be paid £3.60 an hour and, at the end of the agreed reference period, the piece work is calculated at £3 an hour, the employer must make it up to £3.60 in order to ensure compliance with the minimum wage. It is important that the proposals before us are approved in order to introduce some certainty into the system. The hon. Member for Daventry asked what would happen if there was disagreement about the work to be done and the duration of that work. That is a matter for dispute resolution; it is not a matter for these regulations. It is a matter of employment practice between the employer and the employee. I hope that that hon. Gentleman will accept that that is the Government's intention in that regard. It is intended that the introduction of both the national minimum wage and the working time directive will impose minimum burdens on business and that they will be enforced effectively. They will be matched as closely as possible, but they do not always measure the same thing. Time worked for health and safety reasons is different from the calculation of time for pay purposes. There may be differences in some cases when considering hours worked for national minimum wage purposes. As far as possible, we shall ensure that the minimum wage and the directive match. However, different issues must clearly be catered for.

David Chidgey (Liberal Democrat, Eastleigh)

I acknowledge the Minister's answer—I have probably thrown him a bit of a googly, and I accept that he is doing his best. Does he accept that, with the forthcoming working directive and the minimum wage legislation, employers and employees could have difficulty in trying to meet different requirements for measuring working time?

Ian McCartney (Labour, Makerfield)

I have said clearly that we have conducted extensive consultation on the working time directive. It deals with two issues. The first is health and safety and how we can make sure that entitlements under legislation dealing with health and safety in the workplace are calculated for the purposes of ensuring compliance. The second issue relates to ensuring that people do not suffer any detriment when claiming their rights under the working time directive. There are two regimes within the directive: the first ensures that health and safety standards are maintained or improved, and the second ensures that no employee is sacked or suffers some form of discipline for clearly exercising his or her rights under the directive. The hon. Member for Eastleigh (Mr. Chidgey) raises a simple matter. We cannot consider health and safety matters in the same way we consider whether someone has received the proper minimum wage for the hours worked. For example, under the working time directive, employers will be required to keep records in order to ensure that night-time workers are not forced to work more than the number of hours set out over the reference period. In addition, the employer will be required to ensure that medical checks and health assessments are carried out from time to time to make sure that the employees' working hours are not detrimental to their health. We are measuring different things and the regulations will be applied differently. That is the sensible way to approach the issue. The hon. Member for Eastleigh has not really thrown me a googly. That is rather a nice English phrase. It is not a phrase that you, Mr. Deputy Speaker, or I, would recognise from Glasgow. Other phrases would go well with it, but I shall leave them for another day. However, I get the hon. Gentleman's point. When the Bill is enacted, we will move as quickly as we can to put into the public domain the draft regulations and the consultation. I welcome the opportunity for participation that that will give Conservative Members. It is important to us, as it is to anyone in favour of the minimum wage, to ensure that the regulations work effectively and that employers realise that they are not burdensome while allowing proper compliance with the legislation.

FAILURE OE EMPLOYER TO ALLOW ACCESS TO RECORDS

Ian McCartney (Labour, Makerfield)

I beg to move, That this House does agree with the Lords in the said amendment. This is a technical amendment made on Third Reading in the other place to complete and improve the Bill. It came to our attention only at that late stage, for which I apologise, but such things are inevitable on occasion. The amendment affects clause 11(1)(a), which provides a justified ground for complaint about access to records if the employer has failed to produce some or all of the relevant records in accordance with subsection (9) of section 10 above". Clause 10(9) sets deadlines for the time within which records must be produced. Failure by the employer to meet the requirement therefore provides ground for complaint. Counsel has noted that subsection (8) is also a requirement-setting provision, stipulating the place where records must be produced. However, failure to produce records at one of the places specified is not currently included in clause 11(1)(a). The reference there is only to subsection (9), not also to subsection (8). In other words, there is an omission because the Bill creates two requirements but provides a remedy against only one of them. The amendment therefore adds a reference to clause 10(8); and I ask the House to support it.

Tim Boswell (Conservative, Daventry)

I read with some interest the debates in the other place on the keeping of records. In the spirit of the Minister's conciliatory remarks a moment ago, we recognise that he wishes to consult on the details and that there will be proper consultation on the record requirements themselves. We welcome that and hope that industry and, if necessary, hon. Members will participate in it. One other point before I come to the specific amendment is a touch more critical, but we recognise the pressures under which Ministers and officials are working at this time of year. In preparing for today's debate, I noted a number of references in the other place to correspondence with my noble Friend Baroness Miller on certain technical aspects. That correspondence has not been vouchsafed to Conservative Members or to me, and I should be grateful if it were in due course.

Ian McCartney (Labour, Makerfield)

I offer my apologies to both the hon. Gentleman and the hon. Member for Eastleigh (Mr. Chidgey). I have always had a process of maintaining correspondence and meetings. It is an oversight, and I take responsibility for it. I shall ensure that copies of the correspondence are sent to the hon. Gentleman and that I respond to any additional item that he raises this evening to which I do not have an immediate answer.

Tim Boswell (Conservative, Daventry)

I readily respond with thanks to the Minister of State because he is, as ever in these matters, most generous and helpful. We are dealing with the production of records and I have the impression that, even if the Minister does not have the style, he would rather like to join me in playing around at being an amateur lawyer. He explained the draftsman's thought process extremely eloquently. However, we should pause for a moment to ask whether there really is a failure to deliver the records at a particular place. The records must exist, unless they have been wilfully destroyed. The offence arises from the inability to deliver within a particular time the records to the worker who has requested them. If there is a "failure of place"—the point that the tidy-minded draftsman has tried to pick up—and the records are not offered in the worker's place of work or any other reasonable place, or such place as may be agreed between the worker and the employer, the records will not have been produced at all. They exist, but they have not been made available. I do not argue that that provision should not be in the Bill, but perhaps the draftsman's first instincts were better than his second, because the important point is that the records should be practicably available to the worker within a reasonable time. The fact that, for information, the Bill suggests a number of places where the records could be produced does not by itself create an offence because if they are not produced in one of those entirely sensible places, I doubt whether they have been produced at all. Of course, they still exist, but records are of no use to a worker who wants to see them if they are sitting in somebody's filing cabinet or have been hidden behind the mantlepiece. This is not a matter over which we should go to the stake. My instinct may be wrong, in which case there is no need to make a fuss about the matter. However, it is at least worth pausing to think about it.

Philip Hammond (Conservative, Runnymede and Weybridge)

I, too, am delighted to see the Minister in his place. I awaited tonight's debate with trepidation in case he were not there because it would seem inappropriate if, after six months or so, we were to discuss the Bill without seeing his familiar face. I find it surprising that, given the extensive work that was done in Committee, we have not discussed this point before. I heard what the Minister and my hon. Friend the Member for Daventry (Mr. Boswell) said. My hon. Friend referred to the possibility of records having been wilfully destroyed or concealed. Will the Minister assure us that, in dealing with a complaint under this clause, an employer could defend himself by pleading that the records had been inadvertently destroyed or were unavailable as a result of accidental destruction?

Ian McCartney (Labour, Makerfield)

I did not catch the hon. Gentleman's last question. Will he repeat it, so that I do not forget to answer it?

Philip Hammond (Conservative, Runnymede and Weybridge)

I shall gladly repeat it. I should like to be reassured that, under the clause, it would be a defence that the records had been inadvertently destroyed as opposed to wilfully destroyed or concealed. My hon. Friend the Member for Daventry referred to the wilful destruction of records, but records could have been inadvertently destroyed, or destroyed by fire or some other form of misadventure. Another point was discussed in Committee and I am disappointed that the Minister has not taken the opportunity of the Bill's consideration in another place to correct it. There is a lack of symmetry between the requirement on employers, and the need for some employees, to produce and keep records. To an extent, we are going over old ground, but this is an important point that is not in any sense intended to undermine the principles of the Bill. There will be occasions, especially in relation to piece work, on which the employer will be unable to defend himself against a claim that he has failed to pay the minimum wage unless the employee has kept appropriate records in his workplace, which may be his home.

Tim Boswell (Conservative, Daventry)

It is nice to have my hon. Friend back in our deliberations. Does he recall the sensitive issue of spouses who may disagree? The employer—the husband, typically—may be required to keep records, but a disaffected spouse may assert that such records have not been kept or that the hours worked in a family business were much longer than he is prepared to concede.

Philip Hammond (Conservative, Runnymede and Weybridge)

My hon. Friend is absolutely right. As he knows, I have argued throughout consideration of the Bill that, whatever else may be right or wrong, it is clearly wrong to bring businesses that are effectively husband-and-wife operations within its remit. That would bring the full force of the law into the everyday relationship between a husband and wife who operate a small business together. My specific point to the Minister is that there is no requirement for employees to keep appropriate records. What defence would an employer have if he were faced with the claim that he had failed to pay the minimum wage in respect of the number of hours worked by a piece worker in his own home when producing a certain amount of work? How would such an employer prove that the claim was not valid if he had no power to require the employee to produce records of the hours that had been worked?

John Bercow (Conservative, Buckingham)

My hon. Friend is making a powerful case. Given that many self-employed people keep and provide records to the people for whom they work as a condition of their payment, does he agree that there can be no reasonable objection under the Bill to requiring them to do precisely that in future?

Philip Hammond (Conservative, Runnymede and Weybridge)

My hon. Friend is precisely right. It would not be at all onerous for employees to keep simple records, where appropriate. That would not be appropriate for an employee who clocks on when he arrives at the factory, does his day's work and goes home. In such circumstances, it is appropriate that the whole burden of record keeping falls on the employer, but it was common ground in Committee that the difficult cases will arise in situations other than the conventional employment situation in which work is done in the employer's workplace.

John Hayes (Conservative, South Holland and The Deepings)

My hon. Friend's point is made more profound because flexible working—home work and distance work—is on the increase and likely to grow, not diminish. The traditional model of the workplace is not disappearing, but it is becoming less common.

Philip Hammond (Conservative, Runnymede and Weybridge)

My hon. Friend is entirely correct. I am asking the Minister not to impose some additional and unreasonable burden on employees, but to say why he has not considered it appropriate, in suitable cases where it is relevant, to require employees to keep relevant records and to give employers the right to see those records so that they can defend themselves against claims.

Ian McCartney (Labour, Makerfield)

I welcome the hon. Member for Runnymede and Weybridge (Mr. Hammond) to the debate. I understand that he has been promoted to the Front Bench since we debated the minimum wage in Committee, so attempting to hold me up for all those hours has worked well for him. I do not want to overexcite him by going through that process again, but I hope that he gets a further leg up the greasy pole. We are not really discussing the amendments, which are about plugging a little technical gap in the Bill. I must tell him that the Bill is clear—the employer has a duty to keep records. The hon. Member for Daventry (Mr. Boswell) said that he and I might like to be amateur lawyers; indeed, many people may say that one of us, at least, has been a barrack-room lawyer on occasion—or even a Philadelphia lawyer. It does not take a lawyer to get the point made by the hon. Member for Runnymede and Weybridge, and I cannot give any succour in that regard. It is a pretty weak excuse to say, "I inadvertently got drunk last night and drove the car home and smashed it up". Equally, it is a pretty weak excuse to say, "I inadvertently burnt all my records, and it is therefore impossible for me to establish whether I paid my home workers the national minimum wage". We cannot allow a coach and horses to be driven through the principle of employers' duty to maintain good records.

Tim Boswell (Conservative, Daventry)

Even if the Minister did not climb the greasy pole, we are glad to see him in his place. The Minister, perhaps typically, chooses the delinquent employer as his example, but is there not an equally serious problem? I refer to the employer who acts in good faith, but whose records may have been destroyed. Surely the regulations must provide for a workable distinction between the two.

APPOINTMENT OF OFFICERS

Ian McCartney (Labour, Makerfield)

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

Ian McCartney (Labour, Makerfield)

The amendments concern ministerial transactions relating to information obtained. They are essentially technical, and are designed to maintain the status quo in respect of the enforcement arrangements envisaged in the Bill. Their purpose is to ensure the continuation of the policy to leave open the option of appointing agricultural wages inspectors in England, Wales, Scotland and Northern Ireland to enforce the minimum wage specifically in the agriculture sector. If the amendments were not made, that option would be closed in relation to agricultural wages inspectors in Scotland. We had considerable discussion in Committee about the interface between agricultural wages and the minimum wage, and agreement was established. We simply want to get the technicalities right.

Tim Boswell (Conservative, Daventry)

I want to accept the Minister's assurances, but I should like to be clear about one point. I understand that, when records are compiled for one purpose, for example for the purpose of the agricultural wages inspectorate—as the Minister will know, I am familiar with such operations—they remain the records of that inspectorate, and are available for its purpose. For the purposes of the legislation, they are, if I may produce a non-legal term, transferred to the minimum wage legislation to determine whether that has been complied with. The Minister spoke about agricultural wages legislation in Scotland. Was the case that he quoted an example or is he trying to cover the whole class with this sheaf of amendments?

Ian McCartney (Labour, Makerfield)

The hon. Gentleman is right about the proposals. The amendments will secure the correct interface in England, Wales, Scotland and Northern Ireland, and ensure a smooth operation between the two arrangements for agricultural wages and the minimum wage.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Perhaps the Minister would clarify one point. I declare an interest, as recorded in the Register of Members' Interests, in agriculture. It is increasingly likely that farmers will pay their workers in euros in future, particularly if payments from Brussels to farmers are in euros. How will the Minister interpret the legislation in relation to euros?

INFORMATION OBTAINED BY OFFICERS

Ian McCartney (Labour, Makerfield)

I beg to move, That this House does agree with the Lords in the said amendment. The amendment touches on what the hon. Member for Daventry (Mr. Boswell) alluded to on an earlier amendment. I thank him for co-operating with us on this matter. The amendment is technical, and it affects clause 15(2) which deals with information exchange. The subsection provides that information that is covered by the clause is vested in the Secretary of State. The information in question is that which an enforcement officer has obtained, for example, from an employer or worker about working hours or pay. The current formulation of clause 15(2) might be taken to affect the rights and title of other owners of that information. The amendment makes it clear that the vesting of the information in the Secretary of State for this purpose does not affect others with the title or rights to the information. That is to say, the ownership of the information does not change hands: it is exchanged only for the purposes of the minimum wage legislation. I hope that the amendment clarifies the facility in clause 15.

Tim Boswell (Conservative, Daventry)

I have one short question. If information is disclosed by the inspectorate or by the Secretary of State in an unauthorised way that is outwith the purposes of the statute—I do not suggest that that will occur, but accidents happen—will the office that is responsible for the disclosure, if it gives rise to legal action or a claim for damages, bear the cost even if the information is jointly owned by the two parties?

Ian McCartney (Labour, Makerfield)

The hon. Gentleman makes an interesting debating point and I shall reflect on what he has said. The purpose of the measure is to ensure clarity in the process of obtaining information, the purposes of the information, who can use it and who has good title to it. If the clause is operated effectively, the issue that the hon. Gentleman raises should not arise. However, the point is well made and I shall ensure in discussions and by regulation that there is good professional practice in all those matters.

Philip Hammond (Conservative, Runnymede and Weybridge)

I welcome the amendment, which clearly improves the clause. The Minister may recall that in Committee we had a heated debate about precisely this matter. He assured us that, as the clause was originally drafted, there would be no doubt about who had title to the intellectual property in the information to be transferred. He rubbished our arguments, so I am pleased that he has had second thoughts. The provision will be welcomed, if only for the avoidance of doubt. Will the Minister clarify whether the provision will give any additional cause of action to an employer who finds that information has been wrongly used and has been transferred outwith the provisions of the Bill? The clause provides that "any relevant authority" that obtains the information may use it for any purpose relating to this Act. Should officials of the Inland Revenue or of Customs and Excise be empowered to collect information for the purposes of the legislation, their organisations would have to have Chinese walls . On the face of it, the amendment would strengthen the position of the rightful owner of the information—the employer who had the information. Will the Minister confirm for the record that that would give the employer an additional cause of action or additional security?

Ian McCartney (Labour, Makerfield)

I do not remember having a row on this matter. It must have been one of those early morning activities, so I apologise. I shall not go over ground that I cannot remember. I was probably robust with the hon. Gentleman because it was never our intention that the clause would change the ownership of the information. The Bill sets down clearly the purpose for which the information can be used and who is responsible for it. Any action taken that is outside the scope of the legislation would be outside the employer's legal powers. I have no doubt that there would be a remedy in those circumstances. I am trying to clarify the position—to put it in an armlock—to ensure that the original intention of the clause is absolutely clear.

Philip Hammond (Conservative, Runnymede and Weybridge)

I thank the Minister for that reply. May I press him on a further point? Information may be wrongfully supplied to another agency or used by an agency that had lawfully obtained it for a purpose beyond the scope of the Bill. Is it correct that such information could not be produced in court as evidence?

Ian McCartney (Labour, Makerfield)

That is a hypothetical case. I have made it absolutely clear that, under the Bill, information can be used only for the purposes of the national minimum wage. Anyone who used it in any other way would be acting outside the scope of the Bill and would be exceeding his powers. The answer that I gave a few moments ago is the same as the answer that I am giving the hon. Gentleman now.

POWER OF OFFICER TO ISSUE ENFORCEMENT NOTICE

Ian McCartney (Labour, Makerfield)

I beg to move, That this House does agree with the Lords in the said amendment. The purpose is to cut unnecessary red tape, and to prevent enforcement from being weakened in a particular area. Currently, under clause 19(8), an employment tribunal has the power to correct an enforcement notice on appeal, for example if the officer got the amount of the national minimum wage underpayment wrong but an underpayment nevertheless remained due. The tribunal may also correct the subsequent penalty notice, which can be issued pending an appeal against the enforcement notice under clause 22(5). There is a technical difficulty—without the amendment, the tribunal would have the power to correct the penalty notice only if a separate appeal against it had been lodged. Therefore, an employer would have to ensure that he made two appeals, on a just-in-case basis, against both the enforcement notice and the penalty notice. The amendment would cut red tape by providing that, when an appeal against the enforcement notice was partially successful and the notice was corrected by the tribunal, the tribunal would have the power to correct the penalty notice accordingly, even in the absence of an appeal against the penalty notice. I hope that hon. Members will accept that the amendment is about ensuring—

BUSINESS OF THE HOUSE

Tim Boswell (Conservative, Daventry)

The Minister is trying to be helpful. I have a procedural question, which is whether arrangements will be made for the tribunal to ensure that there is in the papers a box to tick, or some other way to enter the fact that a penalty notice has been served, so that the tribunal may look at both automatically and simultaneously, rather than finding out by accident that a penalty notice has been served. We must remember that there are relatively unsophisticated employers who may not be aware of double jeopardy. Is the Minister nodding or is he reflecting on that point?

Tim Boswell (Conservative, Daventry)

I am grateful to the Minister. On the more general points, the Minister's explanation has been helpful, but I should like him again to confirm two matters. The first is that the enforcement notice and the appeal against it are free standing and that the penalty notice and the appeal against it are also free standing. They could happen separately. I have not quite thought through the implications, but the tribunal could come to different conclusions in different cases. We need to ensure that no one's rights are removed. The second matter relates to financial penalties for non-compliance. Although the tribunal will take an interest in the calculation—if that is brought to its attention because, for example, the employer says that the sums have been done wrongly—it is not empowered to rewrite the level of the penalty, other than for a mathematical mistake, if a liability has been imposed. Nor will it look at degrees of culpability as between employer and employee in reaching its conclusions. While having regard to the worker's interests, these cases are very much ones where the employer will appeal against enforcement and, in particular, against the financial penalty. Clearly, the worker is enjoined in that and will want to have a say in it, but the case is very much about ensuring that the employer is treated fairly. The enforcement notice comes after due process, from either the employee or an officer acting on his behalf. I am trying to get the flavour of the issue. The Minister has it broadly right, but it would be helpful if he could comment on it.

Ian McCartney (Labour, Makerfield)

The answers to the hon. Gentleman's first two questions are yes and yes. On his third question, I think that he—not for wrong reasons—is rather overcomplicating the matter. If there has been an error, the tribunal will ensure that it is corrected.

THE RIGHT NOT TO SUFFER DETRIMENT

Ian McCartney (Labour, Makerfield)

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

Ian McCartney (Labour, Makerfield)

When I started work on this Bill, I was 6 ft 6 in tall. I am told that I should just rest a bit on this Box. This is an important group of amendments, the purpose of which is to ensure that there is no loophole in protection against dismissal or detrimental action for workers and employees who would be entitled to the full rate of the national minimum wage or who were about to qualify for a higher rate, even when no rate has yet been set in the months following commencement of the clauses. I am sure that the House will agree on the principle behind the affected clauses. They will protect workers and employees against dismissal or detrimental action on the grounds that they qualify or will qualify for the national minimum wage or for a particular—higher—rate of the national minimum wage. We want to ensure that workers have that protection during the interim—between commencement of the clauses, after Royal Assent and subject to Parliament's will, and the setting of the national minimum wage in the ensuing regulations. By adding the word "might" in each case, the amendments are designed to remove any doubt about whether workers are protected in that manner during that period. I trust that the House can accept these linked amendments.

Tim Boswell (Conservative, Daventry)

I think that we have to stop for a moment on this group of amendments. There is nothing wrong with the Minister's intentions, and I do not wish to suggest that we want people to take action by way of detriment against employees who in future might qualify…for the minimum wage". I have used the phrase that the Minister has included in his amendment, but, in so doing, I express some doubt about it. Circumstances defined in the relevant clause—clause 23(1)(c)—include those in which the worker qualifies, or will qualify, for the national minimum wage or for a particular rate". That should be a fairly clear evidential test. Is there an employment when the wage is in force? Is the appropriate rate for the national minimum wage being paid? Is there an employment when the national minimum wage comes in on the appointed day after the conclusion of regulations? If so, is the person being sacked ahead of the introduction as a way of getting them out of the way? I understand those cases. However, insertion of the word "might" creates the types of uncertainty that the newspapers are so good at exploiting. There could be a story saying, for example, who "might" today become Government Chief Whip. That is the type of story that the newspapers write. The Government "may be" having second thoughts about inclusion of the armed forces in the National Minimum Wage Bill. That story was spun around until there were second thoughts. The word "might" is imprecise. I might have no employment relationship. As an hon. Member, I am self-employed, at least for some purposes, but I might qualify for the national minimum wage. I do not know whether I do. To use "might" is to open the doors to some uncertainty. Although I have no particular penchant for drafting, I should have preferred as the test "either that the worker qualifies, or, provided that his current employment contract is maintained, he will qualify"—not "he might qualify". I am not sure that, in the interests of trying to be fair, the Minister has chosen the right wording. I wonder if he might reflect on the point.

Ian McCartney (Labour, Makerfield)

I have been reflecting on what the hon. Gentleman has said and I disagree with him. I know that that was a pretty quick reflection, but we debated at great length in Committee the importance of the principle of protecting people from being detrimentally affected during employment when they are entitled to the minimum wage, and of preventing an employer from sacking an employee who is coming up to the qualifying age for the minimum wage. In the interim between Royal Assent and the application of the minimum wage, an employer should not be able to dismiss an employee or affect him or her detrimentally. The word "might" is not imprecise. It relates to the period leading up to when people might qualify for the minimum wage and should be protected from an employer seeking to sack them to avoid paying the minimum wage. That would not be acceptable. We are being precise.

Philip Hammond (Conservative, Runnymede and Weybridge)

My hon. Friend the Member for Daventry (Mr. Boswell) and I agree that in relation to the transitional period the use of the word "might" could be seen as precise. My hon. Friend was pointing out that, once the transitional period is over, the word becomes rather imprecise. Would it not have been better to deal with the problem by putting a specific transitional provision in the Bill?

Ian McCartney (Labour, Makerfield)

We could go round the houses on that. I think that we shall just have to disagree. I have made our reasons clear. The provision is for the transitional period leading up to the full implementation of the minimum wage. It will remove the loophole that would allow someone to be sacked on the basis that he might qualify for the minimum wage.

Ian McCartney (Labour, Makerfield)

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

Ian McCartney (Labour, Makerfield)

Amendments Nos. 19 and 20 are tidying up amendments aimed at ensuring consistency and correctness of drafting. Clause 23 protects workers against a detrimental action for asserting their right under the Bill. Amendment No. 19 adds the words "by virtue of in subsection (3)(a) to ensure that the rights to which the protection provided by the clause applies include rights conferred by other legislation that applies for minimum wage purposes by virtue of the Bill—for example, the legislation covering the agricultural wages regimes or regulations made under the Bill—as well as rights conferred directly by the Bill. I hope that hon. Members will not feel short-changed by my shortened version of the reasons behind the amendments and will accept them as minor technical amendments.

Tim Boswell (Conservative, Daventry)

I rise not in retaliation for the Minister's foreshortening of his explanation, but to seek an explanation on amendment No. 25. I fear that 1 am ignorant of the nicer points of the arrangements for Orders in Council and drafting. Clause 42(3) provides that An Order in Council under this section— (a) may make different provision for different cases". The Minister has vehemently resisted the thoughtful provision inserted in another place for some general powers of exclusion, which we debated earlier. We are now dealing with a more precise shrinking of his area of discretion by not allowing an Order in Council—in the context of offshore employment—to make different provision for different cases. The only conclusion that I can produce by way of explanation is that Orders in Council probably cannot make provision for different cases—or, to put it another way, if the cases differ, differing Orders in Council need to be made for them. As I am puzzled on that score, it would be helpful if the Minister would clarify what is going on.

Ian McCartney (Labour, Makerfield)

I shall assist the hon. Gentleman. He is talking about the effect of clause 42(3), which provides that An Order in Council under this section"— applying to offshore workers (a) may make different provision for different cases". Counsel has pointed out that that is unnecessary because clause 51(1) provides that any power conferred by this Act to make an Order in Council … includes power … to make different provision for different cases". We are therefore deleting paragraph (a) of clause 42(3), thus removing a duplication. I apologise for including such a duplication in the first place, but now we are taking it away. Better late than never.

Philip Hammond (Conservative, Runnymede and Weybridge)

Can the Minister turn his attention to Lords amendment No. 28 and explain why it is proposed to leave out the words "in writing"? It seems to me normal that a Secretary of State would give notice in writing, and I cannot envisage a situation in which he or she would want to give notice other than in writing.

Ian McCartney (Labour, Makerfield)

rose—

Ian McCartney (Labour, Makerfield)

I think that the hon. Gentleman has raised an issue not covered by the amendments. However, in the interests of people who are following the Bill, I shall read what he has said in Hansard, reflect on it and write to the hon. Gentleman.

Ian McCartney (Labour, Makerfield)

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

Ian McCartney (Labour, Makerfield)

I hope that we can deal with the group quickly. The purpose of these highly technical amendments is to reflect changes in the treatment of dismissal procedure agreements made by the Employment Rights (Dispute Resolution) Act 1998 as they affect the protection of employees in Northern Ireland against unfair dismissal for asserting their rights under the Bill. Lords amendment No. 23 provides a power, in a new subsection (6) of clause 26, for the Department of Economic Development in Northern Ireland to make an order to repeal subsection (5), as well as the new subsection (6) itself. That will ensure that employees in Northern Ireland are protected against unfair dismissal for asserting their rights under the Bill.

Tim Boswell (Conservative, Daventry)

Why does giving a Government Department power to repeal a piece of legislation help to safeguard employment rights? Given that the legislation in question is supposed to protect employment rights, a power to take them away seems a little odd. I am sure that there is a legitimate explanation, but I should like to hear it.

Ian McCartney (Labour, Makerfield)

All that we are doing is keeping consistency throughout the Bill as it relates to other parts of the United Kingdom. The hon. Gentleman knows about the special nature of Northern Ireland, and the amendment takes account of that—no more, no less.

HOUSE OF LORDS STAFF

Ian McCartney (Labour, Makerfield)

I beg to move, That this House does agree with the Lords in the said amendment. Amendment No. 24 relates to clause 38, which applies the Bill to staff of the House. Before the amendment, clause 38 applied only to such staff who are employees—staff with a contract of employment with the Corporate Officer of the House. I should say at the outset that the amendment has the same effect as a similar amendment tabled by the Opposition in another place, but then withdrawn. Both amendments reflect concern raised by some Opposition Members during consideration of the clause in Committee. I have no hesitation in acknowledging that fact—it is nice to welcome, and act on, constructive comments when we receive them. The clause was originally drafted to reflect the current reality, confirmed by the House authorities, that all staff in the other place have employment contracts. However, partly in the light of the views expressed in another place, the Government have reflected further on the clause. In particular, it was considered preferable to treat staff of both Houses equally. It was also considered wiser to ensure that the law not only reflects the current reality, but is capable of being applied to any reasonably likely future arrangements. I ask the House to support the amendment. I hope that Conservative Members will agree that this is a classic case of great minds thinking alike.

Tim Boswell (Conservative, Daventry)

I am always a consensus person, so we are happy to agree with the Minister. We are glad that the point was spotted and we believe that the outcome is good. I have only one concern, which I am sure has arisen simply because of a slip of the tongue by the Minister. As I understand the matter, the amendment relates solely to clause 38, which concerns the staff in another place. Clause 39 applies the same provisions to staff in the House of Commons. We do not like the Bill, but it is clearly important that the provisions should apply fairly.

THE LOW PAY COMMISSION

Ian McCartney (Labour, Makerfield)

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

Ian McCartney (Labour, Makerfield)

The House will be pleased to know that this is the last time this evening that I shall get on my feet—[HON. MEMBERS: "Shame."] I now want officially to announce that I am on my feet. These drafting amendments are designed to avoid wording that some may regard as offensive. Paragraph 1 of schedule 1 relates to membership of the Low Pay Commission. Paragraph 1(6)(b), unamended, permitted the Secretary of State to dismiss a commission member who was incapacitated by physical or mental illness". On further reflection, I believe that that formulation is best avoided. Instead, the three linked amendments achieve the result that was originally intended—that the Secretary of State can terminate the duties of any member of the commission who, for whatever reason, is unable to carry out his or her functions as a member. I trust that the House will support the amendments.

Tim Boswell (Conservative, Daventry)

This is positively my last response. I agree with the Minister's intentions, but I have a slight reservation about their implications, which may go further than he wanted. The amendments will mean that the objective test of physical or mental illness becomes a subjective test in the hands or opinion of the Secretary of State. I realise that the Secretary of State—who now honours us with his presence—will want to act, as ever, reasonably and sensitively. If a commissioner were to be so incapacitated, I am sure that he would want to handle the case properly. I make that point merely because we should consider the detail of the Bill. There is a slight change in the burden of proof, and we should pause for thought on that point. At this stage of the proceedings, however—I hope that the Minister and his hon. Friends will not be disappointed—I am not disposed to test the will of the House with a Division. The Minister has promised not to speak again, and it may be that he will not respond to what I shall now say. It would, however, be churlish of me not to conclude by thanking the Low Pay Commission and the Minister, appropriately given that we are discussing mental capacity. I have not previously had an opportunity to thank the commission for reasons that the Minister will appreciate. Indeed, we have occasionally complained about it. We do not like the context of the Bill, and we do not like the Bill itself, but we pay tribute, as has the Minister, to the commission's work. It will no doubt continue to work in future to monitor the Bill. Secondly, when the Minister moved tonight from the class war that he fought before dinner to the conciliatory tones in which he responded to our probing of the amendments later in the evening, he showed that he has on his modest shoulders a sure head. He also, occasionally, has some sensitivity for the concerns of the Opposition, and we thank him for that.

David Chidgey (Liberal Democrat, Eastleigh)

I, too, wish the Minister well after the way in which he has conducted the Bill. He has—almost invariably—been courteous, has never gone off the point and has certainly been industrious. He knows of our reservations about the Bill. He has always listened to them, even when he has not accepted them. He knows that we want to see the Bill pass safely through Parliament. We look forward to engaging him again in debate when the Low Pay Commission arises under secondary legislation. I congratulate him on a job well done.

Ian McCartney (Labour, Makerfield)

I thank the hon. Gentleman for those kind remarks. I am not so sure that I am a pussy cat. My new Secretary of State has already nicknamed me Joe Pesci. I accept the hon. Gentleman's points. In response to the point made by the hon. Member for Daventry (Mr. Boswell), I must say that I was precise in the words that I used. The record will show the Government's clear intention to provide non-offensive wording to deal with circumstances that can sometimes be difficult. I am certain that if those circumstances arise—I hope that they do not—my right hon. Friend the Secretary of State will deal sensitively with the cases. I must also say hallelujah, hallelujah to the hon. Gentleman. To hear someone from the Conservative Benches at last acknowledging the tremendous work of the Low Pay Commission is very welcome. I note that the shadow Secretary of State could not bear to be here to hear those words. However, I am sure that he will read them tomorrow. We intend to ensure that the commission plays an effective role in the management of our legislative programme. I thank the hon. Member for Daventry for his kind words, but they will not help him if he makes a late application to join the commission. The Secretary of State is not quite ready to bend over so far as to allow the hon. Gentleman to be a member. However, I thank him for his kind remarks about me. The Bill's progress has taken a long 12 months. 1 am deeply proud that a Labour Government have made so much effort to tackle at last the issue of poverty pay in Britain. I am proud, too, that I, a former low-paid worker, was given the opportunity to do that. Whatever else happens to me in politics, nothing will beat this moment, at which I sit down in the certain knowledge that the National Minimum Wage Bill will become an Act.

Mr. Nick Centi

Beverley Hughes (Labour, Stretford and Urmston)

This is a petition from the family and friends of Mr. Nick Centi, the residents of my constituency and people in the wider locality around Manchester city centre. It concerns the brutal murder of Mr. Centi, an innocent young man who stopped to assist during an argument in the city centre. He was attempting to be a peacemaker, but was killed in a mindless incident of unprovoked violence, which the petitioners believe is all too common in our city centre. So far, 720 people have signed the petition, which reads: The petitioners therefore request that the Secretary of State for the Home Department brings forward measures to improve the safety of city centres, strong action against those who commit violence on the streets, and tougher laws against violent crime.

Lloyd's Insurance Market

Geoffrey Clifton-Brown (Conservative, Cotswold)

Thank you, Mr. Deputy Speaker, for allowing me this opportunity to raise the important subject of the regulation of Lloyd's insurance market. I welcome the new Economic Secretary, the hon. Member for Leicester, West (Ms Hewitt) to her position. I hope that she will have a successful term of office, and that she has received the information that I gave her predecessor and is therefore aware of the issues that I shall raise, as that will make for a more informed debate. It is estimated that 30 per cent. of the entire capacity of the Lloyd's insurance market is controlled by offshore-domiciled companies, mostly based in Bermuda. Within a year, that could rise to a staggering figure of more than 50 per cent. I shall explore the far-reaching consequences of that rapid trend for the entire future of Lloyd's. Mr. Stephen Walton, who was then in the Lloyd's directorate of the Department of Trade and Industry, said in an excellent wide-ranging article on Lloyd's in the spring 1997 edition of the "Financial Stability Review": Regulations need to ensure that the policy holder protection arrangements at Lloyd's are fully effective, that the regulation system of capital provision works effectively and that the market as a whole, is seen to be a fair and a clean place to do business. So perceptive and accurate was Mr. Walton that he was rapidly moved onwards and upwards to a new post in the Treasury. Between 1988 and 1992, Lloyd's lost a staggering £8 billion. More than 30,000 names were disastrously affected, many being stripped of almost all their financial assets, including their homes. However, the majority were given a liferaft by the huge £11 billion rescue—the 1996 reconstruction and renewal reinsurance policy into Equitas Reinsurance. However, it is increasingly beginning to emerge that names may have been fraudulently enticed into Lloyd's in the late 1980s, when a handful of senior Lloyd's underwriters certainly already knew of the serious long-tail environmental claims, including asbestosis in America. Problems were later compounded by the LMX spiral of multiple reinsurance of the same business. I pay tribute to my hon. Friends the Members for Runnymede and Weybridge (Mr. Hammond) and for North Shropshire (Mr. Paterson), who have been working on the detail of that problem. There are also queries about whether the DTI, which was the regulator at that time, and the insurance directorate ever received written confirmation of the relevant Lloyd's resolution relating to the creation of Equitas. If it did not, how could the Government have had sufficient information to be able to say with confidence in the DTI press release on 4 September 1996: adequate provisions have been made against current and possible future claims and that the minimum solvency margin that was required has been met"? How could they have said that when they did not know which names had unconditionally accepted the reconstruction and renewal? It is against that background that I want to raise the current trends in the Lloyd's insurance market. As a result of the enormous losses to which I have already referred, in 1994 the council of Lloyd's voted to admit corporate capital. That was on the understanding that it would be done on a spread vehicle basis, which means underwriting over a number of syndicates. That was done without consultation with the members of the society. The Lloyd's council amended the rules again, so that those with corporate capital can now form themselves into integrated Lloyd's vehicles, buying up capacity on individual syndicates, which is then not available to the current annual venture Lloyd's names. That has caused concern in some quarters that the end of the individual annual venture Lloyd's name is in sight. Indeed, that was presaged by Max Taylor, the chairman of Lloyd's, who said in the Financial Times of 20 June: over time the current annual venture form of participation will become a minority part of the whole Lloyds Market…and those must expect to bear the costs associated with that form of trading. The objective of the Lloyd's council, enshrined in successive Lloyd's Acts from 1870 to 1982, is the advancement and protection of the interests of members, who were at all times understood by Parliament to be individuals participating on an annual venture basis in the Lloyd's subscription market. The whole structure of regulation of Lloyd's is on that basis Charles Sturge, the editor of Lloyd's league table, is quoted in Post Magazine and Insurance Week on 11 June as saying: Lloyd's is the best regulated market in the world but once the Names have gone the structure will disappear and it will be turned into a host of mini insurance companies". That is the fundamental thrust of my speech. Parliament passed the Lloyd's Acts to allow individual participation in the world's leading insurance market. Now there is a major risk that, next year, 50 per cent. of all Lloyd's capacity will be controlled by overseas-domiciled companies mostly based in Bermuda. A further proportion of the capacity—between 5 and 30 per cent.—will be controlled by UK-integrated Lloyd's vehicles. If those two predictions are correct, as seems likely, what is to prevent those companies, which will cease to derive any benefit from an overly costly Lloyd's structure, from demanding that Lloyd's council dissolves itself and the society, and redistributes the new Lloyd's central fund, which currently amounts to £144,238,000, to the current underwriting members—or, more likely, ending its support for the central fund altogether? If that happened, further far-reaching consequences would follow. The joint American trust fund, on which "finality" in the reconstruction and renewal scheme depends, could be withdrawn. That possibility alarms all the 30,000 names who were reinsured into Equitas, and it may well alarm the long-tail policyholders, who may expect to rely on their policies in the United States, and hence the United States insurance regulators. Importantly, the Treasury, not the Department of Trade and Industry, now has responsibility for regulating Lloyd's under the Lloyd's Act 1982 and the Insurance Companies Act 1982. In the circumstances that I have described, where the control of Lloyd's would pass outside the jurisdiction of this country to a number of large offshore insurance companies, which may be interested not in Lloyd's licences or the mutual society, but only in buying books cheaply, UK plc would lose its balance of payments advantages and, importantly, suffer reductions in receipts from corporate, income and capital gains taxes. On 22 January 1998, the then Economic Secretary to the Treasury, the hon. Member for Airdrie and Shotts (Mrs. Liddell), in a revealing speech to the Life Insurance Association conference, said on the one hand: These arrangements will continue to allow scope for a major role by the Council of Lloyd's in ensuring that Lloyd's continues to be well-regulated. However, she must have considered that that was improbable, because she continued on the other hand: Policies underwritten at Lloyd's should enjoy the benefits of the same kind of supervisory regime as those with policies issued by other insurers … I intend that the Financial Services Act will have … much more extensive supervisory powers in relation to Lloyd's … enhancing powers of intervention … authorisation of managing agents … direct authorisation and supervision of the Members … capacity auctions will be overseen. In other words, she had in mind a very tough regulatory regime, which she would have had in mind only if she did not believe that the current self-regulation of Lloyd's was working properly. The comments by the then Economic Secretary sit oddly at variance with today's announcement of the closing of the Insurance Brokers Registration Council, without the announcement of any statutory replacement. That is one of the most important things that I shall say tonight. We have just had the publication of the Financial Services Bill, a huge Bill extending to more than 250 clauses. It is unlikely, therefore, that the Bill will be passed into law for at least a year. By that time, it may well be too late—the Society of Lloyd's, as such, may by then be sliding into oblivion, along with the protection of past and present names and corporate capital. In the regulatory vacuum, many agents will make fortunes at the expense of their principals. My crucial question to the Minister tonight is: in the vacuum before the Financial Services Act comes into force, should not urgent action be taken to protect the future of the Society of Lloyd's, and to address the balance of advantage between past and present individual names in relation to the dedicated corporate capital increasingly being employed at Lloyd's? I hope that the Minister will acknowledge that those are serious, profound and far-reaching issues, which will affect not only the regulation of Lloyd's and the Society of Lloyd's but the insurance market in the City of London, and which will have further knock-on effects. I hope that she will be able to give me some interesting answers tonight. I look forward to hearing what she has to say.

Patricia Hewitt (Labour, Leicester West)

1 thank the hon. Member for Cotswold (Mr. Clifton-Brown) for his kind remarks and his welcome to me at the Dispatch Box. I also thank him for raising this extremely important issue in the House tonight, and I congratulate him on his success in obtaining the debate. I am especially grateful to him for giving me notice of the points that he wished to raise; that is especially helpful to a new Minister. I appear to be the first new Minister in the current round of Government changes to speak in an Adjournment debate. I also take this opportunity to pay a very warm tribute to my predecessor, my hon. Friend the Member for Airdrie and Shotts (Mrs. Liddell). She was, if I may coin a phrase, tough on pension mis-selling and tough on the causes of pension mis-selling. I shall follow her excellent example. I wish her well—as do all my hon. Friends—in her new portfolio. I turn to the extremely important issues that the hon. Gentleman has raised. Reform of the regulation of Lloyd's is long overdue. Lloyd's itself has recognised the need for stronger independent oversight, and the Government announced in January their proposals to provide that oversight through the new Financial Services Authority. Those proposals, like the rest of our reforms, will create a modern and flexible system of independent statutory regulation, capable of coping with the radical changes that will affect all financial markets. We will publish the financial services legislation, in draft, later this week and consult extensively on that draft legislation. I have no doubt that the hon. Gentleman and his colleagues will wish to comment during that consultation period. The hon. Gentleman referred to Stephen Walton, who is now a member of the team that has been preparing that legislation. As hon. Members will know, for most of its long history, Lloyd's has been a successful part of this country's financial services industry, making an important contribution to the economy and the balance of payments. Indeed, only a few weeks ago, I had the pleasure of meeting Eric Harnmouthe and his colleagues at a very helpful briefing that was arranged for relatively new Members of Parliament to inform us about the Lloyd's position. I was obviously not aware then that I would be rising to respond to this Adjournment debate so soon after that briefing. As the hon. Gentleman said, in the late 1980s and early 1990s, Lloyd's was hit by an unprecedented financial crisis, suffering losses of £8 billion between 1988 and 1992. The causes of that crisis have been well analysed. They were primarily a combination of both natural and man-made disasters, but they were certainly exacerbated by some bad underwriting decisions and practices. I am aware that some names have made allegations of fraud. The Serious Fraud Office has reviewed very substantial amounts of material put forward by those names, and has found no evidence to support their allegations. If the hon. Gentleman or other hon. Members have any new evidence, I shall of course be happy to pass it on. I am conscious of the fact that many names were hit very hard. The vast majority shouldered their losses honourably, and I am pleased to say that the legitimate claims of policyholders have continued to be met in full. Lloyd's responded to the disastrous losses with its reconstruction and renewal plan, which involved the creation of a new insurer, Equitas, to reinsure the old liabilities. Equitas's provisions for future claims were set after a massive exercise by consulting actuaries, and this was reviewed in detail by the Government Actuary's Department before Equitas was authorised to begin operations. Nothing has happened since then to suggest that the provisions were inadequate; nor does the funding of Equitas depend on any annual contribution from Lloyd's. In the almost two years since it began operations, Equitas has made extremely encouraging progress—although of course there is still a long way to go. Since reconstruction and renewal, Lloyd's has shown considerable vigour in returning to profitability and renewed financial strength, as shown by the ratings that it has received from major independent agencies. As the hon. Gentleman has pointed out, that has been accompanied by some quite profound changes at Lloyd's. Corporate capital has been admitted, and now accounts for 60 per cent. of Lloyd's capacity. Some of that represents names converting to trade with limited liability, but some is from overseas, including the major insurance centres of the United States of America and Bermuda. The involvement of overseas capital providers with Lloyd's is testimony to the continued strengths of the market and there is every sign that they wish to maintain and develop those strengths. One strength of the Lloyd's market is the common security for all Lloyd's policies that is underpinned by the central fund. The council of Lloyd's has reaffirmed its commitment to common security, which is the basis for the system of licences that Lloyd's holds to trade in world markets. As hon. Members will know, Lloyd's has been largely self-regulating under the Lloyd's Acts. As the hon. Gentleman rightly said, the Treasury supervises its solvency under the Insurance Companies Act 1982, but less extensively than for insurance companies. Nevertheless, one requirement of that Act is that all premiums have to be paid into trust funds, with deeds approved by the Treasury. There is no question of the joint asset trust fund, or any other trust fund, being wound up without the Treasury's approval, and I can confirm that no such proposal has been made to us. Since the crisis, Lloyd's has greatly improved its own regulation, which today is generally acknowledged to be in good shape, but we need to ensure that that standard is maintained. More fundamentally, we need to build a modern system of regulation, with proper statutory oversight, capable of responding to whatever future lies ahead. Regulation must be one step ahead of change, not one step behind, and Lloyd's, like the Government, believes that businesses that are well regulated, and seen to be so, will be in a better position to compete in global markets. The first priority of all insurance regulation is the protection of policyholders. As the Government announced in January, we believe that holders of policies written at Lloyd's should enjoy the benefits of the same kind of supervisory regime as those with policies issued by other insurers. That is why we intend to give the FSA much more extensive prudential supervision powers over Lloyd's. Those will be more like the powers that it will have for insurance companies, including checks on key individuals and comparable powers of intervention and discipline. They will also include a requirement for FSA authorisation of managing agents, the people who are responsible for running underwriting syndicates. We also intend that the FSA should be able to authorise and regulate Lloyd's members direct, if it considers that necessary in the future. Those powers are intended to give the FSA flexibility to cope with whatever may be the future shape of Lloyd's in a rapidly changing global financial services marketplace. If Lloyd's were ever to become simply a group of insurance companies, with no common security, each one could be regulated like a normal insurance company—something with which all insurance regulators are familiar. If a diverse market continues, with common security, that will be reflected in its regulation. Whatever happens, we are determined that the security of policyholders should not be compromised. I come now to capital providers. Members' agents advise members of Lloyd's in which syndicates they should participate. Their activity—advising names and potential names—is very like that of financial advisers, and we therefore propose that they should be authorised and regulated by the FSA. That will give increased protection to members of Lloyd's, some of whom have suffered from bad advice in the past. Of course, the main risk to members is the risk to which they are exposed through the contracts of insurance which they underwrite. The enhanced prudential supervision arrangements which I mentioned should help to reduce those risks, but insurance is inherently about risk, and those who choose to trade in it must accept that. We do not intend to provide protection against underwriting losses, over and above that needed to give security to policyholders.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The thrust of my whole speech was that the time lapse between now and when the FSA comes into operation could be a year or more. Meanwhile, matters need to be investigated under the present regulatory regime. Will the Minister undertake to have a thorough look at all the issues that I have raised this evening? Will she assure us, in particular, that if an application is made to wind up the society of Lloyd's, the Government will not allow the joint American trust fund to be wound up until the names under reconstruction and renewal have been properly and adequately considered?

Patricia Hewitt (Labour, Leicester West)

I thank the hon. Gentleman for that intervention. I was about to deal with his point about the transition period before the new Act comes into effect. My officials and the FSA are already in active discussion with Lloyd's about how the new regime will work and how the transition should be managed. All those concerned are aware of the danger that regulatory attention might slip in the transition period, and will work closely together to ensure that that does not happen. I shall happily undertake to write to the hon. Gentleman in more detail on the points that he raised. Clearly, if a proposal were made to wind up the joint trust fund, we would have to look at it, but, as I said, no such proposal has been made. I should like to say something about capacity auctions, in which the hon. Gentleman is interested. Participation in a syndicate recently moved from being a privilege to a right, with the result that a market has developed in trading capacity on different syndicates. That market currently operates through a series of auctions run by the corporation of Lloyd's. In some ways, that market is similar to markets regulated under the Financial Services Act 1986, and I propose that the FSA should have new powers Over Lloyd's. Questions have been raised recently about whether advice given to names wishing to sell their capacity in the auctions has been wholly impartial and in the best interests of names. I am reassured to see that Lloyd's own regulatory division has taken up the issue and reminded agents of their duties and obligations in giving best advice and avoiding conflicts of interest. An important feature of the Lloyd's market is the part played by the Lloyd's broker, who acts on behalf of a client in helping to obtain insurance. I should like to touch briefly on insurance broker regulation. The hon. Gentleman mentioned today's decision on the Insurance Brokers Registration Council, which was set up by the Insurance Brokers (Registration) Act 1977. As he knows, we have consulted the industry, Lloyd's and the IBRC on whether there is a continuing need for that form of regulation. He will see from the draft Bill that we are building on the consensus that has been arrived at that, although the IBRC has provided a valuable service in the past, circumstances have changed and regulation needs to change to reflect that and to build on the IBRC's work. The arrangements that I have described, which will be set out in detail in the draft Bill, will continue to allow scope for a major role for the council of Lloyd's in ensuring that Lloyd's continues to be a well-regulated, successful and important part of the UK's financial services industry. That industry is an important part of wealth creation, and we are determined, through effective, flexible and modern regulation, to ensure that Britain's financial services industry, particularly the City of London, remains pre-eminent within the rapidly changing global market.

Geoffrey Clifton-Brown (Conservative, Cotswold)

If more than 50 per cent. of underwriting capacity is controlled by offshore, Bermuda-based companies, how can the Minister be so confident that she will be able to regulate and maintain the Lloyd's market in London?

Patricia Hewitt (Labour, Leicester West)

It is not for the Government to tell Lloyd's, or any other business, how it should raise capital. Our responsibility, which we take extremely seriously, is to ensure that there is good regulation which provides proper security for policyholders and advice of an appropriate quality for capital providers. As the hon. Gentleman said, the financial services marketplace is global and changing rapidly. I hope that it is not the policy of the official Opposition that we should venture into some kind of protectionism in financial services or any other industry.

John Burnett (Liberal Democrat, Torridge and West Devon)

On behalf of Liberal Democrat Members, I congratulate the Minister on her appointment. I am diverting the question slightly, but, in hindsight, would the hon. Member for Cotswold (Mr. Clifton-Brown) have chosen to be a Lloyd's name with limited or unlimited liability?

Patricia Hewitt (Labour, Leicester West)

I thank the hon. Gentleman for his kind remarks, but his question should be addressed to the hon. Member for Cotswold. Happily, it is not an issue on which the Government have to advise him. The arrangements that I have set out, which we shall implement through the Act after consultation with Lloyd's, will ensure the strong and successful regulation of Lloyd's. In that regulation, we shall reflect the special role of the council of Lloyd's in controlling the affairs of the society and the powers available to it in doing so. My officials, and their colleagues in the FSA, are in active discussion with Lloyd's about how those arrangements will be operated in practice to deliver strong and cost-effective regulation. As a Government, we are committed to reform—