Scottish Transport Group Pension Scheme
The next item of business is a debate on motion S1M-2486, in the name of Fergus Ewing, on the Scottish Transport Group pension scheme, and one amendment to the motion.
The SNP is pleased to use the time available to it today to seek a fair and just settlement for thousands of men and women who were members of the Scottish Transport Group pension scheme. The issue has been raised by MSPs from all parties who have worked for the cause, but I begin by paying tribute to one MSP who, I believe, has led the campaign—Dennis Canavan. Because of the work that Dennis Canavan has done and the close working relationship that we have had, I have invited him, with the unanimous support of my party, to close the debate on behalf of the SNP.
Will Fergus Ewing mention the work that Sylvia Jackson MSP has done?
I have already said that I recognise that members from all parties have done work on the STG pension scheme—I acknowledge that. Every MSP has constituents whose lives have been affected.
The purpose of the debate is to achieve what I believe is justice for pensioners who have waited for far too long; its purpose is to make a difference. The purpose of the debate, which is being witnessed by many members of the action group—many pensioners who are affected—is to achieve for the pensioners something that the Scottish Parliament was set up to achieve, namely, to address a manifest and long-standing injustice, which is a mark of shame to us all and to the Westminster regime that preceded us.
I hope that all MSPs will support the motion. I drafted it with Dennis Canavan. Most important, the wording of the motion has been fully supported by the members of the Scottish Bus Group pensioners action committee. Any member who votes against the motion will reject the pensioners' case. I hope that that will not happen.
I am disappointed that the minister who now has responsibility for transport, Wendy Alexander, is not in the chamber to witness the debate, never mind to participate in it.
I will canvass the history of the Scottish Parliament's involvement in the issue so far. Last October, in a members' business debate, which was initiated by Dennis Canavan and in which I, Sylvia Jackson, Lord James Douglas-Hamilton and other members participated, we all agreed a number of things. We agreed that the delay in pay-out was unacceptable. It is 10 years since the group was privatised and its assets were sold off, and seven years since the privatisation of the pension scheme was completed. In the motion for that debate, we recorded that some 8,000 pensioners and 4,000 deferred pensioners were still waiting. In the debate, we agreed that they must
"secure the maximum possible benefit".
A record 96 MSPs supported Dennis Canavan's motion, calling for the maximum possible benefit.
The then Minister for Transport and the Environment advised us that a settlement would be achieved in the autumn. When the autumn came and went, we were advised that a settlement would be achieved this autumn. In the words of the song,
"autumn leaves lie thick and still"
and the pensioners still wait for justice.
Last October, I spoke in the debate and mentioned my constituent Alex Munro. He was a bus driver with Highland Omnibuses Ltd for 36 years. I must advise members that, sadly, Mr Munro passed away on 30 April this year. I spoke to his widow a week or so ago. We think of her today, as we think of the many who have not survived to receive the justice for which we are arguing.
The then First Minister put out a press release on 18 December. I have it here. It was issued four days before the Falkirk West by-election. Only somebody with the naivety of Candide could think that that was a coincidence. The press release appeared to offer good news to the pensioners. It appeared to offer a settlement. Many pensioners—many of whom were voting in the Falkirk West by-election—must have thought that justice had arrived at last. What did that press release from the then First Minister not tell us? It did not tell us that the amount of the surplus in the combined staff and transport operatives pension fund was not £100 million, which was the figure mentioned in the press release, but £250 million, which is two and a half times more than the figure that the then First Minister mentioned. The press release described what was on offer not as a repayment to workers of what they had contributed over the years, but as a "windfall"—that is, something to which the workers were presumably not entitled, despite the fact that they contributed to the pension fund over the years.
The Labour deal was agreed between Henry McLeish and Gordon Brown, but we know that it has the new First Minister's fingerprints on it because, when the then Minister for Transport and the Environment wound up in the debate on 25 October last year, she said that she had been working on the deal with Jack McConnell over the summer, because he was the then Minister for Finance. It is Jack's deal—Jack's shady deal. It is a deal that we must tear up and undo if the Scottish Bus Group pensioners are to receive justice.
Why is that the case? What has happened to the £250 million? Well, £46 million has gone to Gordon Brown and £104 million has gone in tax. When Mr Bill McQueen gave evidence to the Finance Committee on 26 June this year, he said that the tax was 40 per cent. Mr McQueen was wrong: it is 35 per cent. Immediately, that gives us £12.5 million extra. Will the minister say whether that money will be refunded to the pensioners? What is the amount of the combined surplus now? It was £250 million at 31 March 2000. According to a pensions expert, at 31 March 2001, it must have been £270 million. The signs are that no payments will be made until 31 March 2002. By then, just as the costs of the Scottish Parliament building are escalating, the surplus will be much larger, up to about £300 million. What does the Labour party say should happen to that extra £50 million? Will it go to Gordon Brown in a secret deal? I hope that we get the answers to some of those questions today.
I close by reminding members of remarks that were made about the matter by a columnist in the Daily Record in 1989. In an article called "Cashing in on the bus sell-off", the columnist referred to the fact that the Scottish Bus Group workers' pensions were to be sold off. He wrote:
"They've found their pension scheme—to which they paid all their contributions for years—is to be wound up and replaced by a new one.
But who is to receive the surplus from the pension scheme when it is wound up.
NOT the workforce ….
And NOT the new pension fund, either.
But the Government."
Who was that columnist? It was Gordon Brown. Do we support Gordon Brown then or do we support the shady deal now? There is no choice. I urge members to support the motion for the sake of Margaret Munro and others.
I move,
That the Parliament notes that both the Scottish Transport Group Staff Pension Fund and the Scottish Transport Group Transport Operatives Pension Scheme have still to be wound up some eight years after privatisation; further notes that the Scottish Executive promised in December 2000 that a total sum of £100 million would be distributed to the pension scheme members and that this would result in a payment of an average of about £7,000 for each member; recognises that the actual total surplus of the pension funds is considerably in excess of £100 million; believes that the level of payment proposed last December by the Scottish Executive is inadequate and should be increased, and calls upon the Scottish Executive to meet representatives of the Scottish Bus Group Pensioners' Action Committee and to make available to them all relevant information to enable them to assist the pensioners in achieving a just settlement.
I am glad to have the opportunity to address the issues around the STG pension schemes; to respond to concerns expressed by members of all parties; and to set out the progress that has been made and what must happen next.
In passing, I refer to Mr Ewing's ungallant comments about my colleague Wendy Alexander. Members from the Falkirk and Stirling areas who are interested in this debate will be well aware of potential job losses at Grangemouth and of the meetings in which Wendy Alexander has been participating with the staff, the work force, the local MSP Cathy Peattie and Alex Neil, the convener of the Enterprise and Lifelong Learning Committee. I am disappointed that Fergus Ewing was not aware of them.
In addressing the substance of the matter, I start with the ways in which the Scottish schemes differ from those south of the border. The differences are important, although the reasons for them are certainly obscure. When the pension schemes were set up many years ago, there was no expectation that the companies concerned would be privatised and that the schemes would require to be wound up. Because of that, when the schemes were established, their focus was on benefits to members, not on the procedures to be followed if the schemes came to an end. Although there were rules for winding up, they did not attract the degree of scrutiny that their consequences are receiving today.
The rules for the English schemes quite clearly stipulated that any remaining surplus should go to employees, while the rules for the Scottish schemes stipulated just as clearly that any remaining surplus should go to the employers. That is why the legal position in Scotland is quite different from that in England.
The minister seems to suggest that the trustees for the Scottish scheme have no discretion to pay additional benefits to members. Has he read the trust deed of 1983? If so, he must realise that that is completely untrue.
I will set out the process by which Scottish ministers have secured, from the trusts, funds that go beyond the strict legal entitlement of the pensioners. [Members: "What about equity?"] I hear Opposition members mentioning equity. Equity is precisely the reason why we took such steps.
I want to explain the English position a little further. When the English trustees set aside the rules at the time of privatisation, the case was referred to the pensions ombudsman on the grounds of the legal entitlement of members of the schemes. The ombudsman ordered that the winding-up should be reversed. He found that the National Bus Company had threatened the English trustees in a way that he described as quite improper and as intended to alter the pension schemes in the company's favour. After several subsequent court judgments, it became clear that members of the English schemes would, as a result of their legal entitlement, receive benefits approaching an average of £7,000 each. In that case, the law found that the rules that applied to the English schemes gave pensioners those entitlements.
The position in Scotland is not the same. Because the rules were different in the first place, former members of the Scottish schemes have not been deprived of any benefit to which they are legally entitled. Indeed, the National Audit Office report makes it perfectly clear that all their entitlements were fully secured. Furthermore, after privatisation and in anticipation of wind-up, enhanced payments amounting to £33 million out of the then surplus of £105 million were made to members of the Scottish schemes in March 1991. Again the National Audit Office took the view that the enhancements were generous, as they amounted to nearly one third of the surplus, which was roughly in line with the one third of the total fund that had derived from members rather than from employers' contributions.
Does not the minister recognise that the Scottish workers spent an additional four years making contributions? Should they receive no credit for the four years' extra contributions they made because the sell-off in Scotland happened four years later than in England? Should they be penalised because the Scottish fund performed more effectively in the gilts markets in the 1990s? Furthermore, should it be ignored that the workers accepted a modest pay rise in 1983 in exchange for the employers making massively increased contributions, which led to the fund having a greater value?
The one thing that is perfectly clear to me is that taking interventions from Mr Ewing on this matter adds nothing to the debate, but only gives him the opportunity for further grandstanding. Having heard his repetitive, lengthy and irrelevant contribution, I will address the relevant issues.
Members are aware that Scottish ministers were keen to go beyond the legal position. Without our intervention, the entire remaining surplus would have gone to the UK Exchequer. Our position is quite clear: we took that action to achieve equity and parity between Scottish and English pensioners. Through last year's direct intervention with the UK Government and through negotiations with the Treasury, Scottish ministers achieved their objective by securing agreement to an additional pay-out to former members of the STG pension scheme that provided an average pay-out that was either the same or slightly better than the average pay-out to English pension scheme members. Members received £7,000 each, which makes a total of £100 million.
The agreement has been described as "Jack's deal". Although I am sure that the First Minister is happy to be associated with the deal, the credit must also go to Sarah Boyack and the other ministers who were involved in obtaining the additional £100 million payment to Scottish pensioners.
As has been described, since then, the surplus has continued to be invested and has increased over time. In April, Gordon Brown reduced the relevant tax rate from 40 to 35 per cent. As a result, the forthcoming STG accounts for the year ending March 2001 are likely to show that the net surplus after tax has risen by approximately £18 million to around £168 million. Therefore, I am delighted to announce today that, in addition to the £100m pay-out that we have already secured, Scottish ministers have this week agreed with the Treasury that an additional £18 million should be paid to members of the scheme.
Do the minister's remarks imply that the Treasury in London—not the legal position—has determined the outcome?
Although it obviously fell on deaf ears, I have tried to explain that the legal position is clear. The political position is that the money belongs to the Treasury. What we, as Scottish ministers, have done is to persuade our colleagues to return a very substantial part of that money to Scottish pensioners. I hope that all MSPs are interested in the welfare of the potential beneficiaries; if so, there should be as little delay as possible in proceeding with the pay-outs. Beneficiaries have already waited too long.
Will the minister give way?
No—I need to make progress.
It is also worth bearing in mind the likely effects of any legal challenge, as the English experience has shown that such challenges can cause further delays for many years. As Scottish ministers, we have carried out our functions speedily. The next step that is required is for the trustees of the STG to wind up their pension schemes. Although ministers do not control that process, we are as impatient as anyone in the chamber to see progress to ensure that payments can be made. We have issued the necessary indemnities to the trustees and we have sought and received Budget Act approval to receive and pay out the surplus. As soon as the schemes are dissolved, we will begin to process ex gratia payments. Indeed, we have finalised the proposed criteria for distributing the money. We have discussed the criteria with the Transport and General Workers Union, which represented the majority of the workers concerned, and will publish them shortly. I invite members to endorse the proposals when they are made public; they are intended to be inclusive rather than exclusive.
I hope that members agree that, despite the absence of any legal entitlement, we have secured a substantial pay-out of £118 million. Although our role in the issue is currently limited, we have taken every available step as swiftly as possible. It is now for others, specifically the trustees, to make progress with their responsibilities and to wind up the pension scheme. We are impatient for that to happen and will continue to press the trustees to ensure that it does.
I mentioned the criteria by which the money will be distributed. We are aware that many people outside the unions who are already involved are keen to understand what lies ahead and the process that will be followed. Therefore, I intend that my officials will meet and brief representatives of the affected trade unions, groups such as the Scottish Bus Group pensioners action committee, other groups that represent pensioners across Scotland and any MSPs who wish to attend, to clarify the process of distributing the funds. That meeting will be held as quickly as possible; indeed, we intend to make arrangements before Christmas.
We are now ready to progress the distribution. All that we require, and have required for several months, is the winding up of the schemes by the trustees. The moment that we achieve that, we will begin making the payments that I have described.
I move amendment S1M-2486.1, to leave out from "both" to end and insert:
"Scottish Ministers have secured from HM Treasury a substantial pay out for Scottish Transport Group Pension Scheme former members despite the absence of any legal entitlement; further notes that any change to the amount to be distributed to former members is a matter for HM Treasury, and finally notes that the key remaining step is the winding up of the pension scheme, which is a matter for the scheme's trustees."
As I handled the bill that brought about the privatisation, it is only fair that I should give Parliament my recollection of what happened.
I recall receiving advice in 1996 that the legal complexities were such that the matter could not be determined immediately, as I had wanted. My thinking was and still is that the matter should be dealt with as quickly as possible. The privatisation—like all other privatisations—was governed by Treasury rules, under which the pensioners were to receive a full pension, with any surplus being returned to the Treasury. It followed that, if there were a deficit, it would be made up by the Government. The Scottish Transport Group (Pension Schemes) Order 1996, which came into force on 14 August 1996, provided for the winding up of the two Scottish Transport Group pension schemes, as part of the eventual dissolution of the Scottish Transport Group, under the Transport (Scotland) Act 1989. Alternative pension arrangements were then made for existing and former employees, leaving the pension schemes concerned to be wound up. Any surplus funds or deficit were eventually to go to the Scottish Transport Group, to be dealt with in the order that dissolved that body. When the Scottish Transport Group was wound up, any surplus funds were to be paid into the consolidated fund, hence the money would be returned to the Exchequer. That was the position then, under the Treasury rules, and it has been the position of successive Governments.
Will Lord James address the point that the minister has not addressed and confirm that the trust deed that governs the purposes of the trust—namely the employers and the pensioners—confers upon the trustees discretion to increase the benefits? Will he also confirm that the trustees have not fully exercised that discretion and that, had they done so, the people in the public gallery and 14,000 others in Scotland would be receiving substantially more, even if his exposition of the legal position is correct?
The trustees' evidence just before the general election in 1997 was that the complexities were so great that they could not resolve the matter. At the time, they were concerned about judicial review. Both the Labour Government and the previous Government have been bound by the Treasury rules. Bill McQueen, a senior official of the Scottish Executive, told the Finance Committee on 26 June:
"the expectation when the bus companies were privatised was that surplus assets would return to the UK Exchequer."—[Official Report, Finance Committee, 26 June 2001; c 1378.]
The minister has made a ministerial decision to pay an ex gratia sum of, on average, £7,000 or £8,000 each—it may even be larger than that. What is important is the settlement for pensioners south of the border. The settlement in Scotland should be at least as good as that, if not better, and I support the minister's decision. It is imperative that the Executive makes strong representations to the trustees to wind up the pension funds, so that the subsequent dissolution order can be brought to the Parliament, which would benefit the pensioners.
In the same evidence to the Finance Committee, the officials made it clear that it was within the minister's gift to give all the surplus back to the pensioners and that there was no constraint on a political decision to give money directly to the pensioners.
With the greatest of respect, I have to disagree on that point. It is not in the power of the minister or the Labour Administration—as it was not in the power of the former Secretary of State for Scotland in the previous Government—to overrule Treasury rules, although Gordon Brown may have written something different when he was in Opposition. If he chooses to use his discretion to change those rules, that is another matter. However, we do not have the power, under the Scotland Act 1998, to override Treasury rules. We are bound by them. The minister has made a ministerial decision that, over and above the legal entitlement, there should be an ex gratia payment. That is an appropriate decision, in view of the settlement that took place south of the border.
Fergus Ewing must excuse me. I have only a minute left.
I would not have been prepared to tolerate an excessively prolonged delay. It is extraordinary that the matter has yet to be brought to a satisfactory conclusion. The maximum pressure should be brought to bear on the trustees to make certain that they fulfil their professional duties. If trustees take on a difficult task, they should be prepared to fulfil it. I hope that the minister will ensure that the situation is resolved rapidly. The argument that certain complexities existed that had to be surmounted had some weight after four years, but I do not think that it weighs heavily after eight years.
Clearly, the matter must be brought to a conclusion as quickly as possible, and I wish the minister every good fortune in achieving that purpose. We intend to support the Executive's amendment.
This was always going to be a short debate so, although there have been important exchanges between the front-bench members, there will be time for only three speeches in open debate. They must not be longer than three minutes each.
I was tempted to begin by turning to the Conservative members and saying, "Here's another fine mess you've gotten us into," as the whole saga dates back to the Transport (Scotland) Act 1989, in which the Tories privatised the Scottish Bus Group.
Following privatisation, the legislation and disposal programme that was presented to the UK Parliament specified that any remaining surplus from the company's pension schemes, after they were transferred and wound up, must be paid to the consolidated fund—the Treasury. The agreement to wind up the pension fund was reached in consultation with workers. The surplus has been invested and will probably be in excess of £250 million on wind up.
The Scottish Transport Group pension schemes were entirely separate from the National Bus Company pension schemes in England. In England, where the pensions ombudsman found that the trustees had acted incorrectly, there was a long-running legal dispute that was halted by the incoming Labour Government in 1997. The English situation was resolved in 1999, when John Prescott finally agreed to pay £300 million to the bus employees' superannuation trust and £55.77 million to the national bus pension fund to allow the situation to be corrected. There was an out-of-court settlement and £350 million went to 54,000 members, which worked out at an average payment of £7,000.
There have been no court proceedings in Scotland to date, and there is no evidence that the trustees of the Scottish scheme acted improperly. Section 14 of the Transport (Scotland) Act 1989 allows any surplus remaining in the Scottish Transport Group pension schemes to be paid in accordance with a specific dissolution order to wind up the Scottish Transport Group, which the Scottish Executive will introduce once a number of complex and detailed legal matters have been sorted out with both the Treasury and the Scottish Transport Group.
To arrive at a resolution of the situation and wind up the STG, the Scottish Executive has negotiated a deal with the Treasury that will deliver benefits described as equivalent to those received from the winding up of the English pension schemes. The pensioners received enhanced benefits on transfer and are now to receive an ex gratia payment. The pensioners are unhappy with the deal because it does not deliver what they feel to be their full entitlement from the scheme. Although the sum that each of them will get is roughly equivalent to the sum that their English colleagues received, the total does not represent the full amount of the surplus that reverted to the Treasury. Although natural justice is on their side, the deal is well beyond any legal entitlement that the pensioners have to the surplus. The legal position involved the entire surplus reverting to the Treasury.
The report that was commissioned for the National Audit Office in 1993 and the failure of individual members to convince the pensions ombudsman that there was a basis for a claim on the surplus highlight the potential difficulty in mounting a legal challenge. If there was a legal challenge in Scotland, it could lead to further delay. A dissolution order could not be introduced until the court proceedings were settled, which could be a long, drawn-out process. Until a dissolution order is passed by the Parliament, the pensioners will not receive the additional benefits.
Delay in winding up the scheme is an issue for most pensioners. First, until the scheme is wound up, staff must be retained and paid from the remaining funds in the scheme. Secondly, as has been said, many pensioners are elderly and require their enhanced benefits at the earliest opportunity. The Scottish Executive is doing its best to make progress on the issue as quickly as possible.
The pensioners and their supporters are to be commended for their concerted campaigning. Without their persistence, it is unlikely that the £100 million share of the surplus would have been secured. The Scottish Executive also deserves credit for the work that it did to secure the deal. The moral argument remains that the entire fund should be paid to the workers who benefited from the scheme. Any further payment, however, is reliant on the agreement of the Treasury. It seems that the moral argument has been won, but there is no legal leg to stand on. Perhaps the only way to prise the remainder of the surplus out of the Treasury would be to shame the Labour Government in Westminster into making good John Prescott's assertion that no Labour Government would pillage workers' pension funds. As Fergus Ewing pointed out, Gordon Brown made similar statements.
The extra amount that has been announced today is welcome and I hope that it will amount to the balance of the surplus.
I call Dr Sylvia Jackson and remind members that speeches must not exceed three minutes.
I welcome the former STG employees who are in the gallery today. I also welcome the debate and hope that we will now move closer to bringing a dissolution order to the Scottish Parliament and starting the long-awaited ex gratia payments to the pensioners, the deferred pensioners and the transfers.
I also welcome Fergus Ewing to the campaign but have to inform him, as there seems to be no mention of the matter in his recent press releases, that a good number of Labour MSPs have been involved in the issue for a considerable time—since long before his involvement began.
We cannot get away from the fact that this issue has been dragging on for too long—for well over a year. Dennis Canavan and I first became involved with the former employees at a meeting in Stirling. At that time, the pensioners were aware of the developments down south and of the fact that National Bus Company employees had taken their case to court to get the surplus funds. Since those early meetings, a number of meetings have been held, in Perth, Kirkcaldy and Inverness. They have all been well attended and have involved MSPs such as Cathy Peattie, Kate MacLean, Marilyn Livingstone, Maureen Macmillan and Fergus Ewing, as well as Dennis Canavan and me. That is not to mention members working behind the scenes in the Parliament.
While Labour MSPs have been pressing from the back benches for an equitable and quick settlement to the issue, the Labour Transport and General Workers Union group, of which I am a member and Cathy Jamieson is the chair, has been active in exerting pressure in the Scottish Parliament and with ministers at Westminster. The contribution of the TGWU, particularly recently, should not be underestimated. The TGWU is concerned not only with the big issue of how much of the surplus should be paid out but with the equally important points around the distribution of the payments.
One of the main problems with this issue has been the difficulty surrounding gaining up-to-date information not only about what is happening down south but about the delays in the process and why the dissolution order was not brought forward earlier. Although it is not directly comparable, the National Bus Company court settlement was used by the Executive as the basis for allocating an average of £7,000 per person as an ex gratia payment. It has been suggested that whereas members of the National Bus Company scheme had a legitimate basis for a claim, the members of the STG scheme did not. I am unsure about that, but it is clear that a long court case is the last thing pensioners need.
What is the present position? The lawyers who are supporting the action group accept that a dissolution order to release the funds must be laid before the Parliament. They also accept that, as a result of the budget, the tax must be paid at the lower level of 35 per cent. Allowing for growth, that leaves a surplus of around £170 million, which is what the TGWU is calling for.
In light of the action group's continuing concerns, I ask the new minister to agree to a meeting with the action group to explain the exact position on its concerns. I am pleased that he has agreed to a meeting.
You must come to a close.
I ask the minister to take a personal interest in this issue. It is important that, if necessary, he intervene directly in the discussions with the access group. The dissolution order must come quickly in order to get the payments to the pensioners.
Fergus Ewing called for a fair and just settlement for the thousands of pensioners who have been affected by the way in which this matter has been handled. I had hoped that, since a new minister has responsibility for transport, this debate would bring about some changes to the provision that has been made for the pensioners. I had hoped that the Executive would take this opportunity to right a wrong that has been done to the pensioners and that it would do the right thing by the pensioners, who are the innocent party in this affair. Instead, we have an Executive amendment that starts off with ministers congratulating themselves on what they have been able to achieve before going on to say that there is an
"absence of any legal entitlement".
During today's debate, members have pointed out that, in Scotland, there has been no legal challenge. I note that Murray Sinclair, giving evidence to the Finance Committee, stated quite clearly that
"It is within the competence of Scottish ministers"—[Official Report, Finance Committee, 26 June 2001; c 1383.]
to act on the issue. It is strange that ministers should choose not to exert their authority.
If the Treasury rules that present us with the problem were made by the Conservative Government, why is the new Labour Government content to continue to enforce them? They should be applying pressure to change the rules. The minister has announced an extra £18 million. It is in addition to the £250 million surplus that exists because of the change in the Treasury rules. The pensioners are entitled to that money. Broadly, the pensioners will receive only 40 per cent of the present level of surplus. How would any member of the Scottish Parliament feel if the Government creamed the surplus off our pension fund and sent that money to an already bloated Treasury? [Applause.]
Order. I do not want to be rude to our friends in the public gallery, but this is a meeting of Parliament, not a public meeting, and members of the public are not allowed to applaud.
The people who are suffering the most are those who invested in the pension scheme. We can all talk about the technicalities and ask why there has been no legal challenge and so on but the reality is that pensioners, many of them dependent on their pension, are suffering. Indeed, many have passed away and will not benefit from the pension scheme.
I ask the minister to consider the possibility of making interim payments, particularly to pensioners who are in ill health and may not benefit from the surplus. I ask the minister—not his officials—to meet the action group, take a personal interest and try to find a way of making progress on this issue.
I also ask the minister to tell the Treasury that the Scottish pensioners will not accept any settlement that is less than that of their English counterparts. They got 60 per cent of the surplus and the Scottish pensioners should get the same.
This is an important issue. I am sorry that Fergus Ewing has tried to make it a political issue because, as Sylvia Jackson pointed out, there has been cross-party support all the way down the line. I praise Dennis Canavan and Sylvia Jackson for their work but I particularly praise all the folk in the gallery who have worked hard and have campaigned for what I believe is their right. My constituents and other pensioners and their families have waited long enough. They have been patient and their patience has been sorely tried.
I urge the minister to do all she can to make progress on the issue. If she has to lean on the trustees to wind up the company, she should do that. She should give a commitment to meet the pensioners and ensure that the two relevant groups are represented on the working groups that will consider disbursement of the money.
The main problems around this issue have been to do with misinformation and a lack of communication and information. At the meetings that I have attended, people have never been clear about who is responsible for what, what decisions have been made, whether meetings had been minuted and so on. Pensioners need an answer. This issue should have been resolved by last Christmas. Can it be done by this Christmas? If not, can it be done by some time in the next year?
We come to closing speeches, which must also be kept to time.
A good campaign has been waged on this complicated issue. As several members said, our purpose must be to get the maximum possible benefit for the pensioners, but there is disagreement over the tactics to be used in achieving that end.
Some good points have been made during the debate. In particular, the minister must get personally involved, along with his officials, in doing everything possible that the Government and the Parliament in Scotland can do. His additional £18 million is certainly welcome, but we should explore whether more money is available, either in the form of interest that has been accruing or from other sources.
The key point is that the campaign, and the involvement of MSPs, has put pressure on Scottish MPs at Westminster. This is a Treasury issue. Although it seems outrageous that the money legally belongs to the Treasury, that is the system—and it shows why the system needs to be examined. At Westminster, we have well-paid MPs—and ministers—who must get stuck into this issue and make UK ministers deliver on the promises they made. If we work with them and put pressure on them, we can achieve as good a deal as possible for the pensioners.
The issues involved are complex—various statements have been made about what the law is and is not. We must accept that a considerable amount of money, over and above their meagre legal entitlement, which was zero, has been got for the pensioners. I am sure that if we work together we can get more. I hope that we can achieve that and that the minister will make a personal contribution to that effort. We all know that if a minister—along with his department—takes a personal interest in a matter, much more is likely to be done. I urge the minister to take note of the debate and to act accordingly.
It is clear that the electorate expects the Scottish Parliament to deliver efficient government. The prolonged delay over the Scottish Transport Group pension fund schemes is becoming a serious embarrassment. Sylvia Jackson, Michael Matheson, Cathy Peattie and Donald Gorrie stressed the point that the matter must be dealt with as quickly as possible.
It was extremely annoying that the trustees could not deal with the matter before the 1997 general election. The further delay, which may take up to eight years, can not be legitimately defended on any reasonable grounds. Eight years down the road from privatisation, both actual and deferred pensioners are being denied what is rightfully owed to them, which is, I believe, an average amount in the region of £7,000, or possibly a bit more.
About 12,000 people are involved: 8,000 pensioners and 4,000 deferred pensioners. They include former bus drivers, conductors, engineers, cleaners, ferry crew and office staff. Some of them invested their entire working lives in public transport. Some of them live off modest pensions and, to be frank, a lump sum of £7,000 or more could make an enormous difference to them.
Whatever the complexities of the matter, it has been delayed for far too long. I urge the minister to ensure that this untidy state of affairs is cleared up and dealt with speedily and professionally. The principle is clear and unmistakable: the pensioners concerned should receive entitlements that are every bit as good as those received by their counterparts in England. I urge the minister to make absolutely certain that he obtains 100 per cent support from the First Minister in his fight to ensure that Scottish pensioners get their entitlement.
I will start by addressing the question of ministerial discretion and Government rules, which a number of members have raised during the debate.
The Scottish ministers took a decision, on the ground of equity, to seek ex gratia payments and thereby to make pay-outs to members of the pension scheme. Taking that initiative lay within our discretion and, in so doing, we secured the agreement of the Treasury—the legal owners of the fund—after long and complicated negotiations. That action secured the £100 million that was agreed and announced a year ago. We have repeated that process over the past few days and have secured further ex gratia payments of £18 million.
Will the minister give way?
Given the shortness of the debate, I must press on and answer the points that have been made.
It has been said that the payments amount to 40 per cent of the total surplus. Let me remind members that one third of the surplus was already paid out some years ago. Therefore, as soon as we have the opportunity to do so, and as soon as the trustees complete their role, we intend to pay out an amount that will be equal to or greater than the share of the surplus that was paid out south of the border. The amount will also be more per head than is available to English pensioners.
We intervened directly with the UK Government to secure an outcome for Scottish Transport Group pensioners that would be as least as good as that which was secured by their English counterparts. The £100 million was calculated on that basis. That amount was agreed on the basis that the average sum for each pensioner in Scotland would be at least equivalent to the average sum for pensioners in England. In addition, as members know from today's announcement, £18 million has been negotiated, which is on top of the entitlements and enhancements that were secured in previous years.
The Executive has recognised the arguments for equity. On the basis of those arguments, we have taken a political initiative to secure the funding. To do that, we have carried out each stage of the process that was within our power as quickly as it was possible to do so. Following the recent approval to receive the surplus from the Scottish Transport Group, as provided by the Budget (Scotland) Act 2001 (Amendment) Order 2001, we now require the trustees to wind up the business and the pension schemes.
My question concerns a simple factual point. The Executive has received Treasury approval to receive the surplus. Precisely how much is that surplus at the current date?
I indicated in my opening remarks that the pension scheme surplus is expected to increase by £18 million by the end of the financial year. That £18 million is the additional sum that we intend to disburse to pensioners.
We are currently waiting for the trustees to wind up the pension schemes. Until they do that, nothing more can be done in terms of paying the money out. Although it would be nice to make interim payments at the earliest possible date, we clearly cannot pay out the money until we have received it. We do not control the process of winding up the schemes, but we continue to maintain pressure on the trustees to carry out their responsibility by bringing the schemes to an end so that the money can be transferred to us and distributed to the pensioners.
We have finalised our proposed criteria, which will be published shortly. The criteria have been discussed in detail with the Transport and General Workers Union. The TGWU, which represents more than 90 per cent of those involved, has expressed its support for the criteria. On that basis, we believe that the criteria are sound, but we await one or two further comments before making them public. When we do so, I think that the pensioners will see that the process that has been put in place is appropriate and suitable.
An opportunity to follow and understand that process will be made available to members of the trade unions involved, members of the action committees and others. That briefing will be arranged shortly. I give Sylvia Jackson my assurance that Wendy Alexander and I will keep a close eye on how the matter proceeds. We will ensure that there is no further delay in the process. Today, I call on the trustees to complete their process so that we can carry out ours.
I call Dennis Canavan to wind up the debate. You have until 12:30 precisely.
I am grateful to the Scottish National Party for the opportunity to reply to the debate and was pleased to add my name to Fergus Ewing's motion, which deserves cross-party support. In view of the minister's announcement, I do not know why on earth the Executive could not support the motion. I pay tribute to all MSPs who have been active in the campaign, including Sylvia Jackson, Cathy Peattie and Maureen Macmillan, all of whom have attended meetings, along with me, at various venues.
All members who have taken part in the debate are generally agreed that Scottish Transport Group pensioners have been waiting far too long for justice. Fergus Ewing referred to my earlier motion—S1M-1096—calling for urgent action
"to secure the maximum possible benefit for the pensioners from the Pension Funds surplus".
A total of 96 MSPs supported the motion. When it was debated during a members' business debate, nobody spoke against it.
I welcome the fact that the minister has improved the offer somewhat, but the question now is: does the additional £18 million offered by the minister today amount to maximum benefit for the pensioners. I welcome the improved offer, but I do not think that it measures up to maximum benefit.
Earlier this year, the Finance Act 2001 reduced the taxation rate from 40 per cent to 35 per cent. I put it to the minister that that seems to be where at least some of the money for this improved offer is coming from.
In December last year, it was announced that £100 million would be available for ex gratia payments; and in June this year, a Scottish Executive official told the Finance Committee that the gross surplus was
"likely to be of the order of £250 million."—[Official Report, Finance Committee, 26 June 2001; c 1377.]
So far, not a single penny has been paid out to the pensioners.
The Executive amendment implies that the delay is the fault of the trustees, who have responsibility for winding up the pension funds. That sounds to me like an attempt by the Executive to pass the buck. The trustees initially pleaded that they would require indemnity before parting with the money. The Executive granted indemnity to the trustees after gaining the approval of the Parliament's Finance Committee. That was more than five months ago—but the trustees are still holding on to the money. Why? Why cannot the Scottish Executive put more pressure on the trustees to hand over the money? And why, in the first instance, did the trustees seek indemnity? Do they perhaps have a guilty conscience about the way in which they have handled the pension funds? Are they afraid of litigation because they did not take adequate steps to ensure that the total surplus was used for the benefit of the pensioners?
The Executive amendment claims that the former members of the pension scheme have no legal entitlement—but that claim has never been tested in the courts.
Mr Canavan asks a perfectly reasonable question about the delay over indemnity. The delay prior to 4 September arose partly from the death of one of the trustees. The indemnity was to named trustees, so clearly that caused some delay. The delay since 4 September does indeed relate to trustees' concerns about their legal position. I am not in a position to speak for them, but it is clearly a responsibility of all trustees of pension funds to ensure that they have proper legal cover before they take any action. I am keen that they should take action quickly and that their legal advice should lead them to that conclusion without any further delay.
I am grateful to the minister for that explanation, and I am very sorry indeed to hear about the death of one of the trustees. However, I urge the minister to put more pressure on the trustees to deliver.
The Executive may be being rather arrogant and complacent in stating in its amendment that the former members of the pension scheme have no legal entitlement whatsoever. As I was saying, the claim has never been tested in the courts. I know that some of the pensioners are considering legal action and have already taken preliminary legal advice. However, legal action can be a lengthy and expensive business. Such action should not be necessary if the Scottish Executive and the UK Government take urgent political action now to increase the amount on offer and to expedite the payments to pensioners.
In a previous incarnation, our new First Minister was the Minister for Finance. I presume that he helped to negotiate the deal with the Treasury. The new First Minister is on record as saying that he wants to introduce a new era of open, accountable government under his leadership. In which case, why did he sell the pensioners short by settling for £100 million in the first instance? Did he know then that the total gross surplus was expected to be of the order of £250 million? Did he accept the spurious argument that because the National Bus Company pensioners south of the border are to receive on average payments of £7,000 each, the average payment to the Scottish Transport Group pensioners should be the same? That is how the initial figure of £100 million was arrived at. There are 14,000 pensioners, including deferred pensioners, in Scotland. If we multiply an average payment of £7,000 by 14,000, we get £98 million, which is near enough the magic figure of £100 million—the sum that was offered.
Mr Canavan is absolutely right in his arithmetic. I can confirm that achieving that degree of equity for individuals was the basis of the calculation. Had the rules in Scotland been the same as the rules in England, the position would have been quite different and that surplus would have belonged to the members. According to our best legal judgment on the matter, it did not belong to the members. As Mr Canavan has said, that is yet to be tested. Given the comments made by other colleagues, I do not believe that testing that at this stage would be in the interests of the pensioners.
The minister is now qualifying his earlier statement as well as the wording of the amendment. The amendment states categorically that the former members of the pension scheme do not have "any legal entitlement". The minister is now saying that that is simply the legal advice that the Executive has received. I can tell the minister that the pensioners and former members of the pension scheme have received legal advice to the contrary and that the matter may yet be tested in the courts.
As I was saying, no one can argue that £7,000 multiplied by 14,000 pensioners comes to about £100 million. I will give the Executive—or those who conducted the negotiations—nine out of 10 for arithmetic, but nought out of 10 for logic. The truth is that the surplus per capita in the Scottish Transport Group pension scheme is considerably greater than the surplus per capita in the National Bus Company scheme. Even more interest has accumulated since last year. Even if the Inland Revenue insisted on taxing the surplus at 35 per cent, that would leave at least £170 million available for ex gratia payments, rather than the £118 million that is now on the table.
I would like the minister to tell us as soon as possible how the sum of £118 million was calculated. Can he give us full details of that? Can he tell us how much of the surplus will go to the Treasury, either by way of taxation or by way of payment of some remainder of the surplus? The Executive amendment claims that any change in the sum of money to be distributed is a matter for HM Treasury. That is another example of passing the buck. It is a matter for negotiation between the Scottish Executive and the Treasury. The Scottish Executive must tell the Treasury that even the improved offer is inadequate. The Scottish Executive must stop passing the buck and it must act now.
The pensioners have been waiting far too long already. We are talking about men and women who were employed as bus drivers, ferry crew, cleaners, engineers and clerical staff. They invested their working lives in Scottish transport services and they invested their contributions in a pension fund that was supposed to be for their benefit in their retirement rather than for the benefit of a rapacious Treasury.
The motion before us today would help to win a fair deal for those people, and therefore deserves the support of every member of this Parliament of whatever political party. I appeal to Labour party members in particular. The Labour party was born out of the trade union movement to fight for justice for working people and their families. Here we have a case of working people who are seeking full justice in their retirement. They are or were members of trade unions, such as the T&G Scotland, which rightly is concerned and wants to ensure that its members and former members receive a fairer deal. I call on all members to reject the amendment and support the motion. It is a cry for justice—justice that is long overdue.
That concludes the debate. The vote on this issue will, of course, take place at decision time at 5 o'clock.