Nuclear Decommissioning Industry: Pensions

(Limited Text - Ministerial Extracts only)

Tuesday 21st March 2017 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing this important debate and her passionate and informative speech. The Government understand the concerns of the workforce across the Nuclear Decommissioning Authority estate, including employees working at the Hunterston A power station in her constituency, about public sector pension reform. It is good to see my hon. Friend the Member for Copeland (Trudy Harrison) in her place, representing the interests of her constituents who work at Sellafield.

We recognise the vital decommissioning work that the NDA and the wider workforce across the estate deliver, while prioritising safe and secure operations in a difficult environment, and we remain firmly committed to supporting the nuclear decommissioning programme. The NDA was allocated £11 billion of taxpayer funding for the 2015 spending review period. However, in line with the challenges that the UK faces to balance the deficit, the NDA was set a proportionate programme of efficiencies and savings for that period of around £1 billion, and it was agreed in the spending review that some of those savings would come from reform of the two defined-benefit final salary pension schemes in the NDA estate.

Approximately 10,800 employees are members of those final salary pension schemes, which, as the hon. Member for North Ayrshire and Arran mentioned, closed in the 2000s. The aim of the NDA consultation is to reform those schemes into career average revalued earnings schemes, in the spirit of the recommendations made by Lord Hutton in his 2011 review of pensions. Since 2006, new starters have been offered membership of a high-quality defined-contribution pension scheme, which is out of scope for reform.

The Government acknowledge that CARE reform would require amendments to statutory pension protections that were put in place at the time of the privatisation of the electricity sector in the 1980s and by the Energy Act 2004, when the NDA was established. Those protections sought to provide pension benefits for existing scheme members that were at least as good as those they received prior to those reforms. That is why the Government have worked with the NDA to consider how best to implement pension reform.

As a first step, the NDA held discussions with the trade unions about the potential for non-legislative options as an alternative to CARE to realise the required savings. As a result of those discussions, the NDA launched a consultation document on 9 February setting out details of two options—the CARE option and a non-legislative pensionable pay cap option. The consultation was due to end on 10 March.[Official Report, 23 March 2017, Vol. 623, c. 12MC.]

During those discussions, several concerns were raised, which the Government and the NDA actively listened to and sought to address. Following a meeting in February between the NDA, national trade union representatives and the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who has responsibility for energy, the NDA and trade unions reached agreement to table a third option for consultation with the workforce that better reflected the circumstances they face—a revised CARE pension reform proposal.

That option was announced by the NDA and the trade unions in a joint statement on 2 March. The consultation period has therefore been extended until 21 April to allow the NDA workforce to consider that new option. The trade unions have committed to hold consultative ballots on the proposal, described as the best achievable through negotiation, and support implementation if their members accept the proposal. Those ballots are due to take place in April and conclude by early May.

[Albert Owen]

The Minister is making an important point. I, too, welcome the progress that has been made on the pension, but will she deal with the exit payments cap? No discussions were held about that. An exemption was given to the Royal Bank of Scotland, to give one example. She is a reasonable person. Nuclear workers have been caught up in this. Will she agree to look into this serious issue and come up with a reasonable response?

[Margot James]

I thank the hon. Gentleman for raising that important point, which was also raised by the hon. Members for North Ayrshire and Arran and for Dwyfor Meirionnydd (Liz Saville Roberts). My Department and the NDA will continue to meet trade union representatives regarding the cap on exit payments. My hon. Friend the Energy Minister is listening to the important concerns of workers in the NDA estate about that cap and is in discussion with the Treasury.

[Patricia Gibson]

I wonder whether I may hurry the Minister along and raise the question of the apparent confusion in legislation about whether these workers are public sector workers or private sector workers. Why do the goalposts apparently change when it is convenient that they should—but not to the workers’ advantage?

[Margot James]

I understand that point, which the hon. Lady also made in her speech and which I took note of. I gather that she wrote to the Secretary of State about that very point in early February and is still awaiting a reply. A reply will be forthcoming. I am very sorry that I am not able to be definitive today, but I can assure her that Ministers in my Department take her point and the point made by the hon. Member for Ynys Môn very seriously indeed. We are listening to the concerns of the workforce she represents, and, as I said, my hon. Friend the Energy Minister is in discussion with the Treasury to try to clarify the point, so that the workforce know where they stand. I absolutely sympathise with a workforce who do not know where they stand—it is an unsatisfactory situation, but I assure her that it is one that is approaching a remedy.

We recognise that nuclear decommissioning is a closure industry and many workers have devoted careers to the industry knowing that their sites may close before they retire. We are actively exploring the potential impact of the cap on workforces at sites that are being actively decommissioned and are on the path to closure, such as Hunterston A in the hon. Lady’s constituency. I will pass all hon. Members’ comments on to my hon. Friend the Energy Minister.

Once the consultation period on the pension issue has finished, the NDA will take account of the consultation responses and make proposals for Ministers to consider after that. The Government will not take a final decision before the consultation has concluded. However, we believe that the revised CARE proposal offers a fair and sustainable solution.

As the debate draws to a close—the hon. Lady will have a further say—

[Mr Philip Hollobone (in the Chair)]

Order. I am afraid that the hon. Member for North Ayrshire and Arran (Patricia Gibson) does not have a further say as this is a half-hour debate. The Minister has 10 minutes left, so there is plenty of opportunity for Members to intervene if they wish to do so, but the debate must finish no later than 4.30 pm.

[Margot James]

Thank you, Mr Hollobone. I am sorry, I thought the proposer of the motion had two minutes at the end. The hon. Lady may take advantage of your offer of further interventions; I would be delighted to give way. While I am on my feet, however, I will continue.

I reiterate that the Government recognise the concerns that the hon. Lady and other hon. Members have raised about the workforce across the NDA estate and pension reform. I emphasise that the aim of pension reform is to balance the legitimate concerns of taxpayers about the present and future costs of pension commitments with the workforce’s concern about maintaining decent levels of retirement income, to which they have contributed and which they have earned. It is right that we debate that important issue and I thank all Members for their views.

[Albert Owen]

I heard what the Minister said and appreciate that she will take this issue back to the appropriate Minister. Will she or the Energy Minister agree to meet a delegation of cross-party representatives from the nuclear workers’ areas? She will know about early-day motion 915, to which there are 120-plus signatories. This is an issue across the country. Can we meet to have further discussions? This debate is helpful, but we need further discussions.

[Margot James]

I will certainly pass on the hon. Gentleman’s kind invitation to meet to my hon. Friend the Energy Minister. He is gainfully employed at the moment, meeting the Treasury, with the interests of the NDA workforce very much near his heart. I am sure that he will consider the invitation proffered.

[Dr Philippa Whitford]

We had a debate regarding Hewlett-Packard’s takeover of Digital Equipment’s workforce. At that time, the Minister responding said that nothing could be done because it was a purely private company. However, in this instance, as my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) said, the goalposts have been moved in the definition of public and private and back again, so the Government can do something for these workers.

[Margot James]

The hon. Lady makes a good point about the difference in the nature of the public-private definition. The industry has had £15 billion of Government and taxpayers’ support, so it sits where it sits. My officials will reflect on the views that all Members have given today, as we consider further the options for NDA pension reform. The Government will set out the next steps following the NDA consultation on pension reform.

Question put and agreed to.

[Mr Philip Hollobone (in the Chair)]

Order. At this point I would have gone on to the next debate, but the rules of engagement are that the Minister has to be present as well as the proposer of the motion. I intend to start the debate as soon as the Minister walks into the Chamber. The sitting is suspended until that point.