Pensions Bill

Lord Dubs Excerpts

Monday 20th January 2014 Grand Committee

Moved by

[Lord Dubs]

65A: After Clause 47, insert the following new Clause—
“Railways pension scheme
(1) The Railways Act 1993 is amended as follows.
(2) In Schedule 11 (pensions), after paragraph 11 insert—
“11A (1) This paragraph applies if an insolvency event occurs in relation to the employer or former employer of a protected person.
(2) Where this paragraph applies, the Secretary of State shall become liable to discharge any liabilities in respect of relevant pension rights, to the extent that they are not discharged by the trustees of a new scheme in which the employer was a participating employer.
(3) For the purposes of this paragraph—
(a) “insolvency event” has the meaning set out in section 121 of the Pensions Act 2004;(b) “relevant pension rights” means the relevant pension rights referred to in paragraph 6(3) above.11B The duty referred to in paragraph 11A also applies if an insolvency event has occurred in relation to the employer or former employer of a protected person on or after 1 October 1994.””

[Lord Dubs (Lab)]

My Lords, Amendment 65A is concerned with persons who worked for a company called Jarvis, which went into administration. Jarvis was one of the private companies that had subcontracts for renewal work with Network Rail; essentially this was the replacement of worn-out track and signals. This company was one of the main firms working on behalf of Network Rail—all well and good.

In March 2010, Jarvis went bankrupt and 1,200 skilled rail workers across Britain were thrown on to the dole. I believe that the situation could have been avoided, and I will come back to that in a minute. Jarvis’s work was transferred to new companies but the 1,200 workers were not transferred. Jarvis was forced into administration because Network Rail deferred renewals work to comply with the Office of Rail Regulation’s decree that Network Rail needed to make 21% efficiency savings over the next five years. Therefore, Jarvis going into administration was not the result of the recession and is separate from the general question of railway funding. It is ironic that Network Rail has recently been criticised for delays caused by its decision to scale back renewals work in 2009.

Jarvis had cash-flow problems but its rail business had an order book of up to £100 million. However, Network Rail and the previous Government refused a £19 million rescue plan from the administrator for the Jarvis rail division for running costs and wages over the next month or so, which would have bought time in order to ensure an orderly transfer of Jarvis employees to new contractors. Representations were made by the unions to the Government, who refused to allow their legal powers under the Railways Act to treat Jarvis as an essential railway activity, which would have allowed them to step in and protect the work of the members of the union. Instead, these 1,200 were thrown on to the dole. This is despite the fact that the Government, according to information provided in response to an FOI request, knew quite a long time in advance that Jarvis was in imminent danger of collapse. Had Jarvis remained in business, the pension entitlements of the workers, past and future, would have been protected.

--- Later in debate ---

[Lord Dubs]

My Lords, I am not totally surprised by the answer but, as I understand it, whatever the Minister said, these former Jarvis workers have lost out through no fault of their own and, because an earlier Government decided to privatise the railways, they are the victims of a process that began with rail privatisation. At the time, they had pretty secure jobs—nobody should have a secure job in the face of any eventuality but they were given assurances at the time. I agree that those assurances did not cover the prospect that the firm might become insolvent; nobody anticipated that and none of the safeguards covered this particular situation. But in moral terms, assurances were given and those assurances should transcend the other points that the Minister made.

It was a very disappointing answer and I will consider coming back to this on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment 65A withdrawn.