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Lloyds TSB Bill [Lords] (By Order)
Order for Third Reading read.
7.5 pm
Mr. Eric Illsley (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.
Mr. Edward Leigh (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
Mr. Illsley:
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.
Mrs. Cheryl Gillan (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.
Mr. Illsley:
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.
Mrs. Gillan:
I understand from TSB that the document is in fact with lawyers and trustees of the TSB scheme.
Mr. Illsley:
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.
Mr. Jim Cousins (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.
Mr. Illsley:
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.
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