Parliament Workbench
Data: Official Report to 12 Nov 2026

Official Report · Committee

Current Petitions

Scottish Transport Group Pension Funds (PE500)

Tuesday 8 October 2002 Public Petitions Committee Petitions 17 contributions · 6 speakers

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The record

17 contributions
John McAllion Lab The Convener · Dundee East
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It is suggested that we deal first with petition PE500. A number of MSPs who would like to speak to the petition are present. The petition relates to Scottish Transport Group pension funds.Members will recall that in September we considered a further response from the Deputy Minister for Enterprise, Transport and Lifelong Learning and agreed to write to him again requesting that the committee be notified when the outstanding reply from the Inland Revenue had been received. I have received a response from the deputy minister that covers two main issues, which are set out in the cover note.The first point relates to the £50 million that has been transferred to the UK Exchequer. The minister has replied to the effect that there is no legal entitlement for that money to go anywhere other than the Treasury. The Scottish Executive's budget has been adjusted to take account of the fact that £50 million has been given to the Treasury.Secondly, the Inland Revenue has said that there is no case for the pensioners to be given special treatment and that the lump sum payments will be taxed. The sponsors of the petition, together with a delegation of Scottish MPs and Transport and General Workers Union members, will meet representatives of the Inland Revenue to discuss the tax rules.We now know that £50 million has been remitted to the Treasury and that double taxation will continue because the Inland Revenue does not think that there is a case for not taxing the payments.

Dennis Canavan Ind Falkirk West
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I want to comment on Lewis Macdonald's reply, in which he states:"agreement was reached in December 2000 which would give Scottish pensioners an outcome which was broadly comparable with their English colleagues."That is not true. To try to justify his statement, Lewis Macdonald goes on to say that the initial negotiations were based on the anticipated average payments that the National Bus Company pensioners would receive. That average payment was £7,000 per pensioner. If you multiply that by 14,000—the approximate number of Scottish pensioners and deferred pensioners—you get a sum of £98 million, which has been rounded up to £100 million to try to make it look like a generous offer. The fact is that the surplus per capita in the Scottish scheme was considerably more than the surplus per capita in the English scheme. That is partly because the Scottish pensioners contributed for longer. Therefore, it would be fairer to base the negotiations on the percentage share of the surplus that the English pensioners received. The English pensioners received about 60 per cent of their surplus and the Treasury received about 40 per cent. In Scotland, the reverse has happened. The Scottish pensioners are being offered only about 40 per cent of their surplus while the Treasury will pocket 60 per cent. That takes into account corporation tax, income tax and the £50 million from the surplus itself.Lewis Macdonald has not addressed that point in his letter. I think that we should write back to him on that specific point. He says that it is entirely"a matter for the UK Exchequer",but the amount on offer is the result of negotiations between the Scottish Executive and the UK Exchequer, and under the existing proposals the pensioners are being sold short. Lewis Macdonald should be asked to renegotiate.I turn to the taxation matter that Lewis Macdonald also mentioned. The Inland Revenue is saying that the Scottish pensioners will have to pay tax on their ex gratia payments because they are not payments directly from a pension fund. However, they are payments arising from a pension fund surplus. The Inland Revenue is saying that lump sum payments from a pension fund are tax-free, but lump sum payments from a pension fund surplus are not tax-free. That seems to be inconsistent.Lewis Macdonald has been in contact with Ruth Kelly, the Financial Secretary to the Treasury. She has also written to me. She has agreed to meet a delegation of Scottish MPs and members of the Transport and General Workers Union. It is fair enough that the UK Exchequer and the Inland Revenue are accountable to the Westminster Parliament rather than the Scottish Parliament, but members of the Scottish Parliament and of this committee have been doing all the running on this issue. With a few notable exceptions, Westminster MPs have shown little interest in or knowledge of the matter.I think that we should write to Gordon Brown as Chancellor of the Exchequer and as an MP who represents a Scottish constituency and ask him to meet a delegation of MSPs. More important, the delegation should include members of the Scottish Transport Group pensioners action committee and its adviser, Derek Scott.To sum up, I suggest two courses of action. First, we should write back to Lewis Macdonald telling him that we are not satisfied with his response and urging him to renegotiate so that the Scottish pensioners get at least 60 per cent of the surplus and so achieve parity with their English counterparts. Secondly, I suggest that we write to Gordon Brown and ask him to meet a delegation.

Fergus Ewing SNP Inverness East, Nairn and Lochaber
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The pensioners have been the victims of a real injustice. It is one of the most serious that has occurred since the Parliament was created. I recently met a widow who, although she behaved with extreme dignity, was extremely upset and angry at the way in which the memory of her late husband has been treated.I have some specific points. As I recall, just before the summer recess, the committee—to its credit—expressed broad consensual support for a number of measures. Those measures were set out in a letter to the minister.One of those measures was that widows and widowers should receive the full payment that their loved one would have received had he or she survived, not the 50 per cent payment that many of them are receiving. Perhaps the committee was persuaded by the logic that whoever was responsible for the 10-year delay, it was not the widows, the widowers and the members of the pension fund. Whether the Government or the trustees were responsible is irrelevant. The delay has meant that, in most cases, the widows and widowers will receive only one half of the payment. I feel that that is insupportable. The minister should come before the committee to explain why that decision was made.Although I have yet to have this confirmed in writing, my understanding is that those widows or widowers whose spouses died on or after 18 December 2000 will receive the full payment. That is yet to be confirmed, so I want to be careful about it, but if that is the case, it is a partial concession and it is a tribute to the work of the committee that it has been obtained. I believe that it has been obtained, but I have not had that confirmed in writing and I think that it should be made clear.

John McAllion Lab The Convener · Dundee East
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It was confirmed in a letter to the committee. We discussed it at the meeting on 10 September.

Fergus Ewing SNP Inverness East, Nairn and Lochaber
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I then spoke to another widow on the telephone. She is not my constituent but I spoke to her after speaking to the local constituency MSP, Alasdair Morgan. She broke down. She thought that for some widows to receive the full payment and some to receive a half payment was a mockery. It just could not be justified. The minister has some explaining to do.From a practical point of view, the money that is available for the payments might well allow for full payment without any increase in the overall total. There were 14,000 beneficiaries initially. Some pensioners will have died without leaving eligible beneficiaries such as widows, widowers or offspring. In such cases, the share that the Executive has earmarked for those people will fall into the money that is available for eventual redistribution to all the beneficiaries. We have also had specific confirmation that the residue of the surplus, if you like, will not go to Gordon Brown; it will go to the remaining beneficiaries. Members might not be surprised to learn that I have asked a few parliamentary questions to ascertain how many beneficiaries have been identified at this stage. Although it is early days, perhaps the estimated remaining residue of the surplus that could go to the widows could be calculated. That is a priority.I also want to talk about tax. I will not repeat what Dennis Canavan said, but it is outrageous that, because of a technicality, Scottish pensioners have to pay tax and English pensioners do not. We should examine the Act of Union 1707 to see whether there has been a breach of that piece of legislation. I am not a fan of it, but it is there and it should be enforceable. It is outrageous that Scottish people should be taxed and English people should not purely because of an absurd technicality.I endorse Dennis Canavan's suggestion that Gordon Brown should meet a delegation of MSPs. I also invite the committee to consider that, if we cannot get an answer to the questions, Mr Brown should be invited to give evidence to the committee and explain why Scots have to pay income tax when it is not payable by English people. Surely that is a breach of the Act of Union 1707. The reasons given in justification of the decision are patently without any merit and are absurd.I hope that I have made my two points in a reasonably cogent way.

John McAllion Lab The Convener · Dundee East
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On your point about the Act of Union 1707, the pensioners are not being treated differently because some of them are Scottish and some of them are English. They are being treated differently because one group was in a tax-approved pension scheme and the other group was in an unapproved retirement benefit scheme. The position has nothing to do with their national origin. The Act of Union 1707 does not come into consideration of the issue. However, we can certainly pursue the difference between the two schemes.

Dr Winnie Ewing SNP Highlands and Islands
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It is really a war of words. Dennis Canavan put the issue very clearly, in slight contradiction to what you have just said. Why is there one law for tax on pension funds and a different law for tax on surplus pension funds? They are only words—and words that are being used to cause an injustice. We should be very careful how we interpret them. That is my first point. I remember well when Lewis Macdonald came before our committee and was quite severely cross-examined. I remember him assuring us that he would not just write a letter but would seek to persuade personally. That was his assurance—certainly to me—but he has not done that. All that he has done is written a letter. He says in his letter of 30 September, "I wrote to", and he was quite happy with a letter back. That is not what he agreed to do. We insisted that he should seek to persuade of the justice of this case, which we are all concerned about. He has not done that, and I think that he should be asked why he did not do that, as he promised the committee he would. Apart from all the other comments, I agree that we should bring Gordon Brown here. I would fairly enjoy that, if I am still here.

Dorothy-Grace Elder Ind Glasgow
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The situation concerning the Treasury is such that Gordon Brown, or someone, should be accountable. There is a big difference between being an iron chancellor and simply being a callous person who seems to have lost the moral compass. On Thursday, a similar situation will be highlighted, as thalidomide survivors are coming to the Parliament. Other chancellors in the rest of Europe do not stoop to taking tax from thalidomide survivors; Gordon Brown does. The situation that Dennis Canavan has described has been running for almost as long as the thalidomide situation in terms of the period over which people have paid into funds. Mr Brown should really be the number 1 target.

Rhoda Grant Lab Highlands and Islands
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Our big problem is that we are dealing with two quite different things, as the English pension plan allowed for the surplus to be redistributed and the Scottish one did not. We must try to get a derogation, because, legally, there is probably not an awful lot that can be done, because of the way in which the pension plan was set up. We need a one-off decision that would exempt the Scottish pensioners from having to pay tax. I do not know whether that is possible. Can we find out whether it is possible to get a derogation?

John McAllion Lab The Convener · Dundee East
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The Financial Secretary to the Treasury has already said that there is no case for special treatment in this instance, so I assume that that rules out a derogation.

Dr Winnie Ewing SNP Highlands and Islands
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She may have said that there will be no special treatment, but what we are getting here is discriminatory treatment. What about that for a starting point?

John McAllion Lab The Convener · Dundee East
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We are in a difficult position. The fact that the money has already gone back to the Treasury and that the Inland Revenue has nothing to do with the Scottish Executive makes it difficult to approach Lewis Macdonald on those issues. Dennis Canavan's suggestion that we write to Gordon Brown asking him to meet a delegation of MSPs and pensioner representatives to discuss the issues would be a good way forward. At the same time, we could write to Lewis Macdonald reminding him of the points that Winnie Ewing raised and asking him to address the question of the 60 per cent surplus in England compared with the 40 per cent in Scotland. We could also ask him about the point that Fergus Ewing raised—whether it would be possible within existing totals to make 100 per cent payments to the widows because of the slack inside the system. That would keep the matter going anyway, and would keep the fight up. It may just be that Gordon Brown will agree to meet a delegation of MSPs. If we were to send out a demand that he come here, it would become too political and we would not be helping the pensioners. We are trying to help the pensioners. If we approach Gordon Brown in the right manner, he may well agree to talk to people, rather than being hauled before the committee. In any case, we could not haul him before the committee; we do not have any power to do that and he could simply say no.

Dr Winnie Ewing SNP Highlands and Islands
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Maybe there is decency tucked away somewhere. He might offer to come.

John McAllion Lab The Convener · Dundee East
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He is certainly welcome to come. However, in the first instance, I think that we should write to him, as Dennis Canavan suggested, asking him whether he will meet a delegation of MSPs. It will be a matter for the pensioners themselves to decide which MSPs to take with them. I do not think that members of the committee should necessarily go. Do members agree to take those two courses of action—writing back to Lewis Macdonald about the points that were raised and writing to Gordon Brown asking him to meet a delegation of pensioners?

Fergus Ewing SNP Inverness East, Nairn and Lochaber
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I have just one further point, which perhaps I should have raised earlier. We have been told only that the average payment to an NBC pensioner was £7,000. Could we ask for confirmation that that was the average and for full details of the computation, the number of pensioners and how the average was calculated?

John McAllion Lab The Convener · Dundee East
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We would need to ask Gordon Brown for that, because the Scottish Executive does not have that information. Is that agreed?Members indicated agreement.

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