Current Petitions

Thank you for allowing me to address the committee. I promise that I will be brief. It will save time if members refer to the briefing paper that I have prepared, which has been circulated by the clerks.I have been asked by the pensioners action committee to convey thanks to the convener, to the Public Petitions Committee and to the previous Public Petitions Committee, under the convenership of John McAllion, for the good work that they have done on the issue over a period of years. Thanks largely to the committee's work, most of the pensioners have received at least one ex gratia payment from the STG pension fund surplus. However, as I have noted in the briefing paper, there are at least four outstanding issues.First, the original amount in the fund surplus was £270 million, but if we deduct 35 per cent corporation tax and the sum that the Executive allocated for ex gratia payments, we are still left with £49.5 million. The pensioners have never been given a satisfactory explanation of where that money has gone. Has it gone to the Scottish consolidated fund or to the UK consolidated fund? Or has it just disappeared into a big black hole somewhere?Secondly, both corporation tax and income tax have been deducted from the payments. Normally, ex gratia payments from a pension fund are free of income tax but, in this case, pensioners have had income tax deducted from their payments despite the fact that corporation tax was sliced off at an earlier stage. The committee wrote to the Inland Revenue on that issue of double taxation, as members will see from the note that has been prepared by the clerk, but I do not think that it has received a reply.The third point is on accumulated interest. Way back in December 2000, the then First Minister and the Chancellor of the Exchequer made a joint announcement about the ex gratia payments but, between that date and the date of payments to the pensioners, there was presumably an accumulation of interest. The pensioners feel strongly that the interest should be added to the amount that is available for ex gratia payments.Fourthly, in reply to a recent parliamentary question, the Scottish Executive told me that even by its calculations a residual sum of £4.3 million is left out of the £126 million that was allocated for ex gratia payments. The Scottish Public Pensions Agency states that it is still waiting for late claims to be submitted—that is why it seems to be reluctant to part with the remaining sum. However, the pensioners have suggested to me that the Executive or the agency should set a deadline for claims and then distribute the residual sum by further payments to all those who have submitted valid claims by the stipulated deadline. I therefore suggest that the committee write to Nicol Stephen, the minister who is responsible, regarding points 1, 3 and 4, and to the Inland Revenue regarding point 2, if the committee has not already received a reply from it.

No, I think that that would be for the Scottish Executive to determine. We are talking about a residual sum out of the £126 million that has already been agreed. There is no dispute between the Scottish Executive and the Government at Whitehall about the £126 million that has been allocated for ex gratia payments. However, there is still £4.3 million of it left, which has not been paid out so far because the Scottish Public Pensions Agency, which distributes the money on behalf of the Executive, wonders whether there might be some late claims still to come in. It would be reasonable to assume—as the pensioners action committee has suggested to me—that the Executive should set a deadline for the submission of claims. Following that deadline, the agency should distribute what is left to those who have submitted valid claims, in proportion to their length of service or the contributions that they have made to the funds during their working lives.

I am aware of that argument. If the committee wrote to the minister, asking for an explanation of the situation, that would help to clarify matters.

That is a good question, which requires clarification. The £49.5 million is the remainder out of the gross sum in the pension fund's surplus. The £4.3 million, which is referred to in point 4, is what is left out of the £126 million that the Executive and the Government have agreed should be distributed in ex gratia payments.

No, we do not. It must have gone to either the Scottish consolidated fund or the UK consolidated fund. The question is why the Government or the Executive is holding on to that money, which came out of the pensioners' fund.

That is correct. The scheme for the transport group south of the border was different in some respects. However, the Treasury and the Scottish Executive decided that there should be a rough parity between the Scottish and English schemes in respect of the ex gratia payments. However, if the calculations are done in percentage terms, pensioners in England received ex gratia payments that were about 60 per cent of their surplus. In Scotland, the figure does not work out at 60 per cent at all, especially if double taxation is taken into account.

That would happen in any case. The qualification is that the beneficiary was alive in December 2000. I think that the date was 20 December or thereabouts, which was the date on which Gordon Brown and Henry McLeish, who was at that time the First Minister, made the joint announcement. Obviously, if someone died after that date, the money would go to their estate, which means that their family would get the benefit.

The Executive has gone to considerable efforts to publicise the matter in newspaper advertisements and so forth. It is highly unlikely that late claims will come forward at this stage. I think that it is reasonable to set a deadline.

Thank you, convener.