Welcome back colleagues. We move to item 3, which is our consideration of current petitions. The first petition is on the subject of the surplus from the Scottish Transport Group pension funds. The petitioners are calling on the Scottish Parliament to urge the Scottish Executive to increase at the earliest possible date the amount on offer to the former members of the Scottish Transport Group pension funds so that they receive maximum benefit from the pension funds surplus.Petition PE500 was prompted by the petitioners' concerns about the continued failure to make payments from the pension funds surplus to former members of the Scottish Transport Group pension funds despite the fact that the Scottish Bus Group was privatised 10 years ago.At our meeting of 3 March 2004, the committee agreed to seek further comments from the Executive on a number of issues arising from the petition. In particular, the committee sought confirmation of whether the £49.5 million surplus in the pension funds has been allocated to the Scottish consolidated fund. We also sought clarification of whether the interest that has accumulated since December 2000 would be allocated to the ex gratia payments.The committee also noted that a residual sum of £4.3 million from the £126 million that was allocated for ex gratia payments has yet to be distributed because the Scottish Public Pensions Agency is awaiting the submission of late claims. The committee asked whether the Executive has any plans to set a deadline for claims after which time the residual sum could be distributed among those who have submitted valid claims.The committee has received a response from the Minister for Transport in which he states that the £50 million surplus was retained by the Treasury. He goes on to say:"The actual interest accumulated in the pension funds after December 2000 and prior to their winding in 2002 was secured for the ex-gratia payments".He also says that he is "considering the way forward" on the subject of the residual sum.The committee has also received a response from the Inland Revenue in which it states:"There are no ‘special' or exceptional circumstances under which the Inland Revenue will agree to the payment of an ex-gratia lump sum from surplus funds of an approved pension scheme to the scheme beneficiaries … There are, however, clearly defined circumstances under which we will consider approving an ex-gratia lump sum payment under the discretionary powers afforded by section 591 ICTA 1988."The subject is complicated. Dennis Canavan is at the committee today to say a few words. I hope that he can take us through some of the issues.
Official Report · Committee
Current Petitions
Scottish Transport Group Pension Funds (PE500)
Speakers
Choose an MSP to read only their contributions- Michael McMahon Lab 4
- Dennis Canavan Ind 4
- John Scott Con 2
- Helen Eadie Lab 1
- Carolyn Leckie SSP 1
The record
12 contributionsThank you for giving me the opportunity to address the committee. I promise to be as brief as possible.None of the letters that the committee has received constitutes a satisfactory response to its inquiries. I therefore respectfully suggest that the committee consider pursuing the matter by writing further letters to Nicol Stephen and Gordon Brown. Why Gordon Brown? The first bullet point of Nicol Stephen's letter states that the £50 million is"wholly a matter for the UK Exchequer",but we have never been given a satisfactory explanation as to why the UK Exchequer is holding on to that money. When the ex gratia payments were announced, the UK Exchequer and the Scottish Executive said that the aim was to achieve parity of treatment between the Scottish Transport Group pensioners and the National Bus Company pensioners south of the border. However, the fact remains that the National Bus Company pensioners got 60 per cent of their gross surplus and paid no income tax, whereas the Scottish Transport Group pensioners are getting only about 47 per cent of their gross surplus and are having to pay income tax.The Chancellor of the Exchequer has ministerial responsibility for the Inland Revenue, whose reply is also unsatisfactory, although the fourth paragraph leaves the door very slightly open by referring to the discretionary powers of"the relevant Inspector of Taxes."I suggest that we pursue that point with the chancellor.In his letter, Nicol Stephen gives no details about how the interest was calculated and he claims that no interest is payable for the period from March 2002, when the scheme was wound up, to August 2002, when the first ex gratia payments were made, because he says it is "normal government practice" to treat such money as a fixed sum and not to pay interest on it. I do not think that Nicol Stephen is correct in saying that, because the Inland Revenue pays interest on late payments and the ex gratia payments in this case were undoubtedly very late payments.On the residual sum that is referred to in the final paragraph of Nicol Stephen's letter, I suggest that we urge the minister to announce an early cut-off date for late claims and then divide the residual amount among all successful claimants. Average payments would amount to about £330 per pensioner, which is not a huge amount of money. However, that is the very least that the Scottish Executive could do to bring about a fairer deal for the Scottish Transport Group pensioners.
Thank you. I have taken a keen interest in and attended meetings with Dennis Canavan on the issue and I am amazed that unanswered questions are still hanging about. From the outset, the pensioners have consistently asked questions and the lack of answers has increased their frustration as time has worn on. We need to get to the bottom of why money remains outstanding and why people are talking about discretionary payments and what have you at a time when a decision must be made about what is to be paid out and when that might happen. The situation is very unsatisfactory and we must stress to the minister and the Treasury that we want a definitive answer to the questions that Dennis Canavan and others have continually asked without receiving answers. We must also stress that we want to know the timescale for the commitment to pay out the amounts in the surplus fund that remain outstanding.
The convener and Dennis Canavan know more about the situation than I do. Have efforts been made to track down the people who are entitled to payments but who have not come forward? How much money is being spent on doing that?
I understand that the Scottish Executive and/or the Scottish Public Pensions Agency have advertised and done everything possible to try to trace potential late claimants. I presume that the SPPA has access to the records of members of the pension scheme that would have been passed over when the scheme was wound up and I understand that the agency has been proactive in trying to trace late claimants.However, let us suppose that the worst came to the worst: a cut-off date was specified, the residual amount was paid out to all successful claimants, and then some very deserving late claimant suddenly appeared. A huge amount of money would not be involved. The amount needed could easily be met from the contingency fund, although I do not foresee that happening at all. In the interests of justice, it would be fair to announce an early cut-off date and then pay out the remaining amount to all successful claimants.
That seems reasonable to me.
I agree with everything that the convener and Dennis Canavan have said. I, too, have constituents who have been affected. I suggest that we should do what Dennis Canavan suggests, which is—he can correct me if I am wrong—that we write back to Nicol Stephen about the interest. Dennis Canavan is right about that matter. We should also pursue the issue with the Treasury. Those are the two key points that have been made and I hope that the committee will write back along those lines.
I share everybody's frustration, as the matter seems to be simple. The money—plus interest—belongs to the pensioners and no explanation has been offered as to why people are sitting on money that does not belong to them. The responses simply state the sums and the facts—they do not offer any explanations, which is wholly unacceptable. I am happy to endorse Dennis Canavan's suggestions for pursuing the matter.
I think that Dennis Canavan will agree that, initially, Treasury rules prohibited any payment of any sort from the fund, but a change by the Government allowed moneys to be paid. Therefore, I cannot understand why, having decided to pay out the sums of money, it is prevaricating on how to pay out the money. That baffles me.
I do not think that Treasury rules prohibited such payments, but a Treasury attitude was certainly involved. To this day, the Treasury and the Scottish Executive claim that they have no legal obligation to give out a single penny in ex gratia payments—indeed, that is why such payments are called ex gratia payments. However, the matter has never been tested in the courts. The pensioners action group in Scotland has received a legal opinion to the effect that if the matter was tested in the courts, the action might very well be successful, as indeed the NBC pensioners south of the border were successful. There was not really a change of Treasury rules. I pay tribute to Gordon Brown and Henry McLeish. For a long time, there was no sign of the Treasury budging on the matter, but in December 2000, following a meeting between Henry McLeish and Gordon Brown, a joint announcement was made that £100 million would be allocated for ex gratia payments. Since then, there have been modest increases in that amount.
Do members agree that we must get answers to the questions that have been posed and that we should continue to pursue the matter further until we receive those answers?Members indicated agreement.
Thank you, convener.
In this meeting
Everything on 9 Jun 2004 →- Scottish Parliament Public Petitions Committee Wednesday 9 June 2004 (Morning) Petitions · 1
- Item in Private Procedure · 4
- New Petitions Petitions · 54
- New Petitions Petitions · 74
- New Petitions Petitions · 31
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- Current Petitions Petitions · 12
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