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 it 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.
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Undertakings were given at the time of rail privatisation. I quote from a Written Answer given by the Secretary of State, John MacGregor. He said:
“My objective remains to preserve the security of rights enjoyed by pensioners and members while adopting arrangements to suit the new structure of the privatised industry. The proposals I am announcing today meet this objective”.—[Official Report, Commons, 20/5/1993; col. 235W.]
He went on—it was a longer answer—but, essentially, workers in the company would legitimately have believed that their pensions were protected. I appreciate that nobody foresaw that the company would go into administration. It was assumed that the protection would transfer with the workers into Jarvis. Nobody at that time anticipated what would happen to Jarvis. Nevertheless, in moral terms, the Jarvis workers have a right. They could not foresee that their company would go into administration, yet they lost a significant proportion of their pension entitlement. That is unfair, and it is only proper to ask the Government to step in, whether by accepting this amendment or by another method. I accept that there are possibly other ways of doing it. People who legitimately expected their pension entitlements to be protected found that they were not. I beg to move.