Rebellion over rail pensions defused

THE GOVERNMENT last night bought off a potentially embarrassing rebellion in the House of Lords with an offer of further talks on safeguards for British Rail pensioners in privatisation legislation.

Lord Peyton, a former Tory transport minister, warned ministers of a 'residue of suspicion and ill-will' unless a full guarantee of index-linked pensions and fund solvency was written into the Railways Bill.

Ministers and BR pension fund trustees reached an agreement last July on safeguards for the 341,000 existing and future pensioners. A memorandum of understanding between the Department of Transport, the trustees and the BR board gave pensioners 'an absolute government guarantee' of index-linked payments when a new fund is set up next year and 40 per cent of any distributed surplus.

The Earl of Caithness, Minister of State for Transport, told peers who were pressing for the memorandum to be written into the Bill: 'It is our firm intention to abide by the memorandum of understanding. The Government regards it as binding.'

However, he offered talks with Lord Peyton over further amendments to give the Secretary of State for Transport power to guarantee the solvency of pension schemes. Lord Peyton then withdrew critical amendments. The Report Stage of the Bill begins tomorrow.