Mr Alistair Carmichael
MP for Orkney and Shetland · Liberal Democrat · United Kingdom
“I do not know whether this is something I still need to declare, Mr Speaker, but I visited the Falkland Islands in 2003 as a guest of the Falkland Islands Government. They have never invited me back.”
“I remind the House of my entry in the Register of Members’ Financial Interests and also that my wife is a practising veterinary surgeon. What is happening was predictable because it was predicted. The Government were warned by the National Audit Office in June last year that they were unprepared for outbreaks of this sort.”
“The Minister is surely aware that there is no route to net zero that does not go through oil and gas hydrocarbons, and that not exploiting resources on the UK continental shelf leaves us reliant on imports, which also has carbon consequences that must be taken into account.”
“The transition to clean energy could be an opportunity to build a different model that would, to use the First Secretary of State’s own words, end “overly centralised decision making and over-privatisation”.”
“I welcome what the Prime Minister just said about strengthening farming. If he is serious about this, one of the first things he can do is ensure that our farmers do not have to compete with imported food that is produced to lower standards than we expect.”
“Q4. Like others, I have always respected the Prime Minister as somebody who was in politics because he wanted to give service to his country, and he has earned our gratitude for that. In my constituency, those who volunteer as coastguard rescue officers also do so from a wish to give service to their community.”
The complete record
Every one of 4,707 lines we hold for Mr Alistair Carmichael, in date order, each linked to its source. Free to read, in full, without an account. Page 12 of 95.
“There are significant developments under way, not least the Government’s recent consultations, which could significantly shape the way in which defined benefit pension schemes treat their beneficiaries in the future. Although I initially thought that I was dealing with a couple of oil companies, I now see that it is a range of different companies. Yesterday I read an alarming brief from the pensioners of Hewlett-Packard. It is pretty clear that, as this area of pension policy develops, an ever larger number of large corporates will take the same path as BP and Shell. Ultimately, it will be our constituents, as beneficiaries, who lose out if we get it wrong and if these companies are allowed to do as they wish, rather than as they ought, on the position of their pensioners.”
“I beg to move, That this House has considered pension schemes. I am grateful to the Backbench Business Committee for allowing time for this debate. I last spoke about this issue in a half-hour debate in Westminster Hall on 17 January, and there have since been a number of significant developments, not least the third report of the Work and Pensions Committee, which is a good and substantial piece of work. I am delighted to see its Chair, the right hon. Member for East Ham (Sir Stephen Timms), in his place, and I will touch on the report towards the end of my comments. Events have unfolded for the various pension schemes over the last few months, and what I spoke about in January as being particularly pertinent to the beneficiaries of the defined benefit schemes at BP and Shell has begun to look more like a wider course of conduct.”
“However, strong governance will also be essential. We recommend that DWP should conduct an assessment of the regulatory and governance framework that would be needed to ensure member benefits are safe and take steps to mitigate the risks before proceeding.” In this brave new world for defined benefit pensions, that is a warning that the Minister and the Government would do well to take onboard. If they do not, I am afraid that the losers at the end of the day will be our constituents, the beneficiaries of such pension schemes. We will look back in years to come, and we will see that the cases of BP, Shell, ExxonMobil, Hewlett-Packard and others are simply the canaries in the coalmine.”
“In particular, the executive summary says: “Many schemes are much closer than they expected to being able to enter a buy-out arrangement with an insurer to secure scheme benefits.” I touched on that earlier. The Committee was also right to talk about the various reasons why the flexibility would be advantageous to wider interests. There is a balance to be struck between the company, the beneficiary, and the national interest, in relation to the money being available for investment. That balance has to be properly struck, and it will inevitably slew towards the interests of Government and corporate interests, unless the necessary protections are put in place. The Committee also observed: “We note the current consultation on the level of funding a scheme would need to have for surplus extraction to be an option.”
“The retirees’ legal fight is taking place against a backdrop of a retirement wave nationwide, with the US Census Bureau estimating that one in five Americans will reach the age 65 or older by 2030.” That was the nature of the commitment that BP employees in America gave to the company, and it is a measure of the moral bankruptcy that appears to be at the heart of that corporate that it could not see that payback was necessary for these people in their retirement. I will touch briefly on the Work and Pensions Committee report to which I have repaired. I apologise for doing something that I was always told not to do as a law student: I will read from the rubric, rather than the substance of the report. I welcome what the Committee said about scheme surplus and governance.”
“The judge agreed and found there is a pension shortfall for many.” It is worth reflecting exactly what the people who took that case were motivated by: the work that they had done for BP. The article continues: “Fritz Guenther, lead plaintiff, dedicated his work life to BP often in dangerous conditions on the North Slope of Alaska. He worked two weeks on, two weeks off for years relying on BP’s representations regarding his retirement. While he is still healthy, he says many of his colleagues face health issues, while others still have died within the past eight years.”
“(BP), in a huge victory for oil workers, with a federal judge ruling that BP”— this is worth paying attention to— “‘committed fraud or similarly inequitable conduct’ in how it announced a pension formula change more than 30 years ago…Federal judge George C. Hanks, Jr., ruled that BP violated the Employee Retirement Income Security Act (ERISA) of 1974 and plaintiffs”— that is, the workers— “are entitled to appropriate redress by ‘equitable relief.’ The court ruled plaintiffs demonstrated BP committed multiple violations of ERISA in its communications to its employees…The Sohio retirees maintained, since 1989, BP had insisted the new formula would provide benefits as good as or better than the old formula.”
“I find it difficult to see any explanation other than that the funds are being fattened up before being hived off to insurance companies or others. The Times —The Thunderer—is not the only news outlet to have reported on BP pensions recently. On 29 March 2024, the PR Newswire reported a case in Houston, Texas, in which the judge told BP that it must reform its pension plan, following an eight-year legal battle over pension losses. Again, we are dealing with big corporates, which have deep pockets and can see off the attention of the small pension beneficiaries. PR Newswire said: “A group of Standard Oil of Ohio (Sohio) oil workers received a winning decision…after an eight-year legal battle with BP Corporation North America, Inc.”
“The Post Office was big enough, strong enough and well enough connected simply to ignore the sub-postmasters, to lie about them, to straight-bat their concerns, and to deny what was obvious to everyone until they could no longer manage to do so. What is the agenda here, and ultimately who will be the winners and the losers? It is pretty obvious that the pensioners will not be the winners. We should consider the reputational damage that the issue is doing to BP and Shell. Obviously, any oil and gas company these days has to be a fairly thick-skinned corporate entity, but still I ask myself why they simply refuse to engage. Why are they denying the very obvious and clear justice of the case being put forward by their own pensioners groups?”
“The message is that it could all end up in an unseemly scramble.” The article continues: “The bitter dispute with BP is just “a foretaste” of how relations between many other DB pension fund members and their former employers are going to sour if the surplus-grabbing reforms are pushed through without proper safeguards. The old world is dead.” That sums up very well the tension between surplus clawback and the need to honour the commitments that were given to beneficiaries. We see so often this mismatch, which affects the ability of the citizen to take on the big corporate, or the big public body. This is just the private sector version of what happened to the sub-postmasters.”
“But even those safeguards aren’t nearly enough to fully protect members, according to a trenchantly argued submission from a ginger group of BP pension fund members, the BP Pensioners Group. Attempts by employers to evade their promises will be “legion” it says; they will “trim back or remove any benefit possible”; they will “abuse loopholes” in the rules to maximise their clawbacks. They will push hard to minimise what members should “reasonably expect”. It also warned that the prospect of executive bonuses being fattened up by success in grabbing back surpluses will be far more potent in driving company behaviour than any residual feeling of responsibility to ensure schemes pay every last penny of promised pensions.”
“I would have loved to have been at BP’s annual general meeting this year; by all accounts, it sounds to have been a heated affair. The analysis published recently in The Times by its financial editor ties in very well what BP is doing with the concerns we should all have about the future direction of travel. In a recent article, the financial editor wrote: “Everyone at least pays lip service to the notion that meeting pension promises in full is paramount. No surplus should be touched without a meaty asset buffer being built up. No sponsor should be allowed to extract cash without showing a strong covenant—providing reassurance that it will still be around to pick up the pieces if things go wrong.”
“We feel that the foregoing demonstrates that sponsors require no assistance or encouragement in that and on the contrary, stronger measures are necessary to hold the surplus for the benefit of the beneficiaries, particularly in contributory schemes in which they have invested their own money by way of deferred salary and additional voluntary contributions.” The Select Committee report has given careful consideration to this matter. Along with most of those to whom I speak, I am well pleased with the recommendations of the report in that regard. BP also continues to double down. There continues to be no formal engagement with the pensioners’ group—what the previous chief executive officer called “the zero- engagement strategy”.”
“It has gone into accelerating a programme that was supposed to take 15 years and instead has been concluded in four years. I am afraid to say to the Minister that the Shell Pensions Group also has strong concerns about the consultation that he launched on 24 February, under the heading “Options for Defined Benefit schemes”. It says: “We are therefore aghast that…the Pension Minister opened a new consultation…with a view to identifying ways of encouraging and enabling sponsors of DB schemes to claw back surpluses.”
“From the actuarial reports and the scheme’s accounts, it concludes that “during the same period, instead of a balanced approach using about 25% of the surplus (as quoted by Shell as necessary for a full cost of living increase) to the immediate benefit of the 93% of members whose pensions are currently deferred or in payment, the Trustee has largely opted to dissipate the surplus by massively accelerating completion of its Low Reliance (upon Shell) investment transition plan. This fifteen year plan was commenced in 2018, but with the acceleration opportunity provided by the surplus arising from increased bond deals, it was almost fully completed in 2022.” That is where the money that could have funded the pension increases has gone.”
“It says: “Shell has imposed this benefits cut upon its pensioners during a period when: the Fund was in healthy surplus and well able to afford full cost of living increases without call upon Shell’s sponsor covenant; and Shell, its shareholders and senior executives benefited hugely from the same energy crisis that was already causing their pensioners extremely high rises in their cost of living.” The Shell Pensions Group has done considerable and detailed research on that point.”
“I am concerned now to see that BP pension fund trustees with a collective 94 years of membership of the fund have been replaced with four with precious little involvement, two of whom are citizens of the United States. Since we last debated this issue, both Shell and BP have again refused any discretionary increase to their beneficiaries—in essence, they are doubling down. The briefing I have received from the Shell Pensions Group is of particular concern. As it is crafted succinctly and concisely, I shall, with your indulgence, Madam Deputy Speaker, read it into the record.”
“They do not seem to understand that they are the inheritors of businesses that were built by others, who are now among those who would be the pension beneficiaries. If one is to stand on the shoulders of others, it is always good to respect the fact that one enjoys the view one has because of the shoulders on which one stands. I am sorry to say that that seems to have been forgotten in the boardrooms of too many of our large corporates. I have expressed these concerns about BP, in particular, before. I remind the House that I have a large number of BP pensioners in my constituency, because for many years BP operated the oil terminal at Sullom Voe. It was a good employer and we valued its presence in the community for many decades.”
“They were given undertakings at the time that one advantage of a big pension scheme at a company such as that was that they would later in life have an income that was protected against inflation. So a question of good faith is at play here. I have no doubt that for many of the big corporates, the BPs, Shells, Hewlett-Packards and so on, the possibility of paying money to those who are no longer economically active and contributing to their business is tiresome and inconvenient. I never cease to be amazed by the extent to which those at the top of these big corporates seem to think that somehow the corporates are as big as they are simply because of the role that they have played.”
“If someone in employment is unhappy with the money they get for the work they do, they can look around and find another job, or they may choose to retrain and do something else more profitable. Once someone is of retirement age, they no longer have that choice and flexibility, which is why it has long been established as a matter of public policy that the beneficiaries of pension schemes require protection. After all, this is simply deferred income, with our being paid later, after we have stopped working, for the service we have done. It is a fundamental aspect of that protection that it should take as its starting point the undertakings that were given. At BP and Shell, and I do not doubt ExxonMobil, people were given vigorous encouragement to join pension schemes and invest in them.”
“It pains me to say it, but I think the right hon. Gentleman is absolutely right. What might have started with the oil and gas companies is clearly going much wider. I should declare an interest, as I hope to be the beneficiary of a defined benefit pension, if I live that long, having been in the House before the move to career average earnings in 2011. I will not rehearse what I said about the decision of BP, Shell and others not to pay a discretionary increase, which mattered significantly to their pensioners at a time when inflation was running north of 11%. However, it is worth reminding the House that a fundamental point of fairness is at stake here. When one is past retirement age, one no longer has the choices one has when one is of working age.”
“I am grateful to the right hon. Gentleman for touching on an area that I should perhaps have given more attention to. The most important protection we can give the beneficiaries is through ensuring that there are independent trustees, and that the office of trustee cannot be manipulated by the company. Does the Select Committee have any proposals for improvement in that regard?”
“I can understand the attractions of such changes for Governments and corporates, but I impress upon the Minister the need to ensure that if changes of this sort are to be made then the first protection always has to be for the beneficiaries. If there is to be flexibility for Governments and corporates to get investment in big infrastructure projects, that is to be encouraged but it should never be at the expense of the pensioners themselves.”
“The function and purpose of debates such as this is to ensure that the concerns of our constituents are heard in Government; the presence of the Minister on the Front Bench is an important symbol of that. The companies to which reference has been made, BP, Shell, ExxonMobil, Hewlett-Packard and Allied Steel and Wire, are some of the best known high street names in the country, and I hope that what we have heard in this debate will be heard also in the boardrooms of those and other companies. The people who run those companies should understand that we are watching what they are doing, that they have an obligation to treat their former workers and their pensioners fairly and that, if they do not have it within themselves to do that, we in Parliament and in Government will make sure that they have to. Question put and agreed to.”
“When I contacted the Speaker’s Office this morning, I was told there was only myself and the right hon. Member for East Ham (Sir Stephen Timms) down to speak, so I am delighted that we have had a good debate. We have had contributions from no fewer than 10 Members, which, given what is happening elsewhere today, is quite significant. A number of Members made reference to the WASPI issue; I did not do so in the course of my remarks because it was not really germane, but it is a point well made and I very much associate myself with it. The ombudsman took long enough to get a report on that, and now we need to get on and honour it. Otherwise, what is the point of having an ombudsman in the first place?”
“No one from the organisation was prepared to come to this House, sit in a room for an hour with the people whose lives had been most dramatically affected by their decisions, look them in the eye and explain what they had done.”
“One of my constituents was out for £130,000, so he is £45,000 down and has suffered a further loss as a consequence of the fact that he was one of the brave souls who was party to the court action. The 95 people who were behind that court action are now left with a bill of almost £2 million. Notwithstanding the fact that this is a consequence of the way that the FCA has gone about its business, it wishes to have no further part in any discussions with the people who were affected. I organised the screening of a documentary in the House a few weeks ago. Even the judge who heard their case turned up. I have never heard of this happening before, but the Financial Conduct Authority did not want to know.”
“On no fewer than three occasions, the FCA, or the Financial Services Authority as it was initially, failed to read the warning signs and take action. As a consequence, that was allowed to continue. Had it acted at the first available opportunity, there would have been only one victim of Alistair Greig, rather than hundreds. As is often the case with these matters, a handful of people were determined to fight, but they were rebuffed at every turn. They were told, “No, this is nothing to do with us. It is not a matter of regulation; it is a question of the creation of a principal and of an agent,” and the rest of it. They took court action, which cost them £2 million, and they lost, but eventually the FCA was forced to put them into the financial services compensation scheme, which gave most of them compensation, albeit capped at £85,000.”
“I beg to move, That this House has considered the accountability of the Financial Conduct Authority. It is a pleasure to serve with you in the Chair, Sir Philip. I welcome the Minister to his place. I know that he has an interest in these issues, and I hope that this debate will be a productive exercise for us all. It may be worth explaining a little bit about how I came to be interested in the FCA. I probably speak more about fishing than financial services in this House, but the FCA came to my attention as a consequence of constituents who I have been helping. They were victims of a Ponzi scheme, and they lost hundreds of thousands of pounds as a consequence of fraud. The perpetrator was sentenced to 14 years, later reduced to 10 years, in the High Court of Justiciary.”
“I absolutely agree with my hon. Friend. In fact, as I hope will become clear as my remarks develop, the way that the FCA is going about its duties at the moment is working for nobody. It is clearly not working for the communities most directly involved, for the financial services sector or for members of the public such as my constituents, who have been left to beat their head against a brick wall for years in their dealings with the FCA.”
“However, we all remember why we have it and why it was set up. For the national economic interest of us all, it is too important to fail, but surely it is apparent that it is failing, and somebody needs to take control and change that.”
“Friend the Member for North East Fife (Wendy Chamberlain), it is surely clear that it is working for nobody. It is not working for members of the public who rely on the protection it might give them, as evidenced by my constituents and the impact they felt from the Midas Financial Solutions Ponzi scheme’s fraud. It is not working for the benefit of the sector that it regulates, as evidenced by its proposed changes to the enforcement code. It is not working for our communities, as evidenced by the work on access to cash referenced by my hon. Friend, and it is most certainly not working for the benefit of the people it employs. It is apparent to me that the poor culture in the FCA is driven from the top and then bleeds into every aspect of its work. As an organisation, it has lost direction and lacks leadership from the top.”
“What are the Government doing to hold the FCA leadership to account for the problematic culture of fear and burnout, the high staff turnover and the sinking morale that Unite the Union has consistently reported over the years? Why has the FCA persisted with a severely outdated model of staff performance grading, long abandoned by the industry it regulates? Surely the FCA should be leading the sector as a role model, should it not? Finally, why has the FCA made no headway in its large disability pay gap? Unite the Union reports that staff with disabilities, neurodivergence or complex personal circumstances are simply getting poorer performance and pay outcomes than their peers. The FCA as an organisation does massively important work in the public interest but as I said to my hon.”
“I do not expect the Minister to answer them all, but perhaps he could follow up in correspondence. Why does a public sector organisation that pays its chief executive over £450,000 a year find it acceptable to pay a large number of staff below the Joseph Rowntree Foundation’s minimum income standard? Why has the FCA not made any cost of living adjustments for its staff in the 2024 pay round, following a punishing cost of living crisis? Why has the FCA not delivered the resource and priority it has promised staff representation in the wake of recent failures? If the FCA is committed to “best in class” staff representation, as the FCA chair Ashley Alder told the Treasury Committee last year, why will it not recognise a trade union?”
“The FCA carries out a quite remarkable performance assessment framework, which is not a million miles removed from the one that I knew when I first became a civil servant at the start of my legal career 30 years ago. I thought we would have moved well away from that, because it was hopelessly inadequate—but no; it seems as if it is almost designed to encourage mediocrity. It is the sort of system that was used by a number of public sector and City companies for a long time, but I do not know of many companies that have used that sort of framework for the last 10 years. It has destroyed the collaborative working environment within the FCA, and 81% of respondents to the Unite survey identified it as being unfair to them. Unite has posed some questions to me that I will read into the record.”
“I have to say, though, that the staff I met genuinely understand the importance of the work they do in the public interest; they value the role they play, but clearly feel undervalued by the senior executives and the people at the top—and, actually, they are undervalued. Sixty staff working at the FCA earn salaries of less than £29,500, which is the Joseph Rowntree Foundation’s minimum salary recommendation that is required for an acceptable living standard. In fact, that amount would not even allow someone to bring a spouse into the UK under immigration regulations these days. Unite the Union has surveyed staff extensively and speaks about the toxic environment within the FCA for staff reps, who are given little assistance or support and minimal information.”
“I am not going to tell the House what they told me, because even though what they told me was in general terms—just for my own background and understanding—they were concerned that if something I said allowed them to be identified within the organisation, it would be to their professional detriment. Just hold that thought for a second: they are so concerned, and the culture in the FCA is so poor, that they are not prepared, even anonymously, to speak to Members of Parliament. If anybody doubts that there is a cultural problem within the FCA, that should surely remove those doubts. The morale among staff is pretty poor.”
“That matters in relation to the enforcement code changes because there is a real risk of undermining this country’s reputation for stable and predictable regulation. Given the importance of financial services to the economy as a whole, the wider national economic interest is clearly at play. The culture also goes wrong when we look at the way in which the FCA runs itself. I have had the benefit of a briefing from Unite the Union, and will turn later to some questions it poses through me. Independently of that, I have spoken privately to a handful of people who work for the FCA.”
“For such an industry, the reputational consequences of naming and shaming at such an early stage could be catastrophic. The people most directly affected are not the big City firms, because they are big enough to withstand the damage, but the small and medium-sized enterprises, for which the FCA does not demonstrate the level of concern that it should. A report by Spotlight on Corruption in February showed that 90% of the value of fines against directors in the financial services sector was levelled against directors in SMEs, and only 2% against senior executives in large companies. It is part of the culture that the regulator seems to be staffed and driven by people in the big City firms, who seem to get a different level of service and, dare I say, protection than the SMEs.”
“Lower down the food chain, where fewer people are affected, including my constituents, it is much more difficult for anybody to get justice. That is how I became interested in the first place. As is often the case, when one starts to lift rocks, what is underneath takes one off in other directions. I am afraid that I have found little under any rock that I have lifted to make me think there is anything in the FCA at the moment about which we should be happy or optimistic. The FCA is consulting on proposals to change its enforcement code. Essentially, it is talking about naming and shaming much earlier people who have become a subject of concern. That has to be viewed in the context of its performance: an average FCA investigation takes at least four years. In 65% of cases referred to it, no further action is taken.”
“I am delighted and relieved to see the hon. Gentleman in his place; he is absolutely right. The engagement of the average constituent—I am legally qualified, but I include myself in that—with the financial services sector is often a matter of supreme consequence. Very often, they have to rely on the judgment and expertise of the people with whom they are dealing, who are regulated by the FCA. That is why this matters for all of us. The parallels with the Post Office are unavoidable. It is the same situation time and again: a well-resourced public body decides to deny, deny, deny until eventually people have to give in. That worked for the Post Office, although we were able to break through it. That is just one of the most egregious examples.”
“I have absolutely no argument with the Minister on that point—it is absolutely sensible—but the fact of the matter is that the regulator was told not once, not twice, but three times, and each time it failed to take the appropriate action. It was sometimes just as basic as putting people through to the wrong extension when they phoned. The truth of the matter is that if my constituent and the 94 others who took legal action had not stuck with it, nobody would have got any compensation from the FCA. That is why there is surely a basic point of fairness and justice here: having been the ones who got the money for everyone, the money that they spent getting that compensation should be recognised.”
“I understand the concerns about housing shortages, which I have in my constituency. The answer to the shortage of housing, however, is to build more houses; it is not to punish what is a very important part of the local economy, including in parts of the country like mine. The advantage of such a tax provision is that it allows for the improvement and professionalisation of the sector, which at the end of the day can only improve the visitor offering.”
“On a point of order, Dame Siobhain. When I intervened, I should have pointed out that I have a declarable interest registered. I apologise to the Chamber for not doing so at the time and I hope the position is now clarified.”
“Will the Prime Minister, or possibly the Secretary of State for Energy Security and Net Zero, get energy companies, the regulator and customer groups together, so that we can stop passing the blame around, and find a solution that does not yet again leave people in the highlands and island behind and out in the cold?”
“Q3. I know that you, Mr Speaker, want to join me in sending condolences to the friends, family and colleagues of our former colleague, Lord Andrew Stunell, who served with exceptional diligence and grace as MP for Hazel Grove in this House, and who passed away very suddenly on Monday. When the BBC ends longwave radio transmission next year, that will also end access to electricity tariffs such as Total Heating Total Control, which is relied on by almost 1 million households across the United Kingdom. Switching to smart meters will not fix that for most people, not least because the roll-out programme is so far behind.”
“The Times reports this morning that the number of visas granted for care workers in March this year was 83% down on the figure for March 2023. Does the Minister expect that reduction to continue? If he does, who will do the work that those carers would have done, and what impact does he think it might have on the national health service?”
“That might be the law, Madam Deputy Speaker, but you will never persuade me that it is justice.”
“Is not the truth of the matter that the debate will continue whether we have it here or not? My colleague Liam McArthur has a Bill going through the Scottish Parliament at the moment. Similar legislation is being considered in the Isle of Man and in the Channel Islands. This issue will have to be addressed. Either we do that in our own time, with our own measured, reasoned debate, or we risk having decisions made for us.”
“I have worked with the hon. Lady in her role as chair of the APPG, and I commend her for her work over many years. The point about the Lord Advocate is surely that the route to justice must go through the Scottish Parliament, because the route to prosecution went through the Scottish Parliament. That is where the route of accountability lies. [ Interruption. ] There was some talk about chuntering earlier, but it seems to go in more than one way. I refer the hon. Lady to the comments of the Lord Advocate in the Scottish Parliament on 16 January. If the Lord Advocate really wants the Bill to proceed, she could say so in terms herself. [ Interruption. ] Chunter on, boys.”