Ministers' pension rules under fire

Labour last night called for a full inquiry into government rules which allow ministers to continue to benefit from pension contributions made by their previous employers.

The provision in the handbook Questions of Procedure for Ministers is highlighted by the acknowledgement by John MacGregor, former Secretary of State for Transport, that he remained a member of the Hill Samuel pension scheme after he joined the Government in 1979. Mr MacGregor left the Cabinet in the July reshuffle and has returned to the merchant bank, where he is now deputy chairman.

Labour last night demanded that Lord Nolan, chairman of the Prime Minister's inquiry into the standards of public life, investigate the entitlement of ministers to remain active members of company pension schemes while in office.

Mr MacGregor said his remaining in the scheme ``was entirely in accordance with paragraphs 128-134 of Questions of Procedure for Ministers. I have been scrupulous in following ministerial rules.''

Mr MacGregor's statement follows parliamentary questions tabled by Brian Wilson, an Opposition trade and industry spokesman.

Mr MacGregor declined to say whether Hill Samuel made contributions to his pension while he was a minister, adding that such details were a personal matter. Hill Samuel confirmed that the pension scheme was non-contributory.

Replying by letter to the latest questions tabled by Mr Wilson yesterday, John Major repeated that while Mr MacGregor's pensions arrangements ``were a matter for him'' the former minister had confirmed that they were fully in accordance with the Questions of Procedure.

But Mr Wilson complained that Mr Major's answer failed to address one question, which asked ``if Messrs Hill Samuel paid pension contributions on behalf of [Mr MacGregor] during his period of ministerial office or any part thereof . . .''

Mr Wilson said: ``The country will be astonished to learn that ministers can maintain financial arrangements with former and prospective employers throughout their period of office, particularly when the companies involved have close commercial links with the business of government.''

Paragraph 131 of Questions of Procedure, published under Mr Major's open government policy in 1992 but dating from 1976, when Labour was in office, says ministers ``who expect to resume their former employment on ceasing to hold office'' may remain in the employers' pension scheme ``with continued payments of contributions, and with their period of office counting as pensionable employment''.

Twice during Mr MacGregor's time as Transport Secretary Hill Samuel became involved in transport issues. The merchant bank gave advice on the Channel tunnel link and to British Railways Board's vendor unit in the run-up to privatisation.

Mr Major said the Department was not represented on the tender board when Hill Samuel was chosen to advise on BR. And he has already confirmed that ``because of his former association with Hill Samuel'' Mr MacGregor told his department in 1993 that he was to ``play no part'' in the selection of financial advisers for the Channel tunnel link.