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Mr. Don Foster (Bath): Will the firm which obtains the contract--if any of the six do so--be allowed to seek to persuade members of the TPA to opt for their own personal pension scheme through that company?
Mr. Squire: I shall come back to the hon. Gentleman during the debate on that, as I do not want to give him a wrong answer. If he will wait a short while, I shall answer him.
Seventhly, we would require a contractor to have effective arrangements for considering complaints from members of the scheme. A contractor would have to have an internal complaints machinery. If this failed to resolve the problem, a complainant would have the right to appeal to the Secretary of State. Members would also be able--as they can at present--to seek redress through the pensions ombudsman. There will be at least as much scrutiny of the administration of the scheme in the private sector as there is now.
Ms Armstrong:
One of the current problems with the pensions ombudsman is that each of its reports is secret and is not available for public scrutiny because the ombudsman is accountable to the pensions industry. As this is a public scheme, will the Minister undertake that any complaint to the ombudsman will be published and be open to public scrutiny?
Mr. Squire:
I shall consider what the hon. Lady says and come back to her at the end of the debate. It is a serious suggestion, and I want to give it proper consideration. Incidentally, the hon. Lady previously made some reference from a sedentary position to Darlington. She may not have picked up on the point that all six companies have confirmed that they would intend to make Darlington the core centre of their operations.
Mr. Alan Milburn (Darlington)
rose--
Mr. Squire:
It looks as if I have started a competition. I know that the hon. Lady will understand if I give way to the hon. Member for Darlington (Mr. Milburn).
Mr. Milburn:
The mention of Darlington is my cue, as the Minister knows. Could he define what core administration means?
Mr. Squire:
No, not in the context of the debate. Not simply because the companies have already made it clear that they see Darlington as a key part of their operations but in view of the skill and expertise of the Darlington staff, logic suggests to me that a significant proportion, if not the entirety of the operations, would be based in Darlington.
Mr. Edward O'Hara (Knowsley, South):
As all six companies seem interested in the advantages of the facilities at Darlington, can the Minister assure us that no sweeteners will be offered to any company which takes on the scheme in the form of a cheap handing over of existing facilities?
Mr. Squire:
I willingly give that assurance to the hon. Gentleman. Nor would sweeteners be necessary. I am not
Ms Armstrong:
Will the Government make it a condition of the contract that the core administration continues in Darlington? Our experience has been too frequent that a commitment is given in the beginning and three or four years later is reneged on.
Mr. Squire:
That issue was raised by the hon. Member for Darlington in a recent meeting that I had with him. I am advised that under European Union law, it would probably be illegal to do as the hon. Lady asks. We are not able to specify a particular place. I reassure her inasmuch as I can that, as all six companies have volunteered--they were not required so to do--the information that they would wish to site their operations at Darlington, in a sense her question is unnecessary. We can look at the reality of the thing, but as I know the hon. Lady will accept, we have to stay within the law.
Mr. Milburn:
If the Minister says that legally the Department cannot make it a condition of any contract that Darlington should be the location of the business operation of a privatised Teachers Pensions Agency, and if he says that he cannot define core administration, are not the assurances given by the six companies about staying in Darlington meaningless?
Mr. Squire:
I understand, and the whole House understands, that the hon. Member for Darlington is in a special position. When he looks at the standing of the companies and the names behind some of them and when he considers the self-interest of the companies in using the expertise currently available at Darlington, he will see why his comment, in fairness, is wide of the mark.
Lastly in my list of details, I confirm that we have no plans to allow a contractor to impose new charges on members of the scheme or their employers for services provided under the contract.
I trust that not only those hon. Members present in the Chamber but people who may subsequently read the report of the debate will accept that the eight points that I have made--eight of the best--allay the unjustified worries that I have heard expressed. I submit that if we let a contract, all parties would stand to benefit. Let me briefly explain why.
First, the taxpayer would benefit, because it would cost less to administer the scheme. There is sometimes a tendency to forget the taxpayer. We should not do so. Everybody is a taxpayer, so everybody, including teachers themselves, benefits if we can deliver public services more economically. There is scarcely an argument there.
Secondly, teachers and retired teachers would benefit. There is every prospect that they would receive not only as good a service as the TPA provides, but a better, faster, more responsive service. We have invited comments on a draft statement of the service that a contractor would have to provide. That draft provides for higher standards than the TPA achieves now. The six companies would expect to exceed even those higher standards over time--again, I submit to the House, a benefit.
Thirdly, the staff of the TPA would stand to benefit from the new opportunities offered. They would transfer to the contractor--if such a contractor were appointed--
on their current terms and conditions of employment. All six companies have said that they intend to keep the core administration of the scheme at its current location. All six companies see possibilities for introducing new business. That, if it happened, could only be good for jobs and good, in particular, for those currently at Darlington.
Mr. Peter Kilfoyle (Liverpool, Walton):
I thank the Minister for taking the trouble to read out the letter that he sent to hon. Members on 10 November. He has added nothing to what he had to say in the letter. He read it extremely well. Perhaps it is a recommendation for literacy campaigns at primary school level.
The teachers superannuation scheme is one of the largest occupational schemes in the country. Currently it has 550,000 contributing members--mainly teachers-- 258,000 members with preserved benefits--mainly former teachers, including those driven out of teaching by Government policy--and 350,000 pensioners--retired teachers or their widows and children. The key difference between the scheme and other schemes is that it is administered not by the 3,500 employers involved but by the Department for Education and Employment, through the Teachers Pensions Agency.
Teachers, practising or retired, look to the scheme to provide them and their dependants with security in retirement, protection from misfortunes such as enforced early retirement due to ill health or redundancy--there have been a lot more of those in the past six or seven years--and protection for their dependants if they die in service or after retirement. Together with that security, they expect those administering the scheme to deal promptly, fairly and sympathetically with their problems and queries, many of which are of an extremely sensitive nature. They also expect high standards of integrity from those administering the scheme and a response which, within the regulations of the scheme, gives first priority to meeting the members' needs.
While organisations representing teachers receive complaints on occasion about the current scheme, they tell me that complaints about the quality of service from the TPA are rare. Even those rare complaints are resolved promptly and satisfactorily. Indeed, the Minister said that everyone acknowledges what a good scheme it is.
Ms Armstrong:
I intervene to declare my interest. I think that my pension, or part of it, is still with the TPA. I am aware that I did not declare that interest when I intervened earlier. I support what my hon. Friend says about the quality of the scheme.
Mr. Kilfoyle:
Well said. Teachers were originally apprehensive when the scheme was transferred from the pensions branch of the then Department of Education and Science to the Teachers Pensions Agency. However, in all honesty, it has to be said that in the main those fears
Since the TPA was launched in 1992, it is a matter of record that it has performed well. During 1993-94, it was set a target of a 2 per cent. saving in running costs. It achieved 5 per cent. Some 95 per cent. of all written inquiries received a substantive answer within 15 working days. In 99.2 per cent. of cases, retirement awards were processed by the payable date or, if applied for later, within 30 days of receipt of the application. Similar results were obtained for pension calculations. In other words, there is a high quality of service. That is not just my subjective opinion. It is well documented in last December's publication of the fourth annual review of the next steps agencies, which detailed the TPA's performance for 1993-94.
One can always make the case, as the Minister has, for yet further improvements, but only on the basis of further investment in the required resources, as opposed to the transfer of administrative responsibilities. Sadly, that latter option is the only one that the Government examined. I put that point twice to the Minister when he spoke, but he could not give a substantive answer as to why that was the only option to be entertained. The Government's only proposal to KPMG was that the administration be left to a private sector company, according to the consultants, on the supposition that major benefits would result.
The Minister's first argument was that it was feasible for the teachers superannuation scheme to be administered by a private sector contractor. Of course, feasibility is not necessarily synonymous with desirability. Lots of things are feasible, but that is no reason for doing them. The proposal is that the administration should be let out to a private sector company on the supposition, according to KPMG, that major benefits will result, despite the fact that 128 out of 131 organisations originally consulted refused to endorse the proposal. It received only three positive endorsements, but the Government still went ahead with it.
The Government say that it is viable for the teachers superannuation scheme to be administered by a private sector contractor. I accept that, but they do not provide any evidence. The only evidence provided is the vague references in the KPMG report to discussions with unidentified organisations and the fact that there are those who are prepared to undertake the task. How can that assertion be tested against such scant evidence? One can assume only that the whole idea is based more on ideology than on objective analysis.
Secondly, the Government insist that the technical means exist for the transfer. That may well be the case, but that does not mean that it will lead to improvements. The Government insist that it will lead to improvements in the efficiency and effectiveness with which the superannuation scheme is administered, but where is the evidence of, as KPMG asserts,
The Government argue that private contractors will somehow benefit the TPA, yet it has exceeded its performance targets. On what criteria do the Government base their claim that commercial disciplines will have a positive effect on the quality of service? I can conclude only that that is doublespeak for lower-quality service and the introduction of charges for services that were previously free, which the Minister has denied.
"a general expectation that cost savings in the order of 20 per cent. or more ought to be achievable over a period of five or seven years"?
Will those savings come from the imposition of new charges for services that are free? The Minister says no, but if they are to come from new information technology equipment, why has that hitherto been denied the Teachers Pensions Agency?
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