Local Government Pension Scheme (Amendment) Regulations 2002

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Chris Grayling: I clarify that we are not talking only about companies. Equally, new blocks of housing could be developed, or there could be additional transfers from local authorities. If a granddaughter company comes under the control of a core housing company, will those new employees become members of the pension scheme, for example, of one of my local councils, Reigate and Banstead? Will it be responsible for providing pensions to employees from a company that has been acquired, for example, in the west country, by the housing management company that it has set up? If so, who will pay for that?

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Dr. Whitehead: If a company that has been taken over by a housing company operated by a local authority accedes to the local government pension scheme and money is transferred to allow that company to operate its pensions in the local government pension scheme, and an indemnity is provided, then those people will be full members of the local government pension scheme. They, both employer and employees, will be required to pay whatever is appropriate for that local administrative unit of the local government pension scheme--Reigate and Banstead will be within one of those units--and will proceed as if there were no difference in terms of their contributions and ability to take money out of the local government pension scheme in future. They will be part of the actuarial assessment of the robustness of the local government scheme, including those who have come into it.

If a granddaughter or grandson company has a different scheme or the employees do not wish to join, there is no compulsion on them to do so and they may continue with a different scheme. The issue is the in-principle access of an application under regulation 3 to the local authority scheme.

I want to emphasise the positive efforts that we make when proposing amendments to the local government pension scheme to inform all interested parties--local authority employers, scheme administrators and employees' representatives--of our intentions and to give them a full opportunity to make representations. We go further because, although formal statutory consultation is an important part of the process, it is frequently the culmination of earlier informal discussions. Interested parties--employees' representatives and those who benefit from the scheme--have ample opportunity to propose and contribute to the formulation of amendments on a rolling basis. Departmental officials who are responsible for the local government pension scheme regularly liaise with employers' organisation through the local government pensions committee and trade unions.

The amendments have been introduced following that running and informative consultation, and with suggestions and contributions from all parties. For the most part, they represent technical fine-tuning of the regulations, but there has been no needless tinkering and they do not add to administrative bureaucracy. They are among the latest in a line of maintenance amendments that are essential to keep the scheme flexible and up to date, to simplify it where sensible, to remove inequalities and anomalies, and to ensure that the scheme regulations are legally sound. They are part of my Department's continuing responsibility for stewardship of this important pension scheme and are supported by all local government pension scheme interests. I commend the regulations to the Committee.

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5.52 pm

Mr. Moss: I am grateful to the hon. Member for Bath for his support in endorsing our decision to pray against the statutory instrument and to instigate a debate. We have had a good debate, which has lasted almost its full statutory time. I am grateful for his contributions and those from my hon. Friend the Member for Epsom and Ewell.

We have asked detailed questions, most of which the Minister has answered, and I am pleased that he has provided confirmation of two critical points on the record in Committee and not in a departmental press release or a letter to the hon. Member for Bath or one of his colleagues.

First, I welcome the confirmation that ACT has resulted in lower funding levels for local government pension funds, but the Minister did not convince the Committee that the Government have made up the shortfall. Our calculations suggest that they are approximately £221 million a year adrift in their funding.

Secondly, I welcome the confirmation that local government employees who transfer their employment to a private sector contractor will retain their pension rights, and in our book that means fully protected. However, the Minister made no apology for the discrepancy between the press release and the Secretary of State's letter. There may have been 24 or 48 hours between the two and I suspect that the interpretation of the press release sent the unions into orbit and that the Department made a 180 deg turn in fast order to sort out the difficulties.

Although we have had confirmation of the protected rights from the Secretary of State's letter, reference is made to schemes that are broadly comparable, so we are back to the realm of defining ''broadly''. I would have thought that omitting ''broadly'' and stating ''comparable'' leaves no room for doubt.

However we describe the regulations--several descriptions have been used--they are certainly important and make important amendments on which there has been consultation. We never suggested that they were unimportant. We understand that they are part of a series of orders being introduced to make necessary adjustments and amendments. Our main point is that the regulations tinker with the fundamental problem with local government pensions and we would like the next order to address those fundamental issues. However, because we believe that the regulations are important and should be accepted, we shall not divide the Committee.

Question put and agreed to.


    That the Committee has considered the Local Government Pension Scheme (Amendment) Regulations 2002 (S.I. 2002, No. 206).

        Committee rose at five minutes to Six o'clock.

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The following Members attended the Committee:
Cran, Mr. James (Chairman)
Baron, Mr.
Brazier, Mr.
Chaytor, Mr.
Foster, Mr. Don
Grayling, Chris
Jenkins, Mr.

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Lloyd, Mr. Tony
Marris, Rob
Moss, Mr.
Tipping, Paddy
Whitehead, Dr.
Woolas, Mr.

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