Parliamentary Pensions (Amendment) Regulations 2002

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Mr. Gardiner: Would the Minister agree that it is inconceivable at a time when we have identified a £26 billion savings gap for retirement pensions that the press would say to any other profession or trade in this country that people should not be putting more towards their pensions? The situation is unique; the press is trying to vilify MPs for putting their own money into their own pensions to create stability for their future and that of their families. I think that that is disgraceful.

Mr. Bradshaw: My hon. Friend makes a very good point, and at this juncture I give the Floor to the hon. Member for Northavon.

11.41 am

Mr. Webb: We have had a helpful debate, which has clarified some of the uncertainties. The Minister's responses to several points have helped to answer some of the questions that I have been unable to get an answer to through any other route.

The Minister confirmed that there is a possibility that Members who do not opt for the arrangements may nonetheless be subsidising them by £1,000 a year from their future salary raises. He said that his intention and the Government's hope is that the temporary taxpayer contribution would be clawed

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back when the new arrangements were put in place. I do not know whether the Government formally submit to the SSRB, but I hope that it will be made clear to the SRB that it is being asked to cover a shortfall in the ongoing contribution, and to recover the loan from the taxpayer to tide us over.

One question that has not been answered, because we were dealing with the SSRB proposals as they stand in regulation, is if we want 5.1 per cent. of our salary improvements in benefit, what stops the SSRB from writing to the Leader of the House and saying that Members' contributions should therefore rise by 5.1 per cent.? We do not know the answer to that question, but the SSRB clearly took the view that Members would not buy it. Having shown last summer that they were prepared to vote through a very generous pension improvement at no cost to themselves, they simply would not accept a 5.1 per cent. increase, but that is the value of what we are asking for. We still have the paradox that Members want a hefty pension rise, but are not prepared to pay the cost of it in one go. I still have a problem with that.

Mr. Butterfill: The hon. Gentleman talks about a loan to the taxpayer and the 2.1 per cent. being paid. Presumably he will not consider it a loan from the taxpayer if it is not paid by the Government. The Government will have to make their full contribution to the scheme, which they have neglected to do for twelve years, plus the 2.1 per cent.

Mr. Webb: I shall come to the question of the pensions holiday in a moment. The written answer sent to me this morning says that the cost to the Exchequer over the period may be estimated. Certainly, the Leader of the House has given me an expected estimate and the Exchequer cost. We can speculate as to how that will eventually met, and the hon. Gentleman has a view as to how it will be met. All I would say is that if the money is in the fund anyway, the Exchequer might not have needed to pay that money through some other route. It does not come out of nowhere.

Mr. Butterfill: It might be Members' money.

Mr. Webb: To respond to my hon. Friend the Member for North Cornwall, I know that he is sympathetic to the regulations, and he knows that I am not. The fact that we are both on the Committee reflects the fact that our party is not trying to Whip anyone on the issue, and that it is happy for divergent views to be put. He says that one could say that the House has spoken, but on the other hand, the world has moved on. Both, of course, are true. In drawing to a close, I want to put the suggestion to the Minister that although there is no automatic procedural requirement for the regulation to be considered by the whole House, and because I do not have access to the usual channels, will he consider putting down a prayer to annul the regulations with a Vote in the House? It would not be an opportunity for further debate, but it

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would give all Members a chance, which they have obviously been denied this morning, to vote on the issue.

Mr. Gardiner: Will the hon. Gentleman give way?

Mr. Webb: No, I ought to conclude my remarks.

In response to the hon. Member for Bournemouth, West, I understood him to say in the introduction to his remarks that if there were a serious burden on the taxpayer he would not support the regulations. Obviously, 12 months ago he was willing to propose a motion for improved benefits for the future and the past that he understood to cost 6 per cent. of salary, which is more than we are talking about today, entirely at the cost of the Exchequer. I have some trouble in reconciling those two positions in the sense that that was a substantial sum last summer. I am puzzled that the world can have changed so much in such a short time that last summer it was alright to ask our constituents, who were having pension problems then, to put in so much money, but it is suddenly not right now.

Mr. Butterfill: I will assist the hon. Gentleman. The situation that has changed is the state and value of the fund. The surplus that was in the fund at that time was so massive that it was perfectly possible to conceive of the motion. Given that the Government had had 12 years of huge reductions in employers' contributions, whereas hon. Members had been making their full contributions, hon. Members felt at that time that a more equitable distribution of the surplus was required.

Mr. Webb: Let me come to that issue, which is quite important. The question is whether the taxpayer has been having a free ride at our expense over the past 10 years. In my judgment, the underlying situation, and the situation from 2004 leaving aside the improvements, is 6 per cent. from us and 18 per cent. from the Exchequer—I fully accept that that contribution has not been paid in full and is due to be paid. The hon. Gentleman says that the underlying share of contributions is phenomenally generous whereas over recent years it has only been fairly generous. We cannot expect our constituents to shed any tears over the fact that our employer is still putting in more than we are at the moment but it is not the phenomenally generous system that we set up for ourselves.

Mr. Butterfill: I have to correct the hon. Gentleman. In many years in the past, particularly when we were paying 9 per cent.—as we will be in the future—we were putting in more than the employer.

Mr. Webb: I heard the hon. Gentleman say that, but I am making the point that the most recent report on the fund, which was only published in June, said that the Exchequer should put in 18.6 per cent. in 2004, an increase from 17.9 per cent. The proposal is that there should be a very generous taxpayers' subsidy.

There are two other issues. First, is our average length of service declining and are we now a more insecure profession? The SSRB looked at that

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proposition and said that it may come to be the case but the evidence is as yet inconclusive. My hon. Friend the Member for North Cornwall puts great store by what the SSRB says, and its judgment is that the evidence is inconclusive. My judgment is that given the average age of the intake in 1997, it may well be that the contrary comes to be the case. We may see longer tenures and we will not see people who have established good careers that they cannot get back into because many younger Members are coming into the House.

The hon. Member for Bournemouth, West mentioned people who have established careers and how difficult it can be to go back to them, which is a point that I understand. Many of our constituents who worked in shipbuilding, coalmining or steel making have similarly lost their professions and have found it difficult to find anything else to do. We are not unique in sometimes having to give up an established profession, but we do it out of choice, whereas many of our constituents do not.

The debate has helped to clarify some of the details. The fundamental point is that if we want the full improvement in the accrual rate we should meet the

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full increase in contributions ourselves from day one because otherwise we are expecting a loan from the taxpayer, and I do not believe that we should do that.

Question put:—

The Committee divided: Ayes 14, Noes 1.

Division No. 1]

Bell, Mr. Stuart
Bradshaw, Mr. Ben
Butterfill, Mr. John
Chapman, Sir Sidney
Gardiner, Mr. Barry
Marshall, Mr. David
Purchase, Mr. Ken
Smith, Angela
Stuart, Ms Gisela
Swayne, Mr. Desmond
Tami, Mark
Turner, Mr. Dennis
Tyler, Mr. Paul
Watson, Mr. Tom

Webb, Steve

Question accordingly agreed to.


    That the Committee has considered The Parliamentary Pensions (Amendment) (No. 2) Regulations 2002.

        Committee rose at eight minutes to Twelve o'clock.

The following Members attended the Committee:
Cummings, Mr. John (Chairman)
Bell, Mr.
Bradshaw, Mr. Ben
Butterfill, Mr.
Chapman, Sir Sidney
Gardiner, Mr.
Marshall, Mr. David
Purchase, Mr.
Smith, Angela
Stuart, Ms
Swayne, Mr.
Tami, Mark
Taylor, Mr. John
Turner, Mr. Dennis
Tyler, Mr.
Watson, Mr.
Webb, Steve

The following also attended, pursuant to Standing Order No. 118(2):

Taylor, David (North-West Leicestershire)

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Prepared 23 July 2002