Previous SectionIndexHome Page

Mike Gapes: Is there not an important difference between introducing changes that affect new Members and introducing changes that affect many Members, including me, in a way that does not involve a right to vote on it as a separate item, and puts us in an invidious position? We will have to vote something down in order to defend our own position, because we can see the difficulties that it will cause us by forcing us either to go very early or to stay until we are about 67. This has not been thought through clearly. Can my right hon. Friend please look at it again?

Mr. Hain: I am sorry to have to tell my hon. Friend, with whom I have a long-standing friendship, that he should study the detail. His position will not be prejudiced, except in one respect.
3 Nov 2004 : Column 333

We are seeking to bring the House of Commons in line with civil servants and other public sector workers, including my hon. Friend's constituents. We are here by permission of the electorate. There is a real problem if we are saying that because of the ageing society and the cost of providing pensions at the taxpayer's expense—which applies in our case as well—we should have fantastically more advantageous pension conditions than our constituents who work in the public sector. We are trying to bring the Government's changes in line with demographic factors affecting the country.

Sir John Butterfill: May I explain why "phasing out" is, in my view, an appropriate term? The changes will come into force gradually. As from this November, new Members will no longer be entitled to the early retirement provision. Existing Members will continue to be entitled to the provision until 2009 and possibly beyond, depending on the date of the general election. Some Members who are re-elected after the next general election will continue to be entitled to the existing arrangements, even possibly until the following general election, so it is a phasing process. The motion will enable the trustees to change the rules of the scheme to allow all this to be put in place.

Mr. Hain: The lucidity of the hon. Gentleman's intervention explains why he is chairman of the trustees and, perhaps, why I am not.

The point is—I think the whole House will understand this, and back it—that the Government are phasing out generous early retirement provisions in the public sector. It would be inconsistent, and would not be understood by our constituents, if we exempted ourselves from these provisions. We must be careful not to cause our own voters to think we are putting ourselves in an extremely privileged position.

The pension age in the parliamentary scheme is already 65, but Members with at least 15 years' service can retire early before that age on favourable terms. Those terms include the ability, often referred to as the "rule of 80", to draw unreduced benefits if they retire early—between the ages of 60 and 65—provided that age plus service totals at least 80.

The third motion proposes a package addressing the issues relating to survivor benefits and early retirement. It would be at least cost-neutral to the Exchequer, which is an important requirement. It proposes the introduction of pensions for surviving unmarried partners of existing active Members, calculated on the same basis as pensions for widows and widowers. I am sure that that will be widely welcomed, as it is in line with the decision already made by the House in principle.

The trustees and the Government Actuary would be involved in working out the detailed implementation of the package, as was mentioned by the chairman of the trustees. In the case of survivor pensions that would include, for example, consideration of what constitutes an eligible partner, and measures to ensure that the provisions remain affordable.

The motion proposes that pensions for widows, widowers and surviving partners of existing active Members should be payable for life, and not cease on remarriage or cohabitation as widow and widower pensions do at present. That is an anomaly, which we
3 Nov 2004 : Column 334
are correcting. It also proposes that the favourable early retirement terms should be removed for new Members immediately, and phased out—I insist that that is the correct term—for existing Members from 1 April 2009 or the day after the general election after next, whichever is the later.

That means that anyone retiring at the next general election will not be affected. Nor will anyone retiring at the general election after that. Indeed, by 2009 nearly half of us—48 per cent—will be able to retire immediately and draw our pensions without any reduction. We will either be over 65 or will have served for more than 20 years, and will qualify for unreduced benefits under the rule of 80. A further 17 per cent of us—including me, as it happens—will either be able to retire then and draw our pensions on better than actuarially neutral terms, or have the potential to do so when we are older.

Mr. Betts: First, will my right hon. Friend spell out more clearly the nature of the residual benefit that will remain after 2009? I do not entirely understand—perhaps other Members do not either—what will happen to those who retain some potential benefit under the existing scheme. Will it go completely after 2009, or will it continue in some form?

Secondly, does my right hon. Friend accept what was said by my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller)? There is a difference between Members of Parliament and those in other schemes. We cannot go on our 65th birthdays; we have to go on the date of the general election. If people cannot go with reduced pensions before they are 65, my right hon. Friend is effectively saying that the average retirement age of MPs is 67 or 68.

Mr. Hain: These are complex matters. We already have generous pensions by most people's standards: the whole House will agree with that. It would be very dangerous if we did not put ourselves in line with the retirement provisions that now apply to other public sector workers, let alone those with much less favourable terms.

Let me give some examples of how the arrangements would work. On 31 March 2009, a Member aged 54 who has served for 13.6 years will have given over 15 years' service but will not meet the rule of 80. That Member will be able to draw pension before 65 on favourable terms, but not on an unreduced basis. Let us consider the position of a 1987 entrant who, as of 3 November 2004—today—is aged 55 and has 17.4 years' service. As of March 2009, they will meet the rule of 80 and will be able to draw pension immediately on an unreduced basis, so the scheme will continue. As of March 2009, an older, 1992 entrant—aged 59, for example—with 12.6 years' service will meet the rule of 80 and will be able to draw pension immediately on an unreduced basis. As of March 2009, a younger 1992 entrant, aged 43, with 12.5 years' service, will have more than 15 years' service but will not meet the rule of 80. They will, however, be able to draw pension before 65 on favourable terms, but not on an unreduced basis. So it is not the case that Members will suddenly fall over the edge and get no benefit at all; rather, it is a question of providing for these changes in a proper fashion.
3 Nov 2004 : Column 335

Finally, I note the SSRB's observation that it will be for the Government, in conjunction with the trustees, to consider the implications of the new pension tax regime. The Finance Act 2004 sets out a much-simplified tax treatment of pensions, and I can confirm that that will apply to the parliamentary pension scheme. The Government look forward to working with the trustees on its detailed implementation. I urge the House to vote for these motions, especially those relating to pensions. It is very important that we bring our own practice in line with outside practice, and that we preserve our own conditions in the way that I described. I reiterate the Government's thanks to the SSRB for conducting this triennial review. A respected independent body has recommended certain changes to our allowances and pension arrangements, and I hope that the House will agree to their implementation in the way that I described.

2.1 pm

Mr. Oliver Heald (North-East Hertfordshire) (Con): The Senior Salaries Review Body's triennial review is an important piece of work, and I, too, would like to thank John Baker, the chairman of the SSRB, and its other members, who have clearly worked hard to produce that report. The SSRB has done its work conscientiously for many years, and it is vital that information such as this be placed in the public arena.

In all parts of the House and in the country, it is recognised that Members need services such as staff, postage, transport, and personal and office accommodation, in order to do the job effectively on behalf of their constituents, many of whom come to them for help when they have been turned away elsewhere, or when they have been unsuccessful in their struggle against a particular bureaucracy. We speak often about connecting Parliament with the public, and it is imperative that parliamentarians maintain, and be seen to maintain, the highest standards of probity and adherence to the principles of public life. But it also should not be forgotten that we do a vital job, and that when our constituents most need help, they come to us.

The work and independence of the SSRB has been important in providing the public with an element of reassurance about our accountability. Members of Parliament were first paid in 1911, and our pay levels have always been controversial, primarily because we are one of the few groups with the power to set our own salaries. The mechanism for mitigating this is, and has been since 1970, the objective assessment of a body that is independent and outside Parliament: the SSRB.

Since that time, the SSRB's terms of reference have been revised on several occasions. The development of its role is welcome, but I still feel that there is scope for making the setting of parliamentary salaries more independent, and in particular for finding firm employment comparators for Members—and sticking to them.

On allowances, I welcome the fact that more of the services necessary to Members are being provided centrally by the House authorities. That has already happened with computers, and such an approach is being tested with the travelcard. The move towards pay
3 Nov 2004 : Column 336
scales for staff is a further important step in the right direction. However, I have a concern that seems to be shared in all parts of the House, and I wonder whether you also share it, Mr. Deputy Speaker. The SSRB compares us to chief executives of councils and businesses. Such people employ private secretaries, and their costs are treated as something that a council or company would necessarily provide. Nobody ever talks about them receiving "expenses" or allowances in that regard; such things are treated as the tools of the job, not a perk. So I hope that on another day, we can discuss how these matters might be better presented in future.

Next Section IndexHome Page