Fire and Rescue Services Bill

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Mr. Hammond: With the greatest respect to the hon. Gentleman, the amendment states that the Secretary of State

    ''shall provide a separate flexible pension scheme for firefighters employed on the retained duty system'',

which implies that it could not be part of one of the core schemes provided.

On proposed new subsection (11), the hon. Gentleman is, frankly, barking up the wrong tree. His proposal simply is not an option. As he rightly pointed out, it is absurd for people to retire at 55 if they are fit and able to serve, but his amendment would give them the option of retirement at 55, as it refers to their willingness to serve beyond the age of 55. Of course, people are entitled to retire whenever they wish, but the implication in the amendment is that they would be entitled to a pension at 55.

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At the risk of being thought unsympathetic, I do not believe that retirement at 55 is an option in this day and age. Firefighting is hazardous, but it is no more hazardous than many other occupations. I do not have the most up-to-date figures—perhaps the Under-Secretary has them to hand—but I believe that it is the 11th or 12th most hazardous occupation in terms of the number of injuries and deaths per thousand man-days, and that construction and agriculture are far more dangerous, yet no one has suggested that people in those sectors should have a right to retire at 55 on a full pension. That seems a throw-back to a bygone era and inappropriate for the 21st century.

As I understand it, and the Under-Secretary may clarify this, retaining a right to retire at 55, regardless of health considerations, would fall foul of the Government's wider proposals for pensions reform and would almost certainly render any such scheme ineffective from a tax point of view. I understand the intention to be that schemes that will benefit from the tax-advantageous status enjoyed by pension schemes would have to drop entitlement to a pension at 55.

Although we are happy to support the principle of encouraging and supporting retained firefighters, we do not believe that the amendment would be helpful in achieving that. There are better methods, and I hope that the Under-Secretary will confirm that the Government are committed to those.

Phil Hope: Amendment No. 181 has two purposes. The first would require the

Secretary of State to provide a pension scheme for retained firefighters within six months of enactment of the Bill. I think that we agree that retained firefighters should have access to a pension scheme in the same way as other employees of a fire and rescue authority. Retained firefighters have been excluded from the current arrangements, although they benefit from the ill-health and injury provisions if they are injured while carrying out firefighting duties. I want to place on record how much we value their contribution and commitment to the service. On my recent visits to Northamptonshire, Cheshire, Cornwall and the west midlands I was extremely impressed by their professionalism and commitment.

Richard Younger-Ross: The hon. Gentleman could come to Devon.

Phil Hope: Yes, I hope to be able to get to Devon at some point to meet retained firefighters in the hon. Gentleman's constituency and representatives of the local authority.

We believe that all persons engaged in firefighting and other emergency work should be entitled to membership of a suitable pension scheme and to the same benefits. We shall therefore seek to ensure that retained firefighters are members of the same pension scheme as other firefighters.

Mr. Hammond: The Under-Secretary referred to people ''engaged in firefighting and other emergency work''. Under the present scheme firefighters are distinguished as a group. Does he envisage that in

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future others who are not firefighters as such would be in the same scheme as firefighters because they were engaged in emergency work?

Phil Hope: The hon. Gentleman may have misheard me. I was referring to the fact that, as we know from the Bill, firefighters also play a role in road traffic accidents and other emergencies. Therefore, ''firefighting and other emergency work'' implies what we have been discussing in the Committee for the last fortnight. Those persons should be entitled to membership of a suitable pension scheme. We indicated that in the note on the regulation-making powers in clauses 33 and 35, to which the hon. Member for Teignbridge referred.

We hope, in June, to publish for consultation our proposals for the new pension arrangements for firefighters, and we expect them to cover retained firefighters. Subject to the outcome of the consultation, we expect the new pension scheme to be operational from 1 April 2005. That is the time scale for delivering the outcomes sought by the amendment, which I hope the hon. Gentleman will now accept is unnecessary.

The second purpose of the amendment is to provide for the retirement age of firefighters to be determined by their willingness and fitness to serve beyond the age of 55. We recognise that the current arrangements, which set a compulsory retirement age of 55 for those other than senior officers in the service, are no longer acceptable. That point was made by the hon. Member for Runnymede and Weybridge (Mr. Hammond). The service needs to retain experienced staff who can contribute to meeting the demands that we are placing on it. Accordingly, we do not intend to specify a compulsory retirement age. Instead, any pension scheme will provide for pensionable age, so that a person who satisfies the fitness requirements for the role in which they are employed and who is willing to continue in service can do so.

9.45 am

In our note on the regulation-making powers, we make it clear that the new pension and tax regime, as the hon. Gentleman implied, would not allow firefighters to continue to draw pensions from the age of 50. It also made it clear that we are considering setting a normal pension age of 60, but allowing earlier payment, possibly actuarially reduced, from the age of 55. We are funding research into fitness standards so that fire and rescue authorities have evidence-based guidance on which to make decisions about an individual's fitness to continue in service.

I hope that with that clarification of how the new scheme will work and the details about retirement age the hon. Member for Teignbridge will withdraw his amendment.

Richard Younger-Ross: I thank the Under-Secretary for a full and helpful response to our probing amendment. I take on board exactly what he said about moving the retirement age from 55 to 60. We did not include that in our amendment because we were

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uncertain about whether to move from 60 or beyond 60 for the compulsory age. The consultations are considering 60, and we support that in principle.

To clarify my intervention on the hon. Member for Runnymede and Weybridge, I should point out that I was trying to refer to the document, rather than to my amendment. The document refers to one scheme; I accept that my amendment refers to a separate scheme. We accept the principle outlined in part 4 on employment, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause, as amended, stand part of the Bill.

Mr. Hammond: Before we move on, we should say something else about pensions, because it is a big issue for the service. My information is that pension costs are about 35 per cent. of total wage costs throughout the service, and that in some of the large metropolitan fire and rescue authorities, 25 per cent. of the revenue budget is consumed by meeting pension obligations. Will the Under-Secretary confirm those figures?

In the White Paper, the Government said that they would address the pension issue, which is an albatross hanging around the necks of fire and rescue authorities. However, the Bill gives us precious little idea about how they will tackle the problem. To a large extent, the note that the Under-Secretary helpfully circulated, and to which the hon. Member for Teignbridge referred earlier, keeps all options open. From my interpretation of it and the enabling provision, it appears that there will be more than one scheme and that colleagues who work side by side, perhaps one being a firefighter who has ceased operational duties and moved to a non-operational role, may be in different pension schemes with different arrangements. That could cause some difficulties.

I understand that there is likely to be a new scheme, possibly funded, for new entrants, while something along the lines of the current scheme would continue for existing members of the fire service pension fund. Will the Under-Secretary confirm my interpretation that there is provision for the establishment of a funded scheme? I know that there is no requirement for it, but the Bill provides the power to establish a funded scheme if the Government decide to do so.

Will the Under-Secretary also provide some comparative examples of the burden of pension costs in the fire and rescue service compared with other public services, such as the military and the police? Will he explain why the burden is higher in the fire and rescue service than any other public service?

Mr. David Drew (Stroud) (Lab/Co-op): Firefighters always tell me that the simple reason why the burden is higher is that there is a great deal of loyalty to the service. In the fire service, unlike even the police, the tradition is that people serve their time, so, with an ageing work force, there will inevitably be a knock-on effect on pensions.

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Mr. Hammond: I am not sure that the hon. Gentleman draws a logical conclusion. One would normally expect the pension burden, if one can call it that, to be proportional to the size and cost of the work force; turnover will not necessarily determine it.

I understand that, under the present system, pension accruals step up after a certain number of years' service, which makes it very disadvantageous for people to leave the service. The Under-Secretary will be able to confirm whether that is correct. If it is, it would explain to some extent the loyalty that causes people to stay in the service for a long time: there is an artificial incentive to stay on for 20 years. I understand that the Government are minded to remove that in the interests of a more open and flexible service, and so as not to disadvantage those who come into the service later in life—something that we all seek to encourage to give the fire service a more diverse experience base. I hope that the hon. Gentleman will be able to explain all those points in more detail.

Finally, I want to ask the Under-Secretary about the time scale for some more illuminating proposals. He will know from his discussions with fire and rescue authorities that, alongside the modernisation agenda, which places on them a substantial burden of management initiatives, managing and funding pensions is a constant cause of concern. The White Paper indicated that the Government would address that problem, but clearly that is not done in the documents before the Committee, which simply set out some of the parameters that we are already aware of. When does the Under-Secretary expect more concrete proposals about the future shape of pension arrangements in the service to be published, or at least set out in initial form for consultation?

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