House of Commons

Session 2007 - 08
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General Committee Debates
Pensions Bill

Pensions Bill

The Committee consisted of the following Members:

Chairmen: Sir Nicholas Winterton, † Janet Anderson

† Ainger, Nick (Carmarthen, West and South Pembrokeshire) (Lab)

† Alexander, Danny (Inverness, Nairn, Badenoch and Strathspey) (LD)

† Banks, Gordon (Ochil and South Perthshire) (Lab)

† Borrow, Mr. David S. (South Ribble) (Lab)

Butler, Ms Dawn (Brent, South) (Lab)

† Cunningham, Mr. Jim (Coventry, South) (Lab)

† David, Mr. Wayne (Caerphilly) (Lab)

† Duddridge, James (Rochford and Southend, East) (Con)

† Flello, Mr. Robert (Stoke-on-Trent, South) (Lab)

Greenway, Mr. John (Ryedale) (Con)

† Keen, Alan (Feltham and Heston) (Lab/Co-op)

Kirkbride, Miss Julie (Bromsgrove) (Con)

O'Brien, Mr. Mike (Minister for Pensions Reform)

† Plaskitt, Mr. James (Parliamentary Under-Secretary of State for Work and Pensions)

Rowen, Paul (Rochdale) (LD)

† Selous, Andrew (South-West Bedfordshire) (Con)

† Waterson, Mr. Nigel (Eastbourne) (Con)

Mark Hutton, Committee Clerk

† attended the Committee

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Public Bill Committee

Thursday 7 February 2008

(Afternoon)

[Janet Anderson in the Chair]

Pensions Bill

1 pm

Mr. Nigel Waterson (Eastbourne) (Con): On a point of order, Mrs. Anderson. It is a great pleasure to have you back in the Chair. You were in the Chair on 29 January when I raised in the Committee the issue of the Government’s promised amendments on the financial assistance scheme. In the light of this morning’s Court of Appeal judgment—the Government lost, again, and were heavily criticised by the Lords Justices—it is particularly relevant that we find out how the drafting is coming along.

While I am about it, could I also ask where we are with the draft regulations? Any would be nice. I do not think that we have seen a single line of draft regulations, yet the Bill is peppered with clauses calling for regulations. Perhaps the Minister could help me out as I have given him prior warning of this point of order.

The Chairman: The hon. Gentleman would agree that that is more a question to the Minister than a point of order. Does the Minister wish to respond?

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): I am grateful to the hon. Member for Eastbourne for giving me notice of his point of order. I will respond in a little detail because I know that he wants clarification on this and I will try to give it.

In oral evidence to the Committee on 17 January, my hon. and learned Friend the Minister for Pensions Reform said that we were focused on delivering the package of improvements to the financial assistance scheme as quickly as possible and that, to that end, we would be looking to use existing powers to make changes by regulations, wherever possible.

My hon. and learned Friend said that as a first step we would be bringing forward a set of regulations in March to increase payments to 90 per cent. from the current 80 per cent., and from normal retirement age. He proposed a short two-week consultation, subject to the views of Opposition Members and others. We are grateful that that has subsequently been agreed.

Those regulations are currently being drafted and the supporting explanations are being prepared. We expect the two-week consultation period on them to begin on 6 March. During that period, we will conduct face-to-face consultation with key stakeholders, including trade unions and members of the Pensions Action Group.

In the meantime, we will today be tabling a new clause to the Bill. This will extend the definition of those who can qualify for the FAS to include those

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whose schemes are still winding up, but who would otherwise have received their benefits in full from the scheme. This is necessary because to take over all members’ assets, we will need the power to make FAS payments to them so that we can pay them what they would have expected to receive from their scheme. There will be an opportunity to consider the matter in more detail when we discuss this new clause after the forthcoming short recess.

In the letter sent to all Members last Friday, my hon. and learned Friend said that we were considering where other small adjustments might be needed to existing powers to deliver all elements of the package of improvements to FAS, and that there might be a need for a few further changes to be made via the Bill, when it goes to the other place for consideration. However, the vast majority of the changes necessary to deliver the package can be made via regulations.

We intend to publish a further set of draft regulations before the end of March, which will make provision for other key elements of the package, such as early retirement on ill-health grounds. There will be a final package of regulations later in the year to deliver the remaining parts of the package that will move us to a position in which financial assistance payments are calculated on a basis that is broadly comparable with the Pension Protection Fund.

I hope that that provides a thorough answer on the matter of regulations in respect of the FAS and other parts of the Bill. I can tell the hon. Member for Eastbourne that we are discussing—and even considering—the content of those with the Personal Accounts Delivery Authority, and it is quite right that we should do so. They will therefore be brought forward as soon as is practically possible.

Finally, the hon. Gentleman’s interpretation of the court judgment was a bit slanted. If he looks at the judgment in detail, he will see that there is very much support for the Government’s position with respect to many of the matters under consideration. With regard to the rest of it, we are considering leave to appeal at the moment.

Mr. Waterson: Further to that point of order, Mrs. Anderson. May I just clarify one point? The Minister says that he is going to table a new clause today. The House is not sitting tomorrow, or indeed next week, so I assume that that clause will not be printed until we return after the break. It will therefore probably not be debateable until the Thursday of the week after next, at the earliest. Will the Minister undertake to let all members of the Committee know—

The Chairman: Order. It is my understanding that if the new clause is tabled today, it will be printed tomorrow, so it will be available. It is clear from the Minister’s very detailed response that there will be the opportunity to have this discussion after the short break, so I think that we should move on.

Clause 73 ordered to stand part of the Bill.

Clause 74

Exception for reserve and volunteer forces

Andrew Selous (South-West Bedfordshire) (Con): I beg to move amendment No. 6, in clause 74, page 35, line 21, at end insert—

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‘( ) subsection (1) shall not apply to any member of the reserve forces who is paid for more than six months in any three-year period.’.

I welcome you back to the Chair for our afternoon sitting, Mrs. Anderson.

I do not think that I technically have to declare an interest, in that I am not currently a member of the reserve forces, but I was for 12 years, in an earlier life. When I served, the role of territorial soldiers, the Royal Naval Reserve forces and the Royal Auxiliary Air Force was somewhat quieter than it is today. It is no secret that our reserve forces are much more of an integral part of the combined efforts of our armed services across the world at the moment. Not all members of the Committee might be aware that territorial soldiers are serving in Iraq and Afghanistan. However, it is really on the issue on the length of time for which many of our reserve forces are serving that I have tabled the amendment.

When I joined the Territorial Army back in 1980, one classically did a night a week, a weekend a month, and perhaps two weeks’ annual continuous training a year—if one was really keen, one would go on a few extra courses—and that was it. Of course, one understood that the pay did not come with pension contributions, and that was not a problem.

My friends who are still Territorials tell me that there are many territorial soldiers and members of other reserve forces who serve for quite long periods—tours of six months or more are not unusual—and come back for perhaps a short time before going out again. It is no secret that the regular forces are short of people to fill those places, so our three armed services rely very heavily on the reserves. I really just want to challenge and probe the Minister as to whether he and his officials should perhaps go back and speak to colleagues in the Ministry of Defence, re-examine this issue, and get some exact statistics and figures on the number of reserve forces personnel who are serving on extended tours of duty, and perhaps back-to-back tours of duty.

There are people who make more or less a full-time career out of being a reserve soldier. They might come back to do something else for a while, but then their camaraderie, or whatever campaign is being fought throughout the world, calls them back. That situation might continue for very many years. The years could mount up until suddenly they take stock of their financial situation and realise that the work for which they have earned their income for many years has not represented pensionable service, although their colleagues in the regular forces have been amassing nice pension contributions during their service.

All that I am really saying to the Minister is that the world has changed and there is now a much greater length of service. The whole issue of the military covenant is quite rightly under discussion. He might be familiar with the phrase “one Army” with regard to the Territorials and full-time Regular Army. Although this is the classic position, it might perhaps need to be revisited, so I would ask him to consider that. If he cannot come forward with a proposal now, I would ask him to go back to the Department and consult with Defence Ministers and with the wider reserve forces community on this issue, and perhaps give us further thoughts on the matter on Report.

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Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): It is a pleasure to be back under your chairmanship, Mrs. Anderson.

I echo the comments made by the hon. Member for Eastbourne about the financial assistance scheme. I do not wish to reopen that debate, but it is important that we proceed quickly to a resolution on that important subject.

Mr. Waterson: And the Government did lose.

Danny Alexander: Indeed. As the hon. Gentleman says, there was a further defeat for the Government in a series of defeats that should lead to prompt action.

The amendment tabled by the hon. Member for South-West Bedfordshire addresses an important point that has been raised by Territorials in my constituency. As he said, Territorials, on average, are now expected to spend a great deal more time on active service than in the past. That potentially changes the nature of our obligations towards them, including in the area of pensions. Those people might choose to be automatically enrolled in pension schemes in their regular employment, but it is important to ensure that the Government meet their pensions obligations to people who now spend a good deal more time on active duty than six months every three years.

Andrew Selous: I am sure that the hon. Gentleman will know from Territorials in his constituency that some of them do not have another job while they are serving. They might have worked as a security guard for a while, but give that up to go on a six-month tour. They might go on a back-to-back or extended tour. They therefore accrue no pension contributions at home from any other job.

Danny Alexander: The hon. Gentleman is exactly right, and that is my experience. We are particularly keen for those people who move from job to job, or might not be employed during those periods, to be supported by the Bill. They should be part of the target group. The Minister’s response, which I look forward to hearing, is important for ensuring that those people are properly served in the pension world, given the service that they are giving their country as Territorials.

Mr. Plaskitt: This is an important matter, and I am grateful to the hon. Member for South-West Bedfordshire for tabling the amendment. I certainly respect his experience.

The clause confirms that some members of the reserve forces and cadet forces volunteers do not come within the definition of “Crown employment”, as set out in clause 71, which we considered this morning. The amendment would bring within the scope of the Bill’s provisions on employer duty reservists who are paid for at least six months’ service in any three-year period. Reservists who attend intermittent periods of weekend training and an annual camp might fall in that group.

I am sympathetic to the spirit behind the amendment, but I shall explain why we do not think that it is necessary. The Ministry of Defence already routinely enrols members of the armed forces and reservists who are mobilised, or take on a full-time reserve service commitment, in a defined benefit pension scheme.

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Andrew Selous: It is important to be clear about the language involved. There is a difference between a reservist and a territorial soldier. A reservist is someone who has been in the regular forces and has an ongoing commitment afterwards, but I am really talking about Territorials. I am sure that the Minister is coming to that issue.

Mr. Plaskitt: The Minister is fully aware of the distinction, and the hon. Gentleman rightly anticipates that I am about to deal with that point. I am just being complete for the record. I wanted to make it clear that reservists who are mobilised or take on a full-time reserve service commitment are enrolled into the defined benefit scheme.

Furthermore, we may reasonably expect non-mobilised reservists and cadet force volunteers to be in civilian employment—the same goes for most of those in the Territorial Army—through which they will have the same right to workplace pension saving as any other worker as a consequence of the Bill. The commitment is there for those who have an extensive engagement with the armed forces—they are enrolled and, incidentally, none has opted out—but for other categories of people, most will be deriving the bulk of their income from other sources and will be automatically enrolled through their other employment, rather than through very short periods of spasmodic engagement with the armed forces. We would certainly want everyone in that category to be covered by the Bill, but it is likely that they will be covered by another route.

1.15 pm

I want to draw the Committee’s attention to our plans for an important change in the way the armed forces are to be treated by the Bill. Members of the forces occupy a special position in law. Many employment law remedies, such as unfair dismissal, do not apply to the armed forces and we need to avoid any potential for confusion. Therefore, after very full consideration and consultation with the Ministry of Defence, we have decided that bringing the armed forces within the scope of the employment right created by this Bill would be inappropriate.

Our policy intention is therefore to remove the armed and reserve forces from the scope of this Bill in their entirety. I want to reassure the Committee that that does not mean that we will be treating members of the armed forces less favourably in any respect. As I have already explained, the Ministry of Defence already automatically enrols members of the armed forces as a matter of routine. This includes reservists who are mobilised or have taken on a full-time reserve commitment. All those people become members of a non-contributory defined benefit scheme. Unlike the arrangements for other public servants, the Ministry of Defence has no record of anyone ever opting out of the scheme. Naturally there will be a further opportunity to debate this issue in more detail once the Government amendment to achieve our aim is tabled and before us.

It might be helpful at this point if I clarify the position for cadet force adult volunteers. These people offer their time and effort without receiving a wage or pension contributions, although they might receive recompense for attendance. As such, they do not have access to pension savings in respect of their voluntary work. While we recognise the important contribution

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of these volunteers, which supports the Government's policy of engaging with young people, and the responsibilities involved when working with them, we do not believe that this voluntary service should attract pension provision when there is a reasonable expectation that such individuals will be saving separately by means of other employment, and as such will be automatically enrolled into a scheme. Having made this decision, it seems sensible to make it clear that such individuals are not to be brought within pension provision in respect of their voluntary work within the forces.

The hon. Member for South-West Bedfordshire has raised an important point and given me the opportunity to clarify the situation. With those reassurances, I hope that he will be able to withdraw the amendment.

Andrew Selous: I have listened carefully to the Minister. I do not doubt his good will and good intentions when he says that he is going to table an amendment to take all the armed forces out of the Bill. He spoke about those who serve with the regular forces and about reservists and then, if I heard him correctly, he said that most Territorials will have the opportunity through their workplace to save. However, he did not address the point that I specifically raised about those people, many of whom I served alongside—I remember well their lifestyle and employment history.

It strikes me that in the same chapter of this Bill we have a clause about agency workers. The TUC, quite rightly, has been standing up for the rights of agency workers. It might be an odd term, but, in a sense, this is another group of agency workers who are putting their lives on the line. I had not decided to force a vote, but I am not satisfied with what I have heard from the Minister.

Mr. Plaskitt: Let me try to help out the hon. Gentleman. I reiterate that the reason why we take our position is because normal employment rights do not apply to the armed forces, save in respect of anti-discrimination measures, as he knows from his experience. All other normal rights, such as unfair dismissal, do not apply. There is no dispute about that, or pressure to alter it, because of the unique role, terms of engagement and demands placed upon those people. The hon. Gentleman quite reasonably made all those points.

If we were to include the armed forces in this measure, we would run against the understanding that normal employment rights do not apply. The idea of automatic enrolment is another normal employment right. For the sake of consistency, it is better to be clear that this does not extend to the armed forces. It would be inconsistent to make a special arrangement for the group of people about whom he talks, given that the armed forces as a whole are not going to be included because of their special employment status. That would be odd, because the group about which he talks will, for the most part, have alternative employment and will be automatically enrolled. I want the landscape to be consistent.

It is not that we are trying to do down, or to be unreasonable towards, the armed forces. They have very good schemes that more than adequately meet the qualifying criteria. The issue will not arise because we want to treat it separately to keep this consistent with every other aspect of employment rights. I hope that helps.

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Andrew Selous: I am grateful to the Minister, but I do not fully accept the logic of his argument. I understand that serving regular forces or Territorials do not have normal employment rights in terms of how they conduct themselves. That would obviously not be appropriate, but I am not sure that the analogy can correctly extend to pension contributions.

While I accept the Minister’s argument about normal employment rights, there is an issue about this group of people. The Minister seems to be sticking to his argument that all the Territorials have other jobs through which they can auto-enrol. My point is that there are some who treat being a Territorial as their main form of employment. They might have very casual employment outside the Territorial Army when they are back in the UK for perhaps quite long periods when they are in their 20s or early 30s. It does not seem right to say that there is a blanket exemption.

Mr. Plaskitt: Let me try to reassure the hon. Gentleman further. We are not trying to be unreasonable towards the group of people whose interests he is speaking up for perfectly reasonably.

There is a further important problem that the hon. Gentleman needs to consider when he decides whether to press his amendment to a Division. TA members are volunteers. Volunteers cannot be jobholders within the definitional terms of the Bill—they are not an employee and not a worker. Given that we have already accepted the definition of jobholder, it would be difficult to get a TA volunteer into the terms of the Bill. It would be hard to make the hon. Gentleman’s proposal fit with every other aspect of the provision.

Andrew Selous: Again, I hear what the Minister says. He has a brief and a position that he is doing his best to advance, but I do not accept the logic of his argument. Once people put on the Queen’s uniform as a reserve soldier, sailor or member of the Royal Air Force, they are a jobholder. It would be easy to amend the definition in the Bill. Those people are certainly subject to the full demands of military law the moment that they walk through the door and put on the uniform.

Auto-enrolment will not be forced on anyone. People will have the option to say no. I have not been reassured by what I have heard. If there were enough members of the regular forces, for whom the Government would be paying pension contributions anyway, the Government would be paying this money as a matter of course. There are long periods of reserve service because the regular forces are under strength at the moment, and I will press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 8.

Division No. 4 ]