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Mr. Anthony Steen (Totnes) (Con):
On a point of order, Mr. Deputy Speaker. We need your advice and guidance. Today I received an e-mail from a moleor
perhaps I should say a krot, which is Russian for molefrom the UK Border Agency saying that the Government were going to ratify the Council of Europe convention on action against trafficking in human beings. As chairman of the all-party group on the trafficking of women and children, I have not been notified of that. Opposition Members do not know anything about it, and there has been no announcement from the Government.
Is there any point in having a Chamber of the House of Commons if the Home Office forget, or ignore, the fact that there is a House of Commons and there are Members of Parliament, and that we need to know whether ratification is going ahead before the media, other organisations and every Tom, Dick and Harry? It is a terrible abuse of the House that the Home Secretary chooses to announce that this is going aheadif that is the caseand one hears it from a mole in the UK Border Agency. I should advise you, Mr. Deputy Speaker, that I have left my door unlocked, if the police want to see anything further.
Mr. Deputy Speaker (Sir Michael Lord): I have no knowledge of the matter that the hon. Gentleman brings before the House. He will be aware that Mr. Speaker is always most insistent that important matters for the House should be brought to the House. The point that he has made is on the record and the Treasury Front Bench will have heard what he has said.
That this House endorses a cost-neutral package of changes to the Parliamentary pension scheme consisting of
(1) the introduction of a new option for members of the scheme to pay a member contribution rate of 5.5 per cent. of salary for a pension building up at an accrual rate of 1/60th of final salary for each year of service, as an alternative to the existing accrual rate options; and
(2) changes to the ill-health retirement provisions, as proposed by the Trustees, including two different levels of benefit depending on the degree of a scheme members incapacity, and the periodic review of ill-health pensions. (Ms Diana R. Johnson.)
Sir John Butterfill (Bournemouth, West) (Con): I will be relatively brief. These two changes to the rules of our parliamentary contributory pension scheme go some way towards righting the wrongs that have occurred in the past, will be beneficially applied for Members overall, and will in some cases help to prevent what may have been abuse in the past.
The first change relates to retained benefits. As you will be aware, Mr. Deputy Speaker, retained benefits are the restrictions that apply to members of our scheme who have been members of another scheme, particularly a better paid one than a parliamentary scheme. Members who have retained benefits will often reach the ceiling of the amount that they can earn through our scheme well before they are due to retire.
The Government recognised that that was unnecessary in modern conditions in the Finance Act 2004, which took away the compulsion for scheme sponsors to operate a retained benefit scheme. The problem is that if scheme sponsorsincluding ours, the Treasurywere to accept that, there would be a considerable increase in their costs. The Government, in line with many private sector scheme sponsors, have said that that would not be an acceptable increase to the burden on the scheme. [Interruption.] It would help me enormously if hon. Gentlemen would not have a conference in the Chamber while I am speaking. They could perhaps have it elsewhere, or be a bit quieter. It is quite difficult to put across a fairly complex point that is not always terribly well understood in the House.
What is proposed in the motion, which has been accepted by the Government, is an arrangement whereby those who are affected by retained benefits can remain members of the scheme, and may continue to contribute, in a way that is much fairer. At the moment, quite a number of Members are contributing at a level that means that they will not see the benefit of the money that they are putting in; they are spending their money for nothing. That is clearly an unacceptable situation.
Simon Hughes (North Southwark and Bermondsey) (LD): I have a simple question for the hon. Gentleman. He said that the proposal, which I accept and support, has been accepted by the Government. Surely the reality is that it is not a Government matter, but a House matter? The Governments view is of course of interest, but in the end it should not persuade anybody either way, should it?
Sir John Butterfill:
I am grateful for that intervention, but of course the reality is that if the House were to put forward a motion that imposed an increased burden on
the scheme sponsor, which is the Government, the Government would be perfectly entitled to move a motion against it, and then we would not have the money to implement the measures. We therefore have to move by consent on these matters. In present circumstances, it would not be appropriate for the Government to accept an amendment that would increase substantially the cost to the taxpayers; they are bearing rather a lot at the moment, and it would look rather greedy if we were to try to insist on such an increase. We are trying to find a mechanism that does not impose a huge additional burden on the Government, but that nevertheless rights a serious wrong affecting Members of the House, particularly those who saved significantly for pensions before they became Members.
The proposal will allow Members who are affected by retained benefits to change the basis of their membership of the scheme; they may go on to a new level, and contribute towards a sixtieths scheme. The present two alternatives are a fortieths or a fiftieths scheme. The sixtieths scheme will not be as beneficial, because in any given year they will not accrue as much money as they would at fortieths or fiftieths. However, it will mean that they can continue to remain members and contribute to the scheme, because at sixtieths, retained benefits do not apply under present law. They can contribute at one sixtieth without limit.
That means that those Members would not be expected to pay as much for their special scheme as those who are on a one fortieth scheme, who currently pay 10 per cent., or those who are on a one fiftieth scheme, who pay 6 per cent. It is proposed in the motion that they should pay at 5.5 per cent. rather than 6 per cent. of their salaries, and they can do that without prejudicing their rights under the retained benefits regime and without prejudicing their right to remain in the scheme for as long as they remain in the House.
If Members came out of the scheme because of the problem with retained benefits, it would mean that they would no longer have the benefit of a death in service grant to their partner or spouse. That, again, is pretty unfair on Members. The proposal gets over those problems. It does not totally solve them, but it creates no cost to the scheme sponsor. Those who are at present trapped in an extremely unattractive situation can escape from that.
Members will have to make a selection. All those coming in new at the next general election will have to decide whether they want to be on the one sixtieth scheme, the one fiftieth scheme or the one fortieth scheme, and they will contribute appropriately. Following the making of the order, it will be possible for those who are at present on the one fiftieth or the one fortieth scheme to come out of that and to move to the new scheme.
The Governments proposal is that that should be a once-and-for-all decision. I am not sure whether that is necessary, and I hope they may think again about that. Members circumstances change over time. People are often in the House for many years and they may wish to change from one scheme to another. Wethe trusteeshave asked the Government Actuary whether there would be any significant cost if Members could make the selection after every general election. The Government Actuary says that the cost would be insignificant.
We have also consulted the staff of the House in the pensions unit as to whether that would involve any significant cost or problem for them, and they confirmed to me that it would not. I am therefore not sure why we cannot allow Members to make the selection after every general election. Be that as it may, I strongly recommend that right hon. and hon. Members approve the motion today, because it is very much for the benefit of Members as a whole and will right a fairly severe injustice which has applied up to now.
The second part of the motion relates to ill-health retirement. The trustees have found that the present scheme is too inflexible. Somebody who becomes very seriously ill or disabled and is no longer able to carry on serving as a Member of Parliament or, probably, to take up any particularly remunerative employment must prove that to us as trustees, and must get a doctor and sometimes a specialist to confirm that that is the case. We, the trustees, have a consultant medical practitioner who would assess that on an independent basis and advise the trustees.
These are difficult decisions to make, because there is often quite a fine line between not being able to do things and being able to do them, but with some difficulty. We have Members in the House who are blind, who are in wheelchairs, who have all sorts of afflictions, yet manage to carry on a very successful parliamentary career. Therefore, no one of those conditions would be enough. The condition has to be permanent, ongoing and unlikely ever to get any better before we decide that we will grant that early retirement. It is a generous scheme, similar to most others outside the House, but it means that even quite a young Member could retire on ill-health grounds and be paid the full pension that he or she would have received if they had stayed here until they were 65.
Mr. David Winnick (Walsall, North) (Lab): Can the hon. Gentleman give any indication of the number of Members who have appliedin the past 10 years, sayto be compensated under the provision that he has just described?
Sir John Butterfill: The past 10 years is about the whole time in which I have been a trustee. I would have thought that the number was about 30 or 35something of that order. Not all such applications have been approved, but some have.
The difficulty is that medical situations are often a moving target. There have been radical improvements in medical science, so conditions that were impossible to treat a few years ago can now respond very well to treatment. Furthermore, we do not know what the position will be in another five or 10 years. We have to make a decision based on a snapshot in time.
The situation means that, when we are not happy with the position of a Member, we have to turn them down, even though they might have quite concerning conditions. Again, we are not particularly happy with that. We now propose a two-tier ill-health retirement scheme, which is common outside this place in the private sector. At the moment, there is nothing that we can do to assist somebody who is suffering considerably but not so badly that they cannot do anything, or somebody who has a condition that our medical advisers
tell us could be overcome with treatment, after which they could carry on working. We are therefore proposing a two-tier arrangement.
One of the tiers is clear: if we are absolutely satisfied about the degree of a Members disability and all our and their medical advisers agree, then we will give that Member their full lifetime pension, starting immediately. If Members have a disability of a lower ordernot so severe as to qualify them for the full lifetime pensionthe new scheme will say that they can retire and take their pension straight away without penalty, but they will get as pension only what their contributions to date will earn. So there is an advantage to them, because they will get the money earlier without any penalty, but the quantum will be only what can be bought with what they and the scheme sponsor have paid in to date. We think that idea much fairer; it enables those who are ill but who do not fully qualify to retire on a reasonable pension and get it early, and it does not prevent those who are much more severely affected from a health point of view from retiring immediately with a full pension.
The only other part of the proposal is that we would reserve the right to review peoples conditions, either up or down. If we find that somebody to whom we have given a full pension has suddenly fully recovered, is capable of doing absolutely everything and is earning a fortune doing some other job, we might say, Well, hang onperhaps the state is being a bit too generous here. The recoveries that some people make can be remarkable, as we have seen in all sorts of instances. The proposal enables us to move people up or down the scale if the appropriate evidence is available. We believe that to be the right way to proceed, and I recommend the motion to the House.
Simon Hughes (North Southwark and Bermondsey) (LD): Both of the proposals seem eminently sensible. I am grateful to the chairman and his colleagues, the trustees, for considering these important matters. These things need careful deliberation, as they would for anyone else planning for their retirement. My intervention was not to suggest that if extra money were asked for from the Treasury, there was not a Government interest. My understanding of the package is that it would reduce the Treasurys liability, but perhaps the Deputy Leader of the House could confirm that in a second.
I have two brief points, one of which relates to the first motion, which seems eminently sensible because it gives greater flexibility. That is something we would wish for others outside this place, so we are not asking for anything special. That flexibility means we can take less, or more, from our salary. We will have three choices as to how much is deducted and three choices on the length of time over which we can contribute. The proposal and that flexibility are both eminently sensible. I support what the hon. Member for Bournemouth, West (Sir John Butterfill) said because people should be able to vary the arrangement at the beginning of each Parliament. That seems an appropriate response for the reasons that he gave: peoples circumstances change and they might want to contribute more quickly to reach the maximum of the pension.
I apologise if the hon. Gentleman said this, but I want to repeat it because I think it is important. I understand that we are one of the only groups of people who are limited to a pension with a two-thirds maximum in relation to our finishing salary. That does not apply across the work force in general, but because we are governed by a special arrangement in statute, we are kept to it. The public need to know that.
Sir John Butterfill: That is not totally correct. If Members reach the maximum level before they are 65, they can no longer continue contributing until they are 65. Once they are 65, they can resume contributions.
Simon Hughes: I have not quite addressed post-65 circumstances yet, but I understand the hon. Gentlemans point. People who retire at the conventional retirement age would be able to contribute to a pension that would only be up to two thirds of their final salary, but he says that if people continue working beyond that, they could pick that process up again.
My second point is that the hon. Gentleman made the extremely good point that there must be a system that allows flexibility about the amount of money people are given if they retire on ill-health grounds, which does not treat everyone as if they were the same, because obviously they are not the same. One given lump sum or settlement would be clearly inappropriate in the different circumstances that may exist. As the hon. Gentleman mentioned, we need the flexibility to conduct a review if a persons health gets much worse, or if they miraculously get much better, either by virtue of science of by some other means. The public would not expect anything else.
Mr. Shailesh Vara (North-West Cambridgeshire) (Con): Earlier this year, the House debated the report of the Review Body on Senior Salaries regarding parliamentary pay, pensions and allowances. I am sure that many Members will remember that debate, although most of the speeches and comments related to the more newsworthy items of pay and allowances, rather than parliamentary pensions.
Despite that, one of the motions passed at the end of the debate was a recommendation from the reportnamely, that members of the pensions fund with retained benefits should be allowed to opt for a one-sixtieth accrual rate, in return for paying reduced contributions, provided that off-setting savings could be found to make the change cost neutral. Ensuring that any change is cost neutral is important and I am pleased to see that the Government Actuarys Department feels that the proposals achieve that.
The changes suggested to the pension scheme are right and proper. It is only fair that those who have retained benefits and will therefore receive less compared with other Members, should contribute less and at a different accrual rate. I appreciate that there has been some debate as regards the percentages involved, but the proposals before us provide a sensible halfway measure, ensuring that those who receive less actually pay less, while ensuring that those who do not have retained benefits do not end up picking up the slack.
The ill-health retirement pensions provisions are very much a step in the right direction. We must recognise the concern about the existing structure, whereby the ill-health pension for serving Members does not distinguish as to whether he or she is deemed capable of being able to carry out some other form of employment. Moreover, once a medical assessment has been made, the current procedure does not allow for reviews to determine whether it is appropriate to continue with the payments.
I therefore welcome todays proposals, which create a two-tier level for serving MPs, which is a structure that is common in the private sector, as well as in other public service schemes. There will be a higher level of payment for those scheme members whom the trustees feel are permanently incapable of doing any form of work and a lower level of payment where it is felt that, although the member is deemed permanently incapable of performing the duties of an MP, he or she can none the less do some other types of work. It is also right that once an assessment has been made, the case and medical history should be subject to review, as felt necessary by the trustees.
The proposals before us are sensible and balanced. They point towards a better and fairer system, and we on the Conservative Benches support them. Finally, may I put on record our huge thanks to my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) and his fellow trustees? They have been trying to resolve the issues for quite a while, and during that period they have put in much time and effort. I thank them not only for sorting out the issues to hand but, more generally, for all the work that they do on our behalf. It is much appreciated.
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