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I believe that the amendment in the names of the hon. Member for Northavon (Steve Webb), my right hon. Friend the Member for Birkenhead (Mr. Field) and the hon. Member for Twickenham (Dr. Cable) supports the changes to the scheme put forward in the
motion tabled by the Leader of the House. However, it calls on her to bring forward further proposals to cap the Exchequer contribution for this year at its 2008-09 level. Achieving a freeze in the Exchequer contribution at 2008-09 rates could involve a further increase in member contribution rates, an increase in pension age, some combination of the two, or other measures. There are a great number of possibilities that we could consider. Clearly, further analysis will be needed on the various options that would avoid an increase in the Exchequer contribution.
We expect there to be more wide-ranging reform in the future. On 13 February this year, my right hon. Friend the Prime Minister commissioned the Senior Salaries Review Body to conduct a fundamental review of pension provision for MPs, Ministers and other parliamentary office holders. I know that some of the right hon. and hon. Members who are in their places are starting to engage with that review. The Prime Minister asked for it to consider the full range of options for reducing the Exchequer contribution. Those options included, but were not restricted to, increases in the pension age, increases in members’ contributions, changes in the accrual rate and a consideration of the overall merits of defined contribution or money purchase arrangements. We are considering the Government’s evidence to the review, and we will make an announcement in due course.
Susan Kramer (Richmond Park) (LD): Will the Minister indicate whether she proposes to accept the amendment tabled by my hon. Friend the Member for Northavon (Steve Webb)?
Barbara Keeley: Members are running just ahead of where I am in my comments, and I will come to that in a moment. I thank the hon. Lady for her intervention.
I have outlined the changes necessary to limit the impact on the taxpayer of increases in the cost of the parliamentary pension scheme. The interim measures in the motion will enact the earlier decisions made by the House to cap the Exchequer contribution. The Government were already considering further measures to avoid an increase in Exchequer contributions from the pre-April 2009 level. The amendment is consistent with that further consideration. My right hon. and learned Friend the Leader of the House is therefore content to return with further proposals to ensure that the Exchequer’s contribution this year does not exceed that of last year. Because all these measures affect the current year, and because there are many detailed questions to answer, I am sure that it will assist Members to know the extent of their contributions to the scheme when we return to the debate. We will do that as soon as possible, and we will present all the various options that could make the freeze happen.
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Alan Duncan (Rutland and Melton) (Con): I thank the Deputy Leader of the House for giving the Government’s position on these two motions. As she said, we are discussing the establishment of a dedicated Select Committee on science and some changes to the parliamentary pension scheme, to which an amendment has been tabled, primarily by the Liberal Democrats.
The changes to the machinery of government in the last reshuffle were, I fear, made in a hurry, and in many
respects for all the worst reasons. Because the Prime Minister did not have the power to change his top team as he wished, he had to satisfy a clash of ministerial egos by carving up a Department completely on the hoof—so much so that some civil servants returned to their desks after lunch to find that their Department had been abolished in the meantime. As I am afraid is often the case in reshuffles, no serious thought was given to the implications for hugely important areas of policy on the back of the reshuffle that was suddenly conducted.
In this case, I think we all accept that the biggest loser, apart from some individuals, was science. When the Prime Minister took up his post in July 2007, he broke up the Department for Trade and Industry and shoved science into the Department for Innovation, Universities and Skills. As a result, the Science and Technology Committee was abolished and subsumed into the wider Committee on that Department, despite the serious protestations and concerns of the science community.
In the Prime Minister’s latest Cabinet reshuffle, science became a bit of a plaything of the noble Lord Mandelson, and was seen right from the start as being just one part of an over-inflated and largely unaccountable department. The Department for Business, Innovation and Skills has 12 Ministers in all, half of whom—including the supposed Science Minister—are not in this House. The latest report of the Select Committee on Innovation, Universities, Science and Skills made it clear that because the Committee’s remit was stretched so wide, it had struggled to give Government science policy the level of scrutiny that it deserved. The new DBIS Committee, being even larger, would have been totally unable to handle the scale of the issues at hand, as it will already have to deal with the Royal Mail and EU regulation, along with universities and measures to stimulate manufacturing.
There are two reasons why it is particularly important at this time to scrutinise the Government’s spending and activity on science and technology. First, as the Innovation, Universities, Science and Skills Committee said, there is a widespread view that British technology and its research and innovation can help us climb out of this recession. The weakness of the pound is providing a much—needed boost for manufacturing opportunities. Although a weak pound is not good for everyone, the Government should be encouraging manufacturers to seize the initiative by investing in research and development. Secondly, science will be central to Britain’s ability to respond to the major challenges of the future, from climate change to tackling swine flu or any other form of pandemic flu.
The creation of a new Select Committee on Science and Technology is therefore an important step in holding the Government to account and ensuring that science policy is not merely a departmental addendum. Indeed, my hon. Friend the Member for Windsor (Adam Afriyie) has been ardent in his campaigning for such a Committee. We welcome the decision and hope that the Committee will go about its work with all the energy and enthusiasm that this area of activity merits.
Let me turn to pensions. The question of pensions generally is one of the most potent areas of public debate. Ten years ago we had some of the best pensions in the world; now we have some of the worst. The public
sector seems to do far better than the private sector. In the private sector, which used to have many amply funded final salary schemes, the vast majority of schemes, if they have not closed already, are heading towards the closure that their funding now requires. In the middle of all that and all the difficulties that we have faced over the past few weeks, this House looks as though it has one of the most protected and generous schemes, compared with anybody else. We have the trustee of the scheme on our Benches this afternoon, my hon. Friend the Member for Bournemouth, West (Sir John Butterfill), who will go into the details more than me.
Mr. David Drew (Stroud) (Lab/Co-op): The hon. Gentleman has put his finger on it: our pension scheme looks as though it is one of the most generous, but when we look into it, we see that it is no more generous than many other public sector schemes. If I was to retire at 60, I would receive no more money from the parliamentary scheme than I would have received from my other pension scheme, as a classroom teacher. We do ourselves a disservice by making it appear as though we have a very good, copper-bottomed pension scheme. It is a good scheme, but it is no better than many others in the public sector.
Alan Duncan: The House will have heard what the hon. Gentleman has said. There are many arguments surrounding the scheme, many of which are difficult to put in the current climate of public opinion. By and large, the scheme would have been totally self-funding, had the Government not taken such a long contributions holiday. The Minister has today made the point that the tenure of Members, unlike others in the public sector, is quite short, at only 10 or 11 years. Indeed, the final salary is exactly the same in one’s 30th year in this place as it is on the day one is first elected. In that sense, there is no progression through the ranks of seniority, which would otherwise dramatically add to the pay-out made.
All those arguments are understood, but we have to accept that we are living at a time when, given the position in the public sector and the private sector, our pension scheme sticks out like a sore thumb. The policy of my right hon. Friend the Leader of the Opposition is to wind up the scheme for new entrants. In the meantime time, however, we have to look at its funding, its benefits and its terms and conditions, to which end the Government have tabled their motion today.
One element will be welcomed by the public, which is that we are going to contribute more out of our pay packets. However, there is another, unfortunate aspect, which is that we are in the middle of a number of changing forces, which would have made it better for the Government not to have tabled anything at all just at the moment. The trustees are looking at the scheme in detail, as is the Senior Salaries Review Body. In the middle of all that, the Government have tabled today’s motion, but at the same time, they are asking the Exchequer to contribute more. That is what people find difficult.
The Government could have looked at alternatives. The main reason, above all others, why the actuaries looked at the arithmetic and decided that the fund needs more money is that former members—and, as the predictions of the actuaries go, existing and future
members—are living longer. The issue is longevity much more than it is the value of the fund. At a time when the Government intend to raise the state pension age, it looks odd that they have not considered, as their first priority, raising the age at which former members can benefit from the pay-out.
Barbara Keeley: The key point is that all those things were looked at, but two points pertain to today’s debate. One is that we needed a simple interim measure to cap the Exchequer contribution, and that is what we have in today’s motion. The Government have to enact the decision made earlier by the House. The second and most important point is that there was already a review—the Prime Minister asked the Senior Salaries Review Body for a review in February—so in some ways we are moving ahead on things ourselves, even though there is parallel action outside this place. I can tell the hon. Gentleman that a great deal of work has been done, and that it will be possible to present a spread of options for hon. Members to review. We are aware that the SSRB is also undertaking its own review and taking evidence from hon. Members, and we would not wish to prejudge any recommendations that it might make.
Alan Duncan: Despite what the Deputy Leader of the House says, she should, in all honesty, admit that the Government have been rather clumsy about this. If he catches your eye, Madam Deputy Speaker, the chairman of the trustees, my hon. Friend the Member for Bournemouth, West will be able to explain this in detail, but I am not confident that we have been consulted in the depth that the issue merits. So, something that was sprung on us by the Government has rather backfired, leading to their having to face the full wrath of the newspapers last night, and seeing what they were planning to write the next day—that is, today—forced them to change their mind about their attitude to this issue.
So it is that the amendment tabled by the hon. Members for Northavon (Steve Webb) and for Twickenham (Dr. Cable) and the right hon. Member for Birkenhead (Mr. Field) appears to have been accepted by the Government, and taxpayers are not now going to face a demand for much greater contributions. With the amendment having been accepted by the Government, I sense that the whole House is likely to agree to proceed on that basis. Nevertheless, I very much hope that the Government will be less clumsy on this issue in the future.
2.36 pm
Mr. David Heath (Somerton and Frome) (LD): I shall deal first with the points about the machinery of government. The hon. Member for Rutland and Melton (Alan Duncan) has echoed things that I have repeatedly said in the past about the way in which the Government changes departmental nomenclature and reorganises desks and offices apparently on a whim, without any thought for the consequences of those moves. It worries me that we so regularly see changes to the structure of government Departments appear to be based mainly on the desire for titles for those in the Cabinet, rather than on a genuine cost-benefit analysis of how they will make the Government run better.
The reason for the changes that we are debating today is that that which was cast asunder has now been
reunited, all in order to add to the splendour of the titles of the—what is he called now?—the First Secretary of State. I think that that is now the principal title of the noble Lord Mandelson of Foy and Hartlepool, or wherever it was—
Andrew Mackinlay (Thurrock) (Lab): The supreme pontiff.
Mr. Heath: I am not sure whether the noble Lord Mandelson builds many bridges, but we shall see.
I do not think that this is the right way of doing business. I hope that we will eventually reach a point at which, if a Prime Minister wishes to change the structure of government, he will argue the case properly by putting a paper before the House and allowing Select Committees to consider the consequences, before then proceeding on a basis of knowledge and understanding of the properly projected advantages and disadvantages, rather than on the rather haphazard basis that we have at the moment.
Having said all that, these changes have been made and we need to respond to them in regard to the way in which we organise the Committees of the House. As the Minister knows, my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis), the hon. Member for Bolton, South-East (Dr. Iddon) and I have been discussing the consequences of the changes for the Science and Technology Committee. I cannot for the life of me understand why the Leader of the House did not immediately see the strength of the argument and just accept what was a perfectly proper request, particularly as it was backed up—as the hon. Member for Bolton, South-East said—by the learned societies, which know a thing or two about these matters.
The Science and Technology Committee, before it was renamed, was an ornament to the House. It was a very valuable body. I served on it for three years in what I like to think of as its golden age. It was a wonderful Committee, precisely because it did not have to spend all its time looking at the activities of a particular Department and because it could range so widely over the scientific and technological aspects of the way in which the Government operate and pick out the areas in which it had particular expertise, or draw on such expertise, in order to inform the House and the Government. That is why the terms of reference are so important. I am pleased that the Deputy Leader of the House expanded on the Committee’s role in her own words as it is not said on paper. I hope that some sort of Pepper v. Hart procedure will be adopted in the House, so that there is no misunderstanding on the part of the Government as to the range of the Committee’s activities.
In its previous manifestation, the Science and Technology Committee sometimes ran into difficulties. As the hon. Member for Bolton, South-East will remember, we received a very dusty response from the then Home Secretary when we were looking at aspects of the scientific response to terrorism. He made it very clear that he did not think that this was anything to do with the Science and Technology Committee and asked us please to poke our noses somewhere else rather than in his Department. He not only discouraged us from looking at what the Home Office was doing, but he actually put pressure on the Department for Transport to ensure that we did not know what that Department was doing either.
I hope that it will be very clearly understood in Government that the Science and Technology Committee has a roving brief, that it must be able to follow its nose in deciding what is appropriate for it to look at and that it must be able to define its own role. If it does so, it will be able to perform the very useful tasks that it has done previously and we should wholly welcome that.
In moving on to deal with pensions, let me say immediately that for me to talk about that subject in the presence of my hon. Friend the Member for Northavon (Steve Webb) or the hon. Member for Bournemouth, West (Sir John Butterfill) is nonsense; I have nothing like their expertise and I will not pretend to have it. My hon. Friend the Member for Northavon will therefore explain the consequences of his amendment himself.
I was a little surprised to read in some of this morning’s newspapers that the initiative to amend the pensions motion came from the right hon. Member for Witney (Mr. Cameron). When I looked at the amendment, I could not see his name. I could see the names of my hon. Friends the Members for Northavon and for Twickenham, (Dr. Cable) the right hon. Member for Birkenhead (Mr. Field) and my hon. Friend the Member for Oxford, West and Abingdon (Dr. Harris), but not the name of the right hon. Member for Witney, so I wondered how he could have been responsible for the Government’s change of heart— [Interruption.] Perhaps the hon. Member for Rutland and Melton can explain.
Alan Duncan: Since I have been invited to explain, perhaps I could put it down to the unique influence in this House of both the Leader of the Opposition and myself.
Mr. Heath: Unique and almost invisible! That is something on which we all congratulate the hon. Gentleman. Let us set that aside, however, and simply say that the strength of the argument that my hon. Friend the Member for Northavon is about to adduce is so strong that it is unanswerable, so the Government will accept the amendment.
On a serious note, it is almost unbelievable to reflect how adept this House is at producing public relations disasters. To be asking for yet more taxpayers’ money to support the MPs’ pension scheme at the precise moment when there is so much criticism of what we do is quite extraordinary. That is why the amendment is so important. Is there a deficit? I understand that deficits are reported by actuaries, but I have no confidence in actuarial science. I suspect that exam papers for actuarial science are very similar to exam papers in economics; as it used to be said, the questions are the same each year, it is just the answers that change. Actuaries never seem to be consistent for more than one year, but there we are.
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