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Sir John Butterfill:
The retirement age is simply a target set by the scheme. If a member sought to retire before that date, they would suffer an actuarial diminution
in their pension. That is the way it always works with such schemes, but the move to 67-years-old, which I have suggested, is in line with what we are doing on national insurance-based pensions, whose starting age will go up over the years to 68. We have already recognised the need for that move on state retirement pensions, and there is no reason why we should not do the same thing with our own.
Barry Gardiner: I am very grateful to the hon. Gentleman for his clarification and, in that respect, I entirely agree.
In addition, I add my welcome to this afternoon’s proposals to reinstate the Science and Technology Committee. It is excellent that the Government have listened to the points that have been made and reintroduced it.
3.39 pm
Steve Webb (Northavon) (LD): I shall principally address the pensions issue before us, but I should like to place on the record my appreciation of the Science and Technology Committee, which has been chaired with exceptional ability by my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis). His whole Committee has contributed a great deal to the House, and I am pleased that it will be able to continue to do so until the general election.
Amendment (a) stands in my name and those of the right hon. Member for Birkenhead (Mr. Field) and my hon. Friends the Members for Twickenham (Dr. Cable) and for Oxford, West and Abingdon (Dr. Harris). I shall seek to move the amendment formally at the end of this debate, but I should like now to address the reasons behind it. I would like clarification from the Deputy Leader of the House, who I hope has had the chance to seek inspiration, on the issue that I raised in intervening on the hon. Member for Bournemouth, West (Sir John Butterfill). I apologise if I did not explain my question terribly clearly.
The motion in front of us says that the Exchequer contribution will be 28.7 per cent.; that much seems unambiguous. However, page 25 of the Government Actuary’s report published in March 2009 says that the amount needed to clear the deficit is 8.5 per cent. per year; there are two components—the amount for the recurring liabilities and the amount to clear the historic deficit, and the second of those is 8.5 per cent. According to my maths, if we take 8.5 per cent. from 28.7 per cent., we end up with 20.2 per cent. I am aware that that 8.5 per cent. was 8.7 per cent. last year—and 28.7 minus 8.7 is 20, so I can see why that would have appeared to be the right number. This year, however, it does not appear to be the right number, as 28.7 minus 8.5 is 20.2.
I cannot see how what the Government’s unamended motion proposes is consistent with the resolution of the House that the Exchequer contribution should be restricted to 20 per cent. I might simply be missing something; that is quite possible, given the technicality of the area. However, I hope that the Minister—perhaps with some advice—will clarify the point before the end of the debate. Whether the figure should be 20 per cent. or 20.2 per cent., amendment (a) is about this transitional year, prior to the Senior Salaries Review Body reporting on a more root-and-branch reform. I have a lot of
sympathy for what the hon. Member for Bournemouth, West said about increasing retirement ages; that is a good direction in which to go. Pending that, however, what should we be doing for 2009-10?
We are all aware that the world has moved on. A 20 per cent. Exchequer contribution was first mooted two years ago, in 2007. That has been the backdrop to our deliberations for a two-year period, but we would all accept that the world of 2007 was very different from ours today. What seemed appropriate then as a cap on the Treasury contribution does not seem so now. It was a very different economic environment. That was not quite so before the crash, but we were certainly not in the full depths of the economic problems. The position of people in many other pension schemes was not as apparent as it is now, and public attitudes to the House were obviously different then.
I accept the point made by the hon. Member for Stroud (Mr. Drew). We should not apologise for existing or for the work that we do, and we should not give an inappropriate impression of the pensions and benefits that we receive. However, many of us feel that the world has simply moved on so much that it is inappropriate in 2009-10 to ask the taxpayer to make any additional contribution to our pensions in comparison with 2008-09.
It is sometimes suggested that that is a hair-shirt approach, but it is worth putting the issue in context. We are talking about the difference between an employer contribution of 28.7 per cent—or 20.2 per cent., which takes away the deficit bit for the sake of comparability; that is how I think it should be—and 18.1 per cent. or 18.3 per cent., depending on what people think the right number is. In other words, we are arguing about whether the taxpayer should put 20 per cent. or so or 18 per cent. or so of our salary into our pensions. Such figures would be beyond the dreams of avarice for anybody in the private sector and for quite a number of people in the public sector. Occasionally we need to remind ourselves that although, as the hon. Member for Stroud said, some people right at the top of the public sector in certain professions have exceptionally generous pensions, their numbers are relatively small. The vast swathe of public sector workers retire on vastly less generous pensions than we do.
One of the issues that has been raised is whether we should simply accept what review bodies say. It is a serious point; if we second-guess the independent review bodies and do a bit more of the hair-shirt, what is the point of those bodies? However, even those bodies accepted that we have to take account of the changing world in which we live.
I want to quote what Sir John Baker said in June 2008. He referred to the 2007 Senior Salaries Review Body report, which referred to the Exchequer cost of the accrual of benefits for MPs being in principle limited to 20 per cent. But he also stated, at paragraph 63, that
“the best solution would be for the Independent Body to continue to consider MPs’ pension arrangements bearing in mind the unusual career pattern of MPs”—
that was the point that the hon. Member for Brent, North (Barry Gardiner) made—
“and the evolution of pensions in the public sector and wider economy.”
That is the crucial phrase. In other words, even the independent review body was saying that these things are not set in stone, and that the world outside, public
sector pensions and the wider economy are moving on. We in this House should therefore have discretion not always to have to wait for the next independent review, which might take 18 months or might not be due to report for another year. We have to make a decision more or less today, and in a sense we are probably nearly three months late in making it, because whatever we do will be backdated to 1 April.
Even Sir John Baker said that the independent body should bear in mind what is going on in the wider economy. Prior to the SSRB’s report, we already know what is going on. Only this week, we had reports of the further demise of private sector final salary schemes, and it important that we as a House show that we know what is happening in the wider economy.
Mr. Love: We have a prominent but small scheme, and the question for us is whether we should give a lead to the private sector or whether, because the scheme is relatively small and funded, which is unusual in the public sector, we should be a lag indicator. That will be critical to how things evolve.
Steve Webb: That is a very thoughtful comment. In my view, we have to be a leading indicator. We must be able to consider what is happening in the public sector with some credibility. Public sector pensions are very diverse, and I do not have a blanket view about them. The amount that workers put in, the salary that they get, their job security and the physical demands on them are different, and there is not a one-size-fits-all answer to the public sector pension issue.
That is why our party believes in having, perhaps as the first act of a new Government, an independent commission, ideally with buy-in across the political spectrum, to review public sector pensions urgently. It could ensure that they are fair to the taxpayer, who makes a substantial contribution to them, and to public sector workers. Some of them at the top do extraordinarily well, but some at the bottom have pretty rotten jobs with pretty poor salaries and end up with pretty poor pensions. There is a balance to be struck, and if we want to say anything about later retirement ages, for example, it would be appropriate for us to have examined our own scheme first and been willing to take the relevant conclusions on the chin ourselves.
Mr. Drew: One point that must be addressed is that those who leave a scheme early often receive enhancements. There is a belief that those enhancements come almost from outer space, but in fact they come from the scheme. They have a disproportionate effect on lower-paid people who serve their full term and then end up with an even poorer pension.
Steve Webb: The hon. Gentleman makes a powerful point. We have been doing some research on local authority chief executives and senior officers, for example, who seem to retire very early and get substantial boosts to their pension on leaving. As he rightly says, that money comes from somewhere—either from other scheme members or from council tax payers, or I suspect from both. That needs to be addressed.
To return to our own scheme, the amendment argues that we should return the Exchequer contribution for 2009-10 to its 2008-09 level. As the debate has illustrated, there are a wide variety of ways of doing that. A number of my colleagues have said that we will already be putting £60-odd extra a month in as a result of the
main motion, essentially reversing the pay rise that we have had, and that their preference would be for any further rebalancing in line with the amendment to come in the form of diminished scheme benefits rather than increased current contributions.
I have an open mind about what the right mixture is, but I would be happy to enter into conversation with the hon. Member for Bournemouth, West, the chairman of the trustees, and with the Leader of the House and her colleagues. Assuming that the amendment is passed, I will be happy to discuss with them how to achieve the right mixture in a way that deals with taxpayers’ concerns but is fair to hon. Members.
Mr. Love: I thank the hon. Gentleman for being liberal in taking interventions. Is not the weakness of both the amendment and the motion that these ideas have been brought forward by Members of Parliament, for Members of Parliament? There is little or no trust outside in MPs taking decisions about themselves. Would it not therefore be better to refer all this to an independent body? I submit that the SSRB has not always been seen to be independent on public sector issues, so perhaps we should roll the whole thing into the Kelly review, which appears to have the confidence of the public and which will report later this year.
Steve Webb: One of my concerns about that suggestion is that it would mean yet more delay. As our debate has illustrated, these are complex matters. Bringing the review under a different review body, which would not quite have to start from scratch, but which would have to get up to speed quickly, could delay things further. Either way, we need a decision for 2009-10, and as I have said, we are already nearly three months late in making it. Until we have heard the views of independent experts, the public will expect us to make a decision now. They will judge what we do, and to go by the indications that we have been given in the past 24 hours, and certainly the feedback that I have received, the public welcome what we have done.
There is a slight danger of grandstanding. I am fully seized of that risk, but hon. Members might be interested to learn that some of the media comment about the amendment has almost been saying that this might be the moment when people finally get it. I would not be so arrogant as to suggest that that was down to me, but there is a sense of the commentators saying, “Perhaps we’re seeing a change in mood.” Given everything that we have been through, it might be helpful to us to send a signal that we are looking at things differently. I hope that that will be constructive, rather than to the detriment of other colleagues in the House.
Simon Hughes (North Southwark and Bermondsey) (LD): Perhaps my hon. Friend will answer on the record a question that I have asked him privately: what independent authority or body supports the amendment? In other words, is there a case for his proposal being agreed to now, on the basis that people outside this place have said, “This is the right thing to do; therefore we should get on and do it”?
Steve Webb: My hon. Friend might have missed the bit when I dealt with that point. The independent Sir John Baker says in paragraph 63 that we should consider not just the normal matters, but
“the evolution of pensions in the public sector and wider economy.”
In other words, we should not just take such decisions in a vacuum. He was talking about what the independent review bodies should do, but as we have to take an interim decision for ourselves, he has given us the authority to look at what is happening in the wider economy. That substantiates the case for saying that it is entirely appropriate for us to take into account, in our interim decision making, what is happening to public sector pensions, where retirement ages are rising, and what is happening in the private sector, where there are some dreadful things. That is only right and proper.
Before concluding, I would like briefly to thank the 23 hon. Members who supported early-day motion 1389, which was the precursor to amendment (a). I am grateful to them all, particularly the hon. Member for Worthing, West (Peter Bottomley), who was the one Conservative MP to give his support, four weeks ago. I was grateful for the support of the other 197 last night, which was obviously what clinched things. However, I am also grateful to those hon. Members who were willing to go out on a limb, because I am aware that I probably lost my copy of “How to Win Friends and Influence People” in raising the matter in the first place.
To reflect what the hon. Member for Edmonton (Mr. Love) said in his intervention, we need to move to a situation with pay and pensions where we hand decisions for wise and independent assessment over to those who are not seen to be partisan and who will take account of what is happening in the wider economy and the public sector, although it is also critical that we ask them the right question. I hope that we can reach that point after this interim year. I also hope that in responding to this debate the Deputy Leader of the House will say whether she feels that the substantive motion hits the 20 per cent., because I do not believe that it does. However, I also commend amendment (a) to the House.
3.54 pm
Mr. Phil Willis (Harrogate and Knaresborough) (LD): Perhaps it is time for a change of mood. I have listened to most of this debate, which has been about the changes to Members’ pensions, and I agree with the hon. Member for Edmonton (Mr. Love). I have listened to the hon. Member for Bournemouth, West (Sir John Butterfill) and my hon. Friend the Member for Northavon (Steve Webb), who bring incredible expertise to this area, for which the whole House will thank them, but at the end of the day, unless things are done independently of the House of Commons, I suspect that the headlines that the hon. Member for Stroud (Mr. Drew) constantly referred to in his contribution will continue, because journalists will simply wrap them up according to how they want to portray Members of Parliament. I thank those hon. Members for their contributions, none the less.
I want to make a brief contribution to the debate in order to thank the Deputy Leader of the House and the Government for the way in which the machinery of government changes have restored the Science and Technology Select Committee to the business of the House. I believe that the Government made a mistake in 2007 when they got rid of the Science and Technology Committee as a separate cross-government scrutiny Committee. That occurred because of the speed of the
changes that took place when the present Prime Minister took over; the speed with which the Departments were reorganised took everyone by surprise. He certainly did not consult me at the time; had he done so, I would have told him that certain responsibilities needed to be protected.
I am grateful for the speedy way in which the Science Minister, Lord Drayson, responded within three days to the Leader of the House to say that our idea clearly needed support and that he supported it. I cannot remember a Minister responding to the Leader of the House in such a clear way before. That spoke volumes about how the House and the broader science community view the importance of science in tackling all the great global challenges that we face. It would be inconceivable for a Department the size of the new Department for Business, Innovation and Skills, with all its responsibilities, not to have anyone examining the very machinery that will deliver the changes. The changes could involve the environment, energy, the green technologies or the plethora of health reforms coming out of our laboratories and our pharmaceutical and technology companies. Without being able to scrutinise all those matters, the House, the Government and our nation would all be the poorer. I want to put on record our genuine thanks to the Science Minister.
I also want to put on record my thanks to the many learned societies and organisations—including the Royal Society of Chemistry, the Royal Academy of Engineering, the Royal Society, the Institute of Biology, the Institute of Physics, the Campaign for Science and Engineering and many others—that did not just sit and say, “Woe is us!”, but wrote to and lobbied the Government about the changes.
Above all, I want to thank the members of my present Committee, the Committee on Innovation, Universities, Science and Skills, including the hon. Member for Bolton, South-East (Dr. Iddon), who was in his place earlier, for the enormous job of work that they have done over many years—in some cases, since before I arrived here. We heard earlier about the distinguished contribution of my hon. Friend the Member for Somerton and Frome (Mr. Heath) to the Committee in its halcyon days.
This is probably the only chance that I will have to put on record my thanks to Dr. Ian Gibson, the former Member for Norwich, North. I do not wish to comment on the circumstances in which he left the House, but it is important to put on record his enormous contribution to the House and to science, including his work in supporting cancer charities. He encouraged the Government to introduce cancer plans and followed that up. He also worked on embryology, and we should acknowledge that the draft Human Tissue and Embryos Bill was largely a result of his early work. I want to put on record my thanks to him, along with those of our Committee and, I hope, of the House, and to wish him well in his early retirement.
The machinery of government changes have raised a number of specific issues for science and technology. The Leader of the House wrote to me in which she said that re-establishing the Science and Technology Committee,
“with a clear understanding that it will pursue a wide-ranging agenda”—
on science and technology across the House—
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