Robert Neill (Bromley and Chislehurst) (Con):
I do not agree with the conclusions of the hon. Member for North Ayrshire and Arran (Katy Clark) about the Bill, or with some of the details of her speech, but I am sure that every Member of the House will agree with her warm remarks about the late right hon. Member for Croydon North, Malcolm Wicks. I knew Malcolm as a fellow London politician for many years. Indeed, I knew his late father, who was a former chairman of the Greater London council. I think that everyone would
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agree that it is a tragedy that Malcolm is not here, because his expertise in this field was recognised throughout the Chamber.
During my time in government I had a measure of responsibility for two of the schemes under discussion, namely the local government scheme and the firefighters scheme. I very much agree with my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) in his analysis of the Bill, the overall pressures that need to be redressed and the need for reform of public sector pensions. I wholly endorse his analysis of how the negotiations—to which he, I and the Chief Secretary to the Treasury were, in varying measure, party—proceeded. There was greater realism and sophistication to be found in my dealings and negotiations with various public sector unions than in the analysis provided by Members on the Opposition Front Bench. That is a sad commentary.
I want to deal initially with the local government scheme. It has been observed, rightly, that this is the most significant of all the schemes in financial terms. It is hugely important and involves 81 funds. It is the biggest pension fund in the United Kingdom and the fourth largest in the world. We are talking about £145 billion in investments and assets, so getting the local government scheme right is critical for its members, many of whom I have worked with for years, going back to the day on which I was first elected as a councillor at the age of 21, about which all I can say is that I was keen.
Robert Neill: Yes, it was shortly after the Municipal Reform Act.
The scheme is important for its members and the council tax payers who fund it. We should also not forget—I will come back to this later—that it is important for the overall British economy, because of its investment potential. Getting it right is important. It is worth emphasising that it is different from the other schemes, because it is largely funded. The Chief Secretary to the Treasury recognised that significant factor, as, I am sure, will the Minister who responds to the debate. It will have consequences, once the Bill is enacted, for how we deal with regulations and secondary legislation with regard to the scheme’s governance and other related matters. There is nothing in the Bill itself—which I warmly support, because reform of all the public sector schemes is necessary—to prevent that from being achieved.
There is clear evidence that reform of the local government scheme is necessary. Reference has been made to the Audit Commission and, at the risk of taking a little longer than I had intended, it is worth quoting what it said in order to make the point. It accepted that the local government pension scheme had funds
“to cover about three-quarters of its future liabilities”
and that it had a positive cash flow. The commission then concluded that the current approach could not be continued indefinitely, the reasons for which included:
“The cost of providing pensions for local authority employees is rising in absolute terms and as a proportion of pay because of increasing life expectancy and action needed to recover funding deficits.”
It was not possible to fund the whole lot. There is no doubt that local government pension funds
“have been affected by lower than anticipated investment returns”.
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At the time of the commission’s report in 2009, the value of assets was “about 15% lower” than had been anticipated in the previous revaluation in 2007. I have to say that Opposition Members cannot escape some of the responsibility that the previous Government have for the investment performance of the funds.
Mr Anderson: Given his long experience of local government, does the hon. Gentleman have any idea how many councils, including the one that he led, took pension contribution holidays?
Robert Neill: I certainly never took any pension contribution holidays. Indeed, I only became a member of the local government pension scheme in 2000, when I was a member of the Greater London authority, so I do not think that the hon. Gentleman’s point is realistic. The performance of the scheme is down to the investment climate in which it operates, and the investment climate is determined by the macro-economic policies of the Government. The hon. Gentleman does not accept the failure of his Government in this context. One of the by-blows of that failure was that the investment returns for the scheme were less than expected and that has added to the pressures on the scheme. It is not the sole pressure, but it has added to them.
The Audit Commission also noted that the cost of pensions affects the amount of money available for local authorities to fund services and it influences council tax decisions, so there were questions about whether the LGPS benefits were affordable in the long term. Although some of those matters have been picked up by prior reforms—I do not pretend otherwise—they were not adequate to deal with the pressures. The Audit Commission concluded that, despite the fact that the scheme had funding, unlike others, reform was needed none the less. It is not just the Audit Commission that has recognised that—so too have the professionals in the local government pensions world. In October 2009 Mike Taylor, the chief executive of the London Pensions Fund Authority—I declare an interest, having been a member of that body for a short period—said that the LGPS needed to respond to increasing longevity because it
“is not designed to pay benefits for ever increasing periods of retirement and, without change, will face extinction…Employer or taxpayer contribution rates currently take all the strain of increasing liabilities in the LGPS. This situation cannot continue and either those costs must be reduced, or employees bear a fairer share of the increasing costs.”
Chris Leslie (Nottingham East) (Lab/Co-op): Will the hon. Gentleman discuss with the chief executive of the LPFA his opinion of clause 16, which will close the existing local government pension scheme and start a new one? As I understand it, closing it might trigger what are known as section 75 crystallisation of debt arrangements, and the burden could fall heavily on local authorities. Does he agree that the Economic Secretary needs to ensure that the crystallisation of costs does not fall disproportionately on local taxpayers?
Robert Neill:
I certainly agree that the impacts of crystallisation have to be considered carefully. It is worth saying, however—I was going to come to this point later, but I will deal with it now—that the reason why we are dealing with the matter in this way is in no
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small measure the result of an agreement between the unions and local government employers. They agreed that it was desirable to have a single reform of the system to deal with both short and long-term pressures, which was referred to as a “single event”, and that it should take place in 2014. There is a technical debate to be had about how best to achieve that while avoiding the risk of crystallisation, and I hope that my hon. Friend the Economic Secretary and his ministerial colleagues will have that debate. However, that is certainly not a reason for opposing the Bill, and I do not think for one moment that it undermines the major thrust of the Government’s reforms. The structural issues that require reform in all the public sector funds, including the LGPS, need more radical work than that.
It seems to me that there is scope to reflect the particular circumstances of the LGPS within the parameters of the Bill, and I hope that Ministers will recognise that. It is still significantly funded, and at its best it has very high standards of governance. Many of us in local government have wanted to examine the capacity of some of the smaller schemes, and I believe that there is scope for the Government to encourage greater collaboration between some of them, or perhaps even mergers. The large and well run ones such as those in Greater Manchester, London and elsewhere have good governance arrangements, and I concede the point that was made about the Greater Manchester scheme. There is no reason why we cannot ensure that those arrangements are reflected in the secondary legislation that flows from the Bill. That will be a desirable outcome.
I hope that there will be democratic local accountability through elected members serving on the boards of schemes. I do not think it is necessary to impose a one-size-fits-all approach on the governance of schemes in order to achieve the important financial and structural reforms that are needed, which I support the Government in taking forward. We can reflect the particular circumstances of the local government scheme within the parameters that the Government have rightly set. That also applies to certain aspects of the scheme’s design, because there were constructive negotiations on the LGPS on the basis that the key point was to achieve the required cost envelope, which, as I recall, was 19.5% of salaries. Particular parts of the scheme enable us to do that while reflecting the particular nature of the local government work force and the scheme’s governance arrangements. I hope Ministers will ensure that the commitment to do so is maintained, and I have no doubt that they will.
I referred earlier to the investment potential of the local government scheme. It is already a significant player in many investment markets, but it could do more. I support the Government proposal to lift the cap on the amount that local government schemes can invest in local infrastructure schemes, which is currently an arbitrary 15%. When I was a Minister, I believed passionately in ensuring not only that local authorities had more resources of their own to put towards local investment but that they made the best use of their current assets, so it does not seem unreasonable that we should remove that cap. The professionals in the field have suggested that something like 30% would be a more realistic cap, and I am open-minded about the exact amount.
I recognise that Brian Strutton, from one of the public sector unions, has some concerns about that idea. If I may say so, I regarded him as a responsible
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interlocutor in my dealings with the trade unions. He rightly recognises that it might be possible to achieve our objectives either through changing the cap, which I think the unions are wary of, or through the creation of a new asset class for infrastructure. I hope that my hon. Friend the Economic Secretary will consider how we can achieve the important objective of giving local schemes a greater ability to invest in local infrastructure. We should not miss that important opportunity.
I turn now to the firefighters scheme. Again, I accept that it has differences from other schemes. A particularly important issue in all my negotiations with the Fire Brigades Union was the retirement age. The final agreement that was achieved, on which I reported to the House shortly before the summer recess, provided us with adequate and proper flexibility to take on board the concerns of our firefighters, whom I greatly respect. Two matters were put forward in that agreement. The first was that there would be a review of contribution levels from 2013-14 onwards, taking into account the impact of opt-outs, to which the hon. Member for North Ayrshire and Arran referred. I am sure the Economic Secretary will confirm that that remains the position.
Secondly, it will be recalled that I commissioned Dr Tony Williams to examine the evidence base for the case that was made about the physical impact of a firefighter’s job and its relation to the retirement age. The new firefighters scheme has had a normal pension age of 60 for new entrants since 2006, so the situation will not change for many firefighters. In addition, the retirement age of 55, or 50 after 25 years’ service, has been protected for entrants from before 2006. There are significant protections built in for long-serving firefighters. Dr Williams is extremely reputable in this field. He is the medical director of Working Fit and has 15 years’ experience as an occupational physician in the NHS as well as experience of firefighting. I hope that my hon. Friend the Economic Secretary will be able to confirm that the Government will look very closely at the outcome of his review.
Mr Russell Brown: The hon. Gentleman is absolutely correct in saying that there is some element of protection for firefighters, but we need to look forward, because that is what pensions are about. The new retirement age will keep firefighters working to 60 years of age in future. Are we about to breed supermen and superwomen who will be able to withstand such work at the age of 60?
Robert Neill: We need to look with care at the evidence, but that does not mean that we should keep the current generous—I use that word with care—retirement age. Firefighters work very hard, but the nature of jobs changes, and there is a case to be made—I put it no stronger than that—that the job of a firefighter is less physical than it was in some respects, because of the amount of technology and kit that they happily have to assist them. There is also a case to be made that increasing health levels in the population should not be taken out of account.
Equally, although I take on board the point raised by the hon. Member for North Ayrshire and Arran, it is realistic to accept that there are generally fewer “light duty” jobs in the fire service than in the police service.
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That is because fire authorities generally operate within a lean and flat structure, and there are fewer civilian-style jobs to which people can be moved. We must take all those important considerations on board, which is why the report was commissioned.
Margot James: My hon. Friend speaks with considerable authority on the firefighters’ situation, but is he as surprised as I was to hear that increases in longevity have meant that the average policewoman now spends more of her life drawing her pension than she did earning it, which is surely unsustainable? That situation will pertain to male police officers in a few years’ time if nothing is done about the retirement age.
Robert Neill: I take on board my hon. Friend’s point, and we must be realistic in all areas of this discussion. Longevity creates a pressure on the scheme, as well as providing greater life opportunities for people who have retired. It is, in part, a result of greater fitness and better health among the population, which can—among other things—enable people to work for longer. That applies in pretty much every other kind of activity, and we cannot regard any scheme as exempt. I accept, however, that there are particular pressures on firefighters, although I suggest to the House that the Government’s proposals recognise that and provide a sensible and evidence-based mechanism for dealing with it.
Grahame M. Morris (Easington) (Lab): I am grateful for the informed contribution from a former Minister. Does he acknowledge that, besides the pressures of longevity, there are risks in increasing contributions for employees? For the firefighters fund, 7% is the magic figure in terms of opt-out. I understand that a poll by YouGov, commissioned by the Fire Brigades Union, indicates that a larger number—12% —of people are very likely to opt out, and that 25% are likely to opt out when the new contributions come into effect.
Robert Neill: When I was a Minister, it was precisely for that reason that I included in the agreement a provision for a review of opt-outs in the firefighters scheme before decisions were taken on increases in years 2 and 3. That was in accordance with the proposals set out by the Chief Secretary to the Treasury. We have built in a mechanism to review that risk, but I hope we will find that it does not materialise. I come back to my point that we must probably move away from our slightly entrenched positions on this issue, and be prepared to look sensibly at how to strike an appropriate balance based on the evidence.
We all want the strongest possible pension schemes for those in our public services. I have referred to the two sectors with which I have been most closely associated, and to which I feel the strongest personal commitment, but one could say similar things about many other sectors. If there is a Division tonight, I would not support the Bill without hesitation if I did not believe that we had put in place a framework that will enable us to deliver on our obligations. There are technical matters to address, but I am confident that we will be able to do so as the legislation proceeds. The Bill deals with an important and necessary reform, and I commend it to the House.
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Madam Deputy Speaker (Dawn Primarolo): Order. May I gently inform the House that no time limit for speeches has been imposed in this debate as yet, but contributions are going up in length, not down? We started with speeches of 15 minutes, and we have just had one of more than 20 minutes. If Members cannot ensure that their speeches are a little shorter—I put it no stronger than that at the moment—it will be necessary to impose a time limit to ensure that every Member gets into the debate.
7.14 pm
Dr Eilidh Whiteford (Banff and Buchan) (SNP): I will try to keep my remarks to the point, Madam Deputy Speaker, and enable other Members to get in.
We have heard a lot about some of the changes that have already started to take effect, but one aspect of the Bill that is undoubtedly causing most concern, and proving a sticking point in negotiations with the public sector work force, concerns the equalisation of the normal pension age with the state pension age, and the implications of that for those who may have to work until they are 68.
Although I welcome the exemptions that have been conceded for some of the more obviously physically demanding public sector occupations—police officers, firefighters, members of the armed forces—that is by no means an exhaustive list of public sector jobs that can be extremely physically challenging. Most people would struggle to do many of those jobs into their mid and late-60s, and I hope the Government will listen carefully to employee representatives, and look again at the proposal and at what it might mean for nurses, paramedics, auxiliaries, prison officers and teachers, and others who do stressful and physically demanding jobs. That was one of the principal issues raised across the spectrum of trade unions and other employee representative groups, and the Bill does not currently seem to contain any flexibility to look at the issue in the context of overall negotiations, which is a particular issue in the devolved context.
We need to look at the normal pension age and its alignment with the state pension age in a slightly wider contextual framework, and inject a bit more practical realism into our actuarial spreadsheets. It was a pleasure to follow the hon. Member for Bromley and Chislehurst (Robert Neill), and the issue of life expectancy that he mentioned is important. We all acknowledge that life expectancy is increasing, but that top line trajectory masks great and very marked divergences on a range of demographic and geographic indicators. At this point, may I add my tribute to those of other hon. Members who have mentioned the late right hon. Member for Croydon North, (Malcolm Wicks)? It was he who raised some of these important points during previous debates.
People who have worked in heavy industry, for example, tend to die younger than those who have worked in professional occupations. People in deprived neighbourhoods live shorter lives than those in affluent areas, and on average women tend to live several years longer than men. One aspect of that divergence that does not receive nearly enough attention yet is pertinent to the debate is healthy life expectancy—the number of years in which we can expect to enjoy good health. Healthy life expectancy is rising, but it is not rising as quickly as life expectancy.
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In Scotland we have one of the lowest life expectancies in Europe, and men and women can expect to live almost two years less than the UK average, at just over 76 years for men, and just over 80 years for women. The key point, however, is that healthy life expectancy is only 61.9 years for women and 59.5 years for men. The health of many men has already been seriously compromised several years before they reach the current retirement age. Those figures come from the Registrar General for Scotland; they are official Government figures.
Last month, the TUC published research indicating that in the UK as a whole, only 54% of men aged between 60 and 64 are actually in work, which, on the face of it, seems fairly consistent with official figures on healthy life expectancy. Women can obviously claim their state pension at an earlier age so they fare a bit better, but even then only 62% of women between 56 and 60 are in work. We as legislators must be a lot more realistic about how long we can expect people to be fit for work. Furthermore, those figures do not include people who have moved into part-time work because of their health, or taken on unpaid caring responsibilities for a spouse whose health has been compromised. Many people also leave the workplace to look after grandchildren.
I am sure all Members know people who work into their 70s and beyond with robust health and enviable levels of energy, and thanks to equality legislation fewer barriers are now in the way of older people who want—or need—to continue working beyond the state pension age and are able to do so. However, we cannot just cross our fingers and hope that older people will be able to continue in their jobs until they are 68. All the evidence tells us that most people will have developed some serious health problems by that stage in their lives, which may well affect their ability to work. That is not just in heavy occupations, but across the board.
Even if we allow for continued improvement in health outcomes, which I am sure everyone aspires to, and if life expectancy continues to rise, we need to factor in the realistic likelihood that a significant proportion of people will not be fit for work in physically demanding jobs by the time they reach 68. My worry is that those who are forced to leave their jobs early because of ill health face having to live on actuarially reduced pensions. That might well save the public pension schemes money, but it will significantly reduce their standard of living and quality of life in old age. It might even force some to rely on state benefits. The hon. Member for North Ayrshire and Arran (Katy Clark) alluded to that. We currently spend about £13 billion a year in means-tested benefits for older people, most of whom have worked hard all their lives, often in low-paid jobs or in unpaid caring, and do not have occupational pensions. Supporting those people through means-tested benefits is probably the least efficient way we could ensure they have a dignified old age.
As other hon. Members have said, today is not the day to debate the chronic problems with, and abysmal state of, private sector pensions and the reasons for them, but the warning is there: we should not pull the public sector down to the base level—the absolutely inadequate level—of private and voluntary sector pension schemes. That would be a recipe for spending a lot more on means-tested benefits in the long term.
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I was struck by the briefing from the Prison Officers Association, not least because the proposed reforms will affect hundreds of prison officers in my constituency who work at Peterhead prison. The POA points out that, although the average age of prison officers in the UK is rising, prisoners are getting younger, and, in its words, “more dangerous”. It is concerned that many prison officers in their 60s might struggle to pass the physical fitness test that all prison officers undertake to ensure they have the physical strength, stamina and stability to, for example, use control and restraint techniques in the course of their duties. Prison officers make the case that there is a direct parallel between their job and that of police officers, and cannot understand why the recognition that police officers might not be able to do their job effectively beyond 60 has not been extended to them. Will the Minister offer some clarification on the Government’s thinking? Is there scope to reconsider the situation for prison officers? Prison officers point out that, if people are forced to leave their job early through ill health, they could put greater financial strain on the system. For example, it could cost a great deal more if they retire on work-related medical grounds than if they retire normally at a sensible age.
Nurses are another group who do heavy work, so the pension age has potentially significant implications for them. The Royal College of Nursing has formally rejected part of the Government’s proposal, but it makes the point that the Government need to keep the link between the normal pension age and the state retirement age under review, as recommended by Lord Hutton. It has asked that that commitment is made explicit in the Bill, and that the review process is conducted independently. I hope Ministers take that on board.
The RCN has also asked the Government to postpone making a decision on the equalisation of the normal pension age and state pension age until the working longer review in England has reported and the Government have had time to consider its recommendations. In the light of what I have said, I hope the Government take that point seriously, because it would be a sensible approach—the review will help to inform good decision making in the longer term.
Another major concern of trade unions and employee representatives—hon. Members have made points on this, so I will not repeat them—is that the retrospective powers in the Bill allow the Government to amend it with limited consultation. Trade unions and employee representatives are legitimately concerned about instability and uncertainty for scheme members. The consequences of people losing confidence in the pension system and dropping out of it are much bigger—that has happened in other sectors when pensions have become unsustainable. I hope the Government consider that in Committee.
The hon. Member for North Ayrshire and Arran raised specific aspects of devolved pensions regulation. I am by no means a spokesperson for the Scottish Government—I urge hon. Members to direct their questions to the Ministers responsible—but I hope I can shed some light on certain parts of the Chief Secretary to the Treasury’s opening remarks. I also want to ask questions for clarification from him and the Minister who will wind up the debate. My understanding is that occupational pensions policy is largely reserved, although Scottish Ministers have Executive responsibilities for the NHS, teachers, firefighters, police and local government pensions
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schemes, subject to a number of constraints. The major constraint is budgetary—the Treasury controls the purse strings, and Barnett consequentials have a knock-on impact on a Government who are working on a fixed budget and have no borrowing powers.
Will the Minister confirm that formal approval is needed from the Treasury for any legislative changes to the NHS and teachers schemes? What is the Government’s thinking on the Treasury approval required in relation to the firefighters and police schemes? My understanding is that the Government are trying to introduce a Treasury approval requirement for those schemes. Will Ministers confirm what they are doing? Are they seeking a memorandum of understanding to claw back powers from the Scottish Government on police and firefighters’ pensions? Scottish Ministers have had discretion to determine the design of the police and firefighters schemes, although the settlements have always mirrored agreements in other parts of the UK. So far, the benefits of consistency have been thought to outweigh any benefits of divergence. I am not sure whether that balance of opportunity will be seen in the same light if the proposals are implemented.
I believe Scottish Ministers have responsibilities in relation to the local government scheme, provided the powers are exercised within primary legislation. In practice, that scheme, too, has mirrored that of the rest of the UK. To return to points made earlier, I understand that the local government scheme has been reformed, and that “cap and share” arrangements are in place. It is funded differently from other public sector schemes, and decisions on it are made in Scotland by those who manage it. It is worth pointing out that, in Scotland, the public sector local government scheme does not seem to have any financial problems. There is no immediate shortfall—in fact, it is currently running a surplus—and neither the Convention of Scottish Local Authorities nor trade unions are of the view that there is any need for reform. The Government could helpfully clarify why they believe that scheme needs to be reformed. Is this the right time to do so? Public sector workers are in tight financial situations. Most have seen their contributions increase dramatically, and many had their incomes squeezed.
I cannot with any confidence answer the question put to me by the hon. Member for North Ayrshire and Arran on the legislative consent motion. My understanding is that there is no need for a legislative consent motion for most of the Bill, because pensions policy is largely reserved. However, I believe legislative consent would be required for some of the reforms to non-departmental public bodies and some judicial offices. I am guided by the Bill’s explanatory notes, so perhaps the Minister could explain if the situation is different. The Unison briefing asserts that further legislative consent is required with regard to the local government scheme, but I have not seen the legal arguments that back that up or substantiate it. Perhaps UK Ministers are in a position to clarify the UK Government’s understanding of the situation.
Katy Clark:
I am grateful to the hon. Lady for going through the detail as she understands it. The Bill will have massive implications for our constituents. Does she agree that, if the Unison legal advice is correct—that a legislative consent motion is necessary in relation to the local government pension scheme—everything should be done by the Scottish Government to ensure that the
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negotiations taking place in Scotland between them and trade unions take precedence in terms of the outcome for our constituents?
Dr Whiteford: I certainly agree that it is important that we get a fair and equitable solution in the local government pension scheme. I cannot speak for the Government, but I know that some of the negotiations have been very difficult. From speaking to trade union representatives in recent weeks, it is clear that they recognise the constraints within which the Government are working—and they value the tone of some of the negotiations that have taken place so far—but Ministers in Scotland have been negotiating with one hand tied behind their backs. Greater flexibility, especially on age, would go a long way to helping to reach an equitable conclusion.
Underlying this debate is the need to maintain confidence in public sector pensions, which are really very modest. They keep people just above the poverty line, especially women who have worked in low-paid jobs most of their lives and have very modest pensions that keep them just above the level of means-tested benefits. People are not unreasonable in their expectations, but asking them to pay more, work longer and receive less is not a reasonable proposition to put to our public sector workers. I hope that the Government can and will do better.
Madam Deputy Speaker (Dawn Primarolo): Order. I am going to put a time limit on speeches now. It will be 12 minutes from the next speaker, after which I will review it. We may not get to all the Members who wish to speak by 9.30, when the winding-up speeches will start. If Members take a lot of interventions and go considerably in excess of 12 minutes, I will have to cut the time again.
7.31 pm
Stephen Williams (Bristol West) (LD): I shall try to keep within the 12 minutes: it is my intention to make only a short contribution.
First, I wish to establish some general principles for why reform is needed. They can be grouped into two areas. The first is the general societal changes that have taken place that necessitate reform and to which the Government must respond, such as the increase in life expectancy and the changes in employment practices over recent decades. The second is the changing balance over time between the sharing of the cost of public sector pensions between the taxpayers, through the Government acting as employer, and the employees who receive the pensions.
It is important to establish that the reforms in the Bill would be needed with or without the current cost pressures that the Government face. We hope to bring public sector borrowing under control by 2017, but these reforms are intended to last for a generation. They are not driven by the short-term need to recover costs: they are driven by a long-term desire to ensure that public sector pensions survive into the future in a sustainable way.
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Any reform should be done fairly and, as far as I and my Liberal Democrat colleagues are concerned, protect those in the public sector on the lowest earnings. The overriding principle should be that the public sector should continue to act as an exemplar to other employers. There should not be a race to the bottom: the public sector should set the gold standard for affordable and attractive public sector pensions that attract the very best people into the public sector, who are paid in a fair way and guaranteed a secure and attractive income into retirement.
The first principle is that of life expectancy. We all know that we would hope for ourselves and people in our families to live longer. Indeed, people retiring now at age 60 can expect to spend 40% of their adult life in retirement—so only 60% of their adult life would have been spent in work. The state pension age has been changed relatively infrequently over the 103 years of its existence. If it had been uplifted in line with life expectancies, people would now be drawing their state pensions at age 75. Several other countries, in particular Scandinavian countries, have ongoing commissions that examine life expectancy and uplift pension ages according to that evidence. That might be a good approach in the future for this country.
The biggest societal change driving the need for reform is the difference that has arisen over time between private sector and public sector remuneration. It always used to be much quoted that pay in the private sector was more attractive than in the public sector and that part of the balancing factor to make public sector employment attractive was a good pension, and perhaps other good terms and conditions. In recent decades, that maxim does not hold. Indeed, the Institute for Fiscal Studies said that in 2011 people in the public sector doing a broadly similar job to people in the private sector were likely to be paid about 8.3% more. But pension provision in the public sector continues to be much more attractive and offered on a much wider scale than to people in the private sector.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): Does the hon. Gentleman regret the way in which the Government have pitted public sector pensions against private sector pensions, when in fact the average local government pension for men is £4,000 a year and for women is £2,600? There is no doubt in my mind that this is an intentional attack on public service and the public sector as a whole.
Stephen Williams: The hon. Lady’s final sentence illustrates her prejudice against the Government’s intentions. This is not an attack on the public sector. The coalition Government are trying to ensure that public sector pensions remain across the board, so that every person in the public sector is able to access a pension, which is not the case in the private sector, as I am about to say; that they are affordable to the taxpayer; and that they are offered on very good terms. Without reform, those provisions would not be in place. I would not want to be associated in any way with an attack on public sector employees who perform services that are absolutely vital to all of our constituents. I would not want to be associated with any reform predicated on that basis, and I genuinely think that that is not the basis on which the reforms are being carried out—from the perspective of both parties in the coalition.
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On coverage, 100% of public sector employees are in theory eligible to join a pension scheme, because it is offered to everyone, but only 35% of employees in the private sector are able to join a scheme, and only about a third have a contribution made to their scheme by their employer. There are many schemes in the private sector in which the employer simply does not make a contribution. There may be a scheme, but it is not funded by the employer. The biggest anomaly is in the type of scheme available to people in the different sectors, between those on defined benefit, final salary or career average schemes, and those who are on defined contribution schemes. Currently, just under 80% of people in the public sector are in defined benefit final salary schemes, but only 9% of people who work in the private sector are able to access such schemes. That percentage is falling year on year, and soon nobody will be joining a final salary scheme in the private sector. Many of them will be closed and no further contributions made by current members.
There is also the cost to the public purse of maintaining public sector pensions, which puts an onus on us to look at the case for reform. Those costs have to be shared between the Government as the employer, all of us as taxpayers, and the employees themselves, who will ultimately be the beneficiaries. Between 1999 to 2009, the cost of the NHS pension scheme rose by 47%, the cost of the civil service scheme by 23% and, as we heard from the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), who is not in his seat, the cost of the teachers’ pension scheme by 37%. That has necessitated a shift in the contribution rates of the employee, who is the beneficiary, and the employer, who is the Government and the taxpayer. For instance, there used to be rough parity in the teachers’ pension scheme—the employee put in 5% and the Government 5%—but employees now contribute 6.4% and the Government about 14%. That is unfair on the general mass of taxpayers who cannot access these types of schemes. So there is an imbalance between the public and private sectors, and the cost to the Exchequer of public sector pensions is now £32 billion. Those costs cannot be allowed to grow uncontrollably.
The pension reforms must be done fairly, however, so I am pleased that there will be no change to the terms and conditions and contributions of employees who earn up to £15,000—about 15% of the public sector work force. Some 750,000 people will see no change in their pension contributions and will still be able to draw the pension they expect at the moment. Those on salaries of up to £21,000 will have their increases capped at 1.5%, so a typical employee on £21,000, after 20% tax relief—everyone gets tax relief on their pension contributions—will pay just £8 extra a month to remain in a defined benefit scheme. And, of course, employees within 10 years of retirement this April will see no change in their terms and conditions and expected pensions.
It is also entirely fair that over time we move to a career average scheme. That will benefit the broad mass of people in the public sector, who have annual salary increments but whose starting salary after inflation is not drastically different from what they start with. A final salary pension scheme, on the other hand, disproportionately benefits those in the public sector who someone described as the star performers—the people on huge incomes, the senior managers, head teachers and directors. It is fair, then, that we move to a career average scheme.
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Our own arrangements, which no one has mentioned thus far, are now entirely a matter for the Independent Parliamentary Standards Authority. If, however, the public sector moves to a career average scheme, Members should expect IPSA, which now sets our terms and conditions, to move us on to a career average scheme, rather than a final salary scheme, as well.
There is no doubt that reform is needed—that is shown by demographics and the change in employment practices—and it is right that the Government are doing it in a way that is fair to public sector employees as well as to taxpayers. That will ensure that public sector pension schemes are not only the best on offer in the country but are offered on terms that are sustainable.
7.43 pm
John Healey (Wentworth and Dearne) (Lab): It is a pleasure to follow the hon. Member for Bristol West (Stephen Williams), who made a very balanced speech. He is right that reform is required. That is accepted and supported by hon. Members on both sides of the House.
I start from a simple principle: pensions are pay deferred. They are part of people’s terms and conditions, often part of their contract of employment, and, in the public sector, part of the deal for public service workers who often give a lifetime’s commitment to the service in which they work. Two things follow from that: first, pensions are principally the property of the scheme members, who defer their pay and put that pay in the hands of managers and trustees; and, secondly, changes to people’s pension terms should involve those members—those whose money it is—through consultation, negotiation and agreement.
That is what the Labour party did with the far-reaching reforms we put in place in government. We agreed and established changes to reflect the increasing age of the population, to manage the changes effectively, to control the costs to taxpayers and to increase contributions overall from scheme members. We did that with the armed forces in 2005, the police, firefighters and local government workers in 2006, and teachers, the NHS and civil servants in 2007. Across all areas, we introduced increases in the pension age, changes to the contribution rates from members—especially the higher paid—and a “cap and share” arrangement that limited absolutely the liability of taxpayers to future increases in costs. As a local government Minister, I was responsible for the local government pension scheme, which we radically reformed not just for new members but for existing members. Furthermore, we did so without closing the scheme, and there is no need to accept what is provided for in clause 16 and do that this time around either.
The reforms recognised the pressures of cost, population and life expectancy. They also recognised that pensions were deferred pay, that changes to contribution rates and benefits should be consulted on and agreed, that most public sector workers were low-paid and that their pensions were far from gold-plated. The average pension for NHS workers last year was a little over £7,500, while the average for a local government worker this year is just £4,406. After our changes, in 2010 the National Audit Office concluded:
“As a result of the changes, which are on course to deliver substantial savings, long-term costs are projected to stabilise around their current levels as a proportion of GDP. The changes
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are also set to manage one of the most significant risks to those costs, by transferring from taxpayers to employees additional costs arising if pensioners live longer than is currently projected.”
The Government have failed to build on those reforms. They did not even wait until the Hutton review, which they commissioned, had fully reported before in October 2010 the Chancellor hit public service workers with a 3p in the pound surcharge—a public service pensions tax that had nothing to do with long-term pension reform and everything to do with a short-term cash grab to try to deal with the deficit; and this from a set of workers that, at the same time, was being squeezed by a public sector pay freeze, hit by a VAT increase, subject to rising energy bills and suffering from deep cuts in tax credits. That is where the Government lost the moral authority to claim we were all in it together and to be a one-nation party. Furthermore, changes such as the switch from the retail prices index to the consumer prices index were imposed without warning, consultation or agreement.
The Government are legislating after losing the trust of public service workers, who simply do not trust them with their pensions or with this pensions legislation. It might not be the Government’s intention to reduce benefits already accrued, to prevent the flexibility to link the normal pension age with the state pension age, or to make further sweeping and radical changes or reforms without proper scrutiny or consultation, but the legislation, as it stands, can be used in that way, whatever the intention of Ministers. That is why it is important to get this legislation right. It is even more important because this is a broad, sweeping framework Bill in which many of the detailed changes will lie in the regulations and scheme rules.
As both a former local government Minister, like the hon. Member for Bromley and Chislehurst (Robert Neill), and a former Treasury Minister, let me say that my main concern is about the local government pension scheme. The Treasury has never really recognised the difference between the local government pension scheme and other public service pension schemes. Unlike other main schemes, the local government scheme is a funded scheme. It has £150 billion in assets, it raises an annual income significantly greater than its expenditure each year and it has seen its investment income cover at least a third of its expenditure on benefits in each of the last few years. Unlike all the other main schemes, employer contributions in the local government pension scheme are set locally by 89 separate funds, each with its own investment strategies, its own member demographics and its own range of employers—in other words, the flexibility to match the responsibilities and pressures that those funds face.
Unlike in other main schemes, the governance of the local government pension scheme reflects local municipal roots, while the respective roles and responsibilities of those managing and overseeing the scheme are different from those for the national schemes. Finally, unlike in all the other main schemes, simply meeting the liabilities is not the only concern of those managers. Stability is a vital element, as is the participation rate. The reforms that we put in place—those now being negotiated—reflect those concerns. This is a broad-brush Bill, and the same centralised powers, controls and restrictions over the unfunded schemes do not fit well with the local government
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pension scheme. As the shadow Chief Secretary said, some significant debates and amendments are required in Committee.
There are some serious flaws in the Bill. I will offer the Minister four for starters. First, the Chief Secretary confirmed in response to interventions from me and the hon. Member for Foyle (Mark Durkan) that clauses 3 and 11 allow scheme regulations to make retrospective changes to the benefits that people have already worked for and paid for. As such, they threaten one of the central tenets of pension saving: that what one has accrued is safe and that the terms on which it was accrued will be honoured, which is as true for the private sector as it should be for the public sector. Secondly, a running theme throughout all 38 clauses is a Treasury power grab—the centralisation of control over all elements of schemes, from valuations to scheme regulations, with no requirement to consult even the scheme members, who are most directly affected.
Thirdly, there is a legislative lock in clause 9 between the normal pension age and the state pension age for all but firefighters, the police and the armed forces. Therefore, even if there is a strong case, which is now being looked at, for that link to be made flexible for some workers in the NHS, the legislation does not permit it. Fourthly, last December the Chief Secretary made an important commitment to the House on behalf of the Government on the retention of current protections for public sector workers who are outsourced and the extension of fair-deal provisions for all staff transferring employers. Schedule 9 enables that to occur in the civil service, but it does not ensure that it will occur, and it must.
Finally, let me say this to the Treasury Minister and his colleagues. There are many excellent minds among the civil servants in the Treasury, but frankly they do not know everything. They sometimes make mistakes and sometimes others know more than they do. I shall give a couple of examples. The dates for the so-called closure of the local government scheme in clause 13 are wrong, as is the date for ensuring that transitional protection, as promised, is in place. As the Minister prepares for the debates and the amendments in Committee, I hope he will take seriously the points and concerns raised tonight. I hope he will be ready to make amendments where there is a good case for doing so, because in the end that is how we get a public pensions system that is fair to taxpayers for the long term, but remains fair to those public service workers who give so much of their time—their whole lives—to support others.
7.54 pm
David T. C. Davies (Monmouth) (Con): I will try to keep my comments as brief as possible. I want to address some of the remarks that I have had thrown back at me as a supporter of this Bill and this coalition Government—not so much by Members, whom I have listened to carefully this evening, but in the newspapers, from the unions and from politicians in other political parties who have sought to make capital out of this issue.
Let me say clearly from the start that I—and, I believe, every single member of this coalition Government, whether from our position as Members of Parliament or from personal experience—very much support and respect the role of public sector workers across the
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United Kingdom. I know from personal experience about the very hard work done by the police officers in London with whom I work. I know about the paramedic who came to the aid of a member of my family recently and solved a problem for them. I also know about those who are teaching my three children the three Rs in a local state school. I know from personal experience, not just through my work, just what a good job public sector workers do, and I do not think there is anyone in this coalition Government who wants to do anything to undermine the pensions of public sector workers or undermine their role in any way whatever.
It was the hon. Member for Banff and Buchan (Dr Whiteford) who talked about the problems in the private sector. Although we should not be making comparisons, it is perfectly true to say that people in the private sector have lost out greatly, and they have done so partly as a result of the previous Government’s policies. We have heard all about the tax on dividends, but there are all sorts of other, subtle ways in which private sector pensions were undermined by the previous Government. They included, for example, demanding that financial institutions buy Government bonds and gilts, instead of allowing them to invest larger proportions of their money in stocks and shares, as well as enacting policies that kept stocks and share prices down. However, those are matters to be debated on another occasion.
What is clear is that we are not going to allow what happened in the private sector to happen in the public sector. We saw the misery that that caused for people—our constituents—and we do not wish to see it happen to other hard-working people. At the same time, however, we cannot ignore the fact that although people may well be doing physical jobs in the public sector, there are people in the private sector who also have to do physical jobs. We do not seem to have heard much about them. What about the lorry drivers? I used to do that job for four or five years, and it can be hard and physical. What about all the people who work in factories? What about builders? Why should they have to work so many extra years to pay for the pensions of people retiring years before them who may not be doing physical jobs at all? To some extent we have to make some comparisons.
Mr Anderson: I agree with the hon. Gentleman about workers in the private sector who should also have better arrangements. If he comes forward with a private Member’s Bill, will he allow me to become part of that process, so that we can legislate to ensure that those people are looked after properly, as public servants should be too?
David T. C. Davies: There is of course a wider problem. When I bring forward that Bill, which the hon. Gentleman will be supporting, I will be looking carefully at the maths, because what I think is absolutely disgraceful is promising people in the public or private sector things that cannot possibly be afforded.
I have heard the argument from trade union officials that says: “Why is this happening? It’s all because of the banks.” It has not been mentioned today, but that is something that people have come out with. However, when we examine the figures, we see that the problem has absolutely nothing whatever to do with the banks. The Treasury Committee looked at the amount of money that some banks were given—on a temporary basis;
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most of it will be coming back—which it calculated as about £120 billion. However, the national debt today stands at £1 trillion, which is almost 10 times that figure. Most of that debt has been caused by politicians overspending. However, when we take into account public sector pensions, the figure for the national debt goes from £1 trillion to £2 trillion at the very least. Indeed, last April the Office for National Statistics issued figures suggesting that the total amount that Britain will need to cover its pension liabilities over the next few years is £7 trillion. I must admit that I do not know how many years ahead that figure covers—I assume it covers quite a few—but it is an absolutely astonishing sum of money. I did a quick calculation and worked out that if £1 million represented 1 cm on a graph, we would need a graph that was 40 miles long, stretching all the way to Reading, to show our current liabilities. We cannot ignore the current financial situation.
Thinking about what has gone on with pensions in the past few years reminds me of an analogy. I used to work in the private sector, for a small family transport business. I wonder what would have happened if, one day, the directors of the company had gone through the books and, instead of collecting money from their workers over the years and investing it for the pensioners of the future, they had simply taken their workers’ contributions and used them to pay for the pensions of the people who were retired at that time. It would have been a sort of giant pension Ponzi scheme, and it would probably be illegal if it were ever tried out.
Anyone bringing about such a situation would have two options. One would be to pretend that there was no problem, and to try to gain short-term popularity with their work force by continuing to pay generous pensions that they could not afford. One way of doing that would be to borrow a vast sum of money from the banks to employ more people whom they could not afford, and to use their contributions to pay for the pensions of the workers who had just retired. That is more or less what has been happening over the past few years.
The alternative is far more sensible, and it is what this Government have done. We have opened up the books and said that we simply cannot afford to do this. We know that a much larger work force is going to retire in the future, and that they are going to live even longer, so there is no point in making promises that we cannot possibly keep. We have only to look at the recent history of the past 30 or 40 years to see what happens when countries can no longer balance their books. That is happening in Greece at the moment, and it has happened in recent years in Russia and Argentina, and across south-east Asia in countries such as Thailand. It happens over and over again, and we must not think that, just because this is the United Kingdom, we can somehow buck the basic rule of economics.
I am proud that this is the first Government to have gone into an election saying, “We’re not going to spend more of your money. We’ll spend as much as we can, and we will spend it well, but we are not going to make promises that we cannot afford to keep.” We are going to protect public sector workers, particularly the lowest paid, but we are also going to ensure that the country is in a financial situation that will allow it to guarantee the pensions of those public sector workers who are going to retire not just in the next few years but in the decades ahead. In other words, we are going to trade short-term
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popularity—the easy thing to go for—for the long-term interests of public sector pensioners in this country. I hope that Opposition Members will, for once, do the responsible thing and support us in this vital work.
8.2 pm
Mr Russell Brown (Dumfries and Galloway) (Lab): It is ironic that we are discussing pensions today, given that much of what we have seen in the press over the past 10 days or so has been about the comments of the Secretary of State for Work and Pensions on whether we, as taxpayers, should support unemployed families with two or more children. No thought has been given to who those children are, but they will become the next few generations of taxpayers who will be making contributions to support pensions, either through public sector pensions or by putting money into the pot to provide benefits for others. I am pleased that we have moved on from having a go at households in which no one is working to looking at a different group of people.
I want to put on record the fact that some of the poorest paid people in our country are public sector workers. As my good friend and colleague, my right hon. Friend the Member for Wentworth and Dearne (John Healey), said earlier, pensions in the public sector are actually pay deferred. That is exactly right, and when we end up with poor pay in the public sector, we also end up with poor pensions.
Much has been said about Lord Hutton’s report. The commission firmly rejected the claim that current public sector pensions were gold-plated, and we have heard that the average pension paid to public sector scheme members is about £7,800 a year, while the median payment is about £5,600. We have also heard that half of women public sector pensioners get less than £4,000 a year.
Labour Members recognise that public sector pensions need to be reformed, which is why we have consistently argued that there will need to be some kind of an increase in contributions and, as the population gets older, an increase in the retirement age. We have also been clear that any settlement or agreement should meet three tests, which are slightly different from the Government’s four tests, although there are elements on which we agree.
The first test is affordability: will the changes deliver a fair deal for taxpayers when times are tight, when taxes are rising and when spending is being cut? The second test is fairness: will the changes deliver a fair deal for public sector workers on low and middle incomes whose pensions are far from being gold-plated and who have given a great deal to the services in which they work and on which each and every one of us—in the House and throughout the country—depend? The third test is sustainability, because anything that any Government do needs to be sustainable. Will the changes deliver a workable settlement for the long term that does not undermine the sustainability of existing schemes and that can be flexible in the face of rising life expectancy?
I recently took the opportunity to meet several serving police officers in my constituency, and I have been tasked with raising their concerns in the Chamber this evening. We often talk about the good job that the
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police do, but I almost never hear people talking about police service pensions. For the sake of clarity, I should point out that although certain public sector pensions in Scotland are administered by the Scottish Government, the reality is that the decisions reached here in Westminster are followed—or mirrored, as the hon. Member for Banff and Buchan (Dr Whiteford) said—north of the border.
Despite the stated opposition of the Scottish Government’s Finance Secretary, John Swinney, to the increase in pension contributions, he confirmed in a statement to the Scottish Parliament on 21 September 2011 that the Scottish Government would apply the increase in employee contributions for the NHS, teachers, police and firefighters schemes in Scotland. As my right hon. Friend the Member for Wentworth and Dearne said, that represents an additional 3% tax on those workers in the public sector.
Dr Whiteford: Is the hon. Gentleman aware that, before that decision was made, the Chief Secretary to the Treasury wrote to the Scottish Finance Secretary to say that if those contributions were not increased, £8.4 million a month would be removed from the Scottish Government’s financial settlement until such time as the Scottish Government followed the lead of other parts of the UK? I do not know what the hon. Gentleman thinks John Swinney should have done in those circumstances, but I believe that his hands were completely tied. Not only would the Scottish Government have lost that money out of the block grant, but they would have had to find it from another budget. In effect, therefore, they would have had to pay for those contributions twice.
Mr Brown: I am pleased that the hon. Lady has come into the debate. I am not sure whether she was here when I intervened on the Chief Secretary to the Treasury to ask whether any such penalty had been suggested, but he did not answer my question in a straight manner, so I thank her for that intervention.
The serving police officers whom I have met are seriously concerned and feel that they have been let down by their representative body, the Scottish Police Federation. We all know about the technique of divide and conquer, yet with regard to the pension changes, it has become clear that we are seeing protection—understandably—for those nearing retirement age, but that that is being provided at a cost to those who joined the police service between 1992 and 2006. Those who fall into that category feel that they have been abandoned and hung out to dry.
Those people joined the police service under certain terms and conditions, one of which was that after paying their contributions into the pension fund, they could retire after 30 years and then qualify for a lump sum and a pension. One officer pointed out that he was halfway through that 30-year period. It was difficult for him to get a forecast, but the closest he could get was an indication that having worked an extra seven years, his lump sum would be about 30% of what was first anticipated, while the pension would be about 70% of what was expected. We all go through life making plans, and for some of us retirement comes that little bit sooner. When people cannot recover ground as they move towards retirement age, it leaves them in a real dilemma. As one
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chap pointed out, “I had looked at retiring at a specific age. My lump sum would have cleared my mortgage. I now need to rethink where I am going.”
There is a strong belief that section 2 of the Pensions Act 1995 prevents the Government from changing pensions, so I hope that the Economic Secretary will put a clarification of that point on record. The first Winsor report of many years ago stated that officers could not work beyond the age of 55, but we are now seeing a significant change. Officers will be subject to a fitness test, but what will happen if someone fails such a test? Will they be made compulsorily redundant?
We know about some of the activity on our streets today. We should not just condemn groups of people, but there are criminals out there, and I would hate to think that police officers will be trying to chase younger people on foot. If officers are between the ages of 55 and 60, there is every chance that criminals will be significantly younger than them. We will be asking the police to do a task that is beyond many people’s comprehension.
Police officers are asking the Government why there is a further review, given that the scheme was changed in 2006 and every officer who joined after that time is on the new 35-year scheme. Many who joined after 1992 are halfway through their service period and their financial future looks extremely uncertain. We all recognise that police officers are not in a position to take strike action—in all honesty, I do not think that they would—but the fact is that those who joined between 1992 and 2006 feel as if they have been singled out.
Although, according to my Front-Bench team, we will not divide the House on Second Reading, I share colleagues’ real concern about retrospection, which has been raised on several occasions. I look forward to colleagues seeking to improve the Bill in Committee and working to offer some protection to those who work —day in, day out—to deliver the services in our public sector that each and every one of us demands.
8.13 pm
Jackie Doyle-Price (Thurrock) (Con): I am pleased that Labour Members have acknowledged the need for the Bill and the need to reform our public service pensions. I was struck by several good points made by the hon. Member for Dumfries and Galloway (Mr Brown) and the right hon. Member for Wentworth and Dearne (John Healey), although I found the desire to pit Government Members against public servants disappointingly partisan. I have to advise Opposition Members that Government Members equally respect the contribution of our public servants. We have retired teachers and former armed service personnel here, and we greatly value their contribution. What sits behind the Bill is the desire to make public service pensions secure and beneficial for the long term.
Given that we are all living longer, it is simply necessary to ask people to pay higher contributions. Unless we do so, we will have to find more money from all taxpayers to support the deficit and the provision of public sector pensions. That is simply not fair. The cost to the taxpayer of public service pensions has risen to £32 billion a year, which is an increase of a third over the past decade. They cost just under 1% of gross domestic product in 1970, but the figure is 2% today and, without change, it
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will continue to rise. The average 60-year-old now lives 10 years longer than was the case in the 1970s, so it is simply not sustainable to leave pensions as they are.
We are tackling the challenge of funding public sector pensions at the same time as we are attacking our structural deficit and the aftermath of a financial crisis. That has led some of our public servants to conclude that they are being asked to bear the consequences of the actions of the bankers, but that is simply not the case. We are where we are because our current system is not financially sustainable, and it is disappointing that Opposition Members allow people to think otherwise. Even without the deficit, and even if the financial crisis had never happened, we would have to reform our public pensions to make them affordable and to secure their long-term future. With these reforms, our public servants will be guaranteed a secure pension with terms that are as generous as those enjoyed by anyone.
The need for change is simple. We all need to make provision for our own retirement, and if we do not put more in, the taxpayer will have to. The Bill will cut the costs to taxpayers by nearly half, while continuing to ensure that the public sector receives the best pensions available. The Bill is therefore a good deal for taxpayers and a good deal for public service workers. It is frankly unfair to expect future generations to pick up the tab by paying more taxes, especially when they are already dealing with the consequences of financial irresponsibility by facing higher taxes and higher house prices. I want all people—whether they work in the private or the public sector—to be able to keep more of what they earn and to pay less in tax. All taxpayers will benefit if we can reduce the burdens on the state and make public pensions self-funding.
Even with these changes, our public pensions will continue to be among the best available. They will also be progressive. A switch to career average pensions across the board will reduce taxpayer liability while letting employees keep their defined benefits. The pensions will also be fairer to all. Final salary schemes disproportionately benefit those on the highest earnings, and many low-paid workers will get a better pension under the Bill. I am pleased that the Government have made changes to benefit the lowest earners, meaning that 15% of our public sector workers will not have to make an increased contribution. I am also pleased that benefits that have been built up will be protected and that members will continue to receive a guaranteed benefit in retirement.
James Wharton (Stockton South) (Con): I am listening to my hon. Friend’s speech with great interest. We have already heard a lot about retrospection and the importance of certainty. Is it not the case that the reforms will hopefully give long-term certainty about the affordability of public sector pensions, so that future Governments will not have to review these pensions yet again and people will be able to plan properly for their retirements?
Jackie Doyle-Price: I completely agree with my hon. Friend. It is important that we bite the bullet now and lay the foundations for future security. If we delay, we will be asking for more contributions from taxpayers and workers themselves, so it makes perfect sense to deal with the problem. We cannot postpone the inevitable, and Government Members are not prepared to do so.
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I am sure that many Members will have received representations on these issues. Most of those that I have received have come from police officers who are worried about the changes. Most public sector employees have recognised that the terms under which they were paying into their pensions were not sustainable in the longer term, not least because they have seen what happened to the pension provision of their friends and family members in the private sector. People in the private sector would have to contribute more than a third of their salary each year to get an equivalent pension, so I am not surprised that only a third of public sector workers voted to strike over this issue last November.
Mark Reckless (Rochester and Strood) (Con): I understand that the public schemes are generally generous in comparison with those in the private sector, but does my hon. Friend have a view on the relative generosity of the police scheme, on which we have received a lot of representations? The police clearly have quite a high pension, but they pay a large amount in. Is it fair that they have had to pay so much more than civil servants, for example, whose contribution is much smaller?
Jackie Doyle-Price: My hon. Friend makes a good point. We will benefit from an examination of the individual schemes in Committee. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) made several good points about the financial sustainability of the local government scheme compared with others. We need to look at what we expect of all our public servants in the round, and the issues raised about the police are quite persuasive. We need to look in detail at what we are proposing not just for public sector workers as a group, but for individual worker groups. We also need to remind public sector workers who are witnessing the debate that their accrued rights are protected, and that there will be protection for those who are within 10 years of retirement.
The Bill will deliver sustainable public service pensions. It will almost halve the cost to taxpayers, and it will rightly ensure that public sector workers continue to receive the best available pensions. It provides a good deal for the taxpayer and for public servants, and I am happy to support it.
8.20 pm
Mr David Anderson (Blaydon) (Lab): Let me begin by declaring an interest. For 20 years I was a member of the mineworkers pension scheme, for 16 years I was a member of the local government pension scheme, and for the past seven years I have been a member of the parliamentary pension scheme.
This is a debate about trust, or rather about the breakdown of trust. The people who are covered by the Bill are those we trust with our most precious possessions: our children, our partners, our parents, our families and our communities. As we all know, when things are going wrong it is the public servants we turn to, and in whom we place the maximum trust.
We turn to the firefighters when our safety is compromised, our homes are at risk and our lives are in danger. We turn to the police when we are in trouble,
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when we face the despair caused by burglary, car crime or petty theft, when our kids go missing, and when we are being persecuted by nuisance neighbours or antisocial behaviour. We turn to the nurse when we are at our lowest ebb, when we are desperate for help, and when we need real human kindness. We turn to the doctor when we are at a loss to explain our pain, when we need their skills to put us back together again, and when we feel that there is nowhere else to turn.
We turn to the social worker when we are in despair because of our parents’ dementia, when our youngsters are hooked on drugs, and when we need real help to sort out life’s real problems. We turn to the home care worker when we cannot cope any longer with our daily lives, when we need a stranger to come into our homes and become a friend, and when only an extra pair of hands will do. We turn to the teacher to take our children on to the next stage of life’s journey, to shape our kids for the world to come, and to inspire our most precious gifts.
There are so many more: the bin man, the caretaker, the school meals lady, the gravedigger, the gardener, the midwife—and, among the hundreds of others, the so-called back office staff. They are the people who make the front line work effectively, and the people whom the Government disparage most of all. All those people are trusted by us to do the right thing when we need them to. We expect—no, we demand—that they do their jobs properly, and we trust them to do so. But trust is not a one-way street: if we expect those people to do the right thing, we should do the same.
For decades, many of those workers have been putting their trust in us as representatives of the state, and have paid into pension funds every week or every month in the belief that they will be rewarded properly for their work. Let no one in the Chamber claim that public servants somehow get a free ride when it comes to pensions. As was pointed out earlier by my right hon. Friend the Member for Wentworth and Dearne (John Healey), they have given up a percentage of their pay in order to have a decent retirement and not to have to rely solely on welfare payments in old age.
There is no free lunch for those workers, no matter how much the divisive policy of the Conservative party or the TaxPayers Alliance may try to claim it is so. The Bill clearly undermines the trust that these workers have been able to place in their pensions for decades. Just five years after the agreement to changes that were supposed to be affordable and sustainable, they are seeing the imposition of changes that will significantly weaken their potential to plan properly for their retirement.
We should hear no more about unaffordability until we in the House face up to our culpability in terms of where we find ourselves today. It was Members of Parliament who allowed public sector scheme employers to take lengthy contribution holidays while the lads and lasses at the front end had no such luxury. The classic example, which I raised earlier—and it is not the only one—is Royal Mail. Between 1998 and 2001, it made no contributions whatsoever to the pension fund. Now we are told that the service must be privatised because there is a huge black hole in the pension fund.
Richard Graham (Gloucester) (Con): Why didn’t you do something about it?
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Mr Anderson: Actually, we did do something about it in 2001.
Just think what ordinary postmen and postwomen could have done with a 13-year contribution freeze. They could have bought a new house or a new car, or taken better holidays. But no, these were not things for the workers; they were just for the employers, and now the workers are feeling betrayed again.
The Government are using the economic mess that global capitalism got us into, and which they have entrenched, as an excuse to attack the future well-being of the people in whom we place our trust. Instead of letting sensible negotiations take place on sector-specific schemes, they are pressing ahead with a Bill that will have huge consequences for millions of dedicated public servants. Yes, Hutton means change, but it does not mean destabilisation and mistrust.
If people do not have trust in their pensions, two things will happen. First, those who are already in schemes will opt out, and secondly, new starters will not join. What will be the result? Ultimately, the schemes will fail, and that will not just be bad for scheme members who will not be able to rely on decent pensions when they retire. It will impose an enormous burden on the welfare system, and—as was pointed out by the hon. Member for Bromley and Chislehurst (Robert Neill)—there will be a huge impact on the country’s investment potential if the schemes do not flourish.
Can anything be done to prevent such an outcome? We are starting from a pretty bad place. Public servants are feeling badly bruised as they face pay freezes, cuts in living standards and job losses. Three quarters of a million will be on the dole after receiving their P45s from the Chancellor of the Exchequer. They face service cuts—people who have worked for donkeys’ years will go out of the door—and they have already been hit by increased pension contributions. They are having to work longer to receive their pensions, and when they do receive them, the payments will be smaller. Only a radical rethink in Committee will give us an opportunity to rebuild the trust that those people feel has gone. We must clarify what is being said here tonight and secure some real commitments from the Government if we are to have the slightest chance of giving them any confidence.
Clause 3 grants huge and retrospective powers to the Government to make further radical public sector changes without real consultation. That must be wrong. If the Government can include measures in the Bill that make it clear that the retrospective changes will not have an impact on pensions, that must be done.
Then there is the issue of the link between the state and normal pension ages. A number of Members have raised the worrying discrepancy affecting people who have worked from the age of 15 or 16, perhaps for more than 50 years, in very hard circumstances. The Government have shown a lack of faith by pressing ahead with these changes while a review is being undertaken jointly by unions and employers in the NHS. It is incredible that they should say that they will pay attention to the review after they have passed the legislation, as if it had no meaning whatsoever. What will we end up with? The potential for 68-year-old nurses to be working in mental health establishments, for 67-year-old home care workers to have to put older people to bed, and for prison officers aged 65, 66 or 67 to be fighting with men who are locked away. That is lunacy.
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Clauses 5 and 6 deal with the establishment of a pensions board in the NHS. We need a real commitment from the Government to allow member representation on those schemes. Clause 10 empowers the Treasury to take control of valuations of pension schemes. That has never been the case before; there has always been partnership working. If the unions are cut out of the decision making on pension schemes and the schemes are seen to be determined by the Treasury, people will lose faith in the new system, as they will if the actuarial valuations are dictated by the Treasury. People do not trust the Treasury to look after them properly. The hon. Member for Bromley and Chislehurst and my right hon. Friend the Member for Wentworth and Dearne spoke about the local government pension scheme. I hope the Minister takes on board the points raised, because it is different from other schemes.
The Chief Secretary to the Treasury told us that the trade unions and the Government have come to a collaborative view. I know he is from another part of the country from me, but I think he must be from another planet. The fact that the Government have done what they want to do and the unions have faced that reality and have done what they have to do, day in and day out, to try to get the best deal for their members should not in any way be mistaken for collaboration.
It always used to be said that pensions were saving for a rainy day. Well, I have got news for the Government: “It’s raining cats and dogs, and you’ve stolen the umbrellas.”
8.30 pm
Andrea Leadsom (South Northamptonshire) (Con): I was rather delighted by the Bill. I think it is an unmitigated good news story, so it is rather depressing to follow the hon. Member for Blaydon (Mr Anderson) who, more than any other contributor today, is talking down an extraordinarily fair, logical and sensible settlement. I would draw to his attention the comments of his colleague the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), who told the TUC annual congress on 11 September this year:
“We must be honest with the British people that under Labour there would have been cuts, and that on spending, pay and pensions there will be disappointments and difficult decisions from which we will not flinch. Because the question the public will ask is: who can I trust?”
It is a great shame when Opposition Members deliberately talk down a settlement that is extraordinarily fair to both the taxpayer and our public sector workers.
This is an unmitigated good news story, of course, because we in Britain have some of the best public service sector servants in the world and the best public services in the world. Is it not fantastic that we are all living longer—that we can now expect to live a good 10 years longer than in the 1970s? That is an unmitigated good, but it has enormous consequences for public policy.
One of the consequences is that people will need to work for longer. It is ridiculous for people to be retired for a third of their lives. That is not only unaffordable; it is nonsensical for those individuals. It is appalling to think of people spending 20 or 30 years fully retired with nothing to do but tend their garden and look after their grandchildren. People do not want to do that. It is completely ludicrous to suggest that people should continue
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to retire at the age of 60 when they are going to continue to live for another 20, 30 or even 40 years. That is completely unsustainable and illogical. The Bill makes sense of such points in a way that is completely fair to the taxpayer and the public sector workers. I congratulate the Government on producing such an extraordinarily fair Bill.
I want to disabuse the Opposition of a couple of the myths. They say that the unions claim that average local government pensions are just £3,800, and that for women they are less than £2,800, but they fail to point out that that includes people who have worked for only a very short time in the public sector. They should be talking about what people would be retiring on if they were to spend their entire career in the public sector. The fact is that many women will be far better off than is claimed. Members on both sides of the House have been very concerned about lower paid women in both the public and private sectors retiring in poverty. Under our proposals, women will be far better off because the Bill safeguards the lowest earners’ pensions. They will not face increased contributions to their pensions, and they will be better off than they previously were. That is very good news.
Dr Whiteford: One misleading aspect of the pensions contribution debate is the claim that people earning under £15,000 will be protected. It is often overlooked that these figures are calculated on a full-time equivalent basis. Many women work part time, and they will find that they have to pay high pension contributions even though their salaries are very modest.
Andrea Leadsom: I think what the hon. Lady is saying is that somebody who would be on, perhaps, £60,000 a year but who is working a day a week and is therefore taking home about £12,000 a year will have to pay higher contributions. Is that what she is saying?
Dr Whiteford: I am thinking of nurses or teachers, whose salaries would be more in the average earnings category. If they work half-time, they will find that their pensions contributions increases will be calculated on the basis of a full-time equivalent so this measure will not help women on low incomes.
Andrea Leadsom: That is a rather extraordinary point. Public sector pensions will be paid and calculated on the basis of a full-time equivalent salary, so our approach is entirely consistent. Moving to career average schemes will also make things much fairer for women. It will mean that high flyers who are promoted late in their career and then earn a significantly higher salary will no longer retire on an extremely generous pension. Those who have spent their career sometimes doing part-time work and sometimes doing full-time work will have a career average pension, which will be much fairer.
It is also right that we link public sector pensions to the normal state retirement age—that is a matter of fairness. If the state retirement pension kicks in at 66, it is right that, with exceptions—notably those who have armed forces, firefighter and police pensions—people start to draw their public sector pension at the same time as their state pension. That is all about fairness.
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Chris Leslie: The hon. Lady will know that in the past—I believe this was in the Pensions Act 2011—people were given short notice about changes to the pension age. Does she agree that, ideally, a good 10-year notice period should be given so that people can plan ahead? If this is pegged to the state pension age, people should have sufficient opportunity to plan with enough forethought.
Andrea Leadsom: The hon. Gentleman will recall that the Government made great efforts to ensure that the cliff edge affecting certain women born in a certain couple of years disappeared. He will also be pleased to note that the pensions of those with less than 10 years until retirement will not be affected by this measure, which provides the ring-fencing for those with not long to go until retirement age. I would have thought that he would welcome that—again, on the basis of fairness between those workers and the taxpayer.
Of course, two thirds of private sector workers are not members of a pension scheme. We have heard hon. Members from all parts of the House say that we do not want a race to the bottom. We are proud of our public sector pension provision, and nobody would wish to see it brought down to the abysmal level of private sector pensions. However, it would be pleasing if Opposition Front Benchers were to concede their part in the destruction of private sector pensions, which has made a significant contribution to putting us into this pitiful position; private sector pensions have been decimated by the actions of the previous Prime Minister.
An important point of fairness is involved in the fact that the taxpayer contributes three times more to a civil service employee’s pension than the average private sector employer pays in. The employer contribution rate to the civil service pension scheme is 19%, whereas the average private sector employer contribution rate for a defined contribution pension scheme is only 6.4%. To get the same pension in the private sector, someone would have to contribute about a third of their salary.
Sheila Gilmore (Edinburgh East) (Lab): There is something extraordinary in what the hon. Lady has just said, which several of her colleagues also said. They say, “We don’t want to compare with the private sector. We don’t want to have a race to the bottom.” They then say, “But” and come out with a long string of comparisons about employers not paying as much. If this has nothing to do with comparisons with the private sector, they should stop comparing.
Andrea Leadsom: The hon. Lady makes an extremely good point. I am not advocating that we reduce public sector pensions to the private sector level, but this does, of course, absolutely bear comparison. This Government are not reducing public sector pensions to the pitiful state the Labour Government left private sector pensions in when they left office. That is precisely the point I am trying to make. We are proud of the fact that our public sector pensions will remain among the best in the world. That is something to be very proud of, and the Opposition should be congratulating the Government on having achieved that at this extraordinarily difficult time.
Let me disabuse Members of one final myth. The Opposition like to say that private sector workers earn more, so private sector pensions make up for the shortfall in salaries. That is not the case. The Institute for Fiscal
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Studies calculates that on average hourly public sector wages are 7.5% higher than hourly private sector wages, even when we take into account an individual’s education, age and qualifications. That is a very important point. Public sector pensions do not subsidise lousy working rates—quite the opposite, in fact. Those in the public sector rightly have a good deal in their employment and in their pension. That is what we wanted to achieve and I commend those on the Front Bench for doing so.
The most important aspect is sustainability, because what we had was unsustainable. Over the past decade, public sector pension costs increased by a third in real terms. Between 1999-2000 and 2009-10, the amount of benefits paid from the five largest public service pension schemes increased by 32% in real terms. In five years’ time, we are set to spend £33 billion a year on public sector pensions—more than on police and transport combined and 1.8% of GDP.
Richard Fuller: On that point about overall fairness and sustainability, does my hon. Friend believe that the Government could have gone further in ensuring sustainability by looking to move towards a fully funded form of public sector pension scheme? There is still an exposure for the public purse in the future. and although the Minister is putting in some cost control, we could have gone further, could we not?
Andrea Leadsom: Of course, my hon. Friend is quite right: we could have gone much further. Across Europe, public sector pensions and terms are being cut with immediate effect to deal with the appalling debts that countries have run up, whereas this Government are putting in place measures that are entirely fair and sustainable both for the taxpayer and the public sector worker.
Let me conclude by saying again that it is an unmitigated good thing that people are living longer, healthier lives, and that we should celebrate our public sector workers and the job they do. They do a fantastic job for us of which we are very proud and we want to ensure that they are fairly rewarded, in a way that is sustainable for the public purse for many decades to come.
8.42 pm
John McDonnell (Hayes and Harlington) (Lab): I declare an interest as a member of a local government pension scheme.
Let me put it clearly on the record that the Bill does a number of simple things: it means that civil servants—teachers, firefighters, hospital workers and council workers—will work longer, pay more and get less. That is the reality. It was said that this has been agreed by the trade unions, but it has been rejected by the Public and Commercial Services Union, the National Union of Teachers, the Prison Officers Association, the Fire Brigades Union and the National Union of Rail, Maritime and Transport Workers, which represents the royal auxiliary workers. Not a single union has supported the Bill or expressed satisfaction with it, and that includes all those in negotiations, the Royal College of Nursing and the British Medical Association. Why? For me, the Bill embodies the Government’s policy and prime objective that the economic crisis will be paid for by public sector workers rather than those who caused the crisis in the first place. It typifies the Government’s approach.
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Richard Fuller: One issue is the fact that the cost that will fall not during this Parliament but on future taxpayers—our children and grandchildren. Does not the Bill do something to relieve some of the burden on future taxpayers? As the Intergenerational Foundation has said, that is a fair way to proceed.
John McDonnell: Let me quote the Treasury, which has said that the cost of the unfunded public sector schemes—I am particularly interested in the civil service one—as
“a share of GDP was 1% in 2007-08 and was projected to rise to only 1.2% in 2057.”
Only 18 months ago, the National Audit Office produced the report, “The cost of public service pensions”, and showed that
“when projections of liability are based on earnings, the total annual payments from the civil service pension scheme will be largely stable over the next 50 years.”
So no, I do not accept that analysis, and neither did the Treasury at the time.
I oppose the Bill. Members of my Front-Bench team will abstain tonight, I believe, because they hope they can amend the Bill. The Bill is unamendable to make it acceptable to me. Therefore I oppose it and I wish to have the opportunity to vote on the Bill if I can. If that means walking through the Lobby on my own, I will. I will find a teller somewhere, I hope.
The Bill is extremely damaging to the well-being and living standards of ordinary working-class people. We know that. My hon. Friend the Member for North Ayrshire and Arran (Katy Clark) quoted the definitive piece of work, an independent analysis from the Pensions Policy Institute, which is a charity funded by the Nuffield Foundation to undertake the research. It confirmed that the Bill means that pension benefits will be cut by a third. My hon. Friend the Member for Leeds West (Rachel Reeves) referred to the shift from RPI to CPI, which was a further 11% cut. What the cuts in pension benefits mean is exactly as others have said—a reduction in participation that will ultimately threaten the viability of the schemes. Perhaps that is what the Bill is about—the degradation of the schemes so that they will eventually be replaced by the private sector.
Let me deal with the issue of private sector pensions, which is dragged out on every occasion. It is a rewriting of history. Let us go back to the 1980s and 1990s. The state pension was undermined by the Thatcher Government when they broke the link between earnings and pensions. That also undermined the earnings-related element of the state pension. They encouraged people to enter private sector schemes but, as we heard, they allowed many employers to take pension holidays, not for one or two years but for long periods. Eventually that undermined the schemes and a number of them in my constituency were wound up almost overnight.
Individuals were urged to enter into their own arrangements, which they did, only to be fleeced on their endowment policies and other mechanisms. Previous Governments, particularly in the 1980s and 1990s, destroyed private sector pensions and now this Government are moving on to destroy public sector pensions in the same way.
Mark Reckless:
I do not want to let this point go—the hon. Gentleman’s claim that somehow Baroness Thatcher broke the link with earnings. Between 1974 and 1979
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Labour claimed to link earnings and pensions, but for much of that time wages went up by less than prices, and for five months of the highest inflation in that period they were not linked at all, giving pensioners a very bad deal.
John McDonnell: Under legislation promoted by Thatcher, the House in 1981 broke the link. That undermined in the long term the value of the state pension—it is irrefutable—and then undermined the earnings-related portion of it.
Mark Reckless: Will the hon. Gentleman allow me to refute that? For the first two years of the Thatcher period, there was a link. The only other period in which there was purported to be a link was under the previous Labour Government. For much of the Thatcher period there was no link and wages went up by less than prices.
John McDonnell: There was always a link with earnings or inflation, and pensions went up accordingly. Why did the previous Government not replace it? I sought on every Budget to enable that to happen and I wish we had done so.
John McDonnell: Let me press on with the points that I am making.
What the Government are now doing is exactly the same as they did to private pensions, but we were told by the Chief Secretary that this is a settlement for a generation—that it will restore stability and predictability to public sector pensions for the next 25 years. No, it does not. As has been said before, the Henry VIII clauses in the Bill not only have the potential to undermine future benefits but are retrospective. I urge Members to look at the BMA’s legal advice on clause 3 and the vast remit that that gives future Governments to undermine future protections. Under clauses 3 and 21 and other clauses, public sector pensions do not even get the protection afforded in the private sector. In the private sector, if an alternative benefit is proposed, it must be actuarially evaluated as a viable alternative and one that does not undermine an equivalent benefit.
I agree with my right hon. Friend the Member for Wentworth and Dearne (John Healey)—we all agree on this—that pensions are deferred earnings, something people invest in and, therefore, something they should have some say in, but the Bill will take away all participatory control by the members who contribute. As he said, the Treasury will now control the design of the schemes, the revaluations and how they are undertaken, and the cost cap and what is included within it. There is a lack of commitment in the Bill, contrary to all that Hutton said, to ensuring that any future changes or reforms are made on the basis of agreement or at least joint engagement.
I am now secretary of the Fire Brigades Union parliamentary group and wish to circulate the evidence the FBU provided to Ministers on the physical work firefighters now do. Under the new pension scheme the retirement age in the fire services has been lifted to 60. The previous Government argued that there would be preventive measures to enable firefighters who could no
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longer undertake the physical rigour of the job to undertake lighter duties, as the hon. Member for Bromley and Chislehurst (Robert Neill) said. This year, 16 posts in the whole the country have been offered for redeployment alone, so that is unreal. Frankly, I do not believe that a 60-year-old firefighter can cope with the rigours of the job, no matter what improvements there have been in technology.
The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the briefing from the Prison Officers Association. There are five physical tests that every prison officer has to undertake in order to be able to continue doing the job. If they fail in any one, they cannot do the job. The POA therefore predicts, quite rightly, that the cost of medical retirements will outweigh any savings gained as a result of the increased pension age. The same information came from the Royal College of Nursing with regard to nurses and paramedics and from the National Union of Teachers with regard to teachers teaching at 68.
The Government said that they would set up the longer life review. Its first meeting was held in September and the results will not be out for at least another six months, yet this Bill allows no flexibility. My right hon. Friend the Member for Wentworth and Dearne was right: even if the money is there and the employer agrees with it, the Bill provides no flexibility in any of the proposed schemes. It is lunacy to bind the hands of negotiators in that way.
There is no legal requirement on the pension boards to consult or negotiate, contrary to what Hutton recommended, and we can see no representation from the work force. There should at least be some assurance in the Bill that there will be an element of representation on the boards. With regard to the closure of the existing schemes, some protections are being put forward, but there is none on ill health or redundancy. I find clause 23 almost sinister. It will enable employers to offer benefits as an alternative outside the schemes, which is another way of using private sector schemes to undermine the public sector overall.
I am worried about this Bill, which is why I want to vote against it. I think we will look back on today as the day when public sector pensions started on a downward slope, with the erosion of benefits and increasing contributions leading eventually to the undermining of the schemes and their closure. I think it will result in many people being impoverished and greater inequality being created in our society. That is why I will oppose the Bill tonight.
Mr Tom Harris (Glasgow South) (Lab):
On a point of order, Mr. Deputy Speaker. I apologise for interrupting the flow of the debate, but I need to raise an important matter. It will be recorded in tomorrow’s Hansard that the Minister of State, Department for Environment, Food and Rural Affairs, the hon. Member for Somerton and Frome (Mr Heath), told Members that the Government’s commitment to introducing a ban on the use of wild animals in circuses was confirmed by the fact that such a commitment was made by Her Majesty in the Queen’s Speech to Parliament. You will, I know, agree that that is a powerful riposte to those of us who had dared to doubt the Government’s good faith on this issue. However, a subsequent inspection of the two most recent Queen’s Speeches of this Parliament finds no mention whatever of such a commitment. Is it in order for any Minister to
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pray in aid of his argument a part of Her Majesty’s Gracious Speech that turns out to be wholly fictitious? Has the Minister in question contacted you or Mr Speaker to schedule an apology to the House?
Mr Deputy Speaker (Mr Nigel Evans): I thank the hon. Gentleman for his point of order. I have not been notified that any Minister wishes to make a statement on this matter or any other matter from the Dispatch Box this evening. As for whether the Minister was in order to give the response that he did, Ministers and, indeed, all right hon. and hon. Members are responsible for their own speeches.
John McDonnell: Further to that point of order, Mr Deputy Speaker. On a serious matter such as this where a Minister has inadvertently misled the House, it is the norm for him to be asked to return to the House as soon as possible to correct the record and explain his position. May we now express the view on the Floor of the House that the Minister has time now to come back to the Chamber to explain the situation?
Mr Deputy Speaker: I thank the hon. Gentleman for his point of order, which I am sure those on the Treasury Bench will have heard. Should a request be made to make a statement or to raise a point of order, the Chair will be notified and I will make sure that the House is informed in the usual way.
8.56 pm
Richard Graham (Gloucester) (Con): Thank you, Mr Deputy Speaker, for calling me to speak in this long and important debate on pensions. This is a subject on which we would surely all agree that the object is to get cross-party agreement on issues that affect so many of our constituents, and that should be achievable. Indeed, the coalition Government have already achieved it across the two parties, and by seeking and taking Lord Hutton’s advice they hoped to secure agreement from Labour. In that sense, it is good news that this Second Reading will be unopposed, but it is none the less sad that we have heard so many speeches in which Labour Members were unable to rise to the challenge of reaching agreement and seeking harmony and instead sought to make a series of party political, aggressive and disagreeable contributions to the pensions debate.
Let me start with the hon. Member for Leeds West (Rachel Reeves), who led the debate for the Opposition. She said, for example, that the Opposition had accepted the need for a move from RPI to CPI as an index for pensions only as a temporary deficit reduction measure for the life of this Parliament, and she criticised its timing. However, she completely failed to mention that the Labour party itself had already changed the index for its own pension scheme for its party workers from RPI to CPI before the Government did likewise for all public sector workers. Unfortunately the hon. Lady is not in her seat, but the right hon. Member for Wentworth and Dearne (John Healey), who is here, said that the change had been imposed without warning and called it the moment at which the Government had lost their moral authority. I am sure that he will be able to explain to his own party workers quite what moral authority his party has on this issue, having made precisely the same change. The reality is that both the Labour party and this Government have had to face uncomfortable facts—
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above all, the consequences of the fact that so many of us are living for so much longer—and have had to tailor pensions accordingly.
The hon. Member for Leeds West rightly expressed concern for public sector workers. She may be a deferred public sector scheme worker herself, as am I and many other Government Members, and it is important for Labour Members to understand that we do not all represent purely the private sector. This is about seeking agreement for public sector and private sector workers from Members of Parliament who have themselves worked in both sectors. She rightly stood up for public sector workers but was unable to give any credit to this Bill, which has completely protected workers earning less than the full-time equivalent of £15,000 a year—some 15% of the work force—and provides considerable protection for people, many of whom live in my constituency, who earn less than the full-time equivalent of £21,000 a year.
The Bill also protects everybody who is within 10 years of retirement, which is very important for so many of our constituents who are in their 40s and early 50s. Crucially, it increases accrual rates, which is a technical point that will be appreciated by those who have worked in the sector, such as the right hon. Member for Wentworth and Dearne. Above all, and most importantly, the Bill protects the risk-free investment nature of a defined benefit scheme.
On that point, I must refer to the speech by the hon. Member for Hayes and Harlington (John McDonnell), who is in his place and whose integrity I respect. He quoted, as he would in his role as the Public and Commercial Services Union representative, the PCS briefing for this Second Reading debate and came to the same conclusion that
“members will work longer, pay more and get less pension.”
The reality, however, is that all of us will live longer, work longer and, if we are lucky enough to have one, get a pension for longer, and those who are public sector workers will have a much better pension than anyone else in the land.
My point to the hon. Gentleman and the hon. Member for Blaydon (Mr Anderson), who is not in his place, is that it is no good simply championing the status quo for today’s workers and betray tomorrow’s. In many ways, that is what happened—I am afraid that the trade unions are partly culpable for this—to private sector DB schemes, which the right hon. Member for Birkenhead (Mr Field) has often referred to as the jewel in the crown. Many of them have closed precisely because the unions could not and would not see the future and adapt before companies decided that they could no longer afford the schemes and closed them.
The point of this Bill—this should be something on which every Member of this House can unite—is that this Government are trying to work with unions and Opposition Members to keep defined-benefit schemes for the public sector, despite the fact that we will all live for so much longer than our fathers and mothers, and that, therefore, the cost of those pensions will be so much greater. To use the analogy of the hon. Member for Blaydon, it may be raining, but this Bill will make sure that the umbrella is kept for public sector workers.
Chris Leslie:
The hon. Gentleman says that we should all stand together to defend ongoing defined-benefit schemes, so could he explain why the Bill does not
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honour that commitment? Clause 7 states that schemes created under the Bill can be defined-benefit schemes, but they can also be defined-contribution schemes or
“a scheme of any other description”.
Where is the guarantee that these will be defined-benefit schemes?
Richard Graham: I have no idea whether the word “guarantee” is in the Bill. In life, only two things are guaranteed as far as I know: taxation and death. We are talking about not guarantees as such, but a defined-benefit scheme in which the entire risk is taken by the taxpayer and the certainty that gives people the chance to budget in their retirement is with the scheme’s beneficiary. In fact, it is even better than that. As the hon. Gentleman will know, because he has studied these things carefully, the advantage of a career average defined-benefit scheme is that it benefits precisely those workers whom I would have imagined he would be most in favour of protecting.
The Pensions Policy Institute, which the hon. Member for Hayes and Harlington referred to, says:
“The Coalition’s proposed reforms will remove the different outcomes for high-flyers and low-flyers which exist in final salary schemes.”
It goes on to estimate that, under the current scheme, a high flyer
“would have had a pension benefit of 29% of salary, compared to 11% of salary for the low-flyer.”
Under the reforms proposed by this Government, both high and low flyers will have
“the average value of the pension offered being worth 15% of salary”.
That is a significant improvement for the low flyers. I would be astonished if all Members of the House were not in favour of that reform.
The hon. Member for Leeds West recognised that something had to be done, but tellingly, she made no reference at all to three of Lord Hutton’s four tests—affordability, fairness to the taxpayer and governance and transparency. Did she not think they mattered? Should they not be at the heart of what any Government do? That was a disappointing series of omissions.
John Healey: The hon. Gentleman said a moment ago that the total risk of the schemes was borne by the taxpayer. Does he not realise that he is making the same mistake as Ministers in not recognising that the local government pension scheme is a funded scheme? The income from its investments last year topped £3 billion, and there is also a strong contribution from employees alongside that of employers. That makes it a case apart from his general argument.
Richard Graham:
The right hon. Gentleman makes half a good point. I know local government pension schemes very well, as many of them are my former clients. The reality is that they have never been as separate from the public sector balance sheet as he might be implying. One of his predecessors as Economic Secretary, Ruth Kelly, tried to amalgamate the whole lot, recognising their fragility. As the National Audit Office has revealed, the schemes are significantly underfunded, and I think I am right in saying that 20% of all money paid in council tax now goes towards
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paying the pensions of scheme members. He is right to say that local government schemes are different from others, but they are not quite as different as he suggests.
The hon. Member for Leeds West mentioned the fear that public sector workers would opt out of schemes altogether, because they might become unaffordable, and thereby become a burden on the state in a different way. I think it is fair to say that she did not recognise that opt-out rates have not altered. There is good reason for that, because although contributions are higher than they were, the value of a defined-benefit scheme is still considerable. In case her concern becomes real and there are large numbers of opt-outs, the Government have built into the Bill a provision for regular reviews to address the situation if and when it arises.
Several Opposition Members have expressed the concern that the Government are trying to set the private sector against the public sector. I have already totally rejected that point. All Government Members are as committed as anyone to helping every worker get some form of pension as quickly as possible. The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) missed the crucial point that the Government are trying not only to make defined-benefit schemes sustainable for the public sector, but to get millions of workers in the business sector to have a pension at all through the auto-enrolment scheme. It is disappointing to me, and I think to others, that she did not understand that.
Several Members have claimed that the real scandal is the lack of pension provision in the private sector, but it is a curious fact that one legacy of the previous Government is that 13.5 million workers in the private sector have no pension at all. Some Ministers in the Labour Government did good work, including the late Member for Croydon North, to whom I pay tribute for his work in the pensions sector. However, as with so many things, it has fallen to the current Government to seek an agreement and to implement reforms that will give people without pensions the chance to have something to retire on for the first time in their lives.
Today’s debate has covered many aspects of the Bill. As I said, it is a good thing that its Second Reading will not be opposed today, but I can see that there will be many arguments ahead in Committee.
Let me leave with hon. Members the points that I make to everyone in my constituency who is employed in the public sector and is in a defined-benefit scheme, whether they are teachers, nurses or other workers. First, the defined-benefit pension has fabulous benefits for all those involved, especially lower-paid workers; secondly, the increase in accrual rates means an improvement of some 8% for public sector workers; thirdly, anyone within 10 years of retirement is completely protected; and finally, I hope that the Opposition will drop their instinctively tribal approach, and recognise that the Bill tries to reform public sector pensions in a way that will, above all, be sustainable. Should our children and grandchildren work in the public sector, they will receive a career average defined-benefit pension, as will today’s workers, should the Bill go through successfully.
Mr Deputy Speaker (Mr Nigel Evans): Order. The winding-up speeches will begin at 9.30 pm.
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9.10 pm
Sheila Gilmore (Edinburgh East) (Lab): I have a feeling that an instruction has gone out to those speaking in support of the Government, and it appears to have been, “Be nice to the public sector.” Speaker after speaker has taken great pains not only to praise the public sector and public sector workers, but to accuse the Opposition of daring to suggest that there might be another view.
I have sat in the Chamber over the past two and a half years, and I do not think I imagined the numerous occasions on which Government Members spoke of gold-plated pensions and the overall extra cost of pensions, or indeed imagined the whole way in which the public sector has been treated. We are clearly now meant to assume we imagined that, but public sector workers have had a pay freeze and are facing job losses in many parts of the country.
On top of that, the view expressed for two and a half years that the public sector is holding back the economy formed much of the justification for many of the policies that followed. We have been told time and again that if we cut back the public sector, the country’s economy will spring to life, and that the public sector is exercising a great drag on the economy. If we put those things together, it is perhaps not surprising that Opposition Members, and many workers in the public sector, have concluded that the coalition Government do not particularly like or support the public sector, however supportive they may be of individuals or people they have come across. That is the backdrop against which the whole debate has been set, and that is why people are still sceptical and concerned about some aspects of the Bill.
If contributions had not been made, quite separately, on the restructuring of the pension schemes, and if we were not working against the general backdrop of the Government’s view of the public sector, many people, including Opposition Members and public sector unions, would perhaps not be asking: where is the guarantee? It is not good enough to say that we want to put pensions on a firm and definite footing; we must ensure that that happens. When parts of the Bill suggest to any casual reader that that may not be the case, one can understand why people have doubts.
The Bill does not rule out further changes for any number of years, let alone 25 years; nor does it rule out the possibility that some public sector schemes in future might be defined contribution schemes. We have heard lots of praise for defined benefit schemes by hon. Members on both sides of the House, but the Bill opens up the possibility—this is what people have spotted when reading it—that we could see the introduction of a defined contribution scheme.
We must be clear, therefore, on whether we are giving long-term protection. Pensions are a long-term business. The problem for pension provision in this country—whether state, public sector employee or private sector pensions—is that taking the long-term view has proved to be difficult. I will not take lectures from Conservatives, who suggest that the only reason why the private sector moved away from defined benefit schemes, or indeed from providing pensions altogether, is due to a policy of the previous Labour Government, because the Tory Government under Mrs Thatcher destroyed the state earnings-related pension scheme. They did not reform it and say, “Over
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the longer term this may prove to be quite expensive and we might have to look, for example, at its accrual rates,” which were generous; they destroyed it, in the name of giving people the freedom to make their own choices. I remember exactly what happened. People said, “Oh well, if I don’t have to pay in to this, I won’t pay in to anything.” Twenty or so years later, those people are no doubt approaching retirement with very little pension. That was extremely destructive legislation. In its place, people did not at that stage get defined benefit schemes. Often, they were encouraged to go to insurance companies and other such organisations to take out pensions of a defined contribution type, but those schemes have not provided them with an adequate pension in their upcoming retirements. If we are to have a cross-party consensus—I do not know whether we will—security for the future must be built in to the Bill.
Hon. Members have said warm words about why some people will not be fit to work through to normal retirement age. However, if people are not fit to work, we need flexibility in the Bill—it cannot be left until later. Ministers have criticised previous legislation on a range of issues for being too inflexible, and have argued that that makes it difficult to make changes later. We need flexibility on the pension age. If we lock the normal retirement age for public sector pensioners to the state pension age in the Bill, it will be difficult to have flexibility, even if it proves to be needed on health or other grounds. We do not want people who do not work to that later age claiming benefits and losing a lot of their assets. Nowadays, many people who claim employment and support allowance can do so on a contribution basis for only a year. If they have other income, they will not get means-tested benefits. Many people who end up leaving work early on health grounds lose a great deal of money.
We are concerned about those in the private sector who are in that position. Even with the state pension age as it is, many people, particularly men in the 60 to 65 age group, are not working on health grounds. I therefore urge the Government to look again at that factor. If they are serious about their concern for people who might find it difficult to work in public sector jobs on health grounds, they need to make it possible to relax the rules in future.
Parts of the Bill require changing. It is important that we go ahead and make those changes, and that we do not say, as has been suggested by some Government Members, that the Bill is already perfect.
9.19 pm
Grahame M. Morris (Easington) (Lab): In the limited time available, I wish to highlight a particular concern. The Chief Secretary’s contribution seemed to suggest that this is a done deal, and various coalition Members suggested that this is a wonderful Bill with cross-party consensus. I agree with the grave concerns expressed by my hon. Friends the Members for Blaydon (Mr Anderson), for North Ayrshire and Arran (Katy Clark) and for Hayes and Harlington (John McDonnell), not least about the retrospective powers the Bill will give to the Secretary of State without reference to Parliament. In my view, we should have a sensible negotiation on sector-specific schemes, as alluded to by the hon. Member for Bromley and Chislehurst (Robert Neill).
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The deal has not been agreed with the firefighters. The key issue for them is normal pension age, which other hon. Members have mentioned, and the proposed increases to the employees’ pension contributions. The Government’s offer published on 24 May 2012 included a commitment to review both the normal pension age for firefighters and firefighters’ contributions. That review is ongoing, and the issue of normal pension age for firefighters is key.
Clause 9 sets a normal pension age of 60 for firefighters in the proposed pension scheme. The NPA is defined in the Bill as
“the earliest age at which the person is entitled to receive benefits under the scheme (without actuarial adjustment) after leaving the service to which the scheme relates”.
This means that, in effect, the Government propose that firefighters should continue to attend house fires, factory and office fires, car accidents, explosions, civil disturbances, terrorist incidents, floods and other emergencies until they are 60 years of age.
At present, nearly 24,000 or two thirds of firefighters in a pension scheme are members of the firefighters pension scheme—the FPS. The normal pension age for those firefighters is 55, with most able to retire in their early 50s. The Fire Brigades Union believes that the proposal is unworkable for firefighters and will destroy the firefighters pension scheme.
This issue goes to the very nature of firefighting. Firefighters perform a number of activities, individually and in teams, such as running, crawling, climbing, lifting, lowering, carrying and hammering. Common activities include ladder lifting and raising, hose running and connection to water supplies, manipulating and operating portable pumps, rescue and evacuation procedures, and wearing breathing apparatus. Worst-case scenarios involve casualty evacuations, search and rescue, operating heavy search equipment, propping and shoring up buildings—as we saw in my area recently during the floods—and carrying equipment over uneven surfaces, which we saw during the dreadful train disaster on the west coast main line.
The public rightly expect the fire service to operate in inherently dangerous situations to save life and property and to render other assistance. The firefighters pension scheme reflects the nature of the job. Firefighters’ work can be
“physically demanding and require sustained effort for long periods, often in arduous conditions”.
It is a career widely recognised as among the most extreme non-military occupations in modern life. I remind the House that currently less than 1% of our firefighters work beyond the age of 55—for good reason. The national pension age of 60 proposed in Lord Hutton’s pension report is for the Government to consider—he did not recommend it as a figure carved in stone—but no evidence was provided to justify it. The Fire Brigades Union has written to him seeking his supporting evidence for it, but as yet it has received no reply.
There are several issues relating to ongoing reports into the merits of a firefighter NPA beyond 55, but the important point, which the hon. Member for Bromley and Chislehurst, the former fire service Minister, referred to is that fundamentally the role of firefighters has not
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changed. The introduction of IT and changing working practices have fundamentally changed how Members of Parliament and other professions operate, and perhaps have made our lives easier, but that is not the case for firefighters—at least, I can find no evidence for it.
No evidence has been produced to show how firefighters can maintain their health and fitness in order to work safely until they are 60. There are recognised aged-related declines in physical potential. We all suffer from them—well, perhaps you do not, Mr Deputy Speaker, but the rest of us do—and, because firefighting is a physically challenging profession dealing with safety-critical emergencies, such concerns are a matter of life and death for firefighters and the public. Academic papers generally conclude that only elite athletes can maintain well into their 50s the levels of fitness required by the UK fire and rescue service, and the majority of fire and rescue services already have fitness policies in place.
My hon. Friend the Member for Hayes and Harlington referred to the limited opportunities for redeploying firefighters no longer fit for active service. The FBU recently surveyed every fire and rescue brigade to determine what opportunities there were for redeploying firefighters deemed unfit for operational duty on health grounds. In England, fewer than 100 firefighters are in that position, but that is with an NPA of 55. Out of the 46 English fire and rescue services, only five confirmed that they currently had any redeployment opportunities, while the total number of opportunities currently available in the whole of England amounted to 16 posts—and that, remember, is with the normal pension age at 55, so we can imagine how much greater the demand would be if it was 60. I am concerned that such a scenario will end up damaging an essential public service and costing the public purse more.
I referred to studies that the FBU carried out through YouGov. I do not propose to rehearse those points. However, it also engaged the services of an expert actuary to carry out an assessment. It indicated that a considerable number of firefighters would no longer contribute to the scheme. The public will not thank the House or the Government for advocating a pension scheme based on an unworkable NPA and on sacking hard-working firefighters in the years before they can retire after a lifetime of public service.
Higher NPAs could be more expensive. During previous discussions on firefighters’ pensions, the Government Actuary’s Department confirmed that increasing the NPA from 55 to 60 would lead to more ill-health retirements. As I mentioned, the FBU, seeking to quantify that, engaged a specialist firm of actuarial consultants to assess the potential impact of a rise in ill-health retirement under the existing scheme. The evidence shows the substantial cash-flow problems that such contribution increases would create for the sustainability of the scheme. Indeed, the worst-case scenario is that the new pension scheme will prove unworkable and will crash. There is a danger of a significant number of firefighters opting out of the new pension scheme, thereby making it unsustainable for the rest. I believe the Department for Communities and Local Government estimated the savings from the new arrangements at £33 million a year. However, if more than 7% of firefighters opt out—the true figure may well be 12% or more—the likelihood is that those savings will be wiped out, with an even greater cost to the public purse.
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Firefighter pensions are rightly seen as part of a social contract with firefighters—men and women who risk their own well-being throughout long careers to help others. I do not believe that the general public will support breaking this well-established covenant, and neither should the Government.
9.30 pm
Chris Leslie (Nottingham East) (Lab/Co-op): This has been a thorough debate, and I welcome the contributions made by Members from both sides of the Chamber.
We need reforms that enhance the sustainability of pension schemes. In an era of significant demographic change, it is right to reform the pension system to ensure affordability for both employees and employers—which in the case of the public sector is the taxpayer. The sustainability of a decent pension scheme was the focus of several tough decisions made by the previous Labour Administration. The changes made to public service provision when we were in office included raising the pension age from 60 to 65, introducing a “cap and share” approach that would protect Exchequer revenues and share costs between employees and employers, and reforming contribution levels, which rose by 0.4% for teachers and up to 2.5% for NHS staff. The Public Accounts Committee says that those changes would save the taxpayer £67 billion over a 50-year period, so considerable reform took place under the previous Administration.
However, the Government have mishandled subsequent reform. As we have heard from some of my hon. Friends, when the Government were formed in 2012 by the Conservatives with their good friends the Liberal Democrats, instead of building on the changes that we made, they decided to rip them up, thus causing major problems. Their incompetent and shambolic handling of the reform process has also made it much harder to build a consensus on some of the many sensible long-term reforms proposed in my noble Friend Lord Hutton’s report, as my hon. Friend the Member for Blaydon (Mr Anderson) said. We have to find better ways of rebuilding trust and achieving consensus on these vital matters.
The Government are compelling major changes without negotiation in a way that is both crude and unfair. In particular, by unilaterally imposing a steep 3% rise in contributions prior to any negotiations or even the completion of Lord Hutton’s review, and by making a permanent switch in the indexation of future pension income from RPI to CPI, the Government provoked strike action, at a cost to the country and the users of public services. They also provoked deep cynicism among public service workers. These changes were not recommended by Lord Hutton, but were unilaterally introduced, in an unfair and provocative way. The Government’s aggressive approach to this serious and sensitive issue resulted in months of stalemated negotiations. It is a matter of deep regret that the Government have lost the confidence and damaged the morale of hundreds of thousands of public service workers, whose engagement is vital at a time when they are being asked to accept ongoing pay restraint.
Many hon. Members have noted that Lord Hutton produced a thoughtful and comprehensive report on the way forward, using a number of the changes made by the previous Administration as a starting point for
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negotiations. The document was very useful. He was right to suggest that career average schemes could be fairer than final salary schemes—several hon. Members have made that point—and to say that we should be asking people to work for longer, given the increase in life expectancy. He was also right to stress the need to approach these issues in a careful, balanced way, and to avoid a race to the bottom on pension provision. It is those aspects of Lord Hutton’s report that I wish the Government had looked at more carefully and taken to heart. The Bill is only part of the story, as the unfair increases in contributions and the changes in indexation that have already been imposed do not appear in it.
The Bill contains a series of proposals that we need to consider on their merits. As it consists mainly of enabling legislation that is designed to put new schemes on a clear and equal footing, we will not oppose its Second Reading, but we will hope to address a number of serious concerns in Committee. My hon. Friend the Member for Hayes and Harlington (John McDonnell) has very strong opinions on these matters, which I respect, but I want us to try to find opportunities to improve the Bill in Committee.
All too often when Opposition amendments are tabled in Committee, we see brand new Ministers, with the advice of their officials, opening up their briefing books to find the word “resist” in block capitals, and then simply parroting the notes that have been put into their folders. However, I am sure that that will not be the case with the Economic Secretary to the Treasury, for whom I have great hopes. Let us pray that the Bill’s Committee stage will involve a genuine exchange of views, and give us the opportunity to look into the detail and dig into some of the Bill’s anomalies and, indeed, failures.
Several hon. Members referred to key aspects of the Bill that contain glaring deficiencies. For example, my hon. Friend the Member for Dumfries and Galloway (Mr Brown) and my right hon. Friend the Member for Wentworth and Dearne (John Healey) referred to the retrospectivity involved in the changes to scheme regulations. By allowing scheme regulations to make retrospective changes, the Bill gives the Government the power to reduce benefits that have already been accrued. Many hon. Members will be surprised by that, because most assume that such things are sacrosanct.
My right hon. Friend the Member for Wentworth and Dearne was right to point out that the proposal comes into conflict with the European convention on human rights. It also goes against the central tenet of pension provision, which is that what has been accrued cannot be reduced, because it has already been earned. That is an important principle, because how can public service workers have any security about their future retirement if they know that the Government can retrospectively reduce the benefits that they have already earned at any point? This should not be a partisan matter, but the contract between the employer and employee is important, so I urge the Minister to listen to the genuine concerns that have been raised in the debate.
Mark Durkan: Earlier, in response to an intervention that I made, the Chief Secretary to the Treasury tried to say that the retrospective provisions in clause 3 would be used only for technical and incidental purposes. Will my hon. Friend test the Government by tabling an amendment in Committee that would stitch that commitment into the Bill?