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We share the noble Lord’s concern that the consensus which has been established should be maintained through a transparent review of the assumptions underlying the reform programme. Many of the relevant statistics are already published on a regular basis, including figures on pensioner incomes, savings, life expectancy and demography. The issue still disputed between us is simply whether the transparent debate and resulting consensus that we all seek will be promoted through the establishment of a permanent commission. It is our view that they would not. Moreover, such a body would not come free of charge, although that is not the key point on which we rest our argument. As a matter of interest, the cost of the Pensions Commission was in the order of £1.5 billion.
Lord Fowler: My Lords, £1.5 million.
Lord McKenzie of Luton: I am sorry, my Lords. The figure is £1.5 million.
Lord Turner of Ecchinswell: My Lords, if it was indeed £1.5 billion, I should like to know where my per diems went.
Lord McKenzie of Luton: My Lords, we fear that if we were to set up such a body it would rather act as a destabilising influence, compromising the successful
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With respect to the issues on public service pensions raised in both amendments, noble Lords should be aware that the Government are in the process of reforming these schemes to ensure their long-term affordability and sustainability. In order to inform this process, we have been closely monitoring the actual and projected costs of public service schemes on an ongoing basis. We have a number of mechanisms in place to ensure that this assessment remains open and transparent. For example, the Government have regularly published the latest estimate of the total unfunded liability, along with a detailed technical note explaining how this has changed during the preceding financial year, as well as detailing the assumptions underlying the estimate. Copies of the latest estimate and technical note are available in the Library of the House.
Since 2004, the Government have also published an annual evaluation of the sustainability of projected expenditure on public service pensions in the long-term public finance report. The latest report and projections published by the Treasury in December 2006 demonstrate that annual cash payments are projected to remain completely affordable in the long term, rising gradually to 2 per cent of GDP in 50 years’ time. To ensure further transparency, the Government also publish the assumptions on which the long-term public finance report projections for public service pension expenditure are based, and these assumptions are available on the website of the Government Actuary’s Department.
Finally, this Government ensure that individual public service pension schemes are themselves monitored on a regular basis through built-in mechanisms such as the annual Resource Accounts. If noble Lords have not had a chance to peruse them, I would recommend them as a very good read with lots of detailed information on the state of individual schemes. These reports are published on a regular basis and are prepared by professional actuaries based on long-term assumptions that are reviewed and updated in each valuation.
Given that public service pensions are currently undergoing major scheme reforms, these schemes are entirely affordable and their cost to the taxpayer is rigorously monitored in an open and transparent fashion. I do not believe it is necessary to establish a commission to further review these issues or to undertake a further commitment to publish unfunded pension liabilities.
Perhaps I may pick up on some of the more detailed points about public sector pensions. I agree with the view taken by my noble friend Lady Turner on this. The Government regard public service pensions as a key part of the remuneration package of public servants aimed at maintaining a high quality public sector workforce. We should share that aspiration. However, like other employers, the Government have to manage the increasing pension costs associated with rising longevity and therefore all major public service pension schemes have been under review since the pensions Green Paper of 2002 and, as a result of those reviews, reforms in these schemes are now well under way.
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Thus far, the following reforms have been achieved. In May 2006, the Teachers’ Pension Scheme reached agreement with the teaching unions on a set of reform proposals, and a new scheme has been operating since January 2007. Cost sharing with employees and capping of employer contribution rates form a part of the scheme’s regulatory framework. The NHS employers expect to implement new arrangements for the NHS Pension Scheme by 2008, and the Cabinet Office has announced that the new Civil Service scheme will be implemented at the end of this month. Reforms proposed in the NHS, Teachers’ and Civil Service pension schemes introduce mechanisms such as cost sharing, which will ensure that any future increases in costs will be shared fairly between employers and employees. In addition, cost capping mechanisms will ensure that there will be an upper limit on the costs to the taxpayer, should costs increase. Reform is also well under way or has been completed in the other public service schemes. The Local Government Pension Scheme announced a series of reforms in November last year, and new arrangements for that scheme are expected to be in place in 2008. New schemes for the Armed Forces, police officers and firefighters have already been introduced.
Establishing an independent commission to report on the terms, benefits and affordability of public sector pension schemes will change the context of negotiations currently under way and, in doing so, could delay the benefits resulting from these reforms. Public service pension schemes are monitored on a regular basis through built-in mechanisms such as the Resource Accounts as well as scheme valuation reports. Alongside these reviews, the Government have, since 2004, as I have said, set out the financial sustainability of spending on public service pensions in the long-term public finance report.
We are addressing public sector pension schemes. We have in place arrangements to review assumptions and to take stock of how these reforms will work and progress. We do not need a standing commission to do that. We do not need the proposals in Amendment No. 34 because the data requested there are routinely available to noble Lords.
Lord Fowler: My Lords, before the noble Lord sits down, I understood his argument at the beginning to be that an independent pensions commission would have a destabilising effect on the implementation of his reforms. I think “destabilising” was the word he used. What happens if the department gets it wrong in implementing the reforms he wants, or one part of those reforms? Does he not feel that some form of post-legislative scrutiny would be of help to him? Or is he closing the door on all post-legislative scrutiny?
Lord McKenzie of Luton: My Lords, there is an automatic engagement with the effect of reforms and the review of what is happening, not only through the
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Lord Oakeshott of Seagrove Bay: My Lords, I thank all noble Lords who have spoken. Apart from the Front-Benchers, every speaker was in favour of our amendment. Even the noble Baroness, Lady Turner, was sympathetic to Amendment No. 5. I wish to add two or three minor points of clarification.
I thank the noble Lord, Lord Howarth, for his support. He did not think that the people on the commission should be party nominees. Perhaps I was not very clear on that. I said that on a commission of six or eight people, one should try to ensure that at least one person was clearly identified with each of the three main parties. In talking about the make-up of this House, it may well be, as I hope, that there will be people who are clearly associated with a particular party who also have other expertise to bring to bear.
I agree with the noble Lord, Lord MacGregor. I did not suggest that the NPC was an exact parallel and I thank the noble Lord, Lord Turner, for taking that argument forward. The proposed commission would not have executive powers. The work of the NPC and its regular publications, which are of enormous benefit, is slightly more the parallel I had in mind.
Perhaps I might say a tiny word of correction to the noble Lord, Lord Turner. It is not right to say that none of the three parties was talking about putting up the retirement age until the day he came out with his report, and then suddenly they were in favour. I was arguing at some length in our party that we should. Indeed, he will remember from our discussions that we were in favour of a citizen’s pension for some time and we made it quite clear that that would be affordable only with an increase in the state pension age. But I thank him for his general support.
I say to the noble Lord, Lord Skelmersdale, that I find a little difficult his argument that we know the facts. Of course we know the facts now, but we will not know them without a standing commission in five, 10 or 20 years’ time. We want to ensure that we have a regular, authoritative, independent view, as did the Turner commission. In a way, the noble Lord, Lord Skelmersdale, made the point against himself. He said the Government are estimating that the public sector deficit is £640 billion but independent actuaries are
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6.45 pm
Lord Skelmersdale: My Lords, if the noble Lord will allow me, I was saying that the figures the Government are publishing—which, presumably, anyone can get hold of—are now so out of date that they are worthless.
Lord Oakeshott of Seagrove Bay: My Lords, I agree. I do not particularly like them, but all we are doing is politically or in other ways bandying figures around. The whole point is that if one has an independent, authoritative commission, it will be much more effective in saying, “No, the Government’s figure is wrong”, or in coming up with its own figures. That seems a much better forum to do it in than through this kind of political argument. That is the point I am making.
Baroness Turner of Camden: My Lords, I thank the noble Lord for giving way. We have had a variety of pensions bodies—the Occupational Pensions Board on one occasion and then OPRA—but does he really think that an independent commission will develop in a way in which those bodies did not? I was a member of the Occupational Pensions Board for many years but we did not have the powers we needed. Does the noble Lord really think that a new body would be any better than the ones we have had in the past?
Lord Oakeshott of Seagrove Bay: My Lords, that is a different point. I pay tribute to the noble Baroness for her good work over many years on OPRA, but OPRA was essentially a regulator, but a regulator without teeth. This is very different. It is an independent authoritative commission, not a regulator, so I think the parallel is different.
I thank all noble Lords who have spoken. It will not surprise the House to know that I wish to test its opinion.
6.47 pm
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 116.
Addington, L.
Barker, B.
Best, L.
Bonham-Carter of Yarnbury, B.
Bottomley of Nettlestone, B.
Bradshaw, L.
Brougham and Vaux, L.
Burnett, L.
Colwyn, L.
Cotter, L.
Craigavon, V.
Crisp, L.
Darcy de Knayth, B.
Dholakia, L.
Dykes, L.
Falkland, V.
Falkner of Margravine, B.
Forsyth of Drumlean, L.
Fowler, L.
Freeman, L.
Geddes, L.
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Greengross, B.
Hamwee, B.
Harris of Richmond, B.
Hogg, B.
Howarth of Newport, L.
Howe of Aberavon, L.
Howe of Idlicote, B.
Hunt of Wirral, L.
Jones of Cheltenham, L.
Lamont of Lerwick, L.
Lee of Trafford, L. [Teller]
Lester of Herne Hill, L.
Livsey of Talgarth, L.
MacGregor of Pulham Market, L.
Mackie of Benshie, L.
McNally, L.
Maginnis of Drumglass, L.
Mawson, L.
Miller of Chilthorne Domer, B.
Monson, L.
Neuberger, B.
Newby, L.
Newton of Braintree, L.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Razzall, L.
Redesdale, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Rogan, L.
Roper, L.
Rowe-Beddoe, L.
Scott of Needham Market, B.
Sharp of Guildford, B.
Sharples, B.
Shutt of Greetland, L. [Teller]
Swinfen, L.
Teverson, L.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Thomas of Winchester, B.
Tordoff, L.
Turnbull, L.
Turner of Ecchinswell, L.
Tyler, L.
Wallace of Saltaire, L.
Walmsley, B.
Walpole, L.
Williamson of Horton, L.
Adonis, L.
Ahmed, L.
Amos, B.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B. [Lord President.]
Bach, L.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Billingham, B.
Bilston, L.
Bradley, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burlison, L.
Campbell-Savours, L.
Carter of Coles, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Corbett of Castle Vale, L.
Crawley, B.
Cunningham of Felling, L.
David, B.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dixon, L.
Donoughue, L.
Drayson, L.
Dubs, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Golding, B.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grocott, L. [Teller]
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Henig, B.
Howells of St. Davids, B.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Janner of Braunstone, L.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
Kennedy of The Shaws, B.
King of West Bromwich, L.
Kirkhill, L.
Lea of Crondall, L.
Lipsey, L.
Lockwood, B.
Lofthouse of Pontefract, L.
Macaulay of Bragar, L.
McDonagh, B.
McIntosh of Haringey, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Massey of Darwen, B.
Maxton, L.
Moonie, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
O'Neill of Clackmannan, L.
Parekh, L.
Patel, L.
Patel of Blackburn, L.
Pitkeathley, B.
Puttnam, L.
Quin, B.
Ramsay of Cartvale, B.
Rendell of Babergh, B.
Rooker, L.
Rosser, L.
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Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Sewel, L.
Sheldon, L.
Simon, V.
Smith of Finsbury, L.
Snape, L.
Soley, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Bolton, B.
Tomlinson, L.
Triesman, L.
Truscott, L.
Tunnicliffe, L.
Turner of Camden, B.
Warner, L.
Warwick of Undercliffe, B.
Wedderburn of Charlton, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Woolmer of Leeds, L.
Resolved in the negative, and amendment disagreed to accordingly.
7 pm
Lord Skelmersdale moved Amendment No. 7:
(a) analysing, by job sector, the number and distribution of people over 50 who are seeking work, and(b) on the provision of training for people over 50.”The noble Lord said: My Lords, I tabled this amendment in Committee but time pressures meant that I was unable to move it. We were able, however, to touch briefly on the difficulties facing older workers, and the noble Baroness, Lady Morgan, did her best to reassure me on this subject in her response to another amendment. However, I feel that it would be useful to debate this amendment more fully, especially as my noble friend Lord Fowler—even if he is not here, I am still talking to him—regretted my decision then.
My amendment focuses on the effectiveness of the Government’s schemes to improve the employment opportunities for older workers. The noble Baroness mentioned some of these schemes in Committee, such as the Age Positive initiative and the New Deal 50 Plus. My noble friend Lord Fowler gave a fairly clear indication that, unfortunately, these were not working. According to the Answer to my Written Question from the National Statistician and Registrar General, the mandate survey, which covers approximately 90 per cent of civil servants in departments and government agencies, revealed that of these employees 585 were aged 65 or over at 1 April 2005. That is around 0.1 per cent of the mandate population, an almost insignificant number, which does not give me an awful lot of confidence.
Fortunately, the situation in the private sector is rather better. This is perhaps not that surprising, given the proven benefits that older workers contribute to their companies and industries. Some 25 per cent of respondents to an EEF survey in 2004 said that they employed full-time workers over 65, and a third employed part-time workers over 65. However, there is still a long way to go.
Research from numerous independent organisations, such as the Chartered Management Institute, shows
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Can the Minister explain why the public sector is so much worse in this regard than the private sector? She reassured me in Committee that the bar on the DWP appointing those over 65 to public appointments had been lifted. This makes me wonder what other bars remain. Are there any positions in the public sector with an upper age limit? My amendment would ensure greater transparency for government departments as well as for private sector companies and ensure that government initiatives were actually achieving something. At the moment, they appear to do nothing but pay lip service to the principle of employing older workers.
I turn to the provision of training. The Government apparently understand the importance of education for older workers. The Minister mentioned the Government’s commitment to giving older workers access to new skills, yet the money provided to the further education sector is almost entirely targeted at young people. It is not all bad news—there have been some notable successes with the provision of remedial literacy and numeracy classes, but not nearly enough attention has been given to other skills. Can the Minister lay out how much of the further education budget is spent on older workers and say whether the Government intend to increase this amount over the next few years? As I have said many times during the Bill’s passage, its success or otherwise will depend on employment at a later and later age. I beg to move.
Lord Oakeshott of Seagrove Bay: My Lords, this seems a very reasonable request on a very important topic.
Baroness Morgan of Drefelin: My Lords, I thank the noble Lord, Lord Skelmersdale, for giving us the opportunity to discuss the important subject of employment and training opportunities for older workers. There have been significant improvements in the employment rates for older workers in recent years and in the provision to increase state pension age. It is vital that we maintain this momentum and continue to support people in extending their working lives.
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