Public Service Pensions and Judicial Offices Bill [Lords]

Report stage
Tuesday 22nd February 2022 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

New Clause 7

Parliamentary procedure for judicial schemes: transitory provision

“(1) This section applies to scheme regulations for a scheme relating to the judiciary that are made at any time within the period of one month beginning with the day on which this Act is passed.

(2) A statutory instrument containing scheme regulations to which this section applies must be laid before Parliament after being made.

(3) Regulations contained in a statutory instrument laid before Parliament under subsection (2) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of each House of Parliament.

(4) In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—

(a) Parliament is dissolved or prorogued, or

(b) either House of Parliament is adjourned for more than four days.

(5) If regulations cease to have effect as a result of subsection (3), that does not—

(a) affect the validity of anything previously done under the regulations, or

(b) prevent the making of new regulations.

(6) If regulations otherwise subject to the negative procedure are combined with scheme regulations to which this section applies, the combined regulations are subject to the procedure set out in this section.

(7) Section 24 of PSPA 2013 (other procedure) does not apply to scheme regulations to which this section applies.

(8) In this section, the following expressions have the same meaning as in PSPA 2013—

‘the judiciary’ (see paragraph 2 of Schedule 1 to that Act);

‘negative procedure’ (see section 38(3) of that Act);

‘scheme’ (see section 37 of that Act);

‘scheme regulations’ (see section 1(4) of that Act).”—(Mr Simon Clarke.)

This new clause disapplies the affirmative procedure in relation to judicial scheme regulations made within one month of Royal Assent of the Bill, and provides for those regulations (and other regulations in the same statutory instrument) to be subject to the made-affirmative procedure.

Brought up, and read the First time.

00:00

[The Chief Secretary to the Treasury (Mr Simon Clarke)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 1—Guidance to public service pension scheme managers on investment decisions—

“(1) The Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) In schedule 3, paragraph 12(a), at end insert ‘including guidance or directions on investment decisions which it is not proper for the scheme manager to make in light of UK foreign and defence policy’.”

This new clause would enable the Secretary of State to issue guidance to those authorities that administer public sector pension schemes, including the local government pension scheme, that they may not make investment decisions that conflict with the UK’s foreign and defence policy.

New clause 2—Investment decisions in funded schemes—

“(1) Section 3 of the Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) After sub-paragraph (3) insert—

‘(3A) Scheme regulations must require an authority’s investment strategy to ensure that investment decisions are consistent with the Glasgow Climate Pact 2021.’”

This new clause would require public sector pensions schemes to ensure future investments are consistent with the climate science, ambitions and timeframes agreed at the COP26 UN Climate Summit.

New clause 3—Investment decisions in funded schemes: fossil fuel assets—

“(1) Section 3 of the Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) After sub-paragraph (3) insert—

‘(3A) Scheme regulations must require the fund to have removed all investment in fossil fuel assets by 2030.’”

This new clause would require public sector pensions schemes to disinvest from fossil fuels by 2030, by removing fossil fuel assets from their investment portfolios, securities transactions and balance sheets.

New clause 4—Review of the impact of this Act on fairness—

“(1) The Chancellor of the Exchequer must commission a review of the impact of this Act on fairness to members in receipt of pensions to which this Part applies.

(2) The Chancellor of the Exchequer must prepare and publish a report on this review within six months of the passage of this Act and must lay a copy of the report before Parliament.

(3) The review under subsection (1) must include an assessment of the impact of the provisions of this Act on women.

(4) The review under subsection (1) must make recommendations as to whether further legislation should be brought forward by the Government to close the public service pensions gap between men and women.”

This new clause would require the Government to report on the impact of this Part on fairness, especially with regards to women.

New clause 5—Guidance—

“(1) Within six months of the passage of this Act the Chancellor of the Exchequer must lay before Parliament a copy of guidance to members of pension schemes affected by this Part.

(2) The purpose of the guidance under subsection (1) is to ensure members are able to make informed choices about their pensions.

(3) The Government must provide a free helpline or online service which members can use to receive further guidance about their pension.

(4) Within six months of the day on which the guidance is published the Government must lay before Parliament a report on its effectiveness in achieving the purpose in subsection (2).”

This new clause would require the Government to publish guidance to members of pension schemes affected by this Part and allows for provision of a helpline or online service to offer further assistance.

New clause 6—Impact on the recruitment of new holders of judicial offices—

“(1) Within 12 months of the passage of this Act the Government must commission an evaluation of the impact of this Act on recruitment of new holders of judicial offices and on the diversity of the judiciary.

(2) The Chancellor of the Exchequer must prepare and publish a report on this evaluation and must lay a copy of the report before Parliament.”

This new clause would require the Government to publish an annual update on progress on recruiting new members to the judiciary and increasing diversity.

New clause 8—Compensation of losses incurred by closure of legacy schemes—

“(1) The Chancellor of the Exchequer must review how a loss incurred by a member with remediable service who is transferred to the new scheme under section 80 and—

(a) reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, and

(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme

could be compensated.

(2) The Chancellor of the Exchequer must prepare and publish a report on this review within two months of the passage of this Act and must lay a copy of the report before Parliament.”

This new clause would require the Government to review how losses arising from the “pension trap” could be compensated, and to report on the review within two months of the passage of the Act.

New clause 9—Equality impact analysis of provisions of this Act—

“(1) The Chancellor of the Exchequer must review the equality impact of the provisions of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passage of this Act.

(2) A review under this section must consider the impact of those provisions on—

(a) people with protected characteristics (within the meaning of the Equality Act 2010), and

(b) the Government’s compliance with the public sector equality duty under section 149 of the Equality Act 2010.

(3) A review under this section must include a separate analysis of each separate measure in the Act, and must also consider the cumulative impact of the Act as a whole.”

This new clause would require the Government to review the equality impact of the provisions of this Act, and to report on the review within six months of the passage of the Act.

New clause 10—Report on losses incurred by closure of legacy schemes—

“The Chancellor of the Exchequer must consult with the relevant trade unions and other bodies representing pension scheme members and report within 6 months of the passage of this Act on the options available for addressing in a non-discriminatory manner any loss incurred by a member with remediable service who is transferred to the new scheme under section 80 and—

(a) reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, but

(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme.”

This new clause would require the Government to consult with the trade unions and other bodies representing members of the pension schemes who are affected by the “pensions trap” and to report on the options available to address this issue without causing discrimination.

Government amendments 1 to 17.

Amendment 24, in clause 92, page 67, line 39, leave out paragraph (c) and insert—

“(c) leave out paragraph (c).”

This amendment removes from the calculation of the employer cost cap the effect of changes in the cost of connected schemes, including the cost of rectifying the unlawful discrimination.

Amendment 22, page 67, line 39, leave out paragraphs (c) and (d).

This amendment removes from the Bill the amendment to Section 12 of the Public Service Pensions Act 2013 that would allow Treasury directions to determine whether the cost control mechanism would operate.

Amendment 23, page 70, line 27, leave out clause 93.

Government amendments 18 to 21.

[Mr Clarke]

It is a pleasure to open this debate. I wish briefly to remind Members why this is such an important piece of legislation that we must ensure we get right. Our public servants provide vital services on which we all rely and their unwavering commitment has been particularly vital during the covid pandemic. We have an obligation to continue to provide guaranteed pension benefits to reward those workers for their dedicated service, and must do so on a fairer basis and in a way that ensures that pensions are affordable and sustainable in future.

Let me turn to the amendments that I have tabled, which are largely technical ones to ensure the Bill works smoothly. New clause 7 makes it possible for the judicial pension scheme 2022 regulations to be subject to the made affirmative procedure rather than the draft affirmative procedure, which is the usual process for judicial scheme regulations. The Bill closes all current judicial pension schemes to future accrual on 31 March this year, so the change is necessary to ensure that the new pension scheme is in place for all judges on 1 April. There will therefore be no gap in judicial pension arrangements.

The provision in the new clause is an exceptional use of the made affirmative procedure in respect of judges’ pensions. It is limited to scheme regulations for the judiciary that are made within 28 days of Royal Assent, so it will be used only to make the judicial pension scheme 2022 regulations. It will not apply to any other public service pension schemes, which are generally made under the negative procedure, nor will it apply to any future amendments to judicial pension schemes.

The remainder of the amendments that I have tabled are minor and technical, with the aim of ensuring that the Bill is applied effectively and consistently. Amendment 19 relates to the commencement provision and simply ensures that different provisions in the Bill can come into force at the appropriate time.

Amendments 1 to 14 simply clarify the wording in various clauses in chapter 1. Together, the amendments give schemes the flexibility to implement the prospective and retrospective remedy in the way that is most efficient for their members.

Amendment 16 ensures that the remedy applies correctly to local government scheme members who were formerly members of other public service pension schemes. In particular, it makes sure that former members of other schemes are not disadvantaged because they previously participated in a scheme with a lower normal pension age.

Amendment 17 provides that the power under clause 81 for local government new scheme regulations to make provision regarding special cases must be exercised in accordance with Treasury directions issued by either Her Majesty’s Treasury or the Department of Finance in Northern Ireland.

On judicial offices, amendment 18 changes the extent of schedule 3 to ensure that if Welsh Ministers or the Department of Justice in Northern Ireland make subsequent changes to the list of devolved offices in schedule 3 using the power conferred on them by clause 125(1), incorrect text will not remain in statute in other parts of the United Kingdom.

Amendments 20 and 21 change a reference to the Special Educational Needs Tribunal for Wales to its new title, the Education Tribunal for Wales, thereby ensuring that a relevant sitting in retirement office is created in the Education Tribunal for Wales.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

The pandemic has underlined the contribution made by the public sector workforce to this country. Public sector workers do so much to keep us all safe. Our brave doctors and nurses and those in the police, fire service and other public service professions deserve security and a high standard of living in retirement, so it is so important that the Government provide decent pensions on a fair and equal basis.

As the Minister knows, we welcome the Bill’s main provisions, and particularly the attempt to bring in a remedy in respect of the discrimination against younger members of the new pension schemes established by the coalition Government between 2014 and 2016. We also strongly support the introduction of reformed scheme-only design, which will mean that the cost of the legacy schemes will no longer be included in the cost control mechanism, along with the Government’s proposal to widen the margin of the cost corridor from 2% to 3% of pensionable pay. Those changes will provide greater certainty for members and for the taxpayer.

However, the Minister will not be surprised to hear that we have a number of concerns about the Bill. It is wide ranging and several Members have tabled amendments. I have a limited amount of time, so I will focus on the Opposition Front-Bench team’s primary concerns about the Bill and speak to the amendments that I have tabled on the Opposition’s behalf to address them.

First, I wish to highlight the concerns of public sector employees and trade unions about the lack of clarity on how the remedy, which I remind the House is estimated to cost around £17 billion, will impact the future value of members’ pension schemes. In the Committee debate on 27 January, the Minister stated that

“no member benefits will be cut and no member contribution rates will increase as a result of the 2016 valuations.”––[Official Report, Public Service Pensions and Judicial Offices Public Bill Committee, 27 January 2022; c. 10.]

That commitment is welcome but, as the TUC and others have said, it does not address the question of whether the remedy will be included in future valuations of the cost control mechanism.

Were the cost to be included at a later date, members could see their benefits cut and their contribution rates increase. I remind the House that the Public Accounts Committee warned that such an outcome would be fundamentally unjust as some of the cost of the Treasury’s £17 billion mistake would be passed on to members. Will the Minister please clarify whether the estimated £17 billion cost of the remedy will be included in the valuations of pension schemes under the cost control mechanism at some later date?

Secondly, I wish to discuss the Government’s proposal to introduce a so-called symmetrical economic check to the cost control mechanism. As the Minister will be aware, many public sector workers and their representative organisations believe that the proposals break the Treasury’s 25-year guarantee that no further fundamental reforms would be made to public service pensions following the 2011 settlement with trade unions. The Minister told us in Committee that

“the Government do not believe that the reforms breach that guarantee.”––[Official Report, Public Service Pensions and Judicial Offices Public Bill Committee, 27 January 2022; c. 36.]

However, I found a press statement issued by the Treasury on 20 December 2011 that makes it clear that the guarantee covered significant reform to the cost control mechanism, and the Paymaster General in the Conservative Government at the time said that it represented a “settlement for a generation”.

Does the Minister recognise that his Government’s proposal for an economic check risks undermining the Bill’s purported aim of restoring public service workers’ faith in their pension schemes? The National Education Union, the TUC and PRS have all warned that the proposals unfairly penalise pension scheme members for public sector pay constraint and lower-than-expected life expectancy. In practice, this will likely mean that any downwards breach of the cap will trigger the economic check. It seems the economic check is unfair, so will the Minister now accept that the Government must go back to the drawing board and rethink their proposals? I will be grateful if he addresses that issue.

14:33

The third issue is the Bill’s failure to address the so-called pension trap, which means that some members may lose benefits due to a higher retirement age brought in under the new pension scheme. That is why we on this side of the House tabled an amendment both at the Committee stage and on Report that would require the Government to review how losses arising from the pension trap could be compensated. During the Committee stage debate on 27 January, the Minister stated that our

“new clause appears to go considerably beyond the police staff associations’ representations and proposals”.––[Official Report, Public Service Pensions and Judicial Offices Public Bill Committee, 27 January 2022; c. 63.]

However, today I wish to inform the House and the Minister that the Police Superintendents Association and other police unions fully endorsed our amendment ahead of the debate today. Will the Minister therefore commit the Government to entering discussions with the Police Superintendents Association and other relevant membership bodies to bring forward a fair solution to the pension trap and demonstrate the Government’s commitment to resolving this issue by supporting my amendment today?

Finally, I wish to bring the Minister’s attention to the Bill’s potentially adverse consequences for equality. For example, trade unions have warned that women serving in the police may be unfairly impacted by elements of the Bill. Under the old police pension scheme, women who have taken off time due to caring responsibilities have been able to make up time that they had lost but, under this new scheme, which is based on age, they may have to work longer. What reassurances can the Minister offer me that this will not be the case and that the Bill will not have adverse consequences for equality?

We are also concerned about the issue of immediate detriment. On 29 November 2021, the Government updated their guidance for police and fire service pension schemes administrators to recommend that no immediate detriment cases should be processed before the legislation is in place because

“it now appears that section 61 [of the Equality Act 2010] may not give all the powers required to operate the remedy smoothly”.

It acknowledged that

“the effect of section 61 would only be known for certain if it is tested in a court of law.”

Police officers who retire early due to their age or disability, for example, may be unfairly penalised as they will not have a complete picture of the value of their pensions benefit. That seems to contradict the provisions put in place by the Equality Act. I would like to hear the Minister’s thoughts on that. Does he agree that that is fundamentally unfair and that our police and firefighters do not deserve to be left in a state of uncertainty while they wait for this issue to be resolved at court? The Government should demonstrate that they are committed to addressing these concerns about equality by supporting our amendment today. The amendment would require the Treasury to review the equality impact of the Bill, taking into account issues such as age, gender and disability.

I very much look forward to hearing the Minister’s response to the various issues that I have raised today. Although we have some outstanding concerns with the Bill, which I have outlined, we do broadly support what the Government are attempting to do and we recognise the need to put the remedy in place as quickly as possible.

[Robert Jenrick (Newark) (Con)]

I rise to speak to new clause 1, which is in my name. The new clause empowers the Secretary of State to issue guidance to authorities that administer public sector pensions schemes that they may not make investments that conflict with the United Kingdom’s foreign and defence policy.

The new clause will resolve a long-standing issue that arose out of the Public Service Pensions Act 2013 and the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016. The issue was whether the Secretary of State had, under their general power to issue guidance provided under the 2013 Act, the ability to guide those who administer pension schemes, particularly local government pension schemes, away from making investment decisions that were contrary to the United Kingdom’s foreign and defence policy.

In 2020, the Supreme Court found by a split decision that the 2013 Act did not confer on the Secretary of State the necessary power to issue that guidance. The purpose of the new clause is to change that by explicitly laying out in law the Secretary of State’s power to offer the guidance to administrators of pension schemes within the public sector, including the local government pension schemes, that investment decisions—by which I mean both investments into a position and divestments from a position—should not conflict with UK foreign and defence policy.

There are multiple reasons for doing that. First and foremost, public service pension schemes that are paid for by the taxpayer by one means or another and underwritten by the state are clearly the preserve of the UK Government and, as such, it is perfectly legitimate that the UK Government have a say in regulating how public pension schemes manage the money that is provided to them by we the taxpayers of the country.

[Peter Grant (Glenrothes) (SNP)]

May I just probe the right hon. Gentleman’s last point a wee bit? My bank account is stuffed full of what was previously taxpayers’ money. Neither I nor my wife have had any significant income for years that did not come one way or another from the taxpayer. Is he suggesting that the Government should have some say as to how the bank can invest my money to make sure that I get it back when I need it? Is he suggesting that the private pensions that I am lucky enough to have should be subject to Government direction as to where they do and do not invest?

[Robert Jenrick]

I shall come on in a moment to my own personal views with respect to boycott, divestment and sanctions, but this new clause has no bearing on the actions of private citizens. This is about public sector pension schemes. The broader issue, which I will mention in a moment with respect to tackling BDS within public institutions and the public sector, is all about the public sector; it is not about limiting the freedom of speech or action of the individual.

[Dr Matthew Offord (Hendon) (Con)]

Will my right hon. Friend give way?

[Robert Jenrick]

I would like to make some progress, but I will give way.

[Dr Offord]

Is my right hon. Friend aware that, only this morning, Hertfordshire County Council was considering a petition submitted by individuals to ask it to divest from its pension scheme? Does he agree that it is the responsibility of elected representatives to ensure that pension schemes have the best and most profitable outcome to allow the members of that pension scheme to receive the best possible income?

[Robert Jenrick]

Yes, I do, and I will give some other examples of local authorities considering the same actions that my hon. Friend describes.

The argument that I wish to advance is that, for too long, we have seen public pension schemes pursue pseudo foreign policies.

[Andy Slaughter (Hammersmith) (Lab)]

Will the right hon. Gentleman give way?

[Robert Jenrick]

I will make a bit of progress and then I will return to the hon. Gentleman.

All too often, the foreign policy of these public pension schemes is, I am afraid, exclusively focused on re-writing the UK’s relationship with the world’s only Jewish state, Israel.

[Christian Wakeford (Bury South) (Lab)]

Will the right hon. Gentleman give way on that point?

[Robert Jenrick]

I will come back to the hon. Gentleman. I appreciate his interest.

The latest example of the politicisation of public pension schemes is by Wirral Council, which is currently considering realising almost £5 million-worth of investments in seven companies. This pet project of a small minority who seek to hijack the money of hard-working taxpayers for their own political ends is of no interest to the public pension scheme holders of the Wirral, or indeed, I suggest, to the public pension scheme holders and rate payers of Hertfordshire.

The politicisation of public sector pension schemes, such as that seen by Wirral Council, is also to the detriment of the UK Government’s relations with states abroad. Supreme Court Justices Lord Arden and Lord Sales established in their judgments that, because the schemes are managed by councils that are part of the machinery of the state, receive taxpayer funding and are underwritten by state regulation outlined in the 2013 Act, they are liable to be identified with the British state. It is perfectly reasonable for an individual, an organisation or a nation abroad to look to these decisions and believe that they are the British state’s intentions. It would be wrong that, owing to a minority of an extreme and well-organised clique, the UK Government’s relationship with an ally has the potential to be undermined. Ultimately, central Government must reclaim their constitutional responsibility for the conduct of the UK’s international affairs. It is for this House to be the place in which those decisions are debated, as I am sure we will see later today. Public service pension scheme trustees must return to their primary duty of achieving maximum returns for scheme members.

[Andy Slaughter]

The right hon. Gentleman said earlier that this is public money. He will be aware that the Supreme Court, in making a judgment on the previous guidance, specifically said that it is not public money when it is employee or employer contributions; it comes from the rightful employment of the employees themselves. Why does he think that his new clause is different from that? As he has gone on to the specifics, while I am not talking about BDS here, does he think there is a possibility that decisions on investments, say, in illegal settlements, which the Government advise against on economic grounds, could also be caught by his new clause?

[Robert Jenrick]

The hon. Gentleman makes an important point. The Supreme Court raised two central arguments. One was whether the 2013 Act explicitly gave the Secretary of State the power to issue guidance with respect to investment decisions that conflicted with UK foreign and defence policy. The second point that some Supreme Court Justices raised was whether it was within the remit of the Secretary of State to speak to all public service pension schemes, including those that are funded and unfunded, particularly the Local Government Pension Scheme.

This new clause explicitly provides the Secretary of State with the power to issue that guidance. Were it to pass, and were this ever to be litigated and reach that court, I expect that the Supreme Court Justices would see clearly the intention of this House, which is that the Secretary of State should be able to issue guidance and that that guidance should be applicable to all public service pension schemes. I hope that answers the hon. Gentleman’s point, which is an important one for us all to be clear on if the new clause is passed.

The new clause does nothing to stop private individuals making individual choices about their consumer habits. They remain at liberty to invest in or divest from, purchase from or boycott whichever companies they wish and for whatever reason they so choose. It does, however, make a distinction between the liberties of the private individual and the obligations of public bodies in receipt of public money, and it is grounded in the principle that public money should be spent in accordance with the wishes of the UK Government as expressed by this House.

[Christian Wakeford]

I am one of those fortunate Members who sit on a local pension board. One of the issues that is often feared, particularly by smaller Jewish communities, is that, rather than focusing on community cohesion, it is about bringing in foreign policy matters that often bring division, when they really want to be settled and to be able to progress and thrive within their local community. Does the right hon. Gentleman agree that the worst thing that could happen would be for the BDS movement to have a say within pension boards and pension funds, and that the best thing we could do is to accept this new clause and bring stability to Jewish communities across the country?

[Robert Jenrick]

I am grateful to the hon. Gentleman for his support for this new clause, as I am to all those hon. Members across the House who have indicated theirs, and for his long-standing interest in the issue. He makes an extremely important point.

Let me be clear: it should not be assumed that someone expressing their support for Palestine is antisemitic. Of course that is not the case. Many are genuinely moved by the cause of Palestinian statehood and are concerned at Israeli settlements and the actions of the Israeli Government. It is the policy of this Government to pursue a two-state solution. However, one does not have to look very hard to find a pattern of antisemitic behaviour in connection with campaigns promoting a boycott of Israel.

Successive studies have shown that the single best statistical predictor of anti- Jewish hostility is the amount of BDS activity, which comes as no surprise when one inspects the ethical inconsistency within the movement. Why does its concern for humanity, and for the welfare of Muslims in particular, expire at the Jordan river? The BDS movement is mute on neighbouring Jordan or Lebanon, where the Palestinian minority really are second-class citizens, and fell silent when thousands of Palestinians were killed at the hands of the murderous Assad regime.

There has been no call for a boycott of ICICI Bank in response to the egregious human rights abuses being committed against Muslims in India, or for divestments from Huawei following the verdict by an independent tribunal in London that a genocide is being committed against the Uyghur Muslims. That selective concern for humanity, and specifically for the welfare of Palestinians, poses some alarming questions. Why is Israel held to a higher standard than every other country in the world?

[Andrew Percy (Brigg and Goole) (Con)]

rose—

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

rose—

[Robert Jenrick]

I will give way to my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) and then to my hon. Friend the Member for Brigg and Goole (Andrew Percy).

14:45

[Stephen Crabb]

My right hon. Friend is making a powerful speech and I commend him on how he has gone about bringing forward this new clause to close a specific loophole on public sector pensions. In the context of his point about the wider boycott, divestments and sanctions movement, does he agree that it is a pernicious movement that singles out Israel time and again, to undermine the UK-Israel bilateral relationship and the very notion of the integrity of the Israeli Jewish state? I very much hope the Government will accept his new clause, but does he also accept that there is a need for a broader piece of work by the Government to address the BDS movement in its entirety when it comes to public sector choices?

[Robert Jenrick]

My right hon. Friend makes a series of powerful points, which I entirely agree with. In particular, I agree that, were this new clause to pass, it should merely be the beginning of a wider effort to tackle BDS within the public sector and that we as the Government should make good on our manifesto commitment to a full BDS Bill, which I hope will be in the forthcoming Queen’s Speech.

[Andrew Percy]

My right hon. Friend is making an excellent speech. The founder of the BDS movement is, of course, somebody who denies the right of Israel to exist—an antisemitic act in and of itself, given that Israel exists in international law. My right hon. Friend says that BDS is the biggest single indicator of antisemitism in this country; I take him back to last year, where we saw the highest number of incidents of antisemitism ever recorded in the UK. The biggest month for those was May last year, following the flare-up of the Israel-Gaza issues. That is a worrying trend, and one that is in part promoted by those who do exactly as he says: single out Israel for treatment they do not apply to other countries and support the BDS movement. That is why we must see this new clause passed and why the Government must move forward quickly on those other issues.

[Robert Jenrick]

I am grateful to my hon. Friend for his intervention and for the work he does on antisemitism. He is absolutely right that we cannot stand idly by and see levels of antisemitism in this country continue to rise. We must take every opportunity to tackle the issue, and this is one way that we can do so—there are many others. None of us wants to see month after month pass with the Community Security Trust reporting ever higher numbers of egregious antisemitic attacks in this country.

I will make two final points. First, the BDS movement does absolutely nothing to advance the cause of peace. It is because it sees Israel as a colonial endeavour that it views the Israel-Palestine question as an insurmountable framework of conflict between the occupiers—in their eyes—the Israeli Jews, and the occupied—in their eyes—the Palestinian Muslims. That is why it apportions blame for the conflict entirely at Israel’s door and denies the agency of other actors such as Hamas and Hezbollah, both of which we as a country have rightly chosen to proscribe. The sad reality is that many who practise BDS have no intention or interest in brokering a two-state solution.

[Scott Benton (Blackpool South) (Con)]

My right hon. Friend is making an excellent speech and I commend him on tabling this new clause. Does he agree that the BDS movement has consistently opposed efforts from Israelis and Palestinians to negotiate a peaceful settlement? He referred earlier to Wirral Council and its pensions committee; does he agree that it would be entirely inappropriate for a local authority to be judge and jury on such complex matters as where businesses should and should not invest in contested territory in the middle east?

[Robert Jenrick]

I agree strongly with both my hon. Friend’s points. On his second point, the motion before Wirral Council is to ask its pensions officer to be the arbitrator of which business it should or should not be investing in within Israel and within settlements. Pity this poor individual, who, instead of going about his normal work as a respectable, hard-working local government officer, must suddenly spend hours, days, weeks or months attempting to understand the intricacies of the Israel-Palestine question and provide advice to a committee of local councillors. It is frankly an absurdity and an abuse of that individual. We should not be seeing this. These questions should rightly be taken forward by the United Kingdom Government.

BDS is ultimately yesterday’s war. In the middle east today things are rapidly changing, and thank goodness for that. As a result of the Abraham accords, we see Arab nations—Gulf states—coming forward to recognise the state of Israel and work with it through science, technology, education and commerce. If Bahrain, the United Arab Emirates, Jordan, Egypt and other nations can do this—even those countries, such as Saudi Arabia, that have not explicitly recognised the state of Israel but are none the less working with it on security matters and other issues—then we as a country should not be tolerating this kind of activity, and certainly not within the public sector. I urge hon. and right hon. Members across the House to support the new clause. I am grateful to the Government for indicating their support. I hope that in the Queen’s Speech later in the spring we will see a wider BDS Bill that makes the UK one of the first countries in the world to really grapple with this issue.

[Peter Grant]

As I said on Second Reading and in Committee, the SNP supports the intention behind this Bill and we will support it on Third Reading. The intention is to clear up a mess of the Government’s making. I also repeat that, as I said in Committee, I do not have any doubts at all about the sincerity of the Ministers who have led for the Government at various stages of the Bill. I am convinced that they want to get it right and to finish up with an Act that is as fair to everyone as it is possible to be. However, my concern with the Bill currently before us is that even after the Government’s amendments are added in, sizeable numbers of current or former public sector employees will lose out. Given where we have been forced to start from and the scale of the mess that the Government made of this previously, I am not sure that it would ever be possible to produce a Bill that would be fair to absolutely everyone, but the Bill as it stands can still be improved. To that end, we will support such amendments as Opposition Front Benchers want to press to a vote, particularly new clauses 8 and 9.

One of the issues I raised on Second Reading has certainly come to pass: the extraordinary number of amendments the Government had had to table to their own legislation during its passage through the House of Lords. We now know that including the 61 amendments they tabled in Committee and the 28 further amendments tabled today, by the time the Bill gets its Third Reading later on the Government will have had to amend their own legislation no fewer than 212 times. In fact, Members who attended the Bill Committee will have seen the spectacle of the Government tying themselves in knots trying to remove two entire clauses from the Bill and replace them with two entirely new clauses. It was only the speedy intervention of the Clerks and the Chair that prevented the Government from presenting us with a Bill that had all four clauses included despite the fact that some of them were completely contradictory to the others. Eventually the Government had to whip their own Members to vote down two clauses that the Minister had already moved, presumably by mistake.

That incident served only to highlight what many of us on the Opposition Benches have been saying from the beginning—that the Government still cannot reassure us that they are genuinely fully in control of this Bill. I worry that they are very quickly running out of last chances to put it right. There is still a danger that the Bill that receives its Third Reading later today will have flaws and weaknesses that neither the Government nor anybody else have spotted yet. Most of today’s Government amendments are part of the process of picking up flaws or ambiguities in the original Bill, and we will not oppose them. We have some concerns about new clause 7, which provides for a lessening of parliamentary scrutiny in some cases. The Minister has not yet convinced me that that is an appropriate thing to do. I hope that when he winds up he will explain why new clause 7 is appropriate and why, in some cases, parliamentary scrutiny should be diluted in any way.

As I indicated earlier, we will support new clauses 8 and 9 in the name of the hon. Member for Hampstead and Kilburn (Tulip Siddiq). New clause 8 would provide a means of compensating scheme members who, through no fault of their own, stand to lose out as a result of the Bill. The Bill rights a wrong for a very large number of people in public pension schemes but goes in the opposite direction for some, and we should not forget about them. The new clause does not commit the Government, or indeed the scheme employers, to any additional expenditure, but it would require the Chancellor of the Exchequer at least to recognise that this is an issue and to look at whether there are realistic and reasonable ways of resolving it.

New clause 9 would require the Government to review how the Bill operates in the real world—as opposed to the assessment, as with any Bill, before discussions on it began—with regard to equalities. Given how many substantial changes the Government have already had to make to the Bill, it is prudent to accept that, once it comes into force, it might have consequences that the Government have not foreseen, which the new clause would attempt to protect against.

New clause 1, in the name of the right hon. Member for Newark (Robert Jenrick), is a different matter altogether, and the SNP is minded to oppose it. We have heard some of the arguments in favour of it—they are similar to comments made on Second Reading—which simply do not wash. I will not get into an argument now about the BDS movement. If the Government genuinely think that that organisation is a threat to peace and stability in the middle east or elsewhere, they could bring forward legislation to address it—they have had over two years of this Parliament to do so, and they still have time—but this is not the Bill for that.

[Richard Burgon (Leeds East) (Lab)]

Does the hon. Gentleman share my concerns that the new clause tabled by the right hon. Member for Newark (Robert Jenrick) risks barring ethical investment decisions across the board—for example, in relation to Saudi Arabia? Given that future Governments might decide to support regimes that abuse trade unionists, for example—as we have seen in Colombia in recent years, or in Chile in the past—the new clause would be not only anti-democratic but would risk ethical investment decisions and human rights policies around the world.

[Peter Grant]

The hon. Member is absolutely right. If the new clause was intended purely to limit the activities of the BDS movement as a precursor to possible further restrictions later on, a very different new clause would have been tabled, and it might have been possible to word it in a way that we would not have significant problems with, but this new clause is far too wide. It could give the Secretary of State—any Secretary of State—the power to prevent any public pension fund from considering any kind of ethical, sustainability or other factors simply because they decide that they are contrary to UK foreign or defence policy.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

The hon. Gentleman is making an interesting argument about why the new clause is too wide. Is there not also the problem that it risks investments themselves due to a chilling effect for investors who might not withdraw from an investment when it is economically advisable to do so because of fear of breaking the rules under the new clause, so we could end up with the devaluation of pension schemes?

[Peter Grant]

I will come on to that later. We need to remember, in all of this, that the trustees of any pension scheme have an absolute fiduciary duty to those who rely on the performance of the fund for their current or future pension. We do not want anything that ties their hands, such as someone saying they should go only for very low-yield investments because that person has objections to the activities of companies that might give a higher yield. There are times when we must question whether it is right to put trustees under that kind of pressure. It is also wrong to suggest that pension trustees, in addition to or instead of their absolute duty to pension scheme members, should have some kind of duty to be a mouthpiece for the British Foreign and Commonwealth Office or the British Ministry of Defence. They are not an arm of Government; these are legally independent trustees, and they have to have that legal independence properly protected.

15:00

As I have said, I do not want to get into a big argument about the best way to ensure peace and stability in the middle east, and I note a number of the points made about the activities of BDS. I caution strongly against assuming that those characteristics apply to anything more than a tiny minority of the people in these islands who have genuine concerns about the illegal activities of the state of Israel, who genuinely believe that the United Kingdom needs first to make clear to the state of Israel that breaches of international law are not accepted and who believe that the British Government are not taking nearly enough steps to help Palestine get into a position where it can be recognised as a sovereign independent state. We should all be contributing to a two-state solution in the middle east.

Going back to the comments of the right hon. Member for Newark, he is arguing that people and Governments in other countries would assume that a decision made by the Wirral Council pension fund trustees or the Hertfordshire County Council pension fund trustees somehow mirrored the views of the UK Foreign and Commonwealth Office or Her Majesty’s Government’s policies on defence. There are some totalitarian regimes in the world where every public sector organisation and most of the private sector organisations are allowed to say only what that Government tell them to say, but Britain is not one of those countries—well, not yet, although we are maybe getting quite quickly to that stage.

It is noticeable that the current Government seem extremely keen to increase our trade with some countries that exercise that kind of totalitarian control over all their public bodies. I would have thought that a Government who sing their own praises about the devolution of authority to local councils would want to celebrate giving councils the right to take a different view from the Government, if that is in the interests of the residents of that council area, and highlight it to other Governments at every opportunity.

Taking the right hon. Member’s argument to its logical conclusion, he said that matters of foreign policy should be debated here and not in council chambers or town halls around the UK, but why on earth not? In the debate on Second Reading, he said that

“we do not want to see local councils trying to influence foreign policy decisions”.—[Official Report, 5 January 2022; Vol. 706, c. 100.]

I beg to differ; I want to see councils with the ability to influence not only foreign policy decisions, but decisions on all aspects of domestic policy. These policy decisions are rightfully taken by the Government of the day and held to account by the Parliament of the day, but to suggest that councils should be frozen out from having any input on those decisions is a dangerous precedent.

[Stephen Crabb]

I am listening closely to the hon. Member’s argument, but I am afraid I just do not accept the points he is trying to string together in what is a fairly strange argument. The reason this amendment is so important and the reason we do not expect council chambers to be dabbling in foreign, defence or security policy is precisely that they are not given the competences over those policies. It is the same for the Welsh Senedd, and the Scottish Government have a limited number of competences. Yes, we want them to exercise their powers fully in those areas where they are given competence, but it is a complete diversion of activity and attention to say that we want councils to be getting involved in incredibly sensitive and complicated subjects of the kind that my right hon. Friend the Member for Newark (Robert Jenrick) has already described.

[Peter Grant]

I certainly cannot agree with the right hon. Gentleman. As I have made perfectly clear, how the British system works is that Ministers have the authority to take policy decisions, and Parliament is right to hold Ministers to account for that. Parliament has the ultimate right to decide what becomes law. If nobody else is allowed to discuss it, and councils are not allowed to express views in the interests of the people they are there to represent, the whole system starts to fall flat on its face.

It is as plain as the nose on my or anyone else’s face that decisions on foreign policy can easily have a disproportionate impact on residents in some parts of these islands. Certainly, decisions on defence policy can have a significantly greater impact on some places than others. Remember that councils are directly democratically elected by local people to represent their views. Are we suggesting that they should not be allowed to debate matters of foreign policy simply because they do not have the right to take the final decision? If that is what Government Members are saying, why is it that almost every Tory MP who pops up on their hindlegs at Prime Minister’s questions to ask a planted question invites the Prime Minister to interfere in local democratic decision making? We have had two examples today, with the right hon. Member for Newark expressing his views on possible decisions by councils that, with respect, are nothing to do with him, because they are not the council area he represents.

I do not know whether Wirral Council or Hertfordshire will take the right decision, but I am happy to trust the good people of the Wirral and Hertfordshire to sort out councillors who get it wrong too often. That is what local elections are about. I do not like to see the Government, having substantially stripped back the powers of local authorities, then deciding to give local authorities the power to take decisions they agree with, but taking away the power for local authorities to do things that might go in a different direction.

Among all this, we are losing sight of the vital fact that as a matter of law, the trustees of a pension fund are a completely different organisation and a completely different entity in most cases from the organisation whose current and former employees are members of that fund. My wife has for many years been a trustee of the Fife Council pension fund, as well as having clocked up nearly 30 years as a councillor. The decisions that the trustees of the pension fund make are completely different from the decisions many of the same people will take as members of Fife Council. Nobody believes that the decisions of the pension fund reflect the views of the council; the council is not allowed to try to whip pension trustees, for example.

[Robert Jenrick]

Will the hon. Member give way?

[Peter Grant]

I will give way once more, but I am aware of the time.

[Robert Jenrick]

As a matter of law, what the hon. Member is saying is not correct. Pensions within the public sector, as elsewhere, are regulated. They were regulated by the Public Service Pensions Act 2013, and they will be regulated by this Bill. He has been speaking for more than 15 minutes, and it is not clear to me whether the SNP is in favour or against BDS. It is important that he makes clear his position.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I am keen that we do not just have a whole debate about BDS. I want the amendments to be addressed, and there are a few other speakers trying to get in.

[Peter Grant]

I made the point much earlier that the amendment is not about BDS; BDS is not mentioned anywhere in it. Going back to the question of whose money it is, we can go round in constitutional or legalistic circles, but morally that money belongs to the people who rely on it for their pensions. If members of the pension scheme want to make strong representations to their trustees, saying, “I do not want to profit in my pension from investments that benefit countries that act in breach of international law”, why is it such a bad thing for pension scheme members to be allowed to make those representations to the trustees? Why is it such a bad thing for the trustees to be allowed to say, “At the request of our members, we will take a decision that might not deliver quite such a high yield for the pensioners, but the pensioners are happy to accept that, because they will be comfortable in their consciences about where the money is going and where the profits are coming from”?

We cannot support new clause 1, and we are minded to divide the House on it later. My final point is that every pension fund trustee has a duty entirely to look after the interests of their pensioners and future pensioners. I do not want to see anything being done that gets in the way of that. We will support the Bill on Third Reading, but I hope it will come to Third Reading without new clause 1 included. The fundamental point is that the £17 billion mistake was made by the Government. If we eventually pass the Bill into law to be an Act of Parliament that makes pensioners or their employing authorities pick up part of that tab, it has not done enough. I fear that by tonight we will still have a Bill that has not done enough and that the Government will not be made to take full responsibility for a mistake entirely of their making.

[John McDonnell (Hayes and Harlington) (Lab)]

I declare an interest in that I am a member of the local government pension scheme. I want to address the amendments standing in my name—new clause 10 and amendments 22 and 24—but I would also like to comment on new clause 1.

On the debate about whether or not this is public money, I thought, as a member of the local government pension scheme, that the Supreme Court was pretty clear that this is not public money in the sense that would enable the Government to issue guidance. However, I have to say that new clause 1 goes further than guidance; it actually includes directions as well. I work on the basis, as I did when I was employed in local government, that the money I earned and the money forgone to invest in my pension scheme was my earned income; it was not public money under the control of the Government.

I think there is a lesson for us all here in that I believe that only in extremis—only in extremis—should the state interfere in one’s own privately earned income. I say that because, in the pension scheme regimes we have at the moment, we have an element of representative democracy with the trustees often being representatives of the workforce and other experts. That reassures me that, as a member of the pension fund, I have an element of say in what those trustees do, if they are appointed, and that enables me and other members of the pension fund to exercise an element of control over decision making, but also to exercise an element of conscience.

[Andy McDonald (Middlesbrough) (Lab)]

Does my right hon. Friend agree that the clumsy way in which new clause 1 has been worded will create a chilling effect on risk-averse pension scheme managers in fulfilling their fiduciary duties and other responsibilities? Does he also agree that it will significantly incapacitate the ability of pension schemes to invest ethically, and the rights of pension scheme members and pension schemes to express and have ethical views taken into account in the investment of their own money?

[John McDonnell]

I agree with the first point, but let me take up that last point, because I just want to explain to other Members where I am coming from and get it on the record.

On moral grounds, I have argued very strongly within my own local government pension scheme—so far, I have to say, unsuccessfully—that I do not want the money I have earned, and part of my pension is my earned income, to be invested in a number of states. They include Saudi Arabia, because of its involvement in Yemen. In fact, I have organised demonstrations when there were visits from various representatives from Saudi Arabia to this country. I have argued that I do not want my pension invested in China because of the treatment of the Uyghurs. Again, I have engaged in demonstrations on that, and also on the moral ground that a number of trade union friends I have worked with over the years are currently in prison as a result of the operation undertaken by the Chinese state in Hong Kong. Yes, I have argued against investments going into Colombia because of the murder of trade unionists, and I have also argued against investments going into Israel because I do believe—according to the Amnesty human rights report, and many Jewish institutions—that it is an apartheid state in the way it treats the Palestinians.

That is my position: on moral grounds, I want to be able to influence the investments. I do not want my pension invested in armaments or fossil fuels either, and I believe that that is my right. I do not believe it is the role of the state to ride roughshod over my moral choices without extremely good reason. Given the threat of climate change and other matters, there may well be, in extremis, reasons for the state to act, but I do not think that this new clause is in that context.

[Chris Stephens (Glasgow South West) (SNP)]

If this new clause had been in legislation in the 1980s, it would have covered South Africa, and the right hon. Member will remember that local authorities drove the anti-apartheid movement, while the UK Government refused to impose sanctions.

15:12

[John McDonnell]

I was chair of finance at the Greater London Council at that time, and I would regularly turn up with my shares with regard to Barclays bank. When Mandela came here—some Members will have been there when he spoke—he and others, including the late Archbishop Tutu, commended those who argued for disinvestment from South Africa in order to bring about a change in that regime, and it worked.

The point I am making—I will finish on this element of it—is that I do not believe it is the role of the state to interfere in this way. Parliament can decide to expand the role of the state, but I think it begins to strain the limits of parliamentary democracy. I have listened to Conservative Ministers warn us in this Chamber about elective dictatorships, so I just warn hon. Members on both sides of the House that once these precedents are set, other Governments will be tempted to follow and, in some instances, go much further. I think this adds to the slow erosion of our civil liberties, freedom of choice and, indeed, human rights.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

On the right hon. Gentleman’s point about his own pension fund, I do not think there would be many countries left in which it could invest. I understand his concerns about pension funds making ethical investments, but the pension fund also has a fiduciary duty to sustain the fund, and to make investments in that respect and for future pensioners who will draw on it. How can he reconcile the two positions?

[John McDonnell]

I was once, in my callow youth, an adviser to the mineworkers pension scheme, and then I was an adviser at the TUC, working with Lord Bryn Davies, who is one of our colleagues in the Lords at the moment, and there was never a problem with our fiduciary duty of maximising the income to the pension fund itself because of the range of investment opportunities available to us. I think we found in the past that exercising such moral judgment can prove effective in the long term, because it ensures that the fund is not investing in countries that may in the longer term become unstable as a result of the actions they take. I would just say, and I am making a personal point, that I think new clause 1 flies against my ability to exercise my moral duties about investments by my pension fund.

[Lloyd Russell-Moyle]

Will my right hon. Friend give way?

[John McDonnell]

Yes, but then I want to move on to my amendments.

[Lloyd Russell-Moyle]

Is there not a problem with this, in that it leaves the Secretary of State to decide what the foreign or defence policy might be in an arbitrary way, rather than requiring pension funds to set an ethical policy in which they can say that they do not want to invest in countries where there are human rights abuses? We would still have to treat all countries equally, so they could not target one country or another, but there would be an ethical framework, and this new clause does not allow an ethical framework.

[John McDonnell]

I would also come out fairly pragmatically and say that there may be some countries that, according to the Government, were not appropriate to invest in a few years ago but now are. I do not want a little red book to be thrown at me again, but I would just cite the fact that the relationship the Government have had with China has changed over the years and, I hope, is changing again at the moment with regard to the Uyghurs.

Let me move on to the new clause and amendments in my name. New clause 10 is a simple reflection of new clause 8, tabled by my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), on the pensions trap. I want to echo what I think she said really eloquently in Committee and today about how the dialogue on this issue must continue, because there is an unfairness at the heart of the legislation we are pushing through at the moment. This affects firefighters, police superintendents and so on, who feel aggrieved, and I feel that a bit more dialogue may enable us to find a solution and restore their confidence in the pension scheme itself. That is why I support new clause 8.

My new clause 10 is simply more explicit about ensuring that there are consultations with the trade unions and other employee representative bodies, and that we seek to overcome the problem so that we have a non-discriminatory approach that does not fall foul of the law.

I turn to my amendment 24, which addresses a complex issue. It reminds me of the debate we had on the d’Hondt proportional representation system, as there were only two people who understood it: Mr d’Hondt, who died, and Jack Straw. Let me just go straight to the point on this matter. I am sorry if I go into some detail. The Chief Secretary to the Treasury said in Committee that

“it is vital that we establish now, for the avoidance of any doubt, that no member benefits will be cut and no member contribution rates will increase as a result of the 2016 valuations. Any benefit improvements due will be honoured, but no additional costs will be imposed. I reassure the hon. Lady”—

my hon. Friend the Member for Hampstead and Kilburn—

“on her important question, that the costs of our remedy genuinely sit with the Exchequer, not scheme members.”––[Official Report, Public Service Pensions and Judicial Offices Bill [Lords] Public Bill Committee, 27 January 2022; c. 10.]

This is complicated stuff. There is a confusion of two issues here. The Government did make a mistake and were challenged in the courts. I fear that that cost burden will now fall on to members of the pension fund, if it is included in the cost mechanism as an employee cost. That is the issue.

I turn to two points in that regard. First, there is the cost to the scheme of giving members the option to choose which benefits—old or new—they want to accrue during the remedy period. Some members will choose benefits that are better for them than they would have received before the McCloud and Sargeant judgments. The scheme will clearly have to meet the cost of paying those benefits—fine. We got the assurance from the Minister that the money will flow—we think it is £17 billion; that is the last estimate—and the burden will not fall on to the members themselves, but that is not what we are talking about here. The issue here is what impact the cost of the remedy should have on the cost control mechanism. I remind Members that this is the mechanism for deciding whether members’ benefits should be changed or, alternatively, whether contributions could be changed.

There is no doubt that treating the cost of the remedy as an employee cost for the purposes of the cost control mechanism leaves members worse off than they would have been had it been treated as an employer cost. I draw the Chief Secretary’s attention to the helpful report from the House of Commons Library entitled “Public service pensions: the cost control mechanism”, which tells us that if we go back to the initial results of the 2012 scheme valuations, which were reported in 2018, the Government said that

“the protections in the new cost cap mechanism mean public sector workers [would] get improved pension benefits for employment over the period April 2019 to March 2023.”

It is those improved benefits that I believe are now at risk if the cost of the remedy is included as an employee cost and not an employer cost.

What does this mean? The improved benefits were required because members had suffered a reduction in the value of their expected benefits over the period 2012 to 2016 because of lower than expected pay increases and because longevity had not increased by as much as had been expected. In other words, the changes would not make members better off; they would simply maintain the value of the benefit package at the level that had been agreed. I apologise to Members, because this is complicated stuff, but it has to go on the record if we are to get redress on this, either today or in subsequent legal actions.

Given the requirement under the cost control mechanism, the respective scheme advisory board then set about agreeing the necessary changes in benefits. In other words, because the pay settlements had not been as large as predicted, and because people were not living as long as the predicted life expectancies, the cost burden on the scheme was less, which should have been reflected in benefits given back to members. The scheme advisory board started looking at what those benefits would be, and the Library report gives an example of packages of changes proposed for the civil service scheme, which included

“a reduction of member contributions; reform of the current contribution rate structure; and increased death benefits.”

The other schemes reflected similar sorts of benefits, so members would gain significantly as a result of this unfortunate situation—unfortunate because they never got enough pay settlements and never had the increase in life expectancy. Nevertheless, because those costs never fell on to the scheme, they should have been paid back to members.

In December 2018, the Court of Appeal ruled that part of the reforms amounted to unlawful discrimination. That was followed by the decision by the then Chief Secretary that the cost control element of the 2016 valuations should be put on hold. In other words, the members were to gain those benefits because of the cost control mechanism, the court decision took place, and the Government then froze the whole process. Eventually, the Government restarted the process and published the Treasury directions in October last year. The problem with the directions is that they treat the cost of remedying the Government’s mistake, as calculated for the purposes of the cost control mechanism, as a member cost, not an employer cost.

The important point to understand is that there is nothing inevitable about the remedy as a member cost. It has always been accepted that there are certain elements in the calculation involved in the cost control mechanism that are regarded as member costs that will impact on the cost control mechanism itself, but there are also other elements in the calculation that are employer costs and do not impact on the cost control mechanism. For example, the impact of changes in pay increases and mortality are obviously member costs, but changes in the discount rate and price increases are the employer costs. It is strongly argued by the trade unions, completely understandably, that mistakes made by the employer—that is, the Government—are employer costs.

What has never been discussed is how to treat the cost remedy incurred by the Government’s own error, and that is what needs to be addressed today. It was the Government’s mistake to have age discrimination in the scheme. The Minister in Committee said it was reflected in trade union representations, but as has been said by the Public Accounts Committee and others, the Government are the Government; they should have foreseen that there was the potential for discrimination. It is the Government who introduced the measures. It is the Government who are responsible for the Treasury directions and any legislation. It was a mistake by the Government. It is therefore logical that the cost of the remedy should be treated as an employer cost for the purposes of the cost control mechanism.

I apologise to hon. Members for the complexity of this, but it is important that we get on the record very explicitly that members of these pension funds should not have to pay in the long term for Government mistakes and should therefore have gained the benefit of either reduced contributions or enhanced benefits, because that is contained in what the Government agreed a number of years ago as the cost control mechanism.

15:30

Turning briefly to amendment 22, I say to hon. Members in both Houses that this is not the way to legislate: no matter who is in Government, no Member of Parliament should accept this style of legislation where significant changes are made at a very late stage in the production of a Bill. The Government have introduced completely new into this legislation an economic test. As my hon. Friend the Member for Hampstead and Kilburn said, that falls foul of the agreement and the guarantees that were given that there would be a 25-year stable regime to administer public service pensions. Unions were told at that stage that there would be no surprises and this would last for a generation, and there would not be these significant amendments that have taken place. The Government are now saying there is going to be an economic test that will impose on the cost control mechanism the Government’s judgment, based upon Office for Budget Responsibility analysis and assessment of the economic trend. I have never considered the OBR as addressing issues ex cathedra with infallibility.

To be frank, we have no idea in any detail how this will operate. We have no idea how it will be transparent and open to debate. I have tabled my amendment because what I fear most is that this will be determined by Treasury direction. Treasury directions never come before this House. They are not like delegated legislation: they are made by Government themselves with no form of accountability. So the Government will be able to determine this economic test and effectively tear up the cost control mechanism that unions were promised would last 25 years. Whether benefits will go ahead and contribution levels will be determined by an OBR assessment of whether the economy can withstand the cost of that without any Member of this House having the ability to debate it, vote on it or determine it. That is why I believe Treasury directions are unsuitable for something so significant that will affect whether so many of our constituents will live in poverty in their retirement. For that reason, I believe the Minister needs to look again at how we can go forward to restore trust and confidence in the administration of public service pensions in the future, based upon some of the promises given a number of years ago to us as Members.

[Christine Jardine (Edinburgh West) (LD)]

This is an important Bill, but Liberal Democrats believe there are still several serious concerns that need addressing. More support is needed for individuals in making decisions; perhaps a helpline would be useful. There are implications for women—the pensions gap. There is also the potential negative impact on diversity in the judiciary, which is currently dominated by a generation of older white men.

I will focus on Liberal Democrat new clauses 4, 5 and 6, but first let me say that the Liberal Democrats will not be supporting new clause 1, tabled by the right hon. Member for Newark (Robert Jenrick). That is nothing to do with BDS; it is because the wider implications and unintended consequences could be significant in cases such as Xinjiang, where we believe a genocide is taking place. That is not Government policy, so what would the Government direction be in that case? Our concern is the wider implications and unintended consequences.

New clause 4 would require the Government to review the impact of the Bill on fairness. It calls a review of fairness and just treatment, particularly with regard to members of current schemes. It is important to ensure that members of current schemes are not caught in the pensions trap. Women are more likely than men to have taken time off work for caring responsibilities. Under some of the new schemes, which are based on age, they will have to work longer. The issue of gender in pensions is not new, and this would not be the first time the House made a misstep.

The gender pension gap is the percentage difference in pension income between female and male pensioners. The latest research showed that it had increased to 37.9%; we must be aware of that. The deficit will continue, so the amendment seeks to highlight the importance of this issue and the need for urgent measures to address it.

New clause 5 is about access to information and would require the Government to publish guidance to members of affected pension schemes and allow for provision of a helpline or online services to offer further assistance in important decisions for people’s futures. It is important that we think of the Bill in terms of individuals—the people whom it will affect—and their futures, what guidance and support will be provided to each person, how that will be resourced and how the Government will signpost that. That is key. We have seen with pensions for women born in the 1950s that when decisions and timings were not signposted, that had a massive impact on them when they found that their pension age had changed. We must not do that again—and we still have not rectified the first mistake. The Government have already accepted that people with complex tax issues can have financial advice. The same should be the case for millions of public sector workers who will have to make such choices, so the Government should put a helpline in place for that.

New clause 6, would require the Government to publish an annual update on progress in recruiting new members to the judiciary and on increasing diversity. It is important that our senior judges in the Court of Appeal and the Supreme Court reflect the society in which we live if they are to be respected. They must be seen as part of the current era, to reflect society’s trends and understand those trends, but there is perhaps a perception that they do not, and we are all concerned about that.

Although the proportion of judges who are women continues to increase gradually, women remain under-represented in judicial roles. That is particularly the case in the courts, where 32% of all judges and 26% of those in more senior roles are women, compared with 47% of all judges in tribunals. I am sure we would all like to see those figures addressed. The situation with black, Asian and minority ethnic judges is worse, with the figures being 4% for High Court judges and above compared with 8% of all court judges and 12% of tribunal judges. Surely that is far from acceptable. The new clause would ensure that the Government published an annual update on progress in this important area.

This is an important Bill and it is important that we address the issues in it. However, we must do that properly and ensure that there are not unintended consequences.

[Zarah Sultana (Coventry South) (Lab)]

I rise to speak to new clause 1. The year was 1985. After a campaign lasting decades, 123 councils answered the call for solidarity with the South African anti-apartheid movement and adopted policies opposing that injustice, including 39 councils that had divested from companies operating in South Africa and Namibia. While the Prime Minister, Margaret Thatcher, was calling the African National Congress and Nelson Mandela terrorists and Young Conservatives were proudly wearing badges calling for him to be hanged, local authorities were on the right side of history, standing up to the horror of apartheid. Of course, the Conservative Government could not tolerate that, so, a few years later, to weaken the anti-apartheid movement, they brought in laws making it illegal for local councils to boycott South African and Namibian goods. Looking back, it is crystal clear who was on the right side of history and who was on the wrong side.

The new clause, in the name of the right hon. Member for Newark (Robert Jenrick), would ban local councils from taking such a stand. Had it been in place back in 1985, because the Conservative Government supported apartheid South Africa—let us not forget that—local councils, no matter the strength of local feeling or the righteousness of the cause, would have been prevented from divesting pension funds from apartheid South Africa. They would have been compelled to be complicit in injustice.

Government Members may argue that that is history and things are different now. I contest that the facts say otherwise. The House knows that British-made weapons and diplomatic support are integral to the Saudi war in Yemen. Even as that war has claimed the lives of more than a quarter of a million people, pushed more than 20 million into absolute destitution and resulted in grave violations of international law, British complicity has continued. The new clause could deny councils the right to divest from arms companies whose bombs rain down on the people of Yemen. Similarly, if a local authority wanted to align its pension fund with international law and divest from companies operating in illegally occupied Palestinian lands, the new clause risks denying it that right, too.

[Lloyd Russell-Moyle]

The Israeli Labor and Meretz parties, our sister parties in Israel, have both written to the leaders of the Labour party and to all of us to say that they want divestment from companies that invest in the occupied territories. Israeli Members of Parliament are asking us to do this. New clause 1 goes against what they are asking us to do, does it not?

[Zarah Sultana]

Yes, it does, and I was proud to stand on a Labour manifesto committed to that policy, too.

With the rapidly accelerated threat of climate catastrophe and the need to consign the fossil fuel industry to the dustbin of history, new clause 1, at the worst possible moment, risks outlawing councils from standing up for climate justice and banning divestment of pension funds from companies that are setting our planet on fire. [Interruption.] The hon. Member for Brigg and Goole (Andrew Percy) laughs, but this is an actual threat. I am not sure if he is a climate denialist, but he should really look into that.

These are just some of the blatant affronts to local democracy and ethical investments. New clause 1 is so vague and so badly worded that it would have a chilling effect on public sector pension investments. It could be weaponised against any human rights campaign that raises concerns about pension investments in any company that is not formally on a UK sanctions list. As Amnesty International and Human Rights Watch warn, it is so badly worded that, in fear of committing an offence, pension scheme managers could be forced to break their fiduciary duties.

In 1959, an anti-apartheid campaigner and Nobel peace prize winner called Albert Lutuli put out a call for global solidarity. In Britain, hundreds of thousands of campaigners responded, launching a boycott of South African goods. People across the country did what they could do to end the injustice. In my city of Coventry, the local Labour party led the fight, distributing leaflets, holding public rallies and even displaying a large poster in the city for a whole month, publicising the boycott and raising awareness about apartheid. As so often in history, it was the actions of local people, anti-racist campaigners, trade unionists and local councils that led the way, counteracting Westminster’s complicity.

Those actions, while small in themselves, were part of a global anti-apartheid movement that was instrumental in bringing an end to this injustice. We should learn that lesson. I strongly encourage Tory Members to learn the lessons of history. We should empower local councils to make democratic ethical investment decisions, not outlaw them, as new clause 1 does. [Interruption.] I therefore encourage Members on the Government Benches, especially the very enthusiastic hon. Member for Brigg and Goole, to vote against it.

[Andy Slaughter]

Perhaps I should begin by following the example of my right hon. Friend the Member for Hayes and Harlington (John McDonnell) in declaring my association with a local government pension fund. I chaired the pension committee of my local authority for a number of years. I am pleased to say that since I stopped doing that it has become much more ethical. I can now tell the House that the pension fund now has the lowest percentage of its fund invested in fossil fuels of any local authority in the UK, with the aim of net zero by 2030. I take no credit at all, other than the fact that it is now chaired by my researcher.

I should also say that I used to be member of the local government pension scheme, but I moved the tiny amount of money I had in that to the MP scheme, so I do not know whether I should declare that. I wonder if we should all be declaring that fact, given that although the MP scheme is not subject to the McCloud judgment, its trustees have said they will follow the McCloud judgment. For the avoidance of doubt, I put all that on the record. I do not think I have much time left now, but let us see.

I generally support the Bill, which is undoing mistakes that the Government made which were exposed by the McCloud judgment. I do, however, have a slight reservation. Nobody has mentioned the matters relating to judicial retirement ages. I see exactly the force of why they need to be increased, although I share the reservations of the Law Society that going from 70 to 75 will actually set back diversity in the judiciary, hopefully only temporarily, because of those who will be eligible to stay on in their roles. However, we are in such a parlous state in relation to the shortage of judges and the crisis in the courts that I can see the force of the argument.

I will be brief because, in a way, by talking too much about new clause 1, we are giving it more credibility than it deserves. It does not really deserve a place in this Bill. I suspect that the right hon. Member for Newark (Robert Jenrick) knows that, and actually, we should congratulate him on managing to squeeze it into the long title of the Bill. I felt that it was slightly surreal to be listening to a speech about the Abraham accords in relation to a technical Bill about pensions. We will have, hopefully, a three-hour debate on recognition of the Palestinian state on Thursday in this Chamber, in which it might fit, although that might be stretching it a bit as well. Perhaps he will speak in that debate as well.

15:45

The right hon. Gentleman went through the history, with the 2013 Act and the 2016 regulations. The mistake that he is making in trying to put this into primary legislation is that pension schemes are already very well regulated in terms of what they can and cannot do, quite rightly, because they look after—in the case of the local government pension scheme—hundreds of billions of pounds of our constituents’ money.

In 2014, following the 2013 Act, the advice, which the Local Government Association sought, said that investment powers must be directed to achieving what is best for the financial position of the fund, and that provided that this remains true, the precise choice of investments may be influenced by environmental, social and governance factors, so long as that does not risk material financial detriment to the fund.

The 2016 guidance that the right hon. Gentleman referred to said that the

“investment strategy… must be in accordance with guidance issued by the Secretary of State”,

who had the power to intervene if satisfied that any authority had failed to act in accordance with statutory obligations or guidance. The guidance also said that although

“pursuit of a financial return”

should be

“their predominant concern, they may…take purely non-financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision.”

Generally speaking, that is the way in which pension funds behave. However, the proposal goes further than that.

I referred in an intervention to the regulations that went to the Supreme Court and were defeated. I appreciate that it is perfectly acceptable—we said this throughout the Brexit debates about many of the actions relating to Brexit, and this was one of the strongest arguments against a lot of the reforms to judicial review, the Human Rights Act and so forth—to argue, as we do now, that this Parliament is sovereign and can make those decisions. Of course, it can return to the issue through primary legislation, but I urge caution. We should look again at the judgment of the Supreme Court and the reasons that it gave for making that decision.

I suspect that the clue to what the right hon. Gentleman was saying came at the end of his speech when he said, effectively, “I’m teeing this up for the Queen’s Speech. I do not expect the new clause to be passed today, but I am putting down a marker.” It is perfectly reasonable to say that because the Government did say in the last Queen’s Speech that they would bring forward such a Bill, and they have not. The Queen’s Speech said:

“Measures will be introduced to ensure that support for businesses reflects the United Kingdom’s strategic interests and drives economic growth.”—[Official Report, House of Lords, 11 May 2021; Vol. 812, c. 2.]

The Government explained that as delivering a

“manifesto commitment to stop public bodies from imposing their own approach or views about international relations, through preventing boycott, divestment or sanctions campaigns against foreign countries.”

That is all on the record and that is where we are, but we would be stretching things today if we approved an extremely widely drawn new clause that goes much further on this issue. The right hon. Gentleman addressed some of the background to this, but he then talked in quite lurid terms about BDS. I am sure that there are Members who support BDS, Members who do not support BDS but support others’ rights to do that, and Members who do not support it full stop, but I would not accuse any of them of ulterior motives. They have their views and they can put them forward freely in this place.

Like my right hon. Friend the Member for Hayes and Harlington, I believe that there are many regimes around the world that are inappropriate for investments of very large sums of my constituents’ money. They include the Gulf countries, which the right hon. Member for Newark prayed in aid when he talked about the Abraham accords. They certainly include Saudi, and they certainly include China.

I raised a point earlier to which the right hon. Gentleman did not respond. I made the terrible mistake of asking two questions and he gave me only one answer, which is what Ministers do; he was probably remembering his days on the Front Bench, so it was just instinct not to respond. However, I asked a genuine question about illegal settlements. Settlements in the occupied territories —no doubt we will hear more about this on Thursday—are contrary to international law. His own Government warn investors about the financial risks, but at the moment there are no sanctions against illegal settlements. Should new clause 1 become law, we could be in the bizarre situation in which a pension fund, for good financial reasons, wishes not to invest in companies that operate in the illegal settlements, but is forced to put its assets at risk—we do not know what is going to happen—because it believes that otherwise it would not comply.

I therefore hope that the right hon. Gentleman will not press his new clause and that if he does, he will not succeed. Any hon. Member is entitled to put forward a proposal that they wish to see coming to fruition at some point, but for the Government to support something that is so nebulous, wide-ranging and potentially destructive, and that acts counter to all that public sector pension schemes do, would be a grave error. I know that the right hon. Gentleman is a very sensible and measured man, so I hope that he will not press his new clause. He can come back with a debate on BDS and tax his Secretaries of State as to why they have not taken the matter further, but his new clause does not belong in the Bill.

[Chris Stephens]

I will be brief, having been on the Bill Committee. First, I should probably declare that I am a member of the Scottish local government pension scheme. I have always taken the view that a pension is deferred pay. In the past few weeks, university lecturers have taken industrial action because of the threats to their pension schemes; I have been very proud to visit their picket lines and offer my solidarity and support.

I wish to raise a couple of issues. I view new clause 1 as a Trojan horse. The main points that I want to raise are my support for the amendments tabled by my good friend the right hon. Member for Hayes and Harlington (John McDonnell), and the effects on employees and workers. In Committee, the Chief Secretary assured me that discussions were ongoing with trade unions to fix the issues. I hope that he will update the House on any discussions that have taken place since then and on the progress of those talks.

A basic principle that has been identified in relation to many of the amendments is that workers should not be penalised financially for mistakes that have been made in calculations by the Government or employers. It is a clear principle for many of us on the Opposition Benches that no worker should be penalised for such mistakes and that their pensions should not be affected. I therefore support the Opposition amendments in that regard.

[Mr Simon Clarke]

I thank all right hon. and hon. Members who have spoken today. I appreciate the constructive way in which all Opposition parties have handled the Bill. Today’s debate has focused on several important themes, which I will address in turn.

One central theme was the clarification requested by the hon. Member for Hampstead and Kilburn (Tulip Siddiq) and other Members about whether the estimated £17 billion cost of remedy will be included in future valuations of the cost control mechanism for unfunded schemes. The answer, definitively, is that it will not. The Government will reform the cost control mechanism to a reform scheme-only design for future valuations. I hope that that reassures the House.

[John McDonnell]

Will the Minister give way?

[Mr Clarke]

Very briefly, but I am conscious of the need to make progress.

[John McDonnell]

I just need the Minister to say that it will be an employer cost, not a member cost.

[Mr Clarke]

The cost of remedy sits with the employer, namely the Exchequer.

[John McDonnell]

Let us be absolutely explicit. With regard to the cost control mechanism, is it the case that this will be not a member cost but an employer cost? Just nod, Minister: that is all you have to do.

[Mr Clarke]

I can confirm that the liability for this rests with the Exchequer. It will be a reform scheme-only design. [Interruption.] I will write to the right hon. Gentleman with the clarification that he is requesting.

[John McDonnell]

Correspondence is not good enough. Put it on the record.

[Mr Clarke]

I will ensure that it is on the record.

My right hon. Friend the Member for Newark (Robert Jenrick) raised the important issue of guidance for the local government pension scheme which will, in effect, prevent bodies from engaging in boycotts, divestment and sanctions activities. In our manifesto, we committed ourselves to stopping public bodies running their own direct or indirect boycotts, and the wider BDS movement. I am grateful to my right hon. Friend for the all the hard work that he has done to draw the House’s attention to this important issue. I also pay tribute to Lord Pickles for his work.

[Paula Barker (Liverpool, Wavertree) (Lab)]

Will the Minister give way?

[Mr Clarke]

I am sorry, but I must make progress.

The Government have been paying particular attention to the arguments that my right hon. Friend has put forward, and I assure him that we take this issue very seriously.

The BDS movement has nothing to do with pensions and everything to do with politics. It has had the chilling effect of legitimising antisemitism among the hard left, leading to kosher food being taken from supermarket shelves, Jewish films being censored, and the disgusting spectacle of Jewish university student societies being threatened with bans.

[Paula Barker]

Will the Minister give way?

[Mr Clarke]

I will give way.

[Paula Barker]

I thank the Minister. He has been very generous. Can he confirm that new clause 1 has nothing to do with BDS, a point to which you alluded, Madam Deputy Speaker?

[Mr Clarke]

On the contrary, it has everything to do with BDS, because, rather than promoting co-existence, debate and dialogue, it sows hatred and alienation. There is evidence of divisive BDS campaigns in public bodies, including too many Labour-led local authorities attempting to declare boycotts. Only this week we saw concerning, but sadly unsurprising, reports of a councillor in Wirral leading demands for Wirral’s pension committee to pass a BDS motion. Even under the leadership of the new Leader of the Opposition, Labour politicians continue to endorse the Palestine Solidarity Campaign and call for boycotts of Israel.

[Andrew Percy]

I thank the Minister for confirming that the new clause does indeed have everything to do with BDS—as it should, because it is an important contribution to making Jewish people in this country feel safe. I am afraid that we heard some embarrassing comments from Opposition Members earlier, featuring the false narrative of “Everything good is always on the left, and everything bad is always on the right.” As the Minister says, we see Labour activists and Labour councillors endorsing what is a fundamentally antisemitic campaign. I thank him for his words today, and I hope the Government will accept the new clause, because it is so important to fighting the scourge of antisemitism.

[Mr Clarke]

I thank my hon. Friend for what he has said, and I can confirm that we will be accepting the new clause. It will have the Government’s support this afternoon.

The hon. Member for Edinburgh West (Christine Jardine) raised a number of important points, but I will deal first with her new clause 4, which relates to fairness for members of public service pension schemes. This is also relevant to the point raised by the hon. Member for Hampstead and Kilburn.

Let me begin by reassuring the hon. Member for Edinburgh West that equal treatment and fairness for all members, including those with protected characteristics, remains a central tenet of the Bill. The Government have conducted a full equalities impact assessment of the Bill, which was published when it was introduced. In addition, when making the necessary changes in the scheme rules to deliver remedy, bodies will carry out any appropriate equalities analysis for their specific schemes, in compliance with the Equality Act 2010. Indeed, many schemes are currently concluding public consultations on the changes in scheme regulations to implement the prospective remedy. The Government intend that a similar exercise will take place when it comes to schemes making further changes in their scheme regulations to implement the retrospective remedy, prior to 1 October 2023.

The Bill also provides that, from 1 April 2022, all public service workers who remain in service will do so as members of the reformed schemes, which provide career average, or CARE, benefits. CARE schemes offer fairer outcomes to those who experience lower salary progression over the course of their careers. A number of women and those with other protected characteristics are likely to be better off under CARE schemes, on average. Moving on to guidance for members, I wholly agree that clear, accessible and accurate guidance—

[Tulip Siddiq]

I am grateful that the Minister is answering all the questions that I posed in my speech, but I want to go back to the question that my right hon. Friend the Member for Hayes and Harlington (John McDonnell) asked. The Minister has said that he will write to us. Can he write both to me and to my right hon. Friend, and can he be explicit that this will be not a member cost but an employer cost? Can he confirm that he will be explicit when he writes to us on that particular point?

[Mr Clarke]

The cost sits with both members and employers, but the liability rests with the Exchequer in relation to the £17 billion cost of remedy. That is how this sits. I will indeed commit to writing to clarify all these points, and I will write to the hon. Lady and the right hon. Gentleman.

Judicial diversity and recruitment were the next issues raised by the hon. Member for Edinburgh West. I emphasise that this is an important measure for ensuring that we deal with the covid backlog in our courts, which is why we need to look at raising the mandatory retirement age. We are conscious of the need to consider the wider issues around judicial diversity and to ensure that we have a judiciary that is truly representative of the public that it serves. The Ministry of Justice publishes annual official statistics on this issue that provide a detailed annual picture.

I would like to assure members that the potential impact of what is being done is small. Compared with retaining the current mandatory retirement age of 70, a higher retirement age is projected to result in a 1% to 3% decrease in diversity growth in the medium to long term. I emphasise the word “growth” there. Overall, judicial diversity is still forecast to improve, and this measure would not reduce diversity overall. There would be only a slight reduction in the trend growth, which is going in a positive direction. We remain committed to increasing judicial diversity, and we have just launched an ambitious new magistrates recruitment plan to bring in younger and more diverse candidates. The MOJ plans to recruit 1,000 judges a year over the next few years, and 4,000 magistrates over that period. There will be a lot of change to the make-up of the judiciary.

The so-called pensions trap—the losses incurred by public service pension scheme members due to the closure of the legacy schemes—has been discussed at length throughout the passage of the Bill. The new clauses tabled by the hon. Member for Hampstead and Kilburn (Tulip Siddiq) and the right hon. Member for Hayes and Harlington appear to be intended to require the Chancellor to devise a way to compensate scheme members with remediable service for any reduction in future pension benefits resulting from the prospective McCloud remedy legislated for in clause 80. As I have noted, it is important to stress that the Government must not take action that would be contrary to the intention of the Bill to remove the discrimination identified by the courts and to ensure that all members are treated equally from 1 April this year by accruing service regardless of their age.

The Government must also safeguard the purpose of the reforms proposed by Lord Hutton and ensure that public service pension schemes are put on a sustainable fiscal footing. The Independent Public Service Pensions Commission stated that

“allowing current members to continue to accrue further benefits in the present schemes for many decades would be unfair and inequitable to the new members coming behind them.”

Compensating or carving out members with remediable service for the difference in pension age between their legacy and reformed schemes would effectively leave a protected class of public service pension scheme members beyond 31 March 2022, which could perpetuate the discrimination identified by the courts or give rise to new discrimination. It is worth noting that the Home Office is looking at this issue as we speak and will respond to its full consultation, in which the issue has been considered at greater length. I look forward to seeing the results of its work.

I turn to the contribution from the right hon. Member for Hayes and Harlington on the reforms to the cost control mechanism. The cost control mechanism is designed to ensure a fair balance of risk between public service pension scheme members and taxpayers with respect to the costs of the schemes. These reforms resulted from recommendations by the Government Actuary, and the Government are seeking to implement them following a full public consultation process. They are the reformed scheme-only design and the economic check. The economic check is essential to ensure stability and consistency across the scheme. It is also important to improve the higher bar for benefit reductions or contribution increases if the country’s economic outlook changes.

On the point about the 25-year guarantee, the Government do not believe that these reforms breach that guarantee. The elements protected by the 25-year guarantee were set out in legislation, and the cost control mechanism is not included there. The Government are making these changes following a detailed review of the mechanism by the Government Actuary and a full and open consultation process.

Amendments 22 to 24, tabled by the right hon. Member for Hayes and Harlington and the hon. Member for Hampstead and Kilburn, seek to reverse two decisions. The first reflects the cost of remedies in the mechanism of the 2016 valuation, and the second prevents the waiving of any ceiling breaches of the 2016 valuations that may occur. As I have already noted, the cost control mechanism is designed both to protect the value of schemes to members and to protect the Exchequer from unforeseen costs. At each scheme valuation, the mechanism assesses the benefits that have accrued and are accruing to members, to determine whether future benefit levels or member contribution rates need to be adjusted to meet the costs of the scheme.

The Government are clear that the remedy, by giving eligible members a choice between two sets of benefits, will increase the value of schemes to members, and this increase in value has therefore rightly been included in the mechanism for the 2016 valuations. The Government have decided that it would be inappropriate to reduce member benefits based on a mechanism that may not be working as intended, and clause 93 will therefore ensure that no member’s benefits will be cut or contribution rates increased as a result of the 2016 valuations.

Amendment 23, which would delete clause 93, would therefore reverse a decision that will protect members and would lead to significant cuts to member benefits for any schemes that breach the ceiling of the 2016 valuations. It is therefore important that clause 93 is preserved.

I am grateful to all hon. and right hon. Member for their contributions. With the exception of new clause 1, I hope I have demonstrated the reasons why I cannot accept these new clauses and amendments, and I hope hon. and right hon. Members will agree not to press them to a vote.

Question put and agreed to.

New clause 7 accordingly read a Second time, and added to the Bill.

New Clause 1

Guidance to public service pension scheme managers on investment decisions

‘(1) The Public Service Pensions Act 2013 is amended in accordance with subsection (2).

(2) In schedule 3, paragraph 12(a), at end insert “including guidance or directions on investment decisions which it is not proper for the scheme manager to make in light of UK foreign and defence policy”.’—(Robert Jenrick.)

This new clause would enable the Secretary of State to issue guidance to those authorities that administer public sector pension schemes, including the local government pension scheme, that they may not make investment decisions that conflict with the UK’s foreign and defence policy.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:07

Division 190

Ayes: 299

---

Conservative: 287
Democratic Unionist Party: 7
Independent: 2

Noes: 81

---

Scottish National Party: 35
Labour: 24
Liberal Democrat: 12
Independent: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alba Party: 2
Alliance: 1
Green Party: 1

New clause 1 read a Second time, and added to the Bill.

16:21

Two hours having elapsed since the commencement of proceedings on consideration, the proceedings were interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 8

Compensation of losses incurred by closure of legacy schemes

‘(1) The Chancellor of the Exchequer must review how a loss incurred by a member with remediable service who is transferred to the new scheme under section 80 and—

(a) reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, and

(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme

could be compensated.

(2) The Chancellor of the Exchequer must prepare and publish a report on this review within two months of the passage of this Act and must lay a copy of the report before Parliament.’—(Tulip Siddiq.)

This new clause would require the Government to review how losses arising from the “pension trap” could be compensated, and to report on the review within two months of the passage of the Act.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:21

Division 191

Ayes: 198

---

Labour: 139
Scottish National Party: 38
Liberal Democrat: 12
Independent: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alba Party: 2
Alliance: 1
Green Party: 1

Noes: 301

---

Conservative: 291
Democratic Unionist Party: 6
Independent: 2

Clause 6

Immediate choice to receive new scheme benefits

Amendment made: 1, page 7, line 21, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 10

Deferred choice to receive new scheme benefits

Amendment made: 2, page 9, line 31, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 14

Pension benefits and lump sum benefits: pensioner and deceased members

Amendments made: 3, page 11, line 33, leave out

“in relation to the scheme”.

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Amendment 4, page 12, line 26, leave out

“in relation to the Chapter 1 legacy scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 15

Pension contributions: pensioner and deceased members

Amendments made: 5, page 12, line 40, leave out

“in relation to the scheme”.

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Amendment 6, page 13, line 13, leave out

“in relation to the Chapter 1 legacy scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 16

Pension contributions: active and deferred members (immediate correction)

Amendments made: 7, page 14, line 3, leave out

“in relation to the scheme”.

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Amendment 8, page 14, line 8, leave out

“in relation to the scheme”.

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Amendment 9, page 14, line 13, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 17

Pension contributions: active and deferred members (deferred correction)

Amendment made: 10, page 15, line 3, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 23

Power to pay compensation

Amendment made: 11, page 22, line 5, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 25

Remedial arrangements to pay voluntary contributions to legacy schemes

Amendments made: 12, page 23, line 11, leave out

“in relation to the scheme”.

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Amendment 13, page 23, line 15, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 30

Section 61 of the Equality Act 2010 etc

Amendment made: 14, page 27, line 28, leave out

“in relation to the scheme”.—(Mr Simon Clarke.)

This amendment caters for the possibility that the power in clause 129(2) to commence this Chapter before 1 October 2023 may be exercised in such a way that it comes into force in relation to a particular scheme at different times for different purposes.

Clause 77

Meaning of “remediable service”

Amendments made: 15, page 57, line 33, leave out “the person’s” and insert

“the date on which the person attains”.

This amendment clarifies the intended effect of subsection (3)(b) of this clause.

Amendment 16, page 58, leave out lines 13 to 15 and insert—

““legacy scheme normal pension age” means—

(a) in a case in which the person meets the third condition in relation to a local government legacy scheme, the person’s normal pension age under that scheme;

(b) otherwise, the age of 65.”—(Mr Simon Clarke.)

This amendment ensures that a person who was never a member of a local government legacy scheme will cease to be entitled to underpin protection after the age of 65 (regardless of their normal pension age under any other legacy scheme of which they were once a member).

Clause 85

Treasury directions

Amendment made: 17, page 62, line 35, at end insert—

“(aa) the power to make scheme regulations by virtue of section81 (further powers to make provision about special cases) and any powers exercisable by virtue of such regulations;”.—(Mr Simon Clarke.)

This amendment ensures that Treasury directions may be made in relation to clause 81.

Clause 128

Extent

Amendment made: 18, page 103, line 12, at end insert—

“(1A) In Schedule 3 (judicial offices)—

(a) Part 4 extends to Northern Ireland only;

(b) Part 5 extends to England and Wales only.”—(Mr Simon Clarke.)

This amendment limits the extent of those Parts of Schedule 3 that list devolved offices. This will help clarify the effect of any changes made in the future to those Parts by the devolved authorities.

Clause 129

Commencement

Amendment made: 19, page 103, line 16, leave out from beginning to “the” in line 18 and insert—

“(1) Any provision of, or amendment made by, Part 1 or 3, so far as it—

(a) confers a power to make subordinate legislation or give directions, or

(b) otherwise relates to”.—(Mr Simon Clarke.)

This amendment clarifies the description of provisions relating to subordinate legislation that come into force on Royal Assent under subsection (1).

Schedule 1

Retirement date for holders of judicial offices etc

Amendment made: 20, page 109, leave out lines 42 to 46 and insert—

“President of the Education Tribunal for Wales

Member of the legal chair panel, or the lay panel, of the Education Tribunal for Wales”.—(Mr Simon Clarke.)

This amendment reflects a change in the name of the Education Tribunal for Wales.

Schedule 3

Judicial offices

Amendment made: 21, page 121, leave out lines 37 and 38 and insert—

“Member of the legal chair panel of the Education Tribunal for Wales”.—(Mr Simon Clarke.)

This amendment reflects a change in the name of the Education Tribunal for Wales.

Third Reading

16:33

[Mr Simon Clarke]

I beg to move, That the Bill be now read the Third time.

I would like to make a short statement about our involvement with the devolved Administrations. Officials worked closely and collaboratively with the devolved Administrations throughout the Bill’s passage, and I am pleased to report that the Scottish Government, the Welsh Senedd and the Northern Ireland Assembly have each passed a legislative consent motion. I am grateful for their continued engagement.

It has been a great pleasure to lead on the Bill’s progression through the House. I extend my thanks to hon. Members across the House for their engagement, particularly of course the members of the Public Bill Committee. This is an important Bill that consolidates and strengthens the legal framework for pensions across all our main public services—the NHS, the judiciary, the police, firefighters, the armed forces, teachers, local government and the civil service. The Bill will ensure that those who deliver our public services continue to receive guaranteed retirement benefits that are among the best available on a fair and equal basis.

The Bill also addresses the resourcing challenges facing the judiciary, recognising the unique constitutional role of judges. It is clear that we are agreed across the House about the principles of fairness and equal treatment for public servants. Furthermore, a number of important amendments have been made, most notably to the provisions that cater for local government workers, which I am pleased have enjoyed cross-party support.

I extend my thanks in particular to my right hon. Friend the Member for Newark (Robert Jenrick), my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill), the hon. Member for Hampstead and Kilburn (Tulip Siddiq), the right hon. Member for Hayes and Harlington (John McDonnell) and the hon. Member for Glenrothes (Peter Grant) for their detailed engagement throughout the Bill’s passage. I also convey my gratitude to the noble Lords in the other place, whose excellent contributions have helped ensure the Bill is as robust as possible.

Finally, I thank the Bill team, the Office of the Parliamentary Counsel, officials across Her Majesty’s Treasury, the Ministry of Justice, the Department for Levelling Up, Housing and Communities, all Government Departments with responsibilities for public service pension schemes, and the devolved Administrations for their extensive support. There is a lot of technical detail in the Bill, and the team’s guidance and expertise has been exemplary.

[Sir Robert Buckland (South Swindon) (Con)]

Will my right hon. Friend give way?

[Mr Clarke]

Fleetingly, yes.

[Sir Robert Buckland]

On a point of technical detail, I do not wish to put my right hon. Friend on the spot, but can he assure me that early commencement provisions will be brought into effect with regard to the judicial retirement age matters? It is a matter of real public importance that we bring those measures into force as soon as possible, rather than waiting for the usual two-month gap between Royal Assent and them coming into effect? Can he give me that assurance?

[Mr Clarke]

Further to my opening speech, I can confirm that that is the case.

In conclusion, this Bill recommits to the principle of greater fairness between lower and higher earners and for the taxpayer, as well as the future sustainability and affordability of public service pensions. I am pleased to see the Bill reach Third Reading, and I am grateful to all Members for their contributions today.

16:36

[Tulip Siddiq]

I echo all the thanks that the Minister has given, and I thank him for meaningfully engaging with me on this topic. I thank the shadow Treasury team, who helped a lot, all the Clerks who helped, my hon. Friend the Member for Reading East (Matt Rodda), who gave me a lot of support throughout the Bill, and my hon. Friend the Member for Hammersmith (Andy Slaughter), who made a sensitive speech during a difficult time. I might not have agreed with everything that my right hon. Friend the Member for Hayes and Harlington (John McDonnell) said, but he made an extensive and important speech.

I hope that the Minister will reply to me in writing, being explicit about how the cost will be shouldered. This mistake is being rectified by the Government, which is why we support the Bill, but we still have some concerns about it, so we would like to hear explicitly from the Minister about how the costs will be managed and that they will not be pushed to any of the members. Finally, I thank all the public sector workers who have kept us safe through all the years, and especially during the pandemic.

Question put and agreed to.

Bill accordingly read the Third time and passed.

[Mr Toby Perkins (Chesterfield) (Lab)]

On a point of order, Mr Deputy Speaker, the Government announced that they were doing a review of level 3 qualifications, with a view potentially to producing a list of level 3 qualifications that would no longer be funded. That list has not yet been produced, but the sector has the impression that it will be produced very soon. It is a matter of huge interest to many right hon. and hon. Members, so I wonder whether you or Mr Speaker have had any notification from the Government of their intention to come to this House and make a statement, and whether inquiries could be made to ensure that the list is not sneaked out at 5.30 pm on Friday, as has sometimes been the case, but is announced first to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the hon. Member for his point of order and his notice of it. I have been given no notification that there will be any statements today, but that could change tomorrow or in the rest of the week. Should that happen, the House will be informed in the usual way.

[Louise Haigh (Sheffield, Heeley) (Lab)]

On a point of order, Mr Deputy Speaker. The bus covid recovery funding will expire at the end of the financial year, and we have had no notification as to whether the Government intend to continue it. Tomorrow is the deadline by which operators will have to notify their local transport authorities if they intend to cut services as a result of that covid funding expiring, and operators are warning that it could lead to a reduction of a third in bus services. This time last year, the Prime Minister, with his “bus back better” strategy, promised great bus services for everyone, everywhere. Instead, we are looking at managed decline. Have you had any notification of a statement from the Secretary of State to reflect the urgency of the situation?

[Mr Deputy Speaker]

I thank the hon. Member for her point of order and her forward notice of it. Again, I have received no notification that there is going to be a statement today, but clearly that could change for the rest of the week. Fortunately, the Leader of the House is sitting in his place and will have heard both points of order, and I am sure he will be reflecting on them during the rest of the day.

Business of the House (Today)

Ordered,

That, at this day’s sitting, notwithstanding the provisions of Standing Order No. 16(1) (Proceedings under an Act or on European Union documents), proceedings on the motion in the name of James Cleverly relating to the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 (SI, 2022, No. 123) shall be brought to a conclusion three hours after the commencement of proceedings on the motion for this Order; the Speaker shall then put the Question necessary to dispose of proceedings on that motion forthwith; such proceedings may be entered upon, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Mark Spencer.)