Local Government Pensions Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014

Lord Beecham Excerpts

Tuesday 13th May 2014 Lords Chamber

[Lord Bourne of Aberystwyth (Con)]

My Lords, it is important to look at this in context. In opening, I say to the noble Lord, Lord McKenzie, that we have to be careful when we talk about volunteers. There are millions of volunteers in this country who do fantastic work, and we should not categorise them as “mere volunteers”. They do fantastic service for this nation. I recognise that councillors’ work is of a special nature, but we should not detract in any way from the marvellous work done by volunteers up and down all the nations of the United Kingdom.

The nature of councillors’ work is different from that of those people who have, historically, been protected by the Local Government Pension Scheme. I think we would all recognise that the first aim of the Local Government Pension Scheme should be to provide a decent, a good, pension for those who work for our local authorities. Historically, going back to the beginning of the century, councillors were not provided with a pension. It was introduced in the aftermath of 9/11, either on that day or on the next day. That is not to say that it was wrong, but it was perhaps not given the consideration that it should have had. This reverts to the historical position of recognising that councillors are somewhat different. They do—let us recognise it—fantastic service: unstinting, unsung, underappreciated and very often totally unappreciated. However, it is also worth saying—and, to be fair, the noble Lord, Lord McKenzie, said this—that it is only a small minority of councillors, I think about 16%, who are signed up to this scheme. Again, we need to get that into perspective.

I also do not recognise the comments made by the noble Baroness in relation to the cost of the mayor and so on providing for their own pensions. I do not see that there is a tax-funded consequence of that, at least not in the same terms as the scheme that applies at the moment. Perhaps I misunderstood that, but I could not see the consequence there. If I have misunderstood, perhaps that will be elucidated later and, if so, I apologise for that.

The second point that is worth making is that there will be a saving in the scheme, and we have to recognise that resources are scarce. I am not sure whether the party opposite is committed to bringing this scheme back in; I have not heard that said. It is one thing to decry this and say it is a bad thing, but I have not heard any commitment to bring it back in. Perhaps there is such a commitment and perhaps that can be clarified, because there is a saving and all parties recognise that there is a deficit that has somehow to be dealt with. Every saving, no matter how small, contributes to dealing with that deficit. It is very easy to say that we approve of measures to tackle the deficit, but the party opposite often falls into the trap of saying it approves of measures to tackle the deficit and when anything specific is brought up to save money, it is always against them. We need to do that and put this into perspective.

My last word is to say again that we are in great danger of castigating volunteers up and down this country who do terrific work without any allowances or pension arrangements. We need to get that on the record.

[Lord Beecham (Lab)]

My Lords, I should perhaps declare an interest as vice-president of the Local Government Association and a serving councillor on Newcastle City Council, albeit one who has not been involved in any way with this provision of local authority member pensions.

I begin by extending congratulations to the noble Baroness, Lady Williams of Trafford, who as far as I am concerned is making her first appearance on the Front Bench on a DCLG matter. I may have missed her on a previous occasion, but in any case it is a pleasure to congratulate her on that, and on not having to answer this debate or accept responsibility for this particularly malign set of proposals.

These proposals were launched initially by Brandon Lewis MP, the Under-Secretary of State at the Department of Communities and Local Government, in October 2012. I think that his main claim to fame is that, on an organisation called Phoenix radio, he hosted a talk show called the “Eric and Brandon Show”, which I suppose had a fairly minimal audience in the Brentwood area, where Mr Lewis was at that time the leader of the council. Subsequently, he has of course become an MP elsewhere, while his colleague, who is now the Secretary of State, is the Member of Parliament for the same constituency. Quite whether that broadcast had the impact of the Nick Clegg broadcasts on London radio, I hesitate to think.

However, Mr Lewis must certainly be given the credit for a certain amount of ingenuity. He wrote a letter on 13 March 2014 to Conservatives MPs in England—not that there are many outside England—to explain and defend what the Government were doing. In that letter he said, as we of course understand, that,

“councillors do not receive a salary; rather, they receive allowances to compensate for their out-of-pocket expenses”.

That is an interesting formulation because the actual wording of the Government’s document about this was rather different. The wording in paragraph 1.20 of that document said:

“Councillors are volunteers, elected to their local council to represent their local community. Councillors are not paid a salary or wages, but they are entitled to allowances and expenses to cover their out-of-pocket costs of carrying out their public duties”.

Now, expenses are clearly designed to cover out-of-pocket costs but allowances are not the same thing. Mr Lewis has elided the two concepts in his letter, and quite deliberately so. In addition, he said that,

“following changes made by the Labour Government, allowances have slowly become a form of salary, a situation worsened by the state-funded pensions”,

as if the entire cost was paid by the taxpayer. Of course it is not, as it is a contributory scheme.

However, even that is not quite the full story because paragraph 1.9 of the Government’s document says:

“The provision allowing for councillors’ pensions in England is contained in Section 18(3A) of the Local Government and Housing Act 1989”—

when to the best of my recollection there was not a Labour Government in office—

“and the Local Authority (Members’ Allowances) (England) Regulations 2003 made under the powers contained in that section”.

We have one former Secretary of State present from a Conservative Government, although I do not think that the noble Lord was the Secretary of State at the time. But it was a Conservative Government who facilitated or indeed established the concept of making this scheme a possibility. Of course, Mr Lewis carefully avoids that reference but he then says:

“This blurs the distinction between council officers and councillors”.

In whose eyes, it has to be asked, is there a blurring of the distinction? Citizens can distinguish perfectly well between councillors and officers. What is the nature of this blurring that is alleged to be taking place?

I have been a councillor for what might seem an interminable time, particularly to some of my constituents, but I am not alone in having a long period of service. I anticipate that we will hear from other noble Lords today who have had very distinguished local government careers, such as the noble Lords, Lord True, Lord Shipley and Lord Tope, as well as my noble friend and the noble Baroness, Lady Jones, who have already spoken. Looking around the Chamber, it is possible that there will be others such as the noble Lord, Lord Palmer of Childs Hill, and my noble friend Lord Harris—and there is of course the noble Baroness, Lady Eaton. How could I forget her? Of the five noble Lords I anticipated would speak, between us we have served 165 years, 43 of those as leaders of our respective councils. It was not until the late 1980s that I was in receipt of a special responsibility allowance as leader of my council. I did not take the full amount until the last three years of my tenure. I was senior partner at a firm of solicitors and I felt, in the circumstances obtaining in the early 1990s, that I should claim the full £7,000 a year, which was the allowance paid by my authority at that time. We are not talking in general about very large sums.

Among my successors was the noble Lord, Lord Shipley, who, no doubt, will tell us about his own experience. My recollection is that he also would have received a modest allowance as leader of the council when he served his term. The present leader of Newcastle City Council—with a budget which, as a result of government cuts, is alas declining from the £260 million a year it had originally reached—receives an allowance of £16,500 and a basic allowance of £8,500. The specialist allowance has been frozen and the standard allowance for members in Newcastle has been cut. That is likely to be the situation in many local authorities in this country. When I was leader of the city council, I was in receipt of a combined allowance that was significantly less than was paid to my secretary. Exactly the same position will apply to all my successors, including the noble Lord, Lord Shipley, and the current leader; and it may well apply in a number of other authorities.

However, there is another matter that Mr Lewis carefully avoided mentioning in his letter to his political colleagues, which is at paragraph 1.11 of the Government’s document. It says:

“Councillors are eligible for allowances to be pensionable if the local independent remuneration panel made a recommendation to that effect”.

In other words, this is not something dreamed up and decided upon by a local authority: it has to follow a recommendation of the independent remuneration panel. Why does Mr Lewis not refer to that? The answer is perfectly obvious: it would demolish the case he is making, which effectively is that greedy local authority members are determining for themselves whether they should be part of this scheme. It is a shabby and disgraceful way to mislead his colleagues, let alone members of the public.

I recall very well that in my early years as a councillor, before I became leader, I had a very good colleague who felt he had to give up his time at the council, because it was going to affect his own pension at work. Clearly, there are many members up and down the country who feel that they cannot continue. Turnover of members is a significant factor, particularly in London. London colleagues may agree, or may not be able to confirm that. There is a particularly high turnover of people who are in employment because it is very difficult to discharge one’s duties as an elected member—at any level, but particularly at a level which carries significant responsibilities—and be in gainful employment. We do not want to see local councils composed of the unemployed, the retired or the rich. A council composed in that fashion is not an adequate way of serving the public. We want people who are actually in a job, working in the community and bringing that experience and influence to bear upon the workings of their council. If their employment or their prospects of pension provision are going to be imperilled as a result of public service, that will diminish the pool of those willing and able to serve the public.

These proposals are another example of the Government’s—or more particularly, to be fair, the Secretary of State’s—aversion to local authority members. He has a rather Malvolian response to the criticism that he has brought upon himself over the past few years by his repeated attacks on local authorities and members generally. I recall that wonderful phrase in “Twelfth Night” when Malvolio, villainously cross-gartered—I cannot see the Secretary of State as cross-gartered, while “villainous” is an adjective that might be applied to other aspects but perhaps not his gartering —says in frustration and rage as a result of his treatment:

“I’ll be revenged on the whole pack of you”.

This recommendation certainly seems to carry that sentiment into government policy, and it is deplorable.

[Lord True (Con)]

My Lords, I, too, thank the noble Lord, Lord McKenzie, for enabling this debate, although it gives me no pleasure to intervene in the spirit in which I shall. Given what I know of the many representations that have been made at the highest level in both coalition parties by local government representatives on this issue—representations that have been brushed aside, sometimes rather brusquely—it would be feeble if I lacked the integrity to speak up publicly from these Benches for hard-working colleagues of all parties, including my own, who serve the public as councillors and who, rightly or wrongly, feel targeted by this proposal.

I should declare an interest at the start lest some bright spark declares that I am—what is the phrase?—“on the gravy train”. I lead, nearly full-time, a local authority that, like 58% of councils, is a participant in the local government scheme for members. I am a scheme member, as are 26 others—just half our members. The scheme cost us £65,000 last year. The total cost of member remuneration in Richmond is £56,000 lower than in 2010. For the record, the leader’s allowance is £26,000, which I cut by 12.5% when I became leader.

Against that background, however, we judged cross-party in 2003 that a right of access to a pension scheme in a workplace was a reasonable part of total remuneration. That was a local decision and, like so many other things in local government where all central Governments tend to put their lead boots on, it should be for local determination and local accountability.

I spent half a lifetime judging and advising on public policy—some of it good, some of it bad. There are various tests for a good policy, and among them would be the following. It should not seek to regulate at national level what can reasonably be decided locally or privately. It should be consistent and coherent with other policy—what some call “joined-up”. It should be based on objective evidence. It should address a problem that needs to be solved. It should be proportionate to the issue concerned. It should not be designed, or felt, to discriminate against any group. It should be likely to lead to better public administration or significant savings in expenditure. It must respect, if not always follow, the outcome of consultation. Finally, failing all these, it must be urgent or necessary to respond to a clear public call for action.

In my submission, the policy spectacularly fails every one of those tests. On a clear public call for action, there was none. We have seen comments from the Taxpayers’ Alliance, which is an estimable group—I share its diagnosis that we are spending, borrowing and taxing too much—but it is not the public. The Taxpayers’ Alliance was quite right to note the generosity of the Local Government Pension Scheme, and in my view the Government were right to reform the scheme. Councillors up and down the country, including me, would have supported the reform of members’ rights, too. But why the removal, not reform, of the right of councillors to contribute to a scheme in the workplace? How does that stand up to the tests of good policy? Does member remuneration need to be decided nationally? I do not think so. Nor, in fact, do the Government; in this provision they are not addressing allowances or setting limits, just attacking pension rights. It does not add up.

--- Later in debate ---

[Baroness Stowell of Beeston]

As Mayor of London, some of his functions are similar to those of police and crime commissioners. However, he is not regarded as a police and crime commissioner for the purposes of the Local Government Pension Scheme. His status is as mayor and not as a PCC.

[Lord Beecham]

Why are police and crime commissioners treated differently?

[Baroness Stowell of Beeston]

The point about police and crime commissioners—this is an area which, in due course, we will want to examine—is that, since they were recently created, we felt that it was not appropriate to make this change at this time. I do not assume that it will be something that will be left unattended for ever.

My noble friend Lord True asked, when we were talking about savings, about the publicity budget for my department. He suggested that somebody in the Box would have the answer. Because I have a great bunch of officials with me, yes, indeed, I do have the answer, which is £2.5 million—which I would guess is a whole lot less than it was under the previous Government.

I can assure the House that the Government did not take this decision lightly. We certainly looked carefully at transitional arrangements for those councillors who are in the pension scheme. I note that the noble Lord, Lord Palmer, dismissed the concessions that we made following consultation that will see that existing members will leave the scheme only at the end of their existing fixed four-year term of office. That means that councillors’ membership of the scheme will be phased out between 2014 and 2017 and that no change to the reasonable expectations that councillors had when they ran for their fixed term will be made. I can also confirm to my noble friend Lord Vinson that he is right that nothing will stop councillors contributing to a personal private pension in future, but the key point is that they will not be able to join a scheme to which taxpayers contribute as their employers.

I firmly believe that the best thing we can do to encourage more people to take part in municipal public life is to decentralise power to local communities so that being a councillor is an even more meaningful and rewarding role. We need to attract and retain a wide range of enthusiastic councillors, and I agree with noble Lords who said that this is important. When we are talking about ensuring that we have a wide range of councillors—in fact my noble friend is back with me on the Front Bench—it is worth noting that one of her successors as leader of Trafford Council is 26 years old, comes from a modest background and put himself through university. It is simply not true to suggest that people do not want to put themselves forward to become councillors.

The reason we are starting to attract a wide range of people is that this Government have made many changes to local authorities that mean that councillors are in a greater position to deliver change. For example, we have abolished the Audit Commission and government offices. This means that councillors can rightly focus on meeting the needs of local people, rather than spending their time dancing to the tune of central government. We have introduced new rights for communities to lead and deliver change, including through neighbourhood planning. This gives exciting opportunities for councillors to support and encourage local people to help them deliver their own aspirations.

The noble Lord may laugh, but neighbourhood plans are seeing a fantastic turnout at referendums, when local people know that, as a result of getting engaged, they will see change and will be able to take control of decisions in their local area. We have introduced the general power of competence. This means that councillors now have greater scope to do things to meet local people’s needs. We have helped councillors better represent their constituents and better enrich local democratic debate by scrapping the Standards Board and clarifying the rules on predetermination. These are just a few examples of the steps this Government have taken to strengthen the contribution that councillors can make to their communities.

The LGA briefing note that was distributed to noble Lords prior to this afternoon’s debate said that,

“76% of people trust their local councillor the most to make decisions about how services are provided in their areas”.

That is great news, and the reason for that kind of result is that councillors have the power to lead their communities, to speak for their communities and to deliver for their communities. That is a very good thing.