Employment: Private Sector Jobs
Debate between Lord Newby and Baroness Donaghy(10 years, 9 months ago)
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Lord Newby
My Lords, that is an interesting idea, and I will pass it on to colleagues in BIS. While in the past year there was a 22% rise in inward investment overall, which bucked a downward trend internationally, there was an increase in FDI of 191% in Wales and 41% in Northern Ireland, so it is not the case that all benefit of growth and inward investment is coming to London and the south-east.
Baroness Donaghy (Lab)
My Lords, as the Minister knows, earnings are not keeping up with prices and the housing stock in London is not keeping up with demand. How will his Government protect the losers in this equation who far outnumber the winners?
Lord Newby
My Lords, I do not agree with that basic proposition. I do not think the losers far outnumber the winners. I remind the noble Baroness that there was an increase in employment of some 450,000 in the past 12 months. All those people are winners. Many people on modest incomes have benefited by several hundred pounds as a result of the increase in the income tax threshold. There are very many winners already, and as the economy continues to grow, there will be a lot more.
Public Service Pensions Bill
Debate between Lord Newby and Baroness Donaghy(11 years, 10 months ago)
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Lord Newby
My Lords, as I was saying, this group of amendments is concerned with the recommendation of the noble Lord, Lord Hutton, that each public service pension scheme should have an advisory group. Although these have always been dealt with administratively, we have listened to concerns raised in another place and proposals from stakeholders. As a result, we have decided to make these groups plain on the face of the Bill.
Amendment 45 introduces a new clause to require scheme regulations to establish a scheme advisory board. The central purpose of the scheme advisory board will be to consider and advise on the desirability of future changes to the schemes. The board will advise the responsible authority on any matter that it asks the board to consider, whether wide-ranging or focused on a single issue. The board’s role will supplement, rather than replace, the role of other persons and bodies in responding to consultations under Clauses 11, 19 or 20.
The scheme advisory boards may play an additional role in the locally administered police, fire and local government schemes. In those schemes, the board may also advise the scheme managers and pension boards when such advice is requested or on their own initiative. Subsection (2) provides that the board can advise them on the effective and efficient administration of the scheme, any connected scheme and any pension fund that relates to them.
This amendment is in light of proposals that employer and employee representatives have put forward in respect of the local government scheme in England and Wales. While the precise role will be a matter for scheme regulations, we envisage that the locally administered schemes will want to provide for the advisory board to offer central support to scheme managers. That advice is likely to cover matters such as best practice and ensuring consistent approaches to the management of the schemes.
The advisory board will identify policy and operational issues that need to be resolved, either by better practices at a local authority level or perhaps through changes to scheme regulations or guidance. In turn, the advisory board will be able to advise the relevant parties on how changes should be made to improve the management and administration of the schemes and their pension funds. For example, there will almost certainly be an advisory board role to agree and advise on the interpretation of the legislative requirements—potentially around co-commissioning of expert advice and systems—and the co-ordination and co-commissioning of services. It is likely that, for the funded local government scheme, it will monitor fund performance across the pension funds. The employer and employee representatives in that scheme envisage a role to support scheme managers and pension boards to improve fund management across the scheme. These amendments allow for that.
The scheme advisory board will not have a separate role in advising the scheme managers and pension boards in the nationally administered schemes. That is not needed in those schemes. Unlike the locally administered schemes, the scheme manager and responsible authority will be the same person. Importantly, the amendments maintain a clear separation between the advisory board’s policy role and the scheme manager and pension boards’ responsibilities for the management, administration and governance of the scheme. The noble Lord, Lord Hutton, highlighted the importance of this separation of roles in his report.
Finally, the amendment requires that scheme advisory board members must not have a conflict of interest that could prejudice the way they undertake their role. This does not prevent a scheme member, or an employer or employee representative, being a board member. Those are not interests that would prejudice the way they undertake the role—indeed, they are instead interests that support such an undertaking. I commend these amendments to the Committee.
Baroness Donaghy
My Lords, I want to speak to Amendment 45. The Local Government Association and the relevant unions welcome this amendment as it ensures an effective separation of responsibilities for boards at local level and at national level, as was required. While it is a positive step, a concern for the LGA and the unions is the scope of the role of the board as contained in the amendment, particularly the nature of the advice which the scheme advisory board can offer. The current wording of Amendment 45 restricts this advice to that of desired changes to the scheme. The LGA and unions believe that the introduction of a scheme advisory board offers the potential for advice, not only on scheme changes but also other areas including scheme governance, technical advice and cost management. Will the Minister comment on this?
Baroness Donaghy
My Lords, I support this group of amendments. Lest my noble friend Lord Whitty and I are accused of running or producing the local government show, I want to deal with the Civil Service pension scheme in relation to this subject. According to the First Division Association, the current wording of the Bill does not reflect the discussions with the unions on revaluation, and seeks to extend the Treasury’s control far beyond that which is necessary and prudent. In the light of the FDA and others v the Secretary of State for Work and Pensions and others in 2012, there is no need for this clause to be in primary legislation, as it is better suited to the scheme regulations that will lay down the parameters for each distinct scheme. There is no similar clause setting out the terms of the indexation of pensions in payment, even though that element is consistent across all schemes.
Fundamental to the agreement reached with the Civil Service was the understanding that, as with indexation of pensions in payment, revaluation would never be negative. If the relevant index was negative, as has been the case in recent history, the figure of zero is used and there are no increases or decreases applied. This is vital to the confidence of pension saving. Just as pensions in payment should not fall from one year to the next, a principle held by successive Governments, so pensions being accrued should not similarly be reduced. That reflects existing practice.
The FDA was not informed at any stage that the Government intended to deviate from that approach in the new scheme, and to do so now would be a fundamental challenge to the agreement. The continued inclusion in the Bill of a provision allowing negative revaluation to occur could have a profound effect on member behaviour, and specifically opt-outs. Scheme members are likely to react to an announcement that their whole pension is to be revalued downwards as a result of a negative figure for the consumer prices index in September; their response is likely to be one of mass opt-out. This is a hugely counterproductive approach for the Treasury to take on the pretext of share and risk, and the cost of management mechanisms already accounts for inflation—yet the Treasury wants additional cost to be accepted by members through this provision, which puts participation at risk.
Lord Newby
My Lords, the amendment proposed by the noble Lord, Lord Whitty, raises the important question about how negative growth should be treated in these new schemes. For the revaluation of active members’ accruals each year the Treasury will lay an order which will establish the changes in earnings or prices. Scheme regulations will then use these changes when applying the revaluation mechanism that they decided on in their proposed final scheme designs. This approach mimics the current arrangements for the indexation of public service pensions in payment; it allows for the agreed scheme-specific variations, but also ensures that the underlying growth measures are transparent and consistent.
As the noble Lords have pointed out, this approach allows for the growth measure to be negative. I am not looking bemused because I did not realise that that was the case; we have never sought to hide that fact. Before explaining the rationale behind this, I should point out that brief periods of negative growth are unlikely to impact significantly upon the total value of any pension, in much the same way that brief periods of unusually high growth would not. After all, pensions are built up over a long period. I should remind the Committee that negative growth is exceptionally rare. It is not the case that in recent times the preferred index has been negative; the CPI has never been negative. The Committee should also be aware that this clause impacts only on those scheme members who are in employment, building up their pensions. It does not impact at all on pensions in payment.
However rare negative growth might be, if scheme members can benefit from the upside risk of revaluation—which they will, since there are no plans to cap revaluation rates—it would be unfair, in our view, for them to be shielded from any potential downside risk. Furthermore, by imposing a revaluation floor, scheme costs would rise and could lead to a breach of the cost cap set out in Clause 11. This is because previous scheme valuations based on standard, long-term growth assumptions would have essentially underestimated the cost of future accruals. If this were the case, it would be likely to lead to an increase in members’ contributions or a reduction in the scheme accrual rate. This would be unfair to anybody reaching pension age when positive growth returns. Their benefits would have been reduced to pay for those people who benefited from the revaluation floor.
It is only right that public servants receive their defined benefit pensions so that they can plan properly for their retirement. However, there is no logic in going beyond this by protecting their accruing benefits from any brief periods of deflation before their pensions come into payment. I believe the approach of directly tracking growth—with no caps or floors—is the fairest way forward. As I have said before, the noble Lord, Lord Hutton, described the idea of an indexation floor as an “asymmetric sharing of risk”. We agree. It is fair to say that the Local Government Pension Scheme does not specify, as the noble Lord, Lord Whitty, implied, that there will be no decrease possible within the scheme rules. My understanding is that it says that the basis of revaluation would be CPI.
Another point was raised about legislating for the measure. I am now coming on to the amendment of the noble Lord, Lord Eatwell, about whether we should legislate for a specific measure and whether the Treasury is being given too much discretion. It has obviously been the case within the last generation that the basis of measuring prices has changed: it has changed from the RPI to the CPI. Our expectation is that the CPI would continue for a very long time, but these things sometimes change and we therefore believe that the best way of dealing with it is in primary legislation. Incidentally, I am not implying that if the measure changed, the pensions would change. It would simply be that the scheme rules would have to reflect any new measure that came into general use.
Moving on to Amendment 49, it is worth re-emphasising that the annual revaluation will set out the general changes determined by the Government’s preferred measure, which is CPI at the present time. As I said, it is necessary to give a limited amount of discretion to the Treasury to determine the measures, but we do not believe that this is going to be a likely or common thing. It is apparent from the wording of the clause that the estimates of changes must be made in a reasonable and appropriate manner. Any attempt to exercise this discretion in such a way that did not produce accurate and appropriate estimates, with reference to a reasonable index of prices or earnings, could be challenged by scheme members. Any decision which is not reasonable—even without this amendment—could be challenged by judicial review and struck down by the High Court, so we do not believe that this amendment would change the position or provide any additional protection to members.
Baroness Donaghy
My Lords, I support my noble friend Lord Eatwell on this important amendment. This was a key part of the national agreement between employers’ unions and the Government. In the local government scheme, which is a funded scheme, employers choosing to withdraw from that scheme could leave substantial costs relating to future fund income to be paid by the council tax payer. Information is already coming in that some higher and further education employers, and recently an academy school, are seeking to find ways in which to get around their obligations to provide the local government pension scheme for support staff. We should bear it in mind that those jobs are often low paid and part time. We should also remind ourselves that having an occupational pension will make sure that those people are self-sufficient when they retire and do not become dependent on the state. So it is in all our interest that these schemes are upheld.
The news that we are hearing is that shared services companies are being created, or that people are attempting to create them, as a way of getting round the obligations that they entered into by allowing their staff to remain in the local government pension scheme. I remind the Minister that, as I am sure he is aware, a big drift away by employers could undermine all the schemes.
Lord Newby
I thank the noble Lord for moving this amendment on behalf of my colleague, the Chief Secretary. I am sure he will be very pleased when I tell him that he did so. The Government are completely committed to the fair deal policy and to its reform. Commitments have been made, both in this House and in the other place, to ensure that members of the schemes who are compulsorily transferred to independent contractors can retain membership of those schemes.
The noble Lord asked about the provisions in the Bill that are relevant to achieve this. Clause 26 will extend access to the existing civil service pension scheme to allow those members who are compulsorily transferred out to stay in the scheme. Clause 22 will allow scheme regulations to make provisions for pensions for other employees who would not otherwise be members of the scheme. The policy will be delivered via the contracts made with independent providers. This will ensure that members of the schemes will be entitled to accrue future benefits through the scheme after the first tender and any subsequent retendering.
There are specific reasons why the proposed amendment cannot be accepted. The Government are currently considering when and how the new fair deal policy will be implemented. We are also consulting on how the new fair deal should be applied to those who have already been transferred out of the public sector under the old arrangements. It would be premature to put something on the statute book while this work is under way.
The amendment also captures the Local Government Pension Scheme. We have been absolutely clear that the principles of the new fair deal policy should apply to the reformed Local Government Pension Scheme, but the policy has always operated differently in that scheme. The Department for Communities and Local Government will bring forward detailed proposals in due course; again, in our view it would be premature to legislate while this work is under way. However, if the noble Baroness, Lady Donaghy, has some specific instances which she can show us of how the current arrangements might be being subverted, we would obviously look at exactly what is going on and how we might deal with that. My guess is that the most effective way of doing it would not necessarily be via this amendment. Obviously, however, because we are committed to the principle, if that principle is being undermined, we would want to look at how that is happening and what we could do to stop it. With those comments, I hope the noble Lord would feel able to withdraw his amendment.
Lord Newby
My Lords, the Bill makes provision for pension scheme valuations across all the public service schemes. These will be carried out in accordance with Treasury directions to ensure that valuations are carried out on a clear and consistent basis.
Amendments 62 and 63 seek to clarify how Clause 10 will apply to the valuation of the individual funds in the local government pension scheme or to disapply the provisions of the clause to those valuations. The Government are well aware of the concerns referred to by the noble Lord, Lord Eatwell, and other noble Lords who have spoken, that this clause will be used by the Treasury to impose inappropriate valuation assumptions on individual LGPS funds. The amendments would ensure that this could not happen by removing these funds’ valuations from the scope of the clause or requiring the Treasury to take account of the nature of individual funds when making directions.
I hope that I can reassure noble Lords that these amendments are not necessary. First, the Government have no intention of making directions relating to the valuations of individual LGPS funds. This commitment has already been made in this House and in the policy paper published by the Treasury in November 2012, copies of which are in the Library. Secondly, Clause 10 needs to be read in the light of the Bill as a whole. It is clearly intended to deal with valuation at the scheme level, as can be seen from Clause 12, which makes provision for valuations at the level of individual pension funds. While that clause would provide for greater oversight of the local fund valuations, it will not mandate how they are to be carried out. Accordingly, we do not think that Amendment 63 is necessary.
In relation to the Local Government Pension Scheme, Clause 10 will be used only—I repeat, only—to set directions of how the model fund, an aggregation of the scheme costs at the national level, will be valued. We need to do that for the operation of the cost-control mechanism at a scheme level in LGPS but it will not directly affect the contributions paid into individual funds.
Turning to Amendment 64, Clause 10 already requires that the Government consult with the Government Actuary before making directions on scheme valuations. That amendment would add an additional requirement that the Government Actuary agrees the directions rather than just being consulted. The intention is to ensure that these directions form a sound basis for the scheme valuations and the Government, of course, support this aim. However, the Government cannot accept this amendment, as it does not achieve this aim and has unwelcome consequences.
The aim of the Government Actuary’s Department is to be,
“a highly valued principal provider of actuarial analysis and advice to all parts of the UK Government and other relevant UK and overseas public bodies”.
The highly valuable, actuarial advice that it provides is independent and professional and this aim would be compromised by the amendment. If this change were made, the Government Actuary’s decisions would inevitably influence the policy on valuations and he could come under pressure to determine elements of the directions themselves. This would fundamentally compromise his position as a truly independent adviser. This is not an outcome which anyone, including the Government Actuary, wants to see.
Amendment 65 highlights the importance of Treasury directions that will be made under Clause 10. These directions will set out the detail of how valuations of public service pension schemes should be carried out. Everybody has agreed that these valuations are of vital importance given their implications on both employer contributions and the employer cost cap. As such, all scheme stakeholders will need to be involved as the valuations are developed. However, the statutory consultation requirement that would be imposed by this amendment is unnecessary. I can reassure the Committee that we will seek to discuss these directions as they are developed. All stakeholders, including scheme managers, their actuaries, pension boards, and member representatives, will be given the opportunity to participate in this process.
I hope this reassures the noble Baroness that the consultation of scheme managers and pension boards that she has proposed will be carried out without the need for Amendment 65 and that she will feel able to withdraw the amendment.
Baroness Donaghy
I thank noble Lords who have participated in this debate. There is a certain irony, particularly on Amendment 65. This was a very mild response to the Minister’s reply at Second Reading when I, like the noble Lord, Lord Whitty, asked for the agreement of the Government Actuary’s Department. He commented then that it did not wish to participate in what would be seen to be a political event, but wanted to maintain its independence. Amendment 65 was an attempt to recognise the reality of that and write in the involvement of scheme managers and scheme boards as a mild substitute. I am still sorry that the Minister is not willing to include that. However, until I have had a chance to study the official record of the Minister’s reply, I beg leave to withdraw the amendment.
Baroness Donaghy
I will speak briefly in support of my noble friend Lord Eatwell. I think I said at Second Reading that the issue of accrued benefits is a deal-breaker as far as the negotiations are concerned. It is about keeping one’s word. Enshrining this in the Bill would do a huge amount to reassure public servants, particularly those in Scotland who have not yet been properly consulted. I believe that if a public servant sat down and did an audit of all the discussions that we have had on Committee days one and two, they would see the Government’s unwillingness to put in the Bill all the areas in those agreements, saying, “No, we do not think that this, this or this needs to go in” and so on. I realise that this Bill is a legal framework but we are talking about the confidence that people can have in their pensions in the future.
We should not forget that it is not only Governments that can opt out of these things; individuals will make assessments about their own benefits and welfare and future, and it is very important for all our sakes that we maintain some kind of stability in this turmoil. If I can use a pun, the accrued failure of the Government to put any real assurances in the Bill might be viewed in a negative light by a lot of people who are very involved in this debate.
Lord Newby
My Lords, I will respond first to the noble Baroness, Lady Donaghy, before returning to the specific issue raised by the amendment. The vast bulk of the provisions that will affect people are not in the Bill; they are under the schemes. I have circulated the draft Civil Service scheme, an extremely long and detailed document that has in it most of the things—the headlines—that people will look at in determining whether they think the pensions they will get are fair and reasonable. I hope that those who worry that the Bill does not cover a lot of the things that they want covered can be reassured, as I have sought to reassure the House, that in the vast bulk of cases these points will be in the regulations, which obviously have the same force as the Bill.
With regard to Amendment 68, I will not repeat at great length that we have no intention to do what the amendment seeks to prevent. I do not need to refer the noble Lord, Lord Eatwell, to the Treasury paper because he has read it. I do not need to remind people about the UK and European legislation that would limit the Government’s freedom to do what the amendment prevents because I have already done so. What I will say is that we are committed to giving further consideration to the protection of accrued benefits, of all sorts, in all circumstances. I plan to have amendments to that effect ready for Report; they will cover this point along with accrued benefits, so I hope that is a reassurance to the noble Lord.
Lord Newby
I think I will have to write to the noble and learned Lord. I am very happy to do so.
I shall return to the amendments and start with Amendment 91D regarding the Scottish scheme. I heard what the noble and learned Lord said about the Scottish Government being unable to implement the reformed schemes in the 27 months available, but the Scottish Government have at no stage asked a Minister for a delay to the implementation of the schemes, and we think there are very good reasons for avoiding a delay.
A delay in implementing the reforms would, for example, result in hundreds of millions of pounds of additional liabilities being accrued in the Scottish schemes. These additional costs would have to be met from the Scottish budget at the expense of Scottish jobs and services. Furthermore, a delay would disadvantage Scottish public service workers on lower and middle incomes by prolonging the period that they will continue to subsidise the pensions of high flyers. I am sure that the noble and learned Lord does not think that that is desirable. The only thing I would say by way of general comment is that it has been clear since the point at which this legislation was introduced that it would apply to Scotland and how it would apply to Scotland. My right honourable friend the Chief Secretary has written repeatedly to the Scottish Government about what is going on in England and how we are making progress, and therefore there is no objective reason why the Scottish Government should not be absolutely marching in lockstep with the Government in London in terms of producing the scheme rules. We think that the time has come for the Scottish Government to get their skates on, and we do not believe that there should be a delay in Scotland for the reasons that I have given.
Baroness Donaghy
As the Minister knows, I am extremely concerned about equality of consultation on this issue. Can he say objectively if the same applies to local government employers and all public servants in Scotland and that they are equally in step and are fully involved?
Public Service Pensions Bill
Debate between Lord Newby and Baroness Donaghy(11 years, 10 months ago)
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Baroness Donaghy
My Lords, when I was chair of ACAS, one of my jobs was to try to read between the lines of documents like this, which is very difficult to absorb at such short notice. In reading between the lines—I am only guessing—it seems possible that the Minister has been placed in a difficult position in terms of timetable, which might not be entirely under his control.
I want to make a slightly narrower point than that made by my noble friend Lord Eatwell and probe a little on this issue of Scotland. When the Minister was summing up at Second Reading, he indicated that the Scottish Government had accepted the “generality” of the Government’s proposals, which he said were very much based on those put forward by my noble friend Lord Hutton. In terms of the more detailed proposals, the noble Lord informed us that,
“the Chief Secretary has written to Scottish Ministers inviting them to propose amendments if they feel the provisions of the Bill are not suitable for the Scottish pension scheme”,
and that as of 19 December, no such amendments had been proposed. He concluded that:
“Any regulations made by Scottish Ministers will be subject to the procedures in the Scottish Parliament”.—[Official Report, 19/12/12; col. 1585.]
I am setting this scene because the point that I want to emphasise is that the Bill is based upon negotiations—these are not technical points that I am trying to make. The Bill is based upon negotiations in England and Wales and has not been subject to the same level of negotiations in Scotland. I am talking about the parties involved in the local government scheme there. I may not know much about the detail of the relationship or the liaison between the Chief Secretary and the Scottish Government, but I do know about genuine involvement and consultation. If you invite someone to a party that is in full swing, they are entitled to feel various emotions, and one of them will almost certainly be resentment that they were not invited earlier. I cannot expect the Minister to be completely frank in the Chamber, but I am slightly puzzled about why the invitation was delayed.
This Bill prescribes the design of Scottish schemes in a way that current UK primary legislation does not. It is vital that the Scots be fully involved in this process and that the Bill should be amended to maintain the powers of the Scottish Parliament to design and regulate the public service pension schemes that are devolved to Scotland. I know that this is a slightly different point from that made by my noble friend Lord Eatwell, but as we are where we are on this. I just want an assurance that the parties involved in this are being fully involved. I hope that the Minister will accept Amendment 28A.
Lord Newby
My Lords, I hope that I can clear up some of the confusion in the mind of the noble Lord, Lord Eatwell, about this, and I am very pleased that the House has not been deprived of his Second Reading speech.
The noble Lord asked about what this meant in terms of the differences in the way in which the schemes will be applied across the various component parts of the UK. I will deal first with Northern Ireland. I point out that I made it clear at Second Reading that the Northern Ireland Executive were intending to proceed in the way to which these amendments give effect. We were not hiding anything from the House. The other point is that the Northern Ireland Executive have accepted the principles of the report of the noble Lord, Lord Hutton, and therefore we would expect that where we end up in Northern Ireland will be very similar to where we are in the rest of the UK.
However, this is a decision for the Northern Ireland Executive, not for us. The Government would have been very happy to include Northern Ireland in the Bill; indeed, that is the basis on which we started, that it would be easier to take something out than to put it in. But it is their decision and their power as a devolved Administration.
In respect of public sector pensions in Scotland and Wales, the areas for which the Scots and Welsh have complete devolved authority are very small. In Scotland, we are talking about part of the judiciary—I gather it involves six judges—and certain public bodies. For the generality of public servants in Scotland, 98% to 99% of them will be covered by the Bill. Those that are being excluded are these small numbers. Equally, in Wales, the number of people for whom the Welsh Assembly has total authority is very small. I think, although I may be wrong, that it only involves councillors and Assembly Members. Again, the vast bulk of the public servants in Wales will be covered by the Bill even as amended. I do not think that we are going to have quite the hotchpotch that the noble Lord is concerned about.
Baroness Donaghy
If this covers so few people—and I come back to Scotland again—why did this not emerge in the Second Reading debate? Why was the House left with the impression that the Scottish devolution issue would cover more than just the few public servants referred to? A slightly misleading impression was given, if the Minister does not mind my saying so, because there is a feeling that the public servants in Scotland have been left behind on this. I emphasise that the negotiations that took place in England and Wales did not take place in Scotland. This is a very important point. I am sorry to keep going on about it, but it is all very well to hide behind technicalities about how many people are involved—I am really quite shocked that it has emerged today that so few people were involved. I just wonder whether this would not have led to a bigger debate at Second Reading.
Lord Newby
The distinction between the very small numbers that I have been talking about and the rest of the public servants in Scotland is that the rest of the public servants in Scotland are covered by the Bill. The schemes established under the Bill for public servants in Scotland were still negotiated in Scotland, but the framework for public sector pensions in Scotland, with the exception of those very small numbers, will be the same as in the rest of the UK. There is devolved power to the extent of the scheme negotiations within the framework of the Bill.
Baroness Donaghy
My Lords, I know that the Minister thought that I overdid it a bit at Second Reading when I said that the confidence of public servants was shattered by two successive large sets of negotiations on their pensions. However, I think that this comes back to an issue of trust, and obviously everyone is going through the Bill line by line to see where that trust might be undermined in future.
I support everything that my noble friend Lord Whitty said. As currently drafted, the Bill would allow scheme regulations to make retrospective changes. I made it clear that in principle I did not disagree with that. However, the absolute crunch would be that scheme members or their representatives should agree to any retrospective change and the Government’s commitment that accrued rights up to the date when the scheme was changed would not be reduced. As has already been said, this would simply ensure that workers in public service pension schemes enjoyed the same protection in relation to their accrued pension rights as exist for workers in the private sector under pensions law.
I was concerned about the noble Lord’s reply on this issue at Second Reading. I understand that there is no set standard of protection across the current schemes, as he said. Apparently the Government have chosen not to carry across the protections in retrospectivity that can be seen in previous legislation, such as the Superannuation Act 1972. They are concerned that what the Minister referred to as the “most extreme” of these protections—member consent locks—is not the way forward. The Government say that they are trying to strike the right balance between the protection of members and the efficiency of the scheme, and no one can disagree with that. However, I cannot help thinking that this obsession with member consent locks is all about not getting unanimous agreement to the deal, and that is throwing out the baby with the bath water. What these very reasoned amendments do is codify the Minister’s precise intention. He said that he would take this issue back and further consider the provisions of the Bill, and I hope that he will give the reassurances that we are seeking.
Lord Newby
My Lords, I begin by saying that I completely agree that we are dealing with extremely important provisions in the Bill, particularly with regard to retrospective and legislation-amending powers. I should also say that I am sympathetic to the concerns that have been expressed. I should like to go through each of the amendments in order, and I hope that I will not detain the House for too long.
Amendment 26 is the first of the two amendments in the name of the noble Lord, Lord Eatwell, dealing with retrospection. I should begin by explaining that some powers of retrospection are needed because of the way that pensions legislation is typically split between primary and secondary provisions. This Bill exemplifies that combination. It sets the core framework in primary legislation while the scheme design details, such as the accrual rate, will be set out in secondary legislation. When future changes are made to the secondary legislation, which typically happens in most years to ensure that they run smoothly, it can be necessary to bridge any gaps to the underlying primary legislation, as well as adjusting existing secondary legislation to ensure that it remains consistent. By allowing scheme regulations, which are themselves secondary legislation, to make necessary changes to primary legislation via the affirmative procedure, we believe that we are striking a sensible balance between member protections and parliamentary scrutiny. This approach is commonplace in existing pensions legislation.
However, the Government have listened to what noble Lords have said and have read with interest the 10th Report of the Delegated Powers Committee, which calls into question aspects of the scope of the proposed power. In particular, the report recommends that the power to amend primary legislation should be restricted to amending Acts that have already passed and to making only consequential or consistency provision.
We are considering the recommendations of the Delegated Powers Committee very carefully and on Report I hope to be able to bring forward amendments on this issue that will satisfy noble Lords’ concerns. I was extremely grateful to the noble Lord, Lord Eatwell, for saying that if we are able to do so successfully, he will support those amendments. These are important but complicated issues and we are determined to get them right. In responding to the individual amendments that have been tabled, I hope that I can tease out some of the complications and ensure that we do indeed get these issues right.