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

Lord Shipley Excerpts

Tuesday 13th May 2014 Lords Chamber

[Lord Shipley (LD)]

I should first declare my interest, as I have a small pension resulting from six years’ contributions to the Local Government Pension Scheme as a councillor. This has been a very helpful debate in identifying the key issues that this decision has thrown up, because it is a very bad decision.

I recognise the role of my party in the coalition in ameliorating some aspects of the proposals. However, the fact remains that the Government’s decision is still poorly thought through and is a bad one, as I say. We should be very surprised and concerned by it because it discriminates against elected councillors, many of whom have heavy workloads as councillors and may have to give up other careers to take on the role, as we have heard. The decision also discriminates against those who have several part-time jobs, of which being a councillor is one. Again, we have heard an example of that.

Recently, during the passage of the Pensions Bill, time was spent discussing how best to recognise that some people may have several part-time jobs in their working lifetime. Being a councillor is such an activity, and it is work. It is formally treated as work in respect of tax and national insurance. Councillors are not, of course, formally employees of a council but because they are remunerated and pay tax and national insurance they are the equivalent of council employees. Therefore, it is very hard to understand why councillors should be excluded from a pension scheme which is available to those who are formally employed by a council.

Council employees may work in full-time or part-time posts and may do so for a short period. Councillors and elected mayors are no different: they may also be full time or part time and may be in post for a short period, should they not stand for re-election or lose their seat at an election. Equality of treatment is missing here. In pension terms, the right of council officers to join a pension scheme should apply also to councillors.

It is sometimes alleged—we have heard this in your Lordships’ House this afternoon—that being a councillor is a voluntary activity. We have also heard it said that it does not take up much time. It is, of course, true that it is a voluntary activity because people are not compelled to stand for election. However, that is not really the issue. In terms of time, being a councillor may not take up much time in a very small council but that is not true in the vast majority of cases.

Full-time elected mayors will not in future be able to join their local government contributory scheme. They may have to give up a contributory scheme in their current employment to become elected mayors but will have no right to continue contributing to a pension through the local government scheme. This seems wrong. Council leaders and cabinet members who carry substantial workloads, often between half and full time, are in the same position. Why should they be denied the right to contribute to a pension?

It has been said that not all councils offer membership of a scheme. My response to that is that I have real doubts about the work of the independent remuneration panels. I do not understand why there is no statutory national scheme for the payment of councillors’ allowances and for a pension scheme. That does not exist yet; I hope that it may do so in future. However, it remains the case that 58% of councils do offer membership. The fact that 42% do not may reflect workloads and the size of those councils, but in total just 17% of all councillors are part of the scheme. My noble friend Lord True asked a critical question—namely, what is the problem that the Government are trying to solve and why do they not simply permit the current scheme to continue? Attention has been drawn to the double standard that will now apply, because in Wales, Scotland and, I understand, Northern Ireland pension rights will continue.

My noble friend Lord Bourne of Aberystwyth asked about the financial consequences and I think said that the proposal may save money. The problem is this: it is unlikely to save any money because an independent remuneration panel will have the power to allocate a sum of money for councillors to purchase pension contributions. If that is done, it will have to be done for every councillor in that council area. Therefore, if that happens, it could end up costing more. At the moment, only 30% of councillors, where there are schemes, have joined them. The right voluntarily to join the contributory scheme is therefore the best way to approach the issue.

At its heart, this is a major issue of principle. The consequence may be that fewer people will be prepared to stand for election and fewer will be prepared to take on leadership roles. The consequences could well be that leadership roles will be undertaken by those who are older, with independent incomes. It would be a great loss to local government if younger people were less willing to serve, and I hope that the Minister will explain what problem the Government are trying to solve, what analysis was done of the consequences of the decision that has been made, and what the future for local government will be if fewer people are willing to come forward to stand for election.

[Baroness Hanham (Con)]

My Lords, I will be slightly out of line with other speakers, all of whom have local government experience as well. I have been listening carefully to the debate. As a former leader of a council and a former Minister who did not take a pension—I declare that interest—I am very conscious of the work that is done by local councillors and the extra amount that they do as a result of the changes to their responsibilities that have been made over the years.

However, I part from a number of the speeches, for which I am sorry because I am very fond of my noble friend Lord True and everyone who has spoken. I want to draw back because the noble Lord, Lord Shipley, and others have talked about the difficulty of recruiting people as councillors. I remember extremely well when allowances of any sort were first considered. The argument was that if we did not provide them, only the rich, the old and people who had time on their hands would be able to be councillors. We introduced allowances and some of them are very substantial indeed. I know that my noble friend Lord True says that they were reduced, but he is not necessarily in the majority. Over the years, council allowances have exponentially increased. I am not concerned about that but about the fact that we are beginning to use the same arguments that supported allowances for supporting the pension scheme. I have never understood why councillors were included in it, and I shall tell noble Lords why.

It is because local councillors are responsible for their position to their local electorate. They can be there, at elections, or they cannot—they can be taken away. They voluntarily stand for election. They do not know whether they are going to be councillors. They are totally reliant on the electorate to make sure that they are there and for how long. That underlines the voluntary nature of standing for a local council. The work that they do is, of course, immensely important. However, this work can be done alongside other jobs—and many people do that—and therefore I do not understand where the pension comes into it.

I understand why there are allowances. If I may say so, they were quite hard fought for at the time but the allowances are there. I do not think that my noble friend has a policy on which she is going to win very strongly but it is something where the Government have to grasp the nettle. If not, the argument will go on and on as people justify more and more expenditure for local councils.

Finally, I want to make a distinction between councillors and council officers. If councillors ever come to be seen as in any way doing officers’ work and running councils on the basis of officials, then we will have lost the plot. Councillors are there to represent people in the local community which they serve; they are not there to implement policy. There is a difference between employed people on the council and councillors, and I think that that is what drives the distinction between those who do and do not have a pension.