Parliamentary Contributory Pension Fund Debate
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Angela Eagle
Main Page: Angela Eagle (Labour - Wallasey)Department Debates - View all Angela Eagle's debates with the Leader of the House
(13 years, 2 months ago)
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Sir George Young
The trustees will continue to administer the scheme. The chairman of the trustees might want to catch your eye, Mr Speaker. Under our changes, the rules that govern the scheme will no longer be made by the Government or the House; they will be made independently by IPSA. After the process of transfer on 1 April next year, the scheme will continue to be administered by the trustees until such time as IPSA makes any change. If it wants to make changes, it must consult the trustees. The motion indicates that the first change should be an increase in the contribution rate. It then suggests that, along with other public sector schemes, a new scheme, perhaps moving from final salary, should be introduced by 2015, but the scheme will continue to be administered by the trustees, and I pay tribute to the work they do.
Ms Angela Eagle (Wallasey) (Lab)
Will the right hon. Gentleman confirm my understanding that the arrangements being put in place for the trustees, some of which come from the Constitutional Reform and Governance Act, are in line with best practice for other pension schemes?
Sir George Young
Yes; I believe that to be so. There has been no representation on the issue the hon. Lady raises. There are some changes in the composition of the trustees to reflect IPSA’s responsibility, as part of the 2010 Act.
Ms Angela Eagle (Wallasey) (Lab)
As the Leader of the House says, the motion seeks to deal with some unfinished business from the previous Parliament. The order that we are debating is necessary to commence the provisions of section 40 and schedule 6 of the Constitutional Reform and Governance Act 2010. Those parts of the Act transfer responsibility for hon. Members’ pensions to the Independent Parliamentary Standards Authority. That legislation was passed, with all-party agreement, by the previous Government. It gained Royal Assent in April last year, just before the general election, and there was a general feeling that it was wrong for existing arrangements to be left unchanged, and that the independent determination of salaries should extend to cover pay and pensions. Having voted for the primary legislation that brings about that switch of responsibilities, we Labour Members will not oppose the motion today.
The order will change the current arrangements, under which the Leader of the House—in effect, the Government —determines MPs’ pension arrangements through regulations. Following the 2009 report by the Committee on Standards in Public Life, the previous Government accepted in principle that the independent regulator should be given statutory responsibility for MPs’ pay and pensions. While that change was being legislated for, there was, quite properly, input from the trustees of the parliamentary contributory pension fund, which ensured that Members’ accrued rights had protection consistent with that provided to members of other occupational pension schemes. There was also agreement to amendments that ensured that the parliamentary contributory pension fund would continue to be a trustee-based scheme with appropriate member representation, and that required IPSA to obtain trustees’ consent before making changes in the administration of the scheme.
Bob Russell
The hon. Lady rightly draws attention to the history that has led to our discussing the motion today, and to what happened in the previous Parliament. After 18 months’ experience of IPSA, does she have total confidence in that organisation’s ability to deliver our pensions?
Ms Eagle
We all have our IPSA stories, and we could probably dine out on them—with each other, and we would not claim it back. We all have stories about some of the absurdities of the scheme, especially at the beginning, when it was bedding in. There has been considerable progress, and I would like further progress to be made. There are ongoing ways in which we in this House can bring to light any remaining absurdities, and I hope that we can continue to iron them out. The principle of independent determination is right. IPSA seems as good a body as any—not withstanding the chaos at its beginning—to undertake all that responsibility. Clearly, we will have to wait and see whether my confidence will be rewarded, but I am willing to give IPSA a try. I know that the hon. Gentleman is somewhat more sceptical about the authority than I am.
Mr Winnick
When the Leader of the House spoke, he was justifying, on behalf of the Government, what is happening to public servants across the country, including many of our constituents who are on relatively low pay, and justifying the attack on their pensions. I certainly do not agree with what is happening, and I am sure that my hon. Friend the Member for Wallasey (Ms Eagle) does not.
Ms Eagle
I will come on to make a few short, in-order remarks about that aspect of our debate, but I think that most Members of the House would agree that we cannot expect to be treated differently from other public sector workers; that is a principle that most of us would share.
I was talking about appropriate Member representation on the trustee board, and the fact that IPSA, under the primary legislation and the order, will have to obtain the trustees’ consent before making changes to the administration of the scheme or the management of the scheme’s assets. Again—this is an important principle—it is entirely in keeping with the usual practice of other funded schemes. It is important that we maintain that parallel.
The order will change the legal structure of the parliamentary contributory pension fund. It will become an IPSA scheme and the power to amend it will be vested in IPSA rather than in the Government via regulations tabled by the Leader of the House, so the Leader of the House is giving away powers in the order. He seems to be quite happy about that. IPSA will acquire the duty to do all this, rather than the current Leader of the House.
The primary legislation ensures that there is a requirement, though, for IPSA to consult interested parties prior to determining benefits or contributions in future. In the primary legislation interested parties include the Speaker, the trustees of the scheme, the Senior Salaries Review Body, the Government, and in many ways the most important organisation in all pension deliberations—the Government Actuary’s Department. This is all entirely sensible, and I look forward to IPSA undertaking this work in due course.
Mr Redwood
The hon. Lady is making an important contribution. May I see if I have understood what she is saying? She is saying that the order does not suspend normal trustee law, so are the trustees under a duty to give their consent or to seek to modify the scheme that IPSA brings forward? I do not know whether this is a normal scheme or not.
Ms Eagle
This will be an IPSA scheme. My understanding of it, in my reading of the primary legislation which we all supported prior to the last election, is that the trustees would have the normal legal requirements and fiduciary duties in the new scheme that trustees of other schemes have. That is my understanding. I am looking at the Leader of the House, who does not seem to be shaking his head. I assume that if the Government had a different interpretation, we would have heard about it by now.
Sir George Young
The hon. Lady is right. Paragraph 12 of schedule 6, which deals with the MPs’ pension scheme, makes it absolutely clear that it is up to IPSA to devise the scheme. There are rights of consultation, but it is an independent scheme set out by IPSA.
Bob Russell
On a point of order, Mr Speaker. If those on the two Front Benches cannot agree on a matter of such fundamental importance as this, how on earth can we proceed?
Mr Speaker
That is definitively not a point of order. It is a point of obvious and intense frustration.
Ms Eagle
I do not want to use the word “frustrated” in the Chamber because it is rather a difficult one to use. I did not think we were disagreeing. I thought I was answering slightly more accurately the point that the right hon. Member for Wokingham had made about trustees’ duties in law. The Leader of the House was answering a slightly different question about the fact that IPSA would be in charge of the scheme. Again, that does not undermine our existing understanding of trustee law and the fiduciary duties of pension trustees.
Stephen Phillips
I am grateful to the hon. Lady for giving way. I do not know the answer, but can she, and in due course the Leader of the House, confirm the position as I expect it to be, which is that the trustees will continue to administer the scheme for the benefit of the beneficiaries, and the terms of the scheme for existing entrants but not for their accrued contributions will be set by IPSA, as indeed will the terms of the scheme for new entrants in due course? The trustees will retain the duties that I understand them to have under the relevant legislation.
Ms Eagle
That is also my understanding, although I am not a trained lawyer, unlike the hon. and learned Gentleman. However, I did a stint as Pensions Minister so have some understanding of these matters.
Other aspects of the motion have proved more controversial, if the presence of the amendment, which proposes deleting everything from line 6, is anything to go by. The wording of the motion was not decided by cross-party agreement, unlike the decision in principle to transfer responsibility for pension arrangements to IPSA. It is the Government’s wording and appears to reflect their position on public sector pensions more generally.
When Lord Hutton produced his final report on public sector pensions, it fell to me, as shadow Chief Secretary to the Treasury at the time, to respond to it on behalf of the Opposition. We certainly welcomed Lord Hutton’s commitment to the ongoing provision of pay-as-you-go pensions in the public sector—our own included—as a matter of principle. We also noted his view that the pensions currently provided were not—to use the phrase that is bandied about—gold-plated. It is easy to forget in the welter of propaganda about the generosity of public sector pension provision that the majority of public sector pensioners receive less than £5,600 a year. Indeed, many beneficiaries are part-time women workers who take home considerably less than that after a lifetime of service. Both the Prime Minister and the Deputy Prime Minister have been guilty of using that alarmist phrase. We may have a far better and more measured debate about these important matters if they would accept what Lord Hutton has said and stop using that highly misleading and derogatory phrase about public sector pension provision.
Although Lord Hutton made the case for an increase in contributions, which is mentioned in the motion, he did not specify what it should be. He stated on page 119 of his interim report that the Government
“should have regard to protecting the low paid and to the possibility of significant increases in the number of employees opting out of schemes and should consider staging increases in contributions where appropriate, to minimise this risk.”
After the Hutton report was published, the Opposition recognised the merit of considering a move to career average benefits, rather than final salary schemes. We also recognised the pressure generated in all pension schemes—again, ours is no different—by increasing life expectancy. We had acknowledged this in government by negotiating changes to existing schemes involving increases in contributions, later retirement ages and “cap and share” arrangements. These agreements will save £1 billion a year.
Clearly, MPs’ pensions cannot be immune from such changes, and I am sure that IPSA will consider that in due course when it looks at what our future contributions and benefits should be. I am also sure that it will take into account the 1.9% increase in contributions that was agreed in 2009 as a cost-saving measure in our scheme, which takes Members’ contributions to 11.9%, 7.9% or 5.9% of salary depending on the chosen accrual rate. Likewise, I expect IPSA to take into account the fact that the average time a Member serves in the House is 15 years.
I know that some right hon. and hon. Members have suspicions about the timing of today’s motion, which is ahead of any outcome of the so-called negotiations on the pension provision for millions of public sector workers. The motion might be read in a certain way, as if it is pre-empting those negotiations, because it states that IPSA should increase Members’ pension contributions
“in line with changes in pension contribution rates for other public services schemes.”
The fact is that the talks are ongoing. If they are to have any meaning whatsoever, rather than being exposed as a charade, we cannot know in advance what their results will be.
Mr Mark Field
I understand some of the hon. Lady’s concerns about pre-emption, but does she not also think that at this juncture we need to take a lead on this, despite all the concerns I have—I hope that she will be able to say a little more on the relatively generous rates for parliamentary contributions, compared with others—given the difficulties we will face throughout the public pensions sphere?
Ms Eagle
It is certainly important that we are not seen to exempt ourselves from the required changes, and in this debate so far that sense has been put across by speakers on both sides of the House.
The Government have to show understanding and good will if they are to make progress on public sector pensions.
Tony Lloyd
My hon. Friend is making an excellent speech, as ever, and the point that she makes is the real one: nothing in today’s vote in the House should be seen to pre-empt the legitimate negotiating process that is taking place with millions of public sector workers. If something should not be pre-empted in particular, it is the opportunity for the Government to say that, somehow, the motion before us gives them legitimacy in refusing to negotiate in good faith with public sector unions.
Ms Eagle
I agree. I certainly hope that the Government want to negotiate in good faith with public sector unions, and I understand that sector-specific talks have been going on. In education there were meetings last Wednesday, in health there are meetings tomorrow, and the civil service has had a few meetings, because on public sector pensions it is hard to generalise. The schemes are quite different, and the local government scheme is funded completely differently.
I understand also that a meeting is due a week today between the Chief Secretary to the Treasury and the Cabinet Office Minister with responsibility for the central talks, and I certainly hope that all sides show flexibility so that there can be a negotiated settlement.
Mr Winnick
Does my hon. Friend agree that, after a lifetime working in public service, and with the expectation of a pension somewhere in the region of £5,000, many of our constituents will not accept a reduction because the House has today decided that its pension scheme is going to be different? They would be daft to be so persuaded, and they will not be.
Mr Anderson
It is quite clear from my discussions with people in the negotiations that the Government are not negotiating seriously: they have made the point that they want a 3% reduction no matter what. All they are talking about is how they should do it, not whether they should do it, and no evidence has come forward—there are no actuarial reports and there is no cognisance—of the impact that the number of people dropping out, which could be in the hundreds of thousands, will have not just on those schemes, but on the investment potential of those schemes.
Ms Eagle
My hon. Friend makes a perfectly good point, and I hope that the Government are listening. They have to show understanding and good will if they are to make appropriate progress on public sector pensions, especially at a time of pay freezes and the most ferocious squeeze on living standards since the great depression.
The Government should not play politics with this issue, and they cannot take our support for the motion as any endorsement of the way in which they have so far chosen to pre-empt meaningful negotiations with public sector trade unions to resolve the outstanding issues on pensions caused by the announcement of an across-the-board 3.2% increase in contributions, a shift from RPI to CPI for indexation—
Ms Eagle
The trouble with the amendment, as the hon. Gentleman would probably admit if he sat down and thought about it, is that, the amended motion would look like we wanted our public sector pension to be treated differently from the generality of public sector pensions, and that would be an unfortunate impression. I hope that he reflects on that meaning of the amendment, to which he has put his name, and thinks better of it when it comes to the debate.
I was in the middle of saying that the outstanding issues caused by the announcement of an across-the-board 3.2% increase in contributions, a shift from RPI to CPI for indexation and speeding up the increase of retirement ages, the latter of which hits women particularly hard, are real issues that I hope the Government will address with good will in the negotiations, rather than regard as a complete fait accompli.
Mr Mark Field
Does not the hon. Lady recognise that one reason for what she would regard as this breakneck speed of reform of the age of retirement and pension arrangements is that so little was done, and not just in the past 13 years, since one could argue, given the actuarial evidence about life expectancy, that the inaction goes back well before 1997? The force of necessity has meant that the Government have had to act relatively quickly to make up for very slothful action from past Governments.
Ms Eagle
I do not agree with the hon. Gentleman’s interpretation at all. We sometimes agree on things; we do not happen to agree on this. We made some good reforms and we saved considerable amounts of money through the negotiations that we had on public sector pensions, which came to an agreement. I am arguing that MPs’ pensions should not be exempt from changes, regardless of whether they are independently provided for and decided on.
I hope that the Government show determination and good will in having meaningful negotiations with the representatives of millions of public sector workers whom they are meeting, and that they recognise the real challenges and dangers, as Lord Hutton pointed out, of going too far and too fast on contribution rates and driving people to leave schemes at a time when there is a ferocious squeeze on living standards. There is a balance to be negotiated, and I am not at all certain that the Government are getting that balance right. If they get it wrong, many hundreds of thousands, even millions, of people will leave schemes and will then look forward to a life on means-tested benefits when they retire, which, paradoxically, will cost the country more than if we can keep them paying into schemes. There is a delicate balance that has not often been reflected in the rhetoric—the bellicose rhetoric, in some cases—from Government Members as these negotiations proceed.
I hope that there will be a new and constructive approach from the Government in the ongoing negotiations on public sector pensions. In the meantime, we will support the motion.
Mr Peter Bone (Wellingborough) (Con)
It is a great pleasure to follow my hon. Friend the Member for Suffolk Coastal (Dr Coffey) who, as usual, made a number of good points. I think it would be wrong if I did not mention the speech of the hon. Member for Central Ayrshire (Mr Donohoe), which I thought was the most reasoned and sensible speech of the whole debate. Uncharacteristically, the Leader of the House was not on his best form and did not show his usual charitable nature. I think that when he reads Hansard tomorrow, he will regret the remarks he made about the implied position of Members who signed the amendment, which was quite wrong. I really think that, on reflection, he will regret saying that.
The emoluments of Members should be a matter for the House and Members should have a free vote and be allowed to make their own minds up—this should not be party whipped. That is where a lot of the problems with our pensions and salaries have occurred in the past, with every party leader trying to bid lower to attract what they thought was the best press coverage on the issue. I do not think that a single Member has said that our pension scheme should not go to IPSA. What I am concerned about is our sending it to IPSA, and then the Executive—the very Government who say they want there to be an independent look at how our pensions are run—telling that independent scheme what to do. That is the whole problem.
The amendment is very simple. It simply takes out all the garbage, goes to the heart of the matter and transfers our pension scheme to IPSA for IPSA to make up its own mind. I am quite sure that Sir Ian Kennedy will ignore the rest of the motion anyway, saying that it is just a representation and that IPSA will make its own mind up. It seems to me that the Government can quite properly make their own submission but that they cannot tie it to the House. Members should be able to make their own submissions and it is wrong to try to force this through. This is what every single Executive have done since I have been here. I say to the Government, “You really have to butt out; you have to leave the pay, conditions and expenses to IPSA.” With all due respect to the Leader of the House, I will have a 10p bet with him that we will be back here again voting on our salaries, because the Government at some stage will not like something that IPSA has recommended.
Let me address the comments of the shadow Leader of the House. I am amazed that the Opposition are going to vote for a motion that states that the House
“supports the approach to public service pension reform set out in the Final Report of the Independent Public Service Pensions Commission chaired by Lord Hutton of Furness”.
I might think that is a good idea, but I did not think that was the Opposition’s view. If they vote for this motion, they are voting for that. They cannot argue about it because it is on the Order Paper.
Ms Angela Eagle
I spent a little time talking about some aspects of the Hutton report that we did support, and I also made observations on some aspects of the Hutton report to which I thought the Government should pay more attention. I think my speech was entirely in keeping with our response to the Hutton report to date—as the hon. Gentleman will see if he reads it in Hansard tomorrow.
Mr Bone
I listened very carefully to the hon. Lady. If this motion goes through, the Government will quite rightly be able to say that the official Opposition support the wording because they voted for it in the House of Commons. That may well be her position—I am happy to accept that—but this is not the right place to be debating this issue.