Public Sector Pensions

Baroness Primarolo Excerpts

Thursday 8th December 2011 Commons Chamber

[Hywel Williams]

Well, honestly, I am sure that you would not want me to be diverted down this particular route, Madam Deputy Speaker.

[Madam Deputy Speaker (Dawn Primarolo)]

Much as this topic might interest some Members, I think the hon. Gentleman should return to the subject of this afternoon’s debate.

[Hywel Williams]

Thank you, Madam Deputy Speaker.

To summarise our motion, we appreciate the valuable work done by public sector workers and believe that they should receive pensions that are affordable, sustainable and fair. I think that we can have agreement across the House on that. We believe that the Government’s changes are primarily for the purposes of deficit reduction—I do not think we are going to have agreement on that—rather than to secure the long-term sustainability of public sector pensions. These changes are, to our minds, unfair on public sector workers.

We also note that the findings of the National Audit Office for the 2007-08 period show that pensions re-negotiated at that time will generate estimated savings of 14% by 2059-60. The conclusions of the 38th report of the Public Accounts Committee reveal that the cost of public service pensions has reduced substantially because of those changes. We agree with the criticism in both reports of the failure to develop a long-term strategy for the role of pensions in recruitment and retention in the public sector, and we condemn the Government’s threat to cut the devolved Administrations’ budgets if they do not implement the Government’s immediate levy.

--- Later in debate ---

[Hywel Williams]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I will be grateful if the hon. Gentleman returns to the topic of his motion, which is the Government’s plans on pensions.

[Hywel Williams]

I will obey your injunction, Madam Deputy Speaker.

As I have said, I have had a great deal of correspondence with the unions, and I have given their point of view, which concurs with ours. We are happy to fight the workers’ corner in this dispute. We are happy to press for a proper pensions settlement, which is why we will press our motion to a Division.

--- Later in debate ---

[Ian Murray]

You are talking about choices that the SNP Scottish Government will make and one of the big choices they made was to cut capital spending far faster and far further than your own Government.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman is referring to the Minister and should refer to him as the Minister or “he”. “You” means the occupant of the Chair, and this is nothing to do with me, fortunately.

[David Mundell]

That is a phrase often used in Scotland, Madam Deputy Speaker, by one of the—

[Madam Deputy Speaker]

Order. I say to the Minister that I am absolutely aware of the use of “you”, but I think that in parliamentary debates we should stick to the convention here, as I am sure he agrees.

[David Mundell]

I will indeed do that, Madam Deputy Speaker.

The SNP Scottish Government have played fast and loose with Scotland on pensions. Rather than making responsible suggestions, they resort to scare tactics. In this motion, the SNP and Plaid Cymru are frightening people by saying that they will receive less pension. The SNP’s submission to Lord Hutton, as we have heard, offered at best no better and in some cases a much worse deal. The Scottish Public Pensions Agency, an agency of the Scottish Government, headed by the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, made a number of interesting suggestions when it illustrated options for further change. It suggested reducing current employer contribution cap levels with members meeting all costs above that cap. Alongside that, it proposed to reduce the levels of benefits available without necessarily reducing the levels of contributions.

--- Later in debate ---

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. A large number of Members wish to take part in this time-restricted debate. I am going to impose a time limit from the next speaker of seven minutes, because I have now been informed of how long the winding-up speeches will take. I cannot take account of how many interventions there will be, however, so the time limit may have to be reviewed downwards in order to get everybody in at a later stage.

--- Later in debate ---

[Jackie Doyle-Price]

That is absolutely true. It is not very good for growth and competitiveness if we are pricing growing businesses out of the market simply because they cannot afford to recruit staff at sustainable levels.

The motion refers to the reports by the National Audit Office and the Public Accounts Committee. I am a member of the Public Accounts Committee. While it is true that we were pleased that the reforms introduced by the previous Government were moving in the right direction, we were not satisfied that they were sustainable in the long term. The NAO would not be drawn on that specific issue, because it recognised that it was a political decision. The PAC said that the Hutton commission provided the opportunity for the Government to develop a clear strategic direction for public service pensions and that we looked forward to those detailed proposals. The Public Accounts Committee report was therefore much more sympathetic to the Government’s approach than is indicated in the motion.

That said, the Committee did express concerns about pension reform. We expressed concern over its impact on staff morale. It would be helpful if employers and trade unions worked more collaboratively to address that. Sadly, that has not been the case to date. We also expressed the opinion that many employees did not understand the value of their pensions as part of their reward. If the colleague I mentioned earlier, who worked in financial services, did not understand the true value of her pension pot, God help any other public sector worker.

We must ensure that we do not discourage people from saving for retirement. I therefore welcome the Government’s decision to exclude the lower-paid from any increases. Obviously, 15% of salary is a lot—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

--- Later in debate ---

[Mr Donohoe]

I do not accept that at all. This Government have put up VAT, which is affecting all the low-paid people across the country more than it is the likes of the hon. Gentleman. He should not delude himself that the situation is different.

My mind has been taken away from this subject over the past week, because young Jack Samuel Donohoe, my second grandchild, was brought into this world at five past 12 on Monday. Jack, his mother Pauline and his father Craig are all doing very well. I mention that only because when my first grandchild was born about three weeks ago, I mentioned it in a debate and I felt that it was only right to mention the second.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sure that the hon. Gentleman will use that point to talk about how long we are all living and return to the motion.

[Mr Donohoe]

I am grateful to you, Madam Deputy Speaker, for that guidance. I am sure that that is what I was about to say. In about 70 years, my grandchildren will collect their first pension. I want it to be a decent pension, regardless of whether they are in the public sector or the private sector.

At the age of 22, I first became involved in pensions as a trustee of the pension scheme at the Ailsa shipyard where I worked. I have always had an interest in pensions as a result. Many people do not have a clue about pensions. I have always accepted that a pension is deferred income. My pension is part of my income, and pensions are the income of every person who contributes. It is income that this Government are taking from individuals. I know that and other hon. Members should know it.

--- Later in debate ---

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before we proceed with the debate, I need to change the time limit again, because there are still more speakers left than time will allow for. I am reducing the limit to five minutes per contribution. Again, I cannot calculate the consequences of interventions. The time limit has gone from seven to five minutes because things are taking longer; therefore, it may be necessary to change it again, although I hope not. Members can either take less than five minutes or choose not to take any interventions. It is up to them.

--- Later in debate ---

[Mr Weir]

I was about to deal with the position of the Scottish Government. They have taken positive action to help to protect household budgets by, for example, freezing council tax for the rest of the parliamentary term, increasing the Scottish living wage to £7.20 an hour for all staff for whom they are responsible, and committing themselves to imposing no compulsory redundancies. In contrast to the Westminster Government, the Scottish Government have sought to focus on protecting Scottish household budgets.

The amendment tabled by the Labour party referred to the devolved Administration. In Scotland—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The amendment was not selected. As the hon. Gentleman knows, he cannot refer to an amendment that has not been selected, and I am sure that he is not going to do so.

[Mr Weir]

Much of the debate has concerned public pensions in Scotland, Madam Deputy Speaker. I mentioned the amendment merely in passing, but I apologise for doing so.

There are five public sector schemes in Scotland—for NHS workers, teachers, the police, firefighters and local government—all of which are subject to constraints. Formal approval is required from the Treasury for legislative changes to the NHS and teachers’ schemes. It controls the purse strings. Scottish Ministers can determine the design of the police and firefighters’ schemes, although to date they have been negotiated on a UK-wide basis, a position supported by the Labour party. Scottish Ministers can decide on the funded local government scheme as long as the scheme regulations comply with primary legislation.

The Scottish Government sought to protect public sector workers in Scotland from the measures proposed by the UK Government, but the Chief Secretary to the Treasury made it absolutely clear that he would reduce the Scottish budget if they did so. In a letter to the Finance Secretary, John Swinney, on 5 September, he stated:

“If you decide not to take forward these changes, the Treasury will need to make corresponding adjustments to your budget. I would have to reduce the Scottish Government’s budget by £8.4million for every month's delay.”

The Scottish Public Pensions Agency issued a document putting forward options. Its contents were not Scottish Government policy, nor were they SNP policy, and at no time have the SNP and the Scottish Government made such suggestions. The document simply set out options and factual information. It is ludicrous for the two main parties to have a duopoly of despair and to attack the public sector based on the document—the SNP has done much more for public sector workers in Scotland than either of them has done in this Chamber.

--- Later in debate ---

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am going to have to change the time limit again if we are to get all the speakers in. I am going to reduce it to four minutes from the next speaker. I make the same point as I have made every time I have reduced the time limit, which is that interventions are not included in that calculation. If extra time is added for interventions, some Members will now not be called in this debate. I hope that is clear.