Public Service Pensions Bill

Bob Russell Excerpts

Wednesday 24th April 2013 Commons Chamber

[The Economic Secretary to the Treasury (Sajid Javid)]

I beg to move,

That this House disagrees with the Lords in their Amendment 78B but proposes amendment (a) to the Bill in lieu of that amendment.

I begin by thanking Opposition Members for their constructive engagement on the treatment of Ministry of Defence police and fire workers’ normal pension age under the Bill. Important issues were explored during our debate on Monday, when views were put forward passionately by Members on both sides of the House. The Government have acknowledged the strength of feeling. In the other place, my colleague Lord Newby has explained that the Government fully accept the spirit of the Lords amendment we are considering today.

We are willing to include a review of defence fire and rescue service and MOD police members’ NPA in the Bill and formalise the approach that I announced we were intending to take. The review will ensure that the issue can be discussed formally by the appropriate parties to consider the best way forward. However, although the Government agree with the amendment, it requires some small changes to ensure that it works as intended. I urge hon. Members to agree to the tweaks put forward in our amendment.

I will explain briefly why the wording of the Government’s amendment differs slightly from that proposed in the other place. First, we have made a small change to the nature of what must be reported on in order to make it more precise and legally certain. Secondly, the names of the work forces were incorrect. The reference to the “Defence Fire and Rescue Service” has been adjusted to make it consistent with the terms of other legislation that describes the same work force.

Thirdly, the amendment passed to us from the other place seems to confer a double role on the Secretary of State for Defence, as he would be included by both references. My right hon. Friend is a very busy man. It cannot be right to require him both to prepare and to lay a report in conjunction with himself—that would defy the laws of physics. I assume that was unintentional, and it is easily rectified by Government amendment (a).

Finally, and most importantly, it is unclear when the amendment is to come into force. The Opposition in the other place have called for the review to be completed within six months. I am keen to address the House on that point, because I believe that there has been some confusion about whether that means six months from the date of Royal Assent, or six months after section 9 comes into effect. The Opposition’s amendment would require a review within six months of the Act coming into force. However, the Act will be brought into force in stages and some sections might not be commenced for more than a year. We do not intend section 9 to be one of those stages.

The Government’s amendment proposes that the review period should be six months from when clause 9, which relates to the state pension age link, comes into force. That provision alters the normal pension ages for those work forces, so that is where the focus should be. It is our intention that the clause should be commenced as early as possible. Standard Government rules require that provisions in a Bill are not commenced until two months after Royal Assent unless the Bill itself provides for earlier commencement, as the hon. Member for Nottingham East (Chris Leslie) will be aware from his time in government.

We should all remember that the key effect of the review is likely to be felt in 2015, which is when the new schemes are brought in, but the important point is that there will be no delay. The Government have every incentive to resolve the terms and conditions of the MOD police and the defence fire and rescue service as soon as possible, since they will be needed to design and implement the new scheme, which will cater for them in time for April 2015.

[Sir Bob Russell (Colchester) (LD)]

The Minister will recall that on Monday I was very critical of the absence of the Ministry of Defence from the debate. Has there been any involvement with it in the past 48 hours?

[Sajid Javid]

Yes, absolutely. It is of course a full Government position; it represents the views of not only the Treasury, but the MOD. In fact, I discussed the matter only yesterday with the Secretary of State for Defence.

--- Later in debate ---

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I join in the thanks to the Minister and our noble friend Lord Newby for their work during all the stages of this end-of-term attempt at reconciliation, which has at last been achieved. I also thank colleagues on the Labour Benches and those on our Back Benches and on the Cross Benches in the Lords who made sure that the remaining issue in this huge Bill could be resolved amicably. The Lords’ proposal and the Minister’s amendment mean that this is not a closed book and I hope that this hugely important Bill to reform public sector pensions will be put on to the statute book this week. There is now a fixed time frame in which to address further the anomaly that was not spotted by the previous Government or by Lord Hutton, but that has since been brought to our attention.

I also join in the thanks to Mr Kirby and his colleagues for their efforts in making sure that we understood their concerns. Their request is not unfair. They are asking to be put in a position similar to those who do similar jobs—they are not identical jobs—in the civilian services. My hon. Friend the Member for Colchester (Sir Bob Russell) made the obvious point about the logic of that position when he said earlier this week that the argument in favour of Ministry of Defence firefighters and police and rescue people retiring at 60, as is the case in the civilian services, is, bluntly, that they do dangerous jobs that require them to be particularly fit. The argument that they can be expected to do their job properly and protect themselves and others after they reach 60 has not been made. We are all in favour of more flexible ages of retirement. I buy the argument that the retirement age has to go up, both in general and in relation to public servants, and I support the Government’s proposals, but we have to accept that the time when people are not fit enough to do certain jobs will come earlier than others.

I have a few questions. The Bill’s provisions will commence when it is enacted, but that does not apply to those in clause 9—the pension age provisions—which will be subject to an announcement by the Chancellor or a Treasury Minister at a later date. That is a perfectly normal procedure. Will the Minister explain in his response to the hon. Member for Nottingham East (Chris Leslie) when he expects that announcement to be made? That will be of wider interest, because it is a hugely important issue.

Secondly, I ask the Minister to accept that some of the facts and figures that he has used, which I think have also been used by the Government in the other place, are not accepted as facts and may be misinformed. I am not accusing the Minister of doing that wilfully. For example, he has made the fairly strong argument that an 8% increase in contributions would be required from these firefighers, rescue workers and police to fund a pension age of 60. The workers say that it would be a very small figure of about 2%.

That ties in to my third question. It is important that we take into account what this change would cost the Treasury and the taxpayer. The Government have in both Houses given the estimate of £10 million a year. The people who have come to see me have argued that the sum will be much smaller and may be in the order of £2 million a year. I do not pretend to be an expert on these issues, but I am sure that the Minister will say when he winds up that the Government will not go into this process with a closed view. It is a negotiation, so the arguments will be heard and I hope that the true facts will be accepted.

It has been accepted already in the conversations with the Ministry of Defence that the pension age for fire and rescue workers and police in the services can be held at 65 and not rise in line with the provisions of the Bill, which take account of increasing life expectancy. I want to reinforce the point that the people who will be affected argue not that their pension age should held at 65, but that it should be 60, in line with similar civilian workers. If that age is later renegotiated across the piece for firefighters, rescue workers and police, that is fine. I think the Minister understands that, but I wanted to put it on the record that that is where the workers want to start from. That is a reasonable expectation.

I am grateful to the Minister and am pleased that we have been able to carry out this bicameral activity again in a spirit of determined resolution, which I hope will mean that this important Bill becomes an Act on the statute book this week.

[Sir Bob Russell]

I am delighted that the trust and confidence that I placed in the Minister on the public record on Monday has been justified. I thank him, those around him and those in the other place for bringing matters to a resolution that, although a compromise, is one that I hope we can all live with. In that spirit of concord, I thank Opposition Front Benchers for their contribution. We should praise the representatives of the Ministry of Defence police and fire and rescue service, because without their sterling endeavours, we might have ended up with a right mess.

I remain critical of the Ministry of Defence, because if it had been involved at an earlier stage, we would not have got to the stage where a resolution was needed. I am still concerned that we are looking at this matter the wrong way around. It is the fitness of the people to do these very dangerous jobs that should be paramount, not the retirement age or the pension. They defend and provide security and fire services for nuclear installations. I urge the Ministry of Defence, notwithstanding the resolution of this particular matter, to look calmly at the security and fire protection that its police and fire and rescue services provide in the national interest to ensure that they are fit for purpose. Nobody doubts the courage and commitment of the individuals concerned. However, as I said on Monday, do we really want our nuclear installations to be looked after by people of my age?

[Mr Alan Reid (Argyll and Bute) (LD)]

I am pleased that the Government have agreed to make this amendment. My constituents who work as police officers and firefighters at Faslane and Coulport will be pleased that the Government have listened to their case and tabled this amendment.

The report will look at the impact of the Bill on the health and well-being of defence police and firefighters, and at the ability of those over 60 to meet the strict fitness requirements that are necessary for the important and dangerous job that they do. The report will also consider the consequences of early retirement for the workers who are forced to retire early on health grounds because they cannot meet the stringent fitness requirements in their 60s, as well as the cost to the taxpayer.

The Government inherited this anomaly and it was missed by Lord Hutton in preparing his report. The Government have been faithful to the Hutton report in the Bill. I am pleased that they have listened to the concerns of defence police and firefighters, and have agreed to table this amendment.

After Monday’s debate, defence police and firefighters in my constituency expressed concerns to me about the size of the abatement of their pay that it was suggested might be necessary to reduce their retirement age to 60. I hope that all the calculations on the abatement of pay will be transparent in the report. Calculating pension contributions is an enormously complex process. Following a review by the Government Actuary’s Department, the abatement on pay rates for MOD firefighters has been reduced retrospectively from 9% to 7.8% from 1 April last year. The fact that that calculation has been made only recently and has been backdated is an indication of how complicated a subject this is. It is important that during the review, all the calculations are transparent and independently verified, and that the workers are allowed to ask questions about them.

I am delighted that the Government have listened and brought forward the review. I am fairly confident that the review will find that it is not good for the workers or for the taxpayer for people doing these strenuous and dangerous jobs to work beyond 60. The calculations will show that if the retirement age is 65 or 68 and significant numbers of people are forced to retire early on health grounds, both the taxpayer and the worker will lose out. The worker will lose out because they will not get the full pension that they had expected. The taxpayer will lose out because the amount that has been paid into the pension pot will not cover the cost of the pension if it is paid out early.

It would not be right for these workers to work beyond 60. The right comparison is with civilian firefighters and police who work for local authority fire services or other police forces. I am fairly confident that the review will recommend a retirement age of 60. I congratulate the Government on listening to the legitimate concerns that have been put forward.