Public Sector Pensions

Debate between David T C Davies and William Bain

Thursday 8th December 2011 Commons Chamber

[Mr Bain]

I will give way to the hon. Gentleman later.

Today’s concessions by the Secretary of State for Health on NHS pension contributions show that the Government’s plans are already unravelling under the weight of their own contradictions and injustices. Is it not disgraceful that the Chief Secretary to the Treasury did not come to the House today to make a statement on the details of this partial climbdown, instead of the Government briefing the press?

At first sight, the concessions stand up to no more scrutiny than the Government’s previous partial climbdown, which would have required a near 50% increase in annual contributions from affected workers, for up to eight years longer, with the claimed increased pensions paid for as much as eight years fewer, losing real terms value each year due to uprating in line with the consumer prices index rather than the retail prices index. Unison has already said in response to today’s announcements that a one-year delay before low-paid workers will pay higher contributions is cold comfort.

This is the Government who refuse to impose a tax on bank bonuses, but believe that nurses, teachers and catering staff should face additional tax rises instead. This is the Government who in the autumn statement sought to slash £1.2 billion a year from the tax credits of these same workers, hurting women and children four times more heavily than the balance sheets of the banks. We need a negotiated solution in which both sides give ground. The Opposition accept many of Lord Hutton’s points, but the Government pre-empted this with the hike in contributions, which must be subject to negotiations.

Let me set out the reasons why we find the Government’s current proposals unacceptable and urge them to produce plans for the future of public sector pensions that genuinely do not penalise those who are least able to shoulder the burden. First, the Chancellor’s proposals are not about fairness or long-term stability. They are motivated by a reckless plan of spending reductions that are made worse by his failure to grow the economy in the last year and the slump in growth that the Office for Budget Responsibility predicts for this year, next year and the year after. The Chief Secretary to the Treasury set out in the comprehensive spending review last October cuts in the public sector pension bill from next April of more than £1 billion, rising to £2.8 billion by 2014-15, coming from the 3.2% hike in contributions paid by 750,000 public sector workers, all as part of the Government’s plan to take £81 billion out of the economy by 2015 through public spending cuts. However, given that the lack of demand and growth is the biggest problem facing the country today, how will reducing the living standards of hundreds of thousands of public sector workers on top of the two-year pay freeze increase consumer confidence or strengthen the retail and service sectors, which will be harmed by this tax on public sector workers?

[David T. C. Davies]

How much will this plan B that the hon. Gentleman is outlining add to the national debt, and what will be the increase in interest payments each year as a result of the money he wants us to borrow from the banks that he despises?

[Mr Bain]

The hon. Gentleman has once again revealed that the Government simply have a plan for cuts and no plan for growth or jobs. A five-point plan for growth and jobs would cut VAT, reduce national insurance and create jobs, which would help pay down the debt and the deficit.