Public Sector Pensions

Graeme Morrice Excerpts

Thursday 8th December 2011 Commons Chamber

[Graeme Morrice (Livingston) (Lab)]

Thank you, Madam Deputy Speaker. I shall try to take less than five minutes, which is predicated on my taking no interventions.

I welcome this afternoon’s debate, although I am somewhat surprised that the Scottish National party, whose Members have not given a speech yet, has chosen the topic of public pensions, given the very thin ice on which they find themselves with this issue. While 300,000 public sector workers and over 70% of the people of Scotland backed last week’s day of action, the SNP sided with the Tories and Lib Dems, and refused fully to support pensions justice. Not for the first time, the SNP’s warm words do not match up to its actions. Many are now asking: what is the difference between the SNP Administration in Holyrood and the coalition Government here? The SNP implements Tory cuts in public sector pensions, pay, jobs and public projects. Indeed, last week’s revelations about the submission to the Hutton inquiry from the Scottish Government’s Scottish Public Pensions Agency showed that the SNP is prepared to suggest even deeper cuts to pensions than those proposed by the Tory-led coalition. Perhaps the SNP Members here today can explain why their party in Scotland is doing the Tories’ dirty work for them.

Like, I am sure, those of numerous other Members, many of my constituents have contacted me to condemn the Government’s actions on public sector pensions. They have already had forced on them a change in the pension calculation from RPI to CPI, which Hutton says represents a 15% cut in pensions benefits.

[Dr Whiteford]

Why did the hon. Gentleman not vote against the move from RPI to CPI when he had the chance?

[Graeme Morrice]

What I am not supporting is this coalition Government’s position on public sector pensions, and I am certainly not supporting the SNP and Scottish Government input into the issue. When they had the opportunity, they went to the Scottish Public Pensions Agency and argued for a position that was even more draconian than that of the Tories and Lib Dems.

Many people face plans to increase contributions by an average of 3.2%, but, as we heard from several hon. Members, not a penny of the money raised will go into pension schemes. The constituents who contacted me are hard-working, public sector employees carrying out vital jobs. They have kept our public services going and have already made a major contribution to tackling the deficit. They have endured a pay freeze for two years and face an increase of only 1% when the freeze ends—in effect, another pay cut. They are not only angry about the Government’s proposals to make them pay more and work longer for less pension but are incensed at the insensitive and misleading way in which Ministers have dealt with this issue. Above all, they are fed up with hearing about “gold-plated public service pensions” and other misinformation about this complex issue.

The Hutton report clearly rejected the idea that public pensions are “gold-plated”. Figures from the National Association of Pension Funds show that the median salary-linked public sector pension currently paid out is worth £5,600 a year, compared with £5,860 in the private sector. Of course, there are many medium and low-paid workers in the private sector who have little or no pension provision, which is a serious problem, but that is not a reason for public service pensions to be attacked by this Government. The artificial divide that the Government have sought to foster, pitting public against private, is failing those at the heart of the debate—the millions of people who need a good pension on which to retire.

To conclude, it is time for the Government to come clean on this issue and drop the myths and misinformation about public service pensions that they have been peddling for months. Public service pensions were reformed by the previous Government and are both affordable and sustainable. The Pensions Policy Institute has estimated that existing pensions reforms have reduced the immediate cost of benefits by 12.5% and should result in savings of around £13 billion on the NHS, teachers’ and civil service schemes, spread over a 50-year period. The question now is whether the Government choose to negotiate a fair and reasonable deal or continue with their ideological drive to undermine public services, demoralise public service workers and destroy their pensions.