Public Sector Pensions

Debate between Hywel Williams and David Mundell

Thursday 8th December 2011 Commons Chamber

[Hywel Williams (Arfon) (PC)]

I beg to move,

That this House recognises and appreciates the valuable work done by public sector workers; believes that they should receive pensions which are affordable, sustainable and fair; further believes that the changes announced since June 2010 by the Government are primarily for the purposes of deficit reduction rather than a move to secure the long-term sustainability of public sector pensions; notes that these changes are unfair on public sector workers who will have to work longer, pay more and receive less in their pension when they retire; further notes the findings of the National Audit Office that the 2007-08 pensions re-negotiation changes will generate estimated savings of 14 per cent. by 2059-60 and the conclusions of the House of Commons Committee of Public Accounts’ Thirty-eighth Report of this Session on the Impact of the 2007-08 changes to public sector pensions (HC 833), that the cost of public service pensions has reduced substantially because of these changes; agrees with criticism in both reports of the failure to develop a long-term strategy for the role of pensions in recruitment and retention to the public sector; condemns the Government’s threat to cut devolved administrations’ budgets if they do not implement the Government’s immediate levy on pensions contributions; and calls on the Government to reverse its unfair changes to public sector pensions.

The motion stands in the names of my right hon. and hon. Friends from the Scottish National party and Plaid Cymru, and of Members from the Labour party and, I understand, from the Social Democratic and Labour party.

Last week, a day of action saw more than 2 million people across the UK join in protests against changes that will make those affected—mainly women—work longer, pay more and receive less when they retire. This year alone, bankers walked away with £7 billion in bonuses. As one constituent said to me last week:

“This is just a way of getting extra cash from public workers. And it is just not fair.”

We are proud to hold this debate on behalf of all those people across the UK who are directly or indirectly affected by the Government’s changes, and we note that despite having 36 Opposition day debates since the changes were announced in June 2010, the official Opposition have not seen fit to devote even one of those opportunities to debate the public sector pensions proposals. Whatever the evasions, the nods and the winks, and the ducking and diving of others, we are glad of the opportunity to show clearly where we stand.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

This is characterised as a joint debate between Plaid Cymru and the Scottish National party, yet last week we saw SNP Members of the Scottish Parliament cross the picket lines to ensure that the Scottish Parliament functioned, while Plaid Cymru Members of the Welsh Assembly refused to cross picket lines and the Welsh Assembly did not function. Where is the coherent position in that?

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[Hywel Williams]

It has clearly escaped the right hon. Gentleman’s attention that the SNP are in government in Scotland, while in Wales—alas—we are not.

[David Mundell]

I am afraid that I do not find that a tenable explanation. All SNP Members of the Scottish Parliament are not in the Government, although they may act like it. Those people crossed the picket lines and spoke in a debate on this very subject.

[Hywel Williams]

Honestly, I think we need to move on to the subject of the debate. I am sure that the right hon. Gentleman will have time later to make those and other fatuous points.

--- Later in debate ---

[Hywel Williams]

My hon. Friend has anticipated a point that I was going to make, which will doubtless be made again by other nationalist party members. Anyone reading the popular press would imagine that public sector workers were driving around in this year’s model of car and enjoying two or three foreign holidays a year, but that is not, of course, the case.

We say “Let us have negotiations”, but is the 3.2% imposition itself negotiable? What the Government have announced today will merely shift the burden from one group of workers to another. They are trying to squeeze out some sort of deal, but we utterly reject that way of going about things.

[David Mundell]

I think it important for the hon. Gentleman to clarify whom he means by “we”. The Scottish National party is in government in Scotland, and a number of choices are available to it. For instance, there are funds that it could allocate to reduce pension contributions, but it has chosen not to do so.

[Hywel Williams]

Again, I do not want to go down that particular avenue—[Interruption.] I have some things to say that the Minister might like to listen to. My hon. Friends will be responding to his point later, but let me say now that the possibilities to which he alludes constitute a broad spectrum of theoretical options for consideration, and that the Scottish Government have expressed no preference. I am sure that others will say more about that later.

--- Later in debate ---

[Hywel Williams]

rose—

[David Mundell]

May I just make a little progress and then give way again? I think I have been generous with my time.

Our reforms are not retrospective, nor do they seek to correct the past failure of the Labour party; they are driven by the need for fair, affordable and sustainable pensions in the future. We have reached agreement with the unions on the importance of transparency, equality impacts, participation rates and opt-outs, scheme governance and high-level principles to inform consultations on scheme-level pensions.

[David Mundell]

I will give way in a moment.

We have set out our proposals. When we make our reforms, the taxpayer needs to be properly protected from the future risks arising from increases in life expectancy by the link between the scheme normal pension age and the state pension age. On 2 November, after months of negotiations with the trade unions, the Government set out a revised offer that was more generous by 8%.

The offer is generous. Most staff on low and middle incomes will retire on a pension that is as good as what they expect today, and for many it will be better. Lord Hutton has said that it is difficult “to imagine” a more generous offer. The offer includes generous transitional arrangements for those closest to retirement; those closest to retirement should not have to face any change at all. This approach mirrors the steps taken in relation to increases in the state pension age, and it is fair that the same applies here. Anyone 10 years or less from retirement age on 1 April 2012 can be assured that there will be no detriment to their retirement income. However, this enhanced offer is conditional upon reaching agreement. It is an offer that can inform the scheme-by-scheme talks which will continue until the end of the year. Of course, if agreement cannot be reached, the Government may be required to revisit our proposals and consider whether those enhancements remain appropriate.

[Hywel Williams]

Some time ago, the Minister referred to a meeting held yesterday, but will he clarify who was involved? Was a Minister involved in the discussions?

[David Mundell]

My right hon. Friend the Minister for the Cabinet Office and Paymaster General and my right hon. Friend the Chief Secretary to the Treasury have made it clear that the meetings are ongoing on a regular basis in respect of the specific schemes. I am sure that I will be able to give the hon. Gentleman the information he requires.

Our objective remains to agree reforms of the main schemes—those for teachers, health and the NHS, the civil service and firefighters—by the end of the year, and my right hon. Friend the Chief Secretary will update the House in due course. The Government’s preferred scheme would produce better pensions for those on low and middle incomes who have devoted a lifetime to public service. At the same time, public service pensions will remain considerably better than those available in the private sector, as my hon. Friends have suggested. A primary school teacher earning £32,000 per year could receive a pension of £20,000 under our proposals. To earn the equivalent pension in the private sector, an employee would have to pay in more than one third of their salary.