Local Government Finance Bill

Debate between Iain Wright and Robert Neill

Wednesday 31st October 2012 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

rose—

[Robert Neill]

There is a bit of queue. I shall give way to my hon. Friend the Member for Bedford (Richard Fuller) first, as he rose first.

--- Later in debate ---

[Robert Neill]

You are, as always, the guardian of rectitude in this place, Mr Deputy Speaker, and, as you know, I am always the willing servant of rectitude in these matters. The point that I was making was that we had indeed moved on a great deal since 1974, in terms of thinking as well as chronology. The situation is better than it was. However, we still have to deal with some entrenched thinking. I believe that, by promoting pooling, the amendment can break down some of that thinking, which, as was pointed out by my hon. Friend the Member for Bedford, can spill into other areas of policy decision-making as well as those relating to local government finance. I hope that, by encouraging economic investment, pooling will make it easier and more desirable to provide the educational opportunities cited by my hon. Friend in the context of free schools. His point was well made: all the various legislative measures interact as part of a broader localism agenda.

Now I must not forget the hon. Member for Hartlepool, who tried to intervene earlier.

[Mr Iain Wright]

I am grateful to the hon. Gentleman, who is being characteristically generous and engaging. I want to move on from 1862, when he was first elected, and away from 1974, when you were born, Mr Deputy Speaker—I hope to catch your eye again: that is why I am trying to be as helpful as possible—to today. Has the hon. Gentleman had a chance to look at Lord Heseltine’s review, which was published today, and which strikes me as very significant in relation to local economic development? In particular, has he had a chance to read recommendation 11? It states:

“All two-tier English local authorities outside London should pursue a path towards unitary status. The Government should encourage this and work with authorities to clarify the process and enable it to happen.”

Notwithstanding his earlier comments, does the hon. Gentleman agree with that?

[Robert Neill]

I must preface my remarks by saying that I cannot pretend to have read all 200-odd pages—

[Mr Wright]

There are 228.

[Robert Neill]

I note that the hon. Gentleman has both read them and counted them. Anyway, I cannot pretend to have read all of Lord Heseltine’s tour de force of a report, but the cursory reading that time allowed me while I was preparing my brief notes for the debate—[Laughter]—did give me a flavour of that helpful and valuable document. I think that it contains much that we, as a Government, would wish to take on board. As for the specific point raised by the hon. Gentleman in relation to recommendation 11, I do not agree with it, for reasons that I have already given. I believe that an imposed form of unitary restructuring is unnecessary, and that the devices and tools given to local authorities by the amendment reinforce the reasons for not following the route proposed by Lord Heseltine.

--- Later in debate ---

[Robert Neill]

My hon. Friend is very kind. He knows a great deal about this topic, as I know from having visited Bedford on a number of occasions when we were in opposition and he was the prospective parliamentary candidate.

[Mr Iain Wright]

So it’s your fault!

[Robert Neill]

I will be delighted to take responsibility for my hon. Friend’s arrival in this House.

Public Service Pensions Bill

Debate between Iain Wright and Robert Neill

Monday 29th October 2012 Commons Chamber

[Robert Neill (Bromley and Chislehurst) (Con)]

I do not agree with the conclusions of the hon. Member for North Ayrshire and Arran (Katy Clark) about the Bill, or with some of the details of her speech, but I am sure that every Member of the House will agree with her warm remarks about the late right hon. Member for Croydon North, Malcolm Wicks. I knew Malcolm as a fellow London politician for many years. Indeed, I knew his late father, who was a former chairman of the Greater London council. I think that everyone would agree that it is a tragedy that Malcolm is not here, because his expertise in this field was recognised throughout the Chamber.

During my time in government I had a measure of responsibility for two of the schemes under discussion, namely the local government scheme and the firefighters scheme. I very much agree with my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) in his analysis of the Bill, the overall pressures that need to be redressed and the need for reform of public sector pensions. I wholly endorse his analysis of how the negotiations—to which he, I and the Chief Secretary to the Treasury were, in varying measure, party—proceeded. There was greater realism and sophistication to be found in my dealings and negotiations with various public sector unions than in the analysis provided by Members on the Opposition Front Bench. That is a sad commentary.

I want to deal initially with the local government scheme. It has been observed, rightly, that this is the most significant of all the schemes in financial terms. It is hugely important and involves 81 funds. It is the biggest pension fund in the United Kingdom and the fourth largest in the world. We are talking about £145 billion in investments and assets, so getting the local government scheme right is critical for its members, many of whom I have worked with for years, going back to the day on which I was first elected as a councillor at the age of 21, about which all I can say is that I was keen.

[Mr Iain Wright]

In 1862?

[Robert Neill]

Yes, it was shortly after the Municipal Reform Act.

The scheme is important for its members and the council tax payers who fund it. We should also not forget—I will come back to this later—that it is important for the overall British economy, because of its investment potential. Getting it right is important. It is worth emphasising that it is different from the other schemes, because it is largely funded. The Chief Secretary to the Treasury recognised that significant factor, as, I am sure, will the Minister who responds to the debate. It will have consequences, once the Bill is enacted, for how we deal with regulations and secondary legislation with regard to the scheme’s governance and other related matters. There is nothing in the Bill itself—which I warmly support, because reform of all the public sector schemes is necessary—to prevent that from being achieved.

There is clear evidence that reform of the local government scheme is necessary. Reference has been made to the Audit Commission and, at the risk of taking a little longer than I had intended, it is worth quoting what it said in order to make the point. It accepted that the local government pension scheme had funds

“to cover about three-quarters of its future liabilities”

and that it had a positive cash flow. The commission then concluded that the current approach could not be continued indefinitely, the reasons for which included:

“The cost of providing pensions for local authority employees is rising in absolute terms and as a proportion of pay because of increasing life expectancy and action needed to recover funding deficits.”

It was not possible to fund the whole lot. There is no doubt that local government pension funds

“have been affected by lower than anticipated investment returns”.

At the time of the commission’s report in 2009, the value of assets was “about 15% lower” than had been anticipated in the previous revaluation in 2007. I have to say that Opposition Members cannot escape some of the responsibility that the previous Government have for the investment performance of the funds.

Oral Answers to Questions

Debate between Iain Wright and Robert Neill

Monday 28th February 2011 Commons Chamber

[Mr Iain Wright (Hartlepool) (Lab)]

The Secretary of State will be aware that as a result of his policies and funding settlement, Hartlepool borough council is cutting much-needed local services and making 89 people redundant, but its chief executive has taken an £11,000 increase in his salary, making his pay £168,000. I have written to the chief executive asking him, in the current climate, to waive that salary increase in back pay, but I have received an unrepentant and defiant response from him saying that

“mob rule seems to have been the order of the day”.

What can the Secretary of State do to curb such an arrogant sense of entitlement from some senior executives in local government with regard to pay?

[Robert Neill]

As I was quoted in the hon. Gentleman’s paper as well, he and I clearly make a fairly large mob. In the Localism Bill, we are proposing to require local authorities to set out a senior pay policy statement that will have to be debated and approved by the full council meeting so that every individual member of the authority must tell the public what their policy is on how much people are going to be paid, and why, and must put their names to it and then be accountable for it.