Public Service Pensions Bill

Ian Lavery Excerpts

Tuesday 4th December 2012 Commons Chamber

[Mike Freer]

My hon. Friend makes a good point. He knows my views and is tempting me down the path of debating the future of defined benefit schemes. I have been entirely consistent on this point: for many years, I have said that all defined benefit schemes are no longer sustainable, whether in the private sector or public sector. That is a debate for another time and is certainly not pertinent to the amendment, but I share his view that perhaps we need more wholesale change and a larger debate.

In supporting specific exemptions where physical demands can be proven, I am not undermining the broad thrust of ensuring that our public sector pensions are sustainable. I have long argued that the contribution rates of both employee and employer do not match: what goes in does not match what comes out. That has driven my long-held view that defined benefit schemes are no longer fit for purpose. Having said that, this Bill is a major step forward in making sure that our public sector pensions are sustainable. We have a duty, however, to protect those who protect us and we ought to revisit this point where there is hard empirical evidence that physicality, in certain roles within those categories, can be proven to be detrimental to people’s health after retirement. I am not suggesting that I will support the amendment, but I am urging my ministerial colleagues to revisit the matter.

I have rehearsed at length the point about physicality. I am sad that the Minister is no longer with us, but I hope that he will address that point when he winds up. Should empirical evidence emerge, I hope that we can revisit this subject.

[Ian Lavery (Wansbeck) (Lab)]

I want to refer, in particular, to my amendment 1. I found the contribution from the hon. Member for Finchley and Golders Green (Mike Freer) very interesting indeed. I certainly agree with a range of points he made.

The amendment seeks to place two additional occupations into the Bill, and they have been mentioned on both sides of the Chamber. They are those of prison officer and psychiatric nurse. Clause 9(2) lists the three occupations to be enshrined in the legislation as exemptions from subsection (1)—they have been discussed by various Members and there seems to be some agreement—which are

“fire and rescue workers who are firefighters…members of a police force, and…members of the armed forces.”

I fully support people working in those occupations and the courageous work they do on a regular basis. I fully understand why they are included in the Bill and support their inclusion, but for the very same reasons I wish to amend the Bill to include prison officers and psychiatric nurses.

It is widely accepted that prison officers and psychiatric nurses have to deal with some of the most dangerous, dysfunctional and disruptive people in society on an almost daily basis. Expecting these categories of worker to work above the age 65 is totally and utterly unjustified; in fact, when we look at it in great detail, the decision seems absolutely outrageous. The hon. Member for Finchley and Golders Green mentioned a constituent of his, a very fit police officer from the territorial support unit who explained exactly how he kept himself in peak fitness to do his job. We cannot expect people in the Prison Service to be grappling with prisoners at the age of 65 and above, but the Bill as it stands would allow that.

Currently, prison officers regularly have to take five different tests: a grip strength test, an endurance and fitness test, a dynamic strength test, an agility test and a static shield hold test. If a prison officer fails any of those tests, they fail the entire health and fitness test. The current regime is therefore rather stringent. If clause 9 is agreed to unamended, it will mean many prison officers and psychiatric nurses either dying in service or retiring on ill health grounds and not having a very healthy lifestyle thereafter.

[Bill Esterson]

My hon. Friend is doing a fine job of explaining the concern of people who work in the Prison Service or in psychiatric health. Ashworth hospital and HM Prison Kennet are in my constituency, and people working at both have expressed exactly those concerns to me. Does he think that, as well as potentially leading to damaged health and increased disability, the Bill will discourage people from entering the Prison Service and that part of the NHS?

[Ian Lavery]

That is absolutely right. When anybody looks to take up a new employment opportunity, they look at a whole array of things. The public sector is changing by the day—although the Prison Service and the NHS now involve not just the public sector, but the private sector. People look at how their pensions will end up and what the pensionable age is, which we have also been discussing this afternoon. That is a huge consideration for many people who want to choose their profession early on in life. This measure will put people off becoming prison officers.

--- Later in debate ---

[Lady Hermon]

May I gently ask the hon. Gentleman to remind the House that prison officers in Northern Ireland also run a particularly grim risk? After a gap of almost 30 years, a prison officer, David Black, was murdered recently in rush-hour traffic on a busy motorway on his way to work. Prison officers in Northern Ireland run an additional risk. It is an absolute disgrace that prison officers are not exempted in clause 9.

[Ian Lavery]

The hon. Lady makes a powerful point. Prison officers in Northern Ireland have had a particular problem with security for decades. They have the same security problem here, although it is definitely not as bad as the problem experienced during the troubles in Northern Ireland. Nevertheless, prison officers put their neck on the block at all times. I have been out socialising with members of the Prison Officers Association when they have been approached by ex-convicts. They were out having a decent time, and those people were coming up to them. They addressed the prison officers very politely, but I have to say that they looked rather strange. I would not want them coming to talk to me. We need to look at the security of the people who work in the Prison Service. As I have said, we need to protect those people.

The hon. Member for Finchley and Golders Green said that members of the police force were highly trained, and that they needed shields and other forms of protection. He said that they were out on the front line when there were problems, and that they would get stuck in to try to resolve them. Prison officers and psychiatric nurses do that on almost a daily basis, and it is not very pleasant for them. There are also problems in the Prison Service and the health service, when prisoners are not only violent but spit in people’s faces and when blood is thrown at people’s faces causing all sorts of distress.

It is common sense to try to ensure that prison officers and psychiatric nurses are added as part of the exemption under clause 9(2), just as we rightly wish to protect police officers in their daily duties. Our brave armed forces and our firefighters are other examples, so we should look to protect the prison officers and psychiatric nurses, whose duty is solely to protect us, in the same way.

I will not press my amendment to the vote, as I do not want to divide the House. Should I say that we are too conciliatory on this issue, and should I say that Members of all parties seem to agree—albeit to different degrees—on it? Rather than split the House on it, I gently ask the Minister at least to consider the amendment to ensure that psychiatric nurses and prison officers are included in the provisions of clause 9(2).

[Mr Gibb]

I shall make a brief contribution and oppose amendment 2, tabled by Opposition Members, which would leave out lines 22 and 23 of clause 9— essentially subsection (1)(a) and (b)—and insert in its place

“65, or current pension scheme age if lower”.

That would drive a coach and horses in many ways through one of the Bill’s key provisions, which is to have a link between the normal pension age and the state pension age. I think that is an important way to minimise the risk of longevity to the taxpayer.

Paragraph 4.5 of the final report of Lord Hutton says:

“It is generally assumed that longevity will continue to increase in the future, but there is significant uncertainty about the scale of any future changes.”

He goes on to say:

“Increases in life expectancy have historically been… underestimated”

when the calculations have been made.

In paragraph 1.2 on page 22, Hutton says:

“As a result”

of this underestimation,

“pension costs…have been much higher than originally expected.”

He cites the example of a female pensioner in the NHS scheme who would retire at the age of 60 in 2010, and says that she would be expected to spend around 45% of her adult life in retirement, compared with about 30% for pensioners who retired in the 1950s. That is the issue that Hutton is trying to address. Spending 45% of one’s life in retirement is simply not sustainable for any pension scheme—even one backed up by the vast coffers of the state sector.

Page 9 of the Hutton report states:

“The main risks within defined benefit schemes are: investment; inflation; salary”—

because salaries can be put up without actuaries being aware of the rises—

“and longevity risk. While government, as a large employer, is capable of bearing the majority of the risk associated with pension saving…present schemes involve too much risk for government and the taxpayer.”

He went on to say:

“There should be a fairer sharing of risk between government”

and scheme members. It is that risk that amendment 2 would push back to the taxpayer.

Hutton says that the increases in life expectancy have been recognised within the state pension scheme, and he therefore recommends that we should follow that lead when it comes to helping members bear pre-retirement longevity risk. That is why he recommends the link between the state retirement pension age and the normal pension age. Recommendation 11—it is in a shaded box, which will please the shadow Minister—states:

“The Government should increase the member’s Normal Pension Age in the new schemes so that it is in line with their State Pension Age.”

Lord Hutton also says:

“The introduction of the link to the State Pension Age, which will initially move Normal Pension Ages to 65, will move the proportion of adult life in retirement for public service pension scheme members back to about a third: roughly where it was in the 1980s. The current State Pension Age of 65 is already the Normal Pension Age for most new entrants to public service pension schemes.”

Teachers, for instance, have a 2007 scheme and a pre-2007 scheme. For those who joined before 2007 the normal pension age is 60, while for those who joined after that date it is 65. Lord Hutton goes on to say:

“In the long term, the timetabled increases in State Pension Age should help to keep the proportion of adult life in retirement for members around this level”—

that is, a third—

“on current life expectancy projections.”

I believe that amendment 2 is a mistake, and would increase risk disproportionately for the taxpayer.