Local Government Pension Scheme

Jack Dromey Excerpts

Monday 24th October 2016 Westminster Hall

[Ian Blackford]

Very simply, yes, I agree. Stakeholders and trade unions are a very important part of the debate. We must also look at the training that is given to trustees in that regard, so that they can discharge their responsibilities fully, and indeed the important role that advisers play. In some senses, we have perhaps rushed these changes, rather than stood back and tried to get something on which I hope we can build consensus.

[Jack Dromey (Birmingham, Erdington) (Lab)]

I am grateful to the hon. Gentleman for giving way. As chairman of the local government unions, I led negotiations on the local government pension scheme; I campaigned to defend the local government pension scheme; and I worked with the scheme, at both national and local level, on investment strategy. It is absolutely right, commensurate with what we always sought to do through the scheme, that we have ethical investment, that we encourage infrastructure investment and that we look at sensible pooling arrangements. However, the first obligation of a pension scheme is to its members, to deliver to those loyal, long-serving public servants the best possible retirement. Does the hon. Gentleman therefore agree that it is not only illegitimate but potentially unlawful for the Government to seek to impose their will on 1 million workers and their pension scheme, and that the best thing to do would be to go back to the drawing board, sit down with the trade unions and negotiate a sensible way forward?

[Ian Blackford]

Again, I find myself in complete agreement. The hon. Gentleman is correct and there is an argument that what the UK Government have done is perhaps in contravention of European law. I will come to that point a little later.

--- Later in debate ---

[Jack Dromey (Birmingham, Erdington) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Edward. Let me start by referring back to my earlier intervention. As national secretary of the Transport and General Workers Union, I was chair of the trade union side that conducted a series of negotiations on the local government pension scheme, and I worked very closely with the local government pension scheme at a national level on a range of the issues that have been referred to in this debate.

Who are the people we are talking about? They are the care workers who look after the vulnerable, the disabled and the elderly. They are the Karens, whom I met at Osborne nursery school but two weekends ago—outstanding education assistants who help kids get the best possible start in life. They are the dustmen, the refuse collectors and the people who go out and keep our streets clean—my uncle Mick, who lived with me until he sadly died, was a street cleaner. They are social workers who take care of, among others, looked-after children who badly need the support that social services and children’s services can deliver.

The millions who depend upon the local government pension scheme, which is fundamentally a good scheme, include not just those who are directly employed but those such as bus workers, who were originally directly employed by local government bus companies and have now been transferred but are still in the local government pension scheme. There are tens of thousands of contractors’ employees who enjoy what is called admitted body status. I know that because I negotiated admitted body status to ensure that, if those workers are transferred to the private sector, they remain in the local government pension scheme. The pension scheme is a good one. It is fundamentally one of the most democratic schemes in the country. I have often argued over the years that the voice of workers should be heard louder in relation to some of the local administrations of the pension scheme.

I have been personally involved not just in the negotiations. I have, for example, addressed two conferences for the scheme at national level on the issues of collaboration to ensure ethical investment, which is absolutely a legitimate concern, and infrastructure investment. The then national chair of the local government pension scheme, Kieran Quinn, said, “Why are we investing in light transport in Taiwan when we should be investing more in developing infrastructure here in Britain?” Of course, that is absolutely right.

The hon. Member for Ross, Skye and Lochaber (Ian Blackford) referred to housing. I remember opening a housing development with the leader of Manchester City Council, where local government pension scheme investment was key to building hundreds of affordable homes. The objectives of having an ethical approach and greater investment in infrastructure are absolutely legitimate—so, too, is the move towards pooling. We have got to get it right, but in my time we used to argue for pooling and greater collaboration to make more effective investments.

What is fundamentally wrong about the proposal is that the Government are elbowing to one side the world of local government and telling millions of pensioners how their pensions might best be delivered.

[Chris Stephens (Glasgow South West) (SNP)]

Surely, it is legitimate for a political party in a local authority administration to seek from the electorate a mandate on how it will invest in its pension funds. That is what the Government are interfering with.

[Jack Dromey]

The hon. Gentleman is, of course, right. He has a background in Unison—one of the major local government unions. It is simply wrong for Whitehall to tell millions of pensioners and town halls what they should do in the future. It is also potentially unlawful, and a very strong case was set out earlier to that effect.

We have shared objectives: a greater ethical approach, infrastructure investment and pooling. Why do the Government have to continue to blunder down this path? There was an extraordinary response to the consultative process, and people overwhelmingly said, “No, no!” The Government should now, even at this stage, listen and get back into discussions with the scheme itself and the local government unions.

How do the Government square their approach over the local government pension scheme with two stated public policy objectives? The first is localism. I remember leading for the Labour party in the endless negotiations when the Localism Bill was going through Parliament in 2011. Power to the people? This is more Leninism than localism.

The second objective is this. The Government have had a damascene conversion. Not since Saul fell off his horse on the road to Tarsus have a Government made such a change. Historically the enemy of working people, they are now posing as the friend of working people—the champion of working people—but what they intend to do is to say to millions of working people, “No matter what you think, no matter what your concerns are, we are going to tell you how your pension scheme should be invested in the future.” That simply cannot be right.

--- Later in debate ---

[Ian Blackford]

Thank you, Sir Edward; that is very kind of you. I thank those who signed the petition and brought us here today. I think we all agree that the debate is important. There are a couple of important underlying factors, the most important of which is that there has to be local democracy and accountability.

The Opposition have spoken enthusiastically about the benefits of pooling and of local authority pension schemes investing in infrastructure on a global basis and locally within our economies, so we support the direction of travel. However, the Minister still has not really addressed—I would go as far as to say he has ignored it—what is written in the regulations, and he and the Government must reflect on that power of interference. I have tried to give them a way out, because there is a logical question: why do the Government want the powers of interference over local authority pension schemes? There is no logic for that situation.

Perhaps the Government need to go back and think, in the days that remain until those regulations come into force on 1 November, about the role that the Pensions Regulator may play. The Government need to get out of the situation and get around the table with the local authorities and the LGPS to agree that there is a fantastic opportunity for pension schemes to invest in infrastructure. They have to do that by taking away the threat of interference.

[Jack Dromey]

The hon. Gentleman is making a powerful case for the Government to think again. Does he agree that it would be absolutely extraordinary, having had a consultative process in which 98% of respondents objected to the Government’s proposals, for the Government to say, “We know it’s your pension and we know that 98% have said no, but we intend to go ahead regardless.”?