Public Sector Pensions

Debate between Jackie Doyle-Price and Sheila Gilmore

Thursday 8th December 2011 Commons Chamber

[Jackie Doyle-Price]

I totally agree with that comment. I do not recognise any criticism that we are levelling down public sector pensions. We are trying to take this forward in a consensual way.

I welcome the fact that in our proposed reforms we are sticking with defined benefit systems. Many private sector schemes have had to migrate to defined contribution schemes because of the unaffordability of their existing schemes. We recognise that public sector workers are going to have to make a much bigger contribution, but they are doing so to achieve benefits that would be much more expensive if offered to workers in the private sector.

[Sheila Gilmore (Edinburgh East) (Lab)]

One of the things that might have brought more money in and created some fairness in the pensions system would have been to limit the tax relief on payments into private pensions to the basic rate of tax. Would the hon. Lady agree with that proposal?

[Jackie Doyle-Price]

I am trying to set out a case for wider structural reform. We have a massive structural challenge across the board in pensions for public sector workers and private sector workers. As regards tax relief for pension contributions, I will not take any lectures from Labour Members given what was done under the previous Government.

It used to be the case that the generous pension provision for public sector workers was a quid pro quo for working in the public sector, as higher salaries were traditionally enjoyed more regularly in the private sector. That is no longer the case. I refer to the comments by my hon. Friend the Member for Aberconwy (Guto Bebb) about average salaries in Wales, which show that public sector workers there often enjoy much higher levels of reward than private sector workers. This will reduce dynamism in the labour market and make us less competitive. Our economy benefits greatly from having people moving from the public sector into the private sector so that we all enjoy their expertise, but when there are such significant levels of differential between salaries, that is not going to happen. If we then add in the benefits that come from the generous pension provision, it becomes impossible for people to move from one job to another.

Let me give an example. In my last job, I worked for the Financial Services Authority, where I had a very senior colleague who had worked for the Bank of England and the FSA for some 28 years. She was offered a very highly paid job with a bank, as one would expect—we all expect bankers to be offered higher salaries than public sector workers. When she worked out the cost implications of moving from her job, with 28 years of a final salary pension, compared with what she would have to be paid by the bank to come anywhere close, she was somewhat crest-fallen to realise that in the longer term she would be taking a pay cut. That illustrates the competitiveness issues raised by how much we have in our pension schemes.

Consumer Credit and Debt Management

Debate between Jackie Doyle-Price and Sheila Gilmore

Thursday 3rd February 2011 Commons Chamber

[Jackie Doyle-Price]

That is why we must avoid being prescriptive about how we tackle the problem. We can make rules, but firms will find ways of getting around them. We could put in place an overarching obligation for the regulator to say, “We will take action when we think something is not fair”, and we will be able to point out that such practice is not fair by any stretch of the imagination. However, we need to set that expectation for the regulator—that it will take action when unfair activities take place.

The hon. Member for Walthamstow mentioned affordable credit. Ultimately, we will not tackle the problems until more affordable credit is available. With that in mind, I should like to ask what more the Government can do to establish and foster the growth of credit unions and to think in a big society way.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the light of the hon. Lady’s support for affordable credit, will she put pressure on the Government to extend the life of the growth fund?

[Jackie Doyle-Price]

I was about to say that I am asking the Government to think in a big society way about what they can do to encourage the growth of credit unions. It would be nice if Opposition Members allowed Government Members to make our case, because we have as much to advance on this subject as they have.

I pay tribute to my local borough council, which has welcomed Essex Savers credit union into its civic offices and other properties that it owns and manages. I encourage the Government to consider what facilities it could offer to credit unions—post offices were mentioned, but we could also use jobcentres. That would give credit unions access to more savings, and they would therefore be able to make more loans. I have now run out of time, but I hope the Minister takes that on board.

Housing Benefit

Debate between Jackie Doyle-Price and Sheila Gilmore

Tuesday 9th November 2010 Commons Chamber

[Jackie Doyle-Price]

Let me address some of the specifics. We are talking about putting a cap of £250 a week on the proposed maximum for a one-bedroom flat. That would amount to £12,000 a year to be spent on rent. I am afraid that not many people who are working can afford to spend £12,000 on rent.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the event that the problem is as the hon. Lady describes it, can she explain to my constituents why they are having their housing benefit reduced when the cap has no relevance whatsoever to people in Edinburgh because all the rents are well below it? Despite that, they will have their LHA reduced to the 30th percentile. Others, who are not necessarily in the private rented sector, will have non-dependants deductions from their housing benefit increased substantially, which is a serious problem for many low-income households. Why is that justifiable to solve the problem of high rents in London? Why not deal with London on its own?

[Jackie Doyle-Price]

It is justifiable because this country simply cannot afford the level of welfare benefits that we are paying out. It is all very well to say that this is all about London, but it is not; it is about the fact that people who are working hard are having to pay higher taxes to pay the bills that Labour left for us to sort out.

We have a system of housing support that is no longer fit for purpose. Housing benefit should act as a safety net to support people who need it—I think we would all agree with that—but it should not provide a subsidy for people to live beyond their means, by which I mean beyond the scope of what they could potentially earn. For those who are jobless, it is clear that this level of subsidy encourages benefits claimants to become trapped in dependency. If we are really going to reform benefits so that work is rewarded rather than penalised, we have to build in incentives that do not encourage people just to sit back and collect their benefits.