Public Service Pensions Bill

Jim Shannon Excerpts

Tuesday 4th December 2012 Commons Chamber

[John McDonnell]

I fully concur with my hon. Friend. I received—perhaps he did too—an e-mail from Inspector Nick Smart, who wrote:

“I am a serving police inspector in West Yorkshire of 17 years. I am about to see my life plans thrown into chaos with the proposed pension changes, with my retirement age extended by at least two years plus a 20% cut in my lump sum—about £40,000—and a significantly worse annual pension.”

It is no wonder that people are demoralised and do not trust the Government. They thought there was at least a 25-year guarantee, but we now know that that is not the case, because the Government are giving themselves the power to change schemes at will in the future.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman, like other hon. Members, will be aware of the indication that teachers will be asked to pay 50% of their contributions up until 2015, and they are not even safeguarded beyond 2015. Does he agree that, if the Government are not careful, they will create a breeding ground for discontent among teachers?

[John McDonnell]

Exactly, but I think it is across the piece. Whether or not we agreed with the last negotiations, or whether they were imposed or signed up to, at least some people felt there was some security for the future. People are becoming demoralised, which is why it is important that we insert in the Bill provisions for full consultation and agreement with organisations representing employees and for full openness and transparency. That is why new clause 3, moved by my hon. Friend the Member for Nottingham East, is critical. As has been said, at least in the private sector there is full display and transparency in what people sign up to, but there is no display or transparency in the public sector, particularly now that the Government have given themselves these powers.

--- Later in debate ---

[Sajid Javid]

I agree. All scheme members, one way or the other, should receive annual information. That is the type of amendment we will table in the other place. However, there are different types of members of schemes, such as deferred members and active members. That needs to be taken into account when they receive that information.

[Jim Shannon]

I seek clarification and perhaps also reassurance in relation to those who are members of small public bodies. They have been informed that their pensions will transfer to larger schemes where they feel that they will lose out more than anyone else. What assurance can the Minister give the House and people in small public bodies that their pension rights will be guaranteed or assured?

[Sajid Javid]

I thank the hon. Gentleman for the question. We will come to a related issue later, which may be a better point at which to discuss that.

We had a robust discussion of new clause 3. The Government have set out their commitment to retaining the fair deal, but reforming it. Staff who are transferred from the public sector to an independent provider will be provided with continued access to the public sector pension scheme. This commitment has been made on numerous occasions by my right hon. Friend the Chief Secretary, as my hon. Friend the Member for Bognor Regis and Littlehampton rightly mentioned in his contribution. It was announced on 20 December 2011 and confirmed in the Chief Secretary’s announcement on 4 July this year. We also reaffirmed this in our response to the fair deal consultation which was published on 19 November this year.

The Opposition say that the Government have not made a commitment to the fair deal in the Bill. That is not entirely correct. Both clauses 22 and 26 allow for the new fair deal policy to be implemented. The Bill has been deliberately crafted so that the new fair deal can be delivered under these provisions. Let me be clear. The current fair deal, which Members are rightly keen to retain, has never been statutory. The new fair deal does not need to be statutory to bind non-public sector providers to the policy. The contracts that independent contractors enter into when tendering will ensure that the fair deal is applied.

The right hon. Member for Wentworth and Dearne referred to my comments in Committee, and it is important to be clear. We are consulting on how the fair deal should apply to those employees who have already been transferred out under the existing fair deal, but we are not consulting on the commitment that we have already made, which is that public sector workers who are transferred out under the new fair deal will retain a right to public sector pensions. We are also consulting on what to do when an existing contract that has already been tendered out is retendered under the new fair deal. There is work to be done to determine how and when the new policy will be implemented. We want to be sure that the contracts put in place will safeguard the legal rights of employees and employers. As the Government, rather than the independent providers of the services, will be retaining the risk of providing these pensions, we need to get this right.

The amendment would also bind the local government pension scheme. However, the fair deal does not apply to staff transferred out of local government. It would not be appropriate to accept the amendment as the implications for local government and the LGPS need to be fully explored. This is work that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), is already doing. For all these reasons, we believe the amendment is unnecessary and would pre-empt the ongoing work on the local government scheme.

On amendment 11, we will no doubt look at Scotland in more detail later in the debate, but let me try to set hon. Members’ minds at rest on the issues raised in the amendment. Legislative competence for the local government pension scheme in Scotland sits with this Parliament. The approval of the Scottish Parliament is therefore not needed under the Sewel convention or the Scotland Act 1998 for primary legislation on Scottish local government pensions. This is a position accepted by the Scottish Government and emphasised by the Scottish Finance Minister on 28 November. He told the Scottish Parliament that the Bill does not contain any provisions

“over pensions for local government, the national health service, teachers or police and fire staff—that would trigger the Sewel convention.”—[Scottish Parliament Official Report, 28 November 2012; c. 14014.]