Universal Postal Service

Debate between John McDonnell and Baroness Clark of Kilwinning

Thursday 17th July 2014 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

My hon. Friend has come up with concrete proposals and a recommendation for Ofcom, but is not the problem that Ofcom has no sense of urgency at the moment? It says that it will not institute a review until the end of 2015 and that the 2011 legislation statutorily barred it from establishing a fund for five years, which means that it will not be able to do so until 2016, unless the Secretary of State acts. There is, therefore, a twin responsibility; on the Secretary of State to act in order to enable a discussion about the fund; and on Ofcom to institute the review now.

[Katy Clark]

There is a great deal of complacency on this issue from not only Ofcom, but the Government. We are seeing the warning signs now and we need the Government to make it very clear that we believe there is a real threat to the universal service. Ofcom needs to look at the matter urgently, carry out a full review and come up with proposals to ensure a level playing field in the postal services market and to protect the universal service.

Postal Services (Rural Areas)

Debate between John McDonnell and Baroness Clark of Kilwinning

Monday 2nd September 2013 Commons Chamber

[Katy Clark]

There is not a short answer to that question, but I will try to explore it. My point is that the legal protections are inadequate, as there is a great deal of uncertainty about where we will go. The 10-year agreement that has been entered into is not good enough and does not last long enough. I expect that we will explore those issues as we continue the debate.

[John McDonnell (Hayes and Harlington) (Lab)]

Is it not true that the industry lost confidence in the Government because of the failure to deliver the additional work promised to the post offices?

[Katy Clark]

That is indeed the case and that is very much what the people running post offices are saying.

I appreciate the difficulties—the Labour Government grappled with them, too—but I must say to the Government that unless we deliver on providing new services to the post offices, change of this nature is unlikely to be successful. All political parties and all levels of government —not just Westminster, but the Scottish Government and local government—must do a lot more in this area. We need to consider ways in which we can ensure that more services are provided in post offices to ensure a long-term future for them.

Public Service Pensions Bill

Debate between John McDonnell and Baroness Clark of Kilwinning

Monday 29th October 2012 Commons Chamber

[Katy Clark]

I am interested in the scheme to which my hon. Friend refers, and I might get more information about it from him later.

[John McDonnell (Hayes and Harlington) (Lab)]

It is worth putting on record that under the deal negotiated by the Labour Government, if there were increased costs with regards to longevity, there would be a cap on the employer’s contribution and the additional cost would be borne by the contributors—the scheme’s participants. The issue of longevity was therefore dealt with by agreement with the unions.

[Katy Clark]

I listened carefully to the hon. Member for Finchley and Golders Green (Mike Freer) and I can say to him that while there needs to be a review of the local government scheme, I understand that the current position is that it is perfectly viable. This proposal has been made because Government Members take the view that public sector schemes are too generous and form too large a part of the employment package in the public sector. We actually need to use the public sector schemes as a model to ensure that pensions are a much greater part of everybody’s employment package. If we do not do so, we will simply end up paying in other ways, whether that is because people opt out, or because people will rely on the state as they are living in such poor circumstances. We should have a debate about how we can move towards a situation whereby, collectively, we save more for retirement, so that people have decent pensions that they can afford to live on and do not need to rely on the state in other ways.

Rail Fares

Debate between John McDonnell and Baroness Clark of Kilwinning

Wednesday 5th September 2012 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

The new Secretary of State is not in his place, but I welcome him to his new position. He said that it is somewhat daunting for him to have on his first day a debate about rail fares. All I can say is: wait until we get on to aviation. I look forward to introducing him to some of my friends: Bob Crow at the National Union of Rail, Maritime and Transport Workers, Mick Whelan at ASLEF and Manuel Cortes at the Transport Salaried Staffs Association. On a serious point, I am sure that the trade unions will show a willingness to meet the new Secretary of State on a regular basis and to work together to improve the system. If hon. Members look at many of the submissions received by the Transport Committee in recent years, particularly from the RMT, ASLEF and TSSA, they will see that many of the issues raised and many of the ideas proposed, particularly on ticketing, have been reflected in contributions by Members from all parties to debates, particularly those centring on fares.

The agenda needs to be worked on jointly with the Government. The focus is on fares as the major problem that passengers bear the brunt of. I believe that the role of the House is to protect our constituents—the travelling public—against many of the companies that are profiteering at their expense. The hon. Member for Northampton South (Mr Binley) gave an example of price increases in his constituency, where people are paying anything up to £6,000 or £7,000 a year to commute, and of how that is becoming an impediment to them maintaining work. That is happening right across the country, so I welcome the Government’s ticketing review and refer them to the evidence that the RMT has already provided to successive Transport Committee reviews of ticketing, in which we have emphasised the problems of the complexities of pricing.

On the performance of the companies with regard to their franchises and fares, it is unacceptable that, when a company reneges on its franchise commitments and then seeks to walk away from it, it is then allowed to bid for other franchises around the country. Any company that reneges on its existing franchise should be banned from being able to bid for another and profiteer at the expense of passengers.

[Katy Clark]

Does my hon. Friend agree that this is yet another example in the transport sector of the private sector getting into difficulties and the public taxpayer picking up the purse?

[John McDonnell]

Time and again, when rail franchises have collapsed, they have been brought under public ownership and control. We saw that with the First Capital Connect franchise in the south-east. When that service was in public ownership, it was one of the most efficient and cost-effective services. Unfortunately, the previous Government—this Government pursued this as well—put it out to the private sector again.

The Secretary of State referred in his opening remarks to the investment in electrification and high-speed rail. I wholeheartedly welcome that investment, but I have concerns about the High Speed 2 route. I am particularly concerned about how it has been consulted on. The two-stage approach and the development of the line—the two stages being those that link London to the midlands and to the north—were consulted on separately from the publication of the route to Heathrow, which will affect my constituency. Nevertheless, I welcome the concept of investment in high-speed rail for the future.

Great play has been made in this debate of the issue of reform and its impact on costs and fares. I think that all the rail unions will be willing to meet to discuss the reform of the current system of franchising and of the operation of the railways. I met Roy McNulty on a regular basis. He is a nice old buffer and I do not in any way disparage his commitment or the genuineness of his approach to the review of the railway network, but I have to say that, even under the previous Government, the terms of reference of the McNulty review were specifically limited and that his horizons were, therefore, limited. My hon. Friend the Member for Wirral South (Alison McGovern) has made the point that the comparisons with Europe were hardly straightforward. The comparison was between a franchising system and systems that were largely in the public sector, publicly owned and publicly managed. He was not allowed to look at what public ownership and public control could mean in this country compared with elsewhere. As I have said, the only time that such ownership has occurred here in recent years is when private sector franchises have collapsed and the public sector has taken them over and managed them efficiently and effectively.

The problem with the McNulty review—this has been touched on—is that he envisages, at the most recent estimate, a cut of 20,000 jobs. That will have consequences for services, and many of our constituents have expressed concerns about that.

Bank of England (Appointment of Governor) Bill

Debate between John McDonnell and Baroness Clark of Kilwinning

Friday 6th July 2012 Commons Chamber

[John McDonnell]

The hon. Lady needs to recognise that the Treasury Committee has a veto over the appointment of senior members of the OBR, but I will come to that point, because it is a valid one and was also raised by the hon. Member for Watford (Richard Harrington).

[Katy Clark (North Ayrshire and Arran) (Lab)]

I am a member of the Business, Innovation and Skills Committee, where recently there was a political divide over whether to approve the appointment of the director of the Office for Fair Access for higher education. Does he agree that ideally we would have a political consensus over the appointment of the Governor, so that the person knows they have the full backing of Parliament, at least when they are appointed?

[John McDonnell]

If Members keep on intervening and reading parts of my speech, I will not get very far. I fully concur. It is exactly as my hon. Friend describes it; she makes an important point.

Let me press on. I want to return to the question of probity, because there are issues outside the House this morning that we need to take into account. Given the scale of the task facing the new Governor, the heightened political atmosphere and the banking reforms, now, more than ever, this appointment cannot be left in the hands of one Minister. Leaving it solely in the gift of the Executive in what is, unfortunately, a tense political context, runs the risk of allegations of a political appointment, a lack of independence and even cronyism.

In the cold light of day, after yesterday’s ferocious party political knockabout and, at times, unfortunately very personal debate, it is important that calmer judgments now prevail and that we seek a consensus, as far as possible, over the key decisions, such as this one, that the House needs to take in reforming our financial system. This is a time for consensus building and a display of magnanimous behaviour on all sides, if we are to get through this crisis and restore confidence in our financial system. Sharing responsibility for the appointment of the new Governor and seeking consensus on this appointment would ensure the credibility of the appointment process and the appointee themselves.

CPI/RPI Pensions Uprating

Debate between John McDonnell and Baroness Clark of Kilwinning

Thursday 1st March 2012 Commons Chamber

[John McDonnell]

That is why—[Interruption.] As the Minister says from a sedentary position, it is mortgage costs, not rents that are excluded. However, the range of other costs that pensioners have to meet are not included—housing-associated costs such as council tax, for example. That is one reason why Age UK undertook detailed research into the real spending patterns of pensioners and arrived at a more realistic assessment in its “silver retail prices index” of what price rises pensioners face. That showed that the impact of increases in basics such as fuel costs and food were hitting pensioners harder than both the RPI and the CPI calculated.

The weaknesses of CPI have been extensively acknowledged. The EUROSTAT—the European Commission’s statistics body, which came up with the original proposals on CPI—is working on a harmonised approach to including housing costs. The Minister acknowledged some of these criticisms in the Welfare Reform Bill Committee and informed us that the Consumer Prices Advisory Committee is undertaking a detailed programme of work to look at ways of including housing costs, but that this would not be concluded in the next “year or two”. In the meantime, pensioners will lose out—significantly.

Despite all the debate about the statistics, we know that the real reason for the move from RPI to CPI is to cut public expenditure. When this matter came before the courts, the Government argued that CPI

“provides a more appropriate measure of benefit and pension recipients’ inflation experiences than RPI and a better representation of the way consumers change their consumption patterns in response to price changes.”

They argued that that was the reason for the shift. Three High Court judges agreed that, on the basis of the facts before them, the Government’s move to CPI was really the result of their desire to force through budget cuts.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Does my hon. Friend agree that one concern about the shift, which will reduce people’s pensions, is that people might opt out of pension schemes? One impact that that might have is to put people even further into poverty, so they will have to apply for state benefits. The shift will therefore not end up as a money-making exercise for the Government.

[John McDonnell]

Yes, I will deal with that point now. The Government’s decision to move from RPI to CPI was taken at an early stage after the election. It was basically a decision to make pensioners in those pension schemes pay for the economic crisis. That was the policy decision that the Government made. Thus, the very people who made no contribution to causing the crisis will now have to pay for it by cuts in their pensions—the one thing they hoped was secure in their lives. I view that as unacceptable by any standards of fairness and equity. As my hon. Friend says, it is incredibly short-term.

We know from surveys of existing contributors to pension schemes that the combination of significantly increased contributions and cuts in pensions payments means that many people are now questioning whether to remain in their pension scheme, while others are wondering whether to join it at all.

--- Later in debate ---

[Katy Clark]

I fully agree with the hon. Gentleman about the wider economic impacts the changes are likely to have. Indeed, that was one of the points I was trying to make in last Thursday’s debate on the uprating of social security benefits and pensions. If the collective effect of some of these changes is that some of those on the lowest incomes and on modest incomes have less money in their pockets, that will have ramifications for the economies of constituencies such as his and mine. Unfortunately, my constituency is extremely reliant on the public sector because we still have not recovered from the decades of industrial decline and the closure of traditional industries in areas such as North Ayrshire. We are therefore over-reliant on the public sector and nothing that the Government are currently proposing looks likely to reverse that trend.

I believe the proposal is about cutting public expenditure and I do not accept that it is about the deficit. The Government’s position is that the policy will be a long-term one, not a short-term one for four years or so. At the beginning of this Parliament, the Government’s policy was that they would pay off the deficit within the Parliament, but if we look at the progress that has been made to date and the economic impact that their policies are having, we see that the growth and unemployment figures suggest that we will still be left with that deficit at the end of the Parliament.

I intervened on my hon. Friend the Member for Hayes and Harlington (John McDonnell) regarding opt-outs from public sector schemes. This is an important issue, particularly for those on low incomes. I have been provided with figures by the trade union Unison, as I believe have other Members, about the impact some of the changes will have on its members. These figures have been quoted in the House before and as far as I am aware they are accurate. Unison says that a woman receiving the average local government pension scheme pension for women of £2,600 a year would be £37 worse off this year and that a member—a man or a woman—receiving the average local government pension scheme pension of approximately £4,100 a year would be £58 worse off this year. It gives a further example of a woman on a median woman’s pension in the NHS pension scheme of approximately £3,500, who would be £49 worse off this year. As the hon. Member for Eastbourne indicated, there might be an element of offset so that if there are increases in the basic state pension and in other forms of benefit, some of those people might recover that money in other ways. However, going back to the example that the Member for Belfast South (Dr McDonnell) gave, of someone on a public sector pension in the region of £10,000, I understand from what the Minister said in last week’s debate that such an individual would be unlikely to obtain equivalent sums in other ways and would be worse off as a result of the changes.

I am concerned about opt-outs and I would be grateful if the Minister addressed this issue today or on a later occasion, because there will be long-term consequences of these changes, particularly for public sector schemes. There is great concern, particularly regarding those on low incomes, that we might see far higher levels of people opting out of public sector schemes as a result of this policy. That will be compounded by people’s experiences over recent years with the financial crisis. As we know, there is a complete crisis of confidence in the financial institutions and in the ability of vehicles such as pensions adequately to provide for people or to provide any certainty for future years. That is one reason why changes such as this RPI/CPI change are so unhelpful: it contributes to the erosion of that confidence when people do not know what they are going to end up with. They think, “If they make this change now, perhaps they’ll come back again and try to erode the scheme further in future years.” For people on low incomes, particularly women, this is a big issue, and I would be grateful if the Minister responded to my points. I know that some figures were provided more than a year ago about the likely impact of these policies on opt-out rates and there was great concern that those figures might have been over-enthusiastic.

[John McDonnell]

There have been other surveys since then. The Fire Brigades Union surveyed its members and the results showed there was potential for 30% to opt out of the scheme, which would threaten its viability.

[Katy Clark]

Of course, firefighters are a relatively well-paid group compared with some of the other groups we are talking about. It might well be that 30% of firefighters do not opt out of the scheme but that they are thinking about it at the moment because they are so concerned about some of the changes being proposed. One point to consider with firefighters and others who work in occupations that rely heavily on physical exertion is that they may not have the choice of working for longer. Paramedics and firefighters have very physical jobs and for them working extra years to pay more into their pension pot is often not a realistic option.

Finally, we need to address the issue in a broader context. I was very interested to hear the comments of the hon. Member for West Worcestershire (Harriett Baldwin). I thought she was absolutely correct when she talked about the serious situation, with so few people having decent pensions to rely on. That is appalling. Her points about the retail prices index and the consumer prices index in relation to pensioners in particular were incredibly important. We know that housing costs are an issue, but council tax is also an issue for pensioners because they spend a far greater proportion of their income on council tax than others in the community. There is merit, then, in the GMB trade union’s suggestion that we consider what it calls a bespoke pensions index. We should perhaps explore that possibility more to compensate accurately and ensure that people enjoy pensions increases that mean that their living standards are not affected in real terms.

I want to make a broader political point about pensions. Many Government Members support this and speak about it regularly: we should be encouraging people to save for their retirement. We should not be encouraging people to have to rely on the state when they retire because their levels of income are so low that they are eligible for welfare benefits. Although we need a decent basic state pension that everybody can afford to live on, we should live in a society in which people are encouraged to save through occupational pension schemes, regardless of whether they work in the private or public sectors.

I was extremely relieved, therefore, that the Government decided to continue with Labour’s legislation on auto-enrolment, which sets out the framework for doing something about the chronic levels of under-pensioning, particularly in the private sector. However, if we keep changing the basis on which people think they are paying into pensions, we will erode faith in the pensions system. Those thinking about auto-enrolment may take that into account when making their decision.