Public Sector Pensions

Jonathan Edwards Excerpts

Thursday 8th December 2011 Commons Chamber

[Hywel Williams]

No, I must try to make some progress. No doubt the hon. Gentleman will have an opportunity to speak later.

Whatever the Government say, the 3.2% is seen by workers and by the general population as an additional and carefully targeted tax, aimed largely at those who have the least means to pay. As for the negotiations, they must be based on proper evidence rather than on the cases that the Prime Minister quoted selectively during last week’s Question Time, which were so effectively debunked in Radio 4’s “'More or Less” programme and in Channel 4’s “FactCheck”.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate my hon. Friend on the excellent speech that he is making. Is he aware of a study by the Fire Brigades Union, which found that 27% of its members were likely, or very likely, to leave their pension schemes if employee contributions were raised? What effect does he think that would have on the sustainability of schemes if it were translated across the public sector?

[Hywel Williams]

There is clearly a danger that some schemes will become unviable, which would mean that in the longer term those who no longer had pension schemes would become even more dependent on the state. I am sure that Government Members would not want that to happen.

--- Later in debate ---

[David Mundell]

My hon. Friend makes a good point and I empathise with it as the MP for a constituency that has some of the lowest private sector wages in the UK.

Only 10% of private sector workers have access to the type of scheme that I was describing, which is at a guaranteed level and is inflation proofed, while only one third of private sector employees currently get any contributions from their employers.

[Jonathan Edwards]

I come back to the issue of the divide-and-rule strategy of playing the public sector off against the private sector. Is the Minister aware that the average pension of a retiring teacher is £9,000 per annum, and that the figures for NHS workers, for civil servants and for members of the armed forces are £7,000 per annum, £6,000 per annum and £7,500 per annum respectively? Do those figures seem unfair to him?

[David Mundell]

It is a question not of playing the public sector off against the private sector but of setting out a fair scheme for public sector workers, and that is what this Government are seeking to do.

The motion mentions two reports, one by the National Audit Office and the other by the Public Accounts Committee, which do not provide us with sustainable and lasting models for the future. Pensions, as they stand, are not affordable. As Lord Hutton says,

“the status quo is not tenable.”

The Office for Budget Responsibility’s latest forecast demonstrates that long-term costs have continued to increase since March, so reform is now essential because the costs of public service pensions have risen dramatically over the past few decades. The fact is that we are all living longer; the average 60-year-old is living 10 years longer than was the case in the 1970s.

--- Later in debate ---

[John Robertson]

I thank the hon. Gentleman for the extra minute his intervention gives me.

I found it surprising that the nationalist parties wished to hold a debate on this issue as I could not remember their raising it in the past. In fact, so bad was my memory that I contacted the Commons Library to find out when a nationalist Member had last raised the issue. This was the response:

“Thank you for your enquiry which was passed to me by the Library’s Business and Transport Section. You asked for statements in the House by Scottish National Party and Plaid Cymru MPs on public sector pensions. Unfortunately, there were barely any mentions of public sector pensions so I have included references to pensions in general in case they are useful.”

The House of Commons Library staff could find only four examples of the SNP raising this subject, and those examples were far from “useful”. I felt relieved that I did not give the Library staff too much work to do.

The Library searched back to 2006 and found that the hon. Members for Na h-Eileanan an Iar (Mr MacNeil) and for Moray (Angus Robertson) have not made any references to pensions in the Chamber since then. When the Library staff asked if I wanted them to search back even further, I was worried they would have to call in an archaeologist. The hon. Member for Arfon (Hywel Williams) said in his opening speech that some parties’ Members did not raise this topic; I suggest he looks at his own house first.

[Jonathan Edwards]

The hon. Gentleman’s party has had 36 opportunities to raise the issue since the Government made their public pension proposals, so why has it not raised it for debate in the House?

[John Robertson]

I thank the hon. Gentleman for giving me a further minute, and I will now carry on with my speech.

The hon. Member for Aberconwy (Guto Bebb) has referred to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) removing, when he was Chancellor, the £5 billion tax break to the insurance industry, which was worth more than £100 million at the time. However, the hon. Gentleman and his colleagues always let slip from their minds the actions of their Iron Lady. I have not seen the recent film on Margaret Thatcher, but I am reliably informed by someone who has that, sadly, it misses out how in 1980 she broke the link with final salaries, thereby hurting 10 million pensioners at the time and millions more since, and that that cost a minimum of £15 billion a year. That puts the £5 billion into perspective. I notice that the hon. Gentleman is no longer in his place; I think he left the Chamber about five seconds after finishing his speech. His train must have been leaving early.

Let me return to the question of why this is an important issue to me and my constituents. I have 13,500 pensioner households in my constituency. We have one of the highest concentrations of pensioners in Europe and the highest amount of single women pensioners in the entire country. About 6,500 claim pension credit in my constituency alone, which is consistently ranked seventh out of all parliamentary constituencies, so hon. Members can see why this subject is so important to me.

My home town of Glasgow is a fairly youthful city compared with others in Scotland. However it has a considerable and growing elderly population. We face large and severe pockets of pensioner poverty—my constituency is, sadly, not immune to that. In addition to the 8% of Scottish pensioners who live in absolute poverty, one in 10 over-65s are classed as “materially deprived”. When I was elected for my constituency in 2000, four out of five single pensioner households in Scotland lived on an annual income of £15,000 or less. So hon. Members can understand why I feel that we should not be heading for a race to the bottom on pensions. I want good pensions for those in both the private and public sectors.

I recall a debate in 2002 when the Minister for Universities and Science, complained that the then Labour Government were using misleading tactics. He must share my anger at the current Government’s misleading statistics on public sector pensions, for example, the constant use of enormous figures for overall pensions liability. There is a frequent tactic to cite figures as a proportion of a single year of GDP, ignoring the fact that payments on pensions are spread. To listen to the Government, we would think that these pension schemes are all in a ruinous state, but as of 31 March 2010, local government pensions in Scotland had a total of 226,554 active members making contributions, and 158,511 pensioners and dependants in receipt of payments. The local government scheme in Scotland has funds worth more than £20 billion, which is equivalent to a fifth of Scottish GDP. It could pay out all its pensions for the next 20 years without a single penny more in contributions—there is currently a £300 million surplus.

The reason I am standing up to speak today is that we have to stand up for the pensioners of the future. I believe, as I said in my speech in 2002, that all parties should put aside political points of view and stop their point scoring on pensions to make sure that they represent the people who really count. That offer was refused by those now on the Government Benches. I still make that offer, because I still think that we should all sit down to solve the pension problem as a group, not just as individuals.