Public Service Pensions Bill

Lady Hermon Excerpts

Tuesday 4th December 2012 Commons Chamber

The Minister has previously spoken about not wanting to include certain commitments in legislation because to do so would bind future Governments. As I said, that is a specious argument, because future Governments can change laws if they so wish. They would not be bound by previous Government legislation, but they would have to make any changes openly and democratically through Parliament. That is the level of protection that public service workers rightly seek. This goes to the heart of trust and confidence. How can public service workers have any security in their future retirement if the Government at any point can retrospectively reduce the benefits they have already earned?

[Lady Hermon (North Down) (Ind)]

The Bill must, of course, be compatible with the European convention on human rights and the jurisprudence of the Strasbourg Court. Will the hon. Gentleman reflect on whether this retrospective provision on accrued property rights is compatible with the convention? Would it be in keeping with our commitments under the convention to take away property rights retrospectively and without compensation?

[Chris Leslie]

The hon. Lady has hit upon an important point. There are questions about whether it impinges on basic human rights to claw back retrospectively property—assets—that has been legitimately accrued, yet there is a provision here in the Bill to allow that to happen. Of course, Ministers could say, “Well, even though we’ve allowed for the possibility of retrospectivity, we’re not actually legislating for it now, although we might want to leave open the door to do it in the future.” That would be the point when it would impinge on the convention. She makes an incredibly important point. That is the extent of the possible outrage being left open in the Bill. All legislation is supposed to be signed off as being compatible with the ECHR, but that is a moot point and a matter of interpretation. She has focused on a crucial point.

The explanatory notes state that clause 3(3) has been included to facilitate the necessary adjustments to

“pension schemes to accommodate changes in law or where the government does not want to delay the benefit of a particular change but needs time to work out the consequences and appropriate method of making the change.”

Amendment 10 would not necessarily hinder those technical operational issues. Given that it would retain clause 3’s intended purpose, as set out by the Minister, and that the Government have promised not to reduce accrued benefits, there can surely be no legitimate grounds for opposing the amendment.

This is not an Opposition whim. We are cutting and pasting text from the Superannuation Act 1972: for 40 years, those provisions have protected the accrued benefits and rights of ordinary working people, and we are seeking to replicate those protections in the Bill. The amendment would not hinder or adversely affect the Government’s intentions, but would be of enormous benefit and reassurance to millions of public service workers. As the Minister knows, that concern arose extensively in Committee, where we debated the issue at length. I shall be grateful, therefore, if he reflects seriously on the strength of opinion voiced so far from across the spectrum—from employee representatives and others who want those safeguards enshrined in the Bill.

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[Sajid Javid]

I thank the hon. Member for Nottingham East (Chris Leslie) for tabling amendment 10, which gives us the opportunity to discuss member protections again. This is a serious issue, and although we had some long debates in Committee, it definitely bears revisiting. We have a duty to consider how best to protect the interests of scheme members.

The Government have made a clear public commitment to protect the rights that people have built up in their current schemes. We have said clearly and on several occasions that past service in final salary schemes will not be affected by pension reform. The commitment to honour rights in old schemes is built into the Bill. The power in clause 3, to which the amendment pertains, could be used only for the purpose of setting up new schemes in scheme regulations or for transitional or consequential purposes.

Secondly, there is the umbrella protection in UK general legislation that restricts state interference with personal possessions such as pension rights, unless such interference is lawful and proportionate. This protection of property rights is also an area of the European convention on human rights. This Bill is compatible with that convention. Of course, Ministers and others making scheme regulations are always bound to act in a way that is compatible with the law. This will prevent scheme regulations from proposing unlawful changes to protected pension rights.

[Lady Hermon]

I am sorry to interrupt the Minister so early, but would he kindly explain for the benefit of the House the jurisprudence of the Court of Strasbourg that allows him to say with such confidence that this Bill is compatible with the European convention on human rights? What is the jurisprudence to support that contention?

[Sajid Javid]

I am pleased that the hon. Lady is asking for clarity on this important question. When the Government put this Bill together, it was important, as with any measure, to make sure that it was compatible with existing legislation, including the European convention on human rights. I mentioned it here not to raise the issue of compatibility—of that I have no doubt—but to say that the convention provides protection for property rights. It represents another layer of protection that should reassure people that high hurdles would exist if any future Government tried for whatever reason not to honour the commitments made by this Government.

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[Sajid Javid]

The hon. Gentleman has approached this issue in a very thoughtful way. We consider that the high hurdle of

“with a view to reaching agreement”

should not apply to every scheme change that might need to be made. I appreciate that the hon. Gentleman has a different view about when it should apply, but I think I have made the Government’s case clear.

[Lady Hermon]

The Economic Secretary has elaborated at great length on clause 19. My concern, however, is that clause 20 refers to consultation

“with a view to reaching agreement”,

rather than until consultation is reached. If agreement is not reached, what will happen? Will the changes be imposed on workers, in which case consultation will merely be an exercise and a formality?

[Sajid Javid]

The requirement of

“with a view to reaching agreement”

is a high hurdle. I cannot remember the phrase the hon. Lady used, but I can say that the requirement is not a tokenism of any kind—it is a genuine commitment. It is in clause 20, so where this is required it is a clear commitment that the Government will have to honour. The second part of her question was about what would happen if an agreement was not reached. I hope that such situations would be rare, but it is clear that if an agreement could not be reached the Government would have to make the final decision, as is absolutely right.

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[Lady Hermon]

May I gently ask the hon. Gentleman to remind the House that prison officers in Northern Ireland also run a particularly grim risk? After a gap of almost 30 years, a prison officer, David Black, was murdered recently in rush-hour traffic on a busy motorway on his way to work. Prison officers in Northern Ireland run an additional risk. It is an absolute disgrace that prison officers are not exempted in clause 9.

[Ian Lavery]

The hon. Lady makes a powerful point. Prison officers in Northern Ireland have had a particular problem with security for decades. They have the same security problem here, although it is definitely not as bad as the problem experienced during the troubles in Northern Ireland. Nevertheless, prison officers put their neck on the block at all times. I have been out socialising with members of the Prison Officers Association when they have been approached by ex-convicts. They were out having a decent time, and those people were coming up to them. They addressed the prison officers very politely, but I have to say that they looked rather strange. I would not want them coming to talk to me. We need to look at the security of the people who work in the Prison Service. As I have said, we need to protect those people.

The hon. Member for Finchley and Golders Green said that members of the police force were highly trained, and that they needed shields and other forms of protection. He said that they were out on the front line when there were problems, and that they would get stuck in to try to resolve them. Prison officers and psychiatric nurses do that on almost a daily basis, and it is not very pleasant for them. There are also problems in the Prison Service and the health service, when prisoners are not only violent but spit in people’s faces and when blood is thrown at people’s faces causing all sorts of distress.

It is common sense to try to ensure that prison officers and psychiatric nurses are added as part of the exemption under clause 9(2), just as we rightly wish to protect police officers in their daily duties. Our brave armed forces and our firefighters are other examples, so we should look to protect the prison officers and psychiatric nurses, whose duty is solely to protect us, in the same way.

I will not press my amendment to the vote, as I do not want to divide the House. Should I say that we are too conciliatory on this issue, and should I say that Members of all parties seem to agree—albeit to different degrees—on it? Rather than split the House on it, I gently ask the Minister at least to consider the amendment to ensure that psychiatric nurses and prison officers are included in the provisions of clause 9(2).

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[Richard Fuller]

It is a pleasure to follow the hon. Member for Banff and Buchan (Dr Whiteford), who made some important points about Scotland.

I oppose Opposition amendments 15 and 16. It was absolutely right for the Government to continue to recognise the specific nature of the roles played by our fire and rescue workers who are firefighters and members of our police forces and armed forces, and it is right that that is reflected through having a lower retirement age. I pay tribute to the Government for recognising that and for pursuing it through legislation.

Members have talked about the issue of physicality. I agree that it is an important issue, but we should not have a specific provision on it in this Bill. In setting pensions, we have a hope that masquerades as a realistic assumption: people are living longer and we are increasing the retirement age, and we hope that people will perform their work as easily in their later years as in their younger years. We hope that is the case, but it cannot be assumed. If people do not save, they run the risk of having a period of poverty, because they might not be able to continue their work until their pensionable age, so there will be a gap in their earnings. As a nation, we have indebted ourselves over the past 20 years far more than any other country. People in this country have not saved to protect themselves financially.

I do not think this specific issue is pertinent to the Bill, however, as it covers all types of employment and all regions—not only Scotland, but the rest of the United Kingdom, too. I therefore ask the Opposition not to push their amendment to a vote as I believe a broader debate would be more appropriate.

[Lady Hermon]

What justification does the hon. Gentleman think there could possibly be for excluding from clause 9(2) prison officers, and in particular those in Northern Ireland, who live daily with a deadly threat from a brutal enemy called dissident republicans?

[Richard Fuller]

The hon. Lady has spoken eloquently and passionately about that point. I do not know whether she was present earlier when I expressed my personal view, but her point may fit in with it. In addition to the issue of physicality, in undertaking their work the people employed in the careers identified in clause 9(2) put their lives at risk. If that is the case for prison officers in Northern Ireland, too, they should be included, and I would be interested to hear what my hon. Friend the Economic Secretary has to say about that.

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[Sajid Javid]

We have had a good debate on this set of amendments, but I am afraid that for reasons of time that are beyond my control I will not have an opportunity to respond on all of them. The main theme in this group is the link between the new normal and deferred pension ages and the members’ state pension age. That will help manage the financial uncertainties associated with longevity changes over the long term. It was a key recommendation of Lord Hutton’s report and is one of the foundations of the Bill.

The average 60-year-old is now living 10 years longer than in the 1970s. Although that is to be celebrated, it would be irresponsible not to react accordingly to ensure that pension provision is sustainable. Clearly, no Government can allow such a trend to continue unchecked.

In the short time I have, I shall deal with the amendments in the order in which they have been selected and I will start with 13, 14 and 15. The deferred pension age in the new schemes is vital given the vast number of public servants who claim deferred pensions. That is why the Bill sets the deferred pension age in all schemes as equal to the state pension age, including in the police, firefighters and armed forces schemes. As Members are aware, a normal pension age of 60 in the police, firefighters and armed forces schemes is in line with Lord Hutton’s recommendations and recognises the unique nature of the work involved.

The amendments proposed by the hon. Member for Nottingham East (Chris Leslie) cannot be accepted by the Government, for two reasons. First, it would be unfair to other hard-working public servants, both those in active service and deferred members whose pension ages would be the state pension age. Of course we value the work of all our police, firefighters and armed forces, but once those people stop doing those jobs, there is no reason for them to be able to take their deferred benefits earlier than everyone else.

[Lady Hermon]

Will the Minister give way?

[Sajid Javid]

I am sorry, I do not have time.

There is no reason for those workers to be able to take their deferred benefits earlier than everyone else because they are no longer exposed to the unique characteristics of their former employment and no longer need an earlier pension age in respect of them.

Secondly, we must consider the cost. As we are all aware, the costs of pensions are increasing owing to increases in life expectancy. The state pension age link for deferred benefits is a crucial means of getting those costs under control. For example, if a firefighter leaves service at the age of 30 to work, say, as a civil servant in an office for the rest of his career, should his pension still be available unreduced at the age of 60?

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[Sajid Javid]

The hon. Gentleman will know that this Government have introduced changes to private sector pensions that will help to increase take-up. I am glad that he has raised the policies of previous Governments, because I was about to come on to them.

Belated changes by the previous Government in the previous decade exacerbated the unequal treatment of members within schemes by introducing reforms that only applied to those who joined from a given date. Those same belated and limited changes also sought to limit costs increasing further in the future. It has often been stated—without foundation, I may add—that those reforms were sufficient to return public pensions to a sustainable footing. They were not. The reforms did not address the historic increases in the cost of providing public service pensions that had taken place in the preceding decades. Instead, they provided for any further increases from that point to be shared between employees and employers. That was simply not enough, and is why Lord Hutton concluded that the status quo is not tenable. His report states:

“Future costs are inherently uncertain”

and that

“the general public cannot be sure that schemes will remain sustainable in the future.”

Through the Bill, our reforms to public service pensions will make a difference. Through the framework we have set out, we will ensure that public service workers get a good quality pension that is among the very best available. Members will continue to receive guaranteed benefits with no exposure to investment risk or fluctuating annuity rates, unlike in many private sector schemes. We will also ensure that the taxpayer gets a fair deal by rebalancing the costs between the beneficiaries and other taxpayers, and by capping their contribution to the schemes, so that costs cannot again spiral out of control.

Until now, pensions have failed to keep pace with changes in longevity. This is without doubt the single greatest risk to the affordability of schemes in the future. The Bill will ensure that members continue to receive defined benefit pensions, and we will ensure that longevity changes are managed by linking scheme retirement ages to the state pension age.

[Lady Hermon]

Will the Minister give a commitment to revisit clause 9(2) to ensure that prison officers do not have to work to 65, particularly in the light of the brutal murder of prison officer David Black by dissident republicans on 1 November in Northern Ireland? Will he give that commitment this evening?

[Sajid Javid]

The hon. Lady spoke passionately in the debate about this issue and I am sorry that we ran out of time to deal with it. I will respond to it now, but I am sure that she will not be surprised to learn that I cannot give that commitment. There are exceptions to the link to the state retirement age for certain services—Lord Hutton mentioned the police, firemen and others—and that is what we have taken on board. If she will allow me, I will move on.

As Lord Hutton and others have sought, we have committed to review the appropriateness of that link as changes are made to the state pension age in the future. That commitment is important in ensuring not only that the link continues to remain appropriate in terms of members’ capacity to work, but that the costs of schemes are appropriately managed.

The Bill will introduce stronger governance, administration and transparency frameworks so that Parliament, the public and scheme members can be assured that the schemes are being run and managed properly. Taken together, the key changes will put public service pensions back on to an affordable and sustainable footing—a sound foundation that can prevail for the next 25 years, a deal that can endure for a generation.

Throughout the Committee’s consideration of the Bill and earlier in this Chamber, it has been clear that both sides recognise the urgent case for reform. The Opposition have set out their support on occasion. It is, of course, fair to say that there remain a few areas—we have discussed some today—where matters are not yet resolved to all parties’ satisfaction. However, I suggest that those areas of disagreement are few and do not detract in any way from what the Government are seeking to achieve with the reforms. We have committed to considering further how members and their representatives are engaged in the administration and future change to their schemes.