Pensions Bill
Debate between Liam Byrne and Mark Reckless(11 years, 6 months ago)
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Mark Reckless
I agree broadly with my hon. Friend. I am not sure that it is fair to accuse the right hon. Member for Birkenhead of fudging, as he is not in his place to defend himself. Certainly, on some issues he has said things that for many are unpalatable, and he has not been shy of spelling out the consequences in some scenarios. I just disagree with what he said about the Bill and women—the Bill will improve matters; it is not the Bill that is creating the difficulty for those in the 1951 to 1953 group—and with what he said about the self-employed. Mostly, I took exception to what he was saying on the latter.
I was astonished that—I assume that he does not speak on behalf of the Labour party on this issue, but perhaps he is doing so—the right hon. Gentleman seemed to suggest that the Bill was terribly unfair because it would not cut pensions further for those in the public sector, compared with those in the private sector. That is a courageous thing for a Labour Member to say. It may be that the National Union of Teachers, from which we have heard, will be writing to him about the policy he is urging for his party.
The Government have undertaken significant reforms to the various state pension schemes which were chronically insufficient under the previous Government. We have taken significant action on a number of different schemes. Like many other MPs, I have met a lot of policemen and policewomen at my surgeries who are very upset about the reforms, but I try to explain to them that their pensions are still far better than those for the vast majority of people who live in my constituency.
The cost of state pension schemes, in particular the extra paid in versus what is coming out to the Exchequer, will continue to increase strongly. Whether that has put those schemes in a sustainable position might remain a subject for debate, but people with such pensions have had significant increases in contribution rates. I am not sure that I agree with the right hon. Member for Birkenhead when he complains that the private sector will be able to reduce benefits because of the reduced amount going in, but that the public sector will not, when so much has already been done in the public sector. We have taken the issue of the various public sector schemes separately and we should continue to address it on its merits, rather than through the Bill.
Mark Reckless
I was just about to come on to that point. That is an extraordinary challenge. Public sector workers will have to pay more, as they will not receive the contracted out national insurance reduction. I think that is fair, because they will benefit from the state second pension, and even the NUT realises that they are getting a good deal. In perhaps eight or nine years, they could build up to the whole single-tier pension, despite having a number of decades in their working life when they had benefited from being contracted out. That is a good deal for many of those employees. It will be a significant challenge for employers, however, and will imply a significant further reduction in public spending in these areas early in the next Parliament. I would be interested to know whether the shadow Secretary of State has worked out his proposals for dealing with that if—God forbid!—Labour were in office at the time. Further changes might need to be made, but we can use separate legislation for that, whereas the private sector cannot, so it is right that the Bill provides the opportunity to make adjustments because public sector workers will no longer benefit from contracting-out provisions.
The huge attraction of the Bill is that it will greatly simplify our pension arrangements. The Minister has done well to make even the transitional arrangements, which inevitably add complexity, as simple as possible, although there remains the job of explaining to our constituents how they will work. Overall, however, the Bill will provide for a pension that accrues on a straight-line basis over 35 years of contributions. People will know what their pension is going to be, and it will be above the limit at which people got top-ups under what used to be the minimum income guarantee and pension credit—the system that Labour introduced and which, however well intentioned, effectively punished people who saved and so did not benefit from the measures in place. It dulled, if not destroyed, incentives to save, and that was a terrible mistake. Now we will have a single-tier pension and people will know what they are going to get. It will be taxed, but not withdrawn if people do the right thing and save. That will benefit our constituents, who will know where they stand, and we will have a better pensions system.