Public Service Pensions Bill

Lord Newby Excerpts

Tuesday 23rd April 2013 Lords Chamber

Moved by

[Lord Newby]

That this House do not insist on its Amendment 78, to which the Commons have disagreed for their Reason 78A.

[Lord Newby]

My Lords, your Lordships’ House now returns to the Public Service Pensions Bill, on which there remains one outstanding issue. The other place has invoked parliamentary privilege on the amendments made by this House that sought to reduce the normal pension ages for fire and police workforces employed by the Ministry of Defence.

I will explain in a moment the reasons why the Government cannot simply agree to give these workforces a normal pension age of 60. First, I put on record that I recognise the arguments that have been made here and elsewhere. I have met members of these workforces to discuss their position, and there is no question that they deliver an extremely important service, often in demanding and dangerous circumstances. However, sympathy for these individuals should not lead to our oversimplifying the issue that we are discussing. The debate today is over just one design element of their pensions, which in turn forms just one element of their overall remuneration and employment package.

We have heard the argument that these individuals are identical to their local authority counterparts. But these workforces are subject to separate working practices, terms and conditions and, specifically, pensions entitlements. These workers receive different pay, pay a much lower level of contributions, have access to a compensation scheme, unlike their local authority counterparts, and receive different allowances—for example, when they work abroad.

We must recognise that the proposal to reduce the retirement age involves substantial changes in their terms and conditions. Those changes to date have not been subject to thorough consideration or the proper process. That is why we should not attempt to conduct detailed discussions here about what the changes may look like. This is not just about normal pension age; there is much more to be explored, and there are several interrelating factors that must continue to be discussed between the parties. It is right that those discussions take place outside the legislative process, and we do not have to resolve this in the Bill. My colleague, the Economic Secretary, said yesterday in the other place that further primary legislation is not necessary in order to do so.

The Ministry of Defence has already committed to discussing this issue further. This is the right approach. As we have these discussions, we cannot shy away from discussions about the costs. Reducing the normal pension age of those workforces to age 60 could create extra expenditure for the Exchequer of up to £10 million in every year that the scheme operates. That is why these two amendments are subject to the Commons financial privilege. These costs would have to be picked up by somebody—either the taxpayer, possibly at the cost of front-line MoD services, or extra contributions from the members of these workforces. The current situation is that dialogue is already under way between the DFRS, the MDP and the MoD. The MoD has written to the representatives of the members of these forces and offered to discuss how a normal pension age of 65 might be maintained when the new schemes come into force. The first step has, therefore, already been taken, and we will keep up the momentum in the coming weeks and months.

I realise that there is some concern about how long these negotiations might take, which was reflected in the Commons yesterday. While I do not wish to tie the hands of either the unions or my colleagues at the Ministry of Defence, I should think that working towards agreement over the next 12 months is an achievable goal. We are definitely not seeking to kick this issue into the long grass. Colleagues in the other place also wanted assurance that if—I stress that this is very much an “if”, not a “when”—the MoD decided that a reduction in its current NPA was appropriate, the Bill would be flexible enough to allow this. I can reassure the House that this is indeed the case. This Bill is framework legislation. This is usually the case in the public service pension arena and, as such, a number of things are possible within the framework of the Bill that do not require amendments to primary legislation. I am, therefore, happy to repeat that if the Government decided that it would be appropriate for some or all of these workforces to be able to access an unreduced pension before normal pension age, there are ways that this change can be delivered using only secondary legislation.

The opposition amendment would effectively require a review of the effect of this Bill on the Ministry of Defence fire and police services. In particular, it would require the Government to have regard to impacts on the health and well-being of the individuals affected; the ability of the MDP and DFRS to meet the Ministry of Defence’s statements of requirement; and early retirement statistics in these forces. I have already stated that the Ministry of Defence is engaging with these forces to look at their pension ages in the new schemes. These are exactly the kinds of factors which they would look at in doing so. As we had already intended to look at this issue again with these workforces, I am happy to accept this amendment from the Opposition, and the Government will support it. I hope that seeing this provision on the face of the Bill will give the forces and Members opposite the reassurance they need that the review will indeed be carried out.

As is normal practice, a few elements of wording will need to be ironed out. The Government will look to make these changes in the other place when the Bill returns there. Allow me to reassure the House that any changes to the wording will be purely to ensure that the provision works properly. However, the Government can today accept the substance of the amendment, and I am grateful to the noble Lord, Lord Eatwell, for taking this very constructive approach to the remaining issue in the Bill. I invite the House to accept the decision of the other place and also to accept the amendment. I beg to move.

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[Lord Whitty]

My Lords, I join the noble Baroness in congratulating the Minister on his change of heart. He has in effect very graciously recognised not only the justice of the case that we on this side of the House, and the noble Baroness, Lady Harris, put in Committee, but that it is pretty absurd for the Government simply to claim financial privilege to resist an amendment that manifestly will bring justice and equity to an extremely special group of workers, putting them on the same basis as people who are doing almost exactly the same job but who are employed by other public sector employers.

I suspect the Minister had some difficulty with the Treasury and the Ministry of Defence in reaching this conclusion. I therefore doubly congratulate him on seeing it through and at least recognising the very difficult position we all find ourselves in. We cannot really resist the Commons claiming financial privilege, but we can ensure by my noble friend’s amendment that the Government think again about this and address the real issues.

I do hope, however, that the Government do not make a habit of using financial privilege to resist a principled amendment from this House that has a minimal cost even in the Government’s terms and, as my noble friend has said, that is probably actuarially inaccurate in any case. If the Government continue to do this, this House has some serious thinking to do about how seriously our amendments and our scrutiny are taken. However, I return to my congratulations to the Minister on seeing sense over this. I hope it is a precedent that will be followed by some of his other colleagues in future.

[Lord Newby]

My Lord, I am grateful to the noble Lord, Lord Eatwell, and other noble Lords who have spoken in this debate. I would just like to deal with the issue of financial privilege, because there is a widespread misunderstanding of how financial privilege works. Privilege is not determined by the Government. Privilege is determined by the Speaker in advance of debate. In this case, the classification of your Lordships’ amendment as being subject to the Commons financial privilege has been known for a month. Once an amendment has been classified by the Speaker as being subject to financial privilege, obviously the Commons considers whether to agree or disagree with each Lords amendment. If it disagrees, it must offer a reason. The only reason it can give is privilege. The Clerk of the Commons explains this as follows:

“If an amendment infringes privilege, that is the only reason that will be given. This is because giving another reason suggests either that the Commons haven't noticed the financial implications, or that they are somehow not attaching importance to their financial primacy”.

I strongly recommend that all noble Lords who seek enlightenment on this matter look up the Hansard of 14 February last year, when the Leader of the House gave a little tutorial on financial privilege before your Lordships discussed a number of issues relating to a Bill. There is a long-established pattern of financial privilege that has in essence been unchanged for several centuries, and it is not for the Government to decide whether an amendment is covered by it. The Speaker does that.

[Lord Whitty]

My Lords, I fully accept that it is for the Speaker to designate financial privilege, but the debate last year to which the noble Lord referred related to expenditure of several hundred million pounds of the welfare budget. During that debate, several Members referred to the fact that there must be a threshold beyond which a Lords amendment was considered an issue of financial privilege. The only point I am making is that the Commons, or whoever jogs the Speaker’s elbow in these matters, needs to take into account the issue that a relatively small amount of financial expenditure and alteration in either direction should not be taken as an issue for claiming financial privilege. I do not want to labour the issue, but there would be a danger of the two Houses coming into conflict if this position were to be adopted by the Commons on a regular basis in relation to relatively small amounts of money.

[Lord Newby]

My Lords, I hope that the Speaker in another place is listening to your Lordships’ debate and taking note.

The noble Lord, Lord Eatwell, asked whether we had sought the views of the heads of the Ministry of Defence fire and police services. The Government are routinely in contact with all their employers and discuss a number of issues with them. We are accepting the idea of a formal review, and the heads of those workforces will be consulted as part of that process. The noble Lord also asked me how many times the Civil Service Compensation Scheme had been used. I simply do not have the answer, but I will seek it out and write to him about it.

I realise that although the Government are accepting the opposition amendment, a number of noble Lords would like us to go further today. In urging patience on noble Lords, I end simply by reminding them of the words of that well known hymn, “Lead, kindly light”, which says,

“I do not ask to see the distant scene.

One step enough for me”.

I hope that we have taken a positive step today.

Motion A1 agreed.

Lords Amendment 79: Schedule 1: Page 23, line 27, at end insert—
“(c) includes members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987”
Commons disagreement and reason
The Commons disagree to Lords Amendment No. 79 for the following Reason—

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Moved by

[Lord Newby]

That this House do not insist on its Amendment 79, to which the Commons have disagreed for their Reason 79A.

Motion B agreed.