Local Government Pensions Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014

Lord Tope Excerpts

Tuesday 13th May 2014 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I, too, must declare an interest, having been a councillor for 28 years and being in receipt of a very modest council pension, to which I contributed. The point is that people like me have contributed to their pension and that seems to be forgotten when we talk about the largesse that is provided.

A councillor said to me that he runs a council with a budget of more than £500 million a year and he is paid £28,000 per annum. The noble Lord, Lord True, is probably a good example of someone in that position. It is a full-time job, and the councillor and the noble Lord are not alone in that. Many people have no income other than that provided with this job, and running a council is a job. Many councillors are not full time but they devote a large amount of time to their council. My noble friend Lady Hanham said that they may be here today and gone tomorrow, but what better reason for them to have some form of pension, however small? These people are giving their time when they are not able to contribute to a pension, and the fact that in many cases they are transitory adds to the argument for them having something of substance to fall on when they get older.

I make no apology for also referring to the insult and lack of understanding from the right honourable Grant Shapps when he said that the work that councillors do is the same as volunteering to run the local Scout troop. I do not want to undervalue the leaders of Scout troops but that comment shows complete ignorance. It is demeaning and insulting, and, quite honestly, it is idiotic to make that comparison. What do councillors of all parties and no parties do? They do a valuable job which takes a great deal of time, and the idea that one can take away or reduce pension rights seems quite unfair.

Various figures have been quoted for how much this is costing. I am not sure now what the correct figures are but one that I was given was that countrywide 18,000 councillors cost £3 million. Whether it is £3 million, £5 million or £8 million is irrelevant; it is fairly modest in terms of national expenditure. I should like to compare it to the cost of the 651 Members of Parliament of up to £10 million a year. It seems quite wrong that the other place can take away pension rights when they themselves will enjoy pension rights of much greater substance.

I said that I started work at Barnet Council 28 years ago. As the noble Lord, Lord Bourne, said, that was a time when one received a tiny attendance allowance of £20 if one turned up at a meeting. Life has moved on in terms of how people are attracted to the scheme. The point was made that a percentage of people are not in the scheme. That is their choice because it is a contributory scheme. People can make the choice that they do not wish to contribute to a scheme albeit that the local authority will also contribute to the scheme. That is their choice. They make their choice because, in most cases, they have a pension from another source, they are affluent from another source or have inherited money from another source. However, that does not apply to all the people that we want to be councillors and running our local authorities, with expenditure of something like £500 million per annum.

Reference was also made to the concessions my Government have made. I look with amazement at how we regard such small droppings as concessions. We are told that rather than access to the scheme being withdrawn immediately—that was horrific on 1 April—we have a big concession that eligibility will be phased out as councillors are re-elected on 22 or 23 May. What a concession. It really is insulting. It has been agreed that local authority remuneration panels can agree to replace the pension provision with a cash allowance for councillors. My local Conservative council administration—I am chairman of its audit committee and am very involved—a little while ago decided to up the allowances by 54%. There was a public outcry and the allowances were very much reduced as a result. The public will not take cognisance of the fact that pensions have disappeared and that remuneration and allowances of councillors will be substantially reduced to take account of the fact that they are not contributing to a pension scheme. That will be regarded by the public in a very poor light and councillors should not be put into that position. The Government made a commitment that they would not criticise councils which decided to allow such payments. The Government may not criticise them but I am sure that many other people will.

This is devaluing the people who are running local government. As central government devolves so much more to local government, what message is going out to local councillors who do not have an outside income? Their efforts are being devalued by the Government, of which I am part, and I regret these regulations.

[Lord Tope (LD)]

My Lords, I do not want to give the impression that this is turning into a Liberal Democrat debate, but I am grateful to my noble friend Lord Palmer of Childs Hill for introducing a little passion into what has so far been a calm and rational debate that rather belies the feelings out there in the country. I am also grateful to the noble Lord, Lord McKenzie of Luton, for giving us the opportunity to debate this issue—an opportunity which, for some reason, was not afforded in the House of Commons. We are the first and only part of Parliament to debate an issue which is causing considerable concern in the country.

During my 13 years as leader of a council—as we are all making these declarations, let me say that it was not in the last century—the most that I ever received as leader was £4,500 a year, and I was not then able to join a pension scheme. Frankly, it would not have been worth very much if I had. One of the things that I learnt early on was that one should never try to defend the indefensible. My sympathies go to the Minister who will have to reply to this debate, which is not of her own choosing. We all have great sympathy with her for having the task of trying to defend the indefensible.

For the last time in your Lordships’ House I declare my interest as a serving councillor, for a few more days, and as someone who joined my council’s pension scheme at the age of 60—an age when most people would think of starting to draw a pension rather than joining a pension scheme. In two weeks’ time I shall start to receive the handsome pension that I have earned in the 10 years since joining the scheme.

[Lord Vinson (Con)]

I wonder whether the noble Lord would be kind enough to give way and clarify a point. If a councillor in the future does not wish to take part in a pension scheme, or is not allowed to, surely he could use the contributions that he would have made to buy a personal pension. Would that not alleviate the problem to some extent?

[Lord Tope]

I will come to that later, but yes, it has always been the case, and will remain the case, that a councillor, like any other individual, may join a private pension scheme and pay for it from such income as he or she may have. Of course that will remain the case. However, when these regulations are agreed, no councillor will have the choice of being able to join a local government pension scheme in future. That is the issue before us today.

In my 40 years as a councillor I have never known councillors of all parties to be so angry about a measure, and I use the word angry deliberately. There have been many occasions, perhaps too many, over those 40 years when councillors have been cross or angry with central government of all parties for political reasons—that is par for the course—but in this case it is personal because councillors feel personally about it. That struck me at a meeting which I attended not so long ago where the majority of councillors in the room—it was not my local authority; there were councillors from all over the country—were not in a local government scheme because many of their councils had decided not to admit councillors to it. They were, if anything, more angry—certainly they expressed more anger—than those who were in the scheme, perhaps because they did not feel inhibited by any personal interest. Let us therefore not underestimate the extent of the anger of councillors of all parties throughout the country, regardless of whether they have the opportunity to join a pension scheme or have availed themselves of that opportunity. It is real and profound.

We have had a good debate today even if it has been a little one-sided apart from the interventions by my noble friend Lady Hanham and, to some extent, the noble Lord, Lord Bourne. I shall not take time to repeat the excellent points that have been made, but I certainly echo and agree with most of them. They have been well made.

Before this debate I inquired for the first time of my own authority how many of my colleagues are in my local council’s pension scheme and how much it costs the council as I had no idea. I learnt that 29 of 54 Sutton councillors are members of the pension scheme and that for the last full financial year it cost the London Borough of Sutton £90,000 in employer’s contributions towards its councillors’ pensions. Although £90,000 is a significant sum—I shall certainly not refer to it as peanuts—when you compare it to the £26 million of cuts which my council still has to find in the next two years it is of rather less significance.

I should like to make more strongly a point which has already been made—that it is comparatively easy to sit in government departments in Westminster and decide to cut budgets by so many millions or, in this case, to reduce grants to local authorities in total by so many billions. I say that it is comparatively easy because it is a lot easier than sitting in a crowded room with a hostile public gallery composed of people who are directly affected by the budget cuts you have to make and deciding how to implement those cuts which are not of your choosing—cuts that you were never elected to make or wanted to stand for election to make.

We are rewarding the people who have to make those decisions—thank goodness it will not be me in the years to come—by taking away their right to join a workplace pension. What spectacular timing for my Government to choose to make those cuts. I think that that is why councillors of all parties are so angry.

I should like to spend a little time returning to the first contribution after the noble Lord, Lord McKenzie, from my former London Assembly colleague, the noble Baroness, Lady Jones. I also want to talk about the position of the Mayor of London and London Assembly members. I again declare an interest. I was elected to the London Assembly, as was the noble Baroness, Lady Jones, when it started in 2000. Unlike her, I also had the pleasure of spending hour after hour on what is now the Greater London Authority Act. This is the crucial difference between London Assembly members and councillors. The GLA Act 1999 recognised that Assembly members were full-time, salaried people and gave them the entitlement to join a pension scheme. In 2000, the Senior Salaries Review Body decided that the appropriate and best-value scheme for them to join was the Local Government Pension Scheme. As a London Assembly member I joined a pension scheme three years before I was allowed to join the scheme run by my local council. I did that because Parliament gave me the right to do so. I think that that is a significantly different position from that of the councillors, much as I agree with it.

When the Government’s intention regarding this matter was originally announced, the GLA—the mayor and Assembly members—was not included. Incidentally, the announcement was tucked away at the same time as the announcement on the 2012 revenue support grant, on the last day of the 2012 Session. If we were burying bad news, that was the day to do it. The announcement did not refer to them, I think it was assumed, because of the GLA Act to which I have just referred. When the consultation came out, we were all astonished to see that it did refer to the London mayor and Assembly members. Most of us assumed—certainly I assumed—that it was a mistake in CLG and it would be recognised, corrected and would not persist.

However, it has persisted and we are now in the position that London Assembly members are to lose their right to join the Local Government Pension Scheme along with all councillors. However, they do not lose the entitlement to a pension scheme that they are granted under the GLA Act. We are now in the position that the Greater London Authority has to find an alternative pension arrangement for its Assembly members. It has to do that, regardless of these regulations. I have not been an Assembly member for some years and am not party to the detailed consideration that is being given to that point. However, I learnt that the GLA had inquired of the Prudential what it would cost for Assembly members and the mayor to join a scheme with similar benefits. The answer—certified, I gather, by the Government Actuary—was that it would cost more than double the current cost to the GLA. How on earth is that in the taxpayer’s interest? It is demonstrably not in the interests of the GLA, Assembly members or the Mayor of London. As this is supposed to be about taxpayer-funded pensions, I have to ask this question. I gave notice of this question and hope the Minister will explain how he believes that this measure is in the taxpayer’s interest.

The other point about the Mayor of London has already been made. It is always difficult to talk about the Mayor of London without immediately bringing to mind the two personalities that have so far held that office. Probably none of us is going to worry too much about their personal pensions and I suspect that they will not either. However, does anyone seriously equate the person who holds the office of Mayor of London with a volunteer? He is not obliged to be Mayor of London. He does not have to stand for election to become mayor—that is voluntary—but once he becomes mayor, is anyone seriously going to say that it is a volunteer activity? Of course it is not; that is nonsense. The man is paid a salary equivalent to that of a Cabinet Minister, and yet his pension rights are going to be changed—not taken away, because the law does not allow that, but changed to a much greater extent.