Public Service Pensions and Judicial Offices Bill [Lords]

Matt Rodda Excerpts

2nd reading
Wednesday 5th January 2022 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

I am grateful for the opportunity to close the debate on behalf of the Opposition. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, we do not oppose this important Bill—indeed, I welcome the serious debate that has taken place this evening—but we will continue to hold the Government to account as the Bill progresses. I thank Members on both sides of the House for their valuable contributions, and I am grateful to the hon. Members for Gloucester (Richard Graham) and for Bromley and Chislehurst (Sir Robert Neill), the right hon. and learned Member for South Swindon (Sir Robert Buckland), the hon. Member for Glenrothes (Peter Grant), the right hon. Member for Newark (Robert Jenrick), my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and the hon. Member for Edinburgh West (Christine Jardine).

Our public sector workers play a vital role, and I pay tribute to the hard work of our NHS staff, teachers, police, firefighters and many other dedicated public servants, all of whom are affected by this Bill. We owe these public servants an enormous debt of gratitude for their vital work during the pandemic. As we heard, these workers had to be at work physically throughout the pandemic—not at home or working online. They were caring for the sick, delivering key services or keeping our streets and communities safe. It is right that these dedicated workers can expect a decent pension in their retirement. It is not always understood that most of the schemes in question operate on a pay as you go basis, with workers themselves contributing throughout their working lives.

The shadow Chief Secretary, my right hon. Friend the Member for Wolverhampton South East, raised a number of important questions in his speech, and I am afraid to say that, so far, Ministers have failed to fully answer them. I hope the Minister, in his closing remarks, will now reassure these hard-working public servants about a number of matters.

The most important question is, where will the £17 billion it will cost to fix the Government’s mistake in 2015 come from, and who will pay this enormous bill? Will it be the taxpayer, or will it be the pension scheme members?

The next question is about the design of the remedy the Government have put forward. I welcome their decision to accept the mechanism favoured during the consultation, but we need clarity about whether that choice will incur any costs for the pension scheme members concerned. If the Government are going to ask scheme members to take potentially significant decisions, will they commit to providing much more information to pensioners and savers to help them avoid making costly mistakes? Ministers have failed to do so in the past, and even now they seem reluctant to include pension scams in their important Online Safety Bill, despite the spiralling costs of pension fraud and mis-selling.

We also ask the Government to be clear about how the cost control mechanism will work. We were told at first that if costs breached the ceiling, benefits would be reduced, but the Government have said that no member will see benefits reduced in this case. What does that mean? How will the necessary funding be provided, and is there going to be a time after which such a guarantee may lapse? Ministers have left a number of crucial questions unanswered about part 2 of the Bill as well: what are the estimated costs to the Treasury of underpinning the liabilities of former employees of Bradford & Bingley and Northern Rock, and are those costs additional to the £17 billion budgeted for the McCloud response, or are they part of the scheme and the overall response?

Carrying on to the next part of this important Bill, which concerns the judiciary and has been the subject of much of the debate this evening, do the annual allowance and lifetime allowance not apply to judges? I ask the Minister to clarify that very important point: it is unclear, and it must be clarified. If judges are not covered by the same rules, how will the Government justify that decision to other pensioners? Indeed, does that decision leave the Government open to legal challenge in the future? Furthermore, colleagues in the other place voiced concerns that raising the mandatory retirement age for judges could make it more difficult to increase diversity in our legal system. I hope the Government will make available further details of how they plan to ensure this does not happen. We understand the need to clear the backlog of cases, but I urge the Government to do far more to increase diversity in this very important profession.

I will also take this opportunity to underline the concerns raised by the Police Superintendents’ Association and, indeed, the Fire Brigades Union. Scheme members in the police and fire services could be adversely affected by this Bill because of the ways in which the years between 2015 and 2022 are treated. We know that the Home Office said that further work was needed on this issue, and Ministers have discussed it with representatives of the police and fire services. How will the Government now address this important point? I hope the Minister will speak to that in his closing remarks.

Finally, I urge the Government to respond to the points raised by the Public Accounts Committee when it went through the proposals in a great deal of detail. We must fully understand the consequences this Bill could have for both employees and employers, and I am concerned that the Government have not properly considered the knock-on effects on public service recruitment and retention, which are both absolutely critical issues for these vital public services. There is also a risk that more means-tested benefits may be required if there are changes to public service pensions, and that public service pensions may be worse off. I hope that we will hear reassurance from Ministers on those crucial points. I assure the House and the wider public that we in the Labour party will keep raising these important questions, and I hope the Government will respond in a timely and appropriate manner.

I realise that time is pressing, so I will end my remarks with the following: on an issue of such great importance as the future pensions of so many public sector workers, the public deserve to be confident that the Government have adequately prepared for all eventualities and fully understand the consequences of their actions. Public sector workers, as well as Members of the other place, have made their concerns and questions clear, and it is regrettable that they have not been answered in full so far today. I hope that the Minister will now take his opportunity to reassure the House, the wider public, and public servants about these important points.

Public Service Pensions and Judicial Offices Bill [ Lords ] (First sitting)

Matt Rodda Excerpts

Committee stage
Thursday 27th January 2022 Public Bill Committees

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I also declare an interest: there are members of my family who may be affected by the Bill. I am not entirely sure, but I believe that they may be affected.

I also pay tribute to our public sector workers. As my hon. Friend the Member for Hampstead and Kilburn said earlier, and colleagues across the House have mentioned, we owe an enormous debt of gratitude to our public sector workers. We are talking about hard-working police officers, firefighters, teachers, local government workers and many others who have been at the forefront of the country’s efforts during the pandemic—and, indeed, over many years—and offer so much to our community. We need to treat the Bill with the utmost gravity, and I am grateful for the tone of the debate overall.

I would like to point out the importance of intergenerational fairness. I appreciate that the Government and the Minister have quite rightly highlighted the importance of the remedy. The Government lost a court case and are now seeking to remedy that significant mistake by the Treasury. However, the risk in the Bill is that inadvertently the Government may impose another unfairness on a younger group of workers. Later on in the course of today’s proceedings, could the Minister reassure those younger workers once again? It is really important for them to have clarity and reassurance about their pensions—that they will not have to pay far greater sums to receive the pensions that they rightly deserve. As part of that reassurance, it is very important that the Government address the issue of the cost control mechanism and are absolutely clear about how it will work. We hope that they will provide further reassurance and information on that matter during the course of today’s discussions.

Finally, I reassure members of the public that these schemes are by and large pay-as-you-go pension schemes, to which teachers, police officers and others make significant contributions during the course of their service. They are not wholly underwritten by the Government. That is a very important point for people who do not work in public services to remember and be reassured by: as another hon. Member mentioned, we are talking about deferred payments to public servants and ensuring that they receive the pensions that they rightly deserve, to which they have contributed over many years of service to our community.

--- Later in debate ---

[Matt Rodda]

I am grateful to the Minister for expanding on those points. I reiterate the importance of listening to the views of women workers in the public sector. They are obviously a large proportion of workers in the public sector, as he well knows. In particular, with this group of new clauses on the local government pension scheme, it is important for the Government to get that right. I urge him to continue to talk and listen carefully to the relevant unions. I should declare an interest as a member of the GMB, which is one of the relevant unions. I believe there is a great deal of knowledge in the local government profession and in the unions on such matters. Please will the Minister consult widely and listen on the fine detail, to ensure that we get it right for the many workers in local government? It is perhaps worth adding that there are a number of other issues with women’s pensions as a whole and a wider context of ensuring that pensions for women are protected and funded properly.

[Mr Clarke]

I thank the hon. Gentleman for what he said. As a former Minister for Local Government, I absolutely agree with everything he says about the value of local government workers and that women form a disproportionately substantial part of the local government workforce. They make up more than 70% of the scheme’s membership, so it is vital that their voice is listened to, and I commit that it will be.

Question put and negatived.

Clause 77 accordingly disagreed to.

Clause 78 disagreed to.

Clause 79 ordered to stand part of the Bill.

Clause 80

Restriction of existing schemes

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Peter Grant]

I share a lot of the concerns that have just been expressed so eloquently from the Labour Front Bench. I have a couple of other issues with what is in the new clauses; perhaps the Minister will explain.

I understand why the Government want to build in growth in the economy, but at the same time I agree fully with the concerns expressed by the official Opposition. In new clause 1, in what circumstances does the Minister envisage

“or any sector of the economy”

becoming relevant? In which particular sectors of the economy does he think that growth will be particularly relevant to local government or other public sector pensions?

The provision goes on,

“the growth in the economy…of the United Kingdom or any part of the United Kingdom”.

Who takes the decision that the economic performance of one particular part of the United Kingdom is relevant to a particular pension scheme or to all pension schemes? What do we mean by a “part” of the United Kingdom? Is that simply the four constituent nations? Can it be influenced more by the economy in London than the economy in Yorkshire?

As the hon. Member for Hampstead and Kilburn mentioned a minute ago, the Bill will be far too vague at this point. It will put far too much power into the hands of, presumably, Ministers. There is no guarantee of any accountability or transparency as to the way this is operated. For that reason, my understanding is that a number of unions, although they support the intention behind new clause 1 in its entirety—I am struggling over whether to oppose the entire new clause, as I want to see a lot of stuff in there in the Bill—have significant concerns about that particular part of the economic check. If I were not opposing the new clause, I would be minded to table a more significant amendment at a later stage in proceedings. Will the Minister explain when he envisages a particular sector of the UK economy to be relevant, and when he expects that to be the economy in a particular part of the United Kingdom?

Finally, the Minister was keen to tell us what the unions had said about the previous transition arrangements. Will he tell us what the unions are saying about the economic check in this part of the Bill? Will he explain why he listened to the unions previously, but does not seem to be listening to them now?

[Matt Rodda]

I rise to support my hon. Friend the Member for Hampstead and Kilburn. She is making an excellent point, and I am glad that she will press for a vote. The issue here relates to the need for transparency and trust, and the Government must reassure worried public servants, who have worked hard and have every right to expect a decent pension and retirement, that there is no sleight of hand here.

One of the three issues the Minister mentioned is to be dealt with in regulations, and the other two are on the face of the Bill. I would like him to reassure the Committee about the nature of those regulations, how they will be dealt with by the House and when they will be brought forward. I also remind him of the views of the independent Public Accounts Committee, which urged the Government to take the matter seriously, saying that the Government should

“quickly resolve the challenges presented by the McCloud judgment and cost control mechanism”

and that that was important to rebuild trust. I hope the Minister will consider the PAC’s thoughtful advice on this matter.

[Mr Clarke]

I thank all Members for their contributions, which I will take in turn. I hope to provide significant reassurance.

On the point that the hon. Member for Hampstead and Kilburn made about the widening of the cost corridor, the Government published a full impact evaluation as part of the consultation response on 4 October 2021, so that detail is available and is modelled.

To the point of the hon. Member for Reading East just now, the cost corridor is being addressed in regulations because the current 2% corridor exists under current powers, so we are simply amending 2% to 3% and do not need to introduce anything new.

As for the 25-year guarantee and the assurances given when the pension reforms were first introduced, the Government do not believe that the reforms breach that guarantee. The elements protected by the guarantee are set out in legislation and the cost control mechanism is not included among them. The Government are making these changes following an independent and thorough review of the mechanism by the Government Actuary’s Department and a full and open consultation process. As the GAD’s report makes clear, it does not seem possible for the mechanism to protect the taxpayer unless it considers the wider economic outlook, and the symmetrical operation of the economic check acts to protect members as well as the taxpayer.

The reforms will fundamentally lead to a more stable mechanism, with both benefit reductions and improvements becoming less likely. That aligns with the spirit of the guarantee which, as the hon. Member for Hampstead and Kilburn quite rightly said, is all about certainty. There is absolute conviction that that is in everyone’s interest including, most importantly, scheme members.

As for how the situation is assessed and to the point of the hon. Member for Glenrothes about how we manage the long-term GDP expectation, the check will be linked to the Office for Budget Responsibility’s independent and objective measure of expected long-term GDP growth and the long-term earnings assumptions. The check will operate purely mechanically with no scope for interference from individuals or groups from within Government or outside. It will be an independent, objectively assessed measure by the OBR. There is no sense in which any Minister from whatever party is in government at whatever time would have the ability to intervene in that process. I hope that provides reassurance on all those points.

Public Service Pensions and Judicial Offices Bill [ Lords ] (Second sitting)

Matt Rodda Excerpts

Committee debates 2nd sitting & Committee stage
Thursday 27th January 2022 Public Bill Committees

[Peter Grant (Glenrothes) (SNP)]

The Minister started off by suggesting his main concern was that the new clause seeks to go further than has been requested by the Police Superintendents Association. If that was the case, then the Minister could have easily tabled an amendment that came closer, in his view, to delivering what the PSA was asking for without going significantly further. He has not done that, so we have to wonder if he had any intention of addressing the issue had the new clause not been tabled.

We are asking the Chancellor to table a report and present it to Parliament. There is nothing in the new clause that would require the Chancellor to commit a single penny of additional spending. It does not tell the Chancellor what his or her conclusions have to be at the end of that. It is perfectly in line with the wording of the new clause for the Chancellor to produce a report to say, “We could remedy the situation by doing a, b, c, x, y and z, but I cannot recommend doing that because that would introduce unfair discrimination that would be contrary to the purpose of the Act.”

The Minister is trying to make it seem as if the new clause is about forcing the Government to incur additional expenditure. My reading of it is that it is deliberately worded to avoid asking for a commitment at this stage, but it seeks to force the Government to recognise that there might still be a massive weakness in the Bill and to force the Chancellor to come forward with a solution that might address that weakness. If the solution proves to be unworkable or to be unfair in other ways, Parliament has the option to reject it.

Surely, it is wrong, at this stage, that a potentially serious unfairness should be left sitting in the Bill just because we are not sure we can find a way of fixing it. That is not a fair response to give, either to the hon. Member for Hampstead and Kilburn, who moved the new clause, or to those officers who are likely to be affected by it.

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Graham. I pay tribute to our police and fire service. I appreciate that the Minister shares that sentiment. I want to underline the points made by my hon. Friend the Member for Hampstead and Kilburn and others that we are just asking the Government to consider this again and to produce a report. That seems to be the very least that could be asked of them at this point.

It is worth remembering that the police and fire service—these valuable services, which are at the frontline of our public service and respond to challenging issues in our communities—have been through the pandemic after 10 years of quite serious austerity cuts in staff numbers. Once again, I ask the Minister to consider this new clause that asks only for a report to be produced, which would allow further discussion to take place.

I have met the Police Federation and the Police Superintendents Association, both of which have genuine concerns, and I understand that the Fire Brigades Union does, too. We should listen to these public servants. They have genuine concerns. This is an important issue about the future and the status of these services. I ask the Minister to consider the new clause very seriously.

[Liz Twist (Blaydon) (Lab)]

I rise briefly to echo the points made by my friend the hon. Member for Glenrothes. The new clause calls for a review to consider the issues further. In responding, can the Minister say what steps he will be taking to resolve those outstanding issues and through what form the discussions will take place?