Mike Freer
Main Page: Mike Freer (Conservative - Finchley and Golders Green)Department Debates - View all Mike Freer's debates with the HM Treasury
Public Service Pensions Bill
Mike Freer Excerpts(12 years ago)
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Chris Leslie
Having spent a considerable number of weeks serving on the Bill Committee, I am pleased that we now have the opportunity to press the Government on questions that remain unanswered and largely unaddressed. Considerable changes are being made to many of the public service pension schemes as a result of Lord Hutton’s report on the future shape of those schemes. The report was largely welcomed throughout the House and that has contributed greatly to the improvement of the reforms. However, a number of the report’s aspects have not been adopted in full by the Government in this Bill, and we are concerned about that.
New clause 2, the first in a considerable group of suggested changes specifically to pension schemes, would implement recommendation 18 on page 132 of the Hutton report that
“public service pension schemes should issue regular benefit statements to active scheme members, at least annually and without being requested”.
At present, defined benefit public service schemes are obliged to provide such information only if they are requested to do so. That limited obligation is set out in the Occupational Pension Schemes (Disclosure of Information) Regulations 1996, but normal occupational pension schemes that do not have an arrangement for either a final salary or career average payment at the end of the scheme are obviously a different state of affairs from defined contribution schemes. New clause 2 would simply implement Lord Hutton’s recommendation and ensure that public service workers have a better understanding of the benefits that they have accumulated to date and what they stand to receive if they continue working until their normal retirement age.
We had a very healthy debate on this matter in Committee, where the exchange of views did not follow the usual to-ing and fro-ing of partisan speechmaking. A number of Members agreed that it would be very healthy if we improved the information and transparency for employees to enable them to make more informed decisions in planning for their savings and their financial future. For example, members of the schemes would be better able to judge whether they were saving enough for their retirement. The new clause is therefore compatible with the aim of reducing people’s need for state benefits in retirement—something that many Members across the House want to achieve.
When we tabled a similar amendment in Committee, it gained quite a degree of vocal support. The hon. Members for Bedford (Richard Fuller) and for Finchley and Golders Green (Mike Freer), who are in the Chamber today, helpfully pressed the Minister to resist his usual logic, which says in big block capital letters, “This is an Opposition amendment; thou shalt resist this devious device by Labour Members to do something nasty in the legislation.” That was not our intention. We actually wanted to implement Lord Hutton’s recommendation and bring defined benefit schemes into the modern age, especially in respect of communicating more regularly and effectively with scheme members. I live in hope that those hon. Gentlemen will chip in and offer their support again, because surely the goal of improving people’s understanding of their pension and helping them to plan more effectively for their retirement should find favour on both sides of the House.
Chris Leslie
I will give way. In fact, I was just about the quote the hon. Gentleman. He said:
“If we want people genuinely to prepare for their pensions, we need to give them the maximum amount of information. Just suggesting that it is good practice without putting in place any requirement is the wrong thing to do.”––[Official Report, Public Service Pensions Public Bill Committee, 22 November 2012; c. 455.]
It gives me great pleasure to give way to the hon. Gentleman.
Mike Freer
I am flattered that the shadow Minister should pay such attention to my words. Does he agree that it is rather perverse that when taking out a pension, particularly a private pension, a customer has to read reams of documentation about the risks, the forecasts, the potential growth rates and what might or might not happen, but when one has a public service pension, that level of detail is not provided and, most importantly, the annual statement provides scant information, even if it is requested?
Chris Leslie
That is an anachronism that has to change. The hon. Gentleman is correct that just because somebody is in a public service scheme or a defined benefit scheme does not mean that they should not think through carefully what the financial consequences will be for them on retirement. This Bill is the perfect opportunity to take that small but significant step forward.
In Committee, the Minister initially went into rebuttal mode and said that we could not have the new clause for a number of reasons. At first, he said that there were different ways of providing information to members of the scheme, that we did not want to be too prescriptive and that legislation was not necessary. However, the new clause does not prescribe the manner in which the information is provided; it would merely ensure that annual statements were provided in some form.
The Minister’s other objection in Committee was that defined benefit schemes in the private sector are not obliged to provide annual statements, so it would not be right for public sector schemes to do so. However, Government Members again disagreed. I cannot do better than to quote again the hon. Member for Finchley and Golders Green:
“We have a pensions problem in this country, and saying that private sector schemes are not required to provide statements—though many do…—is not a good enough reason for not requiring public sector schemes to provide them.”––[Official Report, Public Service Pensions Public Bill Committee, 22 November 2012; c. 455.]
Amen to that excellent argument. The Minister said at the time that he would consider the issue further.
Last week, I wrote to the Minister saying that it was our intention to table new clause 2. I rather hoped that he would table his own variant. Usually, there are accusations that the Opposition have not thought through the drafting of the phraseology of an amendment and there is some technical reason why it cannot be accepted. However, we have offered the Minister the chance to correct that. It is a matter of great regret that the Minister did not come forward with his own new clause. Perhaps I should be more optimistic and assume that that means that the Minister will stand up and accept new clause 2 straight away. That would be fantastic.
It is worth noting that all defined contribution pension schemes are required by the 1996 occupational pension schemes regulations to provide much more detailed statements than those proposed in the new clause. There is therefore no reason to think that there would be any problem in implementing the arrangements.
It would be helpful if the Minister made this change. If he wants to do it in the House of Lords when the Bill gets down there, we could probably accept that, but I think that most Members would accept the change.
John Healey
My hon. Friend’s constituency is in Northamptonshire and mine is in south Yorkshire, but we share an industrial heritage and a strong tradition of steel-making, and I entirely understand the point that he has made. It is as relevant to Corby and to east Northamptonshire as it is to Wentworth and Dearne and parts of Rotherham and Barnsley.
New clause 3 is simply intended to ensure that the undertaking given to the House by the Chief Secretary to the Treasury, and given to the unions that have been negotiating about pension schemes changes on behalf of their members, is guaranteed, and that Ministers will not be able to change their minds and change the schemes in the future. This must be legislation for a 25-year deal, which is what the Government originally promised us.
The question of access to public service pension schemes for public service workers who may face compulsory transfer to non-public service employers and organisations is critical. As has already been pointed out, the Government’s commitment to an extension was a deal-maker for many unions and for many of their members, particularly on the local government side. It would have been a deal-breaker for those unions and members if the guarantee had not been in place, or if what the Economic Secretary said in Committee—which I have quoted—had been on the table instead. We had a clear and principled commitment. That commitment ought to be included in the Bill, and then, as is appropriate in the case of enabling legislation of this sort, the details of the mechanism for how it is to be implemented can be provided in further regulation or scheme rules.
I must say to the Economic Secretary—as some of my hon. Friends have already said—that trust is a problem for the Government in the public services, particularly when it comes to public service pensions. That should come as no surprise to them. After all, they commissioned Hutton to produce the report, and before the publication of the final version, they hit public service workers with a 3% tax surcharge on their pension payments, and with not just a temporary but a permanent switching of the link with pensions from the retail to the consumer prices index. A commitment in the Bill will serve as a confirmation and a reassurance for public service workers that the Government do indeed mean what they say in this regard.
Let me say something about amendments 19 and 20, and about the Bill’s use of the concept of “closure”. During this debate and in Committee, the terms “closure” and “winding up” have been used almost synonymously, but they are not, of course, synonymous. The winding-up provisions in the Pensions Act 1995 apply principally to occupational pension schemes. Those schemes are different from local government pension schemes, which are funded and have the quasi-constitutional backing of local government.
As my hon. Friend the Member for Nottingham East pointed out, the Economic Secretary has said that that it is not the intention to close local government pension schemes. If, as the Government seem to be arguing, closure does not mean closure and there is no intention to legislate for closure of any of the funds, this change should be straightforward. It is evidently needed, especially given that the concern of employers, scheme members, trustees, and unions representing many of the members has been consistent and clear. Why risk uncertainty, why risk a legal challenge, why risk financial jeopardy for some funds, by allowing debts to be triggered in the particular circumstances of a funded scheme for local government?
It may not be the Government’s intention at present to reduce people’s benefits that they have already accrued. It may not be their intention to end any flexibility in the link between the normal pension age and the state pension age. It may not be their intention to make further and sweeping radical changes or cuts in people’s pension provision. As it stands, however, the Bill allows all those things to happen. That is why the new clauses and amendments are so important. They will reassure pension scheme members, now and in the future, that this is a settlement for the long term, that the Government mean what they say, and that the Government can, in the longer run, be trusted with public service pensions. Scheme members have seen little evidence since 2010 that that is really the case.
Mike Freer
Members have discussed the technical definition of “closure”, and I ask the Economic Secretary to make it clear in his response that closure does not mean closure, but instead means the scheme is frozen while a new scheme is run alongside and in parallel. Members have talked about the effects of closing a scheme and the crystallisation of outstanding liabilities. In respect of the local government pension scheme, the council tax payer would then be forced to meet those liabilities in one fell swoop. That runs contrary to all the other efforts the Treasury is making to keep council taxes down, so if closure is, indeed, what is intended, there would appear to be a lack of joined-up thinking in the Treasury.
John Healey
I support the hon. Gentleman’s remarks, and I hope the Economic Secretary will, too. For clarity’s sake, will the hon. Gentleman confirm that this does not only affect local councils, as schools that are academies, charities and a number of non-government organisations also use the local government pension scheme?
Mike Freer
The right hon. Gentleman makes a good point. Having chaired the London borough of Barnet pension fund committee for several years, I know that while the council is by far the largest fund, there are also many admitted bodies for which it administers funds, such as Middlesex university, academies and various charities. The crystallisation of debt that may arise if there is any vagueness in the legislation could therefore have massive impacts not only on councils, which could, perhaps, withstand the financial shock by using reserves and spreading the effects over many years, but on smaller admitted bodies, who certainly could not do that.
As we have seen in respect of Equitable Life, once a fund closes and becomes a zombie fund, all the good fund managers flee. No decent fund manager worth their salt wants to manage a zombie fund. Therefore, because of the performance of the zombie fund, the liability grows still further. The implications of crystallisation of liabilities in this context must be taken into account. I urge the Economic Secretary to explain precisely what he means when referring to closing a fund. I believe he means that one fund would remain but would have no new contributions and no new members, and a new fund would run in parallel. I urge him to make that clear.
On the issues addressed in new clause 2, I urge the Government to go further, because best practice in the public sector in respect of providing information is not enough. It is my hon. Friend the Economic Secretary’s birthday tomorrow; I think he will turn 43 years of age. I calculate that by the time he reaches the normal pensionable age of the parliamentary scheme he will have contributed some 24 years of accrued service, presuming that he is in a one fortieth, one fiftieth or one sixtieth scheme with the various contribution rates that attach to them. My hon. Friend the Economic Secretary is a man of finance and has a head for figures, so I have no doubt that he understands the pension choices he has made, but I spend a surprisingly large amount of my time explaining to teachers and others—on Saturday I spoke to a police officer—exactly how their pension works, because they do not know and do not understand.
Further requirements in terms of transparency and quantity of information are needed, therefore, because people need to make rational decisions. If we want to defuse the pension time bomb, people have to make a rational decision based on information, not supposition. A constituent of mine who is a doctor has been trying for six months to get information from the NHS about his pension contributions and likely benefits. That is simply not good enough. The Government must go further in this regard.
Mr MacNeil
In respect of this Bill and the commitment to public sector pensions, what change in GDP are we likely to see?
Mike Freer
I am not qualified to judge that. I am not an economist, so I do not have information about the impact on GDP. It might be appropriate to ask the Economic Secretary that question, however.
David T. C. Davies (Monmouth) (Con)
I am not an economist either, but the issue is not the predicted rise in GDP; rather, it is the predicted fall in the working population who will be available to pay the pensions of a growing number of older people.
Mike Freer
My hon. Friend makes a good point. The pensions time bomb is not only to do with the fact that people are making insufficient provision; it is also about there being insufficient taxpayers to make up the gap between the contributions made by employer and employee and that gap having to be made up from general taxation. There are two parts of the time bomb, therefore. Unless accurate information is provided on pensions, people will not be able to make the appropriate decisions.
Mr MacNeil
In terms of the provisions in the Bill, the House of Commons Library informs us that this time bomb will be cut from 1.6% of GDP to 1.5% of GDP.
Mike Freer
I am not sure what point the hon. Gentleman is making. After our debate, I may have to check whether I have said something that I cannot remember saying, and I apologise that I cannot respond to that point at present.
The House spends a huge amount of time regulating. The Food Labelling (Nutrition Information) (England) Regulations 2009 spell out in considerable detail the information that must be on food labels. The labels specify for consumers the fibre content, edible carbohydrate polymers, synthetic carbohydrates, salt content, kilojoules and calories, sugar content, fatty acids of trans fatty acids, yet when we ask people to make choices about their pensions, which is one of the biggest decisions of their life, we give them no information at all. I urge the Economic Secretary to go further by ensuring accurate information is included in our pension statements.
Sheila Gilmore
At least with regard to new clause 2 and the need for good communication and good information, it appears that there is a fair degree of cross-House agreement. Members may have different motives for wanting such information to be given, and may hold different views about what behavioural change that might drive. Some Members might also hint that they want this information to be given so that public sector workers are properly and humbly grateful for retaining better pensions than the absolutely dreadful pensions of many in the private sector. I hope the Economic Secretary will respond positively, however, and agree that this is an important step. It will be deeply ironic if better and more thorough information is given to people with private sector pensions than to those with public sector pensions.
We all want to avoid too much information being given, of course, with people receiving many pages of information, much of it hard to understand. We do not want to over-egg that pudding. There is a parallel debate happening in the world of private sector pensions on giving good, accurate but still efficient information, so that people can look at a single page of information—that is preferable—and understand what their likely pensions are going to be. On that matter I hope that the Minister, having heard the debate in Committee and again today, will be happy to make some changes to the provisions. I cannot see why new clause 2 should not be in the Bill, as it deals with such a major issue.
I wish briefly to discuss new clause 3, which deals with the issue of a fair deal. Again, there would appear to be a substantial degree of agreement across the House on the substance of the issue. Nobody is saying, “We don’t think these should be the provisions.” The question that has been raised is whether they should be in the Bill. Some Government Members have suggested that accepting what the clearly stated view of Ministers has been at various points should be good enough, because it is on the record and we should be confident that that is sufficient. However, as far as I am aware, it is not possible to litigate on the basis of what people simply said, rather than what is in legislation. People have attempted to say in the past, “But that was the intention”, even doing so in respect of debates in this House. However, legal disputes about rights or obligations turn on the much narrower construction of what is written in the Bill.
I am not suggesting, in any way, that those who have spoken during our consideration of the Bill do not intend what they have said, but many public sector workers are genuinely concerned. As I said in my earlier intervention, the matter becomes a great deal more important if the Government continue, as they presumably will, over the next two years to do what they say they want to do: outsource more of what we would regard, or have traditionally regarded, as public sector activities. That has already happened to some extent. Some people have explained how this could be very positive, with employee mutuals and all kinds of social enterprises springing up to provide public services. If the Government are genuinely serious about wanting current public sector employees not just to have to do this, but to be enthusiastic about doing it, these safeguards have to be in place. If this is the road that is to be pursued, it is even more important to have these provisions than it may have been in the past. Saying, “You didn’t do it before so we don’t need to do it now” is not a particularly good argument; some of us might disagree about what had been done previously. Even if we do not, the argument is still not particularly good, as we have also to learn from experience. I hope that the Government will seriously consider legislation on this matter, because if they genuinely have no intention of departing from the promised arrangement I cannot see what the problem is. When people begin to say there is a problem, that is when those paying into these schemes—the employees likely to be affected—begin to smell a rat. There may be no rat there, but why not make things absolutely clear?
That is also true of what we are trying to achieve in amendment 12, which deals with an apparent possibility arising from clause 7. Again we were given assurances in Committee that we should not be reading into this something that the Government do not intend. Clause 7 says:
“Scheme regulations may establish a scheme…as
(a) a defined benefits scheme”.
It then goes on to talk about
“a scheme of any other description”.
It is not at all clear what is actually meant. We were told that one or two specialist defined contribution schemes are in existence, but people are clear that the promise that was made as part of this negotiation is that the defined benefits schemes would remain in place. They will, however, be changed, and during the negotiation employees in various parts of the public sector accepted substantial changes in the kind of pension because they accepted the imperatives. In moving from final salary pension schemes to career average schemes, changes are being made in accrual rates. All sorts of changes have been made—for example, the forthcoming changes to pension age—but they were made on the basis that the scheme will remain as a defined benefit scheme.
Chris Leslie
If a private sector scheme rules to make its own arrangements, it has the flexibility to do so. We are simply saying that in future, some degree of latitude and flexibility should be placed in statute to allow Secretaries of State to take account of the outcome of any reviews. We are not saying there should be a requirement for exemptions to be made; we want to give the Secretary of State the power to implement the findings of any reviews should that be deemed fit.
Mike Freer
I sometimes feel as if I am on the wrong side of the Chamber for this Bill, but perhaps I may help regarding the intervention from my hon. Friend the Member for Bedford (Richard Fuller). The private sector does recognise physicality for those such as steeplejacks, chimney sweeps and jockeys who have a significantly lower retirement age. I hope that is helpful to the shadow Minister.
Chris Leslie
If only we had been talking about jockeys when the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock) was in the Chamber; he would have found that helpful intervention most interesting. My respect for the hon. Member for Finchley and Golders Green (Mike Freer) grows by the minute and I am grateful for that interjection.
The key point is whether the reviews can find their course into effect. In Committee, the Minister repeatedly stressed that the working longer review for NHS staff was
“not in any way looking at the link between the normal pension age and the state one.”
Instead he said that it was
“considering the implications of working longer for NHS staff,”––[Official Report, Public Service Pensions Public Bill Committee, 13 November 2012; c. 327-28.]
That seems a slightly contradictory statement. Linking the normal pension age to the state pension age means that people will work longer, and therefore the review will look at the effect on the state pension age link for NHS workers.
The terms contained in the Department of Health document “Reforming the NHS Pension Scheme for England and Wales” include the following objectives for the working longer review:
“Identify any categories of worker for whom an increase in Normal Pension Age would be a particular challenge in respect of safe and effective service delivery and consider how this may be addressed;
Identify any categories of worker for whom an increase in Normal Pension Age would be a particular challenge in respect of their health and wellbeing.”
If that NHS review concludes that a higher normal pension age is inappropriate for certain categories of worker, either because working longer would be physically damaging or because it could lead to unsafe practices in the NHS, the current Bill would not allow those workers to be exempt from the state pension age link in clause 9. I therefore contend that it is irresponsible to make legislation before the findings of the Government’s review are published, without allowing the legislation to accommodate some or all of that review’s recommendations. Given that the working longer review was a key component of the agreement reached between health service workers and their employers, it is unfair to fetter the recommendations that the review can realistically make. It is similarly inappropriate and unfair to fix the retirement age for firefighters at 60 when the working longer review in the fire service is yet to report.
This is an incredibly important issue. I accept that we must note that the cost-cap mechanism in the Bill would ensure that any extra costs of the extra exemptions to the state pension age link will need to be met by the scheme—the Opposition are not saying that the additional costs should fall on the shoulders of the taxpayer—but bearing that in mind and the fact that the clause does not require the Secretary of State to make exemptions, the amendment simply allows flexibility. I cannot see how the Government can object to it.
Chris Leslie
With the greatest respect, that does not deal with the problems, because there is a difference between the early retirement benefits to which an employee is entitled and those they can get at the normal pension age as defined in scheme regulations. The Government set up working groups and committees in the NHS, fire services and services throughout the country. Those groups have been given terms of reference, but now discover that they cannot implement their findings because of a drafting anomaly in this Bill. All the Opposition are asking is that the Government think again about how the scheme capability reviews come to fruition. This ought not to be a partisan point. I am simply seeking to ensure that we have flexibility in the legislation.
Others will want to speak to the amendments in the group that they have tabled, but I strongly urge the House to support amendment 16.
Mike Freer
I said in an intervention that I had some interesting views on the Opposition’s stance. I have sympathy with the thrust of the amendments, but I assure the Minister that it does not extend to voting for them.
Our starting point on the retirement age must be the demographic pressures we face. UK National Statistics data show that in 2008, males were expected to live to 78.1 years and females to 82.1 years, yet by 2011, life expectancy had jumped to 90.3 years for men and to 93.8 years for women, and we could expect to pay almost as many pension cheques as pay cheques. One of my reasons for supporting the linkage—in the main— between public sector pension schemes and the state retirement age is that there is a huge gap between the contribution rates of the employer and employee and what is drawn out as a pension.
The NHS pension scheme tiered employee contributions data, which are published by the NHS, show that the employer pays about 14% and the employee about 8.5%. My rudimentary maths leads me to conclude that 22.5% goes in. Members who took part in the Bill Committee evidence sessions will remember the British Medical Association’s interesting contribution, not least because the BMA said that doctors should pay less and the lowest-paid should pay more for their pensions. The BMA confirmed that the average pension out in the NHS was 49%, so if the contribution rates are putting in only 22.5%, but 49% is coming out, that 26.5% gap has to be covered from somewhere, and it is being funded by the taxpayer. If that taxpayer gap is going to grow because of the demographic time bomb—people are retiring at the same age, but living longer and drawing pensions longer—it will start to be completely unsustainable, undermining the public sector pension schemes in total. That is why the Government are right to link the normal pension age with the state retirement age.
Bill Esterson (Sefton Central) (Lab)
Many years ago I took the bleep test and I can only describe its physical demands as a form of hell. The hon. Gentleman is right about the demands on the police, but what about other public sector workers? It has been put to me by nursery staff, school staff who work with small children, nurses and other NHS staff that they have very physically demanding jobs. Their jobs are not as potentially violent as the job he has just described, but they are demanding. Does he accept that we need to look carefully at the impact on those people too?
Mike Freer
The hon. Gentleman makes a good point. I do not rule out the possibility where there is empirical evidence that people’s ability to work and progress is affected by the physicality of that profession. One difficulty is that those in some of the roles described in the Bill will have limited opportunities to move into other less physical roles. That is another consideration. If there are roles in the NHS where the physicality affects people’s ability to perform that role and where no other avenues are available to them, that is a fair point, but in most roles there will be opportunities to move into less physically demanding roles. Unfortunately, in the armed forces, police and fire service, there are limited opportunities to move out of front-line roles. It is the House’s duty to protect those who protect us.
Mark Reckless
People are living longer and many, albeit not all, are remaining fitter for longer. It is suggested that we amend the Bill to enlarge those categories in the public sector, but what about those in the private sector—people who work in private sector nurseries, for example—who face exactly the same issues as the hon. Member for Sefton Central (Bill Esterson) just raised?
Mike Freer
My hon. Friend makes a good point, but if he revisits some of the private sector schemes, he will find that they rely on actuarial and physical evidence provided by various medical boards, and that the retirement age in certain private sector schemes already reflects the physical demands of certain roles. In an intervention, I mentioned, rather light-heartedly, people such as steeplejacks and jockeys, but there are other roles whose physical demands are reflected in certain private sector pension schemes, which already have mechanisms in place.
Richard Fuller
Does my hon. Friend not accept that those pension schemes are fundamentally different from the types we are debating? The former tend to be defined contribution schemes rather than defined benefit schemes. Does that not have an impact on the flexibility of those schemes and their ability to take account of those issues?
Mike Freer
My hon. Friend makes a good point. He knows my views and is tempting me down the path of debating the future of defined benefit schemes. I have been entirely consistent on this point: for many years, I have said that all defined benefit schemes are no longer sustainable, whether in the private sector or public sector. That is a debate for another time and is certainly not pertinent to the amendment, but I share his view that perhaps we need more wholesale change and a larger debate.
In supporting specific exemptions where physical demands can be proven, I am not undermining the broad thrust of ensuring that our public sector pensions are sustainable. I have long argued that the contribution rates of both employee and employer do not match: what goes in does not match what comes out. That has driven my long-held view that defined benefit schemes are no longer fit for purpose. Having said that, this Bill is a major step forward in making sure that our public sector pensions are sustainable. We have a duty, however, to protect those who protect us and we ought to revisit this point where there is hard empirical evidence that physicality, in certain roles within those categories, can be proven to be detrimental to people’s health after retirement. I am not suggesting that I will support the amendment, but I am urging my ministerial colleagues to revisit the matter.
I have rehearsed at length the point about physicality. I am sad that the Minister is no longer with us, but I hope that he will address that point when he winds up. Should empirical evidence emerge, I hope that we can revisit this subject.
Ian Lavery (Wansbeck) (Lab)
I want to refer, in particular, to my amendment 1. I found the contribution from the hon. Member for Finchley and Golders Green (Mike Freer) very interesting indeed. I certainly agree with a range of points he made.
The amendment seeks to place two additional occupations into the Bill, and they have been mentioned on both sides of the Chamber. They are those of prison officer and psychiatric nurse. Clause 9(2) lists the three occupations to be enshrined in the legislation as exemptions from subsection (1)—they have been discussed by various Members and there seems to be some agreement—which are
“fire and rescue workers who are firefighters…members of a police force, and…members of the armed forces.”
I fully support people working in those occupations and the courageous work they do on a regular basis. I fully understand why they are included in the Bill and support their inclusion, but for the very same reasons I wish to amend the Bill to include prison officers and psychiatric nurses.
It is widely accepted that prison officers and psychiatric nurses have to deal with some of the most dangerous, dysfunctional and disruptive people in society on an almost daily basis. Expecting these categories of worker to work above the age 65 is totally and utterly unjustified; in fact, when we look at it in great detail, the decision seems absolutely outrageous. The hon. Member for Finchley and Golders Green mentioned a constituent of his, a very fit police officer from the territorial support unit who explained exactly how he kept himself in peak fitness to do his job. We cannot expect people in the Prison Service to be grappling with prisoners at the age of 65 and above, but the Bill as it stands would allow that.
Currently, prison officers regularly have to take five different tests: a grip strength test, an endurance and fitness test, a dynamic strength test, an agility test and a static shield hold test. If a prison officer fails any of those tests, they fail the entire health and fitness test. The current regime is therefore rather stringent. If clause 9 is agreed to unamended, it will mean many prison officers and psychiatric nurses either dying in service or retiring on ill health grounds and not having a very healthy lifestyle thereafter.
Sajid Javid
I beg to move, That the Bill be now read the Third time.
I would like to reflect on the importance of this Bill. First, I reiterate the debt of gratitude that this House owes to Lord Hutton of Furness for his comprehensive and adept work with the independent public service pensions commission. The consensus that his report and recommendations have engendered is testament to the care and thoroughness with which he and his team carried out that critical work.
For decades, successive Governments have failed to address the fact that the existing framework for public service pensions is unresponsive to work force and demographic changes. The simple and fundamental truth is that current schemes are not fit for purpose, and they have not responded effectively to the unprecedented improvements in longevity that we have seen over the last 50 years. Largely as a result of people living longer, the cost of providing public service pensions has increased by 40% over that period. At the same time, the number of active, deferred and pensioner members of schemes has risen significantly.
Since 1971 the number of active members has increased by 23% to 5.3 million. At the same time, pensioner member numbers increased by more than 260%, from 1.6 million to 4.2 million. Deferred member data are available only from 1991, when there were 1.2 million preserved public service pensions. There are 3.4 million today. Most of the people who entered public service when the schemes were last fundamentally assessed have now retired.
Mike Freer
I apologise for interrupting my hon. Friend’s flow, but will he clarify the application of the fair deal policy to the local government pension scheme?
Sajid Javid
We discussed that earlier. Transfers from local government are currently covered by an equivalent policy to fair deal. The Government are considering how most appropriately to apply the principles of the new fair deal policy to the LGPS, but our commitment on fair access to transferred staff stands and applies, including to members of the LGPS.
People are now expected to live significantly longer than the generation that went before them—an average of 10 years more than someone retiring in the 1970s. The increasing numbers of people with public service pensions and improvements in longevity have led to significant increases in the number of pensions that are being paid. Consequently, the cost of paying pensions has increased to £32 billion per year—an increase of a third in the past decade.