Parliamentary Contributory Pension Fund

Peter Bone Excerpts

Monday 17th October 2011 Commons Chamber

[Sir George Young]

The position is exactly as I said: under legislation passed by the House we will not vote on our own pay, which IPSA will determine independently. It will have the authority to do that and, without primary legislation, which the House would have to agree, its determination will be the last word.

[Mr Peter Bone (Wellingborough) (Con)]

May we get this clear? Some of us will be rather surprised to hear that we will never again vote on our salaries, because Ministers have told us that before but we have always been persuaded to vote again on them.

[Sir George Young]

Primary legislation precludes that. Were the Government to be minded to change that, they would have to persuade the House to reintroduce primary legislation overturning the Parliamentary Standards Act 2009, which deals with IPSA, and the Constitutional Reform and Governance Act 2010, which have taken the matter out of our control, so there is no longer a parallel with the previous position.

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[Ms Eagle]

My hon. Friend makes a perfectly good point, and I hope that the Government are listening. They have to show understanding and good will if they are to make appropriate progress on public sector pensions, especially at a time of pay freezes and the most ferocious squeeze on living standards since the great depression.

The Government should not play politics with this issue, and they cannot take our support for the motion as any endorsement of the way in which they have so far chosen to pre-empt meaningful negotiations with public sector trade unions to resolve the outstanding issues on pensions caused by the announcement of an across-the-board 3.2% increase in contributions, a shift from RPI to CPI for indexation—

[Mr Bone]

Will the hon. Lady give way?

[Ms Eagle]

Yes, of course.

[Mr Bone]

The shadow Leader of the House is making quite a powerful argument. I think that she is arguing for the amendment, because it would remove all the talk that she is particularly concerned about. Is she arguing for the amendment?

[Ms Eagle]

The trouble with the amendment, as the hon. Gentleman would probably admit if he sat down and thought about it, is that, the amended motion would look like we wanted our public sector pension to be treated differently from the generality of public sector pensions, and that would be an unfortunate impression. I hope that he reflects on that meaning of the amendment, to which he has put his name, and thinks better of it when it comes to the debate.

I was in the middle of saying that the outstanding issues caused by the announcement of an across-the-board 3.2% increase in contributions, a shift from RPI to CPI for indexation and speeding up the increase of retirement ages, the latter of which hits women particularly hard, are real issues that I hope the Government will address with good will in the negotiations, rather than regard as a complete fait accompli.

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[Mr Donohoe]

The trustees do not have that power. Given IPSA’s independence, which is enshrined in legislation, at the end of the day, it makes the ultimate decision, but it must do so after meaningful consultation with the trustees. Any changes that IPSA wishes to make to the pension fund must be reported to the Speaker and laid before the House. That is the power within the Act.

The trustees at the time were presented with the proposals to amend the 2010 Act. They asked for and got a number of amendments, but they had no power to overturn the Government’s proposals, which were eventually agreed. I can tell the House that the trustees made an exceptional effort and fought extremely hard in that period, and they won numerous and significant protections for Members’ pension benefits. By way of an example, accrued benefits will be fully protected after the transfer. Because the benefits have been built up, they obviously must be protected, but they are not currently protected and they could be interfered with. That is a clear indication of what the trustees were able to implement—that protection will be enshrined in legislation following the transfer. I do not have time to give more examples, but I can give them to hon. Members after the debate if they want me to.

IPSA can make changes to MPs’ future pension benefits and contributions only after formal consultation with the trustees, the majority of whom, following the transfer of the power, which will happen whenever the Leader of the House gets round to signing the order, will be Members of Parliament or former Members of Parliament. That is an enhancement of the trustees’ powers, because there is currently no such requirement.

Currently, there are 10 trustees—eight are Members of Parliament and two are former Members, but when the order is signed, one trustee will be appointed by the board of IPSA and one will come from the Government. The Ministry for the civil service, the head of which is the Prime Minister, will appoint the latter. I do not suppose the Prime Minister wants to become the trustee of the Members’ pension fund, but who knows?

[Mr Bone]

I do not understand why we have suddenly created a post for the Government in the running of Members’ pensions.

[Mr Donohoe]

I will explain. That individual would be responsible only for representing the Ministers’ section of the pension fund. A former Minister would have a different contribution rate. I see the Leader of the House agreeing with me on this. The pension fund administers that at present and will continue to do so, but by virtue of the contribution, it will come from the Department that the person was in or from the civil service. The Government are not going to start playing a part in the Members’ pension fund. I hope that that answers the hon. Gentleman’s question.

There was originally a proposal in the Bill that members of the board of trustees could be removed by IPSA. That has now been forgotten, and the eight members of the board will continue to be appointed by this House and no one else. They will continue to be elected or selected from this place or from among former Members. At our trustees’ meeting on Thursday, we thought it sensible to determine that we would lose two members at this stage so that this whole process could be carried out smoothly. Otherwise, all sorts of complications could have arisen. As a consequence, I would like to put on record my appreciation—and that of the other members of the board—for my hon. Friend the Member for Lewisham West and Penge (Jim Dowd) and the hon. Member for Watford (Richard Harrington), both of whom have now withdrawn as trustees.

The increase in contributions is the main point of any argument on this matter. I have already argued, and I want to reinforce the point, that IPSA must be seen in every respect as independent. I see no reason why the House should indicate that it would like our pension contributions to be treated in the same way as those of other public service workers. IPSA has a statutory duty to act independently of Parliament, and by giving such an indication, the House is putting undue pressure on IPSA. It should not be influencing IPSA in that way. IPSA must undertake its role as laid down in statute, and in no other way.

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[Mr David Anderson (Blaydon) (Lab)]

It would be hard to argue with what the hon. Member for Colchester (Bob Russell) has just said if we had not already agreed to do this. We are halfway down the line, and we have been since before the last general election when we said we would give IPSA this responsibility. The debate should have stopped then. We should have said, “Right, we agree today that we’re going to do something we should have been doing over the last 16 months. We’re going to tell IPSA to get on with it by sitting down with our trustees and negotiating a settlement based on the way pension schemes across the world operate.”

Why are we having this debate tonight on a lengthy motion that pulls in public sector pensions? I take the Leader of the House at his word of course, but I am convinced that other people will use this debate as a stick to beat public sector workers over the head with. They will say, “MPs have agreed to have their pensions changed, so why don’t you?” That is the wrong way to deal with something as integral to someone’s terms and conditions as their pension. The terms and conditions of public sector workers, or of any other worker in this country, should be based on a genuine debate between the employer representative for the pension scheme—IPSA in our case—and the trustees. They should come together to weigh up the evidence about what the scheme does, what it is there for, whether it is sustainable and whether there is evidence to back changes.

This country faces a situation in which the Treasury is telling us that a levy must be imposed on those in the public sector, which in some cases will be 3% and for us could well be 5%, without any account having been taken of whether it is legitimate, whether it makes schemes affordable or whether, as has been said, it makes them less sustainable. A survey carried out by YouGov for the Fire Brigades Union suggested that 27% of its members could opt out and 12% would be very likely to opt out of their scheme if these changes go through. Unison has suggested that 350,000 people could opt out of these schemes. These schemes are good for the people in them. They are not gold-plated, but they are probably as good as most people in work can get. If people opt out, that will affect not just those individuals but will have a huge effect on the investment potential of this country, because those pension schemes invest heavily in the stock market.

[Mr Bone]

The hon. Gentleman is putting his point fairly. I might well agree with the Government’s approach to pension reforms, but I am surprised that the motion states that “this House” supports it. This is the wrong debate in which to make that statement.

[Mr Anderson]

I could not agree more with the hon. Gentleman. This debate should be about the processes of this House—House business is about that, not the politics of this House. It should be about whether we agree that this is the right way for Members of this House, and whoever comes after us, to be treated. This should not be about whether this suits someone’s political agenda and allows them to go outside and say, “Look, MPs think it’s legitimate to have a 5% or 3% levy. Why won’t you do the same?”, but my worry is that that is what this is about.

Let us not forget that we had a debate that concluded three years ago about public sector pensions, including our own. That resulted in big changes to public sector pensions. As has been suggested by our trustee colleague, my hon. Friend the Member for Central Ayrshire (Mr Donohoe), a cut-off was introduced: people would retain the benefits if they joined before a certain date, but for those who joined after and for new members the pension contributions would be more and their benefits would be less. Public sector workers agreed to that three years ago on the basis that it would make their pensions sustainable for the future. Nothing has changed since then, except for the fact that the Government want to impose a levy on public sector workers to try to dig themselves out of the hole created by the collapse of the global financial system. That approach is clearly wrong. Public sector workers should not have to carry the can for the failure of the banks, and that is clearly the message being given throughout the world.

My worry is that if we tell people that they should start paying 50% more for their pensions at a time when they face pay freezes, freezes of increments, a tax on shift payments, potential redundancies and so on, they will walk away from these pension schemes, as I said earlier. That will be to the detriment of the schemes, investment and the welfare system, because as people reach retirement age there will be a bigger drain on the welfare state than there would have been had they been able to provide for themselves.

This approach is a con trick. It is not about pensions’ stabilisation; it is about taking money out of the pockets of nurses, firefighters, street cleaners, social workers and home care workers to pay for the failures of capitalism. The truth is that we should stand together with those workers, as public sector workers, in a debate that is about our terms and conditions. They have a similar debate about their terms and conditions and we should say, “We stand in solidarity with you. It’s wrong that the Government are robbing you for your pension and taking money out of your pockets.”

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[Mr Peter Bone (Wellingborough) (Con)]

It is a great pleasure to follow my hon. Friend the Member for Suffolk Coastal (Dr Coffey) who, as usual, made a number of good points. I think it would be wrong if I did not mention the speech of the hon. Member for Central Ayrshire (Mr Donohoe), which I thought was the most reasoned and sensible speech of the whole debate. Uncharacteristically, the Leader of the House was not on his best form and did not show his usual charitable nature. I think that when he reads Hansard tomorrow, he will regret the remarks he made about the implied position of Members who signed the amendment, which was quite wrong. I really think that, on reflection, he will regret saying that.

The emoluments of Members should be a matter for the House and Members should have a free vote and be allowed to make their own minds up—this should not be party whipped. That is where a lot of the problems with our pensions and salaries have occurred in the past, with every party leader trying to bid lower to attract what they thought was the best press coverage on the issue. I do not think that a single Member has said that our pension scheme should not go to IPSA. What I am concerned about is our sending it to IPSA, and then the Executive—the very Government who say they want there to be an independent look at how our pensions are run—telling that independent scheme what to do. That is the whole problem.

The amendment is very simple. It simply takes out all the garbage, goes to the heart of the matter and transfers our pension scheme to IPSA for IPSA to make up its own mind. I am quite sure that Sir Ian Kennedy will ignore the rest of the motion anyway, saying that it is just a representation and that IPSA will make its own mind up. It seems to me that the Government can quite properly make their own submission but that they cannot tie it to the House. Members should be able to make their own submissions and it is wrong to try to force this through. This is what every single Executive have done since I have been here. I say to the Government, “You really have to butt out; you have to leave the pay, conditions and expenses to IPSA.” With all due respect to the Leader of the House, I will have a 10p bet with him that we will be back here again voting on our salaries, because the Government at some stage will not like something that IPSA has recommended.

Let me address the comments of the shadow Leader of the House. I am amazed that the Opposition are going to vote for a motion that states that the House

“supports the approach to public service pension reform set out in the Final Report of the Independent Public Service Pensions Commission chaired by Lord Hutton of Furness”.

I might think that is a good idea, but I did not think that was the Opposition’s view. If they vote for this motion, they are voting for that. They cannot argue about it because it is on the Order Paper.

[Ms Angela Eagle]

I spent a little time talking about some aspects of the Hutton report that we did support, and I also made observations on some aspects of the Hutton report to which I thought the Government should pay more attention. I think my speech was entirely in keeping with our response to the Hutton report to date—as the hon. Gentleman will see if he reads it in Hansard tomorrow.

[Mr Bone]

I listened very carefully to the hon. Lady. If this motion goes through, the Government will quite rightly be able to say that the official Opposition support the wording because they voted for it in the House of Commons. That may well be her position—I am happy to accept that—but this is not the right place to be debating this issue.

[Mr Chope]

Does my hon. Friend share my disappointment at the obvious lack of intellectual rigour being applied to this issue by those on the Opposition Front Bench?

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[Mr Bone]

That is tempting, but I do not think it is that. I think that the Opposition are between a rock and a hard place. They do not want to support that particular point, but, equally, they do not want to be spun against by the Government who will say, “There we are, the official Opposition didn’t want to restrict our pensions.” That is what they are really scared of. They have decided that they would rather put the perception in the papers above taking a principled stand. Time and again we do that in the House, and I think it is a huge mistake.

[Richard Graham]

How would my hon. Friend answer his constituents in the public services whose pensions are about to be significantly downgraded when they ask him why the parliamentary pension scheme remains the most generous of all and whether he missed the opportunity to amend it?

[Mr Bone]

That is simple to answer in the way that I hope that my hon. Friend would answer it: the House believes that our pensions, expenses and salaries must be determined independently, so they should be determined by the independent body, not by him or me. That is how we got into this mess in the first place. I hope that he and all other Members would make that point.

I came to the House expecting the amendment tabled by my hon. Friend the Member for Christchurch (Mr Chope) to be a probing amendment, because we thought that the Government would say that this was up to IPSA, that this was just their view and that it was an independent matter. Unfortunately, the remarks of the Leader of the House have so incensed me that, if my hon. Friend wishes to put the amendment to the vote, I shall support him.