Public Sector Pensions

Stewart Hosie Excerpts

Thursday 8th December 2011 Commons Chamber

[Hywel Williams]

Government Members have deployed such arguments time and again, which is strange given that in other contexts, such as that of education, they always deny that they are lowering standards. It is not about levelling down, they say, but about levelling up—yet when it suits them, it is the other way around. The hon. Gentleman clearly was not listening when I made that point earlier.

[Stewart Hosie (Dundee East) (SNP)]

The hon. Member for Skipton and Ripon (Julian Smith) has advanced a spurious argument. There are some very good private sector schemes and some very good public sector schemes. Some private sector schemes have gone bust, and some public sector schemes require an in-year top-up. This is not about “private good, public bad”, or the other way around. It is about having good schemes, full stop. It is about fairness, and about not levelling down in either the private or the public sector.

[Hywel Williams]

My hon. Friend has made a good point. If Government Members are concerned about the private sector, they should be concerned about the large number of people who have no pensions at all. That is what concerns me, and concerns my colleagues.

--- Later in debate ---

[Hywel Williams]

Again, I do not want to go down that particular avenue—[Interruption.] I have some things to say that the Minister might like to listen to. My hon. Friends will be responding to his point later, but let me say now that the possibilities to which he alludes constitute a broad spectrum of theoretical options for consideration, and that the Scottish Government have expressed no preference. I am sure that others will say more about that later.

[Stewart Hosie]

The Minister said that a number of choices were available to the Scottish Government. As he will know, the choices are rather limited by the UK Government’s threat to withdraw £8 million a month— £100 million a year—from the Scottish budget if we do not stick to their timetable. I am sure he agrees that that rather limits the choice of manoeuvre for a Government who do not want to go down that path.

[Hywel Williams]

I am sure that the £100 million cut that the UK Government are dangling before them is proving very persuasive for the Scottish Government, given the difficult position that they are in. I am sure that more will be said later about that as well.

--- Later in debate ---

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Does the hon. Gentleman not accept that the Labour-run Scottish Executive also had to make choices? When they undertook to introduce free travel for the elderly, they had to do so on the basis of the block grant, and the SNP would have to take a similar hit if they did what the motion suggests.

[Stewart Hosie]

The budget was going up at that time.

[Hywel Williams]

As my Scottish colleague says, the budget was going up then.

--- Later in debate ---

[Iain Stewart (Milton Keynes South) (Con)]

Although it is always a pleasure to follow the hon. Member for Glenrothes (Lindsay Roy), I must confess some disappointment that I have not yet heard from a member of the Scottish National party. In my short contribution to this debate, I should like to focus on what I think is the Scottish nationalists’ real motive behind the motion and the debate on public sector pension reform—their ambition for the Scottish Parliament to have full control over public sector pensions as part of its drive towards fiscal autonomy and full separation. Let me draw the House’s attention to the words last week of the First Minister, Alex Salmond:

“The way to stop this Parliament and Government being hamstrung by the policies of the UK Government is to give us the financial independence that we require in order to do that.”

That is clearly his aim. [Interruption.] And from a sedentary position, Scottish nationalist Members endorse it. That aim is at the heart of the motion.

Notwithstanding the local variation within the devolved Administrations over the administration of pension funds, to which my right hon. Friend the Minister referred, it would be a hugely retrograde step to move away from a unified United Kingdom public sector pension scheme.

[Stewart Hosie]

There is no unified public sector pension scheme, but there is a police pension scheme, a firefighter pension scheme, a Scottish teachers’ scheme, a local government scheme and an NHS superannuation scheme. They are all different; there is no unified scheme. The hon. Gentleman is simply wrong.

[Iain Stewart]

If the hon. Gentleman forgives me, I was using shorthand. I am well aware that there are different schemes for different professions within the public sector, but in a UK context they are broadly similar between Scotland and England.

Paragraph 5.26 of the Hutton report reads:

“There has been scope for some variations in terms to meet local circumstances, but the resulting pension schemes have essentially been the same as those established by the UK Government. That has, for example, helped to prevent pension terms becoming an obstacle to transfers of staff and skills within a sector of the public service. It seems reasonable to continue with this approach.”

Paragraph 5.27 reads:

“The key design features should be part of a UK-wide policy framework that extends to Scotland, Wales and Northern Ireland, with limited adaptations of other features to meet local circumstances.”

I agree with that but it would be hugely disruptive to try to break apart what has been a unified system up until now.

[Iain Stewart]

As I said, in quoting from the Hutton report, local variations can be provided for, and that is exactly what my right hon. Friend the Minister said. There is no inconsistency at all.

Most public sector pension schemes—with the exception, I think, of the local government one—are pay-as-you-go schemes. There is not a separate fund, a pot of money or assets that are invested and then pay out. The current pensions are paid for from current receipts and underwritten more widely by the Government, with the expectation that tomorrow’s pensions will be paid for largely by tomorrow’s contributions. With fiscal autonomy or full separation, however, how would all that be disaggregated? It would lead to an enormous muddle over who was liable to pay for what and over who would be liable for the shortfall in future pension payments accrued under the current system? Were we to move down that road, I would wish to train as an actuary, because a lot of them would make a lot of money from disentangling everything. [Interruption.] Indeed, they earn a good money as it is. But they would earn even more.

[Stewart Hosie]

The hon. Gentleman cannot argue that these are in-year contributions and then make the case that there is a pension pot requiring actuarial rules. There is either a pot of money that is paid for and needs to be disaggregated, or there is not, but he has just said that there is not one because it is paid for in-year. Which is it?

[Iain Stewart]

That is not my point at all.

--- Later in debate ---

[Mr Jones]

I can do no better than refer the hon. Gentleman to the Office for Budget Responsibility, which indicated that 1% would opt out.

There is no doubt that this debate has raised passions, and that is understandable, but the Government’s aim is clear. We will do our best to ensure that public sector workers will continue to have access to pension schemes that are guaranteed, index-linked and inflation-proofed. In the current economic climate, there are many other workers who would be only too grateful to have a similar benefit. Most public sector workers will see no reduction in the pension that they receive, and some indeed will receive larger pension income on retirement than they would otherwise—

[Stewart Hosie]

claimed to move the closure (Standing Order No 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.