Parliamentary Contributory Pension Fund

Mark Field Excerpts

Monday 17th October 2011 Commons Chamber

[Sir George Young]

I would like to make a bit of progress before I give way.

It is accepted by Members on both sides of the House that the UK faces an unsustainable structural deficit that must be brought down. The Government have been forced, as any Government would be, to take difficult decisions across the public sector that have consequences for hon. Members. In March, the House agreed that Members’ salaries should be frozen this year in line with the two-year pay freeze on public sector workers earning more than £21,000. After that debate, I commenced the relevant parts of the CRAG Act, formally transferring power to IPSA. I am sure that the chairman of the trustees and the House will recognise the comparison of that procedure and the one we are debating this afternoon—we are transferring responsibility while at the same time expressing a view.

Before the election, all parties publicly agreed that the current final salary terms of the parliamentary pension scheme should be brought to an end. However, as with other public service pension reform, changes will not be made retrospectively, nor will they have an impact on past benefits—an assurance that is as important to Members of the House as it is to those in other public sector schemes.

Looking ahead to a future scheme, the coalition agreement committed us to consult IPSA on moving from the final salary arrangements. In June last year, the Government established the independent public service pensions commission, chaired by Lord Hutton of Furness, to make recommendations on how to put public service pensions on a sustainable footing. Although the Hutton report did not include hon. Members within its scope of inquiry, it was immediately apparent that reform of the parliamentary pension scheme must be tackled in the light of the commission’s findings and their subsequent application to other public service schemes. I do not believe that there is any case for our scheme being treated differently from other public service schemes. Indeed, there would be justifiable disbelief if it were.

[Mr Mark Field (Cities of London and Westminster) (Con)]

I accept that there is much to be said about our needing to set the public an example, particularly given the reforms we are trying to make to public sector schemes, but unlike many public sector schemes the parliamentary scheme is—or is near to being—fully funded and the contributions are rather larger. Will the Leader of the House go into more detail on the nature of the parliamentary scheme, which is slightly misunderstood in much of the press coverage?

[Sir George Young]

The contributions for those subscribing at one fortieth are indeed higher than those for many elsewhere in the public sector, but so are the benefits. The Exchequer contribution, at some 28%, is also substantially higher than for other public sector schemes. One needs to consider it in the round when one comes to a judgment about the appropriate treatment of the scheme.

Today’s motion supports the approach to public service pension reform set out in the final report of the independent public service pensions commission.

--- Later in debate ---

[Mr Mark Field]

I understand some of the hon. Lady’s concerns about pre-emption, but does she not also think that at this juncture we need to take a lead on this, despite all the concerns I have—I hope that she will be able to say a little more on the relatively generous rates for parliamentary contributions, compared with others—given the difficulties we will face throughout the public pensions sphere?

[Ms Eagle]

It is certainly important that we are not seen to exempt ourselves from the required changes, and in this debate so far that sense has been put across by speakers on both sides of the House.

The Government have to show understanding and good will if they are to make progress on public sector pensions.

--- Later in debate ---

[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.

[Mr Mark Field]

Does not the hon. Lady recognise that one reason for what she would regard as this breakneck speed of reform of the age of retirement and pension arrangements is that so little was done, and not just in the past 13 years, since one could argue, given the actuarial evidence about life expectancy, that the inaction goes back well before 1997? The force of necessity has meant that the Government have had to act relatively quickly to make up for very slothful action from past Governments.

[Ms Eagle]

I do not agree with the hon. Gentleman’s interpretation at all. We sometimes agree on things; we do not happen to agree on this. We made some good reforms and we saved considerable amounts of money through the negotiations that we had on public sector pensions, which came to an agreement. I am arguing that MPs’ pensions should not be exempt from changes, regardless of whether they are independently provided for and decided on.

I hope that the Government show determination and good will in having meaningful negotiations with the representatives of millions of public sector workers whom they are meeting, and that they recognise the real challenges and dangers, as Lord Hutton pointed out, of going too far and too fast on contribution rates and driving people to leave schemes at a time when there is a ferocious squeeze on living standards. There is a balance to be negotiated, and I am not at all certain that the Government are getting that balance right. If they get it wrong, many hundreds of thousands, even millions, of people will leave schemes and will then look forward to a life on means-tested benefits when they retire, which, paradoxically, will cost the country more than if we can keep them paying into schemes. There is a delicate balance that has not often been reflected in the rhetoric—the bellicose rhetoric, in some cases—from Government Members as these negotiations proceed.

I hope that there will be a new and constructive approach from the Government in the ongoing negotiations on public sector pensions. In the meantime, we will support the motion.

--- Later in debate ---

[Mr Mark Field (Cities of London and Westminster) (Con)]

Although I do not agree with the final few words of my hon. Friend the Member for Wellingborough (Mr Bone), I agree with much of the rest of what he said. If this was genuinely the last time that the House would ever consider these issues, I would be rejoicing and might even be entirely persuaded by what the Leader of the House said. He knows as well as I do that, if IPSA recommends a significant salary increase in advance of April 2013, the Government—perhaps even a Government with him still as Leader of the House—will introduce a two-line Bill to ensure that we do not vote on the proposal.

This is a crying shame: we got into this mess, going back 25 or 30 years, because Executives repeatedly interfered with salaries, general remuneration, pensions and expenses, and there seems to be no end in sight. I have not been reassured by what has been said. I have quite a lot of sympathy with what the Government are trying to achieve, but I would have even more sympathy if they had said, “This is IPSA’s responsibility. Let IPSA get on with it.” That was the position as we understood it when the bomb went off less than three years ago over the expenses row.

At the beginning of 2009—a somewhat different time—I wrote an article for the Daily Mail arguing that the disparity between public sector and private sector funded pensions had the makings of an enormous political controversy. I recognised that MPs would have to take a lead and that the public sector, which includes us, had to wake up to the reality of higher life expectancy and the unchallenged cost of unfunded pensions.

We must place on record some commonly misunderstood facts about our so-called brilliant pension scheme. We have quite a generous pension scheme, about which the hon. Members for Central Ayrshire (Mr Donohoe) and for Blaydon (Mr Anderson) made important contributions. Compared with many other pension schemes, ours is well funded, but those who are on the one fortieth scheme already pay a 11.9% contribution, which is considerably higher than the norm for other public sector pensions. Those facts never seem to be mentioned by hon. Members or the press when the issues are discussed.

I very much agree with my hon. Friend the Member for Wellingborough about the lesson to be learned from recent months: we might have hoped that the Executive would stop trying to pander to every whim of the press. Unfortunately, the motion seems to be a little more governed by tomorrow’s headlines than by the justice of the case. I say that with some regret, because I broadly agree that Members of Parliament should take a lead on the issue but should not pre-empt other discussions—that would be wrong, too, given the great difficulties the country will face.

I regret that, once again, the Government, like so many before them, have failed to grasp the nettle on MPs’ remuneration and to consider our salaries, expenses and pensions in the round, rather than disjointedly holding a debate every six or nine months and reducing our total remuneration at the margins.

Above all, the lesson that we ought to have learned from recent times is that we should leave this to an independent body. IPSA now, rightly, sets our rules. I understand some of the concerns about IPSA’s operation expressed by the hon. Member for Colchester (Bob Russell). I have had some of my own concerns about it, as I am sure many hon. Members have, but it would be far better to leave IPSA to recommend an appropriate contribution, rather than have the sense of interference.

I go along with the motion. I understand from my hon. Friend the Member for Christchurch (Mr Chope) that the amendment will not necessarily be pressed to a vote. We have a very important debate to follow, so I am glad to hear that, and I praise the Leader of the House for ensuring that we have a fairly full debate on Hillsborough. That debate is not just for Members of Parliament from Merseyside or south Yorkshire, where the terrible events took place; as a keen football fan, and the vice-chairman of the all-party football group, I think it very important that we hold that debate, and I sincerely hope that, after quick winding-up speeches, we can move on to it and put the issue we are discussing to one side. I hope—I speak more in hope than in expectation—that I shall never again have to speak in the House on any matters to do with MPs’ pensions, pay or expenses.