Public Service Pensions

John Bercow Excerpts

Wednesday 2nd November 2011 Commons Chamber

[Danny Alexander]

I am grateful to the hon. Lady for her response, although she left a few questions unanswered herself, which I shall come to.

On proper discussions, I reject what she said about the Government’s stance. Talks have been going on constructively for the last eight months. The Minister for the Cabinet Office and I have spent many, many hours in those discussions, and if the hon. Lady talked to the trade unions, she would discover that they, too, see them as constructive. She also referred to the previous Government’s cap and share arrangement. Let me tell her what Lord Hutton said about it in his report:

“Cap and share cannot take account of the increases in cost of pensions over recent decades because people have been living longer. Also, untested, complex cap and share arrangements cannot of themselves, address the underlying issue of structural reforms, nor significantly reduce current costs to taxpayers.”

In other words, the previous Government’s arrangements were simply not good enough at controlling the costs in the way we need to.

The hon. Lady asked me several questions; let me address them directly. As I said in my statement, transitional protections and tapering are outside the cost ceiling, so they will not be met at the expense of other arrangements, which may be negotiated on a scheme-by-scheme basis. On contributions, there was an assumption, audited by the Office for Budget Responsibility, about the impact that 1% of pay bill would have on opt-out rates, which I accept. We are engaged in a separate track of negotiations with the local government pension scheme—which the hon. Lady also mentioned—precisely in recognition of the fact that it is a funded scheme and that therefore different considerations apply.

On affordability—the first of the hon. Lady’s three tests—let me tell her that, yes, the changes are affordable. Her test is met. This test ensures—[Interruption.] Opposition Front Benchers are saying, “Part-time workers?” The contributions increase has been set out. We have ensured, on a scheme-by-scheme basis, that the contributions will be tiered according to income. Those earning less than £15,000 a year on a full-time equivalent basis will have zero—[Interruption.] The right hon. Member for Morley and Outwood (Ed Balls) likes to hector from a sedentary position. Instead of being the shadow chunterer, perhaps he will sit there and listen. We have made it clear that those earning up to £21,000 on a full-time equivalent basis will have a reduction. The full-time equivalent basis for pension reform is the basis—[Interruption.]

[Mr Speaker]

Order. There was quite a lot of chuntering earlier when the shadow Chief Secretary was speaking, and that should not happen. Those on the Opposition Front Bench have had their go, and I am afraid that they cannot pursue the debate again from a sedentary position. Let us hear the Chief Secretary. The House knows that I will allow plenty of time for questions, so we need not get aerated about it.

[Danny Alexander]

The full-time equivalent basis for pension reform is being approached in exactly the same way that the previous Government treated it. The hon. Lady’s tests for affordability, fairness and a workable settlement are all met. She did not say, in the end, whether she supported the deal on the table to date. It is incumbent on the Opposition to understand the deal and support it. It is also incumbent on them to make clear their position on strike action. I hope that she agrees with me that, in light of the new offer and the constructive approach taken to the negotiations, she should not support trade unions going ahead with strike action later this month.

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[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the Minister agree that the statement consisted of sacrificing long-term pension rights to pay for a short-term failure to stimulate economic growth? What we are seeing, after 13 years of industrial peace, is the return of mass strike action due to Tory economic failure and a threatening, macho approach to negotiation. [Interruption.]

[Mr Speaker]

Order. It would be more seemly if the hon. Gentleman were not standing with his hand in his pocket, but I must say to the Education Secretary that he really should not keep on expostulating noisily from a sedentary position. If he were to do that in one of the nation’s classrooms, he would be in detention by now.

[Danny Alexander]

The Education Secretary’s noisy expostulations have been thoroughly in support of what the Government are doing; as such, I welcome them. I think that the tone struck by the hon. Member for Swansea West (Geraint Davies) is entirely out of keeping with the tone of the debate so far. For all the reasons I have given, reform of public sector pensions is necessary. It is important that we get it right and that we do so by agreement if we can. That is this Government’s objective.

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[George Freeman (Mid Norfolk) (Con)]

I welcome the statement and congratulate the Front-Bench team on the work they have done to go as far as they can to help the low-paid. Is it not the truth that we are facing a crisis of spiralling costs from an irresponsible boom in the public sector under the last Government—with unfunded pension liabilities, bankrupt public finances and debt interest set to rise to £76 billion? Is it not the truth that it is always the poorest that pick up the bills for Labour and that a responsible—

[Mr Speaker]

Order. The trouble with Members crafting their questions word for word is that they tend to be rather long.

[Danny Alexander]

The hon. Gentleman is right that the poorest in society end up paying the price for the loss of financial control that we saw in this country under the previous Government. He referred to the liabilities in public service pensions. Those liabilities are, on the latest figures, more than £1.1 trillion. That is the entire education budget for more than 20 years.

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[Mr Dominic Raab (Esher and Walton) (Con)]

My question has just been answered.

[Mr Speaker]

Well, that is a first—not the fact that the question has been answered, but the fact that a Member has been self-denying to the extent that he sits down when his question has already been dealt with. That is an interesting precedent.

[Mark Durkan (Foyle) (SDLP)]

Has the Chief Secretary taken into account the particular responsibilities of devolved Administrations and the rights of their public sector workers—many of them low paid, and all of them tax-paying—and do the terms of today’s offer differ from the previous terms about which he wrote to those Administrations?

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[Danny Alexander]

I am grateful for the hon. Gentleman’s comments, and I hope that Mrs Bone shares his views. He is right to say that nobody who is within 10 years of retirement on 1 April next year will see any change either to their retirement age or to the benefits that they receive.

[Mr Speaker]

That answer will doubtless wing its way to Mrs Bone in a matter of minutes.

[Stephen Mosley (City of Chester) (Con)]

I congratulate the Chief Secretary on his statement. May I also ask him to continue to negotiate and engage positively with the trade unions in the weeks and months ahead?

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[Danny Alexander]

The hon. Gentleman is right about that, and he makes an important point. Part of the reason for setting out some of the information about pension pots today is precisely to widen public understanding of the comparison. That is not to do down public sector workers—in fact, what we are setting out today is a properly positive and generous offer to them—but we are making it clear that there is a wide gulf and we need to raise standards in the private sector too.

[Mr Speaker]

I thank the Chief Secretary and colleagues, whose succinctness enabled 47 Back-Bench Members to question the Chief Secretary in 41 minutes of exclusively Back-Bench time. It shows what can be done when we try.