Pensions Bill

My Lords, I thank my noble friend for his remarks about my eloquence last year. I hope he will be rather more effective than me in getting this amendment through the House. I share very much the concerns of the noble Baroness, Lady Noakes, about the figures she quoted and I hope she will feel that if there is a very modest element of government expenditure involved in the amendment it is a drop in the ocean compared with the potential savings and the importance of properly identifying what are the costs of allowing these liabilities to continue. I again pay tribute to the Pensions Policy Institute and the Nuffield Foundation which financed its excellent report on assessing the cost of public sector pensions which has recently been published. They have performed a signal service for informed debate in this crucial area. As always, the report is written in balanced and measured tones, but the figures contained in it are a substantial and devastating analysis of the unfairness and unaffordability of public sector pensions today compared with the clearly much poorer pension provision for the rest of our citizens who have to pay for the public sector pensions. Who does the noble Baroness, Lady Turner, think is paying for these pensions? Their costs come from taxpayers, and council taxpayers in particular, who, on average, have less good pensions by far than people in the public sector. I shall quote some of the figures for the noble Baroness. I do not know whether she has read this balanced report but, on average, employers in the public sector contribute £4,000 per year per employee whereas the figure is £1,600 in the private sector. On pay rates, the report points out that there is no general pattern of public sector pay being lower than that in the private sector. It states that in the comparison between private and public sectors, "““women and low-skilled male workers seem to be paid relatively more on average in the public than the private sector. High-skilled male workers are paid more in the private than the public sector””." So there is no general pattern. It goes on to say that, "““around 20 per cent of private sector employees who earn between £100 and £200 a week are members of an employer-sponsored pension scheme, compared to around 70 per cent of public sector employees””." The noble Baroness referred to costs, but the negotiations and reforms that she mentioned have had the effect, basically, of producing savings of tuppence ha’penny in the pound on the total cost. The effect of those changes on the taxpayer—and remember the taxpayer is the employer here—is to reduce the employer contribution from 24 to 21 per cent in public sector pension schemes. For example—and this is for new entrants only—in the Armed Forces, the police and fire service, which are the most extreme versions, the contribution has been reduced from 37 to 33 per cent. Again, there is a distinct difference between the retiring age—or the pension age, should I say—in these sectors. So the changes have been very small. In the previous debate we were talking about how the value of private sector pension savings and pension schemes has been seriously affected—that will not change any time soon—but the figures today are even more dramatic. No one is saying that the public sector should not go on having high quality pension schemes. What we are saying is that there needs to be proper, detailed, independent, regular analysis, as the Turner commission proposed, of what the costs are and how they should be paid for over the longer term.