Constitutional Reform and Governance Bill

Thank you, Mr. Gale. I apologise for not being able to be here at the start of the debate because of a meeting of the House of Commons Commission. I wish to contribute a few remarks in my capacity as a trustee of the parliamentary contributory pension fund. I know that the Secretary of State indicated during earlier exchanges that he acknowledges the need for further thought to be given to the specific measures proposed, but I am anxious to ensure that the trustees' concerns are articulated in this debate. We all accept that the world has changed, that the coming into being of IPSA means that there is a need for some change in our pension arrangements and that it will be necessary to make some legislative changes to give effect to such change. However, I am concerned at the speed with which these arrangements have appeared, at the lack of any consultation and—far more so—at the way in which they sit very uncomfortably, to my way of thinking, with the fact that during the latter part of last year the Government commissioned from the Senior Salaries Review Body a fundamental review of MPs' pension arrangements. To the best of my knowledge that body completed its work by the end of last year, as it was asked to do. I do not know whether it has yet submitted its report to the Government—the trustees have certainly not yet seen it. I would have thought it made a great deal more sense for that report to have been delivered and for its recommendations to have been assimilated and taken on board before we made the sort of changes that are anticipated and provided for in these new schedules and other add-ons to the Bill. In particular, the trustees have a concern that serving Members of this House should have confidence that the pension benefits that they have already built up in the fund to date cannot be taken away without their consent. As drafted, the Bill does not provide that protection because it is giving huge additional powers to IPSA that, in the past, this House and its Members, as members of the pension fund, have held. Although under the current fund structure the power is exercised by the Leader of the House, that takes place only through regulations. The Leader of the House has to bring to the Floor of the House, for consideration by the members of the scheme, any changes that are wished. In future, according to these arrangements, IPSA could, in the extreme, simply make a scheme that removes the entitlement to all or any of the benefits earned in the fund by any or indeed every member. Although we would all hope, obviously, that IPSA would never take such a course of action, one has to ask whether it makes sense to give it the power to do so. The Kelly report made two recommendations on MPs' pensions. The first was on the independent determination of MPs' pensions and the second was on oversight of the administration of parliamentary pensions. The Bill goes well beyond that and gives IPSA substantially greater powers over the structure of the fund—the power to determine how it is administered goes well beyond the oversight and scrutiny recommended by Kelly and gives the authority control over the management of the fund, the application of its assets and the constitution and proceedings of the funds' trustees as well as the power to determine, with Treasury consent, the rate of the Exchequer contribution without consulting the Government Actuary. Although, in a sense, those powers replicate the existing arrangements by vesting with IPSA the powers that are currently vested in the Leader of the House, the difference, of course, is that the Leader of the House has to bring these matters to the House for its consent. We need proper and detailed consideration of whether it is right for IPSA to have these extensive new powers that go far beyond what was recommended in the Kelly report. I think it would be better to leave vested with the trustees some of the powers that they already have. I do not think we should undermine the objective of MPs' pensions' being influenced by an independent body, but the arrangements as proposed today go too far. For example, IPSA has the power to appoint a trustee body without any Member representation on it. I do not think anybody would take exception to the idea that IPSA should nominate a member of the board of trustees, but to give it the power, in effect, to remove the trustees and to appoint its own board of trustees seems to me to be going much too far. Is there any other pension fund anywhere that could be subjected to such a degree of interference? It would be unlikely, in practice, that IPSA would ever do so, but the measure goes too far in terms of the sweeping powers that it gives the authority. The legal structure of the fund is highly complex and the detail is largely set out in 1993 regulations, which are regularly amended. I think that the wholesale transfer of powers to IPSA, as proposed by the Bill, will in effect empower IPSA to rewrite the rules of the fund and could jeopardise the ability of the trustees properly to manage it. I welcome the fact that the Secretary of State has said that there will be further consultation with the trustees, but as the Bill is drafted all Members should be deeply concerned at what is being proposed. We frequently say that we want our arrangements to be comparable to those elsewhere and those in the real world, but my concern is that these proposals go to lengths that no other pension fund anywhere would expect.