The pandemic has underlined the contribution made by the public sector workforce to this country. Public sector workers do so much to keep us all safe. Our brave doctors and nurses and those in the police, fire service and other public service professions deserve security and a high standard of living in retirement, so it is so important that the Government provide decent pensions on a fair and equal basis.
As the Minister knows, we welcome the Bill’s main provisions, and particularly the attempt to bring in a remedy in respect of the discrimination against younger members of the new pension schemes established by the coalition Government between 2014 and 2016. We also strongly support the introduction of reformed scheme-only design, which will mean that the cost of the legacy schemes will no longer be included in the cost control mechanism, along with the Government’s proposal to widen the margin of the cost corridor from 2% to 3% of pensionable pay. Those changes will provide greater certainty for members and for the taxpayer.
However, the Minister will not be surprised to hear that we have a number of concerns about the Bill. It is wide ranging and several Members have tabled amendments. I have a limited amount of time, so I will focus on the Opposition Front-Bench team’s primary concerns about the Bill and speak to the amendments that I have tabled on the Opposition’s behalf to address them.
First, I wish to highlight the concerns of public sector employees and trade unions about the lack of clarity on how the remedy, which I remind the House is estimated to cost around £17 billion, will impact the future value of members’ pension schemes. In the Committee debate on 27 January, the Minister stated that
“no member benefits will be cut and no member contribution rates will increase as a result of the 2016 valuations.”––[Official Report, Public Service Pensions and Judicial Offices Public Bill Committee, 27 January 2022; c. 10.]
That commitment is welcome but, as the TUC and others have said, it does not address the question of whether the remedy will be included in future valuations of the cost control mechanism.
Were the cost to be included at a later date, members could see their benefits cut and their contribution rates increase. I remind the House that the Public Accounts Committee warned that such an outcome would be fundamentally unjust as some of the cost of the Treasury’s £17 billion mistake would be passed on to members.
Will the Minister please clarify whether the estimated £17 billion cost of the remedy will be included in the valuations of pension schemes under the cost control mechanism at some later date?
Secondly, I wish to discuss the Government’s proposal to introduce a so-called symmetrical economic check to the cost control mechanism. As the Minister will be aware, many public sector workers and their representative organisations believe that the proposals break the Treasury’s 25-year guarantee that no further fundamental reforms would be made to public service pensions following the 2011 settlement with trade unions. The Minister told us in Committee that
“the Government do not believe that the reforms breach that guarantee.”––[Official Report, Public Service Pensions and Judicial Offices Public Bill Committee, 27 January 2022; c. 36.]
However, I found a press statement issued by the Treasury on 20 December 2011 that makes it clear that the guarantee covered significant reform to the cost control mechanism, and the Paymaster General in the Conservative Government at the time said that it represented a “settlement for a generation”.
Does the Minister recognise that his Government’s proposal for an economic check risks undermining the Bill’s purported aim of restoring public service workers’ faith in their pension schemes? The National Education Union, the TUC and PRS have all warned that the proposals unfairly penalise pension scheme members for public sector pay constraint and lower-than-expected life expectancy. In practice, this will likely mean that any downwards breach of the cap will trigger the economic check. It seems the economic check is unfair, so will the Minister now accept that the Government must go back to the drawing board and rethink their proposals? I will be grateful if he addresses that issue.
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The third issue is the Bill’s failure to address the so-called pension trap, which means that some members may lose benefits due to a higher retirement age brought in under the new pension scheme. That is why we on this side of the House tabled an amendment both at the Committee stage and on Report that would require the Government to review how losses arising from the pension trap could be compensated. During the Committee stage debate on 27 January, the Minister stated that our
“new clause appears to go considerably beyond the police staff associations’ representations and proposals”.––[Official Report, Public Service Pensions and Judicial Offices Public Bill Committee, 27 January 2022; c. 63.]
However, today I wish to inform the House and the Minister that the Police Superintendents Association and other police unions fully endorsed our amendment ahead of the debate today. Will the Minister therefore commit the Government to entering discussions with the Police Superintendents Association and other relevant membership bodies to bring forward a fair solution to the pension trap and demonstrate the Government’s commitment to resolving this issue by supporting my amendment today?
Finally, I wish to bring the Minister’s attention to the Bill’s potentially adverse consequences for equality. For example, trade unions have warned that women serving in the police may be unfairly impacted by elements of the Bill. Under the old police pension scheme, women who have taken off time due to caring responsibilities
have been able to make up time that they had lost but, under this new scheme, which is based on age, they may have to work longer. What reassurances can the Minister offer me that this will not be the case and that the Bill will not have adverse consequences for equality?
We are also concerned about the issue of immediate detriment. On 29 November 2021, the Government updated their guidance for police and fire service pension schemes administrators to recommend that no immediate detriment cases should be processed before the legislation is in place because
“it now appears that section 61 [of the Equality Act 2010] may not give all the powers required to operate the remedy smoothly”.
It acknowledged that
“the effect of section 61 would only be known for certain if it is tested in a court of law.”
Police officers who retire early due to their age or disability, for example, may be unfairly penalised as they will not have a complete picture of the value of their pensions benefit. That seems to contradict the provisions put in place by the Equality Act. I would like to hear the Minister’s thoughts on that. Does he agree that that is fundamentally unfair and that our police and firefighters do not deserve to be left in a state of uncertainty while they wait for this issue to be resolved at court? The Government should demonstrate that they are committed to addressing these concerns about equality by supporting our amendment today. The amendment would require the Treasury to review the equality impact of the Bill, taking into account issues such as age, gender and disability.
I very much look forward to hearing the Minister’s response to the various issues that I have raised today. Although we have some outstanding concerns with the Bill, which I have outlined, we do broadly support what the Government are attempting to do and we recognise the need to put the remedy in place as quickly as possible.