Clause 3 — Scheme regulations

Human Rights Act 1998 (Repeal) – in the House of Commons at 3:36 pm on 4th December 2012.

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Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 3:36 pm, 4th December 2012

I beg to move amendment 10, page 2, line 16, at end insert—

‘(3A) Scheme regulations shall not make any provision which would have the effect of reducing the amount of any pension, allowance or gratuity, insofar as that amount is directly or indirectly referable to rights which have accrued (whether by virtue of service rendered, contributions paid or any other thing done) before the coming into operation of the scheme, unless the persons specified in subsection (3B) have agreed to the inclusion of that provision.

(3B) The persons referred to in subsection (3A) are the persons or representatives of the persons who appear to the responsible authority to be likely to be affected by the regulations if they were made.’.

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chairman of Ways and Means, Chair, Panel of Chairs

With this it will be convenient to discuss the following:

Amendment 3, page 6, line 27, in clause 10, at end insert—

‘to be agreed with employee representatives’.

Amendment 5, page 11, line 8, in clause 19, at end insert—

‘with a view to reaching agreement’.

Amendment 34, page 11, line 24, in clause 20, leave out from ‘—’ to ‘(b)’ in line 27 and insert—

‘reach an agreement through consultation with the persons specified in subsection (3), and’.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

Clause 3 is an important part of the Bill, as it makes a series of arrangements for scheme regulations. Hon. Members will now be turning to page 2 in their copies; when they merrily flick through to it, they will discover that subsection (3)(c) states:

“Scheme regulations may…make retrospective provision.”

The theme of retrospectivity gives the Opposition great concern. Essentially, the Bill allows the reduction of accrued pension benefits.

The measure is not qualified in any way: it allows all retrospective provisions, including, essentially, the reduction of the savings that people have put aside, which many regard as sacrosanct—the contributions from their monthly salaries or income into a pensions pot that is supposed to safeguard their financial future in retirement. We now discover that the Bill contains a provision that allows the Government to dip their hand into what are normally regarded as safe amounts of money—the accrued benefits for which people have paid in over their years of service. The Opposition believe that that breaches a central tenet of pension provision. Benefits that have been accrued are deferred earnings and should not be reduced. Retrospectively reducing accrued rights is essentially akin to taking back a portion of an employees’ wage that has already been paid; there is very little difference.

Many hon. Members and many of my constituents find it difficult to resist the grey mist that descends and the heaviness of the eyelids that pensions law tends to bring about, but hon. Members should wake up and realise what is in the legislation. They should recognise that we are talking about the Government’s ability retrospectively to reduce the amounts that ordinary employees have saved for their retirement, which they believe are safe.

Public sector workers and their representatives are extremely concerned about the retrospective powers that the Bill gives to this and any future Government. Understandably, they believe that as long as the Bill contains those powers, the pensions of ordinary working people—public sector employees—are not safe. On 29 October, the Chief Secretary to the Treasury was asked about the retrospective provisions in subsection (3) by Mark Durkan. The right hon. Gentleman replied that there was no need to be concerned about the reduction of accrued benefits, because the Bill mirrored the Superannuation Act 1972 in that respect. It is important to read out his exact words:

“The hon. Gentleman will know that the provisions in the clause to which he refers mirror directly those in the Superannuation Act 1972, which this Bill in many cases replaces. It was passed in the year I was born,”— in the year I was born too, but let me not digress—

“and it has been used by a number of Governments to make adjustments to public service pensions.”—[Hansard, 29 October 2012; Vol. 552, c. 60.]

The Chief Secretary went further than that when he gave one of those famous quotes—a bit like the George Bush “read my lips” quote—in a speech to the Institute for Public Policy Research on 20 June 2011. He said:

“We will honour, in full, the benefits earned through years of service. No ifs, no buts.”

Well, it turns out that the Bill does not mirror the Superannuation Act 1972 in relation to accrued benefits. The 1972 Act provides that accrued benefits can be reduced only with the consent of scheme members—in other words, only if members of those schemes, employees, agree to such retrospective arrangements—whereas the Bill allows for retrospective reductions without the consent of scheme members.

Given that the Bill does not mirror the Superannuation Act protections in the way the Chief Secretary said it would, we can only assume that it must have been a drafting error by the Minister—perhaps some sort of oversight or typo. We are not sure why the Government did that. We tabled an identical amendment in Committee to ensure that the protections for accrued benefits in the 1972 Act were retained, but, surprisingly, our amendment was rejected. The Economic Secretary said that there was no need to mirror the protections in the 1972 Act, which prompts the question: why on earth did the Chief Secretary to the Treasury say that the Bill contained certain protections when it obviously does not? It may be, as we have said, because the Chief Secretary is from a different political party from the Economic Secretary. We are not quite sure why the Chief Secretary said that it mirrors the Superannuation Act provisions, but this Minister, the Economic Secretary, resisted that arrangement.

As we have said time and again, when employees in the public sector find themselves facing changes, without any consultation, to their contribution rates and radical changes to the valuation arrangements for their pensions, the question of trust comes up again and again. This Minister says, “Oh, don’t worry, we’re not going to use this provision on retrospectivity,” but when employees voice their doubts and say, “Hang on a minute. Why on earth are you putting it in the Bill?” we have to sympathise with them. They will be extremely sceptical of the Government’s motivations.

We tabled the amendment to give the Minister another chance to include the protections that the Government—or at least one Minister—said were already in the Bill. When accrued benefits and retrospective changes were raised in Committee, the Minister did not dispute that the Bill allowed the Government unilaterally to reduce members’ accrued benefits, but he said repeatedly that the Government had promised not to reduce those accrued benefits. He said that that promise—a verbal promise—offered adequate protection to public service workers and that legislative protection was therefore unnecessary. That is an extraordinary argument. Even if this Government intend to keep their promise—that is a big “if”—their words will have no effect on a future Government, particularly a Conservative Administration. Surely the Government appreciate that, among the public, the level of trust in politicians and Ministers is low and that our request that they enshrine this protection in statute is a basic one.

The Minister has previously spoken about not wanting to include certain commitments in legislation because to do so would bind future Governments. As I said, that is a specious argument, because future Governments can change laws if they so wish. They would not be bound by previous Government legislation, but they would have to make any changes openly and democratically through Parliament. That is the level of protection that public service workers rightly seek. This goes to the heart of trust and confidence. How can public service workers have any security in their future retirement if the Government at any point can retrospectively reduce the benefits they have already earned?

Photo of Sylvia Hermon Sylvia Hermon Independent, North Down 4:00 pm, 4th December 2012

The Bill must, of course, be compatible with the European convention on human rights and the jurisprudence of the Strasbourg Court. Will the hon. Gentleman reflect on whether this retrospective provision on accrued property rights is compatible with the convention? Would it be in keeping with our commitments under the convention to take away property rights retrospectively and without compensation?

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

The hon. Lady has hit upon an important point. There are questions about whether it impinges on basic human rights to claw back retrospectively property—assets—that has been legitimately accrued, yet there is a provision here in the Bill to allow that to happen. Of course, Ministers could say, “Well, even though we’ve allowed for the possibility of retrospectivity, we’re not actually legislating for it now, although we might want to leave open the door to do it in the future.” That would be the point when it would impinge on the convention. She makes an incredibly important point. That is the extent of the possible outrage being left open in the Bill. All legislation is supposed to be signed off as being compatible with the ECHR, but that is a moot point and a matter of interpretation. She has focused on a crucial point.

The explanatory notes state that clause 3(3) has been included to facilitate the necessary adjustments to

“pension schemes to accommodate changes in law or where the government does not want to delay the benefit of a particular change but needs time to work out the consequences and appropriate method of making the change.”

Amendment 10 would not necessarily hinder those technical operational issues. Given that it would retain clause 3’s intended purpose, as set out by the Minister, and that the Government have promised not to reduce accrued benefits, there can surely be no legitimate grounds for opposing the amendment.

This is not an Opposition whim. We are cutting and pasting text from the Superannuation Act 1972: for 40 years, those provisions have protected the accrued benefits and rights of ordinary working people, and we are seeking to replicate those protections in the Bill. The amendment would not hinder or adversely affect the Government’s intentions, but would be of enormous benefit and reassurance to millions of public service workers. As the Minister knows, that concern arose extensively in Committee, where we debated the issue at length. I shall be grateful, therefore, if he reflects seriously on the strength of opinion voiced so far from across the spectrum—from employee representatives and others who want those safeguards enshrined in the Bill.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

Let me follow on from what my hon. Friend Chris Leslie has just said, which relates to the previous debate. The running theme is trust. Every one of the trade union organisations that signed up to the deal or had it imposed upon them in the pensions dispute has expressed reservations about clause 3. That is why amendment 10 from our Front-Bench team seeks to address that matter.

The logic is fairly straightforward, but let us get it on the record again. The Government promised a 25-year deal—a once-in-a-generation commitment that there would be no further reform of public sector pensions and that this would be guaranteed in legislation. However, clause 3—we had a discussion earlier about Henry VIII clauses—gives the Government extremely wide-ranging discretion, through the use of statutory instruments and all forms of delegated legislation, which, more importantly, includes the discretion to act retrospectively on what are clearly accrued pension rights over a long period. The saving grace, as presented by the Chief Secretary to the Treasury, was that the same protection would be written into this Bill as is in the Superannuation Act 1972—as my hon. Friend Chris Leslie said—which is that no changes would be made without the consent of the employees’ representatives. Again, that provision, which was promised, is not in the Bill.

What we now have in the Bill is the exercise of discretion, which breaks the commitment of the 25-year guarantee and does not even go as far as past legislative protection. The argument is that in future the Government will need the flexibility to introduce minor changes in legislation, without being impeded from making minor reforms or tidying things up. However, minor reforms or measures to tidy up the legislation—to reflect changed circumstances or change minor details of a scheme or pension arrangements—should be introduced by consent. Unions have never withheld that consent in past discussions about minor changes in pension provision. That has been the nature of the relationship between the Government and employee representatives up until now. This Bill breaks all that and undermines confidence not just in the Government’s commitments to date, but in their good will on this matter for the long term.

My amendments 3, 5 and 34 relate to exactly the same issue of trust. I am trying in some way to establish further transparency and openness in the management of the future pension schemes that will be established. Amendment 3 relates to valuations, which we discussed in the previous batch of amendments. As I have said, valuations are critical to all those involved in a pension scheme, and certainly to employees who have contributed over the years. They will want to ensure that the valuation is done effectively, on professional terms and with their agreement. That is why my amendment 3 would amend subsection (3)(c) of clause 10, which deals with valuations. As set out in subsections (3)(a) to (3)(f), the Treasury directions under which valuations will take place will include

“how and when a valuation is to be carried out” and

“the time in relation to which a valuation is to be carried out” but more importantly,

“the data, methodology and assumptions to be used in a valuation”.

If we are to have real employee participation in a scheme, which involves the management of their money—their deferred pay—it is critical that they are fully involved in the valuation process and therefore that they are consulted and agree to the data, methodology and assumptions to be used. Otherwise, we will yet again undermine members’ confidence in the process of evaluating their own schemes. I do not understand why that is not in the legislation throughout. I hope that the Minister can assure us either that I have missed the mention of full employee involvement in the Bill or that he is willing to amend it accordingly.

Let me turn to my amendments 5 and 34. Again, I just do not understand the drafting of the Bill. These proposals refer to the consultations that will be undertaken before scheme regulations are made. Again, this might seem like an esoteric point, but the scheme regulations are critical because they will determine the nature of the scheme under which the funds will be managed, contributions will be made and benefits will be paid. It is therefore critical that the regulations should be made following full consultation.

In legislation of this kind, when consultations take place and schemes are drafted that are likely to affect their members, the form of words that is normally used includes

“with a view to reaching agreement”.

That intention is always set out in the legislation. Indeed, those exact words are used in clauses 20 and 22 of this Bill. Clause 20(2) states:

“The responsible authority must…consult the persons specified in subsection (3) with a view to reaching agreement with them”.

My amendment 5 would simply put that form of words into clause 19, so that when consultation took place, it would be done with the intent of reaching agreement. I do not understand why it was deleted from that clause in the first place. This is just another way of seeking to reassure the employees, the members of the pension schemes, that they will be fully involved in the process, and that the aim, in introducing any changes to the scheme, is to reach agreement and secure their consent whenever possible. This is not a contentious matter.

I have also tabled amendment 34. An assurance has been given that there will be no further changes for a generation, or 25 years, that new schemes will come into force and that the vast bulk of them will, we hope, be defined benefit schemes, but the whole process involves the security of the elements of the schemes that the Government have guaranteed not to change. Those arrangements must be secured by agreement in the future. If those protected areas of the schemes, which the Government have until now guaranteed, are to change, there should not just be consultation with the employee representatives; there should be consultation with a view to reaching agreement. That consultation should have to secure that agreement. That would give the employees, the members of the pension scheme, the protection that they need, and the reassurance that nothing would be done to those protected areas of their pension without their agreement. Those areas include contributions and benefits.

The whole ethos of the Bill fails to recognise that pensions are not solely in the ownership of the Government or the employing organisation, and that they are paid for by the employees over the years. Those who have paid into the schemes should therefore have a role in managing them. It is interesting that the Bill does not mention the representation of employees on the pension boards that are to be established. We should at least have a proper consultation process, and that process should involve some security that any changes, particularly to those guaranteed areas, should be achieved by agreement.

I do not know of any other walk of life in which people contribute towards the funding of an organisation or a benefit without having a role to play in the management of it, or at least in the direction of policy. The Government are saying in the Bill that those who have paid vast sums into their pensions should have no say, no role and no entitlement to have their views sought or to have agreement reached. I hope that the Government will take on board some of the amendments and send out a message to the trade unions that represent the members of the pension schemes that yes, they do recognise their rights and they do want them to be fully involved. That full involvement would reassure those members of the Government’s good will and willingness to adhere to their commitment to a 25-year guarantee.

I come back to the point made by Lady Hermon. On the interpretation of the law as it stands and on the basis of the legal advice we have been given over some time, my view is that pension contributions develop accrued rights and that they are protected in European law. My view is that when the Government proceed at some time in the future to interfere or tamper with those accrued rights, there will be a legal challenge. I believe that the Government will lose it, and then—four, five or 10 years down the line—legislative changes resulting from the European Court decision would have to be brought back to Parliament. At that point in time, there will be a cost burden on the Exchequer to compensate those people who will have lost out as a result of the proposed Government changes.

I believe that we should seek to avoid that, and the way to do so, as my hon. Friend the Member for Nottingham East has said through his amendment, is to ensure that those accrued rights are protected and that the Government do not have a vast array of powers retrospectively to interfere in people’s pensions. We can also protect pensions by ensuring that employees are, through their trade unions, properly represented and consulted—and, yes, their consent sought—on any changes that the Government might want to make in the future.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury 4:15 pm, 4th December 2012

I thank Chris Leslie for tabling amendment 10, which gives us the opportunity to discuss member protections again. This is a serious issue, and although we had some long debates in Committee, it definitely bears revisiting. We have a duty to consider how best to protect the interests of scheme members.

The Government have made a clear public commitment to protect the rights that people have built up in their current schemes. We have said clearly and on several occasions that past service in final salary schemes will not be affected by pension reform. The commitment to honour rights in old schemes is built into the Bill. The power in clause 3, to which the amendment pertains, could be used only for the purpose of setting up new schemes in scheme regulations or for transitional or consequential purposes.

Secondly, there is the umbrella protection in UK general legislation that restricts state interference with personal possessions such as pension rights, unless such interference is lawful and proportionate. This protection of property rights is also an area of the European convention on human rights. This Bill is compatible with that convention. Of course, Ministers and others making scheme regulations are always bound to act in a way that is compatible with the law. This will prevent scheme regulations from proposing unlawful changes to protected pension rights.

Photo of Sylvia Hermon Sylvia Hermon Independent, North Down

I am sorry to interrupt the Minister so early, but would he kindly explain for the benefit of the House the jurisprudence of the Court of Strasbourg that allows him to say with such confidence that this Bill is compatible with the European convention on human rights? What is the jurisprudence to support that contention?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

I am pleased that the hon. Lady is asking for clarity on this important question. When the Government put this Bill together, it was important, as with any measure, to make sure that it was compatible with existing legislation, including the European convention on human rights. I mentioned the issue here not to raise the issue of compatibility—of that I have no doubt—but to say that the convention provides protection for property rights. It represents another layer of protection that should reassure people that high hurdles would exist if any future Government tried for whatever reason not to honour the commitments made by this Government.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I simply do not understand why the Minister refuses to put clearer unambiguous clarifications, protections and safeguards directly into the Bill. What is the purpose of leaving this as some sort of moot issue about whether there is sufficient jurisprudence to prove compatibility with umbrella protections in the European convention of human rights? That is not strong enough. The Minister must understand that people will be very anxious about this issue; why not clarify it and put it on the face of the Bill?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

If the shadow Minister will allow me to continue my comments on this important issue, I shall, I hope, be able to give him some reassurance, but first I want to explain the reasons for the Government’s approach.

Since the courts could set aside unlawful scheme regulations, responsible authorities have strong reasons to respect pension protection rights.

There is a third reason for our approach. In order to provide the statutory protections that underpin our commitment on accrued rights, the Bill establishes a common set of member consent and consultation requirements. In the case of the new schemes set up under the Bill, any change in scheme regulations will require a prior, statutory consultation with all who are likely to be affected, or with their representatives.

Clause 20 provides that if any changes are made that could have “significant adverse effects” on members, consultation must be conducted with a view to the reaching of an agreement, and preceded by a report to

Parliament or the relevant legislature. Any such changes will require explicit approval by that legislature under the affirmative procedure. They cannot simply be nodded through under the nose of Parliament. Taken together, the rule of law and the specific provisions in the Bill should give members the strong reassurance that there is already a very high hurdle against unlawful interference with pension benefits that have been built up.

As I have said, this is an important issue, and we must get it right. We are adamant that the application of universal consent locks is not an avenue that we intend to investigate. As a matter of principle, we do not believe that members, employers or anyone else should be given a ticket unreasonably to hold each other, or the Government, to ransom and to inhibit changes that are for the greater good. The Government feel strongly that it is right to prevent that scenario from occurring in the future, and that is why we cannot support the amendment.

Most retrospective changes in accrued rights are either minor and technical, or in the interests of the vast majority of scheme members. As I have said, however, it is vital that we strike the appropriate balance between member protections and the efficient operation of public service schemes. Although I firmly believe that the provisions in the Bill achieve that balance, I can tell the House that the Government do not have a closed mind on this serious issue, which has been raised thoughtfully by Members on both sides of the House, both today and in Committee. I can only reiterate that we are listening and do not have a closed mind. I am sure that the issue will be discussed in the other place, and we shall listen carefully then as well. I hope that, in the light of the reassurances that I have tried to give, the shadow Minister will consider withdrawing his amendment.

Amendment 3 would place a statutory requirement on the Government to seek the agreement of employee representatives when the data, methodology and assumptions to be used in pension scheme valuations is set. I agree that we must get those elements of the valuations right. We must be sure that a valuation accurately calculates the scheme’s costs. I understand that Members want to be certain that the Government will honour their commitment to ensure that stakeholders are involved in the process, and I can tell the House that they will be so involved.

I believe that the amendment is both unnecessary and unworkable. It is unnecessary because we have already made it clear that the Government will engage with stakeholders over the directions on valuations. Transparency and consultation are extremely important principles, and it is important for everyone to have a say in how the valuation process works, but that does not mean that we will allow the whole process to be stymied by a very small group of people. That would hardly be democratic, let alone a rational way in which to proceed, and it would mean that the employer contributions would not be set at the correct rate. I am sure that that was not the intention of Members when they tabled these amendments, but we think it right for discussions about the valuation process to take place within the normal scheme governance procedures. I am also sure that in the normal course of events the vast majority of the discussions will prove to be sensible and constructive, resulting in broad consensus between all parties. I hope Opposition Members recognise that if the worst happens and the talks break down without a full meeting of minds, it is important that, where necessary, the Government can make the final decisions.

On amendment 5, I understand why Opposition Members want to ensure there is meaningful consultation with scheme members before scheme regulations are made, and clause 19 requires precisely that. All scheme consultations on regulations will be conducted in line with the Government’s consultation principles, as set out by the Cabinet Office. As they make clear, the Government are committed to consulting on our proposals and to ensuring consultations are carried out proportionately. Clause 19 as currently drafted provides for a good and comprehensive consultation standard. It also recognises the genuine interests of the members and employers in how their scheme is run.

The clause ensures that whenever a change is proposed to the scheme regulations, the responsible authority must consult everyone whom the authority considers to be affected. Since this will be a statutory consultation, the authority must set out clearly on each occasion the matters on which it is consulting. It must provide enough information and time to allow for considered responses. The authority also needs to keep an open mind until the consultation has closed, and must give fair and proper consideration to those responses before making its final decision. It is worth setting all of that out in detail in order to reassure those who might feel clause 19 does not provide for meaningful consultation; on the contrary, it does precisely that.

Moreover, there are many reasons why the Government may wish to consult scheme members and other stakeholders when making scheme regulations. In many cases the Government will consult with a view to reaching an agreement for proposed changes. Clause 19 as drafted does not prevent that. As the Government have made clear, the enhanced consultation standard should apply to some elements of the scheme, and they are specified in clause 20. It is not necessary to extend this provision to cover every other possible element of scheme design.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I am not trying to be obstreperous, but in a former life I drafted this stuff, so I would be grateful if the Economic Secretary clarified why the phrase

“with a view to reaching agreement” is in clause 20 but not in clause 19, because I consider the scheme regulations and the aspects addressed in clause 20 to be of equal importance?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The hon. Gentleman has approached this issue in a very thoughtful way. We consider that the high hurdle of

“with a view to reaching agreement” should not apply to every scheme change that might need to be made. I appreciate that the hon. Gentleman has a different view about when it should apply, but I think I have made the Government’s case clear.

Photo of Sylvia Hermon Sylvia Hermon Independent, North Down

The Economic Secretary has elaborated at great length on clause 19. My concern, however, is that clause 20 refers to consultation

“with a view to reaching agreement”,

rather than until consultation is reached. If agreement is not reached, what will happen? Will the changes be imposed on workers, in which case consultation will merely be an exercise and a formality?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The requirement of

“with a view to reaching agreement” is a high hurdle. I cannot remember the phrase the hon. Lady used, but I can say that the requirement is not a tokenism of any kind—it is a genuine commitment. It is in clause 20, so where this is required it is a clear commitment that the Government will have to honour. The second part of her question was about what would happen if an agreement was not reached. I hope that such situations would be rare, but it is clear that if an agreement could not be reached the Government would have to make the final decision, as is absolutely right.

Amendment 34 gives me the opportunity to discuss the rationale for the inclusion of the provisions in clause 20. On a number of occasions the Government have stated their belief that the package of pension reforms that the Bill helps to implement represents a settlement for a generation—a deal that should last 25 years or more. The provisions in clause 20 are intended to deliver on that promise by putting in place a high bar for any future Government who might wish to amend any of the core elements of the new schemes. The clause also extends these protections to instances where the responsible authority proposes to make retrospective changes that will have significant adverse effects in relation to members of the schemes.

As we have discussed, the clause requires consultation

“with a view to reaching agreement”.

Such a provision goes further than the already thorough consultation requirements set out in clause 19, which we have just discussed. Clause 19 requires consultation on every change to scheme regulations with all interested parties. That consultation must be carried out in good faith and with an open mind. The courts have shown no hesitation in holding the Government to the high standards required by a statutory consultation of the kind required in clause 19.

By making it clear that the consultation under clause 20 should be undertaken

“with a view to reaching agreement”,

the Government are making a legislative commitment about how such consultations should be carried out. The clause requires consultation to be conducted in a manner conducive to reaching an agreement. A Government will also have to report to Parliament on the actions they wish to take, having due regard to the desirability of not making changes to the protected elements. The amendment seeks to go further than that, by making it compulsory for the Government to obtain agreement from members or their representatives before such a change could be made—the very scenario that Lady Hermon just raised. On the very rare occasions that these elements may require amendment, it is important that the Government should consult and work with members to ensure that the best outcomes for all involved can be achieved. However, it would be entirely wrong for individual trade unions or members to be able to prevent reform should it be in the interest of the vast majority of members.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 4:30 pm, 4th December 2012

I have great sympathy with many of the arguments that my hon. Friend John McDonnell made. He has tabled a series of amendments and has highlighted a couple of appropriate points. He seeks to pin down what happens in respect of changes that affect data, methodology, assumptions and valuations. Those are the long-grass details that many people often put in the box marked, “Too difficult to handle”. However, it is really important that people realise that a tweak here or a change there to the way in which some pension metrics are defined can seriously affect the retirement incomes of hard-working public sector employees. So he is right to shine a bit of a spotlight on those areas. I am not necessarily sure about his drafting, but he has brought an important proposition to the House’s attention. Similarly, he raised some issues we debated in Committee, such as why certain parts of the Bill talk about consultation being done in the way that many of our constituents have become used to—as a cynical box-ticking exercise. There is consultation, but most people have, sadly, grown used to the notion that consultation in that context means a form being sent out that they can send back if they want to, which Ministers will just ignore when it comes back.

Ministers then say that they will have a special enhanced consultation process, which means that it is done with a view to reaching agreement. As Lady Hermon pointed out, even in an enhanced consultation process there is no guarantee that agreement will be reached. It is difficult to know how anybody participating in that consultation would enforce the process, but that consultation is the so-called protection in the protected elements of the Bill. In a sense, my hon. Friend the Member for Hayes and Harlington is debunking a lot of the differentiation between consultation and enhanced consultation.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I have not seen this before, but we now have two types of consultation. The first is, “We’re consulting you because we hope you agree with us,” and the other is, “ We’re consulting you but we couldn’t care what you say to us.” Amendment 34 is simply trying to protect the Government, so that they can demonstrate that they are adhering to their promised level of consultation.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I suppose it is a case of diet consultation—or consultation-lite—versus full-fat consultation, which I know that my hon. Friend would be far more keen to see. I think he has done the House a service by casting some light on those issues, but I hope he will forgive me if I focus mostly on amendment 10 and the issue of retrospectivity, which is, ultimately, to me one of the worst aspects of the Bill.

I am glad that the Minister said that the Government have an open mind on retrospectivity—at least, he said that they do not have a closed mind, which is a similar thing. We hope for great things in the other place when the question is considered. He gave a set of reasons: a court might come along and set aside scheme regulations or there might be technical reasons for raiding people’s accrued savings and pension benefits retrospectively. I must say to the Minister, however, that when the Chief Secretary to the Treasury—for it was he—promised “No ifs, no buts” and said that he did not want that retrospectivity, not to have put that particular provision clearly and explicitly in the Bill is a major failing that will leave many employees with a sour taste in their mouths. They want some pretty basic protections to stop the notion of clawback and the ability of Ministers to sequester savings that they thought were safe—the deferred wages they have set aside for their long-term well-being.

We need to ensure that we focus on the confidence of employees in the scheme, as this is their property too, as my hon. Friend pointed out. It is not just the preserve of the Government; they are not simply giving out a pension as though it were a state pension scheme or however they wish to characterise it. These pensions are a joint endeavour between employees and employers and that is why we have said that the Superannuation Act 1972 protections need to be transposed into the Bill. The provision, derived from that Act, states:

“Scheme regulations shall not make any provision which would have the effect of reducing the amount of any pension, allowance or gratuity, insofar as that amount is directly or indirectly referable to rights which have accrued”.

The protection we need is very straightforward and we wanted to put it into our amendment. The Minister needs to go back and think about this again, as it is a signal issue that is at the core of the trust we need to have in the scheme. We want the scheme to work and we want members to stick with it and not opt out, but they need to know that their money and their savings are safe. That is why I would like to test the opinion of the House on amendment 10 by pressing it to a Division.

Question put, That the amendment be made.

The House divided:

Ayes 223, Noes 281.

Division number 112 Human Rights Act 1998 (Repeal) — Clause 3 — Scheme regulations

Aye: 223 MPs

No: 281 MPs

Ayes: A-Z by last name


Nos: A-Z by last name


Question accordingly negatived.