Public Service Pensions Bill — Commons Reasons

– in the House of Lords at 3:07 pm on 23rd April 2013.

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Lords Amendment 78: Schedule 1 page 23, line 20, at end insert-

"(c) the Defence Fire and Rescue Service"

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 78 for the following Reason-

78A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion A

Moved by Lord Newby

That this House do not insist on its Amendment 78, to which the Commons have disagreed for their Reason 78A.

Photo of Lord Newby Lord Newby Lords Spokesperson (HM Treasury) (Whip), Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, your Lordships' House now returns to the Public Service Pensions Bill, on which there remains one outstanding issue. The other place has invoked parliamentary privilege on the amendments made by this House that sought to reduce the normal pension ages for fire and police workforces employed by the Ministry of Defence.

I will explain in a moment the reasons why the Government cannot simply agree to give these workforces a normal pension age of 60. First, I put on record that I recognise the arguments that have been made here and elsewhere. I have met members of these workforces to discuss their position, and there is no question that they deliver an extremely important service, often in demanding and dangerous circumstances. However, sympathy for these individuals should not lead to our oversimplifying the issue that we are discussing. The debate today is over just one design element of their pensions, which in turn forms just one element of their overall remuneration and employment package.

We have heard the argument that these individuals are identical to their local authority counterparts. But these workforces are subject to separate working practices, terms and conditions and, specifically, pensions entitlements. These workers receive different pay, pay a much lower level of contributions, have access to a compensation scheme, unlike their local authority counterparts, and receive different allowances-for example, when they work abroad.

We must recognise that the proposal to reduce the retirement age involves substantial changes in their terms and conditions. Those changes to date have not been subject to thorough consideration or the proper process. That is why we should not attempt to conduct detailed discussions here about what the changes may look like. This is not just about normal pension age; there is much more to be explored, and there are several interrelating factors that must continue to be discussed between the parties. It is right that those discussions take place outside the legislative process, and we do not have to resolve this in the Bill. My colleague, the Economic Secretary, said yesterday in the other place that further primary legislation is not necessary in order to do so.

The Ministry of Defence has already committed to discussing this issue further. This is the right approach. As we have these discussions, we cannot shy away from discussions about the costs. Reducing the normal pension age of those workforces to age 60 could create extra expenditure for the Exchequer of up to £10 million in every year that the scheme operates. That is why these two amendments are subject to the Commons financial privilege. These costs would have to be picked up by somebody-either the taxpayer, possibly at the cost of front-line MoD services, or extra contributions from the members of these workforces. The current situation is that dialogue is already under way between the DFRS, the MDP and the MoD. The MoD has written to the representatives of the members of these forces and offered to discuss how a normal pension age of 65 might be maintained when the new schemes come into force. The first step has, therefore, already been taken, and we will keep up the momentum in the coming weeks and months.

I realise that there is some concern about how long these negotiations might take, which was reflected in the Commons yesterday. While I do not wish to tie the hands of either the unions or my colleagues at the Ministry of Defence, I should think that working towards agreement over the next 12 months is an achievable goal. We are definitely not seeking to kick this issue into the long grass. Colleagues in the other place also wanted assurance that if-I stress that this is very much an "if", not a "when"-the MoD decided that a reduction in its current NPA was appropriate, the Bill would be flexible enough to allow this. I can reassure the House that this is indeed the case. This Bill is framework legislation. This is usually the case in the public service pension arena and, as such, a number of things are possible within the framework of the Bill that do not require amendments to primary legislation. I am, therefore, happy to repeat that if the Government decided that it would be appropriate for some or all of these workforces to be able to access an unreduced pension before normal pension age, there are ways that this change can be delivered using only secondary legislation.

The opposition amendment would effectively require a review of the effect of this Bill on the Ministry of Defence fire and police services. In particular, it would require the Government to have regard to impacts on the health and wellbeing of the individuals affected; the ability of the MDP and DFRS to meet the Ministry of Defence's statements of requirement; and early retirement statistics in these forces. I have already stated that the Ministry of Defence is engaging with these forces to look at their pension ages in the new schemes. These are exactly the kinds of factors which they would look at in doing so. As we had already intended to look at this issue again with these workforces, I am happy to accept this amendment from the Opposition, and the Government will support it. I hope that seeing this provision on the face of the Bill will give the forces and Members opposite the reassurance they need that the review will indeed be carried out.

As is normal practice, a few elements of wording will need to be ironed out. The Government will look to make these changes in the other place when the Bill returns there. Allow me to reassure the House that any changes to the wording will be purely to ensure that the provision works properly. However, the Government can today accept the substance of the amendment, and I am grateful to the noble Lord, Lord Eatwell, for taking this very constructive approach to the remaining issue in the Bill. I invite the House to accept the decision of the other place and also to accept the amendment. I beg to move.

Motion A1

Moved by Lord Eatwell

That this House do not insist on its Amendment 78, to which the Commons have disagreed for their Reason 78A, but do propose Amendment 78B in lieu.

78B:* After Clause 9, insert the following new Clause-

"Defence Fire and Rescue Service and Ministry of Defence Police Capability Review

(1) The Secretary of State, in conjunction with the Secretary of State for Defence, will, within six months of this Act coming into force, prepare and lay before both Houses of Parliament a report setting out the Government's assessment of the impacts of this Act on current and future members of the Defence Fire and Rescue Service and current and future members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987.

(2) A report under subsection (1) will include, but not be limited to, consideration of the following

(a) the impacts on the health and wellbeing of members of the Defence Fire and Rescue Service and members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987;

(b) the ability of the Defence Fire and Rescue Service and members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987 to meet the Ministry of Defence's statements of requirement of these personnel;

(c) the number of members of the Defence Fire and Rescue Service and members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987 taking early retirement, the consequences of early retirement for those members and the costs to the taxpayer of such members taking early retirement."

Photo of Lord Eatwell Lord Eatwell Shadow Spokesperson (Treasury) 3:15 pm, 23rd April 2013

My Lords, I beg to move the manuscript amendment on the Marshalled List. We were told last night-that is to say, at the last minute-that the Government intended to assert financial privilege over our attempt to achieve fairness for the members of the Defence Fire and Rescue Service and the Ministry of Defence Police. We have learnt that the Government know they have lost the argument when they assert financial privilege. However, it is worth examining what this financial privilege is being asserted over. The noble Lord quoted the possible cost to the Government as £10 million. We had the opportunity to take actuarial advice overnight and the figure is a maximum of £2 million. So the Government are asserting financial privilege over the magnificent sum of £2 million per year and are using that argument to prevent the debate on your Lordships' amendments, which would have achieved fairness for Ministry of Defence firefighters and police by equalising their retirement age with those of other police and fire services.

The amendment I have tabled requires a review of the impact of these measures on the Defence Fire and Rescue Service and Ministry of Defence Police. We want to know the impact on the health and well-being of these members, particularly because there is substantial evidence that the vast majority of members of the fire service and police are required to retire before the age of 60, because they can no longer meet the Ministry of Defence statements of requirements for these personnel. In effect, they are stood down for health reasons already. What is striking is that the Government have not taken the cost of people retiring early through ill health into account in their calculations of the overall impact. Indeed, the cost calculations are simplistic in the extreme.

The other area that we are particularly concerned about is whether early retirement due to inability to meet exacting standards is taken into account in considering the settled retirement age. The noble Lord again raised this issue of fixing the retirement age of this group of workers at 65 and not letting it creep up in future years, as anticipated in the Bill. I hope that the Government will dismiss these thoughts from their mind and instead concentrate on achieving fairness. I refer the noble Lord to the speech made by my noble friend Lord Hutton of Furness when we considered this matter on Report. He stated that,

"this is fundamentally a matter of fairness".-[Hansard, 12/2/13; col. 570.]

As noble Lords may remember, my noble friend also pointed out that if he had known about this anomaly when he produced his report on public service pensions, he would have included the MoD firefighters and police within his general recommendations for those who would have a retirement age of 60. My noble friend Lord Hutton told us that this was simply a mistake on his part and that he wanted the House to have the opportunity to correct that mistake.

I am grateful to the Government for accepting our amendment and our request for a review of the circumstances of MoD firefighters and police, but I wonder if the noble Lord could answer a number of questions for me. For example, have the Government sought the views of the heads of the MoD fire service and police force? What do the heads of these services actually think about the Government's proposal not to equalise the retirement age of their men and women to the retirement age of other police and firefighters?

Moreover, the noble Lord made quite a point about the difference in conditions of the pension scheme that the MoD police and fire services are currently in and the pension scheme to which they might transfer. He referred to the Civil Service Compensation Scheme, to which they have access. How many times in the past two years have MoD firefighters and police accessed this scheme? Why did they do so and what has been the outcome of their application?

In moving this amendment, I seek to give this House the opportunity to debate once again, on a report by the Government, this particular anomaly in the Public Service Pensions Bill. We wish to be clear on the impact on the health and well-being of members of the Defence Fire and Rescue Service and the Ministry of Defence Police. We wish to be clear on the circumstances under which the firefighters and police meet, or fail to meet, the Ministry of Defence's statement of requirements for its personnel. We also want to be clear on the cost to the taxpayer of the early retirement which has become such a standard characteristic of service in these professions because of the failure, through advancing years-which I understand, as I am sure many of us do-of the firefighters and police to meet the requirements of service.

Photo of Baroness Harris of Richmond Baroness Harris of Richmond Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I had not necessarily intended to participate in this debate, knowing that the noble Lord, Lord Eatwell, had put down an amendment which I wholeheartedly approve and agree to. I am very pleased that the Government have decided to accept it, especially after all the work that was done in trying to persuade them about the Ministry of Defence fire service and the Ministry of Defence police. I emphasise this point because it is tantamount to having made them accept that this really must be looked at again, and I think it was the work that was done in Committee in this House that made this happen. Like the noble Lord, Lord Eatwell, I was surprised to find that financial privilege had been put forward as the reason not to accept something a little stronger. So I can assure my noble friend the Minister that during the year that this amendment will be looked at, mulled over and digested, we will be looking very carefully to see the progress that is made and to make sure, through questions and other means, that we keep the Government's feet to the fire.

Photo of Lord Whitty Lord Whitty Labour

My Lords, I join the noble Baroness in congratulating the Minister on his change of heart. He has in effect very graciously recognised not only the justice of the case that we on this side of the House, and the noble Baroness, Lady Harris, put in Committee, but that it is pretty absurd for the Government simply to claim financial privilege to resist an amendment that manifestly will bring justice and equity to an extremely special group of workers, putting them on the same basis as people who are doing almost exactly the same job but who are employed by other public sector employers.

I suspect the Minister had some difficulty with the Treasury and the Ministry of Defence in reaching this conclusion. I therefore doubly congratulate him on seeing it through and at least recognising the very difficult position we all find ourselves in. We cannot really resist the Commons claiming financial privilege, but we can ensure by my noble friend's amendment that the Government think again about this and address the real issues.

I do hope, however, that the Government do not make a habit of using financial privilege to resist a principled amendment from this House that has a minimal cost even in the Government's terms and, as my noble friend has said, that is probably actuarially inaccurate in any case. If the Government continue to do this, this House has some serious thinking to do about how seriously our amendments and our scrutiny are taken. However, I return to my congratulations to the Minister in seeing sense over this. I hope it is a precedent that will be followed by some of his other colleagues in future.

Photo of Lord Newby Lord Newby Lords Spokesperson (HM Treasury) (Whip), Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lord, I am grateful to the noble Lord, Lord Eatwell, and other noble Lords who have spoken in this debate. I would just like to deal with the issue of financial privilege, because there is a widespread misunderstanding of how financial privilege works. Privilege is not determined by the Government. Privilege is determined by the Speaker in advance of debate. In this case, the classification of your Lordships' amendment as being subject to the Commons financial privilege has been known for a month. Once an amendment has been classified by the Speaker as being subject to financial privilege, obviously the Commons considers whether to agree or disagree with each Lords amendment. If it disagrees, it must offer a reason. The only reason it can give is privilege. The Clerk of the Commons explains this as follows:

"If an amendment infringes privilege, that is the only reason that will be given. This is because giving another reason suggests either that the Commons haven't noticed the financial implications, or that they are somehow not attaching importance to their financial primacy".

I strongly recommend that all noble Lords who seek enlightenment on this matter look up the Hansard of 14 February last year, when the Leader of the House gave a little tutorial on financial privilege before your Lordships discussed a number of issues relating to a Bill. There is a long-established pattern of financial privilege that has in essence been unchanged for several centuries, and it is not for the Government to decide whether an amendment is covered by it. The Speaker does that.

Photo of Lord Whitty Lord Whitty Labour 3:30 pm, 23rd April 2013

My Lords, I fully accept that it is for the Speaker to designate financial privilege, but the debate last year to which the noble Lord referred related to expenditure of several hundred million pounds of the welfare budget. During that debate, several Members referred to the fact that there must be a threshold beyond which a Lords amendment was considered an issue of financial privilege. The only point I am making is that the Commons, or whoever jogs the Speaker's elbow in these matters, needs to take into account the issue that a relatively small amount of financial expenditure and alteration in either direction should not be taken as an issue for claiming financial privilege. I do not want to labour the issue, but there would be a danger of the two Houses coming into conflict if this position were to be adopted by the Commons on a regular basis in relation to relatively small amounts of money.

Photo of Lord Newby Lord Newby Lords Spokesperson (HM Treasury) (Whip), Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I hope that the Speaker in another place is listening to your Lordships' debate and taking note.

The noble Lord, Lord Eatwell, asked whether we had sought the views of the heads of the Ministry of Defence fire and police services. The Government are routinely in contact with all their employers and discuss a number of issues with them. We are accepting the idea of a formal review, and the heads of those workforces will be consulted as part of that process. The noble Lord also asked me how many times the Civil Service Compensation Scheme had been used. I simply do not have the answer, but I will seek it out and write to him about it.

I realise that although the Government are accepting the opposition amendment, a number of noble Lords would like us to go further today. In urging patience on noble Lords, I end simply by reminding them of the words of that well known hymn, "Lead, kindly light", which says,

"I do not ask to see the distant scene.

One step enough for me".

I hope that we have taken a positive step today.

Motion A1 agreed.

Lords Amendment 79: Schedule 1: Page 23, line 27, at end insert-

"(c) includes members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987"

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 79 for the following Reason-

79A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion B

Moved by

Photo of Lord Newby Lord Newby Lords Spokesperson (HM Treasury) (Whip), Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

That this House do not insist on its Amendment 79, to which the Commons have disagreed for their Reason 79A.

Motion B agreed.