My Lords, the new Local Government Pension Scheme came into effect on 1 April 2014. It is the first scheme to be introduced that follows the principles for reform of my noble friend Lord Hutton of Furness. The regulations before us set out transitional and savings provisions relating to members of the 2008 LGPS, which is to be replaced by the new scheme. They preserve benefits already accrued by members under the existing scheme and make provision to ensure that members within 10 years of their normal retirement age on 31 March 2012 do not suffer any detriment.

I will be clear: our Motion of Regret does not seek to comment on, revisit or revise what has gone before except in one respect. It regrets the inclusion of those transitional arrangements that deny the right of newly elected councillors to join the Local Government Pension Scheme and of existing council members to remain active after the end of their current term of office. Our Motion does not seek to influence the current consideration being given to a possible restructuring of the scheme or to involve a more collaborative approach. Nor does it purport to address the problems that arise as a consequence of the abolition of contracting out in April 2016, although the Minister might wish to update us on this issue.

Currently we are told that the scheme has assets of some £178 billion; annual employer contributions are in the region of £6 billion and there are some 4.68 million active, deferred and pensioner members. Councillors were given access to a special section of the LGPS where permitted by local authorities’ remuneration panels in 2003. Benefits include a pension based on an eightieth of career average earnings, together with a lump sum life cover and survival benefits. The councillor contribution rate is 6% of basic and special responsibility allowances, so the Government’s description of these arrangements as taxpayer-funded pensions for councillors is less than complete. The most recent data show some 5,000 councillors taking up the opportunity of membership, so while important for councillors, their membership is clearly a tiny part of the overall scheme and cannot in any serious way be said to affect its sustainability.

The proposal to deny access for councillors to the Local Government Pension Scheme was presaged in the Written Ministerial Statement to Parliament in December 2012. As justification for the proposition, the Minister, Brandon Lewis, described councillors as,

“volunteers undertaking public service; they are not and should not be employees of the council dependent on the municipal payroll. They are not professional, full-time politicians, nor should they be encouraged to become so”.

He complained about the allowance system being made worse—he said—by the pension arrangements,

“blurring the distinction between council staff and councillors”.

This was asserted as being,

“a corrosive influence on local democracy and independent thought”.—[ Official Report , Commons, 19/12/12; col. 105WS.]

I ask the Minister for the evidence for this insulting nonsense. How does this corrosive influence manifest itself? How are things different from the pre-2003 period?

Initially, individuals were to be excluded from the scheme because they were categorised as volunteers. The Written Ministerial Statement was followed by a consultation last year that suggested adding the Mayor of London and other elected mayors and London Assembly members to those denied access, notwithstanding that it recognised that such positions could be full time and that they carried a salary. This was apparently based on another principle: that the LGPS should extend only to paid employees. Could the Minister enunciate more clearly for us the basis for this principle? Also, in what way is it considered that the Mayor of London, for example, has been unable to withstand the corrosive influence of the pension arrangements thus far? Indeed, if this principle is sacrosanct, why are police and crime commissioners to be allowed continued access to the scheme when all other elected officeholders, including those paid a salary, are to be excluded? To the extent that they remain in the scheme, what is to happen to their contribution rate? What is it that inures Commons Ministers from the corrosive influences of their largely taxpayer-funded juicy pension schemes? In seeking to explain the distinction between pension entitlements for paid employees and paid elected officeholders, how would the noble Baroness rationalise the situation where an elected mayor subsumed the role of chief executive?

It is not only the consequences of the Government’s decision that we regret but the manner in which it is presented and argued. The Government acknowledge that they have no central information about participation in the scheme yet pluck from the air a figure of £7 million that might be saved from the changes. Can we please be provided with the basis for this calculation? If cost is the driver, why have the Government eschewed the prospect of change in the member contribution rate? What consideration have the Government given to the prospects of local authorities setting up alternative collective arrangements for elected members?

The Written Ministerial Statement holds to the notion that councillors receive allowances to compensate them for out-of-pocket expenses, yet notes that they are slowly becoming a form of salary and that, as I said, pension entitlements are making this blurring worse. Of course, this issue will not be unfamiliar to Members of your Lordships’ House but for taxation purposes elected officeholders are treated in the same way as any other officeholder or employee. Their allowances are subject to income tax and, where appropriate, national insurance—after deduction of allowable expenses on the same basis as employees. To the extent that there is a blurring of the payment arrangements, it is suggested that this is a consequence of the diversity of roles and commitment that elected members are today called to undertake. It is spurious to use that as a reason to change the pension arrangements.

People are living longer. Notwithstanding changes to the state pension age and single-tier pensions, we have long recognised that the state alone will not provide sufficient for us all in retirement to live a full life. We have political consensus on the need to encourage greater take-up of occupational and private pension provision, and we have recognised the benefit of auto-enrolment in reversing the impact of individual inertia in this area.

However, the consequences of the Government’s actions for elected local officeholders are not only to shut off access to the Local Government Pension Scheme but to continue to exclude them, as councillors, from the benefits of auto-enrolment. Only to the extent that they have employment income elsewhere will they have the prospect of an employer contribution and the specific impetus to save which is provided by auto-enrolment. Because the thresholds for auto-enrolment are being continually raised by the Government, those elected members who devote more time to council matters and less to remunerative employment will miss out the most. That is hardly an example of valuing those who take on responsibilities for our benefit.

We need politics to be open to people from all walks of life. Some will be able to devote most of their time to the task of being a councillor, some less. That is the strength of our system. To see leaders of our major cities, who oversee billion pound budgets, as just volunteers, is frankly talking down the role of councillor. As the LGA Labour group points out:

“If we want to live in a democracy, then we have to ensure that those that give up their time to deliver it for their local communities are treated respectfully and fairly. Many Councillors make significant salary sacrifices”,

and accept reduced career opportunities in order to serve in public office.

In the words of Sir Merrick Cockell, there is a risk that being a local councillor will become the,

“preserve of a privileged few”.

He called it,

“perplexing that ministers who have been busy adding to the workload of councillors by transferring functions from central to local government”,

should seek to class those councillors as volunteers. We can all point to an impressive array of individuals, not just leaders, in all parties, who do a first-rate job as councillors at a time when we need their talents like never before. As the LGA points out, ending access for councillors in England creates a,

“double standard, as councillors in Wales, Scotland and Northern Ireland retain their entitlement to participate in the scheme”.

It goes on to say that that does not reflect differences in the responsibilities of councillors in any of the home nations or the dedication needed to serve local communities.

Only yesterday, an LGA report set out just how difficult life is to become for local authorities. Being a councillor, a Member of the Assembly or an elected mayor is not for the fainthearted. They are on the front line in dealing with the budget crisis, of embracing innovation, providing local leadership and driving the growth and skills agenda. They are to be encouraged and valued. In the scheme of things, the Government’s denial of their participation in the Local Government Pension Scheme is very much to be regretted. I beg to move.