Clause 9 - Pension age

Public Service Pensions Bill – in a Public Bill Committee at 10:45 am on 13th November 2012.

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Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 10:45 am, 13th November 2012

I beg to move amendment 80, in clause 9, page 5, line 17, at end insert—

‘(d) those members of public service pension schemes to be exempted from the operation of subsection (1) as a result of scheme specific capability reviews.’.

Clause 9 is also a considerable provision. It relates to pension age and the fact that under these new schemes the normal pension age of a person will be the same as the person’s state pension age or 65 if that is higher. There are several exclusions from that: fire and rescue workers who are firefighters, members of a police force and members of the armed forces. The normal pension age of such persons under these new schemes will be 60. A number of deferred pension age arrangements are also set out in the clause.

We propose a couple of amendments to the clause. Again, we are seeking to improve the Bill. We do not want to rip up the Government’s proposals, many of which are perfectly laudable because they are largely based on the recommendations in the Hutton report, but there are deficiencies in this clause. I hope that amendment 80 points out one of those deficiencies. At line 17 on page 5, we want to introduce a fourth caveat to subsection (1), so that in addition to the normal pension age arrangements not applying to firefighters, police officers and members of the armed forces, they would not apply to those members of public service pension schemes who should be exempted from the operation of subsection (1) as a result of scheme-specific capability reviews. Those reviews are ongoing, and I shall explain what they are, but the whole point of a review is to check people’s capability to work until that particular age.

Obviously, with life expectancies increasing, it is reasonable to ask people to work for longer before retiring. No one disagrees with that. Without such adjustments, public sector pension schemes would become unsustainable. That is why we support many of the changes that Hutton recommended. However, there are some categories of workers for whom longer careers are not a realistic option due to the physically demanding nature of their professions. Even with life expectancy increasing, there are some jobs that a 67 or 68-year-old will struggle to do.

The Bill acknowledges that by fixing the normal pension age at 60 for firefighters, police officers and members of the armed forces. However, those are not the only public sector workers who carry out physically demanding work. Other examples include mental health nurses, who have to restrain patients physically, paramedics, cleaners and care workers. There are others who are involved in very physically demanding forms of work. It is inconsistent to make exceptions for some categories of workers in physically demanding professions and, potentially, not for others.

The amendment would allow for further categories of workers to be exempt from the state pension age link under clause 9(1) if scheme-specific reviews found that they were physically unable to carry out their roles after the age of 65. We hope that we are giving some flexibility to the provisions so that those review findings can come to fruition.

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

Amendment 80 is an excellent provision. The Government have included these different occupational groups and made the clause far too blunt an instrument. I think that they will seriously regret the terms of the clause if they do not adopt the amendment, because within the occupations that they have included there may be workers who will potentially be fit and able to do their job at 60 and 65. As I say, the clause as it stands is much too blunt an instrument, so introducing capability reviews would make it much more sensitive to the difficulties and the physical constraints that many workers have to deal with.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 11:00 am, 13th November 2012

I am grateful to my hon. Friend; she might want to intervene later to offer her health service experience, because it is precisely the NHS provisions that prompted us to think about how the clause is drafted. We are not dreaming up the concept of scheme-specific capability reviews; such reviews are already go on. The Department of Health, NHS employers and health unions are jointly undertaking the working longer review, for example. It will make recommendations about the appropriateness of certain NHS staff working beyond the age of 65. That is the crux of the matter, and my hon. Friend has experience within the NHS. The Bill does not exempt any NHS workers from the state pension age link, nor does it provide for the findings of the working longer review to inform further exemptions to clause 9(2). In effect, the Bill makes the review totally redundant, and therefore ends the process before the findings are published. That is an astonishing way for the Government to conduct themselves.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

Does the hon. Gentleman accept that the phrase “scheme specific capability review” is somewhat nebulous? Has he calculated the implications in terms of the unfunded liability of public sector pensions? Does he see it applying to the normal retirement age of those who work in the private sector?

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

We are talking about the specific capability reviews that the Government are conducting. The notion of a scheme-specific capability review is well accepted in the Hutton report and Government policy, and the working longer review is the example I have given.

My point is simple: as it stands, the Bill does not allow for any findings of the NHS review to alter the retirement age of those who might find some of their work at 67 or 68 too physically demanding. I am not even saying that we should definitely accept the findings of the working longer review in the NHS; I simply hope that if the Government so choose in the future, they will be able to use clause 9 to implement any recommendations from that review that they see fit to accept under that provision. My amendment is specifically about ensuring that the Bill does not shoot the Government in the foot and unnecessarily binds them from accepting future changes that arise from scheme capability reviews.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs)

The amendment would add considerably to the Bill, in that it gives the Government the necessary flexibility to allow the review—it is like the egg before chicken. What comes first? It would allow proper cognisance to be given to the reviews as they are produced, and as they will be produced over the years ahead. Such flexibility would give significant meaning to the Bill, allow it to acknowledge the needs of people and allow ongoing scheme-specific reviews.

Some reviews might indicate that a person should retire before 60—I am particularly thinking of firefighters, who currently retire in their mid-50s. If, for example, the amendment went further and applied up to the age of 60, it would not do violence to the Government’s provisions or the reviews as they come out, but would introduce flexibility to the Bill. If a review indicated that someone had to retire before 60, that would be taken care of in the Bill. It might never happen, but there should be that flexibility.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I understand the hon. Gentleman’s point about firefighters. Indeed, a lot of representations have been made on that by the Fire Brigades Union and others. The amendment might need to be supplemented elsewhere, because we are simply seeking to include in subsection (2) a provision that would disapply subsection (1) for those findings of scheme-specific capability reviews. Obviously, the normal pension age of 60 would still apply in respect of our amendment. Certainly, there are other amendments that could be proposed. We wanted to propose something that is palatable to the Government in this circumstance. We are asking not for the moon on a stick but that the Government’s capability reviews are capable of then finding their way into effect should Ministers so want. This is one of those non-partisan opportunities for the Government to reflect on the amendment. It would not be responsible for the House to make legislation before the findings of a NHS working longer review are published, as we need to consider whether the legislation should accommodate some or all of the review’s recommendations. It would also be unfair—some might even see it as an underhanded approach—if the Government were to nullify the results of the working longer review in that particular way, given all the effort that has been put into it. It was a key component of the negotiations between employees and the Government in the period preceding this legislation.

This amendment is helpful. It is about asking for some flexibility that will, we hope, help Ministers should they want the scheme-specific capability review recommendations to come into effect.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

The problem with the clause is its inflexibility. It creates a situation in which it would be difficult to vary the normal pension age, other than for the three named groups. In earlier debates and in the questions that were asked of witnesses, it was said that the clause does not stop people retiring at an earlier age. This is a normal pension age, but people are free to negotiate or leave work at an earlier age, but that has a significant impact on their income should they do so. A normal pension age will be the age at which we get a non-actuarially reduced pension. Another issue was raised by the hon. Member for Bedford, who asked whether it opened the door to unfunded commitments that might be unaffordable in the short, medium or long term. If we are considering that, and I agree that we must, we must look at the potential costs to Government and to public spending. If people are leaving employment before they are able to secure their full pension—they may secure only a much reduced pension—they will then be eligible to make other claims for financial support, and that might be over a considerable period. Such a commitment has to be factored into the costs of this measure.

Photo of Graham Evans Graham Evans Conservative, Weaver Vale

Does not the hon. Lady agree that if an employee is not physically capable of doing a job that he or she might have done for 30 or 40 years—hon. Members used the example of various NHS workers—no reasonable manager or management team would insist on their continuing to do the same physical work, but is it not possible for those employees to take up more sedentary positions in clerical and back-office jobs rather than to retire early?

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

We would have to consider the scope for doing that, but the Government have said that many back-office jobs should be cut in order to concentrate on front-line work. It is also true that in both the private and the public sectors technology has removed some routine administrative jobs, and we now have other ways of doing them. Typing pools, for example, with people sitting typing in rows, are no longer necessary because technology has enabled many professionals to do much of that work themselves.

Photo of Graham Evans Graham Evans Conservative, Weaver Vale

I do not disagree with the hon. Lady, but if we look at the police service, for example, many police officers retire in their early 50s and are re-employed in the police service in exactly such back-office roles in a police station. The evidence is there for anybody to see. Those are the sorts of positions that may or may not be available in various public sector organisations.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

Surely, whether such jobs are available is one of the things we should look for in a review such as that suggested in the amendment. Such a review should take account not only of someone’s physical capability to continue doing a job, but of the other options and their availability.

From work that has been done on whether people are in work at various points before retirement age in taking the state retirement pension, we know that substantial numbers of people in many walks of life—particularly men aged between 60 and 65—are already outwith the work force for several reasons, many of which relate to health. That is a significant issue and it must be looked  at in as much detail as possible. We must not assume from the outset that people will be able to do certain types of jobs until they are 65, 66 or 67; that is specific to the proposed rise in the state pension age. If someone is not capable of continuing in their original job, we must look at whether there are sufficient jobs for them to do. I would have thought that the last thing we would want to do is to create or continue with unnecessary jobs. A criticism often levelled at local government is that rather than make people redundant, jobs are sometimes found. That is not necessarily helpful, because it still costs money.

The inflexibility of the clause gives rise to concern from a number of groups. Anyone who is a member of the police force will be able to retire at 60, but no one who is employed in the health service—even in physically demanding jobs, or jobs where staff have to be at the peak of their ability—will be able to. Much of the evidence that we have heard about intensive care unit staff, for example—

Photo of Debbie Abrahams Debbie Abrahams Labour, Oldham East and Saddleworth

My hon. Friend is again making a valuable contribution to the debate. If the amendment is not agreed to, is there not a risk that people will retire in a worse physical condition and shorten their retirement life because they have to continue working under physical duress? Not only that, but the Bill risks widening the gap in society around certain occupations, in which people retire in ill-health and live a shorter life as a consequence. The provision may exacerbate the situation. I would be interested to hear from the Minister what assessment has been made of the effect that the provision might have on different occupational groups. I made the point last week about people in low-income groups not only dying earlier but living in poorer health, and the measure may well make that problem worse.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East 11:15 am, 13th November 2012

My hon. Friend illustrates the need to look in depth at the jobs people are doing and the health situations they find themselves, as well as the costs to them, their families and, ultimately, the state, if it has to pick up the pieces. If people leave work on lower pensions, for example, they are more likely to become entitled to greater state support, and we have to factor in that cost.

Perhaps the Minister can explain whether, under the clause, it will be easy for people to reduce their hours. At the moment, it is quite often possible for people—before, and sometimes after, normal pension age—to reduce their hours or days of work. That opens up the possibility, for example, of a job share, which can be helpful at other points on the age spectrum. We have all the issues, which have been much debated of late, and which will continue to be debated, about how we encourage women into the work force or how people can balance child care responsibilities with employment. The ability to match people—one may be at the end of their career, and the other may be at an earlier stage in their career—has always seemed to me to be a win-win situation for both of them, because one can continue with their child care responsibilities and employment, while the other can start the step-down process towards retirement so that it is not quite so abrupt.

One factor that makes it possible for people to afford to do such things is the ability to take part of their  pension at that point. That is often good for them, and it can be good for the organisation they work in, because their expertise can be passed on at a point when they are able to work towards their ultimate retirement and to enjoy doing so. Traditionally, it has been suggested that women find retirement easier than men, although I do not know whether that is altogether true. However, the opportunity to work towards retirement is important for people’s mental well-being and their ability to cope with retirement.

Will the Minister therefore explain whether it will be possible for people to make such a compromise under the proposals? The amendment would allow different schemes to look at someone’s work. As my hon. Friend the Member for Nottingham East said in moving the amendment, they might conclude that there is absolutely no need for any changes in the scheme or in relation to a particular type of work, but they might conclude otherwise . If we are inflexible, we may come to regret it, and we may incur additional costs in public spending.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs)

I like the amendment, which would add something to the Bill, as I said in an intervention. It would give the Government flexibility and the right to use the review to the advantage of the people who matter. It would allow the evidence gathered in the review to shape policy, rather than the policy to shape the evidence, which is important.

Last week, I was particularly taken by the representations and evidence we received from Dr Porter of the British Medical Association, who told of his personal experience as a senior medical practitioner. He said he did not mind rushing around the wards, putting in lines and dealing with emergency cases while he was in his mid-40s, late 40s and early 50s, but he did not look forward to doing that when he was 67 or 68. There may be people who are fitter, stronger, braver and tougher, who could do that at that age, but he was strongly making the point that flexibility is necessary to get the best out of people. The evidence we have heard from the people who have come to the Committee has been about how the public can give their best, especially in the public sector.

Adding an amendment that would provide flexibility for front-line medical workers, nursing staff with physical demands on them and some care workers would enable the Government to make the Bill much better and stronger, by recognising the needs of certain people. I spoke to the BMA last week and received a letter from Dr Paul Darragh, the chair of the BMA in Northern Ireland, in response to my specific point. He replied:

“The Working Longer Review of the planned increase in the normal pension age for staff in the NHS pension scheme to 68 is currently being undertaken jointly by the UK Government, employers and health unions.”

The BMA believes that we should defer to it. Dr Darragh continued:

“The review should be allowed to make genuinely evidence-based recommendations as to whether all or some front-line NHS staff have roles that are particularly physically, mentally and/or emotionally demanding and so should have their normal pension age capped at a lower age.”

The amendment would allow that to be taken on board. It would allow us to improve a Bill based on evidence, not to have legislation that creates the evidence, which is the wrong way round.

I was less taken by the evidence we received from the National Union of Teachers. I would be quite happy to see my children taught by someone in their mid-60s. Their wealth of experience can be drawn on and is very much part of the classroom. I would be reluctant see my house in flames and my children rescued by a fire officer in their late 60s. That would not be tolerable. There is a balance to be struck.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

The hon. Gentleman’s point about teachers and their experience is important. However, a physical education teacher might be in a very different position from some others.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs)

My comments are not intended to be prescriptive. The amendment would allow for that wider interpretation. If there is an element of physicality that would prevent someone from doing the job—as is part of the Government review—it would allow that to be recognised in the legislation. I am not being prescriptive; I just said I was less taken, when comparing the evidence of fire workers and teachers.

In response to the point made about police officers, I served on the Northern Ireland Policing Board for eight years. We tried to get police officers behind desks out on to the street. I do not like to think of a police officer—trained, skilled and wanting to get out there, catch criminals and deter people from committing crime—coming back to do a desk job at the end of their career. We should recognise there are opportunities for clerical staff, for people less trained and with different skill sets, to do that job until they are 68, rather than a police officer who has a bit of limp, is carrying too much weight or is too old.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

It is rather a shame that the hon. Gentleman should say that people with experience on the front line should not bring that to bear in the final part of their career. We would lose a great deal by saying that as soon as someone had finished on the front line they should just clear off. Does he not agree that there is enormous value in those years of experience at the sharp end being brought to bear in a more advisory desk role towards the end of a career?

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Environment, Food and Rural Affairs)

The hon. Lady is being rather harsh in her interpretation of what I am saying. I said my experience in our own police authority was that those jobs did not always exist for police officers, and the last place a police officer wants to be is pen pushing or doing clerical work because he or she is no longer deemed to be capable to be out on the street deterring people from crime and addressing community needs. There are frankly not the jobs for them to be revolved from one part of policing into the clerical aspect. We want the clerical work to be done by people who are trained and have a given skill set, rather than by police officers who have a very different skill set. I like the amendment; it does not do any violence to the Government’s position, in fact it strengthens it.

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

On a point of order, Mrs Brooke. Is it in order for me to point out quickly to the Committee that the Treasury has published online this morning the Treasury’s policy towards clauses we will discuss later? It includes further information on clauses 10 and 11 and how schemes may handle them. Copies will be made available to the Committee as we finish now.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.