Public Service Pensions and Judicial Offices Bill [Lords] – in a Public Bill Committee am 2:15 pm ar 27 Ionawr 2022.
“(1) The Chancellor of the Exchequer must review how a loss incurred by a member with remediable service who is transferred to the new scheme under section 80 and—
(a) reaches the required number of years of pensionable service to retire with full benefits under the legacy scheme, and
(b) is unable to access the full value of those benefits because they must continue to work to retire with full benefits under the new scheme
could be compensated.
(2) The Chancellor of the Exchequer must prepare and publish a report on this review within two months of the passage of this Act and must lay a copy of the report before Parliament.”—
This new clause would require the Government to review how losses arising from the “pension trap” could be compensated, and to report on the review within two months of the passage of the Act.
I beg to move, That the clause be read a Second time.
I intend to press new clause 14, which I tabled on behalf of the Opposition Front Bench, to a vote. It would require the Government to review how losses arising from the pension trap can be compensated and to report on the review within two months of the passage of this legislation. We are concerned that the Bill does not take into account the so-called pension trap, which means that some members may lose benefits due to a higher retirement age brought in under the new pension schemes. This has come about because police and fire service pensions operate differently from other public sector schemes in that they are based on a 30-year service record rather than a specific retirement age.
The Police Superintendents Association, the Police Federation, the Fire Brigades Union and others have raised fears that individual members could lose out in their pension schemes because of the way that the affected years, between 2015 and 2022, are being treated by the legislation. It cannot be right that pension scheme members in the police and fire service, who have given so much service to the country, will see the overall value of their pensions decline even as they continue to work and to pay contributions, so I ask the Minister whether he will commit the Government to entering discussions with the relevant unions and membership bodies to bring forward a fair solution to the pension trap, as it is called. To demonstrate the Government’s commitment to reviewing the issue and finding a fair solution, he should support the new clause.
I thank the hon. Lady for tabling the new clause, which would require the Chancellor to lay a report before Parliament within two months of the passing of the Act setting out how the Government could compensate scheme members who had reached the required number of years to retire with full benefits under the legacy scheme but who would need to continue to work if they wished to retire with full benefits under the reformed scheme. The intention of the new clause appears to be to require the Chancellor to devise a way to compensate scheme members with remediable service for any reduction of future pension benefits resulting from the prospective McCloud remedy legislated for in clause 8, and the difference in pension ages between the legacy and reformed schemes.
The Government received representations made by police staff associations regarding members of the 1987 and 2015 police pension schemes who reached 30 years of service in the legacy pension scheme before reaching minimum pension age in the reformed scheme. Lord Davies of Brixton proposed amendments regarding that issue during the Bill’s passage through the other place; however, by referring to full benefits in the reformed pension scheme, the new clause appears to go considerably beyond the police staff associations’ representations and proposals, effectively requiring compensation for those below normal pension age, not minimum pension age, in the reformed scheme.
Under the Bill, all members in active service will be moved into the reformed schemes in respect of service from
The Government have received detailed representations on the specific issues that the prospective remedy causes for certain members of the police pension scheme. This arises due to the move from the legacy scheme, where retirement is based on length of service, to the reformed scheme, where retirement is based on age. I am grateful for the hard work and extraordinary dedication shown by our police officers. The Government support the police and the important work they do to protect the public, and recognise that the police face changing demands from crime. That is why the reformed police pension scheme is one of the most generous pension schemes in the United Kingdom.
The Government have considered the issues raised by police representatives carefully, including whether there are viable policy mitigations. The Home Office is also considering responses to its consultation on the detailed regulations to implement the prospective McCloud remedy for the police pension scheme, where the issue has also been referenced. The outcome of that consultation will be published in due course. However, the purpose of this new clause goes considerably beyond the specific issues raised regarding the police.
It is important to stress that the Government must not take action that would be contrary to the whole purpose of this Bill: to remove the discrimination identified by the courts and to ensure that all members are treated equally from the first of April 2022 by accruing service in the reformed schemes regardless of their age.
There is obviously a serious issue here, on which the Government have had representations. Can the Minister assure the Committee that discussions will continue between trade unions and other associations and the Government to try to fix this problem?
I thank the hon. Gentleman for the spirit in which he asks his question. We always want to discuss these issues as fully as possible with a view to finding viable options where they exist. As I said, the Home Office has consulted on detailed regulations to implement the prospective McCloud remedy for the police pension scheme, and it will bring forward the outcome of that consultation in due course.
The Government must not take action that inadvertently creates a new form of the very discrimination that this legislation is designed to address. The Government must also safeguard the purpose of the reforms proposed by Lord Hutton and ensure that public service pension schemes are put on a sustainable fiscal footing. As the Independent Public Service Pensions Commission put it,
“Allowing current members to continue to accrue further benefits in the present schemes for many decades would be unfair and inequitable to the new members coming behind them.”
The reformed public service pension schemes remain among the most generous schemes available in the United Kingdom. Based on the Office for National Statistics’ most recent assessment, 6.3 million public sector workers participate in these valuable schemes, while only 0.7 million workers in the private sector have access to defined-benefit schemes that are open to new members.
I am concerned that the new clause ultimately seeks to oblige the Chancellor to devise measures that would contradict these crucial aims of the prospective McCloud remedy. Compensating members with remediable service for the difference in pension age between their legacy and reformed schemes would, effectively, leave a protected class of public service pension scheme members beyond
To summarise, I genuinely thank the hon. Member for Hampstead and Kilburn for bringing attention to this issue, and reassure her that the Government have been considering the position of these members. However, careful consideration must be given to the need to avoid perpetuating the discrimination identified by the courts, or introducing new discrimination against other pension scheme members, or inadvertently undoing much of the policy aims of this Bill, and this new clause asks the Chancellor to propose a means of doing just that. I therefore, respectfully, ask the hon. Lady to withdraw the new clause.
The Minister started off by suggesting his main concern was that the new clause seeks to go further than has been requested by the Police Superintendents Association. If that was the case, then the Minister could have easily tabled an amendment that came closer, in his view, to delivering what the PSA was asking for without going significantly further. He has not done that, so we have to wonder if he had any intention of addressing the issue had the new clause not been tabled.
We are asking the Chancellor to table a report and present it to Parliament. There is nothing in the new clause that would require the Chancellor to commit a single penny of additional spending. It does not tell the Chancellor what his or her conclusions have to be at the end of that. It is perfectly in line with the wording of the new clause for the Chancellor to produce a report to say, “We could remedy the situation by doing a, b, c, x, y and z, but I cannot recommend doing that because that would introduce unfair discrimination that would be contrary to the purpose of the Act.”
The Minister is trying to make it seem as if the new clause is about forcing the Government to incur additional expenditure. My reading of it is that it is deliberately worded to avoid asking for a commitment at this stage, but it seeks to force the Government to recognise that there might still be a massive weakness in the Bill and to force the Chancellor to come forward with a solution that might address that weakness. If the solution proves to be unworkable or to be unfair in other ways, Parliament has the option to reject it.
Surely, it is wrong, at this stage, that a potentially serious unfairness should be left sitting in the Bill just because we are not sure we can find a way of fixing it. That is not a fair response to give, either to the hon. Member for Hampstead and Kilburn, who moved the new clause, or to those officers who are likely to be affected by it.
It is a pleasure to serve under your chairmanship, Sir Graham. I pay tribute to our police and fire service. I appreciate that the Minister shares that sentiment. I want to underline the points made by my hon. Friend the Member for Hampstead and Kilburn and others that we are just asking the Government to consider this again and to produce a report. That seems to be the very least that could be asked of them at this point.
It is worth remembering that the police and fire service—these valuable services, which are at the frontline of our public service and respond to challenging issues in our communities—have been through the pandemic after 10 years of quite serious austerity cuts in staff numbers. Once again, I ask the Minister to consider this new clause that asks only for a report to be produced, which would allow further discussion to take place.
I have met the Police Federation and the Police Superintendents Association, both of which have genuine concerns, and I understand that the Fire Brigades Union does, too. We should listen to these public servants. They have genuine concerns. This is an important issue about the future and the status of these services. I ask the Minister to consider the new clause very seriously.
I rise briefly to echo the points made by my friend the hon. Member for Glenrothes. The new clause calls for a review to consider the issues further. In responding, can the Minister say what steps he will be taking to resolve those outstanding issues and through what form the discussions will take place?
I thank the hon. Members for their comments and questions. I entirely echo what the hon. Member for Reading East said about the debt we owe to our police and fire services. Collectively, they are perform enormous public service and we are all in their debt.
We have concerns about the wording of the new clause, particularly where it says that a loss “could be compensated,” implying that compensation should be paid. We are concerned that that creates an expectation on Government.
The Home Office, as the responsible Department, is leading a genuine consultation process about the police pensions services. It will bring forward the outcome of that consultation in due course. To address the issue at this point would fall outside my remit and the remit of this Bill.
First, I want to say that my new clause is supported by the Police Superintendents Association. I checked it with the association before I tabled it.
I listened to what the Minister had to say, but the new clause does not really propose a solution, which is the Government’s job. We were pushing for a review of the issue, which we know is important to the Police Superintendents Association, the Police Federation and the Fire Brigades Union. I am disappointed that the Minister does not seem to recognise what a concern the pension trap is to those organisations. I wish to push the new clause to a vote, Sir Graham.
I thank you, Sir Graham, the Clerks and the officials for all their work on the Bill, and colleagues throughout the House and in the other place for their contributions. I repeat what I said at the outset about the debt I owe to my team for the hard work that has gone into the Bill, which I really do appreciate. It is very impressive.
As I set out in my opening remarks, the Bill’s underlying intent—that public servants should be provided with high-quality pensions on a fair and equal basis—is shared throughout the House. I listened closely to Members’ comments today and am grateful for them. I hope I have provided reassurance where it was sought and that we can continue to work together on the Bill. I look forward to further consideration on Report.
Thank you, Sir Graham, for chairing the Committee, and I also thank your co-Chair, my hon. Friend Mr Sharma.
Even though we did not win the votes, we broadly support the Bill. We recognise that the remedy needs to be put in place. I thank everyone who contributed to the debate and I thank Mark and my team, who worked very hard on the Bill.