Previous SectionIndexHome Page

That this House concurs with the Lords in the said Resolution.
That a Select Committee of twelve Members be appointed to join with a Committee appointed by the Lords as the Joint Committee on House of Lords Reform
(1) to consider issues relating to House of Lords reform, including the composition and powers of the Second Chamber and its role and authority within the context of Parliament as a whole, having regard in particular to the impact which any proposed changes would have on the existing pre-eminence of the House of Commons, such consideration to include the implications of a House composed of more than one 'category' of member and the experience and expertise which the House of Lords in its present form brings to its function as the revising Chamber; and
(2) having regard to paragraph (1) above, to report on options for the composition and powers of the House of Lords and to define and present to both Houses options for composition, including a fully nominated and fully elected House, and intermediate options; and to consider and report on—
(a) any changes to the relationship between the two Houses which may be necessary to ensure the proper functioning of Parliament as a whole in the context of a reformed Second Chamber, and in particular, any new procedures for resolving conflict between the two Houses; and

19 Jun 2002 : Column 383

(b) the most appropriate and effective legal and constitutional means to give effect to any new Parliamentary settlement;
and in all the foregoing considerations, to have regard to—
(i) the Report of the Royal Commission on House of Lords Reform (Cm. 4534);
(ii) the White Paper The House of Lords—Completing the Reform (Cm. 5291), and the responses received thereto;
(iii) debates and votes in both Houses of Parliament on House of Lords reform; and
(iv) the House of Commons Public Administration Select Committee Report The Second Chamber: Continuing the Reform, including its consultation of the House of Commons, and any other relevant select committee reports.
That the Committee shall have power—
(i) to send for persons, papers and records;
(ii) to sit notwithstanding any adjournment of the House;
(iii) to report from time to time;
(iv) to appoint specialist advisers;
(v) to adjourn from place to place within the United Kingdom; and
That Janet Anderson, Mr. James Arbuthnot, Mr. Chris Bryant, Mr. Kenneth Clarke, Dr. Jack Cunningham, Mr. William Hague, Mr. Stephen McCabe, Joyce Quin, Mr. Terry Rooney, Mr. Clive Soley, Mr. Paul Stinchcombe and Mr. Paul Tyler be members of the Committee.




19 Jun 2002 : Column 384

NHS Pensions

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jim Murphy.]

10.11 pm

Ms Gisela Stuart (Birmingham, Edgbaston): I think that all hon. Members share one common experience: we often get asked why we ever got involved in politics. Whenever I am asked that question, I either blame Lucas Industries or pension provision, especially for women. On this occasion, it was my interest in pensions for women that drew me to a particular problem, which also happened to relate to the health service.

I had the great honour of serving as a Minister in the Department of Health and I want to put it on record that the NHS is an exemplary employer. In many ways, it has driven forward the agenda on fair employment practices, so I am by no means criticising the NHS as an employer. However, I want to criticise an especially quirky provision in the pension system that has historic roots. The best way of describing it is to use the words of one of my constituents.

Dr. Susan Collier, who works in a neighbouring health authority, said:

Dr. Collier describes the problem succinctly. It is not clear how many GPs will be affected, but I think that the figure is estimated at about 5,000. The potential cost of remedying the problem is also unclear, as calculations often tend to ignore the fact that women still tend to live longer than men. In a sense, there would be a practical effect on the Treasury only if the woman predeceased her husband.

I think that I have a fairly good idea of what the Minister might be tempted to say in her response. Indeed, I know what I would probably have been tempted to say in her shoes. In all fairness, the Department of Health has been very consistent in its response. A written answer given as long ago as 1999 stated that, to put the problem right,

I think that that is a very rational and logical response, but I am afraid that that does not make it right. I put it to the Minister that it is unacceptable in this day and age that a pound paid into a pension fund by a woman should be worth less than a pound paid in by a man. There should not be any differences between widows and widowers. The days of systems designed with the man as breadwinner were, I hoped, well and truly over. Surely that sends out the wrong message, as the NHS wants to recruit and retain more GPs, especially women. I urge the Minister not just to give me the usual answer but to justify the gender difference.

However, I am a realist and I know that I am asking the Minister to right an historic wrong from the period 1972 to 1988. She may tell me that that is not the best

19 Jun 2002 : Column 385

use of money and may well have a point. If she resists the temptation to right a past wrong, may I urge her not to create a wrong for the future? In 2001, after lengthy negotiations with the Department of Health, agreement was reached on whether GP locums would be able to join the NHS superannuation scheme. It was thought that all locum income would be superannuable from 1 April 2001.

Alas, on closer inspection, that does not appear to be the case. Repeated pressure on the NHS Pensions Agency and the Department of Health did not produce the necessary draft regulations to ensure that arrangements were made for the 2001–02 financial year. Draft regulations finally saw the light of day in January 2001, but locum income was excluded in cases where the doctor also worked as an assistant or principal practitioner. Bizarrely, any locum who also had a hospital post was included.

To avoid delay in full-time locum doctors receiving entitlements, the NHS Pension Scheme Amendment Regulations 2002 were laid, but provisions for part-time GPs have yet to be introduced. The new GP contract includes an undertaking that in future all net NHS income earned by GPs will be pensionable, including locum earnings by assistant and principal practitioners. When the regulations were laid, assurances were given that they in no way marked the end of discussions. I hope that is the case.

Even if the Minister cannot remedy a past wrong on this occasion, and even if only a small group of doctors are affected, two long-term issues must be addressed. First, women will be disproportionately affected, so I hope that we move to a system that does not discriminate against women. Secondly, we want to recruit more doctors and keep more GPs. We do not want women GPs to be lost to the health service when they have families, so the flexibility to work part-time at certain times of their lives without losing the chance to build up pension rights is in all our interests.

Given the time of night I shall be brief. I should be grateful if the Minister addressed past wrongs, but I accept that I shall probably have to accept whatever she says. However, will she assure me that the draft regulations will be amended so that we do not create another generation of women GPs who will experience discrimination on retirement?

10.18 pm

The Minister of State, Department of Health (Jacqui Smith): I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on securing a debate on the important issue of national health service pensions and women doctors. I also acknowledge her expertise and experience on pensions and the NHS.

I am glad that my hon. Friend recognised that the NHS has an excellent final salary pension scheme, with benefits on average worth about 20 per cent. of pay, which is open to all NHS employees, regardless of hours worked, including general medical and dental practitioners. It has more than 1 million members and currently pays benefits to nearly 475,000 NHS pensioners. The NHS scheme operates under the principles of mutual assurance, allowing employers and members to join together to share the risks and spread the costs. There is no individual pot of money for each member, which means that the scheme can offer a defined package of benefits for a standard contribution.

19 Jun 2002 : Column 386

Like many public service schemes, the NHS pension scheme is unfunded. There is no pension fund, and contributions are not invested to provide for future pension payments. My hon. Friend will be aware that NHS employers pay a 7 per cent. contribution, with the Exchequer guaranteeing scheme benefits and underwriting the cost of inflation-proofing pensions in retirement. The NHS scheme has introduced many changes over the past 50 years, sometimes adding extra pension benefits, at other times withdrawing outdated provisions. New rights accrue prospectively and withdrawn rights are protected for existing members. Employers, the Government and, ultimately, taxpayers take the financial risk of underwriting future benefits. That means that we must ensure that the NHS scheme operates with a fair degree of financial certainty. The future may be unpredictable, but at least past liabilities can be assessed and accounted for.

My hon. Friend rightly raised concerns expressed by women doctors about the restrictions on past service rights. We recognise those concerns—indeed, as a member of another public service scheme, I recognise them personally and acutely. However, sharing risks and costs means that a feature of defined benefit schemes is that proportionately some members may do better than others. For example, it generally costs more to provide pensions for doctors than it does for administrative and clerical staff, but each pays the same 6 per cent. contribution. Female members will generally outlive their male counterparts and so may take a greater share of personal benefits from the scheme. Moreover, some members may not be interested in a particular aspect of the package. For example, single members may not want and may never benefit from dependants' cover, but the cost of providing those benefits is spread across the whole membership under the mutual assurance principle. Members cannot opt out of parts of the basic benefit package.

Before April 1988, the NHS scheme did not include a general widowers' provision. Widowers' benefits were not part of the package that members were buying and on which the NHS scheme was costed. When widowers' benefits were introduced for membership after 6 April 1988, the new benefit was included in the future costing arrangements, but only on the basis of the prospective cover. Backdating widowers' cover to 1972, when half-rate widows' pensions were introduced, would have created unfunded liabilities.

The Government want all workers to be treated fairly. In that respect, we ensure that the NHS pension scheme complies with all existing domestic legislation and European Community directives and law. I understand that saying that the scheme complies with the law offers little reassurance to those who want equality for the past as well. However, given that there is an equal treatment rule that has applied for the past 14 years, it is difficult to see the justification for back-dating the provision to an even earlier date. It would seem unreasonable to expect the general membership and current health budgets to address such issues now, especially as there are more contemporary and relevant improvement candidates. My hon. Friend emphasised that when she talked about how we respond in future to recruiting and retaining more NHS staff. The Government sometimes have to make hard decisions about matters such as pension rights. We want and need to be fair to scheme members, but equally we have a duty to be fair to the taxpayer and to users of health services. It is a question of balance.

19 Jun 2002 : Column 387

Although widowers' cover was not backdated in 1988, a special scheme was available until 30 June 1989 that allowed existing female members to purchase widowers' cover for their earlier service. The costs were shared with NHS employers. There are provisions in the NHS pension scheme for the unrestricted payment of widowers' benefits when the member's husband is permanently incapable of earning a living because of ill health and is wholly or mainly dependent on his wife.

We understand the strong feelings of women doctors and the view that they subsidised their male colleagues over the provision of half-rate widows' pension cover from March 1972. We have considered whether retrospective cover should be made available but the costs are significant. Of course, there would be wider implications because the policy on widowers' benefits applies across the public service. Even at 1999 salary levels, the Government Actuary has calculated the capital cost of backdating NHS widowers' cover for those who were members in 1988 at approximately £500 million. I understand that the costs are little different today, and we are not prepared to pick them up. It is not reasonable to expect us to do that, and we would not realistically expect the general membership to want to pay.

On a more positive note, I hope that I can answer my hon. Friend's second question on locum GPs. We opened the NHS pension scheme to freelance locum GPs from 1 April 2001. That was a major step forward and means that all doctors practising in the NHS have access to sponsored pension arrangements.

Our commitment was to allow scheme access to freelance locums when the health authority supplementary lists were in place. The link was to improve the protection for patients by ensuring that all GPs who work in the NHS have access to training and regular appraisal by their host health authority.

Consultations with the profession about the shape of the new lists were greatly protracted and we were not able to introduce the legislation until December last year. The changes to the NHS scheme depended on the arrangements agreed for supplementary lists and, in that context, we can claim some credit for having scheme amendments in place by the end of the tax year.

I agree with my hon. Friend that the new opportunity will be especially important to the increasing number of women GP qualified doctors, who now have the option of working in the NHS and joining the NHS pension scheme without having to join a main health authority list as a GP principal. That will give them access to generous pension arrangements but with the flexibility to balance their work and family commitments. We take that seriously as we develop recruitment and retention in the NHS.

I know that the scope of the regulations did not go as far as doctors wanted. We understood their anxieties, but our priority was to fulfil the commitment to freelance locum GPs. Unlike other GPs, they had no access to the NHS scheme.

19 Jun 2002 : Column 388

However, as my hon. Friend said, the Department has given an undertaking that the amending regulations do not mark the end of the discussions. We made it clear to doctors' representatives that we would continue to consider the position of principals and assistants.

We recognise that assistants and other GPs want all their NHS earnings to be covered by the NHS pension scheme. I understand my hon. Friend's point about the importance of that form of working. That is understandable because, unlike those of employees, GP pensions are based on total uprated career earnings.

Clearly, there are detailed issues to consider but, as my hon. Friend pointed out, the framework document for the new GP contract says that we would expect all net NHS income earned by GPs to be pensionable, including locum earnings in the hands of assistants and principals.

GP pension issues are complex and we should not overlook the fact that practical difficulties and cost implications need consideration. However, I can confirm to my hon. Friend that the NHS Confederation, with the active support of officials from the Department and the NHS Pensions Agency, is currently engaged in detailed discussions to identify solutions in order to present recommendations to Ministers as soon as possible.

In summary, we have taken steps to ensure that the NHS pension scheme complies fully with equal treatment legislation and provides all members, including doctors, with unrestricted access to an excellent package of pension benefits. The NHS pension scheme continues to provide very good value for money and, in the light of the recent turbulence in private sector final salary schemes, a very attractive inducement to working in the NHS.

We must, however, look forward to the future recruitment and retention needs of the NHS, in line with our NHS plan aspirations. That does not mean that we can forget about the past, but, with competing priorities for resources, it would seem increasingly appropriate to spend tax revenue on things that will significantly help to improve the delivery of patient services rather than redress past inequalities, however deserving those claims may be.

For locum GPs, we have addressed a long-standing grievance over access to the NHS pension scheme. To meet our commitment to provide scheme access from April 2001, we have not been able to resolve some of the outstanding concerns of other GPs, but we have committed to further discussions within the new GP contract negotiations.

In conclusion, may I again thank my hon. Friend for raising this important issue? I assure her that, as we go forward with developments in the NHS pension schemes, we shall bear in mind both the need to ensure equality of treatment and the need to ensure that we recruit—and retain—the very best people into the NHS to provide the very best treatment for those who depend on it.

Question put and agreed to.

Next Section

IndexHome Page