Parliamentary Pensions (Amendment) Regulations 2002

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Mr. Butterfill: What we said was based on evidence that we took after the 1997 election. The trustees had conducted an independent survey of what happened to Members of Parliament after that huge change. It is a fact that Members come in here in their early 40s and tend to go out in their early 50s; the average is less than 10 years. Those Members who interrupt a career in that way find that, for example, if they were partners in a firm of lawyers, accountants, headteachers or whatever, they find it very difficult to go back to where they were.

Mr. Webb: Up to a point, I accept that. However, I would note that the SSRB was well aware of that when it considered the issue last summer. It did not come as a shock to the SSRB. It commented on the

    ''unusual features of an MP's job''

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of which that is one. The 1997 election was very important because it was historic and unusual. Since then we have had the 2001 general election.

Mr. Gardiner: The 2001 election was historic.

Mr. Webb: The hon. Gentleman says from a sedentary position that the 2001 election was historic, but it was not in the sense that the 1997 one was. The 1997 election brought an involuntary end to the careers of large numbers of sitting MPs. The 2001 election did not. In the 2001 election—if I have my figures right—19 sitting MPs were defeated. In 640 constituencies the sitting MP carried on, voluntarily retired, or stood down. If one looks at the 2001 election, one could argue that the argument about transience goes completely out of the window. Practically everyone elected in 1997 who wanted to carry on was able to do so. Therefore, they were pretty much guaranteed eight years in this House.

Ms Gisela Stuart (Birmingham, Edgbaston): The hon. Gentleman misunderstands. The point about 2001 is that many of the people who held on to their seats did not expect to, so they would have made decisions about their pension arrangements in 1997. For example, they may have wondered whether they should buy extra years assuming that they were only going to be in the House for four years. Many then found themselves here for eight years. It is unpredictability that is important. The election in 1997 was unpredictable because so many went out; 2001 was unpredictable because so few went out.

Mr. Webb: I accept what the hon. Lady says up to a point. However, people would have little sympathy with us if we argued that we needed greatly enhanced pensions because there was a risk that we might keep our jobs. I paraphrase loosely.

The thinking behind the demand for an improved scheme for MPs seems to be that we have got to get it while we are here, because we ain't going to get it anywhere else. It seems to me that many of our constituents suffer job uncertainty, job changes, disruption to their pensions and so on. Our constituents have to piece together a pension from different jobs.

Mr. Gardiner: Will the hon. Gentleman give way?

Mr. Webb: I have given way several times to the hon. Gentleman. I should make some progress.

Our constituents have to piece together a pension from lots of different pots. That is part of the reason why many of them have inadequate pensions. We should not be seen as trying to cocoon ourselves from the pressures that all our constituents face. That is the nub of the issue.

Mr. Butterfill: Will the hon. Gentleman give way?

Mr. Webb: I probably should not because several Members want to make a contribution, and I have spoken for some time already.

In Committee this morning arguments have been put forward about what other legislators get, job insecurity, and about us all being unemployable. The

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SSRB said in the conclusion of its letter to the Leader of the House that it had already looked at the issue, and previously concluded that anything better than fiftieths was not necessary and added that

    ''that remains its view in the light of the evidence summarised above.''

In other words, the SSRB has heard those arguments, looked at the latest evidence, and still thinks that anything more than fiftieths is unnecessary. When the SSRB recommends 3 per cent. from MPs and 2.1 per cent. from the taxpayer in the short-term, that is in the context of a reminder that the SSRB does not agree that we need it in the first place. I think that that has been slightly lost in the discussions so far.

There is a proposal on the table in the regulation. I am aware of the two drafting errors that the Leader of the House confirmed were in the existing regulations, and that the No. 2 version of the regulations has been tabled to correct them, so I shall not comment on them.

The SSRB has been asked to make the best of a bad job. On the point made by the hon. Member for Brent, North (Mr. Gardiner), it does matter what question the SSRB was asked. It was asked to consider the matter, and it repeated in its letter that it did not think it necessary to make improvements but, on being told that they must happen, it came up with a scheme for paying for them.

Mr. Gardiner: Will the hon. Gentleman give way?

Mr. Webb: No. For reasons that I have explained, I shall not give way again.

Many questions remain unanswered, especially about how the proposals will work, and I should be grateful if the Minister responds to them.

This morning, I received a written answer from the Leader of the House, which set out the cost of the regulations to the taxpayer. On 22 July, he said that if all hon. Members and office holders were to decide to opt to pay 9 per cent. instead of 6 per cent. with immediate effect—obviously, we do not know how many Members will take that up—the additional cost to the Exchequer by the end of next March would be £600,000, and £860,000 for a full year. If, as has been generally assumed, the situation runs on not until next March but the following March, the written answer suggests that we are talking about a maximum contribution from taxpayers of £1.5 million. I should be grateful for the Minister's clarification on that.

Mr. Butterfill: Will the hon. Gentleman give way?

Mr. Webb: No.

Mr. Butterfill: Just on that one point.

The Chairman: Order. The hon. Gentleman is not giving way.

Mr. Webb: I am unclear as to whether the sum of £1.5 million will ever be paid back to the taxpayer. It is clear that once the new system is introduced and 2 per cent. is deducted from our pay rise, ongoing improvements will be funded. That is common ground to us all. When people talk about clawing back the

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taxpayer cost however, it is not clear whether 2.1 per cent. will be part of the knock-off from our pay rise in a few years' time and will cover just the increased accrual or whether something else will cover the £1.5 million.

It has been suggested that the £1.5 million will just come from the fund and there will be no additional Exchequer contribution. Can the Minister clarify whether that is the case? Obviously, if the fund has money to spare, the Exchequer could have been paying less than it does now. There will therefore be a taxpayer cost.

Presumably, we have no guarantees that the 2.1 per cent. will ever be paid because the SSRB cannot bind the House, and the regulations make no reference to our future salary rises. Given that last summer the House voted against the SSRB recommendations on pensions, we have no guarantee that the House will not again vote against what the SSRB recommends on the 2 per cent. When we vote on the SSRB recommendations on pay in one or two years' time, we cannot be sure that the House—after the issue has died down and nobody understands it any longer—will not simply say that it needs to keep the taxpayer subsidy for our pensions. The only way in which to guarantee that that does not happen is to increase the 3 per cent. to 5.1 per cent. In other words, we could pay now the full cost of the enhanced benefits that we want for ourselves. That would be the only guarantee.

Can the Minister clarify the time scale for the salary reviews that the SSRB are talking about? In its letter to the Leader of the House, it states:

    ''This will leave 2.1 per cent. to be funded initially by the taxpayer, but the Review Body considers that this additional contribution should be taken into account in subsequent reviews''—

reviews in plural—''of MPs pay''. I do not know whether it is significant that the letter does not refer to the next review. Perhaps there is a suggestion that the cost will be spread over a number of reviews, in which case, the taxpayers' subsidy would go on for longer.

My third question applies to all Committee members and other hon. Members, regardless of whether they opt for the improved pension. The pension will be funded in part by roughly 2 per cent. being deducted from our next pay rise. Can the Minister confirm that that will come off everyone's pay rise, whether or not they want the enhanced pension benefits and that there is cross-subsidisation between those who believe that the current scheme is adequate and those who prefer to pay for enhanced benefits. Will he also confirm that every Member will pay £1,000 a year, which will help to pay for the pension funds of those who want to improve their pensions?

David Taylor (North-West Leicestershire): How likely is it that the House, which voted overwhelmingly to give itself a pay increase of 4 per cent. above inflation last year and this year, would rebate a future pay increase that may or may not be linked to inflation? If it were linked to inflation, it would be around 2.5 per cent. and would support a pay increase

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of around 0.5 per cent.? In the current climate of everyone for himself, does the hon. Gentleman not think that that is unlikely?

Mr. Webb: It had certainly occurred to me that with the current headline inflation rate of 1 per cent., issues would arise about how to claw that back in the short term. I understand the hon. Gentleman's point and was hinting at it.

I tried to obtain advice from officials, who were unable to help me, about the opt-out for Members who do not want to pay the extra 3 per cent. and do not want the improved benefits is permanent. New Members elected after the next election will go straight in at 9 per cent. and existing Members who want to go to 9 per cent. may do so. I want the Minister's assurance that anyone who does not want the enhanced benefits will be able to remain on 6 per cent. indefinitely for preserved rights.

I have detained the Committee to explain the substance of my position. I am speaking personally and am aware that there are divergent views within and across parties. We have a very good scheme, which in my view and that of the SSRB does not need improving. Many of our constituents have poor and worsening pension rights, so we should not be voting to improve our pension rights and we should certainly not be asking taxpayers to make any contributions.

10.57 am

 
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Prepared 23 July 2002