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Mr. Hammond: Can the Minister explain to those of us who are not well versed in the subtleties of such things the difference between the order being effectively in effect, with everybody having to abide by it, and legally in effect? What would be the situation if the House chose not to approve the order to bring the national framework into effect, when regional centres and control rooms have been reorganised on the back of it?
Phil Hope: There will be a lot of disappointed people in the fire and rescue services—as my right hon. Friend the Minister has just told me. The debate on targets that the hon. Gentleman would like us to engage in, but on which I shall not be drawn, is one that he may choose to initiate when we debate the order to bring the national framework into effect. It is a matter for him and other hon. Members to take that option if they so wish.
There are no substantive changes to the original draft. If the hon. Member for Runnymede and Weybridge wants to see the detailed responses to the consultation
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on the original draft, he is more than welcome to look them up on the ODPM website, which is excellent, and I recommend other hon. Members to use it.
On the local government intervention protocol, it is true that we have taken on board hon. Members' views. The hon. Gentleman does not like the fact that we did not accept the amendment that he tabled in Committee. Let us say that we have taken the spirit of the intent of that amendment—flawed though it was—and drafted a better amendment. It is the privilege of Government to be able to do that.
The hon. Member for Teignbridge (Richard Younger-Ross) supports what we are doing, and I am glad that we have achieved consensus across all parties on accepting the amendment.
Lords amendment agreed to.
Lords amendments Nos. 6 to 9 agreed to.
Clause 33
Lords amendment: No. 10.
Phil Hope: I beg to move, That this House agrees with the Lords in the said amendment.
Madam Deputy Speaker (Sylvia Heal): With this we may discuss Lords amendment Nos. 15 to 17.
Phil Hope: Lords amendment No. 10 would rectify a possible gap in the powers to establish arrangements for the funding of fire and rescue service pensions. My colleague, Lord Rooker, made it clear when moving the amendment in the other place that the White Paper, "Our Fire and Rescue Service", committed us to
"introduce alternative arrangements for local authority funding of service pensions, in consultation with the fire and rescue authorities".
In 2001, a joint Treasury, Home Office and Department for Transport, Local Government and the Regions working group reviewed the current finance arrangements for funding police and firefighter pensions and recommended that a new pension account system should be developed. We announced our intent to pursue that option in the 2004–05 fire and rescue national framework, which was published on 16 July.
The underlying principle of the scheme is that Government would pay current pensions and that employers and employees would make contributions to the Government to meet future pension liabilities. In practical terms, authorities would pay pensions from a separate pension account to which employers and employees both contribute. Normally, a payment would be made by the Government to the fire and rescue authorities to balance the account at the end of the year. Provision for those payments could be made under clause 33(2)(e).
An authority's pensions account could be in surplus at the end of the year— the contribution that it and its employees made to future liabilities exceeded the authority's existing pensions payments. Therefore, to ensure that the system works fairly and consistently and to protect the national taxpayer and other authorities, we need to ensure that a balancing payment can be made
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to central Government. New clause 33(2)(ea), proposed under Lords amendment No. 10, would permit such payments to be made.
Lords amendments No. 15 and 16 amend clause 61, so that all the provisions in schedules 1 and 2, which amend or repeal pension legislation, extend to Scotland. Lords amendment No. 17 amends the reference to the Pensions (Increase) Act 1971, in schedule 1, so that it applies to Scottish fire authorities in the same way as it does to English and Welsh fire and rescue authorities. Pensions are a reserved matter in relation to Scotland.
Mr. Hammond: I think that the Minister will find that Lord Evans, and not Lord Rooker, moved the relevant amendment in the other place.
The Minister will forgive me for being slightly suspicious and sceptical of any provision enabling money to be paid to the Secretary of State that is inserted late into arrangements for the operation of a pension fund set up for the benefit of employees. We remember the Chancellor's attempt to get himself paid from pension funds, with his £5 billion annual pension smash-and-grab raid. We want to be sure that this is not another smash-and-grab raid on employees' pensions funds.
When Lord Evans moved the amendment in the other place, he said:
"However, it is possible that an authority's pension account will be in surplus at the end of the year—in other words, that the contribution that it and its employees make to future liabilities will exceed its existing pension payments. Therefore, to ensure that the system works in a fair and consistent way, we need to ensure that a balancing payment could be made to central government."—[Official Report, House of Lords, 24 May 2004; Vol. 661, c. GC 414.]
I had always worked on the assumption that if employees and employers over-contributed to future liabilities, the benefit of that over-contribution would accrue to future contributors, who would need to contribute a little less.
I hope the Minister does not think that I am labouring the point, but this is a fairly unusual provision. It also seems unusual that the Treasury, which presumably has some oversight of the provisions when they are drafted, should have missed a tiny clause providing for payments to be made to the Secretary of State. Can the Minister elaborate on how, when and where it was decided that the provision, which was not included in the original drafting, was necessary? Who spotted the need for it, and in what circumstances do the Government expect that such payments will be made?
What auditing will there be of the pension arrangements? If payments are to be made out of a pension fund to the Secretary of State from contributions that have been made or partly been made by employers and employees, it will be reassuring to know that proper independent auditing of the pension fund accounts is taking place to ensure that the Secretary of State does not have a slush fund that he could get his hands on. The matter should be dealt with properly at arm's length.
The Minister said that amendments Nos. 15 and 16 add to schedule 1 new statutes that extend the scope of the provisions to Scotland. However, he did not make
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clear to the House whether the Government determined that the change was required because of the other change that had been made through amendment No. 10 or whether it was simply an omission or error in the original drafting. Were statutes that should have been specified in schedule 1 omitted? If it is the latter, that is again an example of the dangers of rushed legislation. If the additional provisions in schedule 1 arise from the changes made by amendment No. 10, that is a different matter, and I accept that they are consequential on the amendment. Will the Minister clarify that?
John McDonnell (Hayes and Harlington) (Lab): I am relieved by the Minister's explanation of the provision for making payments to the Secretary of State. For one minute, I thought that we were going to pay the Secretary of State's pension and that this was a new incentive scheme for Ministers on some form of productivity deal.
May we clarify who will make the decision on the payments and on what criteria, how that decision will be independently assessed and verified and what role the House will play in determining or verifying the payment? Is this a standard clause as used in other public sector pension schemes that have been introduced by legislation in recent years?
Richard Younger-Ross: The points made by the hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Hayes and Harlington (John McDonnell) were extremely valid. If the fire service and fire officers are to have any faith in their pension schemes, those questions put need to be answered. I shall say no more because the points have been concisely made.
7.30 pm
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