With permission, I would like to update the House on today's public sector strike action, which is about long overdue reforms to public sector pensions.
I start by thanking the large majority of public servants who have turned up for work today as normal. The low response to the call for strike action reflects their dedication to their public service calling. It also reflects the recognition that taking strike action while negotiations continue on an almost daily basis is nothing short of irresponsible, inappropriate and untimely. It is plain wrong.
This strike is about long-overdue reforms to public sector pensions. I repeat that we want public sector workers to continue to have access to pension schemes that are among the very best available. They will continue to be defined benefit schemes, delivering a guaranteed pension, index-linked and inflation-proofed. Such schemes have all but disappeared from the rest of the work force.
Reform, however, is urgently needed. The cost of public service pensions has increased by a third in the past 10 years to £32 billion a year, and the Office for Budget Responsibility forecasts that, without reform, spending on public sector pensions will rise by nearly £7 billion over the next five years. Life expectancy is rising, and people are living longer, so in future people will work longer, for a better balance between life spent in work and life in retirement. Most public sector staff, except the lowest-paid, will pay more for a fairer balance between what they pay towards their pensions and what other taxpayers pay.
During the discussions, we have been willing to listen to the concerns of staff, and we have responded. On 2 November, after months of negotiations, my right hon. Friend the Chief Secretary set out in Parliament a revised offer that was more generous by 8%. In addition, we have made sure that any public sector workers within 10 years of retirement will be able to retire on their current terms. We are also protecting the lower paid. Public sector staff earning less than a full-time equivalent of £15,000 will not have to pay anything extra at all, and there will be limited increases and contributions for those earning, on a full-time basis, between £15,000 and £21,000. We think that that is fair.
The offer on the table is, by any standards, a generous one. It is a deal that most people in the private sector could only dream of being offered. Most staff on low and middle incomes will retire on a pension as good as what they expect today, and for many it will be even better.
The changes to the pension schemes will particularly protect women, who form the majority of the public sector work force, many of whom are on lower pay. A move from final salary schemes to career average will secure fairer outcomes for lower-paid workers, most of whom are women. The new schemes will also protect future generations from an unsustainable burden placed on them by unaffordable public sector pensions.
It is simply not true that the Government are not negotiating. I was surprised to hear the Leader of the Opposition repeating that claim today. Only yesterday there were discussions with the civil service unions on the civil service pension scheme; tomorrow there will be discussions with the teaching unions, and on Friday with the health unions. After the new offer was made on 2 November, it was agreed, at the request of the TUC, that discussions would continue on the schemes—so it is within the sectoral schemes that the discussions are taking place, at the specific request of the TUC. In addition, there are frequent—[Interruption.] The shadow Chancellor asks from a sedentary position whether we have met the TUC. The answer is yes. [Hon. Members: “You!”] So, contrary to—[Hon. Members: “You! You!”] I will say to—
Order. The right hon. Gentleman will resume his seat. The Minister has, perhaps understandably, been provoked into a response, but questions, of whatever kind, relating to his statement must follow the statement. We cannot have constant sedentary interjections. I appeal to Members to stop doing that, and if it happens, I suggest that the Minister blithely ignore it.
As always, Mr Speaker, I will do as you encourage me to.
Contrary to claims being made this morning by trade union leaders—and by the Leader of the Opposition and the shadow Chancellor—talks are very much alive. They are intensive and they are making good progress. I deeply regret the misleading claims to the contrary.
All this underlines how indefensible today’s strike is while talks at scheme level are moving forward. It is inappropriate, untimely and irresponsible. The ballots for strike action, particularly in the bigger unions, had a turnout of between a quarter and a third—a very low turnout indeed. Our latest data suggest that, as of 11 am today, 135,000 civil servants—well below a third, indeed not much more than a quarter, of civil servants—were on strike. Most civil servants are going to work today as normal.
We have put in place rigorous contingency plans to ensure that, as far as possible, essential public services are maintained during such periods of industrial action. I have an update on what my right hon. Friend the Prime Minister said a few minutes ago: only 16 of the 930 jobcentres are now closed to the public, and UK borders are open and operating with only very minor delays in some seaports. In the airports services are being maintained. I pay tribute to all the dedicated people who are keeping those borders both secure and open.
Across the other sectors the impact has been varied. According to estimates early this morning, across all state-funded schools in England, some 60% are closed but a great many are open or partially open. I am very grateful to those who have worked hard to keep their schools open across the country—head teachers, governors, support staff and teachers, all of whom may have concerns about their own pensions but have chosen to put the needs of pupils and parents above their own to minimise the impact of this strike. I deeply regret the fact that there will have been disruption to the lives of so many hard-working parents across the country, and to hard-working pupils, many of whom are facing mock exams in the near future; they need a closed school like they need a hole in the head.
Overall, the national health service is coping well with industrial action. Early indications are that the strike is having only a minor impact on patient services, and that has largely been mitigated by robust contingency planning. Several trusts have been forced to make cancellations of elective surgery, which is deeply unfortunate and I deeply regret it, but many organisations in the health service are reporting that they are operating at near normal levels. There is some disruption taking place in the local government sector, but councils have worked hard to secure essential services in areas such as dementia care and homelessness, to protect some of the most vulnerable members of the public from the most serious potential impacts of strikes.
Let me finish by saying this: I have huge respect for the dedicated women and men who keep our public services running. Their work is demanding, essential and highly valued. They deserve to be able to retire on decent pensions. Our reforms will ensure that their pension schemes will be decent, and that they can be sustained for the future. They deserve no less.
I thank the Minister for his courtesy in letting me have advance sight of the statement, which I received 20 minutes ago.
Clearly, the whole House regrets that industrial action is taking place today and that millions of families now face disruption to the services on which they rely and depend. Strikes are always a sign that negotiations have broken down, and if a deal is to be reached it is essential that both sides—let us be clear that that includes the unions, but the bulk of the responsibility lies with the Government—get around the negotiating table and show willingness to give ground.
Is it not true that the Government bear the greatest burden of responsibility for what is happening today? We accept that there is a need to continue the reform of public service pensions, which we in fact began when we were in office. We found the unions to be tough but ultimately reasonable negotiators. and we achieved a settlement without any industrial action.
The Government refer to Lord Hutton. He provided rigorous analysis of the current situation, laid out the ground rules for the negotiations, and persuasively argued that there was a need for further change. For example, he was right when he suggested we should look again at career average schemes, which might be fairer in many cases.
The unions need to show they accept the need for change, and indeed they have said they accept the continued need for negotiation and further change. The Government arbitrarily announced a 3p in the pound levy on the incomes of public sector workers, but this imposition has nothing whatever to do with Hutton. Is it not the case that the money that will be garnered from that 3p is not going to the pension schemes but is instead going into the pockets of the Chancellor of the Exchequer? The Minister says negotiations are ongoing, but will he tell us whether or not the 3p imposition, which is a form of tax on public sector workers, is negotiable? It clearly is not in the Government’s mind. Will he also respond to the question about when he last met the unions as part of the negotiation, and when Treasury Ministers last met them, as the leader of Unison said today he had not met them at all since 2 November? It is remarkable that the Government can say negotiations are ongoing when the key Departments have never met the trade unions.
At the core of today’s industrial action are 750,000 low-paid workers. These people provide daily services to all of us and to all the people we serve in our constituencies. They are mainly women, they are almost exclusively low paid, and they provide the essential services on which our whole country depends: they are school dinner ladies, teachers, nurses and others. The House must not underestimate the difficult decisions each of those people must make in deciding whether to take action. Many of them never thought, when they entered the service of the public, that they would have to go on strike. It is a difficult personal decision for each of them, and I assure the House that they take it only with the greatest reluctance. They feel a burning sense of injustice that, low paid though they are, an additional burden is now being imposed on them. Equally, they face a significant deterioration in their pensions, which is why 750,000 low-paid workers—mainly women—have taken that difficult personal decision.
There is a risk that many of those people will opt out of their pensions.
Order. May I gently say that I know that in pretty short order the shadow Minister will want to come to his questions on the statement?
I thought I was asking questions as I was going along.
What estimate have the Government made of the number of people who might opt out of their pension schemes, and what damage might the schemes incur?
It has been suggested that the Prime Minister thinks he can gain political advantage from the strike. He told The Daily Telegraph that he was delighted that a strike would take place. What is the Minister’s strategy? Will he and the Treasury again meet the trade unions to begin negotiations? We have consistently argued that negotiations should be ongoing. Will he call the unions today to ask for meetings tomorrow?
Let me turn to the disruption that has been caused today. How many people are staffing the borders? Will the Minister confirm that there has been no relaxation of border checks?
This is a strike that did not need to happen—nobody wants strikes. The Government must show that they are willing to negotiate sensibly.
It is easy to tell from the tone of that response who pays for the hon. Gentleman’s party. [Interruption.]
Order. I gently say to Whips, wherever they are in the House, that the House is best served when they go about their Protean tasks quietly. On the whole, the House is greatly nourished if they are seen and not heard.
May I deal with the point about the negotiations? I thought I had made it as clear as possible that, at the TUC’s request, the negotiations are continuing in the scheme sector talks. [Hon. Members: “Are you going to meet them?] I have met them—[Hon. Members: “When?] Since 2 November. We conduct many of the negotiations in private—at the request of the TUC. [Interruption.] If Labour Members want to know when the meetings took place, I shall give them the TUC’s telephone number. Let me be absolutely clear: I shall not disclose what the contacts are—at the express request of the TUC. Okay? If they want me to be explicit about the contacts, rather than attacking me they should talk to the TUC. I think they probably know the number.
The shadow Minister asked whether I would call the unions today to suggest a meeting. He is a bit slow on the uptake: I called them yesterday to make that suggestion. I make it absolutely clear that my right hon. Friend the Chief Secretary and I are ready at any stage to meet the TUC. We have done so consistently over the whole period, but at the request of the TUC the discussions are continuing in the four sector schemes and are making good progress. That is why this strike is so indefensible, so unjustifiable, so irresponsible. Luckily, not that much damage will have been inflicted on the economy, because most public servants have chosen to work today as normal. But that has nothing to do with the attitude of the Labour party or of some trade union leaders.
I was asked about the Labour Government’s public sector pension reforms. The shadow Minister made a point about full-time equivalence—the basis on which the previous Government put in place their public sector pension reforms. We have simply followed what they did. I can tell the House that 750,00 low-paid workers will not lose at all—they will not pay a penny more in contributions, because they are below the threshold we have set—and 85% of them are women. It would be useful if the hon. Gentleman confirmed those figures.
The other thing to say about the Labour Government’s pension reforms is that, at the behest of their paymasters in the trade unions, they bottled out of putting in place the long-term reform that makes these changes sustainable. That is why Lord Hutton, Labour’s former Work and Pensions Secretary, recommends all these proposals and reforms, which will make the arrangements we arrive at in the discussions sustainable for a generation. No Government over the next 25 years should have to revisit pension schemes, which we have had to do because the previous Government bottled it.
Order. Many Members are seeking to catch my eye. There is another statement to follow, and I remind the House that we have an Opposition day debate too. There is therefore a premium on brevity, the exemplar of which will be Mr David Ruffley.
Three out of four of my constituents work in the private sector for middling incomes, and they tell me that they would have to put one third of their earnings into their pension to get the benefits that people on strike today enjoy on retirement. Does the Minister agree that the public sector pensions settlement is not only incredibly affordable but incredibly fair?
I think it is fair to the general taxpayer, who has carried all the additional cost of public sector pensions over the past 10 years, and to public sector workers and staff, who are dedicated, hard working and perform essential work. We want pension schemes to be available, without their having to be revisited every few years, because this Government are determined to get this right for the long term.
Despite the sickening trade union bashing of Tory MPs, a number of whose campaigns were financed by Lord Ashcroft, so we do not need any lectures from them, is the Minister aware that many decent, dedicated, law-abiding public servants have gone on strike—in many instances for the first time in their life—because they feel cheated and insecure about their pensions and do not accept what the Minister and other Ministers have said? Is there not at least an opportunity to try to understand the deep, strong feelings of people, many of whom will retire with pensions worth a tiny fraction of those that most Tory MPs will receive?
I do understand the concerns of public sector staff and I want to commend the 75% to 80% of public sector workers who have gone to work today as normal. No one had to go on strike. Discussions are continuing and, as I said, making progress on a daily basis. The hon. Gentleman mentions pensions for Members of Parliament. We are public sector workers. We have a very generous pension scheme. It needs to be reformed and I hope it will be.
I declare an interest as a paid-up member of the NASUWT who is not supportive of the action taken today. The critical thing is the timing. Can the Minister reiterate and continue to reiterate the fact that negotiations went on yesterday, will go on tomorrow and, tragically, would have happened today had it not been for the action that has been taken?
My hon. Friend is completely right on that. His own union will be in discussions with the education employers tomorrow. There is disruption caused by today’s action, but despite that there were discussions yesterday with civil service unions and there will be discussions tomorrow and on Friday with health unions. This process is still going ahead, which is why it is so hard to defend the action being taken today. I am just sorry that the Labour party cannot bring itself—does not have the guts—to say it is wrong.
Does not the Minister understand that there are thousands of part-time workers, the vast majority of whom are women, who are being asked to pay an extra 3%? I would not call it pension contribution, because it is not even going to boost their pension fund. How many of them will opt out as a result of the Government’s changes?
For most public sector workers there is no fund. Contributions made today go to pay pensions today. The local government scheme is funded. Most of them are not funded. They are pay-as-you-go schemes. Lower paid people will not be asked to pay more. As I say, 750,000 low paid public sector workers will have to pay nothing extra at all as a result of these changes.
Is my right hon. Friend aware that in a substantial number of local authorities, local government pensions are paid for by the equivalent of 25% of council tax? Is it fair to those council tax payers who are paying such a large sum of their hard-earned cash?
Over recent years the balance between what is paid by public sector staff towards their pensions and what is paid by the general taxpayer and, in the case that my hon. Friend refers to, the council tax payer, has got out of balance. What we are doing is putting it into a fairer balance. In every case the employer, which is the taxpayer, will be paying more towards the cost of those pensions than staff. I think that is fair, as well. But there will be a fairer balance, and so there should be.
A good St Andrew’s day to you, Mr Speaker. The Scottish National party fully supports the public sector unions and we deplore this Government’s pension fund raid. The Scottish Government tried to protect public sector workers in Scotland by not imposing the pension levy, but the Chief Secretary promised to deprive us of £100 million if we did that. Why did he do that? Surely that is a great example of why pension policy should be under the democratic control of the Scottish people in the Scottish Parliament.
The Scottish Government have benefited from the results of the reforms, and if they choose not to implement them they will have to make savings from elsewhere. That just follows. It comes with devolution.
Can the Minister tell my constituents who work hard and have no chance of achieving a £20,000 index-linked guaranteed pension what level of contributions they would have to pay to their own scheme to get that level of pension?
As has been said, to achieve the same pension as many public sector workers will continue to enjoy after these reforms are put in place, many people working in the private sector would end up having to pay no less than a third of their salary in pension contributions. These are good pension schemes. They will continue to be good pension schemes. We want them to be so.
I know that those on the Government Benches want to denigrate trade unions, but I am proud of being a trade unionist. I first joined a trade union when I was a vicar, though it was always a bit difficult to strike, because nobody noticed and it was difficult to identify who one’s employer was. What angers many public sector workers is that, even where there are pension funds, as the Minister admitted today, the extra 3% that is being asked for is not going into those funds. It is going straight to the Government. That is what makes it feel like a raid on public sector workers.
I feel confident that if the hon. Gentleman was on strike today, we would definitely miss him. I commend him, as a member of a trade union, for having crossed the picket line today to come to work. The issue he raises is where the extra contribution is going. He fails to understand that these schemes, for the most part, are not funded schemes. What is not paid by staff towards the cost of their pensions is picked up by the general taxpayer. And I say again—I assume this is the basis on which the shadow Chancellor said this morning that further reform of public sector pensions is needed—that whatever is not paid by staff is picked up the taxpayer, and that all the extra cost in the past 10 years, which has risen by a third—an extra £10 billion a year—has fallen on the general taxpayer. That is why we need a fairer balance.
With only a third of union members voting for today’s strike action, does my right hon. Friend believe that today’s action is justified?
I do not think that on any basis today’s action is justified. First of all, there are negotiations going on almost on a daily basis, as I said. Secondly, certainly in the biggest trade unions, a very low proportion of the members who were balloted voted. In Unison, for example, only a little over a quarter of the members balloted voted. In all the large unions, it was somewhere between a quarter and a third. That does not amount to very much of a mandate for strike action. I think it was irresponsible and I wish it had not happened.
Some on the Government Benches, when they are baying against the unions, should understand the history. It was the Thatcher Government who gave us the political levy, and that decision allows individual trade unionists to pay the levy to the Labour party. I want to try to be helpful. The reason that we are having the dispute today, apart from all the obvious arguments about the cut taking place by the Government, is that when a union holds a ballot, it has a finite amount of time before it has to take industrial action. If the Government did away with that stupid rule, which was brought in by the Thatcher Government, we would have been able to continue negotiations. Is that not correct?
I start by saying that we are in continuing negotiations. There will be negotiations tomorrow, the day after, next week and the week after, so negotiations are continuing. I agree with the hon. Gentleman that the way the law works at present creates a perverse incentive for unions to take action. We suggested a number of ways in which the mandate could be kept open. For example, in order to keep a mandate open but not inconvenience the public, the National Union of Rail, Maritime and Transport Workers has called a two-hour strike in the middle of the night. In the Royal Mail, the Communication Workers Union has occasionally called five-minute strikes in order to keep a mandate open. It was not necessary, in order to keep this mandate open, for the unions to call a full strike. I am happy to say that most of their members have ignored the call.
Mr Speaker, I hope you will not think it unparliamentary language if I say that I am gobsmacked by today’s strike action. If anybody is responsible for the biggest attack on our pensions ever, it was the previous Government, who raided our private sector pensions. There were no strikes then. That has left the private sector with very little in their pensions. Does my right hon. Friend think the time is right to look again at the ten-minute rule Bill introduced by my hon. Friend the Member for Esher and Walton (Mr Raab) suggesting that a minimum level of turnout should be required for any ballots on future strikes, particularly under the circumstances, which are so unbalanced towards the private sector?
I am aware of the motion, and I am aware of the case having been made by the CBI, among others, for such a change in the law. We think that the law can work well and we do not see any priority for making changes along those lines, but every time a strike is called on the basis of a very low turnout in a ballot, those advocates for change will feel that their hand is strengthened.
The House will understand why the Minister has wriggled so consistently on this question of part-time workers on below £15,000, who will be paying the 3%. Can he explain to the people who will be paying that why they have to pay 3% income tax while the bankers’ bonuses are left untouched?
I remind the hon. Gentleman that under the scheme put in place by the Labour Government, there would have been an increase of £1 billion in the contribution paid by public sector staff towards their pensions in April next year in any event. The proposal we are making is only slightly ahead of that, and we are exempting large numbers of low-paid workers from the effects of it. I repeat that 750,000 low-paid public sector workers will have no increase in their contributions as a result of the specific protections that the coalition Government have put in place.
Given that only one in 10 low-paid private sector workers could afford anything like the pension arrangements for comparably paid people in the public sector, does my right hon. Friend agree that urgent reform is necessary if we are to have anything like fairness for all?
In his report, Lord Hutton made it clear that he did not want public sector pension reform to be a race to the bottom, and we totally agree with that. We want as many people as possible to have access to a decent pension in retirement, but we want the public sector pensions that persist after reforms have been put in place to continue to be decent pensions that are sustainable for the long-term future. That is what we are aiming at, and that is what we will achieve.
In relation to turnout, could the right hon. Gentleman reflect on the fact that only 39% of his constituents voted for him and only 27% of the constituents of the Chief Secretary to the Treasury voted for him? We do not need any lectures about turnout. Notwithstanding the confidentiality of some of the negotiations, will the Minister put in the Library a document showing exactly where we are with the negotiations and, in particular, where we are with the local government negotiations, where, as far as I am aware, no offer has been made?
My right hon. Friend the Chief Secretary came and stood at the Dispatch Box on 2 November and made an offer. What is going on in the discussions on the four schemes is that the elements that he announced are being worked over, in conjunction with the unions, to work out what the best configuration is for the future. All these work forces are different—they have different salary profiles, different demographics, different age profiles—and the right arrangement of those moving parts within each scheme will also differ. That is where the negotiations are taking place, in order to arrive at the right agreed outcome. That is happening at the moment, so the idea that no offer has been made is completely irrelevant and immaterial.
If we fail to make sustainable reform, to what extent will future generations be liable?
My hon. Friend makes the right point. If the reform goes through, as it will, this will be a settlement for a generation and future Governments will not have to come back, as we have had to do to clear up the mess left by the last Government, who bottled it. If there is no sustainable reform, the burden on future generations will be significant. We cannot have a position where an ever smaller working population continues to pay for the pensions of an ever larger retired population. People are living longer. Life expectancy is rising every year. A 60-year-old today can expect to live for 10 years longer than could a 60-year-old in the 1970s. It is absurd to suppose that we can have the same retirement age today as we had then.
Order. It is also absurd to suppose that we can accommodate everyone unless questions and answers are significantly shorter.
The Minister has consistently refused to address the issue of low-paid part-time workers and the extra contribution they will have to make on a pro rata basis. Does he deny that those people—many of them the lowest-paid women working in the public sector—will be more affected than others?
I have to remind the hon. Lady that the basis on which we have made these arrangements is precisely the same as the basis on which the Government of whom she was a member was planning to reform, and indeed reforming, public sector pensions.
In view of the fact that a private sector worker would have to contribute, on average, a third of their salary in order to get a similar pension to a public sector worker, and that without reform the public pensions bill would cost an additional £7 billion in borrowing, may I urge my right hon. Friend not to compromise any further on the generous offer that he has already made?
We have made a generous offer. It means that many people in the public sector, especially those on lower and middle incomes, will be able to retire on a pension at least as good as they can expect at the moment. But we have said that that offer was conditional on there being agreement, so we want the discussions in the schemes to continue even more intensively than they have been already so that we can give effect to that offer.
Public sector workers will have to work longer and get less out of their pension schemes while, this year alone, bankers walked away with £7 billion in bonuses. I know that the Minister will say that he cannot do anything about that, but does he think that it is fair?
As my right hon. Friend the Chancellor made clear yesterday, more will be got out of the banks than was the case under the Labour Government, who made such an enormous fuss about this. Public sector pensions will continue to be extremely generous, and that is what we want.
I commend the immigration contingency plan. My husband came through Heathrow very smoothly at 6 o’clock this morning. There was a lack of enthusiasm for the mandate for this strike. Will my right hon. Friend update us on exactly how many people are taking industrial action, as enthusiasm for being on strike today seems not to reflect the unions’ enthusiasm for this event?
I am delighted that my hon. Friend’s husband had an easy ride. There are reports that, at some airports, the service is better than it usually is. I commend all those immigration staff who have come to work as normal and all of those who have, in a public-spirited way, volunteered to help to ensure that the borders are secure and that disruption is kept to an absolute minimum.
Will the right hon. Gentleman confirm that a community nurse working two days a week on an extremely low salary of £10,000 a year will have to pay the 3% surcharge? If that is the case, does he think that it is fair?
Unlike the Labour Government, we are tiering the increases in contributions in a progressive way so that people on the lowest pay are protected and those on highest pay will pay most. We think that that is a fair way of doing it. Someone who is working part-time, on a full-time equivalent salary of between £15,000 and £21,000, will have their increase in contributions capped at 1.5%. If it is below £15,000, they pay nothing more. We think that is fair. The full-time equivalent basis about which she is complaining is what her own Government put in place.
As a former private sector worker, I know how many people will be wondering, given the irresponsible nature of these strikes, why £113 million of Government money is paid to the unions. Would it not be better used on body armour for our troops in the field, or on looking after sick babies in our hospitals by improving intensive care?
It is entirely correct that a large amount of taxpayers’ money is effectively used to pay for full and part-time union officials. There can be perfectly good justification for some of that, in order to sort out local disputes quickly and effectively, but that there should now be 260 full-time union officials on the civil service payroll is really hard to justify, and we are reviewing it.
I regret the trade union action while negotiations are going on, and the Northern Ireland economy can ill afford the cost of this. Will the Minister confirm that the offer on the table is not a final offer and that, in ongoing negotiations, he will consider the impact on low-paid part-time workers and the appropriateness of raising the pension age for people who are engaged in physical activity, such as firemen?
We absolutely take those points on board. I, too, regret the additional disruption that there is today in Northern Ireland, where the whole public transport system has come to a halt. As the hon. Gentleman says, the Northern Ireland economy can ill afford that kind of disruption. There is a great deal of flexibility within the negotiations. There are a lot of moving parts and they will be put together in different combinations in different schemes. We are very much aware of concerns of the sort that he raises.
The move to basing pensions on a career average is good news for very many women. Does my right hon. Friend share my frustration that Labour Members seem so determined constantly to portray women as victims rather than take pride in this important move?
My hon. Friend is completely right. The move from final salary to career average schemes is of particular benefit to a lot of women, who, as has been said, form the majority of the public sector work force. Many women will have taken a career break and so their final salary will provide a less good basis for a good pension than the career average, which is what we seek to put in place.
The Minister has repeated an assertion made by the Prime Minister that workers on low and middle incomes would get a larger pension at retirement than they do now. Does he accept, as has been widely reported, that that is contradicted by the Government’s own pensions calculator and that, for example, a worker on an average wage of £26,000 retiring with accrued service of 10 years at this point, whether at 60 or 67, would have a substantially worse pension despite the additional contributions?
I do not believe that that is the case. Public sector workers on middle and lower incomes will be able to retire—albeit many of them later than they currently expect and having paid more towards it; we are perfectly open about that—on a pension that is at least as good, and many of them will be able to retire on a better pension than they currently expect.
Does my right hon. Friend share my concern that very many of those who are engaged in industrial action, including many of my constituents—half my constituents work in the public sector—are completely unaware of the offer that he has made in relation to defending accrued rights of all pensioners up to the date of change, and of the significant improvement in accrual rates announced by the Chief Secretary, which gives the lie to the claim that we have just heard from the Labour Benches?
My hon. Friend is completely right. We have done our best to get the details of the offer through to members of the public sector staff directly and to correct the misleading indications given by some trade union leaders, which I deeply regret. He is absolutely right to draw attention to the commitment we have made that all accrued rights are protected. What has been paid for up until now will be honoured in full.
The Minister said recently that the north-east is heavily dependent on the public sector, and the loss of a day’s pay means less spending power in the north-east economy. That will impact on the economy, for sure. What does he believe will happen after he has sacked 700,000 public sector workers? Is it not the case that, whether someone took strike action today or not, they will probably not have a job?
I am really sorry that the north-east economy is going to take a bigger hit than other parts of the economy because the Tyne and Wear metro has been closed down, completely unnecessarily. I hope that the hon. Gentleman will join me in strongly condemning that irresponsible strike action, which will have inflicted damage on the economy of the north-east and inevitably led to there being more job losses than would otherwise be the case.
Does the Minister agree that unions are important organisations that have to get the right and fair deal? This morning I was on Radio Merseyside with Frank Hont from Unison, and we both agreed that it had to be a fair deal, but a fair deal for private sector workers, for public sector workers, for the taxpayer and for future generations, putting pensions on a fair and sustainable footing for the future.
I totally agree with my hon. Friend. I can confirm that for most of the time we have been conducting these negotiations, the union leaders and the TUC have been behaving in the way that trade unions should in representing their members in a tough and effective way. Where they have gone wrong is in holding ballots and calling a strike at a time when negotiations are still continuing and we are making progress towards a settlement that is fair for taxpayers generally and very fair for public sector workers.
I respect the right of workers in the private or public sector to take legal strike action; that used to be the position of the Conservatives and, indeed, the Liberals. As the Minister will know, some teachers are taking strike action for the first time. On Friday I met a delegation who said that the teachers’ pension scheme has not been valued, that there is a surplus in it, and that the Government are refusing to review the scheme. Will he publish the valuation of that scheme, which they say is in surplus and is not costing the taxpayer money?
That is wrong in so many ways that it is hard to know where to start. The hon. Gentleman talks as though there is a surplus in a fund. I am sorry to break this to him, but there is no fund. Teachers’ pensions are being paid for by contributions paid predominantly by the taxpayer. There is not a surplus; there is no fund whatsoever. We have to get a better balance between what teachers themselves pay towards their pensions and what the wider taxpayer pays, and that is what we will do. However, there will still be more paid by the wider taxpayer than by teachers, and we support that too.
I join my right hon. Friend in thanking public sector workers who, despite being angry about pay freezes and pension changes, are serving the public today.
Further to the point made by my hon. Friend the Member for Cardiff North (Jonathan Evans), a Labour councillor in my home town today told public sector workers that the money saved is going to be used to bail out the banks. What more can the Government do to make sure that people get told the truth about why these changes are being made and the detailed nature of the offer?
We will do everything we can. We have communicated directly with civil servants because the Government are their employer and we can do that very directly. It is much more difficult to communicate directly with all teachers and people working in the NHS, because they are employed by a wide range of different, dispersed employers. However, the fact is that most public sector workers—more than three quarters—have ignored the call to take part in this irresponsible strike, and I warmly commend them for doing so.
I put it to the Minister that the willingness to negotiate has got to be a bit more than the willingness to attend meetings. A while ago, Ministers said that the offer was “final”. Is it a final offer or not; and, specifically, will the Minister negotiate around the 3%?
We have made it clear that if, in the discussions within the sectors, there can be alternative ways of delivering the savings that are needed in the comprehensive spending review period, we will consider those suggestions. However, no such suggestions have been made. I am grateful to the hon. Gentleman for at least conceding for the first time from the Labour Benches that negotiations are continuing and making progress. There are still a lot of moving parts, and we need to discuss how they are put together to achieve a fair and sustainable result. I hope that we can continue to intensify that process and make further progress after today’s irresponsible strike action.
Will the Minister confirm that in return for paying a little bit more and working a little bit longer, many public sector workers will still be able to retire at 55, and that many low-income and middle-income earners will receive higher pensions under the Government’s proposals than they do currently?
That is the case. We are absolutely clear that people who, in April next year, will be within 10 years of their expected retirement date will see no change to their retirement age. There are some who are currently looking to retire at 55, and if they are within 10 years of that retirement date, that will be honoured and their pension will be paid in exactly the same way that is envisaged at the moment.
The Minister says that he has huge respect for public sector workers, but at the same time his Government are sacking tens of thousands of them. Regarding lower-paid part-time women workers, will he put in the Library some examples of the impact that the change from RPI to CPI has had on their pensions?
We have made available a huge range of information about the effects of the changes to public sector pensions, and there will continue to be more as the negotiations make further progress in the weeks ahead.
I just want to make this point about the job losses. I very much regret that there will continue to be job losses in the public sector. If we had not inherited the biggest budget deficit in the developed world from the Government of whom the hon. Gentleman was a member, those jobs would not be at risk today.
The Minister knows that I, as one who has worked in the civil service and as the brother and son of teachers, have huge respect for people who work in public service. However, I also believe that many teachers and nurses in my constituency have been woefully misinformed about the details of a complex pension proposal by their unions and by statements from the Labour party. Will he clarify, once and for all, for all hon. Members and for my constituents in Gloucester, that the lowest paid 15% of the work force who are on less than £15,000 a year––about 750,000 people, of whom 85% are women––will pay no extra contributions and will receive a better pension than the one they now receive, inherited from the previous Government?
I can confirm that and add that many of the lowest paid in the public sector will pay no more towards their pension. When the basic state pension is added on top of the occupational pension, they will be able to retire on a bigger income than they were earning while they were employed.
What discussions has the Minister had with ministerial colleagues in the Northern Ireland Executive about building stable industrial relations, which would contribute to the local economy, rather than allowing them to undermine low-paid public sector workers who have higher costs to pay for everyday essentials?
It is the responsibility of all the devolved Administrations to make their own arrangements and conduct their own industrial relations. We conduct our own approach to industrial relations, which involves very intensive discussions with the trade unions that are continuing on an almost daily basis.
Further to the answer that my right hon. Friend gave the hon. Member for Birmingham, Northfield (Richard Burden), does he agree that it is disingenuous of militant trade union leaders to claim that there have been no recent negotiations when he has explicitly confirmed in his most illuminating statement that talks continued until only yesterday?
I confirm talks yesterday, talks tomorrow, talks the day after. These will continue and they need to intensify so that we can reach a conclusion.
Why do the Government so despise public sector workers such as nurses, doctors, teachers and street care cleaners as to impose a swingeing tax increase when the contributions to pension funds exceed their liabilities? The local government pension fund has an annual surplus of £4 billion to £5 billion. How is that fair and how can he justify it?
On a point of order, Mr. Speaker.
Order. The hon. Gentleman must calm himself. There will be an opportunity for points of order, but it does not arise in the middle of a statement.
Far from having the views about public sector workers that the hon. Member for Derby North (Chris Williamson) wrongly attributes to me, all of us in this House have dedicated ourselves to public service. We know that this is an honourable calling and we know how dedicated are the 6 million public sector workers. I commend the 75% to 80% of public sector workers who have ignored the irresponsible call for strike action and gone to work today as usual.
Will my right hon. Friend take this opportunity to praise those ordinary, hard-working trade unionists in Kettering who have crossed picket lines today to go work to serve members of the public and refused to believe the misleading advice they get from their overpaid, hot-headed trade union bosses, who are itching for a fight with the Government?
I am afraid that there are some trade union leaders who seem to be absolutely hellbent on confrontation and industrial action. We absolutely did not want that and I join my hon. Friend in commending those of his constituents who are trade union members but who have ignored the call to strike, crossed the picket lines and gone to work to serve the public, as is their vocation.
As a trade union member, I place on record that I am here this afternoon specifically to represent in Parliament the concerns of my constituents who are trade union members, as they wish me to do. In the light of the news yesterday of a further restriction on pay increases in the public sector, they are particularly concerned about how they are to meet the additional 3% cost. Will the Minister say if there is an opportunity for meaningful negotiation around the timing as well as the rate of any increase in contribution?
As I said earlier, we have made it clear that the savings that have been baked into the spending settlement for the comprehensive spending review period need to be delivered. If the discussions produce alternative ways of delivering those savings, we have said that we are open to hearing them. We have not heard any yet. Of course the hon. Lady is entitled to represent the interests of her trade union member constituents. I hope that she will also represent the interests of all those in the private sector who pay their taxes, which pay for the lion’s share of the public sector pensions that public sector workers will continue to enjoy.
On the questions that the hon. Member for Nottingham South (Lilian Greenwood) and others asked about part-time public sector workers, does the Minister agree that the responsible conversation to have with them is to say, “Don’t protest. Do pay an extra 3%, because you are getting in return for that a pension that would cost you 38% to buy in the real world”?
My hon. Friend is right. The public sector is as much the real world as any other, but in the private sector, staff would have to pay a very significant part of their salary––more than a third––in contributions to buy pensions as good as these. We want these to continue to be among the very best pension schemes available. That is why we are pushing forward these reforms, with a settlement for a generation, so that future Governments will not have to clear up the mess the last Government left behind.
Does the Minister agree that it is fair and legitimate for the wider British public to know when he personally took part in negotiations with unions? I heard what he said earlier, but in the interests of transparency, should he not publish this information?
I say again to the hon. Lady that there are formal negotiations on a continuing basis within the schemes. There are many informal contacts that happen on a continuing basis. Those are kept confidential, not at my request but at that of the TUC, and I will continue to honour that.
The Minister seems to have given my hon. Friend the Member for Stretford and Urmston (Kate Green) an answer on the 3% different from that given by the Chief Secretary to the Treasury. Can he confirm that he is willing to negotiate on the 3%?
What I said, and what my right hon. Friend the Chief Secretary to the Treasury said as well, was that the savings that are represented by the average increase of 3.2% must be delivered. If there are other ways of delivering it, we are willing to listen to them, but no suggestions have been made. In the absence of suggestions about how those savings can be delivered by other means within the pension schemes, we are requiring that those contribution increases will be made, but with protection for lower-paid workers.
I am dismayed by the Minister’s statement today that the low response to the call for strike action reflects the dedication of those who did not vote for it to their public service calling. That clearly implies that those who voted in favour do not have the same dedication. Does that apply to the 57% of the health care physios’ union, the near 50% of the Royal Society of Radiographers and other health professional organisations that voted in the same proportions? Those figures relate to the total work force, not the turnout in the vote. Does he feel that they are in any way at all not as dedicated?
I did not make the distinction that the hon. Gentleman suggests. All I am saying is that in the public sector work force of nearly 6 million people, over three quarters have gone to work today and ignored the irresponsible call to strike action. If I am going to discriminate between those who have gone to work to follow their public service calling and those who followed the irresponsible call to strike action, then I commend those who have gone to work over those who have gone on strike while negotiations are continuing.
The Minister knows that he is accountable to Parliament—full stop. He is treating Parliament with contempt by not telling Parliament when he—when he—last met trade union organisations. Will he now set the record straight?
I urge the hon. Gentleman, if his enthusiasm to know the details of confidential discussions is so intense, to call Brendan Barber and ask him.
Does the Paymaster General not recognise that many public sector workers taking industrial action today do so reluctantly, with a heavy heart and because they feel that what is on offer is simply not fair? May I press him a little further on his answers to my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for West Dunbartonshire (Gemma Doyle)? Is he now saying that he is definitely prepared to countenance meaningful negotiations on the 3% increase?
I have made it as clear as I possibly can, but I will say it again: the savings represented within the pension schemes and within the comprehensive spending review period by an average 3.2% increase in contributions must be delivered. We have made that clear.
We have made it clear also that we are willing to entertain suggestions on how those savings can be delivered in other ways. We have heard no such suggestions, so those contribution increases—the first of which will go through in April, and which are actually of the same order of magnitude as those that would have gone through under the previous Government’s reforms in any event—will go ahead.