Motion of Regret
That this House regrets that the Local Government Pensions Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 will unfairly exclude elected councillors in England, directly elected mayors, the Mayor of London, and members of the London Assembly from active membership of the Local Government Pension Scheme. (SI 2014/525).
My Lords, the new Local Government Pension Scheme came into effect on 1 April 2014. It is the first scheme to be introduced that follows the principles for reform of my noble friend Lord Hutton of Furness. The regulations before us set out transitional and savings provisions relating to members of the 2008 LGPS, which is to be replaced by the new scheme. They preserve benefits already accrued by members under the existing scheme and make provision to ensure that members within 10 years of their normal retirement age on 31 March 2012 do not suffer any detriment.
I will be clear: our Motion of Regret does not seek to comment on, revisit or revise what has gone before except in one respect. It regrets the inclusion of those transitional arrangements that deny the right of newly elected councillors to join the Local Government Pension Scheme and of existing council members to remain active after the end of their current term of office. Our Motion does not seek to influence the current consideration being given to a possible restructuring of the scheme or to involve a more collaborative approach. Nor does it purport to address the problems that arise as a consequence of the abolition of contracting out in April 2016, although the Minister might wish to update us on this issue.
Currently we are told that the scheme has assets of some £178 billion; annual employer contributions are in the region of £6 billion and there are some 4.68 million active, deferred and pensioner members. Councillors were given access to a special section of the LGPS where permitted by local authorities’ remuneration panels in 2003. Benefits include a pension based on an eightieth of career average earnings, together with a lump sum life cover and survival benefits. The councillor contribution rate is 6% of basic and special responsibility allowances, so the Government’s description of these arrangements as taxpayer-funded pensions for councillors is less than complete. The most recent data show some 5,000 councillors taking up the opportunity of membership, so while important for councillors, their membership is clearly a tiny part of the overall scheme and cannot in any serious way be said to affect its sustainability.
The proposal to deny access for councillors to the Local Government Pension Scheme was presaged in the Written Ministerial Statement to Parliament in December 2012. As justification for the proposition, the Minister, Brandon Lewis, described councillors as,
“volunteers undertaking public service; they are not and should not be employees of the council dependent on the municipal payroll. They are not professional, full-time politicians, nor should they be encouraged to become so”.
He complained about the allowance system being made worse—he said—by the pension arrangements,
“blurring the distinction between council staff and councillors”.
This was asserted as being,
“a corrosive influence on local democracy and independent thought”.—[Official Report, Commons, 19/12/12; col. 105WS.]
I ask the Minister for the evidence for this insulting nonsense. How does this corrosive influence manifest itself? How are things different from the pre-2003 period?
Initially, individuals were to be excluded from the scheme because they were categorised as volunteers. The Written Ministerial Statement was followed by a consultation last year that suggested adding the Mayor of London and other elected mayors and London Assembly members to those denied access, notwithstanding that it recognised that such positions could be full time and that they carried a salary. This was apparently based on another principle: that the LGPS should extend only to paid employees. Could the Minister enunciate more clearly for us the basis for this principle? Also, in what way is it considered that the Mayor of London, for example, has been unable to withstand the corrosive influence of the pension arrangements thus far? Indeed, if this principle is sacrosanct, why are police and crime commissioners to be allowed continued access to the scheme when all other elected officeholders, including those paid a salary, are to be excluded? To the extent that they remain in the scheme, what is to happen to their contribution rate? What is it that inures Commons Ministers from the corrosive influences of their largely taxpayer-funded juicy pension schemes? In seeking to explain the distinction between pension entitlements for paid employees and paid elected officeholders, how would the noble Baroness rationalise the situation where an elected mayor subsumed the role of chief executive?
It is not only the consequences of the Government’s decision that we regret but the manner in which it is presented and argued. The Government acknowledge that they have no central information about participation in the scheme yet pluck from the air a figure of £7 million that might be saved from the changes. Can we please be provided with the basis for this calculation? If cost is the driver, why have the Government eschewed the prospect of change in the member contribution rate? What consideration have the Government given to the prospects of local authorities setting up alternative collective arrangements for elected members?
The Written Ministerial Statement holds to the notion that councillors receive allowances to compensate them for out-of-pocket expenses, yet notes that they are slowly becoming a form of salary and that, as I said, pension entitlements are making this blurring worse. Of course, this issue will not be unfamiliar to Members of your Lordships’ House but for taxation purposes elected officeholders are treated in the same way as any other officeholder or employee. Their allowances are subject to income tax and, where appropriate, national insurance—after deduction of allowable expenses on the same basis as employees. To the extent that there is a blurring of the payment arrangements, it is suggested that this is a consequence of the diversity of roles and commitment that elected members are today called to undertake. It is spurious to use that as a reason to change the pension arrangements.
People are living longer. Notwithstanding changes to the state pension age and single-tier pensions, we have long recognised that the state alone will not provide sufficient for us all in retirement to live a full life. We have political consensus on the need to encourage greater take-up of occupational and private pension provision, and we have recognised the benefit of auto-enrolment in reversing the impact of individual inertia in this area.
However, the consequences of the Government’s actions for elected local officeholders are not only to shut off access to the Local Government Pension Scheme but to continue to exclude them, as councillors, from the benefits of auto-enrolment. Only to the extent that they have employment income elsewhere will they have the prospect of an employer contribution and the specific impetus to save which is provided by auto-enrolment. Because the thresholds for auto-enrolment are being continually raised by the Government, those elected members who devote more time to council matters and less to remunerative employment will miss out the most. That is hardly an example of valuing those who take on responsibilities for our benefit.
We need politics to be open to people from all walks of life. Some will be able to devote most of their time to the task of being a councillor, some less. That is the strength of our system. To see leaders of our major cities, who oversee billion pound budgets, as just volunteers, is frankly talking down the role of councillor. As the LGA Labour group points out:
“If we want to live in a democracy, then we have to ensure that those that give up their time to deliver it for their local communities are treated respectfully and fairly. Many Councillors make significant salary sacrifices”,
and accept reduced career opportunities in order to serve in public office.
In the words of Sir Merrick Cockell, there is a risk that being a local councillor will become the,
“preserve of a privileged few”.
He called it,
“perplexing that ministers who have been busy adding to the workload of councillors by transferring functions from central to local government”,
should seek to class those councillors as volunteers. We can all point to an impressive array of individuals, not just leaders, in all parties, who do a first-rate job as councillors at a time when we need their talents like never before. As the LGA points out, ending access for councillors in England creates a,
“double standard, as councillors in Wales, Scotland and Northern Ireland retain their entitlement to participate in the scheme”.
It goes on to say that that does not reflect differences in the responsibilities of councillors in any of the home nations or the dedication needed to serve local communities.
Only yesterday, an LGA report set out just how difficult life is to become for local authorities. Being a councillor, a Member of the Assembly or an elected mayor is not for the fainthearted. They are on the front line in dealing with the budget crisis, of embracing innovation, providing local leadership and driving the growth and skills agenda. They are to be encouraged and valued. In the scheme of things, the Government’s denial of their participation in the Local Government Pension Scheme is very much to be regretted. I beg to move.
My Lords, I rise to speak on this matter because, although other Members of this House have been Assembly members—and, obviously, councillors—before, I am the only remaining Assembly member in this House. I thank the noble Lord, Lord McKenzie, for tabling the Motion of Regret. I have also been a councillor, and I can tell your Lordships that I certainly did not feel like a volunteer. I felt like someone who worked extremely hard; it was way beyond anything that a volunteer has to put up with.
I think that it is deeply illogical, in particular, for Assembly members and the Mayor of London to be excluded from the scheme. It is true that we are full-time and we are salaried. We are, in effect, like MPs: we have the same sort of elected demands on our time. Of course, the Mayor of London is also a police and crime commissioner. It seems deeply illogical that other police and crime commissioners will stay in the pension scheme when the Mayor of London will be excluded, although he is a police and crime commissioner by law. I would like a bit of clarification on that: is he excluded as Mayor of London but included as police and crime commissioner? In its report of 2000, the Senior Salaries Review Body recognised the full-time roles of the mayor and the Assembly members, and it decided that they should be members of the Local Government Pension Scheme. The SSRB saw no reason to change these arrangements.
It is also deeply unfair for councillors to be excluded. It is a time when it is harder and harder to find people to stand for these posts: they are less and less rewarding, and to exclude councillors from a pension scheme is not just unfair but also rather cruel.
In addition, Assembly members and the Mayor of London will have to find alternative arrangements for their pensions. This will probably be much more expensive than the local government scheme but it will be funded by the taxpayer. We have heard about savings, but actually it will cost the taxpayer more if we go outside the scheme. Therefore, I deeply regret that this has happened.
My Lords, it is important to look at this in context. In opening, I say to the noble Lord, Lord McKenzie, that we have to be careful when we talk about volunteers. There are millions of volunteers in this country who do fantastic work, and we should not categorise them as “mere volunteers”. They do fantastic service for this nation. I recognise that councillors’ work is of a special nature, but we should not detract in any way from the marvellous work done by volunteers up and down all the nations of the United Kingdom.
The nature of councillors’ work is different from that of those people who have, historically, been protected by the Local Government Pension Scheme. I think we would all recognise that the first aim of the Local Government Pension Scheme should be to provide a decent, a good, pension for those who work for our local authorities. Historically, going back to the beginning of the century, councillors were not provided with a pension. It was introduced in the aftermath of 9/11, either on that day or on the next day. That is not to say that it was wrong, but it was perhaps not given the consideration that it should have had. This reverts to the historical position of recognising that councillors are somewhat different. They do—let us recognise it—fantastic service: unstinting, unsung, underappreciated and very often totally unappreciated. However, it is also worth saying—and, to be fair, the noble Lord, Lord McKenzie, said this—that it is only a small minority of councillors, I think about 16%, who are signed up to this scheme. Again, we need to get that into perspective.
I also do not recognise the comments made by the noble Baroness in relation to the cost of the mayor and so on providing for their own pensions. I do not see that there is a tax-funded consequence of that, at least not in the same terms as the scheme that applies at the moment. Perhaps I misunderstood that, but I could not see the consequence there. If I have misunderstood, perhaps that will be elucidated later and, if so, I apologise for that.
The second point that is worth making is that there will be a saving in the scheme, and we have to recognise that resources are scarce. I am not sure whether the party opposite is committed to bringing this scheme back in; I have not heard that said. It is one thing to decry this and say it is a bad thing, but I have not heard any commitment to bring it back in. Perhaps there is such a commitment and perhaps that can be clarified, because there is a saving and all parties recognise that there is a deficit that has somehow to be dealt with. Every saving, no matter how small, contributes to dealing with that deficit. It is very easy to say that we approve of measures to tackle the deficit, but the party opposite often falls into the trap of saying it approves of measures to tackle the deficit and when anything specific is brought up to save money, it is always against them. We need to do that and put this into perspective.
My last word is to say again that we are in great danger of castigating volunteers up and down this country who do terrific work without any allowances or pension arrangements. We need to get that on the record.
My Lords, I should perhaps declare an interest as vice-president of the Local Government Association and a serving councillor on Newcastle City Council, albeit one who has not been involved in any way with this provision of local authority member pensions.
I begin by extending congratulations to the noble Baroness, Lady Williams of Trafford, who as far as I am concerned is making her first appearance on the Front Bench on a DCLG matter. I may have missed her on a previous occasion, but in any case it is a pleasure to congratulate her on that, and on not having to answer this debate or accept responsibility for this particularly malign set of proposals.
These proposals were launched initially by Brandon Lewis MP, the Under-Secretary of State at the Department of Communities and Local Government, in October 2012. I think that his main claim to fame is that, on an organisation called Phoenix radio, he hosted a talk show called the “Eric and Brandon Show”, which I suppose had a fairly minimal audience in the Brentwood area, where Mr Lewis was at that time the leader of the council. Subsequently, he has of course become an MP elsewhere, while his colleague, who is now the Secretary of State, is the Member of Parliament for the same constituency. Quite whether that broadcast had the impact of the Nick Clegg broadcasts on London radio, I hesitate to think.
However, Mr Lewis must certainly be given the credit for a certain amount of ingenuity. He wrote a letter on 13 March 2014 to Conservatives MPs in England—not that there are many outside England—to explain and defend what the Government were doing. In that letter he said, as we of course understand, that,
“councillors do not receive a salary; rather, they receive allowances to compensate for their out-of-pocket expenses”.
That is an interesting formulation because the actual wording of the Government’s document about this was rather different. The wording in paragraph 1.20 of that document said:
“Councillors are volunteers, elected to their local council to represent their local community. Councillors are not paid a salary or wages, but they are entitled to allowances and expenses to cover their out-of-pocket costs of carrying out their public duties”.
Now, expenses are clearly designed to cover out-of-pocket costs but allowances are not the same thing. Mr Lewis has elided the two concepts in his letter, and quite deliberately so. In addition, he said that,
“following changes made by the Labour Government, allowances have slowly become a form of salary, a situation worsened by the state-funded pensions”,
as if the entire cost was paid by the taxpayer. Of course it is not, as it is a contributory scheme.
However, even that is not quite the full story because paragraph 1.9 of the Government’s document says:
“The provision allowing for councillors’ pensions in England is contained in Section 18(3A) of the Local Government and Housing Act 1989”—
when to the best of my recollection there was not a Labour Government in office—
“and the Local Authority (Members’ Allowances) (England) Regulations 2003 made under the powers contained in that section”.
We have one former Secretary of State present from a Conservative Government, although I do not think that the noble Lord was the Secretary of State at the time. But it was a Conservative Government who facilitated or indeed established the concept of making this scheme a possibility. Of course, Mr Lewis carefully avoids that reference but he then says:
“This blurs the distinction between council officers and councillors”.
In whose eyes, it has to be asked, is there a blurring of the distinction? Citizens can distinguish perfectly well between councillors and officers. What is the nature of this blurring that is alleged to be taking place?
I have been a councillor for what might seem an interminable time, particularly to some of my constituents, but I am not alone in having a long period of service. I anticipate that we will hear from other noble Lords today who have had very distinguished local government careers, such as the noble Lords, Lord True, Lord Shipley and Lord Tope, as well as my noble friend and the noble Baroness, Lady Jones, who have already spoken. Looking around the Chamber, it is possible that there will be others such as the noble Lord, Lord Palmer of Childs Hill, and my noble friend Lord Harris—and there is of course the noble Baroness, Lady Eaton. How could I forget her? Of the five noble Lords I anticipated would speak, between us we have served 165 years, 43 of those as leaders of our respective councils. It was not until the late 1980s that I was in receipt of a special responsibility allowance as leader of my council. I did not take the full amount until the last three years of my tenure. I was senior partner at a firm of solicitors and I felt, in the circumstances obtaining in the early 1990s, that I should claim the full £7,000 a year, which was the allowance paid by my authority at that time. We are not talking in general about very large sums.
Among my successors was the noble Lord, Lord Shipley, who, no doubt, will tell us about his own experience. My recollection is that he also would have received a modest allowance as leader of the council when he served his term. The present leader of Newcastle City Council—with a budget which, as a result of government cuts, is alas declining from the £260 million a year it had originally reached—receives an allowance of £16,500 and a basic allowance of £8,500. The specialist allowance has been frozen and the standard allowance for members in Newcastle has been cut. That is likely to be the situation in many local authorities in this country. When I was leader of the city council, I was in receipt of a combined allowance that was significantly less than was paid to my secretary. Exactly the same position will apply to all my successors, including the noble Lord, Lord Shipley, and the current leader; and it may well apply in a number of other authorities.
However, there is another matter that Mr Lewis carefully avoided mentioning in his letter to his political colleagues, which is at paragraph 1.11 of the Government’s document. It says:
“Councillors are eligible for allowances to be pensionable if the local independent remuneration panel made a recommendation to that effect”.
In other words, this is not something dreamed up and decided upon by a local authority: it has to follow a recommendation of the independent remuneration panel. Why does Mr Lewis not refer to that? The answer is perfectly obvious: it would demolish the case he is making, which effectively is that greedy local authority members are determining for themselves whether they should be part of this scheme. It is a shabby and disgraceful way to mislead his colleagues, let alone members of the public.
I recall very well that in my early years as a councillor, before I became leader, I had a very good colleague who felt he had to give up his time at the council, because it was going to affect his own pension at work. Clearly, there are many members up and down the country who feel that they cannot continue. Turnover of members is a significant factor, particularly in London. London colleagues may agree, or may not be able to confirm that. There is a particularly high turnover of people who are in employment because it is very difficult to discharge one’s duties as an elected member—at any level, but particularly at a level which carries significant responsibilities—and be in gainful employment. We do not want to see local councils composed of the unemployed, the retired or the rich. A council composed in that fashion is not an adequate way of serving the public. We want people who are actually in a job, working in the community and bringing that experience and influence to bear upon the workings of their council. If their employment or their prospects of pension provision are going to be imperilled as a result of public service, that will diminish the pool of those willing and able to serve the public.
These proposals are another example of the Government’s—or more particularly, to be fair, the Secretary of State’s—aversion to local authority members. He has a rather Malvolian response to the criticism that he has brought upon himself over the past few years by his repeated attacks on local authorities and members generally. I recall that wonderful phrase in “Twelfth Night” when Malvolio, villainously cross-gartered—I cannot see the Secretary of State as cross-gartered, while “villainous” is an adjective that might be applied to other aspects but perhaps not his gartering —says in frustration and rage as a result of his treatment:
“I’ll be revenged on the whole pack of you”.
This recommendation certainly seems to carry that sentiment into government policy, and it is deplorable.
My Lords, I, too, thank the noble Lord, Lord McKenzie, for enabling this debate, although it gives me no pleasure to intervene in the spirit in which I shall. Given what I know of the many representations that have been made at the highest level in both coalition parties by local government representatives on this issue—representations that have been brushed aside, sometimes rather brusquely—it would be feeble if I lacked the integrity to speak up publicly from these Benches for hard-working colleagues of all parties, including my own, who serve the public as councillors and who, rightly or wrongly, feel targeted by this proposal.
I should declare an interest at the start lest some bright spark declares that I am—what is the phrase?—“on the gravy train”. I lead, nearly full-time, a local authority that, like 58% of councils, is a participant in the local government scheme for members. I am a scheme member, as are 26 others—just half our members. The scheme cost us £65,000 last year. The total cost of member remuneration in Richmond is £56,000 lower than in 2010. For the record, the leader’s allowance is £26,000, which I cut by 12.5% when I became leader.
Against that background, however, we judged cross-party in 2003 that a right of access to a pension scheme in a workplace was a reasonable part of total remuneration. That was a local decision and, like so many other things in local government where all central Governments tend to put their lead boots on, it should be for local determination and local accountability.
I spent half a lifetime judging and advising on public policy—some of it good, some of it bad. There are various tests for a good policy, and among them would be the following. It should not seek to regulate at national level what can reasonably be decided locally or privately. It should be consistent and coherent with other policy—what some call “joined-up”. It should be based on objective evidence. It should address a problem that needs to be solved. It should be proportionate to the issue concerned. It should not be designed, or felt, to discriminate against any group. It should be likely to lead to better public administration or significant savings in expenditure. It must respect, if not always follow, the outcome of consultation. Finally, failing all these, it must be urgent or necessary to respond to a clear public call for action.
In my submission, the policy spectacularly fails every one of those tests. On a clear public call for action, there was none. We have seen comments from the Taxpayers’ Alliance, which is an estimable group—I share its diagnosis that we are spending, borrowing and taxing too much—but it is not the public. The Taxpayers’ Alliance was quite right to note the generosity of the Local Government Pension Scheme, and in my view the Government were right to reform the scheme. Councillors up and down the country, including me, would have supported the reform of members’ rights, too. But why the removal, not reform, of the right of councillors to contribute to a scheme in the workplace? How does that stand up to the tests of good policy? Does member remuneration need to be decided nationally? I do not think so. Nor, in fact, do the Government; in this provision they are not addressing allowances or setting limits, just attacking pension rights. It does not add up.
How does this policy meet the test of consistency? As we have heard, Ministers argue that elected councillors and other assorted idle so-and-sos such as the Mayor of London are not employees. If that is the yardstick, who employs MPs or MEPs? Are the Government about to act on them? If councillors are not employed, why, as has been pointed out in this debate, are their expenses taxed as if they were employed? I make no complaint about that—and, for the record, I do not claim expenses. But why is my local UKIP leader, for example, who has no residence or place of work in our borough, able to stand in the elections on 22 May because government rules say that his role as a councillor is to be considered as “employment”?
It simply does not add up. Members are either employed or not employed. They cannot be employed to suit last week’s policy, not employed for today’s policy, and employed again for the purpose of standing in next week’s election. This is not consistent. How is removing members’ workplace pension rights consistent with the requirement—referred to earlier—that is being imposed by law on workplaces to provide and contribute to workplace pensions? This is regulation in one direction in the interests of pension provision for small businesses, and in the opposite direction for councils. Again, it does not seem to add up. Maybe my noble friend will be able to explain.
Is this policy based on objective evidence of abuse? I think not. It is not actually councillors’ abuse of expenses that has brought the political class into disrepute lately. Those in the two Houses who throw their caps in the air at the stripping of councillors’ pension rights might perhaps look a little closer to home. There is no benefit in one set of politicians belittling another set, so I will go no further down that road—but some others may be thinking what I am thinking.
Does the policy meet a problem needing to be solved, and is it proportionate to that problem? Overgenerous public sector pensions needed addressing. We agree on that, but what was the overriding need not to reform member contributions but to abolish member pension rights? Is the cost of these rights so high that the policy is proportionate to the effect on individuals? I have seen no costing from government. The Taxpayers’ Alliance says that the annual cost is £7 million. That would be far lower if there had been reform, but let us accept that figure. The annual publicity budget of one government department, Defra, is £13.6 million—almost double the sum under consideration. No doubt somebody in the Box can say what the DCLG’s budget is for that. When it comes to savings, is this not a case of a speck of dust in local government’s eye and a beam in Whitehall’s perhaps?
If the unique and draconian removal of pension rights is not justified by its cost, how does this policy justify discrimination against one group? Why has this group—not bookmakers, rat catchers, racehorse trainers or any other group that might catch a passing Minister’s eye, but 4,500 local citizens giving public service—been told that the possibility of a workplace pension is not for them? Why were they singled out to be the exception in workplace pension grants? Why is it to be English councillors, not Welsh or Scottish ones? Why them? Can someone explain?
Is this plan likely to lead to better public administration or significant savings to the taxpayer? I fear not. We could save zillions more by a phased reduction in the number of councillors; if that is the way that we want to go, I would rather support it. We have heard that this plan may save £7 million across the land. My own council has saved taxpayers £90 million in the past four years—five times as much per year as this proposal. That is not a bad return in just one local council.
Who are the people directing those large savings up and down the country—and often doing so, frankly, rather better than central government? It is not council officers, however worthy—and they are worthy—because they implement policy. It is the very people this policy attacks: elected members making tough and often unpopular decisions, driving improvement in public service, day in, day out, in the public interest. What a brilliant way to motivate those knee-deep in the battle for taxpayer value.
The Government consulted on this bright idea in 2012. Was there a massive surge of support? No. As we have heard, only two members of the public backed the idea in more than 700 responses. How much more are any Government respected when they listen.
I will conclude. My noble friend, whom I like and respect—by the way, how much I welcome the noble Baroness, Lady Williams, to the Front Bench—has made it abundantly clear in the private conversations we have had, for which I thank her sincerely, that the coalition Government I support are not disposed to listen to its senior representatives in local government on this matter. After more than 20 years in local government, which I consider a decent, honourable and sometimes quite wise world, I find that a little sad.
It is not the money that is the issue for so many who have spoken to me and asked me to make these points, whether or not they or their councils have chosen to take up those pension rights. Money is not the main point—and in my case, the cuts in my allowance far outweigh any benefit from a pension. It is the signal sent out that of all the people in all the workplaces of the land who are singled out as not deserving of rights assigned by law to those in any other productive activity and whose hard work is deemed to have no pensionable value, it is hard-working local councillors. I have to say with deep regret to my Front Bench that that is a wretched and demeaning message. Sir Merrick Cockell, the LGA chairman—there is no more experienced, milder or more loyal Conservative than he—called it a kick in the teeth. Like him, I thought much better of our Government than that.
My Lords, I rise to speak in favour of this regret Motion. I, too, thank the noble Lord, Lord McKenzie, for the opportunity to do so. I first held elected office as a parish councillor in the late 1980s. In 1993, I was elected to Somerset County Council. At the time, I was working full time. However, instead of having just one parish council meeting to attend a month, I now had 10, and all expected attendance and a report on what the county was doing. After 12 months, I realised that if I was going properly to serve the people I had been elected to represent, I would have to decrease my working week, and so I resigned from my job and did a number of part-time ad hoc jobs. All the council meetings were during the working day and week. Very few took place in the evenings and there were none at weekends. The time commitment was considerable.
When independent panels to assess members’ allowances were introduced, in Somerset we fared better than most in that they recommended councillors could have access to the Local Government Pension Scheme should they wish to. Councillors who had found that their employers were not sympathetic to their work as a councillor, or those who had no other means of support, joined. As has been mentioned, the Local Government Pension Scheme is contributory, and councillors, who pay national insurance and income tax on their allowances, contribute to their pension. The majority of those who join the scheme are in positions of responsibility and find that the time commitment prevents them having full-time jobs which would provide for their retirement.
Councils vary greatly in size, type and responsibility, and it is not uncommon for their budgets to be well over £500,000 million per annum, whereas councillors’ pension contributions will be in the thousands, a tiny proportion of the overall budget. These councillors will be providing services to the vulnerable and frail elderly, as well as scared and frightened children; repairing highways after appalling damage due to flooding; preparing plans to extract minerals at the same time as protecting sensitive rural locations; and ensuring that streets are securely and adequately lit and that there is a sufficient supply of appropriate housing for residents. So are these people not worthy of being allowed to enter the pension scheme? How many Scout leaders have these same responsibilities or oversee the same level of budget?
There have been many inquiries into local government and the need to encourage more able people to come forward to be councillors. Sir Michael Lyons’s report in March 2007 was followed by the councillor commission later that year, in which I, along with the noble Baroness, Lady Eaton, took part. The key thrust of that commission was to look at the barriers faced by councillors and how to ease the process. One of the main principles was that councillors are most effective as locally elected representatives when they have similar life experiences to those of their constituents. They are not all wealthy or retired. Key to effective local representation is the relationship and the connection between councillors and their constituents. Councillors need time to engage with and be seen by their constituents. It is therefore important that the Government are seen to be encouraging suitably able, qualified and representative people to be candidates to serve as councillors of local authorities.
One of the 60 recommendations of the commission—noble Lords will be pleased to know that I shall not go through all 60—was that, in order to ensure that as many people as possible can participate in local representative democracy, ideally the role of a councillor must be compatible with full-time employment and an executive councillor with full or part-time employment. The leader of a council should be able to work in addition to council duties. It is recognised that some leaders of larger authorities may wish to work full-time on council duties, but they should not be required to do so. However, this recommendation is extremely difficult to achieve.
The more rural the council, the less likely it is that cabinet/executive members will be able to work full-time. The drive to the council offices can often take anything from 50 to 90 minutes, and any employment that the councillor may have is very unlikely to be in the same location as the council offices. Why should those who give up their time, damage their career prospects and often do not spend as much time with their families as they would wish, be penalised by not having access to the Local Government Pension Scheme?
During my time on the commission, we travelled around the country, holding evidence sessions with local councillors and employers about their experiences and the difficulties that they faced in engaging with local democratic bodies. How can we encourage young people in rural areas, young mothers, or those in their 30s and 40s to come forward? They are representative of people in our communities, but they need to know that their contribution is going to be valued. They have as much to offer as the retired and the well off. Access to the Local Government Pension Scheme is one way they can be sure that they will have some protection should they take on the role. In rural areas, there is no queue around the corner of people wanting to be councillors.
This measure is a real slap in the face for councillors. The Government are giving the message that their contribution is insignificant and they are not valued. It would seem that in future councils are to be run by the wealthy and the retired. What a bleak prospect.
I should first declare my interest, as I have a small pension resulting from six years’ contributions to the Local Government Pension Scheme as a councillor. This has been a very helpful debate in identifying the key issues that this decision has thrown up, because it is a very bad decision.
I recognise the role of my party in the coalition in ameliorating some aspects of the proposals. However, the fact remains that the Government’s decision is still poorly thought through and is a bad one, as I say. We should be very surprised and concerned by it because it discriminates against elected councillors, many of whom have heavy workloads as councillors and may have to give up other careers to take on the role, as we have heard. The decision also discriminates against those who have several part-time jobs, of which being a councillor is one. Again, we have heard an example of that.
Recently, during the passage of the Pensions Bill, time was spent discussing how best to recognise that some people may have several part-time jobs in their working lifetime. Being a councillor is such an activity, and it is work. It is formally treated as work in respect of tax and national insurance. Councillors are not, of course, formally employees of a council but because they are remunerated and pay tax and national insurance they are the equivalent of council employees. Therefore, it is very hard to understand why councillors should be excluded from a pension scheme which is available to those who are formally employed by a council.
Council employees may work in full-time or part-time posts and may do so for a short period. Councillors and elected mayors are no different: they may also be full time or part time and may be in post for a short period, should they not stand for re-election or lose their seat at an election. Equality of treatment is missing here. In pension terms, the right of council officers to join a pension scheme should apply also to councillors.
It is sometimes alleged—we have heard this in your Lordships’ House this afternoon—that being a councillor is a voluntary activity. We have also heard it said that it does not take up much time. It is, of course, true that it is a voluntary activity because people are not compelled to stand for election. However, that is not really the issue. In terms of time, being a councillor may not take up much time in a very small council but that is not true in the vast majority of cases.
Full-time elected mayors will not in future be able to join their local government contributory scheme. They may have to give up a contributory scheme in their current employment to become elected mayors but will have no right to continue contributing to a pension through the local government scheme. This seems wrong. Council leaders and cabinet members who carry substantial workloads, often between half and full time, are in the same position. Why should they be denied the right to contribute to a pension?
It has been said that not all councils offer membership of a scheme. My response to that is that I have real doubts about the work of the independent remuneration panels. I do not understand why there is no statutory national scheme for the payment of councillors’ allowances and for a pension scheme. That does not exist yet; I hope that it may do so in future. However, it remains the case that 58% of councils do offer membership. The fact that 42% do not may reflect workloads and the size of those councils, but in total just 17% of all councillors are part of the scheme. My noble friend Lord True asked a critical question—namely, what is the problem that the Government are trying to solve and why do they not simply permit the current scheme to continue? Attention has been drawn to the double standard that will now apply, because in Wales, Scotland and, I understand, Northern Ireland pension rights will continue.
My noble friend Lord Bourne of Aberystwyth asked about the financial consequences and I think said that the proposal may save money. The problem is this: it is unlikely to save any money because an independent remuneration panel will have the power to allocate a sum of money for councillors to purchase pension contributions. If that is done, it will have to be done for every councillor in that council area. Therefore, if that happens, it could end up costing more. At the moment, only 30% of councillors, where there are schemes, have joined them. The right voluntarily to join the contributory scheme is therefore the best way to approach the issue.
At its heart, this is a major issue of principle. The consequence may be that fewer people will be prepared to stand for election and fewer will be prepared to take on leadership roles. The consequences could well be that leadership roles will be undertaken by those who are older, with independent incomes. It would be a great loss to local government if younger people were less willing to serve, and I hope that the Minister will explain what problem the Government are trying to solve, what analysis was done of the consequences of the decision that has been made, and what the future for local government will be if fewer people are willing to come forward to stand for election.
My Lords, I will be slightly out of line with other speakers, all of whom have local government experience as well. I have been listening carefully to the debate. As a former leader of a council and a former Minister who did not take a pension—I declare that interest—I am very conscious of the work that is done by local councillors and the extra amount that they do as a result of the changes to their responsibilities that have been made over the years.
However, I part from a number of the speeches, for which I am sorry because I am very fond of my noble friend Lord True and everyone who has spoken. I want to draw back because the noble Lord, Lord Shipley, and others have talked about the difficulty of recruiting people as councillors. I remember extremely well when allowances of any sort were first considered. The argument was that if we did not provide them, only the rich, the old and people who had time on their hands would be able to be councillors. We introduced allowances and some of them are very substantial indeed. I know that my noble friend Lord True says that they were reduced, but he is not necessarily in the majority. Over the years, council allowances have exponentially increased. I am not concerned about that but about the fact that we are beginning to use the same arguments that supported allowances for supporting the pension scheme. I have never understood why councillors were included in it, and I shall tell noble Lords why.
It is because local councillors are responsible for their position to their local electorate. They can be there, at elections, or they cannot—they can be taken away. They voluntarily stand for election. They do not know whether they are going to be councillors. They are totally reliant on the electorate to make sure that they are there and for how long. That underlines the voluntary nature of standing for a local council. The work that they do is, of course, immensely important. However, this work can be done alongside other jobs—and many people do that—and therefore I do not understand where the pension comes into it.
I understand why there are allowances. If I may say so, they were quite hard fought for at the time but the allowances are there. I do not think that my noble friend has a policy on which she is going to win very strongly but it is something where the Government have to grasp the nettle. If not, the argument will go on and on as people justify more and more expenditure for local councils.
Finally, I want to make a distinction between councillors and council officers. If councillors ever come to be seen as in any way doing officers’ work and running councils on the basis of officials, then we will have lost the plot. Councillors are there to represent people in the local community which they serve; they are not there to implement policy. There is a difference between employed people on the council and councillors, and I think that that is what drives the distinction between those who do and do not have a pension.
My Lords, I, too, must declare an interest, having been a councillor for 28 years and being in receipt of a very modest council pension, to which I contributed. The point is that people like me have contributed to their pension and that seems to be forgotten when we talk about the largesse that is provided.
A councillor said to me that he runs a council with a budget of more than £500 million a year and he is paid £28,000 per annum. The noble Lord, Lord True, is probably a good example of someone in that position. It is a full-time job, and the councillor and the noble Lord are not alone in that. Many people have no income other than that provided with this job, and running a council is a job. Many councillors are not full time but they devote a large amount of time to their council. My noble friend Lady Hanham said that they may be here today and gone tomorrow, but what better reason for them to have some form of pension, however small? These people are giving their time when they are not able to contribute to a pension, and the fact that in many cases they are transitory adds to the argument for them having something of substance to fall on when they get older.
I make no apology for also referring to the insult and lack of understanding from the right honourable Grant Shapps when he said that the work that councillors do is the same as volunteering to run the local Scout troop. I do not want to undervalue the leaders of Scout troops but that comment shows complete ignorance. It is demeaning and insulting, and, quite honestly, it is idiotic to make that comparison. What do councillors of all parties and no parties do? They do a valuable job which takes a great deal of time, and the idea that one can take away or reduce pension rights seems quite unfair.
Various figures have been quoted for how much this is costing. I am not sure now what the correct figures are but one that I was given was that countrywide 18,000 councillors cost £3 million. Whether it is £3 million, £5 million or £8 million is irrelevant; it is fairly modest in terms of national expenditure. I should like to compare it to the cost of the 651 Members of Parliament of up to £10 million a year. It seems quite wrong that the other place can take away pension rights when they themselves will enjoy pension rights of much greater substance.
I said that I started work at Barnet Council 28 years ago. As the noble Lord, Lord Bourne, said, that was a time when one received a tiny attendance allowance of £20 if one turned up at a meeting. Life has moved on in terms of how people are attracted to the scheme. The point was made that a percentage of people are not in the scheme. That is their choice because it is a contributory scheme. People can make the choice that they do not wish to contribute to a scheme albeit that the local authority will also contribute to the scheme. That is their choice. They make their choice because, in most cases, they have a pension from another source, they are affluent from another source or have inherited money from another source. However, that does not apply to all the people that we want to be councillors and running our local authorities, with expenditure of something like £500 million per annum.
Reference was also made to the concessions my Government have made. I look with amazement at how we regard such small droppings as concessions. We are told that rather than access to the scheme being withdrawn immediately—that was horrific on 1 April—we have a big concession that eligibility will be phased out as councillors are re-elected on 22 or 23 May. What a concession. It really is insulting. It has been agreed that local authority remuneration panels can agree to replace the pension provision with a cash allowance for councillors. My local Conservative council administration—I am chairman of its audit committee and am very involved—a little while ago decided to up the allowances by 54%. There was a public outcry and the allowances were very much reduced as a result. The public will not take cognisance of the fact that pensions have disappeared and that remuneration and allowances of councillors will be substantially reduced to take account of the fact that they are not contributing to a pension scheme. That will be regarded by the public in a very poor light and councillors should not be put into that position. The Government made a commitment that they would not criticise councils which decided to allow such payments. The Government may not criticise them but I am sure that many other people will.
This is devaluing the people who are running local government. As central government devolves so much more to local government, what message is going out to local councillors who do not have an outside income? Their efforts are being devalued by the Government, of which I am part, and I regret these regulations.
My Lords, I do not want to give the impression that this is turning into a Liberal Democrat debate, but I am grateful to my noble friend Lord Palmer of Childs Hill for introducing a little passion into what has so far been a calm and rational debate that rather belies the feelings out there in the country. I am also grateful to the noble Lord, Lord McKenzie of Luton, for giving us the opportunity to debate this issue—an opportunity which, for some reason, was not afforded in the House of Commons. We are the first and only part of Parliament to debate an issue which is causing considerable concern in the country.
During my 13 years as leader of a council—as we are all making these declarations, let me say that it was not in the last century—the most that I ever received as leader was £4,500 a year, and I was not then able to join a pension scheme. Frankly, it would not have been worth very much if I had. One of the things that I learnt early on was that one should never try to defend the indefensible. My sympathies go to the Minister who will have to reply to this debate, which is not of her own choosing. We all have great sympathy with her for having the task of trying to defend the indefensible.
For the last time in your Lordships’ House I declare my interest as a serving councillor, for a few more days, and as someone who joined my council’s pension scheme at the age of 60—an age when most people would think of starting to draw a pension rather than joining a pension scheme. In two weeks’ time I shall start to receive the handsome pension that I have earned in the 10 years since joining the scheme.
I wonder whether the noble Lord would be kind enough to give way and clarify a point. If a councillor in the future does not wish to take part in a pension scheme, or is not allowed to, surely he could use the contributions that he would have made to buy a personal pension. Would that not alleviate the problem to some extent?
I will come to that later, but yes, it has always been the case, and will remain the case, that a councillor, like any other individual, may join a private pension scheme and pay for it from such income as he or she may have. Of course that will remain the case. However, when these regulations are agreed, no councillor will have the choice of being able to join a local government pension scheme in future. That is the issue before us today.
In my 40 years as a councillor I have never known councillors of all parties to be so angry about a measure, and I use the word angry deliberately. There have been many occasions, perhaps too many, over those 40 years when councillors have been cross or angry with central government of all parties for political reasons—that is par for the course—but in this case it is personal because councillors feel personally about it. That struck me at a meeting which I attended not so long ago where the majority of councillors in the room—it was not my local authority; there were councillors from all over the country—were not in a local government scheme because many of their councils had decided not to admit councillors to it. They were, if anything, more angry—certainly they expressed more anger—than those who were in the scheme, perhaps because they did not feel inhibited by any personal interest. Let us therefore not underestimate the extent of the anger of councillors of all parties throughout the country, regardless of whether they have the opportunity to join a pension scheme or have availed themselves of that opportunity. It is real and profound.
We have had a good debate today even if it has been a little one-sided apart from the interventions by my noble friend Lady Hanham and, to some extent, the noble Lord, Lord Bourne. I shall not take time to repeat the excellent points that have been made, but I certainly echo and agree with most of them. They have been well made.
Before this debate I inquired for the first time of my own authority how many of my colleagues are in my local council’s pension scheme and how much it costs the council as I had no idea. I learnt that 29 of 54 Sutton councillors are members of the pension scheme and that for the last full financial year it cost the London Borough of Sutton £90,000 in employer’s contributions towards its councillors’ pensions. Although £90,000 is a significant sum—I shall certainly not refer to it as peanuts—when you compare it to the £26 million of cuts which my council still has to find in the next two years it is of rather less significance.
I should like to make more strongly a point which has already been made—that it is comparatively easy to sit in government departments in Westminster and decide to cut budgets by so many millions or, in this case, to reduce grants to local authorities in total by so many billions. I say that it is comparatively easy because it is a lot easier than sitting in a crowded room with a hostile public gallery composed of people who are directly affected by the budget cuts you have to make and deciding how to implement those cuts which are not of your choosing—cuts that you were never elected to make or wanted to stand for election to make.
We are rewarding the people who have to make those decisions—thank goodness it will not be me in the years to come—by taking away their right to join a workplace pension. What spectacular timing for my Government to choose to make those cuts. I think that that is why councillors of all parties are so angry.
I should like to spend a little time returning to the first contribution after the noble Lord, Lord McKenzie, from my former London Assembly colleague, the noble Baroness, Lady Jones. I also want to talk about the position of the Mayor of London and London Assembly members. I again declare an interest. I was elected to the London Assembly, as was the noble Baroness, Lady Jones, when it started in 2000. Unlike her, I also had the pleasure of spending hour after hour on what is now the Greater London Authority Act. This is the crucial difference between London Assembly members and councillors. The GLA Act 1999 recognised that Assembly members were full-time, salaried people and gave them the entitlement to join a pension scheme. In 2000, the Senior Salaries Review Body decided that the appropriate and best-value scheme for them to join was the Local Government Pension Scheme. As a London Assembly member I joined a pension scheme three years before I was allowed to join the scheme run by my local council. I did that because Parliament gave me the right to do so. I think that that is a significantly different position from that of the councillors, much as I agree with it.
When the Government’s intention regarding this matter was originally announced, the GLA—the mayor and Assembly members—was not included. Incidentally, the announcement was tucked away at the same time as the announcement on the 2012 revenue support grant, on the last day of the 2012 Session. If we were burying bad news, that was the day to do it. The announcement did not refer to them, I think it was assumed, because of the GLA Act to which I have just referred. When the consultation came out, we were all astonished to see that it did refer to the London mayor and Assembly members. Most of us assumed—certainly I assumed—that it was a mistake in CLG and it would be recognised, corrected and would not persist.
However, it has persisted and we are now in the position that London Assembly members are to lose their right to join the Local Government Pension Scheme along with all councillors. However, they do not lose the entitlement to a pension scheme that they are granted under the GLA Act. We are now in the position that the Greater London Authority has to find an alternative pension arrangement for its Assembly members. It has to do that, regardless of these regulations. I have not been an Assembly member for some years and am not party to the detailed consideration that is being given to that point. However, I learnt that the GLA had inquired of the Prudential what it would cost for Assembly members and the mayor to join a scheme with similar benefits. The answer—certified, I gather, by the Government Actuary—was that it would cost more than double the current cost to the GLA. How on earth is that in the taxpayer’s interest? It is demonstrably not in the interests of the GLA, Assembly members or the Mayor of London. As this is supposed to be about taxpayer-funded pensions, I have to ask this question. I gave notice of this question and hope the Minister will explain how he believes that this measure is in the taxpayer’s interest.
The other point about the Mayor of London has already been made. It is always difficult to talk about the Mayor of London without immediately bringing to mind the two personalities that have so far held that office. Probably none of us is going to worry too much about their personal pensions and I suspect that they will not either. However, does anyone seriously equate the person who holds the office of Mayor of London with a volunteer? He is not obliged to be Mayor of London. He does not have to stand for election to become mayor—that is voluntary—but once he becomes mayor, is anyone seriously going to say that it is a volunteer activity? Of course it is not; that is nonsense. The man is paid a salary equivalent to that of a Cabinet Minister, and yet his pension rights are going to be changed—not taken away, because the law does not allow that, but changed to a much greater extent.
I think that we have overwhelmingly made the case that these regulations are unnecessary. They have caused a disproportionate amount of anger in relation to the amount of benefit they bring to taxpayers or anyone else. It has sometimes been said that the fact that a relatively smaller number of councillors are members of the pension scheme is somehow an argument for abolishing the right to join it. I see it exactly the other way round. There is a reason why many members who may be able to join the pension scheme choose not to. Many of them will undoubtedly be on a relatively low back-bencher’s allowance and therefore the benefits to come from contributing to a pension scheme are pretty small. Many will still be in employment and no doubt in an occupational pension scheme and reasonably well taken care of. Some of them may be retired or semi-retired and already in receipt of a pension and it is therefore not in their interests to join a pension scheme for the relatively few years that they are councillors and the relatively small contributions they will make and the benefits they will receive.
However, for those who are doing a full-time job or a near full-time job, for which they receive a special responsibility allowance—particularly for those who are leaders of major councils or mayors of major cities such as Liverpool, Bristol, Watford, Bedford and so on—why should they not have the same rights that anyone else in a full-time job would have to be able to contribute to an occupational pension scheme?
My Government should not be proposing this unnecessary, mean and petty move. If the noble Lord, Lord McKenzie, presses the Motion to a vote—and I recognise that it is not entirely his choice—with considerable sadness, I will vote for it.
My Lords, I start by paying tribute to councillors and the work that they do. Unlike all noble Lords who have contributed to today’s debate, I have never been a councillor or worked in local government, but my granddad was a councillor in Beeston during the late 1940s and early 1950s. I never knew him but, when I was a little girl and out with my dad, older people in Beeston would often remark that they had known my granddad and tell me about some of the things that he had achieved for the people of Beeston. They never mentioned politics or his party, but they were very keen to reinforce that he had changed things for the better as a councillor.
Unlike me, other DCLG Ministers have direct experience of local government. All have been councillors and many of them have been leaders of councils; that includes my noble friend and respected predecessor Lady Hanham, who was leader of Kensington and Chelsea and also my noble friend Lady Williams of Trafford, who was with me on the Front Bench earlier. She takes her title from the council that she led. They know what it is like to be a councillor. They understand what it means to represent people locally and the importance of that role. They know that it extends from being at the front line of a national crisis, such as the recent floods, to spending hours every week listening to local people and doing what they can to help on matters that may seem minor to outsiders but are of major importance to those affected.
I had the privilege—and I do underscore that word—to hear my right honourable friend the Secretary of State Eric Pickles pay tribute to councillors with real enthusiasm at the LGA’s annual reception in Parliament only the other week. I have heard him in private in ministerial meetings, particularly during the flooding crisis, stand up for councillors and all that they were doing at that time. I reiterate to noble Lords and to the House this afternoon that everyone in the Department for Communities and Local Government understands and respects the work of councillors. All of us understand that councillors do all this excellent work voluntarily as elected representatives of local people.
This debate relates to the provision in the Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations, which, as we have heard, excludes councillors and other elected local officeholders from membership of the new Local Government Pension Scheme. It may be helpful to highlight to noble Lords that those regulations also serve a broader purpose. In June 2010, the Government invited the noble Lord, Lord Hutton of Furness, to chair the Independent Public Service Pensions Commission. The purpose of the commission was to carry out a fundamental structural review of public service pension provision and to make recommendations on pension arrangements that would be sustainable and affordable in the long term. Further to the commission’s recommendations, I am pleased to be able to tell noble Lords that the new scheme for local government workers came into operation, on time, on 1 April this year. Importantly, the design of the new scheme will ensure that the large number of low-paid workers in local government will continue to have access to good pension arrangements that are affordable for them.
The new Local Government Pension Scheme, like its predecessor, is an occupational pension scheme intended for employees, who make a contribution alongside the employer’s contribution, which is paid by taxpayers. This Government do not believe that councillors, as representatives elected locally to hold town halls to account and to serve local people, should be in a pension scheme designed for employees. It is on this point of principle that Ministers take a fundamentally different view to the previous Administration. We do not believe it is right to blur the line between council staff and elected councillors.
That point has been heard before and has been referred to by noble Lords during the debate this afternoon; indeed, my noble friend Lady Hanham reinforced the point in her contribution. Contrary to the contributions of noble Lords today, it seems that the vast majority of councillors agree with this Government, because only 16% of councillors in England are part of the Local Government Pension Scheme. To put it another way, only 30% of those eligible to join are members of the scheme. This Government want all councillors to have the full opportunity to demonstrate, as the vast majority already do, that they are independent and not reliant on the municipal payroll.
We made our position clear when we first announced the proposals in December 2012. I was not going to make this point, but as my noble friend Lord Tope said with tongue in cheek that this was a good day to bury bad news, it is worth reminding noble Lords that he said that because the previous Government announced their decision to provide access to the Local Government Pension Scheme on the day of 9/11. I hope that my noble friend is not seriously saying that the last working day before Christmas—a day when we were in any case publishing the local government financial settlement in documents which all people interested in local government activity were waiting for—is the same as 9/11. When we announced our intentions, Ministers indicated the Government’s view that councillors’ ongoing membership of the Local Government Pension Scheme was not appropriate. The Government’s direction of travel has been clear since then.
The Government have, of course, sought views on this change. Between April and June last year, we consulted with a wide range of interested parties. Although the consultation made clear the Government’s preferred position, it also invited respondents to offer evidence about the impact of the change and to suggest alternative proposals. It is fair to say, as noble Lords have made clear this afternoon, that a majority of respondents did not support the Government’s proposals. Many—particularly some councillors and those representing them—felt strongly that they should be able to continue to be members of the Local Government Pension Scheme. However, it is worth pointing out to noble Lords that only 472 individual councillors felt moved to write as part of the consultation to express their opposition, which is fewer than 3% of the around 18,000 councillors in England.
We have heard today some reasons why those who oppose these changes do so, but it is important to go back to the previous Labour Government’s decision to make it possible for councillors to access the scheme and the reason they outlined for making this change and creating this access. In his Written Ministerial Statement in 2003, Nick Raynsford talked about the change being brought in to address what he described as disincentives. This change was intended to incentivise more people to come forward to stand as councillors but, as I have already said, only 16% of all councillors in England have taken up the offer. If the previous Government decided to make this change to provide an incentive, it clearly has not succeeded. If it was about incentive, then why have more councils and councillors not decided to take up the opportunity?
The LGA and some noble Lords have argued that, if we withdraw access to the scheme, people will not put themselves forward to be councillors. We disagree with that and, indeed, are not aware of any strong evidence that offering access to the scheme has resulted in any change in the number of people putting themselves forward for public service. Similarly, we are not aware of any strong evidence that ending access to the scheme will limit the number of people standing for local election.
I note in particular the point raised by my noble friend Lord Shipley and other noble Lords about the upcoming local elections. I think it was one of my noble friends who suggested that this change was somehow an insult to those who were minded to put themselves forward and that we were doing something that would deter people. The facts do not bear that out. In the forthcoming local council elections in England, we see an extra 1,000 candidates standing compared to when those seats were last fought—an additional 1,000 people have decided it is worth their while to put themselves forward to represent local people even though they will no longer be able to access the Local Government Pension Scheme. People become councillors because they want to serve their communities, because they want to change things or because they may have clear, strong political beliefs.
The leader of the Opposition in the other place, Mr Miliband, has tabled an Early Day Motion calling not only for councillors to be reinstated in the scheme, as the Motion of the noble Lord, Lord McKenzie, does today, but for annulling the new pension arrangements in toto—the new arrangements that will benefit low-paid local government workers. My noble friend Lord Bourne made the point that these changes that the Government are introducing are providing some savings. I am happy to acknowledge that the savings are modest, but they are none the less savings. It is important for us to understand whether the Labour Opposition are now committing to reinstating councillors’ access to the Local Government Pension Scheme, were they to be elected. It would be interesting to know, when the noble Lord, Lord McKenzie, comes to respond, whether that is something they will be campaigning on in the remaining few days before the local elections on 22 May.
This Government do not believe that people choose to enter local public life in order to have access to the Local Government Pension Scheme. I know that no one in this debate is suggesting otherwise. However, given the focus and energy that has been spent on this issue, I worry that there is a risk that we give the public the impression that this is the case. We need to be quite careful on this matter.
I turn to some of the specific points raised in the debate that I have not already covered. My noble friend Lord True, the noble Lord, Lord Beecham, and the noble Baroness, Lady Bakewell, talked about the treatment of councillors for tax purposes and questioned the distinctions between allowances and expenses. There are a couple of important points for me to make here. For tax purposes, local councillors are officeholders, not employees. Officeholders are subject to the same tax rules as employees, and these include the tax rules for allowances and expenses. That definition is quite a long-standing one; it does not equate to someone being classed as an employee. The noble Baroness, Lady Bakewell, raised in particular the issue of tax on mileage. I am very much aware of that concern among councillors at the moment. Noble Lords might like to know that this is something about which we in DCLG are talking to the Treasury at this time.
My noble friend Lord True talked about the definition of councillors as employees and referred to the Electoral Commission’s guidance on the qualifications necessary to stand for local election. It indicates that service as a councillor in an area can be treated in the same way as having your main place of work in that area. However, if we look again at the same Electoral Commission’s guidance, it also indicates that you would be disqualified from standing for election to a council if you were employed by that local authority.
The noble Baroness, Lady Jones, and the noble Lord, Lord Tope, talked about the London mayor and Assembly members and questioned the arrangements for them. It is worth reminding ourselves that separate legislation provides for the London mayor and Assembly members to have access to a pension scheme. By removing their access to the Local Government Pension Scheme, we are not at the same time changing the law that remains in place for them to access a pension scheme that would attract contributions from an employer. However, by making this change, we will bring them into line with MPs, because they will be able to access a pension scheme in just the same way as MPs do: they do have a pension scheme but they are not in the same pension scheme as any employee of Parliament.
As to whether a new scheme for the London mayor and Assembly members would be more expensive—a point raised by my noble friend Lord Tope—I would argue that, equally, it does not have to be more expensive; it could be less expensive. I certainly hope, on behalf of London taxpayers, that the relevant body would take account of that possibility.
My noble friend Lord True wanted to draw a comparison—
As Mayor of London, some of his functions are similar to those of police and crime commissioners. However, he is not regarded as a police and crime commissioner for the purposes of the Local Government Pension Scheme. His status is as mayor and not as a PCC.
The point about police and crime commissioners—this is an area which, in due course, we will want to examine—is that, since they were recently created, we felt that it was not appropriate to make this change at this time. I do not assume that it will be something that will be left unattended for ever.
My noble friend Lord True asked, when we were talking about savings, about the publicity budget for my department. He suggested that somebody in the Box would have the answer. Because I have a great bunch of officials with me, yes, indeed, I do have the answer, which is £2.5 million—which I would guess is a whole lot less than it was under the previous Government.
I can assure the House that the Government did not take this decision lightly. We certainly looked carefully at transitional arrangements for those councillors who are in the pension scheme. I note that the noble Lord, Lord Palmer, dismissed the concessions that we made following consultation that will see that existing members will leave the scheme only at the end of their existing fixed four-year term of office. That means that councillors’ membership of the scheme will be phased out between 2014 and 2017 and that no change to the reasonable expectations that councillors had when they ran for their fixed term will be made. I can also confirm to my noble friend Lord Vinson that he is right that nothing will stop councillors contributing to a personal private pension in future, but the key point is that they will not be able to join a scheme to which taxpayers contribute as their employers.
I firmly believe that the best thing we can do to encourage more people to take part in municipal public life is to decentralise power to local communities so that being a councillor is an even more meaningful and rewarding role. We need to attract and retain a wide range of enthusiastic councillors, and I agree with noble Lords who said that this is important. When we are talking about ensuring that we have a wide range of councillors—in fact my noble friend is back with me on the Front Bench—it is worth noting that one of her successors as leader of Trafford Council is 26 years old, comes from a modest background and put himself through university. It is simply not true to suggest that people do not want to put themselves forward to become councillors.
The reason we are starting to attract a wide range of people is that this Government have made many changes to local authorities that mean that councillors are in a greater position to deliver change. For example, we have abolished the Audit Commission and government offices. This means that councillors can rightly focus on meeting the needs of local people, rather than spending their time dancing to the tune of central government. We have introduced new rights for communities to lead and deliver change, including through neighbourhood planning. This gives exciting opportunities for councillors to support and encourage local people to help them deliver their own aspirations.
The noble Lord may laugh, but neighbourhood plans are seeing a fantastic turnout at referendums, when local people know that, as a result of getting engaged, they will see change and will be able to take control of decisions in their local area. We have introduced the general power of competence. This means that councillors now have greater scope to do things to meet local people’s needs. We have helped councillors better represent their constituents and better enrich local democratic debate by scrapping the Standards Board and clarifying the rules on predetermination. These are just a few examples of the steps this Government have taken to strengthen the contribution that councillors can make to their communities.
The LGA briefing note that was distributed to noble Lords prior to this afternoon’s debate said that,
“76% of people trust their local councillor the most to make decisions about how services are provided in their areas”.
That is great news, and the reason for that kind of result is that councillors have the power to lead their communities, to speak for their communities and to deliver for their communities. That is a very good thing.
My Lords, I start by thanking all noble Lords who contributed to this debate. I apologise to the noble Baroness, Lady Williams, for being remiss in not recognising her first appearance on the Front Bench on CLG matters. Despite the fact that this is an emotive subject, the debate has been fulsome, knowledgeable and very measured.
We recognise that the Minister today paid fulsome tribute to the role of councillors, but part of the problem with this whole issue is that some of her colleagues did not display the same attitude, and certainly not in presenting and developing the pensions issue that we are discussing today. Also, the concept that somehow people are rushing to stand for election because of the abolition of the Audit Commission is a little far-fetched. The issue about the numbers of people standing is not perhaps so much whether there are new people wanting to come forward but how many people are not standing who stood before because of the financial pressures and challenges of being in local government today. We have not heard anything new from the Minister—that is not to be expected, perhaps—in justification of the policy the Government are pursuing here.
On this issue of not being reliant on the municipal payroll, if there is not some basis for elected members to earn a living, will we not end up in a situation where only the rich, the retired and—less so these days—those with benevolent employers who are happy to give their employees lots of time off can serve in local government? There must be some form of remuneration. Is not the issue about pensions the general point that if we encourage people in all other spheres to save for a private pension because the state will not be able to produce enough for them to have a full retirement, why—in the words in particular of the noble Lord, Lord Shipley, who is not in his place—are councillors being discriminated against in that respect?
I will pick up on some comments from other noble Lords. I think all but two who spoke were in support of the proposition before us today. The noble Baroness, Lady Jones, raised a very important point about the mayor and PCCs, although that has been clarified. The noble Lord, Lord Bourne, reminded us that we should be careful about how we use the term “volunteer”, and I take that point. The problem is that the Government, in characterising what local councillors do as “volunteering” in the same category as some of the work done in the voluntary sector, undervalue, underestimate and do not recognise the role and responsibilities that councillors undertake in the modern era. That is the key point.
The noble Lord asked whether we would commit to bringing this back, and I think the Minister said that we were in favour of scrapping the 2014 revised scheme. Was that what she said?
Let me make it absolutely clear that it is my party’s position that we support the revised Local Government Pension Scheme. So far as these arrangements are concerned and whether we would reinstate this, I cannot give a blanket commitment that we would. No incoming Government would do that without looking across the piece at all the things that must be addressed. More particularly, the Local Government Pension Scheme is currently under consultation to restructure on a more effective, collaborative basis. That is part of the Government’s consultation. We do not yet know how and where that will lead. Also, the consequence of the Government’s position is that councillors will be driven into the private pensions market. How readily that can be unpicked would be a real issue as well, particularly because small pension pots stranded in private sector schemes cannot be transferred back into the local government scheme. A raft of issues would, quite properly, need to be considered.
My noble friend Lord Beecham, with his usual incisive approach, reminded us that Conservative legislation laid the groundwork for some of these proposals and that it depends upon independent panels enabling members to become part of the Local Government Pension Scheme at the moment.
We should pay tribute to the noble Lord, Lord True, who was in the very difficult position of speaking up for his hardworking colleagues against government policy. I know he does not find that easy. He made the point that this should be for local determination and that the Local Government Pension Scheme has been reformed. He referred to the Government’s inconsistency of policy in this respect. He also made the point that this is a group being discriminated against. Why are councillors not enabled to be part of what is effectively an occupational or employer-supported pension scheme?
We heard from the noble Baroness, Lady Bakewell, a real, practical example of somebody who had to reduce their working week to cope with their council responsibilities, giving up earning capacity. Particularly in the rural context where distances and the time taken are a feature of engagement as a local councillor and the jobs market, the noble Lord, Lord Shipley, said—I agree—that the Government have made a very bad decision. It discriminates against elected members. He made the very interesting point about remuneration committees. If, to an extent subject to public pressure, there is some grossing up so that individuals can go out and engage in the private pensions market, that would have to be done across the board—not only for those who are currently members of the scheme or wish to be.
I did not altogether follow the position of the noble Baroness, Lady Hanham, in not being able to understand why pensions were involved. Pensions are involved because if a person’s sole or main source of income—if we call it that—was from their local authority allowances, how would they make the private provisions that top up what the state will do if they cannot access a pension scheme like other people do?
The noble Lord, Lord Palmer, drew the very real comparison and contrast with ministerial salaries. What is good for Ministers does not seem to be very good for councillors.
We understand that the noble Lord, Lord Tope, is now at the end of his days as a serving councillor. I think that means we will have more of his time with us here so we will benefit from that. He emphasised the extent of the anger that these provisions have incurred, particularly in the timing, with the pain—as he put it—of councillors having to make those dreadful cuts up and down the country. They are on the front line. It is those people who take those responsibilities that we want serving on councils and we pull away from them an important part of their ability to provide for themselves and their families now and in future.
Given the tenor of the debate I was tempted to test the opinion of the House, but the measure is not to defeat the proposition, just to express an opinion. The very full debate has spoken for itself. Therefore I will decline on this occasion to test the opinion of the House—but this issue will not go away. We will have to see what is done by local government and whether alternative arrangements are developed outside the current Local Government Pension Scheme to enable serving councillors not only to serve their communities, often on a full-time basis, but to do it with some reassurance that their old age will not lead to penury. Having said that, I beg leave to withdraw the Motion.