HC Deb 07 November 1979 vol 973 cc399-400
70. Mr. Bruce-Gardyne

asked the Minister for the Civil Service what progress he has made with his review of the computation of the value of the index-linked pension for purposes of Civil Service pay determination.

The Minister of State, Civil Service Department (Mr. Paul Channon)

The Government believe that the valuation of pensions in determining Civil Service pay should be subject to outside scrutiny and that this can best be done by the independent Pay Research Unit Board which reports on the work of the Pay Research Unit. We are in touch with the board's chairman, Lord Shepherd, and the national staff side with the aim of arranging for the board to receive and report both on the Government Actuary's assumptions and on his assessments of the appropriate adjustment for the 1980 pay settlement. Both reports will be published.

Mr. Bruce-Gardyne

I am grateful to the Minister for that answer, so far as it goes, but does he accept that the basic problem is that, at present, on the basis of the last public expenditure White Paper, the taxpayer is subsidising a benefit for the public employee which is totally unobtainable from private insurance and that the purpose must be to ensure that the system is fully self-financing and that the £400 million a year from the taxpayer is eliminated?

Mr. Channon

As my hon. Friend knows, I am responsible only for the pay and pensions of the Civil Service. Index-linked pensions relate to much wider groups in the public sector—including nurses, policemen, doctors, members of the Armed Forces and even Members of Parliament.

Mr. Wrigglesworth

By how much is the pay of civil servants reduced on account of the pension scheme of which they are members? How much will the new scheme cost? Does it show any lack of confidence in the work of the Government Actuary?

Mr. Channon

It certainly shows no lack of confidence in the work of the Government Actuary, who is now asked to have his work reviewed by the Pay Research Unit Board. Civil servants pay approximately 7 per cent., in a variety of ways, for their pensions—

Mr. Bruce-Gardyne

No, 2.6 per cent.

Mr. Channon

The figure of 2.6 per cent. is but one of the deductions made. The total is about 7 per cent. I do not think that the new system will cost any more—or, if it does, it will be very little.

Mr. Renton

But is there not a real danger that, if there are to be years of recession and high inflation at the same time, a large gap will develop between those retired people who enjoy inflation-proofed pensions and those in work who have to pay for them? In those circumstances, will the Minister consider discussing with the leaders of the Civil Service unions the possibility of limiting inflation proofing to 10 per cent. a year—which would be comparable to many private sector pension schemes—and of civil servants paying a realistic deduction from their wages for that limited inflation proofing?

Mr. Channon

I am sure that my hon. Friend is not suggesting that that should be done in isolation. If it were done, it would have to be done to nurses, policemen, Members of Parliament, teachers, and local government officers. [HON. MEMBERS: "Yes."] If that is the view of the House, I shall certainly discuss it with the Chancellor of the Exchequer.

Mr. Straw

Is the Minister aware that the 1974 agreement requires the Government to give six months' notice to the unions of changes of this kind? Can he explain why, instead of six months, he has given only two days' notice? Is this not a cavalier way to run industrial relations with the Civil Service?

Mr. Channon

I am surprised by what the hon. Gentleman says. We are hoping to discuss this matter in consultation with the national staff side. I cannot believe that any reasonable man could object to an independent assessment of a problem which causes public concern. That is in the interests of the general public and of the Civil Service itself.