HC Deb 25 November 1981 vol 13 cc886-7
58. Mr. Marlow

asked the Minister for the Civil Service if she will make a statement on the financing of Civil Service pensions.

The Minister of State, Civil Service Department (Mr. Barney Hayhoe)

Civil Service pensions are financed from the Civil Superannuation Vote, the original estimate for which this year was £660 million on continuing pensions, together with £300 million on lump sum payments. This cost is offset by reductions in Civil Service salaries and direct contributions to widows' benefits, which together amount to an effective contribution of about 8 per cent. of salary. The whole question of index-linked public sector pensions, including contribution arrangements, is currently under review in the light of the Scott report.

Mr. Marlow

My hon. Friend will be aware that industry, which feels that in many respects it pays the bill for the Civil Service and Civil Service pensions, cannot offer, under the present conditions, the same benefits to its own people. Obviously, my hon. Friend will take that into account when he brings forward proposals.

Mr. Hayhoe

I can assure my hon. Friend that that view and many others are being carefully considered as part of the review following the Scott report.

Mr. Arthur Lewis

When the Minister undertakes this review, will he consider the obvious unfairness of ex-Ministers and ex-civil servants drawing three and four indexed pensions, as well as their salaries from taking private jobs at £50,000 and £60,000 a year? Is it not unfair, when he cannot give a little extra to old-age pensioners, the sick and the disabled—[Interruption.]—do not laugh—that ex-Prime Ministers get four pensions and take on jobs as spies at £50,000 a year?

Mr. Hayhoe

It should also be borne in mind that, in looking at public sector pensions as a whole, the average pension after this month's increase is under £36 a week. It is necessary to view this whole question in full perspective, taking account not only of what the hon. Gentleman says, but of the wider issues.

Mr. Higgins

Will my hon. Friend tell us to what extent the pension payments made are covered by contributions in the current year?

Mr. Hayhoe

In the Civil Service it is probably about 40 per cent. This year there has been a particular bump of payments because of the greater number of people who are retiring, partly as a result of the Government's policy of reducing the size of the Civil Service.

Mr. Woolmer

Does the Minister accept that civil servants will be pleased to hear his more measured response today to the implied attack on civil servants' pensions? It is rather in contrast to the somewhat hysterical attacks that were made prior to the publication of the Scott report. When do the Government intend to respond to that report, which largely vindicates the current Civil Service pension scheme and points out that it provides substantial assistance to many people on low incomes?

Mr. Hayhoe

The Scott report covered some very complicated issues. There are several hundred index-linked pension schemes—some are funded, some are funded in part, some are notionally funded, and some are unfunded. The precise legal requirements differ from one scheme to another. Perhaps 10 million people have a direct stake, as pensioners, members of schemes, or dependants. We therefore seek a lasting solution that will be fair both to individuals and their families and also to taxpayers generally.