HL Deb 31 July 1981 vol 423 cc879-80
Lord Harris of High Cross

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they have considered how far to modify the indexation of public service pensions in the light both of the Scott Report and of the severe economic pressures on incomes in the private sector.

The Minister of State, Treasury (Lord Cockfield)

My Lords, the Government are considering in detail the issues raised by the Scott Report. No decisions have yet been taken, but we hope to reach initial conclusions within the next few months.

Lord Harris of High Cross

My Lords, naturally I thank the noble Lord for that rather sparse Answer, coming six months after the publication of the Scott Report. Is the Minister aware that statutory and discretionary indexation has been extended rather surreptitiously until it embraces over 5 million people employed in nationalised industries and in central and local government? Accordingly, will the Government take a rather hard look at two aspects of present arrangements? The first is whether the Government Actuary underestimated the cost of indexed Civil Service pensions, which he put in the Scott Report at 16.8 per cent. of salaries, whereas the Scott Report estimated that perhaps a figure twice as high—namely, 36 per cent. of salaries—might be more appropriate.

Several Noble Lords:Speech!

Lord Harris of High Cross

My Lords, the second question concerns the choice of index. Do the Government consider that the retail price index is appropriate for calculating indexation when it reflects not only the debasement of the national money but also a rise in relative import prices and shifts to taxes on expenditure, such as VAT?

Lord Cockfield

My Lords, the Scott Report raised far-reaching and important issues which require very careful consideration. In these circumstances I think that the time taken—which is an indication of the depth of consideration which has been given—is not unreasonable.

On the other points raised by the noble Lord, the Government give attention to all representations received and views expressed, including those expressed by the noble Lord. But I suggest that the right course would be to wait until such time as the Government have stated their initial conclusions.

Lord Plant

My Lords, will the Minister agree that the Government Actuary did not overestimate the effect of index-linking on Civil Service pensions? Will he also agree that having just settled a long Civil Service strike, to have another confrontation would not be in the best interests of the country?

Lord Cockfield

My Lords, I do not think that this would be the right occasion on which to endeavour to debate the Scott Report. On the Civil Service dispute, that has now been settled, and I think the important thing is to try to restore harmonious relations rather than indulge in discussion of the issue.

Lord Boardman

My Lords, does my noble friend agree that it is quite impossible to cost either the value of an inflation-proofed pension or the liability that it places on an employer? For that reason, does he agree that no private employer can afford to fund such pensions? Will these be factors which are taken into account in the present considerations?

Lord Cockfield

My Lords, of course I note what my noble friend says. These particular issues were discussed at length in the Scott Report itself, which is now the subject of the Government's detailed consideration.

Lord Bruce of Donington

My Lords, will the noble Lord give the House the assurance that the limited pledges that have already been made by Her Majesty's Government, or on their behalf, in regard to indexation will, in fact, be honoured in any event?

Lord Cockfield

My Lords, we are, of course, aware of various statements which were made and which are, no doubt, those that the noble Lord has in mind. These are a matter of importance and full regard will be paid to them in consideration of this problem.

Lord Leatherland

My Lords, when the Government are considering public service pensions will they perhaps by some accident—extend that consideration to include Members of this House?

Lord Cockfield

My Lords, in so far as Members of this House draw pensions, they are covered by a different pension scheme from those which were the subject of the Scott Committee Report.

Lord Leatherland

My Lords, that was not quite the answer that I sought. My question was directed at the Minister in order to ascertain whether long-service and somewhat elderly Members of this House could themselves look forward to a pension under this new scheme.

Lord Cockfield

My Lords, I am well aware of the point that the noble Lord was trying to make, but I fear that it lies outside the ambit of the Question on the Order Paper.

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