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Grace under fire

Fair play to Ken Clarke for giving up what is the biggest freebie in government outside the civil list. The £106,868 a year index-linked pension, accrued after a single day’s work as Lord Chancellor may not match the amounts paid to senior royals but they at least have to perform civic duties to get their civil list payments.

Clinging on to a pension worth around £2.3m would obviously not look good at a time when he is proposing up to £2bn worth of cuts on his own department, the Ministry of Justice.

Clarke is not afraid of controversy, as nine years on the board of British American Tobacco will testify. But with plans drawn up that could lead to 15,000 civil servants losing their jobs, by hanging on to such a colossal freebie he might as well have painted an enormous target on his back.

And with ministerial colleagues set to consider the conclusions of the public sector pensions commission’s report, clinging on to the granddaddy of civil service handouts would have surely raised a few eye – brows around the Cabinet. The post of Lord Chancellor is one of the three offices of state that entitle the holder to a grace and favour pension of roughly half of ministerial salary for life after a single day’s work.

This Parliamentary benefit is a genuine relic of a bygone age, set up under the Lord Chancellor’s Pension Act, 1832. The other two posts to get such generous treatment at the public’s expense are Prime Minister and Speaker of the House.

David Cameron agreed to forego his grace and favour pension in a TV debate in the weeks after forming the coalition, after an angry member of
the audience quizzed him on the issue. Gordon Brown agreed to do the decent thing too, as did Jack Straw, Clarke’s predecessor as Lord Chancellor.

But those holding the role of Speaker of the House have found sharing in the mood of austerity a harder pill to swallow. Michael Martin kept this, after resigning as Speaker following revelations that refurbishments of his official residence had cost £1.7m and that he had claimed expenses of £1,400 for chauffeur-driven cars visiting, among other places, Celtic Park.

The current incumbent, John Bercow has so far declined many invitations to clarify his position on whether he will keep his pension. The line from his office ever since he took over the role in June 2009 has been a monotonous “no decision has yet been made”. Bercow’s pension is
a comparatively modest £40,000 a year, accrued after a single day. But in light of the fact that he is 47 years old, it would cost the taxpayer around £2m if he were to leave his post tomorrow.

Public sector workers have already seen the indexation of their pensions downgraded, a move that will hit those affected by an average reduction in benefit of 15 per cent, and are set for more cuts when the current commission’s review has been absorbed by the Government.

When it comes to nurses and firefighters, the debate over public sector pensions is less clear, but the further up the income scale you go, the more voters support the notion of public sector pensions being reined in. It seems inconceivable that anyone in government should get a multi-millionpound pension after a single day’s work.

I would doubt there is a single person outside Parliament who supports the current grace and favour pension system. It is time to get rid of this Parliamentary civil list once and for all.

John Greenwood is editor of Corporate Advise

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. David Trenner - Intelligent Pensions 30th September 2010 at 3:56 pm

    John, I agree with you .. but crafty Ken will keep his MP’s pension, which after some 40 years in the house will be two thirds of his salary – and it won’t count towards the Lifetime allowance. Gordon Brown was in parliament for 27 years, so 27/40 of salary is also two thirds.

  2. Public sector pensions (relative to earnings) are still amongst the best in the land but, for the vast majority of those entitled to them, they have to be earned year by year. The scandal of lavishly enhanced public sector pensions paid early with a phoney redundancy pay off on top is another matter, but not much less abhorrent than Grace & Favour pensions. What makes enhanced early retirement public sector pensions even more outrageous is when the lucky recipient is then invited back on a highly paid “consultancy” basis.

    Grace & favour pensions, especially huge ones, are (IMHO) totally unjustifiable. Come to think of it, has anyone in line to receive one ever made the slightest effort to justify them?

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