§ Order for Second Reading read.
§ 3.34 p.m.
The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)
I beg to move, That the Bill be now read a Second time.
Among the many problems with which a Chancellor has to deal I find that few are apt to prove more complicated than those relating to superannuation. Often there is a double misfortune for me in that I find myself forced, for unassailable financial reasons, to come down against improvements in pension provisions. But today I have the double pleasure of presenting to the House a Measure which is, as these Bills go, relatively simple and one which will bring direct and, I hope, speedy benefit to over 400,000 men and women who are drawing pensions after careers of public service.
The House will recall that I undertook in my Budget statement that a review of public service pensions would begin at once. The increase in the cost of living with which we are dealing on this occasion is a less serious one than in the case of previous Bills. The Retail Price Index has risen 7 per cent. since the last Pension (Increase) Act took effect, whereas it rose 11 per cent. between the 1952 and 1956 Acts and 37 per cent. between the 1947 and 1952 Acts.
Since my Budget statement we have had the benefit of a number of consultations. We have had consultations with representatives of local authorities, upon whom part of the cost of these proposals will fall. A suggestion for a new scheme of pension increases was sent to them on the very day of the Budget speech, and my hon. and learned Friend the Financial Secretary had a most useful discussion with them on 14th April. I am glad to say that the reaction to our proposals at that meeting was favourable and that further consideration has led to their general acceptance by the local authority associations. I should like to say at this point how grateful I am to the local authority representatives for the energy with which they strove to meet the timetable which the Government's desire for prompt legislation imposed on them.
36 We had a good deal less time for consultation on this occasion than in 1956.
My hon. and learned Friend also had the advantage of most helpful discussion with representatives of the Trades Union Congress. Earlier this year he had the pleasure of meeting a deputation from the Public Service Pensioners' Council which, through its affiliated organisations, represents pensioners from a good many branches of public service. We have also had the benefit of the views of the National Staff Side as well as many letters from individual pensioners which hon. Members have been good enough to share with us. Therefore, with all modesty we can claim to be well seized of the views of the many different interests who will be affected by the Bill.
I do not propose to say anything this afternoon about the pensions of retired members of the Forces and their dependants, as that is a matter not for this Bill, but for parallel action under the Royal Warrant procedure.
Close study of the Bill will have shown hon. Members that this is not an intrinsically simple type of legislation, but the Bill does no more than reflect the complexity of the many differing schemes which provide for civil servants, teachers, policemen, firemen, local government officers, National Health Service officers, including nurses, and many other smaller categories. Indeed, the only factors common to all these schemes are that they provide pensions from public funds and that they are, I believe, in the van of occupational schemes.
Beyond the diversity of the schemes themselves lies an even greater diversity of effect on individual pensioners according to their length of service and their pay, usually at the end of their service. In devising a scheme, therefore, that will do broad justice over the whole field and will be simple to apply, we have been greatly helped on this occasion by the 1956 Act, which did so much to simplify the labyrinth of earlier legislation. The House will recall that the 1956 Act, unlike its predecessors, provided for no means test and no income limit, though it had an earlier cut-off date for those who retired on higher incomes; and it removed such limitations from all the earlier Acts that preceded it.
That 1956 Act was a generous Measure, indeed, and, in that respect, worthy of 37 the record of Conservative Governments in this field——
§ Mr. Douglas Houghton (Sowerby)
The right hon. Gentleman will, of course, recall that the 1956 Bill was considerably improved in Committee on the representation of hon. Gentlemen on both sides of the Committee, when we got rid of a scheme that based the pension increase on length of service and asked for compensation on the pensions paid.
I recall, of course, everything that is relevant to recall in this connection, and I hope that we can rely on hon. Members opposite to help us improve the Bill in Committee—if it is conceivably possible to improve it further—in any appropriate way.
Taken together, this Act and earlier Acts have already done a good deal to improve the pensions of those who retired some time ago, and we are, therefore, taking the previous Acts as a floor on which to build the improvements now proposed.
The basic scheme of the new Bill is quite simple. We propose that percentage increases should be applied to existing annual rates of pension, including increases given under existing legislation. The percentages, which are set out in Clause 1, vary according to the year in which the pension began. Those whose pensions began not later than 31st March, 1952, will receive an increase of 12 per cent. on their present annual rate of pension. The scale then descends by steps of 2 per cent. until those whose pensions began after 31st March, 1956, but not later than 31st March, 1957, will receive 2 per cent. Those who started to draw pensions after 31st March, 1957, will not receive an increase.
One of the great attractions of this simple, regular scale is that it can be easily understood by the pensioners concerned. I often feel that that is a point to which, perhaps, we sometimes pay too little attention in respect of a complicated technical subject like this, which will be of great interest to a very large number of people. The House may like to know that our intention, when the Bill passes into law, is to send to every pensioner who benefits a pamphlet explaining the main features of the scheme, and a notification of the precise amount by which his or her pension will be increased annually. That is the kind 38 of thing that, when it is administratively feasible, is a sensible and reasonable thing to try to do.
In emphasising the simplicity of the basic scheme, I should not like to leave the House with the impression that there is anything capricious or arbitrary about it. It has been devised, after very careful examination of the levels of pension attracted by service ending in different years. That examination disclosed a very complicated pattern indeed.
The first element in that pattern is the rise in pensions that has taken place since the war as a result of increases in pay, but there are different pension arrangements in each service. Most pensions are related to pay either at retirement, or over a very short period before retirement. Others are related to pay over the whole career. A few, even more complicated, are not related to pay at all. So, while there has been a general tendency for pension levels to rise, they have done so at different rates for different services—and at different rates even for different groups within the same service. That was one complication.
The second element in the pattern is the general tendency in the past two decades for the lower salaries and wages to rise faster than those in the middle and higher ranges, though even that is not universally true in the public services. Then there is a third element in the pattern; the effect, which I have mentioned, of past Pensions (Increase) Acts. Until the 1956 Act, the tendency was to concentrate on the smaller pensions. The 1956 Act took a wider scope, but the combined effect of all the Acts taken together is still to give relatively bigger increases in the case of the smaller pensions.
Already, the result of that has been to bring some of these smallest pensions of the earlier years up to, or very nearly up to, the level of those for corresponding services in much later years. The combined effect of all those factors has been to create a situation in which the lowest pensions are those awarded either before 1945, or between 1949 and 1952, or in both those periods. That is why we propose now that the maximum benefit, which is the increase of 12 per cent. should go to those whose pensions began before 31st March, 1952. That covers the whole of these hardest cases.
39 I should like to stress here that the 12 per cent. applies, of course, to the basic pension as already increased in existing pensions increase legislation. Therefore, expressed as an increase of the basic pension alone, the 12 per cent. would often amount to much more than that—to over 20 per cent. in the case of the oldest and smallest pensions. Therefore, percentagewise, it is quite a considerable increase on the old basic pensions.
At the other end of the scale, as I have said, we propose 2 per cent. for those whose pensions began between 31st March, 1956, and 31st March, 1957. Bearing in mind the hardship qualification, it would be difficult to justify more than this, because quite soon after the latter date—31st March, 1957—we began to enter upon a period of relative stability in the cost of living, which hon. Members will be glad to see continues. The Retail Price Index for April of this year stood at 109.5—a slight fall from the 110.3 for March, and the same as the figure for April of last year. Between these two extremes of 12 per cent. and 2 per cent. we have filled in the scale by regular steps of 2 per cent., and that matches the general and continual rise of pensions related to pay over that period.
It will be noticed that we are not proposing that there should be any upper limit on the benefit that a pensioner may receive. In the last Bill there was an upper limit of, I think, £100. In this respect, I think that this proposal will be an improvement on the Act of 1956, and one that will be welcomed by the House.
Having outlined the broad intention of the Bill, I should like to say a word or two to those who may consider that, in one way or another, the Government's proposals do not go far enough. The method of proceeding which I have been explaining is based on the view held by successive Governments that the aim of such a Bill as this should be to relieve hardship and not to give full compensation for the increase in the cost of living over any particular period.
In other words the Bill does not purport to insulate public service pensioners from the effects of inflation. It seeks rather to add increases distributed so as to give greater benefit to those who— taking into account past increases and 40 other factors—have suffered more acutely from inflation. These are, of course, to be found more particularly among the oldest pensioners.
There is, I know, a body of opinion, expressed most forcibly by the Public Service Pensioners' Council, that the right course is to bring every existing pension up to the amount which the individual concerned would be awarded if he were retiring today with the same length of service as he actually had. At first sight that is attractive, but it is not, I think, a proposition which this or any Government could accept, in present circumstances certainly.
It was certainly not accepted by the Government of hon. Gentlemen opposite, although the case for it when they were in office was the same in principle as it is today. It is actually a proposal for changing the whole basis of public service pension arrangements in such a way as to depart from the fundamental principle that pensions are directly related to length of service and pay on retirement and, once awarded, are not normally altered.
This proposal would, of course, amount to a revolutionary change, implying a quite new standard of employers' practice, and one which would place the public services on a totally different and more privileged footing from those in other employments. Apart from its merits or demerits, such a change would be wholly inappropriate in a Bill of this kind. Moreover, it would be enormously more costly. On actuarial advice, the cost in the first year of bringing all pensions up to the level of those related to current pay would be about £55 million, and that figure must be viewed against the background that the cost of public service pensions generally is tending to rise, in common with all other provisions for old age, as older people come to form an increasingly large proportion of the population.
I am sure that when I say all this the House will not suspect me of any lack of sympathy for those who have given good service over a long period to the community. We are concerned with a matter in which the Government and the local authorities have to balance their responsibility as employers, on the one hand, against their responsibility to the taxpayers and ratepayers, on the other. It 41 would, I think, be difficult to feel that we should be justified in departing from what is sometimes called the principle of parity for one group of pensioners, bearing in mind that the cost of doing so would be bound to fall to some extent on others who are equally affected by inflation and who may be living on small fixed incomes which they have no means of augmenting.
These are what I regard to be very weighty arguments of principle against the doctrine of parity. They apply with almost equal force to all other variants of the main doctrine, including, for example, the proposal that rough equivalence with current pensions should be attained by an extended scale of percentage increases. I should add that there is a very practical difficulty in adopting the principle I have mentioned in its extreme and precise form of equating all existing pensions individually with those now being awarded to holders of corresponding posts.
That difficulty arises from the fact that over the past twenty-five years or so there have been very great changes indeed in the organisation of the various services with which we are dealing. Many are unrecognisably different from those that existed just after the First World War and markedly different from those which existed just before the Second World War.
In the Civil Service, for example, hundreds of grades which existed even as recently as 1945 disappeared in the postwar reorganisation. The same is true of the new services such as the National Health Service. In very many cases, therefore, it would be almost impossibly difficult to decide with what present day grade a pensioner who retired some years ago should be equated. I do not want to over-stress that side of the picture because in this country we have a great reputation for overcoming practical difficulties of this sort, and I would not say that this one is not capable of some solution. But it is not the main objection to parity and I mention it only in case it should be overlooked.
Having begun to anticipate criticism—although I do not expect there will be very much—perhaps I may continue a little further along this path. Just as we are not proposing to disturb any of the arrangements which led to the emergence of particular basic pensions under the 42 various schemes, so we are not proposing to disturb the conditions for eligibility for pension increases which have been embodied in earlier Acts. The conditions set out in Clause 1 of the Bill may be summed up by my saying that to receive an increase a pensioner, other than a widow, must be aged at least 60 unless he retires on grounds of ill-health or has become unable to work since retirement.
There is, I know, a school of thought which believes that if a person begins to draw a pension under his own scheme before he is 60, which is, of course, not uncommon for certain classes of public servants such as policemen and firemen, as well as the Armed Forces, he should be able to draw a pension increase straight away. To abandon the limitation which Governments up to now have considered right would mean undermining the philosophy which, I think, we must maintain in these Bills, that the object of increasing any pension is primarily to relieve hardship.
Moreover, and perhaps this is even more important, it would be, I would have thought, inconsistent with national policy on the age of retirement, namely, that people should be encouraged to continue at work, though not necessarily in the same jobs, as long as they can. The taxpayers should not be asked to pay for increases of this kind in the pensions of people of working age who may reasonably be expected to get work at current rates of pay.
Again, some hon. Members may have noticed that the Bill does not specifically cover pensioners of industries which are now nationalised. There is a simple explanation of that. We deal exclusively in this Bill with pensioners who have earned their pensions in the public service and who are paid their pensions from public funds. Pensioners of industries now nationalised are not paid their pensions from public funds and it would be anomalous for this Bill to cover them. Moreover, it would be unnecessary, because the nationalised industries do not need additional statutory powers of this kind for the payment of pensions increase. The essential point is, however, that any improvement of pensions in this way is primarily a matter for the Board's concerned.
Somewhat similar considerations apply to those former colonial servants whose 43 pensions are paid by overseas Governments.
§ Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)
Before the right hon. Gentleman leaves the question of the nationalised industries, may I remind him of the financial difficulty of the British Transport Commission which, consequently, cannot meet the claims of railway superannuitants? As the present Government have led the Commission into such difficult circumstances—[HON. MEMBERS: "Oh."] It is quite true—will the Chancellor see whether he can do anything to assist this particularly unfortunate type of employee, the old railway superannuitant, whose pension is extremely low compared with present-day costs? Such people certainly come within the hardship category.
I do not dispute the last part of the hon. Gentleman's remarks. Some of these railway pensioners are in receipt of very small pensions. But I could not accept the hon. Gentleman's other statement that the policy of the present Government has led the railways into the present situation. If any Government is responsible for that, it was the Government of right hon. and hon. Members opposite. What I have said applies precisely, nevertheless, to the British Transport Commission as to other nationalised industries.
§ Dr. Horace King (Southampton, Itchen)
The right hon. Gentleman has stated, the technical and constitutional reasons why he is unable to include people like railway superannuitants. Would he not agree that their moral case for an increase in pension is on all fours with that of other pensioners?
I have said that many of them are in receipt of small pensions which bring them into the same hardship class as other pensioners who are in receipt of small pensions. Of course, the nationalised industries concerned have shown themselves to be aware of their position and their responsibilities.
I was saying that somewhat similar considerations apply to the former colonial servants whose pensions are paid by oversea Governments. This Bill does not extend to them, although it does extend to the pensions of colonial servants paid from United Kingdom funds. 44 But most colonial Governments grant increases to their pensioners not less favourable than those under these Acts, though with modifications to suit their particular pension schemes and local conditions. When the present Bill passes into law, as I hope it will my right hon. Friend the Colonial Secretary will be sending copies of the new Act to overseas Governments, inviting them to consider whether further improvements should be made to their own pensions.
§ Mr. John Tilney (Liverpool, Waver-tree)
Will my right hon. Friend tell the House what happens when a country such as Ghana refuses to implement even the last Pensions (Increase) Act?
I should like notice of that question in detail, but from what my hon. Friend has said I assume that the Ghana Government have the responsibility of paying these pensions. The ultimate decision would lie with the independent Commonwealth country concerned.
§ Mr. Raymond Gower (Barry)
I am sorry to interrupt my right hon. Friend, but may I ask whether he will keep his eye particularly on the position of these former colonial servants in territories which are becoming independent? Whereas in the case even of the nationalised industries there are funds within the United Kingdom which can at some stage be made available for the payment of pensions, for people in these territories there are no funds under the command of any authority in this country with which these pensions can be made commensurate with those which are paid elsewhere. When a former colonial Government do not fulfil their duty, will my right hon. Friend reserve power to enable him to act in this matter?
I think that that would be difficult, but I will take note of what my hon. Friends have said, and I will have a word with my right hon. Friends the Colonial Secretary and the Secretary of State for Commonwealth Relations on this point.
I must not delay the House much longer, for I know that a number of hon. Members on both sides are anxious to catch your eye, Mr. Speaker. I have already referred to the essential simplicity of our proposals. It may be thought by the careful reader of the Bill that this is 45 less apparent after Clause 1 than in the case of Clause 1. Certainly, at that point it becomes increasingly technical and I should hope that we should not today seek to go too deeply into its technicalities in advance of the Committee stage. The effects of the individual Clauses are described in the Financial and Explanatory Memorandum to the Bill and I shall not take up the time of the House by repeating them. In general, they follow the lines of previous Pensions (Increase) Acts.
There is, therefore, only one other matter to which I should refer now, namely, the cost of the increases proposed in the Bill. As the Memorandum states, this is estimated at about £8½ million a year initially, of which a little over £6 million will fall on the Exchequer and the remainder on local rates. The cost will fall gradually in future years as the number of pensioners affected declines. There will also be the cost of the parallel increases made by prerogative Instruments estimated at about £2¼ million initially and tending to rise as the years go by for some time.
Finally, in commending the Bill may I emphasise one aspect that I hope we shall keep in mind. This is a straightforward scheme and the Bill is as simple as it is possible to make it. A small price has had to be paid for this simplicity. In applying one broad scheme to a number of diverse superannuation schemes, and hence to an infinitely greater number of diverse individual pensions, we cannot escape small anomalies here and there as between one pensioner and another. Hon. Members will have no difficulty in finding small anomalies here of that kind.
I have studied this difficulty closely with my colleagues and we are satisfied that there is no way of avoiding that, short of producing a far more complicated scheme and an infinitely longer Bill. The important thing seems to me that we should strike the right balance between our obligations to the taxpayer generally and to those retired public servants who, unhappily, have seen the value of their pensions eroded by the fall in the value of money. I am satisfied that this Bill does do that.
For the future I draw encouragement from the stability of the economy, of which there is now greater promise than we have known for many years past, and 46 it is on this basis that I invite the House to consider the Bill and approve it.
§ 4.13 p.m.
§ Mr. Glenvil Hall (Colne Valley)
I am sure that the whole House is grateful to the Chancellor of the Exchequer for the fact that he has thought it proper to introduce this Bill himself. It is an indication of the importance which he attaches to it and an indication, too, that he will listen to the various criticisms that will, I am positive, be offered from both sides of the House, and that when we reach the Committee stage he will act upon the advice given. At any rate, most of us hope so.
As the right hon. Gentleman said, this is not such a complicated Measure as the 1956 Act was. That did a lot of the work which it is no longer necessary for any Bill of this kind to do. We can, therefore, be grateful that today we have a relatively simple Measure to consider, although in some of its Clauses it is complicated enough.
This is actually the sixth Pensions (Increase) Bill which has been presented to Parliament in the last fifteen years. It has been found necessary to introduce them on an average of about every two and a half years—almost as often as we used to get the Isle of Man Customs Bills in recent times.
I thought that the Chancellor of the Exchequer stuck his neck out, if Chancellors of the Exchequer can ever be said to do such a thing, when he said, towards the end of his speech, that he thought that, now the cost of living had remained fairly stable for a little while, this may possibly be the last Measure of its kind which the House will be asked to implement.
§ Mr. Glenvil Hall
I do not want to depress the right hon. Gentleman, but I must remind him that, during the Second Reading debate on the 1956 Bill, the then Financial Secretary to the Treasury, who is now the Minister of Housing and Local Government, expressed just the same hope in his winding-up speech. That was only just over two years ago. Far from that being the last Bill of its kind, we have another now.
47 From my recollection of the debates on the 1956 Bill, I am convinced that there is a general and sincere desire on both sides of the House, irrespective of party, to do the best we can for those who are affected by the provisions of the Bill. They have between them served the State in a number of capacities. I believe that the Bill covers about 400,000, and, if we include the Service pensioners who are covered by Royal Warrant, the number runs to half a million or more.
The need to match pensions with purchasing power has presented Parliament with a problem for some years. From 1944 onwards the list of Acts is quite long—1944, 1947, 1952, 1954 and 1956. All these Measures have failed to find any real solution of the problem which faces us in this matter of pensions for State servants. All of us would welcome a real attempt at a permanent solution by any Government, no matter of what party. I am sorry to say—I feel that the House and the Chancellor himself will agree—that we have not found such a solution in this Bill.
The Bill sets out to do no more than its predecessors, namely, to add a little to everybody's pension. I suppose that all we can do is to look forward to a similar Measure in two or three years when we, or our successors, will have to do the same again. But what is wanted, and what is devoutly wished for on both sides of the House, is legislation to provide machinery for a periodic and automatic review of pension rates in the light of the cost of living as it changes.
The Bill is, of course, an improvement on those which have gone before. Any increases in pensions, however small, are certainly bound to be that. As the Chancellor pointed out, however—we are grateful for it—the Bill does go further than its predecessors in that it abolishes what I might call the ceiling. There is now no upper limit, apart from the percentage laid down in the Bill, on the amount which the individual pensioner may receive. That was the drawback of the 1956 Act. It abolished the means test and did various other things which I will not now recapitulate, but it did, as the right hon. Gentleman reminded us, set an upper limit of £100, although, in addition, it did something for the higher-salaried civil servants which previous Measures had not done.
48 It is interesting to note the astonishing advance made by the Treasury in this matter during the last five years. Most of us can remember the White Paper, Cmd. 9092, which was issued by the present Government in 1954, setting out their declared policy in this respect. Paragraph 44 of the document reads:The fundamental principle of public service pensions, that once they are awarded they are not normally subject to change in either direction, has been upheld by successive Governments. It has also been endorsed by Parliament. Her Majesty's Government are in no way prepared to abandon it.That was the considered policy and view of the Government on this matter in 1954.
The Government have, of course, now abandoned it. They began to abandon it in the 1956 Act and they are abandoning it further in this Bill. The idea that only those on small pensions who were most hard hit should be helped has gone by the board and now anyone, irrespective of the size of his pension, has something. I do not object to this, of course, and neither do my right hon. and hon. Friends—far from it. But it means, I hope—I remind the House of it for this very reason—that the Chancellor will, when we reach the Committee stage, realise that the old sheet anchor on which the Government set such store has gone. We are now out in the open sea and can do what we will within the limits set by the finances available. We must do the very best we possibly can for the pensioners who look to us for help.
Pensions must be brought up to such a level as to enable them to buy what it was expected they would buy when they were awarded. I do not think that anyone will quarrel with that aim. It is a very modest goal, a much more modest one than that advocated by The Times in 1956, shortly before the Bill of that year was introduced. In a leading article, The Times, which is a very reputable journal not given to revolutionary views or statements, committed itself to the assertion thatpensions should be kept in line with those payable to currently retiring servants of comparable status.This afternoon the Chancellor referred to the fact that that view was held, although he did not indicate that it was held by so august an organ as The Times. It is, I know, a view held by many people, 49 and there is much to commend it. I now commend it to the Chancellor for his consideration. Logically, there is much to be said for it. Salaries, and, with them, pensions, have gone up not because civil servants today are worth more than their predecessors, but because the cost of living has risen. But the cost of living has risen for the old-time pensioner, also. If he did not enjoy the salary emoluments of his office because he retired too soon, is this a reason—I put this to the Chancellor—why he should not enjoy the resulting pension which others now receive because they retired later? After all, the burden of the cost of living falls upon the schoolteacher, the retired county court judge, the civil servant, or whoever it may be, whenever he retires.
§ Mr. Glenvil Hall
And those in manufacturing industries, as my hon. Friend points out.
The landlord or the grocer does not say to Mr. A, "I shall charge you less because you retired in 1949", and to Mr. B, "I ask more from you because you retired in 1953 and, therefore, must be getting a higher pension." The burden of the cost of living, which it is the underlying purpose of the Bill to alleviate, bears as hardly on an individual whenever he retired, whether it was early or late.
§ Mr. Glenvil Hall
One would have to look at the figures before one could accede to a proposition of that kind. We are dealing with civil servants and others who have served the State, often for up to forty years.
I understand that it is now an established principle—and this long list of Acts seems to bear that out—that Parliament has conceded that something should be done for pensioners as the cost of living goes up. It seems to me that the only question before us is: what should Parliament do to help these people? Should we relieve only a few 50 at the bottom, and then in a parsimonious and meagre fashion, or should we do it in a proper way and relate what we do to the cost of living as it goes up and see that the pension which a person receives enables him to live a comfortable, decent and dignified life? I take the view that we should do everything we possibly can within the limits set by the financial structure under which we live.
As the Chancellor of the Exchequer pointed out, the method followed in the Bill is to give increases on a percentage basis. This method was begun in the 1956 Act and is continued here. The percentage varies according to the year in which retirement took place. I have had letters, and I take it that other hon. Members have had letters, from some of those affected by the Bill stating that the percentage increase, 12 per cent., 10 per cent., or whatever it may be, is not enough and that it should be more. From some of the letters and figures given to me, I think that there is a good deal to be said for that contention.
The Chancellor did not fully explain why the figure of 12 per cent. is laid down for everyone up to 31st March, 1952, whatever the date of their retirement. A little while ago there was a letter in The Times which drew attention to this point. I assume that the answer that the Treasury will give is that the 1956 Act covered the rises in the cost of living suffered by pre-1952 pensioners, that they received the 10 per cent., and, therefore, all that is necessary now in this Bill is to make up for the increased cost of living since 1951–52. I take it that that is the reason why there is a flat rate of 12 per cent. up to 1952 and thereafter, as salaries altered and went up, in the Civil Service certainly, the scale diminishes right down to 2 per cent. at March, 1957.
We would not say that the increases given in previous Acts covered the increases in the cost of living, but made contributions towards them.
§ Mr. Glenvil Hall
I understood that. The right hon. Gentleman was very fair. He did not claim too much either for previous legislation or for this. He made it quite clear that there had been no attempt to cover fully the rises in the cost of living: only an attempt to mitigate its worst hardships. Some of us 51 may think that the amount given in mitigation is not as good as it might have been. Later in the debate some hon. Members will probably come back to this point. When we reach the Committee stage some of us will possibly put down Amendments to try to improve the scale.
As I understand it, the reason why 31st March, 1952, is put into the Bill as a sort of starting date is that in earlier legislation the pensioners up to that date were covered. But I am not sure that all pensioners were, in fact, completely covered. As has been stated already this afternoon by the Chancellor, there was a limit of £100 in the last Act. That was calculated on the basic pension. Today, the new percentage increase will not be founded on the basic pension, but on the basic pension plus any increases that have come to the recipient from earlier legislation.
It is not by any means plain to me—possibly the Financial Secretary will elucidate this point a little further—why those who were covered in the 1956 Act should not get more than the 12 per cent. which is laid down. I have been looking at the figures in the Library. As far as I can discover, if one takes the £ as being worth 20s. in October, 1951, by last January its value had dropped to 15s. 2d.—a decrease of 4s. 10d., or nearly 25 per cent. Compare the 12 per cent. in the Bill with this 25 per cent. drop in the cost of living during the same period.
It is small wonder that many a pensioner becomes bitter and believes that anything done for him is always too little and too late. In spite of what the Chancellor of the Exchequer says—that no attempt has been made in this Bill to equate pensions upwards with the cost of living—12 per cent. as against 25 per cent. is a bit too big a gap.
As I see it, there are some disadvantages in having a percentage scale and no upper limit. It means that if a man on a pension of £2,000 retired before 1952 and gets the full 12 per cent., he will receive an increase of £240—almost £5 a week—whereas the smaller man or woman—and there are many teachers who retired on very small pensions of well under £200—will not get anything like that sum. The most that a man on a 52 pension of £100 can get, even if he receives the full 12 per cent., is £12 a year, which will not carry him very far.
Some figures were handed to me as the Chancellor was speaking. They deal with a postman who retired in 1939 after forty years' service. His pension then would have been £91. Now, under today's Bill, if it goes through in its present shape, together with previous advances under earlier legislation, he will get £182, or twice as much. Against £91, £182 sounds an excellent increase to give a man in the way of something extra because of the difficulties experienced due to the cost of living, but £182 is not very much. It will not carry him very far these days. A postman who retires now will get £235, which is at least about another £1 a week more than is being given to the man who retired in 1939 after just as long service as the man who retires now.
When we reach Committee, the Chancellor would be doing the pensioners and the public service a good turn if he would consider inserting in the Bill a minimum amount which pensioners should receive. I would like to see it made £1 a week so that those pensioners who, even under the Bill, will not get very much because their pensions are so small will feel that at least this has been realised and Parliament is anxious to help them.
Most of our criticisms of individual parts of the Bill, apart from the scales, can probably wait until we reach the Committee stage. Some of us on this side, however, are not happy about Clause 2. It has been inserted, I understand, to meet the case of the individual who has retired and is thereafter reemployed. Very often, a man may retire, notionally anyway, at the age of 60 and then carry on until he is 65. Clause 2 re-enacts Section 6 of the 1956 Act. It was inserted then, just as, I imagine, it is inserted now, to safeguard the interest of the individual concerned, otherwise he might find himself disqualified for an increase because of the dates which will be an integral part of the Bill.
I have had a number of letters centring around this provision. It stems, I imagine, from the Superannuation Act, 1834, Section 20 of which lays down that a person who is entitled to a pension but who continues to work cannot get more 53 than the salary of the post would have brought him if he had continued properly in his original employment without the pension. In other words, the pension is diminished to such a figure as he would have got had he continued in his established post from the age of 60 onwards.
I would like the Chancellor to consider whether a change cannot be made to permit those who continue in the service of the Crown, and who, after all, are giving additional service to the State, to enjoy extra pension because of it. I am told that, under Clause 2, that will not be possible for the great majority of those affected.
In the earlier part of his speech, the Chancellor stated that the local authorities had been consulted about the provisions of the Bill. That, I gather, is true. I understand, however, that the local authorities feel that they were not given sufficient time for the consultations which took place. They regret this all the more because the same thing happened in 1956. Then, the local authorities were given insufficient time to consider the details of the Measure then produced and they were promised by the then Financial Secretary of the Treasury that should another Bill ever become necessary, they would be consulted in ample time.
I gather that the local authorities were given very short notice. On about 8th April, they were invited to meet the Treasury on 14th April. They have a legitimate grievance and they certainly feel that they have not been consulted in the way they were promised.
§ Dame Irene Ward (Tynemouth)
Is the right hon. Gentleman suggesting that if the local authorities had been given more time they might have suggested that they would increase their contributions? If the allegation is that they would have been more forthcoming if they had been given more time, I am all in favour of having more time, but I would like to know what the right hon. Gentleman means.
§ Mr. Hall
I have received from those who speak for the local authorities a complaint that although they were promised that on this occasion there would be ample time for consultation, they have not had such time and they have been rushed. Local authorities are responsible bodies. They have a duty to their electors and in a matter of this kind, when a contribution 54 is expected from them, they are entitled to proper and full consultation. On this occasion, the local authorities feel that they have a grievance because they were warned on 7th April and the meeting was called for 14th April. It was quite impossible in that short time to get the local authorities together in a proper way.
§ The Financial Secretary to the Treasury (Mr. J. E. S. Simon)
Perhaps I may say, since it was I who had the pleasure of meeting the representatives, that that was only a preliminary meeting and they were then asked to give their views in writing before the Bill was presented.
§ Mr. Glenvil Hall
Even then, one has only to consider the dates to realise that they could not have been given adequate time to go into the matter thoroughly and to consider it on behalf of local authorities, who themselves have a large number of pensioners who are affected by a Bill of this kind.
As the Financial Secretary has admitted, the local authority representatives were invited to meet the Treasury. They met the Treasury within a week or so of the original intimation from the Treasury. Thereafter, it is obvious from the date when the Bill was introduced that the local authorities were given little time for consultation. They feel all the more aggrieved, I understand, because they believe that in the Treasury this matter has been under consideration for some months. Their grievance is that they should have been taken into consultation earlier.
Finally, we on this side welcome the Bill so far as it goes. We hope that when it reaches Committee, hon. Members on the Government side will join together in trying to improve it. If the Committee stage of the 1956 Bill is any guide, we can count on the support of hon. Gentlemen opposite for a number of Amendments which seem to us to be necessary and which, we hope, when the time comes, the Chancellor of the Exchequer will accept.
§ 4.40 p.m.
§ Sir Lionel Heald (Chertsey)
I think that it will be generally agreed that, although the Bill is in principle quite uncontroversial, it is one which should have the very careful attention of the House and which we should approach in an entirely constructive and impartial 55 spirit. After all, all of us in this House have a special responsibility towards these public servants, since we are the representatives of the public to whom they have given these many years of faithful service.
There is also the fact that this is a very difficult and complicated subject, as those of us know who have had occasion to go into it—far more complicated perhaps, than we thought when we started to look into it; and it is necessary to give careful and simple explanations if we are to prevent misunderstanding. In my experience, nothing is more distressing to a public servant who has considerable pride in his position than to feel, however erroneously, that he has not had a fair deal. As one said to me not very long ago, "If you have had V.R. and G.R. and E.R. on your collar you feel you really do belong to something." There is a very great deal in that. They do have real pride in their position.
I should like, therefore, to say at once that I really do believe that the Bill achieves a substantial measure of justice. Of course, it does not compensate anything like fully for the rise in the cost of living, and there are points of criticism, there are anomalies and various details which have not been dealt with and which we shall have to discuss in due course, and which it may or may not be possible to deal with; but I think that on the whole it represents a fairly important step forward, and that the responsible organisations concerned will support, and do support, that point of view.
I see that the hon. Member for Sowerby (Mr. Houghton) is going to speak, if he catches your eye, Mr. Deputy-Speaker, and I know that with great experience he is better able to speak on such a matter than I, and I hope and believe that he will be able to help us to assure these people that they really have got a substantial measure of justice.
I believe that I can speak with reasonable impartiality in this matter, having had the privilege of being chairman of an entirely unofficial group which was concerned first with the 1956 Act, with the circumstances which led to it, and which was revived this year, when it was obvious that we ought to urge the Government to deal again with the results of inflation in 56 connection with these pensions. I can say that the members of that committee of which I had the privilege of being chairman feel that these public service pensioners ought not to allow themselves to be too much influenced by some of those—not in this House, of course, but outside—who have rather belittled the effect of the Bill and who have said that it really achieves nothing very much at all.
Perhaps I should add that we in that committee have never approached this matter on a party basis, or holding any brief for the Government. It is quite true that we were appointed by the back benchers on the Government side of the House, what is anachronistically called the 1922 Committee, which I personally think is a most misleading title, and which, I hope, we can get rid of. Perhaps this occasion will disabuse some people's minds that the 1922 Committee consists entirely of antediluvian diehards with long white beards.
If further proof is necessary, I have only to mention that one of the members, and one of my very valued assistants on the committee, was my hon. Friend the Member for Tynemouth (Dame Irene Ward). I think it is sufficient to mention her name to demonstrate that it is not the sort of committee which consists either of "rubber stamps" or "yes-women"—if there is such a thing as a "yes-woman".
One of the matters which always concerns us in our small group is one which has been already mentioned, this great disparity between those who retired perhaps some thirty years apart and of the same rank and who are yet receiving an entirely different amount of basic pension. The postman has already been mentioned. In 1939, his basic pension was £91; in 1957, the basic pension was £235. We took this matter up in 1955, but the Government at that time did not feel able to deal with it.
This year we returned to the charge, and the Government took the view, quite understandably, as has already been explained, that the general principle that there should be a standard retirement pension for every grade applicable at whatever date of retirement might be relevant was not desirable and was certainly not a practicable thing. When we went into it we did see, after the discussion we had, that it would be extraordinarily difficult, if not quite impossible, to apply it 57 where there had been so many changes over the years.
What my right hon. Friend did do—and we ought to be very grateful to him for taking this line—was something rather revolutionary. As the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) has pointed out, he dealt a further very heavy blow at Cmd. 9092. I was very glad that he did. I think it is rather moribund.
What he has done is very remarkable and there are these two factors in it which I think we ought to appreciate. The first is to apply a differential increase according to the date of retirement, which has the effect of giving a greater increase, of course, to those who have retired longest. There is no doubt about it that that will narrow the gap we all object to. Take, for instance, the executive officers who retired in 1939 and in 1956 respectively; that is to say, two men of the same rank. Their basic pension, the assessed pension, differed by £56 10s. After the 1956 Act it still differed by approximately £50. The figures were, respectively, £369 and £415. Under the Bill the respective figures will be £413 and £422, that is to say, a difference of only £9. That is a very striking improvement, and I think it is one which should be appreciated.
When the right hon. Gentleman the Member for Colne Valley was talking about the figure of 12 per cent. and comparing it with a figure of 25 per cent. depreciation in the value of money, I wondered whether he appreciated how the thing works. Of course, there are two factors. There is, first, the escalator percentage—one of those horrible terms which does not mean anything except that something goes up more than something else, but I hope it always goes up the same way all the time. However, that is what it is called. That is the application of 12 per cent. to the 1939 man and 2 per cent. to the 1956 man.
Of course, that has a big effect, but it is not only that. The application now made is not to the basic pension, as it has always been called. It is made to the basic pension plus the increases, which is having it both ways in a very admirable way. That is why it is that we get this result. When we talk about the 12 per cent. it really is much more than 12 per cent. in pensions language. For this reason, let us go back, for example, to our 58 friend the postman with £91 in 1939. The addition of 12 per cent. to that is the equivalent of an addition of 22 per cent. on the basic pension. That is the reason why these amounts go up to that extent. It takes him up now to £182 against £91. In the intervening period he had £162 5s.
It is not a question of adding another 12 per cent. to his original pension. It is a case of adding 12 per cent. to the pension which he receives now. No one would suggest that £182 is a princely sum as a pension, but the fact that the pension has been doubled between 1939 and the present day is worth bearing in mind.
§ Mr. Glenvil Hall indicated dissent.
§ Sir L. Heald
The right hon. Gentleman the Member for Colne Valley shakes his head, but twice £91 is £182, according to my arithmetic.
§ Mr. Glenvil Hall
I was not shaking my head at the fact that the right hon. and learned Gentleman was doubling £91 and making it £182, but at the implication of what he was saying. What really matters, and what we ought to take into account, is the value of money today. If that postman receiving £182 had the equivalent of the drop in the value of money since 1939, he would be receiving £250.
§ Sir L. Heald
I think that we all appreciate, and my right hon. Friend the Chancellor has been more than fair about it, that there is no question of compensating for the increase in the cost of living. The right hon. Member for Colne Valley has to scratch around a little to find something to say on behalf of the Opposition, but he does it always in a kind and friendly way and we do not mind that. It reminds me of the old saying, "Don't shoot the pianist. He is doing his best". We need not quarrel about that, however, and I will get away from the point and consider an entirely different matter.
A very important step which is taken in the Bill has been mentioned already, but is worth mentioning again. Before 1956 there was a means test. Indeed, I think it was one of those cases which might well be described as a "mean test" as well as a means test, because it meant that a very large number of people received no increased pension at all. The 1956 Act removed that provision but we left untouched something which I would 59 think, in a different way, is in principle equally objectionable. That was what was called a ceiling. It meant that because a man was a senior servant he had no increase at all.
That was thoroughly indefensible. It was a thoroughly egalitarian view which we had not got rid of in those days. I was delighted to hear the right hon. Member for Colne Valley say that we have now got rid of that nonsense and the idea that because a man received more than someone else there should be provision for a ceiling. If the view that that is nonsense spreads into other branches of the policy of the Opposition, it will be a good thing.
Before this new Bill becomes an Act, a 1948 retired civil servant with a basic pension of £1,000 a year receives no increase at all. In effect, he is carrying in his pension 66 per cent. inflation. It is a very good thing, indeed, that we are getting rid of that provision. The fact ought to be generally appreciated. The Bill will enable that same man to obtain £1,120, and if there are any further increases in future they will be calculated on the £1,120 and not on the £1,000. I make no apology for that change. It is an excellent thing that the old provision, like Cmd. 9092, is going into the waste-paper basket.
These are some of the improvements in the Bill, but there are defects to be noted on the other side. I shall not delay the House by discussing those in detail, but we know of them and I should like to say how grateful the group with whom I am associated feel to those individuals and associations who have sent us some interesting particulars. We have paid attention to them and will put them forward in due course, but there are also a few points of principle which can be dealt with by reference, not in any complicated detail, to the Clauses of the Bill.
Clause 2 contains a feature which I do not like at all. It provides that where a person has rendered further service, that is to say, when he has retired once and then gone back again, he is not to receive less pension by reason of going back. The mere fact that it should be necessary to say that at all seems to me rather appalling. How could Parliament possibly agree that a man—as in a case of 60 which I have particulars—who has done forty-seven years' service and goes back to do a further eight years should receive less than if he had not gone back? But the fact is that the machinery is such that but for Clause 2 that would happen.
I have particulars of a case of a gentleman who was at the Admiralty for many years. It is interesting because it concerns a record of service about which the House might like to hear. This gentleman retired as a higher clerical officer from the Admiralty in 1946, after forty-five years' service. In August, 1951, he was re-employed and did another eight years. By the time he finished he was 78½ years old, but, in accordance with some machinery which I do not understand—probably something to do with trade union rules—he had to go back at a lower grade.
Although he was a higher clerical officer he was told, "You must come back as a clerical officer". When he retires finally, the earnings which come into the consideration of the pension are the earnings of a clerical officer and not those of a higher clerical officer. Although there has been a substantial increase in pay since the time when he first started working, and indeed since the time when he retired originally, the pay of a clerical officer is not anything like what his earnings would have been if he had retired as a higher clerical officer.
The result is that his retirement date is not the date when he retired but the date when he re-retired, and he does not receive any of the increases in pension, because he goes back to 1946 and all the increases since then occurred while his pension was frozen. He is, therefore, out of it. The net result is that he gets a very few pounds more than he would have got if he had not gone back at all and had treated the original retirement date as the end of his service.
I suggest in all humility, not with any accuracy but in general outline, that if this matter were divided into two parts and the man were told that in the first instance he was entitled to the pension on his real retirement, plus all the increases, and then was entitled to an addition for further service, it would be possible to say that justice had been done in his case. Another method of dealing with the matter would be for the man to be re-employed in his proper status. 61 His retirement pension then would be basically on the lines of a very much higher earnings figure, and the same result might be obtained in the end.
§ Mr. H. Hynd (Accrington)
May I point out to the right hon. and learned Gentleman that if senior civil servants are to be allowed to continue in the senior grade to the age of 78½ years there is little chance of promotion for the others?
§ Sir L. Heald
I agree. I will not trespass on that ground because, if I rush in on it, I shall not be an angel. One should realise, however, that in the time of the hon. Gentleman's Government people were encouraged to go back to work, and also that I was not talking about a permanent secretary but of whether a man should be employed as a clerical officer or as a higher clerical officer, which is not the same thing, with all due respect.
On Clause 3, I want to mention a somewhat controversial point which has not been borne in mind sufficiently, I think. In the Indian Services, particularly the Indian police, it was compulsory to retire at 55; indeed, a number of people retired at an earlier age and their pensions were fixed according to the age at which they retired. Now, however, they are not allowed to draw a pension until they are 60, which means not only that they do not get the pension for some years, but, when they get it, they do not get the benefit under the new scheme of the increase made, for example, under the 1956 Act. As I understand it, this is because, according to the definition, they would not then be receiving any pension, and therefore there has been nothing to increase.
One finds, therefore, that the result of not allowing such people to draw their pensions until they are 60 has the result not only of postponing the pension, but also of reducing the amount they receive. That is a point which my hon. and learned Friend the Financial Secretary may like to look into. It has been pointed out in recent correspondence, and it was rather suggested by my right hon. Friend the Chancellor in passing today, that, after all, those people are only 55 years of age and that they can easily get some other work. All I can say it 62 that if anyone can tell me where a friend of mine, who retired from a job in India at 55, can get a suitable job, I shall be very pleased to refer him to it. In fact, it is very difficult for such people.
There is a third case which I am nervous of rushing in to discuss, but it has been drawn to my attention and I would like the hon. Member for Sowerby, in due course, to help me about this. It has been said that there will be no need for any more of these increases because we hope we have stabilised the value of money. I am told that this is by no means the fact. In the case of a man who retired in 1957 on a three-year average pension that would have to be reached by taking three different figures and during that time those figures were rising because of inflation. I do not know the exact figures, but they were around £500, £530 and £550 and on the average of them his pension was based, which was not the figure for the year in which he retired. It could be said, so I am told, that the man who retired in 1957 was receiving only a 6 per cent. increase on his 1954 basis when, in fact, there was a rise in the cost of living of two or three times that amount. That point should also be looked into.
While we all hope sincerely that inflation will not return in this country, we also hope that the general standard of living will improve, so that at some time in the future there may be an improvement in the remuneration of civil servants. If that happens, the same position will arise again. In that event, any hardship will not be that of possible starvation but of a man being unable to live up to the standard of other people with whom he has always consorted. After all, a man who has been a civil servant has always had to maintain a standard, so that point also should be borne in mind.
There are a number of other cases that we must have in mind. One is that of the railway superannuitants, whose case is a very deserving one. I am thinking particularly of a very old engine driver. There are a number of these men, the salt of the earth, who are receiving extremely minute pensions—perhaps because engine drivers seem to live a very long time. No doubt this is due to the salubrious atmosphere of steam trains. I am sure that drivers of diesel engines will not be so healthy in the future.
63 Another case is that of the Armed Forces. A suggestion was made, either in the Press or on television, that further effort was necessary to ensure that the Armed Forces have proper treatment. My right hon. Friend has pointed out that for practical purposes this procedure is automatic. Once we have decided to grant these increases, others will be made on a similar basis by Royal Warrant.
It has been said that the pensions increase machinery should not be of a hand-to-mouth type, which operates only when pressure has reached a certain strength. A number of correspondents have made this point and it has been suggested that there should be some organisation for regular review. I know there are objections to any cast-iron arrangement, but would it not be possible to have a committee which would keep the matter under review?
We went into this matter in 1955. A certain amount was done, though not everything we wanted, and this year we have had to start again from the beginning. That is not a businesslike way of dealing with this matter. Where small amounts are involved, could a little more generous view be taken? It is true that we cannot avoid anomalies, but it is a curious fact that anomalies seem to operate against the man concerned and in favour of those who have to pay the pension. Might it not be possible for an anomaly to work the other way?
Finally, we should remind ourselves that the greatest contribution we can make towards alleviating future hardship for public service pensioners, as well as others, is to prevent the return of inflation. We all know from contact with our constituents that the one thing which worries those on small fixed incomes is to see those incomes fading away. It will help these people more than anything else if we can assure them that this will not happen. We must also remember that the prevention of inflation is not entirely in the hands of our own Government. Conditions in the world may change and so cause inflation to arise. In the case we must have our tackle ready and be prepared and willing to deal with the situation when it arises, taking time by the forelock, instead of trying, as we have done in the past, to catch up with it.
§ 5.10 p.m.
§ Dr. Horace King (Southampton, Itchen)
I welcome the Bill and congratulate the Chancellor and all concerned. Before the right hon. and learned Member for Chertsey (Sir L. Heald) spoke, most of us knew that he had been intimately concerned in the spade work before the Bill, just as he and the committee of which he was chairman did such excellent work in 1956. Those of us who have had the pleasure not only of hearing the right hon. and learned Gentleman in the House and in Committee on this subject but have had contact with him privately know how deeply he has interested himself in the well-being of the old pensioners of all classes of public service.
I think we might pay tribute to the Public Service Pensioners' Council, the association of all the various types of public servants, the National Union of Teachers, the Civil Service unions and the rest, because they have been putting pressure on the Government in what I might call an almost purely altruistic way. One of the things which make one believe in people is the way the young folk in the various branches of public service have been campaigning, largely because they want to help their old retired comrades, in a spirit of pure altruism. It might be enlightened altruism. As a letter in the Daily Telegraph this morning points out, the people in work today will, after all, be the veteran pensioners of some subsequent generation.
After welcoming the Bill wholeheartedly, I feel I must say, in spite of sounding ungracious—I hope that neither the Chancellor nor others on the Government Front Bench will think that what we say this afternoon is at all ungracious—that the Measure does not go far enough. Those of us who have been in contact with the people who stand to benefit from the Bill know that is true.
As to the magnitude of the Bill, it affects, as the Chancellor has pointed out, some 400,000 public servants. The amount of money involved is £11 million. This means that there will be an average increase of 10s. a week. However, as the right hon. and learned Member for Chertsey pointed out, we have taken the ceiling off and a number of public service pensioners will get considerably more than 10s. a week and a lot—it is the lot at the bottom in which some of us 65 are particularly interested—will get merely one or two shillings a week increase.
I understand that about £2¼ million of the £11 million a year will be provided by local authorities. I hope that in the conversations which took place the Government were able to assure the local authorities that this will be allowed for in the general grant which the Government make to local authorities.
The £11 million is one-fifth of what I understand it would cost to equate the position of the veteran pensioner with the position of a pensioner who retired tomorrow. So we are really conceding one-fifth of the claim of the public service pensioners. I am told that since the previous Measure was given its First Reading in February, 1956, the cost of living index figure has risen by ten points. On the other hand, the average provision made by the increases proposed in the Bill is by no means of that order. Therefore, we cannot even claim that the Bill takes the pensioners back to the value of their pensions at the time of the introduction of the 1956 Measure. That Measure mitigated the lot of veteran pensioners but it by no means brought the pensions in 1956 to the value which they had when they were first awarded.
As has been pointed out in every speech in every debate on this subject, the basic problem is that veteran pensioners are among the chief victims of inflation. Year by year they see what ought very often to have been honourable and comfortable incomes whittled away in value so that the evening of their life becomes anxious and what ought to have been comfort becomes hardship. The various Pensions (Increase) Acts which have been passed by Labour and Conservative Governments have mitigated the burden of inflation on the retired pensioner but have never given the pensioner in modern money the value of the pension for which he paid in.
The grievance of the veteran pensioner is even greater than that. The old retired teacher, civil servant, postman, policeman and local government clerk naturally compares himself with his colleagues in work today and compares the pension that he draws with what is earned by persons doing exactly the same work today, whose pension not only has some relation to inflation but is sometimes 66 based on a salary expanded not only because of inflation but because of a betterment of the salary position for that class of worker.
When we discuss details in Committee it will be possible to present staggering figures showing the difference between former pensions and the pensions that some will earn today for doing the types of job that the veterans were doing twenty or thirty years ago. This must outrage the sense of justice of pensioners.
The claim of the old public service pensioner is twofold. He wants his pension raised to its original value in real money, and he believes he has a right to draw the same kind of pension as a person doing an equivalent job now. While that may be a Utopian goal, I hope that before the Bill leaves the Committee we shall be able to persuade the Chancellor to move a little nearer to that state of affairs. I hope, as does the right hon. and learned Member for Chertsey, that we shall be able to tackle some of the details of the Bill in Committee, just as we tackled the 1956 Measure, and bring about some tidying up and some improvements.
The main weakness of the Bill to me is that it does not go wide enough. When we debated this issue in 1956, I congratulated the Government—I do so now—on the wide range of categories brought within the Bill. It was a real work of art and, as I said at the time, perhaps a real labour of love on the part of the committee over which the right hon. and learned Member for Chertsey presided to draw the net in the Schedule so wide as to bring in almost every kind of public servant. However, the present Bill, like previous Measures, omits some types of public service pensioners towards whom the State has a moral responsibility.
I was glad that the right hon. and learned Gentleman mentioned the railway superannuitants, the old faithful servants of the various railway companies. Many of them had pensions which were pitifully small even by pre-war standards, and those meagre pensions have steadily dwindled. I can understand the difficulties of the British Transport Commission. It has made small increases, sometimes following in the steps of Governments, in the superannuation payments, but the increases have been by no means comparable to those which the Government have made in a succession of Pensions 67 (Increase) Acts. The Commission has not the funds to give the whole of the increase to all its servants; its superannuation funds cannot by any means carry the burden of inflation. Therefore, I appeal to the Chancellor and to the Government to accept a responsibility which I believe it is their moral duty to accept, and to include this group of pensioners——
§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
I must ask the hon. Member to keep within the terms of the Bill. Those pensioners are not included in it.
§ Dr. King
I am sorry that I cannot plead any further the case which some of us would have liked to plead. I hope that we shall have an opportunity of fighting this battle in Committee and of endeavouring to get this group included.
I end by saying that I am glad that the Bill gives the biggest increases to those needing the most and that what is called an escalator provision exists by which the veterans will get the maximum increase out of the Bill, since it is those whom we have mostly in mind. I know that both sides of the House will give the Bill their support.
I hope that in Committee we shall be able to improve the date on which the Bill is to come into operation and to backdate some of its provisions. It will help thousands of old people most of whom have small fixed incomes. Whatever has caused inflation—and there may be very fierce arguments about that between the two political parties—it is quite certain that the veterans whom we are helping this afternoon have had nothing to do with it. Theirs has been merely to endure the chief burden of inflation. I quote the words which struck me when I was reading a letter by Air Marshal Sir Gerald Gibbs in the Daily Telegraph today:This inflation may be unavoidable but why should we make the past workers suffer?68 I understand from what you have said, Mr. Deputy-Speaker, that I am unable to refer to those not mentioned in the Bill. I only express the hope that private enterprise will be inspired by what we are doing this afternoon. Pensioners in some great private industries have been treated generously in this matter by their employers. Other industries lag behind. I only hope that what the House is doing this afternoon for the veteran pensioners of the public services will be copied by private industries for the veteran pensioners of those industries. I hope that, having got this Measure through, we shall turn our attention to the pensioners whose need is even greater than that of those whom we are discussing this afternoon, the people with no form of superannuation except their State pensions.
§ 5.23 p.m.
§ Mr. John Tilney (Liverpool, Waver-tree)
I hope that the hon. Member for Southampton, Itchen (Dr. King) will forgive me if I do not comment on his largely agreeable speech. Many hon. Members want to contribute to the debate, and I want to take up the time of the House on only one aspect of the Bill which has already been mentioned in Question and Answer. I want to refer to the body of Government servants only partially mentioned in the Bill. If one has been lucky enough to serve in India, Pakistan, Burma or even in Palestine, all well and good, but there are many, who served largely in erstwhile Colonies, who are not mentioned in the Bill as likely to benefit from it. I believe that that is all the more bitter to them as their hopes were raised by a Question of my hon. Friend the Member for Tynemouth (Dame Irene Ward)—and few people have done more for the pensioner than she.
On 14th April, my hon. Friend asked the Chancellor of the Exchequer if he would… give an assurance that, in the investigations prior to the introduction of a new Pensions (Increase) Bill and a fresh Royal Warrant, the case of retired nurses, midwives, officers and other ranks and retired colonial servants will also be added to the list already announced as covered by the investigation?One would have thought from that, as many overseas civil servants thought, that the Question referred to them. Indeed, my right hon. Friend the Chancellor of the Exchequer replied:I envisaged increases of the pensions paid by Her Majesty's Government to nurses and 69 midwives, to officers and other ranks, and to retired colonial civil servants."—[OFFICIAL REPORT, 14th April, 1959; Vol. 603, c. 806.]Of course, only a very small minority of overseas civil servants have their pensions paid directly by Her Majesty's Government.
I am not making a plea for those servants who have served many years outside this country in conditions often very unfavourable that they should be treated differently or in any way better than civil servants here. Some have already been treated better—if they were lucky enough to serve in Hong Kong, East Africa, or Rhodesia. However, many are treated far worse, and I am thinking particularly of West Africa.
A scientist, say, who served twenty-one years in Ghana as head of 3 department and who retired in 1938 had a pension of £594 per annum. If he was subject to the 1956 pensions increase, he would have got an extra £140 per annum. If he were subject to the increases under the Bill, he would get £228 per annum. However, from Ghana he has got no more than £6 and only a few weeks ago he received a communication to say that he could expect no more.
These cases occur not only in West Africa. A few days ago, I had a letter from a member of the Malayan Pensioners' Association saying:The prospect of a very left Government in Singapore makes the chances of getting any increases, whether to service or to widows' pensions, even less rosy. The Colonial Office's stock answer is, of course, always that 'this is a matter for the Colonial Government'. No doubt it is, but if the Colonial Government resolutely refuse to do anything it is really a waste of time writing to them.After all, the officers of those days, who are now pensioners, were appointed by the Secretary of State and were moved from Colony to Colony by the Secretary of State. I know many people who were seconded from one area in Africa to another. If they were lucky enough to stay in East Africa, their pension is immensely greater than if they were unlucky enough to be seconded to the West. That seems very unfair. There are no fewer than forty-two Commonwealth Governments who pay pensions——
§ Mr. Deputy-Speaker
I have given the hon. Member sufficient latitude. That has nothing to do with our Government.
§ Mr. Tilney
Some of them are paid by Her Majesty's Government and have already been paid increases if they have been lucky enough to have served in India, Pakistan, Burma, or even Palestine. If some have been lucky enough to have served in East Africa, they are better off than those who have served in West Africa.
§ Mr. Deputy-Speaker
I thought that it was the unlucky ones about whom the hon. Member was speaking.
§ Mrs. Eirene White (Flint, East)
On a point of order. Will you enlighten us, Mr. Deputy-Speaker, on how far we can go on this matter? We are discussing a Bill on Second Reading and we have not yet had a Money Resolution. The title of the Bill refers to providing increases for certain pensions and does not specify which pensions. There is a Schedule in two parts and the second part refers topensions payable by local authorities, etc.That "etc." may cover a good deal. Is it not possible for us to argue that there should be certain additions to the Schedule, if we think fit? Can we not at least argue it at this stage?
§ Mr. Deputy-Speaker
We must make some presumpton and one is that the Bill will be founded on it. The Money Resolution cannot be amended.
§ Mrs. White
I do not want to bandy words with the Chair, but it seems an undue restriction on a Bill with such a title.
§ Mr. Tilney
On a point of order. I suggest that my point is somewhat different from that put by the hon. Member for Itchen. As far as I know, no Minister is directly responsible for railway superannuitants, whereas I suggest that at least 71 one and probably three Ministers are responsible for these civil servants.
§ Mr. Tilney
No, I have not, Mr. Deputy-Speaker, because largely under my right hon. Friend the Secretary of State for the Colonies, forty-two Governments are responsible for paying these pensions. The Financial Secretary has already said that the majority of them are very generous, and, in some casts, are more generous than the Government of the United Kingdom. I am not at all sure that they are more generous. The Financial Secretary was good enough to write to me on 26th May saying that he had every sympathy with my viewthat retired Colonial Service officers should in this matter of pensions increases be treated in no way worse than home civil servants. As you know, our policy is to encourage overseas governments to pay increases as favourable as those paid by Her Majesty's Government, and, in fact, almost all of them do so.However, my information is that of those 42 Governments paying pensions no fewer than 21 are less generous to their civil servants than are Her Majesty's Government. That was true under the 1956 pensions increase and, of course, far more Governments will be less generous under this Bill.
It is only natural that many Governments like those of Ghana, Malaya or Singapore have to consider their own indigenous civil servants at the same time as they think about the expatriate ones. Their cost of living has not gone up to quite the same extent as it has in this country. Politically they find it extremely difficult to raise pensions.
I wish to ask my right hon. Friend what happens when overseas territories that are now self-governing, and for which we were responsible in the days when these colonial civil servants were working in their territories, say, "We are not prepared to pay any more." I believe that Her Majesty's Government have a major moral obligation to see that those civil servants are well treated.
I have here a list of West African widows and orphans from which I should like to quote a number of cases of pensioners who served for as many as twenty-four years and who contributed to a 72 compulsory pension scheme. It might have been very much better had they not done so and had they invested their savings in a pensions policy of their own in the United Kingdom on a with-profits basis.
The first case concerns a civil servant who contributed for twenty-four years. His widow is dependent on an invalid daughter and has an income of under £4 a week. In another case the man paid contributions for twenty-one years and his widow is now on National Assistance. She gets help from her family.
§ Mr. Deputy-Speaker
Surely these are matters for which Her Majesty's Government are not responsible.
§ Mr. Tilney
These people were recruited by the Secretary of State for the Colonies and they joined a general service under the Crown. They were moved from one territory to another overseas on the fiat of whoever was the Secretary of State for the Colonies at the time. Surely Her Majesty's Government are responsible, or is the House going to announce to the world and to people who want to serve in territories overseas that it has forgotten all about these people? I cannot believe that is so.
§ Mr. Douglas Houghton (Sowerby)
On a point of order. This is a Bill to provide for increases in certain pensions and the House has not yet decided what those certain pensions should be. As I understand it, the hon. Member for Liverpool, Wavertree (Mr. Tilney) is arguing that although some of the persons whom he has in mind are getting their pensions from local Governments he believes that the increases, if any, which these Governments are giving are inadequate. He is pleading that Her Majesty's Government should include in increases of certain pensions those which are inadequately increased by local Governments. Is that in order, Mr. Deputy-Speaker, on the Bill?
§ Mr. Deputy-Speaker
That, I thought, was not in order. That is the whole point. I was not in the Chair at the beginning of the debate, but I understand that the pensions given by the nationalised industries, for instance, cannot be criticised; and, in the same way, the Royal Warrant cannot be criticised. I thought that this matter came under the same heading.
§ Mr. Tilney
No Minister of the Crown is really responsible for pensions given by the nationalised industries, but I am suggesting that several Ministers of the Crown are, in the end, responsible for these colonial pensions.
§ Mr. Deputy-Speaker
That is just the point. If they are, well and good, but if they are not what the hon. Gentleman is saying is out of order.
§ Mr. Tilney
I suggest that they are responsible because the Financial Secretary of the Government of Nigeria—I do not know on whose authority—several years ago announced that if the widows and orphans pension fund of Nigeria were to be funded then there would be no further claim. I can only imagine that he was speaking on behalf of the Colonial Office at that time, and, therefore, that Her Majesty's Government are responsible. The Financial Secretary stated that in open debate in the Lagos House of Representatives.
I have some sympathy with many of these colonial Governments—several of which are extremely poor—who, because the cost of living in this country has risen, are asked for more money when equivalent indigenous civil servants now retired in their own country are not entitled to those increases. I wonder whether it is morally right to saddle those Governments with all the increases some of which may be due to a fall in the value of our own gilt edged securities. Surely it would be possible if there were a package deal in the future, on technical aid, on Government to Government loans or in some other way, for the Governments of Sierra Leone, Nigeria and of other territories to look after their old servants.
I have many friends in Nigeria. They are generous people and the Government of Nigeria are a generous Government. They have, I know, offered to look into the various cases put up to them on compassionate grounds. However, I should have thought that it would be very much better, if and when there is a funded scheme, for Her Majesty's Government to take over the fund entirely. Surely we should not treat our former servants as forgotten people. They worked before the war on lower salary scales and at a time when there was no paludrine, no air conditioning and very little refrigeration. 74 Conditions were very much worse then than they are today, but they occupied positions of even greater authority.
I believe that the people of this country would like to see justice done and would welcome some arrangement with Colonial Governments. The necessary increases could surely be shared in some way. Any negotiations that there may be should not be dragged out indefinitely for, in a few years' time, the bulk of those badly treated pensioners will be dead.
§ 5.40 p.m.
§ Mr. H. Hynd (Accrington)
This is one of those happy occasions when both sides of the House are largely in agreement. Apparently, Mr. Deputy-Speaker, from the Ruling which you have just given I am prohibited from raising the main point which I wanted to raise, namely, to regret with the Chancellor of the Exchequer that he was not able to include within the Bill anything for railway superannuitants.
It is generally understood that these people are in a specially difficult position, and, as you know, Mr. Deputy-Speaker, I have had a Motion on the Order Paper on this matter for some time and I have also been trying to raise the subject on the Adjournment ever since December last year.
[That this House, being of opinion that exceptional hardship has resulted to British Railways superannuitants, many of whom are not in receipt of National Insurance benefits, in a period of declining money values, calls upon Her Majesty's Government to bring forward proposals for the alleviation of this hardship.]
I say good luck to the many and varied classes included in the Schedule and I hope that the further improvements envisaged by the right hon. and learned Member for Chertsey (Sir L. Heald) will be brought about, because since the Pensions (Increase) Act, 1956, the cost of living has gone up from 103 to 110, and something ought to be done. The £that was worth 20s. in 1951 is now worth only 15s. 2d.
The hon. Lady the Member for Tyne-mouth (Dame Irene Ward) has often quoted what the Prime Minister said at a certain conference in 1947. He said:It is the pensioner, the retired man, the people on fixed or nearly fixed incomes, who have borne the burden … We have a clear 75 duty to those sections of our people who have not shared in this general prosperity and we intend to discharge it.The Bill goes some way towards fulfilling that pledge, but every argument that the Chancellor of the Exchequer and other hon. Members on both sides have used applies to certain other people as well as the people embraced within the Schedule to the Bill.
Dealing with the scope of the Bill, I submit that there is purely a technical difference between various classes of workers some of whom are officially and technically regarded 'as public servants while others are not. Is the railwayman any less a public service man than the postman or the fireman? It is only be cause the form under which the railways are run under public ownership is different from the way in which the Post Office is run under public ownership that we have the difficulty that led you, Mr. Deputy-Speaker, to give the Ruling which you did. Some of these other classes have more difficulties than civil servants, teachers, policemen and others whom we have been discussing because some of them did not get any consolidation of their war-time earnings, and some of them were exempted from compulsory National Insurance until 1948. They therefore did not qualify for the State retirement pension.
Some of these people are existing on pitifully small pensions. I am not in a position to speak with first-hand knowledge about civil servants—that will be done by my hon. Friend later on, no doubt but I can speak from my knowledge of railway servants and say that if the civil service pensions are anything like as small as the pensions on which railway superannuitants have to exist, they need this percentage increase at the present time. I am a member of the Transport Salaried Staffs Association, but I have no interest to declare because I no longer belong to the superannuation fund. In fact, the superannuation fund to which I belong pays no supplements at all.
The history of this is simple. Applications have been made time and time again for those people to whom the Chancellor referred. Meetings have been held with the Minister, but all that the Minister can tell us is that he is in communication with the British Transport 76 Commission. Since then, however, the British Transport Commission has not come forward at all.
I am sorry that the hon. Member for Heston and Isleworth (Mr. Reader Harris) is not here, because I know he is interested in the subject. He showed me a letter which he received from the Chancellor a few days ago in which the right hon. Gentleman said:When exercising their"—that is, the British Transport Commission—discretion in this most difficult matter they must equate the difficulties of the superannuitants with the very large deficit at which the Commission are at present operating.This is rather a curious argument—at least, I think so. It cannot be argued that those classes of people who are deservedly getting pension increases in every case belong to services that are showing a financial profit. If we are going to consider whether a profit or a deficit is being incurred by a particular service, I do not know where we will get to, but the Schedule would be very much shorter than it is at the present time. That point ought to be wiped out of consideration and the moral obligation should be recognised.
In introducing the Bill the Chancellor said that other nationalised industries have shown their awareness of this matter and, in some cases, have made provision for it. It is unfortunately true that whilst some of the nationalised industries have made fairly generous provision the railways have not felt able to do so. This is an injustice that must be remedied.
Thank you, Mr. Deputy-Speaker, for allowing me a certain amount of rope despite the Ruling that you gave, but I think you will agree that it is impossible for the House to consider a Bill of this kind without having in mind those classes that have been referred to, particularly the railway superannuitants. I hope something will be done either in the Bill or in some other way.
§ 5.46 p.m.
§ Lady Gammans (Hornsey)
I am very glad to have this opportunity of speaking for a few moments. For many years I lived amongst and knew personally the people whose affairs we are discussing today. I have a great admiration for 77 the spirit that they always bring to their work. They are loyal and anonymous servants of the State and community, and this is so whether they serve in this country or overseas. Whichever Government is in power they give the same loyal service and carry out and make workable the laws that we make in this House. At home, in the Welfare State, they have made it possible for us to develop the country as we have done.
I know from personal experience that in the Commonwealth the civil servants have played a leading and very vital part in the guidance and education to eventual self-government of the emerging young nationals who have come along to swell the wonderful community of nations in the Commonwealth.
Without the sometimes dedicated service that has been mentioned, the Commonwealth would not have advanced to the position in which it is today. It is because I have such admiration for these fellow countrymen and women of ours, and for the way that they have carried out their work in the past and are doing so at present, that I welcome this Bill to increase their pensions.
I realise that this is just one more step in a long succession of such Bills, but our responsibility is very great to these men and women, and we should do all in our power to bring their pensions into line with the times. By the very nature of their service they cannot speak for themselves and for that reason alone our responsibility is all the greater.
I know from experience how wrapped up these people are in their work. Whether they are serving at home or abroad they feel that they are doing a real service. It is our duty to see that in their retirement they do not suffer in comparison with those around them who have been successful in other fields, and whose very success and prosperity has been made possible and very greatly helped by this background of good work by civil servants in all grades and in all Departments both at home and overseas.
I hope, therefore, that we shall be as generous as possible in adjusting these pensions and so ensuring that, in their years of retirement after a lifetime of forty years or more of honourable service, these people are not embittered.
§ 5.50 p.m.
§ Mrs. Eirene White (Flint, East)
We do not often hear the hon. Lady intervening in our debates, but I am sure that we have all been moved by her most sympathetic reference to the civil servants of the Crown. From family experience I know what inflation can do to a Civil Service pension. My father retired from the Cabinet Office in 1930 and lived to a ripe old age, until 1955. Had he been dependent upon his Civil Service pension he would have had neither comfort nor dignity in his old age. Fortunately, his mental and physical powers were so well maintained that he was able to continue a full-time job until he was 75. But anyone who knows at first hand what inflation has done to Civil Service pensions will be glad that, in the Bill, we are taking some steps to improve the situation of our public servants.
Nevertheless, I feel that this is a pusillanimous Bill. The time has come when the House should accept a much greater degree of responsibility for the well-being of public servants. I stand four-square for parity. The Chancellor has said that difficulties are involved, and we must accept that a precise calculation cannot be made in every instance, when great changes have taken place in the structure of a certain service or Department since a particular person retired. But the Chancellor also rightly remarked that these difficulties are not the main objection to accepting the principle of parity.
The right hon. Gentleman said that to implement this principle in broad lines would cost £55 million, as compared with about £11 million provided for in the Bill. But the extra £44 million which would have to be covered is not a frightening sum, in terms of our national economy. I would remind the Financial Secretary that if the Government decided to forgo the 2d. which has been taken off the price of beer—which might encourage Mr. Clore——
§ Mr. Simon
The hon. Lady may allow me to remind her, in return, that she has already acquiesced in that proposal in Committee on the Finance Bill.
§ Mrs. White
If we did not acquiesce we would have no control over what would be done with the resulting money. This is one way in which the money might be used.
79 I cannot help feeling that the country would have been very much happier in its conscience if that money had been used for some such purpose as to secure parity of pensions for our public servants. Even with the improvements which we are hoping to make as a result of the Bill there will still be many people who retired many years ago who will be in very difficult circumstances in their extreme old age.
I can think of several elderly women—retired teachers—in my constituency who are in this position. I can think of a former headmistress of an infants' school who was one of the best teachers ever to have been found in the county—somebody for whom everyone would have a great regard. Not long ago she wrote to me describing her circumstances, which seemed to me to be deplorable. She retired when salaries of people in her position were very low compared with what they are today.
In this connection I think especially of women's salaries, and how low they used to be in some of these occupations. We realise that there are some elderly women who have, somehow or other, to eke out a very small income and who feel that they have not had a fair deal in comparison with their younger colleagues who are retiring now and are benefiting by increases of salary and also in the approach to equal pay. We ought to face the problem of trying to equate the pensions we pay to those who retired in the past to the pensions to be given to persons retiring at present.
The Chancellor mentioned one other objection. He said that it would make an even greater disparity between persons who retired on pensions and those who were trying to live off small fixed incomes. We fully accept that; that is one of the reasons why hon. Members on this side of the House are anxious to have an adequate superannuation scheme which would ensure that far fewer persons, if any, were obliged to live entirely upon small investment incomes in future.
I do not want to go too widely into the various aspects of this matter, but there is another problem which the community will have to face some day or other. It is a problem, again, to which hon. Members on this side have paid some attention, and which they are working on at 80 present. It is the question of preserving some measure the purchasing power of small savings. Whatever we may think about small savings, the cyclic trend is inflationary—sometimes a little more, and sometimes a little less. The cyclic trend in any industrial society is inflationary. Therefore, we are deluding ourselves if we suppose that this will be the last Bill of this kind that we shall have to introduce, and that we can escape this recurring problem of a fall in the value of pensions or savings.
The time has come for the country to face the problem and to deal with it adequately, instead of making these piecemeal efforts, time and again, in order to try to catch up with events. It seems absurd that in 1956 we had one Act and that only three years later we are discussing another. We should have sufficient responsibility and intelligence to deal with this matter in a much more comprehensive way.
During the course of the debate it has become quite clear that many of us are concerned with classes of pensioner whom we think ought to have been included, or whom we would have liked to be included in such a Measure as this. The Chancellor of the Exchequer devoted lengthy passages in his speech to discussing the problems both of railway pensioners and colonial civil servants. I would not wish to go into any detail on either of those matters, because there seems to be a little doubt about their being in order, but I have here a letter addressed on behalf of the Minister of Transport to the Council of Railway Superannuitants of North Wales, dated 22nd May last, in which the Minister says that the Commission has examined the question of a further increase in railway pensions but has been obliged to declare against it on the ground of cost. The letter goes on to say that the Minister has accepted the Commission's decision.
So, clearly, the Minister is accepting responsibility for this standstill in railway pensions. Had he not accepted the decision, presumably he would have done something about it. Therefore at least we are entitled to go this far and say, as some of my hon. Friends have said, and as the right hon. and learned Member for Chertsey (Sir L. Heald) also said, that we feel most strongly that this group of public servants—because, after all, the 81 railwaymen are public servants—have had a very raw deal. We feel it a matter of justice that they should have adequate pensions, and if the British Transport Commission, for quite other reasons, is not able itself to meet this financial obligation, we in this House should urge the Government to take some responsibility on our behalf.
I think that the same argument applies to the colonial civil servants who are not included in this Bill. Some are included. Those who worked in India, Burma, Pakistan and Palestine are included, but there are others who are not. I strongly support the plea of the hon. Member for Liverpool, Wavertree (Mr. Tilney) particularly on behalf of some of the West African and other civil servants. In some instances such civil servants and the widows and orphans of their colleagues are in a very bad state.
I have here a statement that there are six colonial Governments which have not increased the pensions for widows and orphans since 1947. There are a number of others who have made quite inadequate increases. Representations on this matter have been made to the Prime Minister, indicating the very considerable discrepancies between pensions received by former colonial civil servants, who have given comparable service both in rank and length of service, or their dependants. I feel that one cannot waive the obligation to these men and women. They were recruited as servants of the Crown and we should recognise some obligation for the deficiencies.
I strongly urge the Government to make some more satisfactory arrangements in the future, particularly as there are other countries in the Commonwealth approaching independence over whom we shall have no further jurisdiction if we fail to make satisfactory pension arrangements at the outset. I think that we are fully entitled to express the hope that something more should be done and to let the Government know that there is a strong feeling about these classes of persons.
I should like some assurance about another class not included in the Bill, those who receive Civil List pensions; men and women distinguished in the field or arts and learning, and their dependants. I know that some very desirable increases have been made in recent years, but in 82 this country we are not over-generous to those who have made their living in the arts or in learning. Again, I hope that we shall express the view that they, too, should have their pensions examined so that when we congratulate ourselves, as the Government have done so constantly, on the prosperous state of our affairs, we may make certain that at least we share that prosperity with those who have reached an honourable old age.
§ 6.5 p.m.
Vice-Admiral John Hughes Hallett (Croydon, North-East)
The hon. Lady the Member for Flint, East (Mrs. White) closed her speech by referring, as have other hon. Members, to certain categories of persons who, perhaps, ought to have been included in the Bill but are not. I do not wish to labour that point, but should like to mention one category and ask a question of my hon. and learned Friend the Financial Secretary. There is one small category of pensioners whose position appears to be in considerable doubt. I refer to the former municipal transport workers who, at one time, were paid by the various local government authorities. For the purpose of information, I wish to ask whether or not they are included in this Bill, or whether they will have to await some action by the nationalised industries.
Earlier in her speech the hon. Member for Flint, East came out hot and strong for the principle of parity and I shall refer to that later in my own speech. But first I wish to join with those hon. Members on both sides of the House who have congratulated the Government on introducing the Bill. If it is not out of order for me to do so, I should like to congratulate the Government not only on having introduced the Bill, but on having managed the nation's finances in such a manner that it is possible to introduce a Measure of this nature in a year which has been marked by very substantial reductions in taxation.
Despite the modest manner in which my right hon. Friend the Chancellor opened the debate, I have reached the opinion that this is by far the most comprehensive pensions increase Measure yet introduced. It goes quite a long way to restoring to those veteran servants of the Crown something of the standard of living to which they looked forward during their working years. Perhaps I 83 might, in passing, comment that surely there can be no doubt that the Crown pensioners as a whole were the next in the queue for some sort of concession.
After all, compared with the progress made by the wage-earning population since the war, or compared with the National Insurance pensioners and, even more relevant, compared with their own younger colleagues who are retiring now, they have fared very badly indeed. In particular, they were heavily hit in the earlier post-war years when the rise in the cost of living was somewhat steeper and—I do not wish to make a party point of his—for reasons which we all understand, the Pensions (Increase) Act, 1947, was necessarily very much more restricted in what it did than were the Acts which followed it.
Indeed, at that time there was an idea—again I say this without wishing to be provocative—which has died hard among public service pensioners that the party opposite was less sympathetic to their cause than perhaps were we on this side of the House. I have been delighted to observe what I think is a welcome change of opinion in this matter quite recently. After all, I think I am right in saying that even the great comprehensive Labour plan for superannuation—"National Superannuation,"—which covered the whole field of superannuation, never mentioned the case of the Crown pensioners from beginning to end—there was not even a footnote about them.
Of course, it is true that some of them would have benefited by the rise in the National Insurance pension which was promised, but by no means all of them. A point which is often forgotten when we consider the case of the Crown pensioners is that very many of the older ones are outside the National Insurance pension scheme altogether and, therefore, do not stand to receive any benefits, and have not received any benefits from the increases made in those pensions.
I was therefore, particularly interested, when I ventured to press my right hon. Friend the Minister of Defence on 19th November last on the subject of reviewing the pensions of those who had already retired from the public service, that no less a person than the right hon. 84 Member for Ebbw Vale (Mr. Bevan) intervened and said:Is it not the fact that the contract originally entered into has been falsified by events, and, therefore, should not the contract be reviewed and refreshed in the light of those events? Why should we allow inflation, whoever may be responsible for it, to victimise individuals who made a contract with the State and who are now suffering from the changed circumstances?Later, the right hon. Gentleman said:May I be allowed to follow this up? The contract is not for a figure of money but for a standard of living represented by the money.—[OFFICIAL REPORT, 19th November, 1958; Vol. 595, c. 1123–4.]I only regret that the right hon. Gentleman did not have more to say in the preparation of Labour's plan for superannuation, because those sentiments certainly were not to be found in that document so far as this group of pensioners was concerned.
Grateful though I was at the time for that sentiment, I must now say that I do not agree with the principle that pensions, whether under National Insurance or the pensions that we are considering in the Bill, should be linked rigidly to the cost of living. I am sure that the Government are right to reject that idea. We tried it for a period after the First World War and, for a variety of reasons which many hon. Members will recall, the idea proved a failure. Suppose the idea which was put forward so attractively by the right hon. Member for Colne Valley (Mr. Glenvil Hall), for the Opposition, were adopted. He said—I paraphrase his words—that the pension of the older pensioners should be brought up until it would buy what it would have bought when those pensioners first retired.
§ Mrs. White
No doubt the hon. Gentleman will agree that there are two ways of looking at this matter. One is the link with the cost of living and the other is parity with pensions in comparable occupations at the present time.
§ Vice-Admiral Hughes Hallett
I want to deal, first, with the proposition that the pension should be linked to the cost of living. If the idea to which I referred were adopted, we should find that most of the older pensioners would have their pensions increased to a figure substantially in excess of the pensions of those retiring now. The difference would be even more striking in the Fighting Services than in the Civil Service. It would 85 be a difference quite big enough to cause the greatest discontent and it could not be justified for a moment.
As the hon. Lady the Member for Flint, East reminded us, if we are to have an automatic link it is far better to achieve it by the principle of parity. That has always been the aim of the pension societies, but it has never been particularly popular with Crown servants who are still serving. They feel that any such principle would make it much more difficult for them to get subsequent increases. Of course, they are quite right. I have, therefore, often wondered whether we are correct in thinking that this principle would, in practice, turn out to be inflationary if applied.
On balance, I support the Government in not going for the principle of parity, on grounds of cost and for various other reasons which were given by my right hon. Friend in opening the debate. The Bill seems to go a surprisingly long way towards parity of pensions, much further than I had thought, judging from the figures I have seen in the various tables produced by pension societies. On the whole, the surprising thing is that a Measure which goes such a long way towards bringing pensions into a position of parity should have such a low cost of about £11 million a year. That figure compares with the £55 million which the Grigg Committee told us in its Report would be the cost of full parity. At the time I thought that perhaps the Grigg Committee had been led up the garden path by Treasury witnesses in order to frighten it off making any recommendation about parity.
However, my right hon. Friend the Chancellor of the Exchequer repeated this figure when he opened the debate. There must be some misunderstanding about the figure. It may be that the £55 million assumes that the 60-year rule is dropped as well. I cannot believe that this Measure, which goes such a long way towards establishing what the pension societies want will cost only one-fifth of what the whole would cost. It seems a mystery.
However that may be, the Conservative Government can at least claim that since they have been in power, from October, 1951, successive Pensions (Increase) Acts have more than compensated for the rise in the cost of living during those past 86 seven and a half years. That is something for which the Government can take credit. No one questions the justice or the humanity that has prompted those increases. The older Crown pensioners can be pardoned for having thought at one time that they were forgotten in the various improvements made in the past few years. Their patience has been rewarded and justice has to a large extent been done for them.
For public service pensioners as a whole, the Bill, read in conjunction with earlier Pensions (Increase) Acts, contains one important lesson which I hope will not be lost on them. It is that Governments of either party will always treat Crown pensioners as a whole—treat them alike—and that there is very little useful purpose served by lobbying for any particular group or section of pensioners. I am sure that this is the right principle and that it should be maintained. In this connection I regret the continuing need to make separate, though parallel, provision for the Fighting Services. Had this Measure contained a Clause to end the constitutional difference between the methods by which those two sets of pensioners are paid, so that they would be dealt with together, I would have most warmly welcomed it.
At this point perhaps I might refer briefly to several details which have already been touched upon. There has been pressure from the various pension societies for the ante-dating of the Bill to make it come into operation at an earlier date. I cannot support that suggestion. In principle, the ante-dating of wages or pension increases is to be avoided. One recognises that there are occasions where ante-dating is unavoidable, but as a general principle we should not put everybody to the enormous labour of calculating the increases back to a date a month or two earlier than that proposed in the Bill.
This Pensions (Increase) Bill follows the practice of previous Acts, and confines the increases to pensioners who have reached the age of 60. We are told in the Financial and Explanatory Memorandum that the provision which is to be made for the Fighting Services will be on parallel lines. Therefore, we can safely assume that members of the Fighting Services—who are affected more by this restriction than are civil pensioners—will not get their pension increases until 87 they reach the age of 60. We can also safely assume that there will be the usual agitation to change this restriction and to allow them to have the pension increases at once.
The only point upon which I differ from my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) is that I do not support this agitation. It would be wrong in principle to pay the increased pensions to comparatively young men in their 50's or even 40's. It is better that they, like the rest of the Crown-servant population, should wait until they are 60. In passing, I would ask the Government to be consistent on this point, because what is sauce for the goose should be sauce for the gosling as well. We have the promise of future revisions of pensions. When existing pensions are raised, as they probably will be, surely these pensioners might also wait until the age of 60 before they get increases. That might save the taxpayer a very considerable sum of money in the years to come.
Reference to people who retire young and do not immediately qualify for these increases brings me to the point I want to make about letting them know what their new pension will be. I was delighted to hear the Chancellor say that this was to be done. He was referring, I presume, to all the categories of pensioners referred to directly in the Bill itself. If, without going beyond the bounds of order, I may put in a word for them, I hope that this principle will also be applied to pensioners in the Fighting Services who are far more affected by this particular provision and, in many cases, perhaps have ten or fifteen years to wait before the pension changes.
In conclusion, I say that these successive Measures to increase pensions have a wider lesson for the country as a whole, particularly for those who continue to accept inflation as something which is inevitable— if not indeed desirable to a certain extent. The House will remember that in the first Report of the Cohen Committee it was pointed out that in the long run political pressure from millions of retired people would compel the Government of the day to compensate them for falls in the value of the currency. This pressure, of course, has been to some extent responsible for the present Measure.
88 There is no doubt, moreover, that private firms will be obliged, wherever they can afford it, to follow the lead of the Government—some have anticipated the Government—in these matters and make corresponding increases. Yet even when that is done, we will have to face the fact that there are very large numbers of elderly people who have done their own saving during their lives and cannot be helped by this Measure, or any other Measure that could be introduced.
I therefore hope greatly that this will indeed prove to be the last Pensions (Increase) Bill which it is necessary to introduce within the lifetime of any hon. Member in the House today. I hope that future Governments will realise, as do the present Government—and I hope industry will also realise, too—that there is only one fair way to distribute the benefits of increased productivity, and so on. That is by lowering prices rather than by raising wages, pensions, or whatever it may be. If we really are to double the standard of living in the next generation, let it be done by halving prices. If that policy is followed, surely the pressure of the campaigns for higher wages will diminish and the force behind the campaigns for higher pensions will slowly fade away. I suggest that no one who has the general interest of the country at heart will regret their passing.
§ 6.25 p.m.
§ Mr. W. R. Williams (Manchester, Openshaw)
The hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) has covered a very wide field. Had he been talking about the Army in particular I might have been able to follow him but when he talks about the Navy I am completely lost—I am lost at sea. Therefore, he will excuse me if I do not follow him on some aspects of his argument today.
I must disagree, however, on the last expression of hope which the hon. and gallant Gentleman put forward, that this will be the last pensions increase Measure to come before the House. I think he is very much too hopeful on the one hand and, on the other, there is a purpose to be served by the Chancellor and Government reviewing from time to time the situation of people who retire from active work in industry or the public services.
One of the most pleasing tendencies of modern political life is that all political 89 parties are now coming to the opinion that everything possible must be done to narrow the wide gap between people who have retired from work and those who are in work. All the schemes which the various parties are considering try to narrow that gap, recognising as we all do that the prosperity which present workers are enjoying is due in no small measure to the activities, work, effort and inventiveness of those who have now retired.
Therefore, while I go a long way with the hon. and gallant Member and should not like to make the cost of living the only criterion for review, it still has to be considered. We cannot ignore it, because it decides what goes into the basket when we go to the shops and how much money can come from one's purse to pay for what is in the basket. We must not only review these pensions and superannuation schemes with a view to ensuring that so far as possible people do not suffer hardship because of inflationary tendencies, but also to see whether they can share in any higher prosperity which the country as a whole is enjoying at any given moment. Not only must we make sure that these people do not suffer hardship, but, so far as lies in our power, we must see that they share in the good things and in the prosperity that may come. If the mind of the hon. and gallant Member is travelling in that direction, for what it is worth I endorse his sentiments.
Coming to the Bill, I think this has been an excellent debate. I declare my interest straight away. Although I am not a Government pensioner, I have been actively associated with the Civil Service for so many years that I am obviously interested and must argue in favour of civil servants getting a square deal. Therefore, I welcome this further effort on the part of the Government to adjust the pension to the cost of living position. That is all the Bill is doing. There is no suggestion of seeking parity in any form. I am not sure that I agree with the question of parity in the form in which it has been discussed today.
There is something in the suggestion made by the hon. and gallant Member that it becomes a difficult matter of negotiation if trade unions in asking for an improvement in wages or salaries based on an improvement or expansion of work have at the same time to be "fag-ended" by people who were in the service thirty years ago and whose claim 90 for additional pension would be a corollary to an increase in wages claimed by the union. That would be completely impracticable from the point of view of many trade unions. I have been wondering what would happen if I had to apply parity for the people I had the privilege to represent in the Post Office and assign that parity among workers in the new grades and those who retired some years ago from sorting clerks and telegraphists grades. Certain work was done by one grade which was not done by the other. It would be virtually impossible for any trade union to try to work on the assumption that we could find parity in that way.
It must be remembered that local authorities are involved in the Bill. In thanking the Chancellor for the £6 million which will be provided under the Bill, we must remember the contribution made by local authorities where they are financing it. I am sorry that my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) had to complain about the treatment accorded to local authority associations in connection with these negotiations. That complaint has been repeated from another quarter. I sincerely hope that if there have been any difficulties of that sort, some effort will be made to make sure that people who have to pay some of the money, as local authorities have to pay on this occasion, will be given reasonable time in which to consider the effect of legislation upon their financial position.
Good employers, including local authorities and the Government, have from time to time and in varying degrees recognised hardship and distress and have sought to provide a measure of relief. We ought to make it clear, not so much for the benefit of hon. Members as for the benefit of those outside the House, that we are in no way improving the basic pension of any civil servant or teacher or anybody else. The basic pensions remain as they are. What we are trying to do is to extend their value towards the demands made at present on the purses of those receiving basic pensions.
In four efforts, on which we ought to commend the House, there have been varying Measures of relief. Each of those Measures, in its own way and its own time, has made some contribution towards the removal of hardship and 91 distress. As a result of those four Acts many pensioners have been receiving assistance.
The big change which has occurred with the introduction of the Bill is that we have passed from the criterion of absolute hardship to that of relative hardship. We should be very pleased about that. I have always fought hard in the House and outside for the man on the small pension to receive as much as possible in order to relieve hardship. Among postmen and other members of the Union of Post Office Workers, with which I have been associated, I have found many in real distress because of the changes in their affairs due to inflation throughout the world. Nevertheless, I have also had regard to the man higher up the scale who was denied his entitlement. Although one cannot say that it was a legal entitlement, he was certainly morally entitled to a full pension.
I agree that we should be looking after the interests of the lower income groups and the men on small pensions, but I am equally interested to ensure that justice is done to those in the middle and higher ranges, because it is recalled to my mind that whenever I had to take cases to arbitration courts on behalf of those whom I represented in the Union of Post Office Workers, and whenever I asked for more money for them, I was always presented with the counter argument, "They have pensions which are reasonable and which are calculated at the value of 12½ per cent. of their income, and they have security at the end of their service". Ever since I have been in the House I have failed to hear a more illogical argument than that which has denied to these people that to which they were fully entitled as a condition of their contract in the Civil Service or the Post Office. The right hon. and learned Member for Chertsey (Sir L. Heald) is not in the Chamber. If he were, I am sure that he would express himself entirely in sympathy with that point of view, because I know that he has taken that view on other occasions. In so far as the Bill goes a little way from the criterion of absolute hardship and towards the criterion of relative hardship, I entirely approve of it.
There are many other hon. Members who wish to speak in the debate and I 92 must therefore condense my remaining remarks. One of the two main features of the Bill with which I am satisfied is that which provides for the first time for increases to be calculated by applying the percentages to the annual rate of pension and not to the basic pension. That is a big advance on anything which we have had up to now. I congratulate the Chancellor on making what I regard as a very substantial improvement. I have had an example quoted to me of the result of that change. A person awarded a pension of £91 in 1939 will receive an increase of £19 10s. under the Regulations following the previous Acts by which increases were calculated on basic pensions. The proposed 12 per cent. would produce only £10 18s. 6d. To put it another way, to produce £19 10s. under the present method would require an increase of about 21 per cent. I therefore think that the principle included for the first time in the Bill is a substantial improvement in the conditions of the pensioners.
I am very pleased that there is an escalator Clause. The figure of 12 per cent. deals in a logical and rational way with those who have been retired the longest. After all, the others have had benefits from increases in their basic salaries and wages, whereas some of those who have been retired for a long time have had no compensation worth mentioning.
I do not know why a figure of 12 per cent. has been chosen. Perhaps the chancellor explained that in his speech and I missed the explanation, but I cannot remember any reason having been advanced for a figure of 12 per cent. A man I knew well many years ago—he is now getting quite old—has suggested to me very substantial increases in those figures. He has said, "Anybody who retired not later than March, 1940, should have 25 per cent. more, the next group should have 22 per cent. and the next group 20 per cent." Like the Chancellor, he has given no reason for those figures. Both he and the Chancellor seem to be guessing at a figure. Perhaps the Financial Secretary will give us some logical argument why 12 per cent. is the figure chosen in the Bill.
§ Mr. Williams
For the man to whom I have referred and his colleagues it would be a great asset if we split the difference between 12 and 25 per cent. That would be a reasonable compromise. If the Chancellor puts that suggestion to me I will see whether we cannot put down an Amendment in Committee to meet his views. I am very glad that there is the escalator Clause, because it brings benefits in the direction which most hon. Members would like to see.
I am glad that the Chancellor is abolishing the ceiling for the same reason that I advanced before. I saw no reason for saying to a retired person that he was entitled to an increase of about £250 on his pension, but would receive only £100. Having taken my standard of the officer who had retired on his full pension, I have never ascribed to the £100 ceiling, and I am glad that the ceiling is being abolished.
I have been advised by some experts who get in touch with us on these different Bills that the effect of the ceiling restriction in previous Acts is, however, perpetuated by the introduction of the new system of a percentage increase on basic pension plus earlier increases, unless the Government are willing to make the abolition of ceiling retrospective. Perhaps the Financial Secretary will deal with that problem. It seems a reasonable statement. I feel sure that my hon. Friend the Member for Sowerby (Mr. Houghton) and other hon. Members who may be on the Committee will be only too pleased to join with me in tabling a suitable Amendment. It is no use deciding, on the one hand, to abolish a ceiling if, on the other hand, the Government make it impossible for that to take place.
I wish to say one word about the review, simply because the Chancellor has returned to the House. I hope that the right hon. Gentleman will forgive a very brief repetition of a point I made earlier. I believe that the Chancellor should take note of the suggestion made by the right hon. and learned Member for Chertsey that these reviews cannot just be dropped now; they must be continued, because the pitch has not been cleared, as I hope to show. I want the Chancellor to take note of my point. The Chancellor must not only ensure that pensioners receive something like a 94 reasonable amount of money to meet their commitments. That is in the form of compensation for the rising cost of living. From time to time, as a good Chancellor, he must be prepared to review the situation nationally to ensure that the advantages of productivity and automation and the advantages which are being enjoyed by workers generally as a result of prosperity are in some way or another shared by retired people. I commend that to the Chancellor. The right hon. Gentleman will go down in history as a very progressive Chancellor if he listens to that very good advice.
One other practical point arises out of this review. As I understand the position, no man who retires after 31st March, 1957, comes within the scope of the Bill. A man who retired on 1st April, 1957, is drawing a pension 6 per cent. higher than his 1954 salary would have warranted, while the cost of living has risen by 20 per cent. We have not completed the job in the Bill. There must be an early review, because these cases will be repeated in the future. I cannot speak for the Forces or for teachers, but in the Civil Service the pension is based on an average of the last three years. Therefore, if the man who retired on 1st April, 1957, has lost in the ratio of 6 per cent. to 20 per cent. obviously his case ought to be reviewed in a year or two, Will the Chancellor consider having a review in 1961?
I hope that the cost of living is stabilised. I have never believed that it is in the interests of workers anywhere that we should have wage claims chasing high costs of living. So long as the Chancellor can stabilise the cost of living there will be no need for wage claims arising from this cause. I hope that the right hon. Gentleman will give serious consideration to my suggestion that there should be a review at least by 1961.
Finally, I wish to emphasise the point made by the right hon. and learned Member for Chertsey. Some anomalous cases have been brought to the notice of my hon. Friend the Member for Sowerby and myself. I have been told of the case of a postmaster who was due to retire, but who wanted to continue. He was encouraged to carry on, but in a subordinate grade. I disagree with the right hon. and learned Gentleman's statement that a man should carry on in a high 95 grade until he is 78 and nearly dropping dead, while the other fellows coming along behind him receive no promotion. When a man has been accepted into a subordinate grade of that sort I do not think that he should be penalised in his pension because he has stepped in to assist the Department with which he was associated. This man has suffered. He has pestered—I use the word advisedly—my hon. Friend the Member for Sowerby and myself for the best part of three years. We thought that we had caught the Treasury on one leg in 1956. I still believe that we did, but they went back on a promise which they made to us.
I sincerely hope that the Chancellor and the Financial Secretary will look at this case. The question of date is involved here, not the money which the man was receiving at the time. If he had retired at the original date he would have received a substantial amount more in pension than he is receiving at present. I am prepared to send the particulars to the Chancellor. It is a small matter affecting perhaps only a few individuals, but it should be cleared up once and for all. It might easily be done in Committee.
I am very glad to give my personal approval to most of the provisions in the Bill and to wish it a very urgent passage through the House.
§ 6.47 p.m.
§ Mr. Richard Sharples (Sutton and Cheam)
I am very glad to be able to follow the hon. Member for Manchester, Openshaw (Mr. W. R. Williams), who speaks with very great knowledge and sympathy in these matters. I find myself in almost complete agreement with everything that he said. The House will particularly wish to take note of his remarks about parity and the difficulties which exist in trying to achieve that object.
The hon. Member's speech was different from previous speeches we heard from the opposite benches, because he did not accept the inevitability of a rise in the cost of living. I was especially glad about that, because I do not accept it as inevitable. I share the hope expressed by my right hon. Friend the Chancellor, in opening the debate, that we shall be able to conquer this rise which persisted almost continuously from the end of the war to about twelve months ago.
96 I was not able to understand the figures given by the hon. Member towards the end of his speech in relation to the man who retired in 1957. I hope that when my hon. and learned Friend replies to the debate he will be able to sort it out for me.
I am very glad to be able to join hon. Members on both sides of the House in welcoming the Bill. It is a particularly good Bill, and the Government are to be congratulated on it. I think that we now finally see the end of any suggestion of a means test, which was originally ruled out in the 1956 Act. In this Bill, not only has the means test not been resurrected, but the £100 limit on pensions that can be earned has also been removed.
Secondly, the Bill is to be welcomed because it gives the greatest help to those who have been longest in retirement. There are a very large number of retired civil servants in my constituency—many of them in the late 70's and in the 80's—and they have, perhaps, suffered much greater hardship in these post-war years than have others. I am thinking of those who retired some years before the war. They have seen their standard of living drop considerably. I especially welcome the fact that the escalator Clause, which takes into account the increases given in previous Acts by both Governments, gives the comparatively greatest increase to those who have been longest in retirement.
I also welcome the Bill because although, as my right hon. Friend very fairly pointed out, it does not go the whole way towards restoring the loss in the value of money that has taken place in the post-war years, it goes a long way towards doing so—and a great deal further than did previous Acts.
The hon. Member for Openshaw mentioned the higher civil servants, and I, too, should like to refer to them. One does not hear much mention made of them. For one reason or other, the higher civil servants have not benefited to the same extent as have others under previous Acts of this nature. The principle in previous Acts, I know, has always been to give first priority to the relief of hardship, but now that we have emerged from that phase there is an especial obligation upon any Government to treat, as far as possible, all pensioners, irrespective of their rank or the salary they were drawing on 97 retirement, equally in the maintenance of the value of their pension.
The effect of the £100 limit in the 1956 Act has already been mentioned but, of course, the top-grade civil servants who retired after 31st December, 1947, were excluded entirely from the benefits of that Act. The effect of that exclusion is carried forward into this Bill because, although they will get, if they retired before 1952, the full 12 per cent. increase, they suffer as a result of not receiving the increase in pension bestowed by the 1956 Act. They are, therefore, at a disadvantage compared with their colleagues who may not, perhaps, have reached the same high rank.
I recall that when the 1956 Bill was being debated, the then Financial Secretary made particular reference to this exclusion. He did not base his case entirely on giving priority to hardship. His main point in excluding these pensioners from that Bill was that the senior ranks in the Civil Service had not received rises in salary since 1951. Of course, very shortly after the Bill was enacted, the senior ranks of the Civil Service did, quite rightly, receive quite substantial rises in salary. Therefore, from that moment, that argument became somewhat invalid. I do not want to press my right hon. Friend further on this matter, but perhaps he will give an assurance that he has considered it and will bear in mind the obligation that the Government owes to those who have reached the highest ranks in the Civil Service, and have carried the greatest load of responsibility in days past.
My hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) very forcefully presented the case of those pensioners who receive their pensions from colonial Governments. As I do not want to stray outside the rules of order, I will only say that I very strongly support what he said, and I was very glad to notice my right hon. Friend's remarks on that subject when it was raised at the beginning of the debate.
Clause 7—the Interpretation Clause—states thatthe appointed day" means the earliest day after the passing of this Act which is the first day of a calendar month;I am sure that the whole House hopes that the Bill will have a speedy passage, and that the appointed day will be 98 reached very soon. However, I would ask my right hon. Friend to remember that, in many cases, this Bill deals with people who are in what might be described in the evening of life—some of them are in the late 70's and in the 80's—and the matter of one month or another means quite a lot to them. If it should become possible for my right hon. Friend at a later stage of the Bill to be able to forecast the appointed day and, perhaps, thereby put a certain number of these people out of their anxiety, I am sure that it would be appreciated by the House as a whole.
Taking the Bill together with the other Measures that the Government are introducing, I think that the Government have gone a very long way towards meeting their obligations to those who have served Governments and local authorities so well in the past.
§ 6.58 p.m.
§ Mr. G. A. Pargiter (Southall)
An alternative title to the Bill might well be a "Bill of Restitution". It is, in fact, a recognition by the Government—and one that they might possibly include in the Preamble—of their failure during their term of office to combat inflation, in spite of the promises made from time to time from the Front Bench opposite, and to give some compensation for that failure. That, in effect, is what the Bill really is. An increase from 1952 of a further 12 per cent. in addition to the other advances made is a not inconsiderable figure when one considers values of money, and it is the extent to which the currency has been debased during the life of this Government.
The Government now come forward and suggest that as part of the Budget proposals they are distributing largesse in this form, and haw good and kind they are. Of course, it is nothing of the kind. It is a partial recognition of the Government's failure and should be treated as such and not as an act of generosity on their part. The Government should have seen to it that the contractual obligations that were entered into were reasonably enforceable and reasonable from the point of view of their application. The fact is that the Government's policies which they have pursued from time to time have shown that that has not been so. That, however, is not what I am mainly concerned with.
99 This Bill departs very considerably in principle from previous Bills and Acts of this kind. Previous Acts were a recognition that there was a contractual liability and that there were hardship cases to be met which could only be met in the form of increases in the lower range of pensions. The abolition of the ceiling is a recognition by the Government that differentials should be restored. We know that to be the Government's policy any way. The wider the differential the better they like it. There should always, in their view, be a lot at the bottom and a few at the top. This Bill, while not devising that particular policy, does in fact show that there is a considerable difference between this and previous Pensions (Increase) Bills. I am not saying that that is necessarily bad or good. I am only saying that this is not merely another Bill in the line of succession of previous Bills on this matter.
In view of the fact that other bodies are concerned as well as the Treasury, it would have been as well if they had been consulted to some extent before the Government's proposals were put forward. I want to enter the very strongest possible protest on behalf of the local authorities at the failure of the Government adequately to consult them before inflicting on them an additional burden of £2½ million, because that is what this means to the local authorities.
While there may have been a case previously on the block grant for the Government to have said, "At least we are in this to a fairly considerable extent", there is no guarantee at all that any part of this increase which will fall on the local authorities will in fact be met by the Exchequer. There is a halt promise—but nothing is contained in the Bill that this may be one of the items that will fall to be considered when the block grant is reconsidered, but at this stage there is an additional flat rate burden of £2½ million imposed on the local authorities, and they were given less than seven days' notice of consultation before this burden was inflicted on them.
The local authorities were called on very cavalierly to meet on a particular date—no alternative date was given—the Financial Secretary, not to discuss anything with regard to the principles contained in the Bill, but merely to be told that they had a limited period—a few 100 days—in which to give their considered views through the local authority associations to the Government on this matter. This was in spite of the promises which the Government had made previously that although they had done this sort of thing before it could not occur again. It has happened in precisely the same way again, and I am not sure that the general notice given was not rather less than previously.
There is no particular reason why the Bill should be tied to the Budget. Acts of Parliament are passed from time to time which increase liability on the Treasury and, in fact, this is done regularly throughout the whole course of a year. But, no, it had to be included as part of the Chancellor's largesse and part of the distribution of a benevolent Government giving away money. On this occasion they are giving away £2½ million of ratepayers' money, but they are not saying anything about that. Nor is there any indication that if the ratepayers have to meet the burden which the Government have insisted that the local authorities should pay the Government will meet part of the cost. That is what I am particularly concerned with. No doubt we shall be told that this will not occur again and that the Government will make certain that there is adequate consultation. We were told on this occasion that there could not be consultation because this was top secret and had to be included in the Budget. I do not accept that. We were then told that we had only so many days' notice and it was urgent to get the Bill before the House—we are not disputing that—because the Government's policy made it absolutely necessary to increase the income of pensioners.
It seems to me that the people who have to find the money, even to the extent of £2½ million out of a total of £8 million, have some right to be heard. They have some right to say what they think of the proposals both in detail and in particular. If the Government had not wanted to do it in that way, the best thing that they could have done would have been to put it in two forms. First, they could have introduced a Bill for the pensions for which they are responsible, and then they could have negotiated quite separately with the local authorities on the pensions with which the local authorities are concerned. 101 This might be a cumbersome procedure, but it is an alternative which would ensure adequate representations from the local authorities being considered.
I am not arguing that the local authorities are opposed to these increases. They have indicated that they are not opposed to increases, but that there are certain matters of detail about which they are not happy. They are totally unhappy about the way in which this matter has been dealt with and they have asked me to make the strongest protest on their behalf against what has been done.
§ 7.6 p.m.
§ Mr. Denzil Freeth (Basingstoke)
I think that it is unfortunate that the hon. Gentleman the Member for Southall (Mr. Pargiter) was not in his place when my hon. and learned Friend the Financial Secretary, in answer to a remark from the other side of the House, came to the Dispatch Box and went into detail concerning his own part in calling the consultations with the local authorities. Indeed, I think that one can only say that it was a pity that the hon. Gentleman was not here for some of our earlier debate because, had he been here, he would have recognised the very discordant note which he has struck in our discussions this evening.
§ Mr. Pargiter
I have a perfect right to express my view irrespective of whether or not the Financial Secretary has expressed his.
§ Mr. Freeth
I would not dispute the hon. Gentleman's right to express his views because, like Voltaire, I believe that I would even fight to enable him to do so.
I welcome the Bill, not least as the son of a civil servant who retired over twenty years ago, because it goes some way to implement the pledge which the Prime Minister gave at Brighton in 1957 and which was quoted by the hon. Gentleman for Accrington (Mr. H. Hynd) earlier. My right hon. Friend, as the House will recall, stated that we had a clear duty to those sections of our people who had not shared in the rising prosperity and that the Government intended to discharge their duty.
Of course, some people have private means—savings which they can invest—and the hon. Lady the Member for Flint, East (Mrs. White) spoke a few words 102 about the unfortunate effect that income from savings could have when it buys less and less every year. Some people have been able to keep up with the falling purchasing power of the £ by wise investment in equity shares. Many others have not, and some, by the terms of trusts, and so on, cannot invest in equities and have to remain in gilt-edged.
I think that civil servants and those in public service in general have a particular right to be looked after by the State, not least because for the work that they do they are in their working lives very underpaid, and for the responsibility that they shoulder they receive salaries which bear little comparison with the salaries that would be paid to them in commerce or in industry. Therefore, during their working lives they have very little opportunity to save. It is one of our main moral duties to see that during their period of retirement these people are paid a pension or retired pay which bears some relation in purchasing power to the standard of life which they expected to be able to enjoy when they retired.
I am glad that my right hon. Friend the Chancellor of the Exchequer and, indeed, all the Treasury Ministers have stopped talking the unutterable nonsense about a contract of service bearing some relation to a percentage of the final salary or the average of the final few years' salary. That is absolute rubbish. I was a little saddened that at one moment my right hon. Friend appeared to be echoing that suggestion. However, if I may say so, the general tenor of his speech followed a far more progressive line of thought.
When people join one of the Services of the Crown and they think of their pension, they certainly do not think of it in money terms. They think of it in terms of what that money will buy. I hope that the fact that we have once and for all done away with the ceiling, or the limit, to the increases which are allowed, means that this Bill is a final nail in the coffin of the invalid argument of the Treasury.
We have helped public servants who have retired in the past, under Coalition, Socialist and Conservative Governments. In 1955, the Government gave a promise in their General Election manifesto. They said that insurance pensioners, war pensioners and public service pensioners could be sure that the Conservative Government would continue to give the most 103 constant attention to their interests and needs. I believe that that is a pledge which the Government could do more towards fulfilling. Admittedly, in 1956 we gave further increases for all pensions granted before December, 1947, and for pensions granted between that date and 31st March, 1952, where the final salary had been under £1,500 a year.
I am very glad to see that that figure of £1,500 is not repeated in this Bill. As my hon. Friend the Member for Sutton and Cheam (Mr. Sharples) said, these senior civil servants are still suffering from the fact that no increase was given in 1956, because the percentage in this Bill is calculated upon the pension receivable upon retirement plus any increases which have been made since.
Like everyone else who has spoken, I rejoice that the Opposition welcome this provision. I welcome the fact that the £100 limit has gone out of the window. We are, in fact, to quote the hon. Member for Southall, widening out the concertina a little. It had got a little too close together. It is one of the things which nearly always happen to retired people in times of inflation. It is, unfortunately, true, whatever figures may be quoted, that the retirement pensioner, or the person on retirement pay from the Armed Forces, is still substantially worse off than the person retiring today with equivalent rank or in a roughly equivalent grade. The Chancellor said that this Bill was designed to relieve hardship and those who have suffered most acutely. I would prefer to think of justice than hardship in relation to these people, because it seems to me that if we merely consider hardship we shall neglect justice—and justice will relieve hardship.
There has been a lot of discussion earlier about postmen. The right hon. Member for Colne Valley (Mr. Glenvil Hall) said that the 1939 postman had had a 100 per cent. increase in money terms. That is still less than the pension which a postman in similar circumstances would get if he retired today. The 1939 postman gets about £180 after the passing of this Bill; if he retired today he would be getting £235. It is worth noting, in passing, that the purchasing power which he would need to maintain the 1939 standard of living would be not £235, but between £250 and £270. The fact remains that today his income in monetary terms 104 is doubled but that has meant a severe sacrifice in purchasing power.
However, I do not think that the postman is typical, because he comes at the bottom of the pension scale and, therefore, he has benefited from every single Pensions (Increase) Act. If we go a little further up the income scale we do not find people who are receiving twice the pension they were receiving in 1939. The Civil Service principal who retired in 1939 received £550 and he is now getting £691. When the Bill is passed and he gets the 12 per cent. increase he will be receiving £774—the 1939 pension plus not 100 per cent., but 40 per cent. I should have thought that this was a far more general picture than the picture of the postman. Most people will be getting roughly half as much again in money terms as they were receiving in 1939. Yet the cost of living has risen not by 50 per cent., but by 200 per cent.—three times what it was pre-war.
I regard myself as a supporter of the parity school of thought. The hon. Member for Manchester, Openshaw (Mr. W. R. Williams) dealt with the difficulties of this scheme in some detail. I was very pleased that my right hon. Friend the Chancellor said that he did not consider the practical difficulties in a scheme of parity to be insuperable. I fully realise that some of the serving civil servants may not be in favour of it because, as one of my hon. Friends said, they fear that a scheme of parity would result in the Treasury being less willing to grant increases in salary. That may be, but one day they, too, may be pensioners and they may find that a parity scheme would be of great benefit to them.
After all, what the pensioner wants is the knowledge that whatever happens to prices—and prices to a considerable degree are the responsibility of the Government in power: they can be the total responsibility of nobody else—he will remain able to enjoy those comforts to which he has looked forward and to which he thought he would be entitled on retirement.
I do not understand this figure of £55 million which has been quoted. Does it include the amount that the local authorities would have to pay, or is it purely a Treasury figure for the central Government? It seems odd, in view of the 105 figures that have been quoted, particularly for the earlier pensions—rather selective figures, I thought—that £55 million is so far ahead of £11 million. I think that the answer is that the figures which have been quoted to show how, under the Bill, we almost approach parity, are too selective and the vast range of civil servants will be drawing pensions two-thirds as much as are drawn by persons retiring today in a similar grade. I do not believe that the pensioner would be very worried about the grade in which he was placed. I think he would be far more keen to know that his pension was definitely linked to a pension on a level or standard where it moved in line with the cost of living. I think that he would like that just as much as, if not more than, the suggestion of the right hon. Member for Colne Valley that in some way, based upon a retail price index, the purchasing power of the pension should be assured.
It is possible to be too clever with one's employees' money. It is possible to be too clever in not paying people what they are really worth. If we wish to continue to recruit the top brains for the Civil Service and other Government services, we must pay people something which will enable them to have a decent level of comfort throughout their working lives and in retirement. They will be overworked for the whole of their working lives and they will be underpaid for the whole of their working lives, but they will have the security of the pension. Unless the Government in some way guarantees to protect the purchasing power of the pension, the civil servant will have nothing to look forward to and we shall not have the best people volunteering for the Service.
This is true not only of those civil servants whose pensions are at the moment the direct responsibility of the United Kingdom Government. It is particularly true, also, I should have thought, of those colonial Civil Service pensioners who now find themselves in the awkward position of having their pensions paid by a Government over which they have no control at all through the ballot box because that Government is in Ghana and they happen to be here. I suggest that my right hon. Friend has some kind of moral obligation to see that these people do not lag behind in the 106 purchasing power of their pensions, even if this Government have to pay the difference.
Inflation is the main enemy of the second half of the twentieth century, of the post-war world, just as deflation was the main enemy in the inter-war period. Quite frankly, I am not immensely optimistic about inflation having been killed. I do not think that it is an enemy which one kills. There will be many skirmishes and battles in the war, and I should not be at all surprised if inflation won some of them. In an economy pledged to full employment, to a high standard of social services and to a high proportion of national expenditure devoted to defence, and without a currency linked to gold, I do not see how we can stop prices rising from time to time.
I believe it is essential, therefore, to make a definite effort to fix the pension of those who have retired in some kind of relation of graded parity with the pensions of those who are retiring today and who will retire in the future. It is only in this way, I believe, that our honour can be satisfied and the right people be attracted to the civil and military services of the Crown.
I have one plea to make to my right hon. Friend about the appointed day. I know that he will say that he will need the co-operation of both sides of the House in this, and I am sure that it will be forthcoming. Could we not make certain that the appointed day, the first day of the calendar month following the Royal Assent being given to the Bill, will be 1st August so that pensioners will not have to wait throughout the long Summer Recess until Parliament reassembles in the autumn?
Like everyone else who has spoken, I heartily support the Bill and I congratulate my right hon. Friend on bringing it in. I do not believe that his work has ended with it. Until we have some method for protecting the pensioner against the falling purchasing power of the £ or the potentially falling purchasing power of the £, we shall not have done our duty to those who have served the State in their working lives.
§ 7.25 p.m.
§ Mrs. Patricia McLaughlin (Belfast, West)
I join with those who have spoken in welcoming the Bill. It represents a very determined effort on the part 107 of the Government to solve the pension difficulties of those who urgently need something to be done to make their standard of living more equitable and more in keeping with our general standard of life today.
I am sure that the Chancellor has taken into account very carefully all the pressure which has been brought to bear by all manner of public service pensioners who have written to and visited Members of Parliament urging upon them their needs and their rights. I am not quite certain about the percentage increase, and I hope that my right hon. Friend may be able to tell us later exactly what is the position in regard to the 12 per cent. as a maximum which can be offered as a starting point for older pensioners. What would be the cost of increasing this to 15 per cent., and increasing the 10 per cent. to 12 per cent. and the 8 per cent. to, say, 9 per cent.? Although we have heard many reasons for parity or for not having parity, it is obvious that there are many older pensioners today who find it extremely difficult to live.
I will quote as an example the case of a teacher who retired in 1945 on a basic pension of £129. Today, that pension is still under £4 a week. The particular teacher I have in mind is 74 years of age. A 12 per cent. increase of a pension under £4 a week is not a very large amount, and it will not make an enormous difference. Indeed, I should like to think that the 15 per cent. of which I have spoken could be made even higher, although one must remember that this is the taxpayers' money, the country's money, as well as money which has to be found by the local authorities.
We are dealing here with those who find it most difficult to fit into the present pattern of life. There are very many people retiring today who can expect to enjoy a better standard of living than those who have for many years put up with pensions which were far too low as a result of the increased cost of every day necessities. Many of them were public servants who worked all through the war, working in great difficulties. I have in mind particularly teachers who, in some cases, had to take a reduced salary because of evacuation problems and who then took a reduced pension on 108 that salary, with the result that today they have a pension paid to them at a level lower than they originally deserved, merely because they played their part in our war-time effort.
It is wonderful to think that the Government have at last done something for all categories of public servants, but we have no right to be complacent. Every time something good is done, of course, there are criticisms. That is healthy. But if we allow ourselves to think that this Bill will solve the problem for all time we shall be entirely mistaken. It will be difficult to balance the rights of the older pensioner with the rights of those who have retired recently, but the recently retired will, in time, be old pensioners themselves. We cannot look ahead to what the situation will be in ten or fifteen years, but we can look at it today.
In this context, I wish to refer especially to one category of pensioners. I am sure there must be a large number of them; otherwise the provision which there is in the Bill would not have been inserted. In Clause 5 (2) there is a proviso thatnothing in this subsection shall prevent a pension authority making such reduction in the amount of any increase payable under the said provisions to a pensioner as may be necessary to secure, where the pensioner is in receipt of a non-contributory pension under the Old Age Pensions Act, 1936, that he shall receive the greatest possible amount in respect of the increase and the non-contributory pension taken altogether.This must surely mean that there are people who are at present enjoying—if that be the right word—a pension so low that they require, if they are to have any increase whatever, that their old-age pension itself given to them under the non-contributory pensions Act will have to be altered. There are the really low level pensions which, I feel, could be adjusted more generously than is now suggested.
Secondly, in the Schedules there is a reference to Royal Irish Costabulary pensioners who are to have their pensions increased by the 12 per cent. since they will come under the category of older pensioner because the R.I.C. was disbanded many years ago. There are, however, some constables who feel that they still have not had complete justice. I put it to the Chancellor, now that he has gone so far in pensions, that he might consider 109 looking into the problem which has worried members of the Royal Irish Constabulary who were transferred to the Royal Ulster Constabulary and who feel that their compensation at that time, which they looked upon as part of their pension, was not honoured. This is a matter which has been shuttlecocked back and forth between Stormont and Westminster, and it would be very useful if on this occasion something could be said to clarify the position.
We have heard many differing views this afternoon on pensions. We are all agreed that we must try to ensure that the Bill is passed into law as quickly as possible, whatever Amendments or alterations may be discussed in Committee. It is a fine thing to think that we can be so unanimous on that point. On the other hand, whatever happens when the time comes for the Bill to go forward, I feel that of necessity many Amendments will be put forward. I hope that the Chancellor will be able to prevent many of those Amendments being put forward by answering some of the questions which have been put to him and, in particular, to say whether there is any likelihood of his increasing the percentages in the Bill.
Hon. Members opposite and on this side have all said that they will ensure that there is no delay in helping the Bill forward so that the people who have waited so long will get the amount of pension to which they are rightly entitled.
§ 7.31 p.m.
§ Mr. Walter H. Loveys (Chichester)
It is obvious that there is a considerable measure of agreement on this Bill. As my right hon. Friend the Chancellor of the Exchequer said, it is a simple Bill designed to give relief to State pensioners who have suffered so much from rises in the cost of living over the last two decades. As so much has been said with which I entirely agree, and also because I so much agree with the Select Committee on Procedure which suggested that there should be an interval for short speeches to enable back bench Members to take part in the debate, I shall keep the House for only a few minutes.
When I first read the Bill I was very disappointed that the rates were not higher, although I realise that it is not justifiable to link pensions with the cost of living. Also, I was very pleased that the Schedule was so comprehensive. It 110 deals with about 400,000 pensioners. If the Service pensioners, who will be rightly included by Prerogative instruments outside the Bill, are included, then it deals with about half a million pensioners. I am, however, disappointed that it does not include superannuated railway workers. I understand that we are not allowed to talk about that matter as it is outside the Bill. I hope that the British Transport Commission will take note of the obvious feeling of the House towards this special class of pensioner.
I have already expressed my disappointment about the rates. It is so easy to say, "Let us give them a little more." We would all like to say that, but we must look at the picture as a whole. Eleven million pounds is not chicken-feed. This is the fourth increase in pensions by the present Government. We all realise from what we have heard this afternoon that the only real way to help pensioners is to stop the rise in the cost of living. At last we have reached a stage where prices have remained steady for twelve months. This is the first time that that has happened since the war. I know that my right hon. Friends dare not suggest that the cost of living may remain steady, but as a back bencher I may be allowed to be a little optimistic and to say that perhaps the cost of living may even go down in the years to come. I realise that that is a very rash statement.
I welcome the Bill. Many of my constituents will be affected by it. I know that many of them will say that the rates should have been higher, but I feel that it is one more step in the right direction to alleviate the difficulties of State pensioners whom it is our duty to help. We are the only people who can help them. If looked at in conjunction with the larger question of the steadying up in the cost of living, it is a real contribution that should be welcomed throughout the country.
§ 7.35 p.m.
§ Mr. Douglas Houghton (Sowerby)
The right hon. Gentleman must be the most congratulated Chancellor of the Exchequer that we have had for some time. He is a very lucky man. He has not had to dish out any of the rough stuff. Almost everything that he does is pleasing to the House. Owing to the more favourable economic position he is 111 able this year to reduce taxation, to repay post-war credits on an unparalleled scale and to bring in a Pensions (Increase) Bill which undoubtedly must be commended for what it attempts to do.
I have been associated in one way or another with every Pensions (Increase) Bill except that of 1920. There have been many of them. There were Pensions (Increase) Bills in 1924, 1944, 1947, 1952, 1954 and 1956, and now we have this one. It seems to me that that is a reflection on someone. Perhaps it is a reflection on this House that we have not really settled the problem of how to deal with pensioned public servants in all these years.
That brings me to the first question which I think we must consider, namely, what is the principle of the matter? That is a very difficult question to answer, because we have not had the assistance which is so frequently obtained from outside bodies of great repute and wisdom on matters of this kind. One can turn to the somewhat harsh doctrine in the White Paper of 1954 and the still harsher doctrine of the 1920s. I will not quote paragraph 36 of the White Paper to which reference has been made on several occasions, but it embodied the principle of not protecting our servants against the decline in the value of money. That led to the restriction of increases to lower pensions only, to the introduction of the means test, even including wife's income as well, to ceilings and other limitations upon the benefits of pensions increase legislation.
The Government held to a large part of that doctrine until 1956. It is admitted that a good deal of it was swept away by the 1956 Act, but, as I reminded the Chancellor during his speech, it was the Committee upstairs which improved the 1956 Bill and took out of it a new principle which was then introduced into pensions increase legislation of relating the increase to the length of service rather than to the amount of pension and the date of retirement.
However, these are past events, although I agree with the hon. Member for Basingstoke (Mr. Denzil Freeth) that in his speech the Chancellor appeared to repeat in softer tones the doctrine of paragraph 44 of the White Paper of 1954. Certainly he did not replace what was said there with anything different. He said 112 it in a way which did not sound so objectionable to current thinking on how we should treat our pensioned public servants. Now, however, I suppose that the 1956 Act and this Bill to a large extent turn the back of the Government upon the literal sense of what was embodied in the 1954 White Paper.
The right hon. and learned Member for Chertsey (Sir L. Heald) said that perhaps the 1954 White Paper was now moribund. I do not think that we have completely said goodbye to it and I should have been much happier if the Chancellor had enunciated a fresh principle, something different from the doctrine which said that the fundamental principle of Civil Service pensions is thatonce awarded they are not normally subject to change in either directionand thatit is a principle that should be departed from … only to the extent that severe falls in money values causing real hardship among pensioners may justify special increases—as distinct from revised pensions—where the degree of hardship calls for it.What is to be the principle of dealing with those who have retired, the purchasing power of whose pensions may fall owing to changed circumstances, and who may be denied a reasonable share in the rise in the national income and in the rise of the standard of life of all those round about them? If we jettison the idea of real hardship as a condition of adjustment of pensions, which the 1956 Act did and the present Bill continues, what principle are we to follow?
I do not think that the cost of living alone is a satisfactory basis on which to adjust these pensions. At best, that would merely restore the purchasing power of the pension to what it was assumed to be at the time the pensioner first received it. That is not enough in times when new amenities and widening horizons of domestic expenditure and of personal enjoyment are all leading to higher demands upon our production and national income in which these pensioners, in common with others, are entitled to share.
The hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) suggested that the real solution was not to increase pensions but to halve prices. It is no good halving the price of a radio set if everybody wants a television. One must bear in mind that new things are now regarded as essential 113 parts of personal and domestic expenditure which a few years ago would have been regarded as luxuries or even beyond the scope of many people.
§ Mr. Houghton
One has first to get them at any price before the price can be halved. The hon. and gallant Member appreciates, I believe, the point I am making that the cost of living in its literal and possibly restricted sense would not of itself be a satisfactory guide.
Parity has been mentioned as a simple device for applying a principle to pension increases. My hon. Friend the Member for Manchester, Openshaw (Mr. W. R. Williams) and the hon. and gallant Member for Croydon, North-East have both referred to some of the difficulties of applying this principle. I do not think that it would be insuperable, although there would admittedly be difficulty where duties and grades have changed and where the current standard of pay takes into account the present nature of the work performed and the responsibilities that these servants carry in a field of growing complexity of public administration, public responsibility and duties. It is not easy to relate service today with the more congenial times of years ago. Although I say that it would not be insuperable, it would be difficult to relate existing grades, especially as they may change from time to time in the future, to those in which retired civil servants served years ago. That, however, is something which we can examine in closer detail in Committee.
Bearing in mind the number of times that we have had to do what we are doing today, it is a pity that we are without some considered judgment on this matter. The Priestley Commission on the Civil Service was not asked to do this and felt that some aspects of superannuation were not within its terms of reference. After much consideration and thought, the Commission found a principle for the fixing of Civil Service pay, which in two words was fair comparisons, but it was not required to consider a principle for adjustment of pensions for those who had already retired. It would be useful if the Government were to ask an independent committee to consider this 114 matter and to give us the benefit of its advice.
For the time being, we can do little more than approach the matter somewhat ad hoc and see what changes are to be made which will give reasonable justice to those who have retired in past years and whose pensions have now fallen behind what they should be.
Are the increases in the Bill enough? I do not know. We have not been told very much about the increases which are proposed, upon what they are based and why they stop short where they do. Simplicity is written into the Bill very clearly. I will not dissent from any attempt to get a simple solution as we go along, because these complicated matters can be very tiresome. They can be misleading to the pensioners themselves and sometimes they raise a great many false hopes as to what the Bill will do for them. There are a great many misconceptions regarding the proposals in the Bill already.
The figures which have been given by the Treasury illustrating the effect of the Bill show that those who retired years ago are getting a little nearer to those who retired more recently. I am, however, bound to point out that those who retired more recently, in 1957 and 1958, did not have the full benefit of the substantial pay increases that were given to civil servants as a result of the recommendations of the Priestley Commission in 1955 and, in the case of the Higher Civil Service, since that date.
The operation of the three years' average as the basis of calculation of pension in the Civil Service obviously means that a man who retired in the early part of 1957 has his pension calculated on the average of his pay in the three preceding years, which, as I say, would not reflect the current increases given to civil servants in those grades, and the current level of remuneration of the officers themselves. They will retire with a basic pay calculated on the three years' average, lower than what they are actually receiving at the moment. So they start with the disadvantage that the pay upon which their pension is calculated is lower than the pay they are receiving at the time they retire.
If the higher pay at the time of retirement represented some reward for promotion or incremental adjustment or 115 something else which in the long term represented a distinct increase in the civil servant's standard of life, one is justified in saying there is no reason why we should calculate pension for the rest of his life on a fortuitous increase in remuneration in real terms towards the end of his service. That is the reason for the averaging principle. In local government, I understand, the average is over five years, not three, which emphasises the point I am making, that there is a backlog of past remuneration on the lower scale which will be a drag on the amount of pension of a civil servant retiring now.
The pay increases which have been given to most of these public servants, local authority people, teachers, civil servants, have not been improvements in their standard of living in real terms. They have been in restitution for the fall in the value of money. They have been paid to them to enable them to maintain the standard of life which they previously had. Therefore, it is a misfortune that the averaging principle subtracts from the compensation given to them in current remuneration when fixing the figure upon which their pension is to be calculated, so that the figures given in the Treasury table for those who retired in 1957 and 1958 are all much lower than the pension which will be payable three years from now to those who will retire in that time.
There was a letter in The Times of 22nd May which illustrated this point very clearly in connection with the principal grade in the Civil Service. The principal with thirty years' service who retired in 1939 now gets a pension of £691. Under the Bill his pension will be increased to £774. Meantime the principal grade in the Civil Service has had a substantial pay increase, so that when those civil servants retire who can get the benefit of the three years' average at the higher rate of pay they are getting now their pension will not be £774 but £1,025.
That illustrates the difference in pension between those who are shortly to retire and those who already have retired. It will soon be visible, and those who retired in 1957 and 1958 are already beginning to feel their sense of grievance. That is why I think it is important to have something much more definite about review in the future.
116 That would lead to a suggestion, I think, either that the scale should be recast to take account of these factors or that there should be more specific provisions for review after a period, in order that the fresh gap which will arise can be looked at in the light of the circumstances in a few years' time.
That probably touches on the point which the right hon. and learned Member for Chertsey raised about the operation of the three years' averaging. I think the three years' average was quite justifiably a basis for calculating pension when, as I said a few moments ago, there could be fortuitous rises in pay in the concluding years of service which would scarcely justify reflecting fully in the amount of pension to be received for the rest of the civil servant's lifetime; but when applied to adjustments of pay to compensate for the fall in the value of money there is much less justification for the three years' average.
Another point which has been referred to in the debate is this very vexed and complicated one of those civil servants who go on pension and are re-employed or who formally retire and extend their service either in the same grade or in a lower one. Like my hon. Friend the Member for Openshaw, I could not justify the re-employment or the extension of the service of serving civil servants in all cases in their existing grade or in the grade which they held immediately prior to retirement. There are very many considerations which have to be taken into account, including, of course, age and capacity, as well as matters of promotion of those who follow on, and other questions affecting the interest of the public service.
Most of those who did stay on or who came back believed that they would benefit from so doing in the matter of pension, that if they continued for a few years they would earn an addition to the pension which they had earned up to the time of formal retirement. That was held out as inducement for civil servants to stay on.
Now they find that Clause 2 of the Bill gives them the more favourable of two alternatives, either the basic pension calculated at the time of formal retirement plus the addition for extended service, or the pension which they were 117 entitled to at the date of formal retirement plus any increases under the Pensions (Increase) Acts. In some cases I believe it is true that retired officers will find that their pension at the time of formal retirement plus increases is better than if they take their basic pension plus the addition for extended service, thus depriving them of any pension benefit for the period they stay on.
The reply of the Treasury on this difficulty is that it must, of course, be careful not to create an anomaly as between the person who formally retires and stays on or retires and comes back again, and the civil servant who elects to continue as a fully established civil servant not drawing his gratuity and not having his pension calculated at any notional date of retirement. If he stays on his pension will be calculated at the time of eventual retirement and may not necessarily attract any pension increase at all and would put him in a less favourable position than the person who adopts the former course.
That is regarded by the Treasury as anomalous and must be avoided. There is, perhaps, a solution to that, if one has to be found, on these lines, and that would be to regard all civil servants, if they extend their service, as having formally retired at the age at which they were entitled to do so and to treat them all on the same footing to avoid any anomalies as between the two types who stay on.
Then I think it would be the wish of the House to give some reward for those who extend their service. Whether it would mean some reduction in pension increase to take account in some measure of additional pension earned or whether they should have both in full is a matter for argument. I think that we would wish, if we can, to see that those who stay on fulfil their expectation of getting a somewhat bigger pension.
A number of references have been made to the "ceiling". The Chancellor has been congratulated on removing it from the new proposals but, as has been pointed out, the ceiling of 1956 remains built into the scheme. Later we shall wish to consider whether it should not be dismantled entirely. It is perpetuated because the pension increase now is to be given on the total pension payable 118 under the 1956 and earlier Acts and since, in a number of cases, the total amount of pension is limited by the ceiling obviously the increase will be correspondingly limited under the Bill. I think that the Chancellor when dealing with the ceiling would wish to get rid of it altogether.
As to the effective date, the hon. and gallant Member for Croydon, North-East said that he was against retrospection. I would remind the House that the Pensions (Increase) Act, 1944, received the Royal Assent on 24th May, 1944. It was back-dated to 31st December, 1943. The Royal Assent was given to the 1947 Act on 18th February, 1947, and that was back-dated to 31st December, 1946. The 1952 Act received the Royal Assent on 1st August, 1952, but that was effective from 30th September, 1952. That was a forward date, but the 1956 Act received the Royal Assent on 12th May, 1956, and was operated from 1st April, 1956. Therefore, there is on the whole a tradition of modest retrospection and I think that most people would expect this Bill, on the precedent of the 1956 Act, to be back-dated to 1st April this year. This is a matter we can look at later on.
The right hon. and learned Member for Chertsey had a few thoughts on the question of review and in earlier debates on Pensions (Increase) Bills I have advanced the view that it is somewhat paradoxical that pay can be settled by negotiation in the public service, in local government as well as central Government service, yet pensions require legislation. The smallest adjustment of pension conditions requires legislation. That seems to be very tiresome and unnecessary. It probably has a history, the House keeping a close watch on sinecure pensions at the hands of the State which were ill-deserved and which in centuries past went to friends and courtiers. Therefore, on the matter of pensions the House keeps a very vigilant eye and a tight control. Is that necessary in these days?
I concede, however, that it may be necessary to have legislation to deal with the responsibilities of local authorities and education authorities in respect of local government service pensions; and since we wish to deal with them altogether and in the same way, I 119 recognise that if legislation is necessary for that purpose we had better have it for all. But I think that it is a great pity that the most deserving of public servants who are retired, who have no trade unions to fight their current claims, who have no Civil Service arbitration tribunals to make awards which can almost make the Chancellor blench at the size of them, are denied any remedy except at the hands of the House, dependent on the legislative programme, on the judgment of Ministers, and the mood of the House, and on other pressing claims on Parliamentary time.
I can carry that no further today. It is a very big question and I have referred to it several times. In my view, enabling legislation, giving Her Majesty power by Order in Council to do certain things, would be preferable. The Prerogative instrument is the method by which it is done in the case of Service pensions, and that does not require the attention of the House. I am sure that after a few years only there will be a fresh case to consider in this connection. We ought to prepare for it, either by getting a committee to consider it, to look at the principles and consider a basis on which the House could do justice without incurring debates on principle as well as on method, or by providing some greater facility for dealing with the matter through the processes of legislation or otherwise.
The case for review has been strengthened by the recommendations of the Grigg Committee on Forces pensions. The two-year review mentioned there has certainly captured the imagination of the civilian pensioners, who think that what is good for the Forces pensioners should be good for them. There can be arguments about that, about different considerations, recruitment needs, the transfer from a conscripted to a voluntary Army and so on, but it is something to which the Chancellor should give serious attention.
The only remaining thing to say is that it is a reproach to the House and to the country to see men and women who have served the State long and well living in threadbare retirement. Although many of these retired civil servants, and public servants of all kinds, gave their service in a world that has passed, those of them who survive are having to live 120 in the world of today. We should recognise that, and adjust their circumstances to their having a reasonable place in the world of today alongside their erstwhile colleagues in the public services, workers in industry, in commerce and the professions. We should let them feel that they are not neglected public servants of the past.
There are some most distinguished civil servants who are living in circumstances which are bound to move anyone who sees them today. They are deprived of much intellectual enjoyment, and of books, magazines and travel which they were able to enjoy when they were in full-time service. They have still something to contribute to our intellectual life, and certainly to our consideration of the problems of public administration. We wish that they should not feel aggrieved with the country which employed them and feel a constant sense of indignation at the shabby way in which they have been treated by Governments in the past. The Bill removes some blemishes of that past treatment, but in Committee we shall argue that it has not gone far enough and that we have not answered the main question of what is the principle of the matter and what should be the guide for future action in this field.
§ 8.10 p.m.
§ The Financial Secretary to the Treasury (Mr. J. E. S. Simon)
For those of us who have listened to it, this has been an agreeable and an interesting debate. It is agreeable in the first place in that it is always pleasant to have a Treasury Bill generally welcomed by the House, but this seems to me to have been a singularly well-informed debate, drawing on a remarkably wide range of experience of the problems which we have been discussing.
We started by hearing the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) speak with his experience of administering this problem as a former Financial Secretary to the Treasury. We have heard hon. Members speak with experience of the Civil Service. There was the hon. Gentleman the Member for Sowerby (Mr. Houghton), who speaks on these matters with unrivalled experience and authority, if he will allow me to say so, and from whom we have had again today a most excellent 121 speech. Then we heard the hon. Gentleman the Member for Manchester, Open-shaw (Mr. W. R. Williams), who, again, has had a lifelong experience of considering the problems under review today, and I hope he will allow me to say without offence that he gave us an outstanding contribution.
Then there was the hon. Lady the Member for Flint, East (Mrs. White) and my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth), who are, respectively, the daughter and son of civil servants. Then we heard my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) and the hon. Gentleman the Member for Accrington (Mr. H. Hynd), who have been closely associated with certain aspects of this problem. Then we heard the hon. Gentleman the Member for Southall (Mr. Pargiter), who could speak for the local authorities, and whom I had the pleasure of welcoming with the other local authority representatives when I saw them on 14th April.
I hope that I may be allowed to pay a special tribute to the contribution made by my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) and his committee, and to include my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) and my hon. Friend the Member for Tynemouth (Dame Irene Ward), although we have not had the pleasure of a contribution from her today.
A great many suggestions and points have been made, and I know the House will forgive me if I leave some of the details unanswered. Some of them are more appropriate to be considered during the Committee stage, others, even some quite important points, my hon. Friend and I would like to consider further before the Committee stage without adverting to them today. I know that the House will bear with me in that step.
I should like to deal with the challenge made by the hon. Gentleman the Member for Sowerby, who asked what is the principle of this matter? I myself had great sympathy with his final declaration, as I took it to be, which seemed to be very much in accordance with our national approach to such questions; that is, to say "Well, really, this is not at bottom a matter of principle. We have to try to approach it ad hoc." That is particularly 122 the case here, because what one has to do is to weigh two conflicting considerations. Where the balance is struck at any time seems to me to be partly a question of expediency, partly of social climate, partly of the economic situation, and so on; because what we are concerned with here is the responsibility of the Government as an employer.
It is clear that the Government, as an employer, have a twofold responsibility; the first to their employee and the second to the taxpayer who has to find the money. First, then, like any other good employer there is a duty to the employee. I do not think that it is necessary, nor would it be particularly fruitful, to try to ascertain how much of that duty is promoted by self-interest and how much by more elevated principles. I think that good employers have always felt a sense of personal obligation towards their employees, which arises from the very relationship of dependence. But, as so often, altruism is not only the best morality but the best policy, and the employer who cherishes his staff and is careful of their interests and welfare will readily attract the best employees. His organisation will be a happier, and, therefore, probably a better functioning one. I think that that was implicit in the remarks of my hon. Friend the Member for Basingstoke. That is because dependence is really inter-dependence, and in a complex economic society like ours there is no doubt that we are members of one another.
Nor do these considerations apply only to the staff actually in employment. No employee will work his best, under however felicitous conditions, if he feels that at the end of his service he will be thrown on the scrapheap. Nor will any humane and responsible employer willingly contemplate such a state of affairs. For this reason we have seen in recent years considerable growth in occupational retirement schemes. The best employer does not regard himself as absolved from further responsibility even by the setting up of the most generous occupational retirement scheme. He should remain solicitous lest rising prices erode the value of the pension in such a way as to cause unconscionable hardship. Certainly, that is the attitude, as we know, of quite a few private employers.
For many years the State has sought by its conduct to rank among the best 123 employers. Naturally, again, this has not been confined to the provision of welfare for those actually serving. Public service occupational pension schemes were amongst the first in the field, and they are still among the best. And when inflation cast its ugly shadow on the lives of the pensioners, the State has sought to mitigate their hardship by a series of Pensions (Increase) Bills. That aspect was put very strongly by my hon. Friend the Member for Basingstoke.
That is one aspect. The Government have another responsibility as an employer. They must never forget that it is not their own money which they spend. Broadly speaking, the Government have no money of their own. They have to raise the funds they need by taxation, and this taxation falls on many whose means are as straitened as those of the public service pensioners and, indeed, who 'have no protection from the effects of inflation. The Government, in this respect, must, therefore, act with humane responsibility to their former employees, trying to shield them from hardship. But they owe an equal responsibility to those who have to find the money, remembering that this has to come from many who are themselves suffering hardship from which the Government, unfortunately, have no means of shielding them; that is to say, no means save by what should be a principal object of policy, as my right hon. and learned Friend pointed out, namely, so to conduct our affairs as to avoid the evils of inflation.
It is for these reasons among others, as my right hon. Friend explained, that the claim of the Public Service Pensioners' Council for so-called parity—that is to say, by one means or another raising past pensions to the level paid to those now currently retiring in similar grades at the expense of others whose means have equally been eaten away by rising prices —is to my mind unacceptable. It takes cognisance of only one aspect of the Government's responsibility.
There is one other aspect of which it would be a mistake to lose sight, and that is the purely budgetary question of the cost. It costs £55 million, as my right hon. Friend pointed out. I have been asked by a number of hon. Members for the break-down of that figure. Of that figure the State and local government would have to find £40 million, of which about 124 £10 million would fall on the rates, and the Services would pay the other £15 million. It is not really such a remarkable increase when one considers the recent increases in Service pay, sharp increases, and also such measures as we have seen in recent years as the introduction in gradual stages of equal pay between the sexes.
Therefore, even apart from the question of cost, it seems to me, for the reasons which I have laid before the House, that parity is unacceptable in principle. There was a division of opinion which ran clearly across the House, with my hon. Friend the Member for Basingstoke in an unholy alliance with the hon. Lady the Member for Flint, East; and I do not think that other hon. Members, including those who have great experience of negotiation in this field, were prepared to accept it.
It seemed to me that the point put by the hon. Member for Openshaw was really repeating in other words what had been said by my hon. and gallant Friend the Member for Croydon, North-East, that it would have very serious repercussions on wage negotiations which one ought to think out more carefully. The hon. Member for Openshaw used a striking phrase about "fag-ending wage claims", and he emphasised the physical impossibility of reconciling past grades with present grades and so on.
It seems to me that, quite apart from those difficulties, the principle is not one that the Government could accept, because it takes cognisance only of the responsibility of the State as employer to its employees without taking equal cognisance of the State's responsibility to the taxpayer who has to find the money.
Nevertheless, not only have we thought it right to bring forward a Pensions (Increase) Bill at this stage, but the Bill that we have brought forward is in many respects, as hon. Members have pointed out, considerably more favourable to the public service pensioner than any previous Measure. My hon. and gallant Friend the Member for Croydon, North-East said that it is by far the most comprehensive Pensions (Increase) Bill yet put forward, and there is a great deal to be said for that point of view.
In the first place, the cost of living has risen less than before any previous Pensions (Increase) Bill. The figures were 125 given by my right hon. Friend. Since April, 1956, when the latest Act took effect, the Retail Price Index has risen by only about 7 per cent. Compared with the rises during the intervals between the existing Acts, this is a low figure. Between October, 1952, when the 1952 Act took effect, and February, 1956, when the 1956 Act was presented, the index rose by about 11 per cent. Between December, 1946, when the 1947 Act took effect, and June, 1952, when the 1952 Act was presented, it rose by no less than 37 per cent.
I see the right hon. Member for Colne Valley getting restive. I hope that I shall not add to his restiveness, nor indeed breach the harmony of today's proceedings, if I mention that the cost of living had already risen by more than 28 per cent. in October, 1951, when his Government left office without introducing any Measure of their own.
§ Mr. Simon
Yes, that was the period after 1947.
Another matter which one must bear in mind in relation to the cost of living is that this Measure is brought forward in conditions far more favourable than they were for previous Measures. We must remember that in October, 1951, the cost of living was rising rapidly. It was to some extent again rising rapidly in 1956. Today, mercifully, it has been stable for a year.
§ Mr. Glenvil Hall
I am sorry to interrupt the hon. and learned Gentleman, particularly as he has been so kind over this, but it is fallacious to talk of the 1956 Act taking effect in 1956 with the underlying assumption that it included all additions to the cost of living up to that date. The 1956 Act, as I understood it and still understand it, took into account only the cost of living figures up to 1951.
§ Mr. Simon
That is so. I think, though, that I am comparing like with like.
That brings me to my next point, the second respect in which this is a very favourable Bill to the public service pensioner. In general, the increases proposed in the Bill go closer than on previous occasions to reinstating the value of the pension after erosion by rising prices. 126 My hon. and gallant Friend made that point very clearly and forcibly, and I think that is the obverse to the point that has just been made by the right hon. Gentleman.
Thirdly, the percentage increase is not, as heretofore, on the basic pension but on the pension as increased under previous Pensions (Increase) Acts. Both my right hon. and learned Friend and the hon. Member for Openshaw have emphasised the significance of that. Its effect is that the pensioners who benefit most from the Bill are automatically—I emphasise that—in general those who retire earliest and those whose pension is smallest, and that is so because it is they who were the principal beneficiaries of the earlier Pensions (Increase) Acts. Indeed, their basic pension is increased not by the 12 per cent. which figures as the maximum under the Bill but by as much as 20 per cent. or more.
Fourthly, there is no upper limit under the Bill on the amount of increase which is payable. That has been generally welcomed throughout the House. There has not been a dissenting voice. The hon. Member for Openshaw put it as having passed from the criterion of absolute hardship to the criterion of relative hardship. I think that that is absolutely true, particularly when one considers that it supervenes on the abolition of the means test in the 1956 Act.
Fifthly, there is no earlier cut-off date in respect of higher pensions. That, again, is an aspect of the same point which was made by the hon. Member for Openshaw. "But", says the hon. Member for Sowerby, "although you are abolishing the upper limit you have built the ceiling of 1956 into the scheme". Both the hon. Member for Openshaw and my hon. Friend the Member for Sutton and Cheam (Mr. Sharpies) suggested that we ought to make the abolition of the upper limit retrospective.
I put it to the House that if we did that we should automatically disturb the rather more than nugatory weighting, which is intentional under this scheme, in favour of the smallest and oldest pensions. It was put to me very strongly by the deputation from the Trades Union Congress, which I had the pleasure and honour of receiving, that it was essential so to frame a scheme that those 127 whose pensions had been most eroded by inflation and rising prices, and particularly those whose means were smallest, should have particular consideration.
Previously, there was an upper limit. Previously, there was a means test. Previously, the pensions increases had been particularly directed to the older pensions and to the smaller pensions. The deputation pointed out that if on top of that we gave pensions increases on the increases, there would be a weighting additional to the escalator in favour of the older and smaller pensions. I am sure that hon. Members will bear that in mind if we discuss this matter in Committee.
Lastly, and I believe of considerable importance, as a result of the general structure of the scheme and the matters I have mentioned, the proposals contained in the Bill are—and I hope that hon. Members will agree with the hon. Member for Sowerby about this—remarkably simple and intelligible considering the complexity of the subject and of some of the previous Bills. Those are the general considerations which I wanted to put before the House.
I want now to deal with one or two specific matters raised in the course of the debate. The right hon. Member for Colne Valley and the hon. Member for Southall mentioned discussions with local authorities. We would certainly have liked to have given more time to local authorities, and I am the first to appreciate that they, like ourselves, were working against the clock. We could not consult them before my right hon. Friend had announced to Parliament what he was proposing to do, which was considered in the context of his Budget proposals, but we took the first opportunity, on the very day of the Budget, to write to local authorities and to outline the scheme which we had in mind, and to invite them to a preliminary discussion.
I met them myself on 14th April and made it clear that that was only a preliminary discussion. Indeed, I apologised for the very short notice which they had been given, and I pointed out that we desired, as I knew that they would desire, that any pension increases which resulted from the scheme should be in the hands of the pensioners as soon 128 as possible. I know that they shared that wish. I know that they would have welcomed more time, but they recognised the desirability of bringing the matter to a reasonably quick fruition, and I should like to say how grateful I am to the representatives of the local authorities for complying with the very tight timetable and for all the help and cooperation which their representatives have given to us.
The hon. Member for Southampton, Itchen (Dr. King) posed a question about the general grant to local authorities. Of the total of £2.34 million in the table which my right hon. Friend gave, about £0.4 million would be attributable to services covered by the general grant payable to local authorities. As such, it would fall to be taken into account in the periodic settlements of the totals of the general grant, but the associations with whom we discussed these matters have agreed that the amount involved will be too small to warrant a reopening of the settlement for the first period. As hon. Members know, that will cover the years 1959–60 and 1960–61. They made the point that if that settlement had to be reopened for other reasons this expenditure would be relevant to the reconsideration, and I formally accepted that position.
The next particular issue which was raised during the course of the debate was, who was included or excluded under this Bill? A number of hon. Members raised the question of the railway super-annuitants. They were my right hon. and learned Friend the Member for Chertsey, the hon. Member for Itchen, the hon. Member for Accrington—in a speech which either showed great flexibility of the rules of order, or great accommodation in the occupant of the Chair, as it seemed to me—the hon. Member for Flint, East and my hon. Friend the Member for Chichester (Mr. Loveys). The matter was dealt with conclusively by my right hon. Friend in opening the debate.
What my right hon. Friend said was that we deal exclusively in this Bill with pensioners who have earned their pensions in the public services and who are paid their pensions from public funds. Pensioners of industries now nationalised are not paid from public funds and it would be anomalous for the Bill to cover 129 them. Moreover, it would be unnecessary because the nationalised industries do not need additional statutory power of this kind for the payment of pension increases. The essential point, however, is that any improvement of pensions in this way is primarily a matter for the boards concerned.
In the end, it comes to this, that the general practice which is the foundation of the status of the nationalised industries is that each industry acts as an independent commercial undertaking. To write into the present Bill a proposal for an increase in the pensions of railway super-annuitants would not only be inappropriate for the reasons given by my right hon. Friend, but would actually be inconsistent with the freedom and responsibility of the industries and the boards concerned as commercial undertakings.
My hon. and gallant Friend the Member for Croydon, North-East raised a particular problem, the question of old municipal transport workers. Certain employees of local authority tramways were taken over by the London Passenger Transport Board, now the London Transport Executive, and I take it that it was to that group he was referring. The point is that those people ceased to be local authority employees when the tramways were taken over. They are no longer covered by the provisions of the Pensions (Increase) Acts relating to local government. They elected to continue as members of their former employers' superannuation schemes, but nevertheless they are not appropriately the subject of a statutory Pensions (Increase) Act such as this Bill will become.
The hon. Lady the Member for Flint, East asked me about the Civil List pensioners. I understand that these pensions are reviewed annually in the light of the pensioners' needs. Technically, the increases granted are new pensions and particulars of them are laid before the House. The short point is that they, again, are not appropriate subjects of a statutory Pensions (Increase) Act—and I see that that proposition has the approbation of the right hon. Member for Colne Valley, who, no doubt, had to consider the matter from time to time when in office.
A number of hon. Members raised the question of the ex-colonial servant, including 130 my right hon. and learned Friend the Member for Chertsey, my hon. Friend the Member for Wavertree, my hon. Friend the Member for Hornsey (Lady Gammans), my hon. Friend the Member for Sutton and Cheam, my hon. Friend the Member for Basingstoke and the hon. Lady the Member for Flint, East. It seems to me that in the end the plea made, particularly with such force by my hon. Friend the Member for Wavertree, is a request that the United Kingdom Government should take the responsibility for giving pensions increases in any case where the colonial Government failed to bring their scales up to the United Kingdom scales, and that this should also apply to those Governments which were recently colonial.
I understand very well the point and the force with which the argument was pursued, but I would leave this thought with those hon. Members who raised the question; if we were to do that, does any hon. Member doubt that no other colonial or ex-colonial Government abroad would ever give a pension increase? Not only would it be a question of ourselves giving the pension increase in the place of Governments which so far have defaulted—if I may use that term in the sense which will be understood by the House and without imputing any ill faith—but there would obviously be a considerable additional likelihood that any other colonial Government or Government of a former Colony, which so far has shouldered its responsibility in the way we like to see it shouldered, would feel it very unfair to have to continue to do so when other Governments received the advantage of the United Kingdom paying the increase.
Most overseas Governments are at least as generous as Her Majesty's Government in this matter. We realise very well that some territories have so far felt themselves unable to award increases on widows' and orphans' pensions as favourably as those they would pay on officers' pensions, and indeed that some of those widows whose pensions were awarded many years ago are to our knowledge suffering hardship. The Government have that question very much in mind, but it is not appropriately dealt with in a Bill which deals only with increases in pensions paid by Her Majesty's Government. I can assure hon. Members that the Government have and will keep this matter under review.
131 My hon. Friend the Member for Belfast, West (Mrs. McLaughlin) asked about the Royal Irish Constabulary. As my hon. Friend knows this is a very long-standing problem which has been considered on many occasions. It is an extraordinarily difficult problem and, again, I shall simply run away from it, if my hon. Friend does not mind, by saying that it is not a matter which is appropriate to consider on the Bill. It is a basic pension problem rather than a problem of pension increase.
I will deal now with a question raised by the right hon. Member for Colne Valley, the hon. Member for Openshaw and the hon. Member for Sowerby. They asked why the maximum increase should be 12 per cent. and not more. That was echoed in a number of speeches. It really springs from the history of pension increases. In almost every combination of Service and rank at some point or other in the long span of years which we are considering there are cases of earlier pensions exceeding some at least of the later ones. As always, it is not the beneficiary who minds that. It is the one whose pension is exceeded. He feels resentment.
It is not a question, as one hon. Member put it, of the anomalies being always taken against the pensioner. These are two pensioners side by side, and obviously the one who has retired later, possibly on a higher salary, feels resentment if an earlier pensioner has retired with, as a result of Pensions (Increase) Acts, a larger pension. Every pension increase must accentuate some such anomaly. I was very glad that hon. Members recognised that a great many anomalies had been mitigated by the scheme we have put forward.
If we increased too many of the earlier pensions too far above the level of the comparable ones beginning later, the anomaly would be accentuated and the later pensioners would have a very real cause for complaint. I give as an example a civil servant retiring as a clerical officer after twenty years' service, which is by no means a rare case. If he retired in 1947 his pension is already 16 per cent. larger than that of his colleague who retired in 1952. Under the Bill it becomes 19 per cent. higher. If we raised the upper end of the scale above the 12 per cent. proposed in the Bill we should widen the gap still further. That is the reason why we have stepped it in the way we have.
132 Although it sounds mercenary, as a Treasury Minister I am bound to tell the House that there is also a question of cost. An increase of 14 per cent., instead of the 12 per cent. for which the Bill provides, would cost about £1 million. Personally, I could not regard that expenditure as justified when, as I have ventured to explain, the plan would lose rather than gain in equity as between pensioners retiring at different times over the period with which we are concerned.
Finally, I will say a word about Clause 2, about which there has been some misapprehension. We will certainly consider the scheme suggested by the hon. Member for Sowerby for dealing with the basic pension. Perhaps we can return to that in Committee. But I would venture to emphasise that Clause 2 is purely a relieving Clause. It is solely in the interest of the pensioner. The reason why it is necessary is that the Bill prescribes a diminishing scale of increases after March, 1952. The result is that the later a pension begins after that date the less the pensioner benefits under the Bill.
Unless there was a special provision, as we have it in Clause 2, a pensioner who postponed the beginning of his pension by becoming re-employed would run the risk that his new pension, enlarged by the additional service plus the lower rate of increase, might be smaller than his original pension enlarged by the higher rate of increase. Therefore, it is necessary to have this provision in order to ensure that the pensioner who postpones his retirement does not suffer in that way. I hope that that explanation will satisfy the House that the proposal is a reasonable one.
The hon. Member for Sowerby commended a modest retrospection in regard to the appointed day. I myself prefer the challenge that was given to us by my hon. Friends the Members for Sutton and Cheam and for Basingstoke, that we should proceed with all the celerity at our command and ensure that the appointed day is 1st August—in other words, this side of the Summer Recess.
It only remains for me, once again, to thank hon. Members for the very agreeable welcome they have given to the Bill, and for all the constructive thoughts and suggestions that have been put forward. I can assure the House that we 133 will consider them carefully before the Committee stage. I know from what has been said that it is in accordance with the wishes of the House that I now commend the Bill's Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).