§ Order for Second Reading read.
§ 10.18 p.m.
§ The Minister of State, Privy Council Office (Mr. John Smith)
I beg to move, That the Bill be now read a Second time.
Like most pensions legislation this is, I am afraid, a technical and complex Bill. But the changes it seeks to introduce are not in themselves unduly difficult. There may be some aspects on which differing views in the House will be expressed—as, indeed, there always should be—but in the main I hope that this is a Bill which will commend itself to the whole House. It is not intended to be costly or controversial and I hope that it will enjoy a wide measure of support on all sides.
The purpose of the Bill is to implement the recommendations for improvements in the parliamentary contributory pensions scheme which were contained in report no. 8 from the Top Salaries Review Body. It also makes a number of lesser administrative changes in the scheme. The Review Body's report was, of course, presented to Parliament in July 1976, but at that time pay policy virtually ruled out any improvements in occupational pension schemes and we were not able to take any immediate action. From 1st August 1977 this was no longer the case, and we were able to consider implementing the Review Body's recommendations.
At this point, I should like to say a little about the Government's general approach to the Review Body's report. We have accepted all the recommendations as a package. I am sure that there are several additional changes which hon. Members might have wished to see in the Bill but which the Review Body did not recommend or even specifically reject. My right hon. Friend the Leader of the House has received a number of proposals of this kind. One can, of course, think of many ways of adding to the benefits of any pension scheme, and not least the parliamentary scheme.
Many of these suggestions are, at least on the face of them, attractive. An example is the thought that some improve- 616 ment might be made in the benefits for dependent children. But I am sure that hon. Members would agree that we are always in a difficult position when it comes to determining our own conditions of service. It is reasonable that our conditions should match those of comparable occupations in the public service and elsewhere. On the other hand, we naturally want to avoid any suggestions of self-interest or over-generosity to ourselves.
There is great advantage, therefore, in our being able to refer these matters to the Top Salaries Review Body. In this way we can ensure that improvements in the scheme have regard to the overall level of benefits under it and that they are introduced only after careful costing and thorough research by an independent body. I am sure that this arrangement works well and to the advantage both of Members and of the taxpayer. It is for this reason that the Government are reluctant to depart from the Top Salaries Review Body's recommendations, particularly when a proposal put to them by hon. Members and others has been specifically rejected. We have no wish to weaken the Review Body's standing in these matters. Indeed, I should like to take this opportunity to express our appreciation to Lord Boyle and his colleagues for their work in this difficult field. One does not lightly enter the dense thickets of the legislation on the parliamentary pension scheme.
The main provisions of the Bill are, I think, by now fairly familiar to hon Members, and in view of the lateness of the hour I am sure that the House will not wish me to dwell now on the minor administrative provisions in the Bill. I shall, therefore, confine myself to describing the five main improvements introduced by the Bill, all of which do no more than bring the basic scheme for Members of the House of Commons up to the level of public service pension schemes generally.
The improvements in the Bill will make no difference to the basic pensions of Members, with the exception of the small group of present Members who served in the House between 1949 and 1955. The changes that the Bill makes are designed primarily to assist the dependants of Members and those Members who find themselves in particularly 617 difficult personal circumstances—for example, serious ill health. The ill health retirement provisions are almost identical with those which have been available to civil servants since 1972.
The first main improvement, contained in Clause 1 of the Bill, is an option, to be exercised at the end of a Parliament, for Members with 25 years' service in the House to retire at age 62 with the full pension they have accrued to date—that is, without any actuarial diminution such as is done in the case of hon. Members who retire early, at the age of 60, under the present scheme.
The Review Body noted that some other pension schemes with a retirement age of 65 contained provision for early retirement on pension accrued to date. They considered that the present option for MPs to take an actuarially reduced pension from age 60 onwards imposed a heavy financial burden but that a general reduction in the retiring age of the scheme to, say, 60 would lead to few Members being able to accrue a full pension by the age of retirement. The Review Body concluded, on balance, that retirement at age 62 should be permitted at the end of a Parliament for Members with at least 25 years service in the House. This is, I am sure, a recommendation which will be widely welcomed.
Clause 2, which is very important, provides an option for Members to retire early on grounds of ill health with their reckonable service enhanced in certain circumstances. In all cases the Member must satisfy the Trustees that he ceased to be a Member as a direct consequence of his ill health, which was such as would prevent him from performing adequately the duties of a Member of the House of Commons. This is, we believe, a reasonable test for the Trustees to apply. Under Clauses 3 and 4, current members of the supplementary scheme who retire on grounds of ill health will be eligible to receive an early pension, but without enhancement of reckonable service—that is, confined to the Members' scheme. The same will apply to former participants in either scheme who retire from work on grounds of ill health after leaving Parliament.
The third main change is in Clause 9, which permits the Lord President by order to provide for the purchase of added years of reckonable service, at full cost to 618 the Member, by periodical contributions from salary or by lump-sum purchase. Work on the preparation of this order is well advanced and it will embody all the Review Body's particular recommendations for the scheme. I hope that an early draft of the order can be made available to hon. Members who are interested before we reach Committee stage on the Bill. The provision applies to any Member serving at the passing of the Act.
Clauses 6 and 7 of the Bill seek to introduce improvements in the arrangements for widows' and dependants' pensions payable in respect of Members of the House of Commons in service after the passing of the Bill. Where a former Member dies after retirement, his widow will receive not less than the full amount of his pension for three months before she begins to receive the normal half-rate widow's pension.
Similarly, where a Member who had qualified for a pension dies in service his widow will receive not less than his full pay as a Member for a period of three months. If he was under 65 when he died, the widow's continuing pension after the three-month period will be calculated on the basis of enhanced reckon-able service, as if her husband had retired on grounds of ill health. Clause 7 provides a limited short-term benefit for widows and children when a Member dies in service who had not qualified for a pension.
Clause 10(3) provides for Members actually in service after the passing of the Act to receive an extension of back service credit from 10 years—as at present—to 15 years, for services as an MP before the introduction of the parliamentary pension scheme in 1964. The Review Body considered carefully whether all previous service should be reckonable for pension purposes. It concluded that this would not be appropriate but that a limited increase could be justified in the context of the package as a whole.
To pay for these changes, there has naturally to be some increase in contributions both by Members themselves and by the Exchequer. The total cost of the changes provided for in the Bill will be about £120,000 a year. This will be met partly by an increase in Members' contributions from 5 per cent. to 6 per cent. of pensionable salary and partly by an 619 Exchequer contribution of some £60,000 a year. There is no increase in contributions under the supplementary scheme for office holders, because the great majority of the improved benefits attach only to the basic scheme for Members.
Some hon. Members may be interested in the effect of Clause 14, which may appear particularly complicated. The main purpose of that clause is to bring about a small improvement in the position of those who retire from the House of Commons and then hold offices in the House of Lords with fairly low salaries. At present they may not receive any part of their pension earned as a Member of the House of Commons, as long as they hold office in the House of Lords. Clause 14 would allow some or all of their pension to be paid up to the level where pension and salary together equal the current salary of a Back-Bench Member of Parliament. They will not, therefore, lose financially on moving from this House to take up an office in the House of Lords.
I am fairly sure, too, that I shall be asked why the Bill does not seek to improve the arrangements for severance pay for Members of this House. The answer is that severance pay is not a benefit payable under the Parliamentary Pension Scheme and it is, therefore, outside the scope of the Bill. But my right hon. Friend has already informed the House that there will be an early opportunity to discuss this matter during the forthcoming debate on Members' pay.
§ Mr. Thomas Swain (Derbyshire, North-East)
How does the Minister explain the fact that anyone who is retiring at the next General Election and who has been in the House 19, 20 or 21 years will, if he wants to buy service of 10 years, have to find a sum of roughly £4,260? This means that it will be more than three years before he gets one penny benefit from his investment.
§ Mr. Smith
There is a genuine difficulty here. I am afraid that to get an enhanced benefit under the pension scheme there must be some method by which it is paid for. In the case that my hon. Friend mentioned, if it is paid for by a lump sum obviously it will be very expensive. But we do not see how it is possible to make such a radical difference 620 to the parliamentary pensions scheme to allow extra year's service to be added without payment for it. I am afraid that that is an unfortunate consequence of the parliamentary scheme having to stay roughly in line with other public service schemes. Some Members who would be retiring—not particularly those to whom my hon. Friend referred, because I think that he was careful to say 19, 20 or 21 years' service—and who were here for many years prior to 1964 when we did not have a scheme would get the extra five years. This is a considerable benefit, for which no extra contribution will be required. That is a genuine attempt to try to make up for the fact that a number of Members with very long service in the House have only 10 years reckoned for the period before 1964, although they may have spent a very long period of time in the House before that. It is in the nature of a compromise, but many of these things have to be compromises.
§ Mr. Kenneth Baker (St. Marylebone)
The Minister said that the ideas enshrined in the Early-Day Motion on severance pay were outside the scope of the Bill, but he added that the Leader of the House had said that the House would have an opportunity to discuss the matter. May I press the Minister a little further on that topic? Will the House have an opportunity not only to discuss severance pay but actually to decide upon it? The House would welcome the opportunity to make a clear decision whether it wants to support the sentiments in the Early-Day Motion.
§ Mr. Smith
I am sure that my right hon. Friend the Leader of the House will consider the hon. Gentleman's suggestion, but it is not appropriate for me on this pensions Bill to speculate what might be possible in respect of Member's pay and severance pay, which are quite other matters. I thought it only fair to the House to point to the limits of this Bill, which would not go so far as to allow amendments in Committee on severance pay. I have no doubt my right hon. Friend will reflect on the hon. Gentleman's remarks.
I should like to end on a more general note. In opening the debate I said that this was a complex and difficult Bill, as hon. Members who have read it will appreciate. I apologise for the difficulty 621 in sometimes understanding its provisions. I am afraid that, because it was a difficult Bill to frame, it has taken some time to produce. I know that hon. Members have been concerned about the time the Bill has taken to emerge into the light of day, but those who have experience of pensions matters will know that this is an area in which no prizes are awarded for being 90 per cent. right. Small mistakes can have major consequences and can be seriously damaging to individuals. Therefore, particular care must be taken in framing legislation.
I should, however, like to leave with the House the reflection that our pensions scheme is probably one of the most complicated in the United Kingdom, if not in the world. It is carefully tailored to meet the difficulties and uncertainties of parliamentary life, and it is composed of two separate schemes woven tightly together for Members of Parliament and office holders. As an example of the drafting difficulties this creates, the ill-health provisions in the Bill have to allow for 14 different permutations of service in the House of Commons and the House of Lords.
After the Bill is passed, the parliamentary pension scheme will be governed by at least five separate Acts of Parliament as well as the major order, to be made in the next few days, modifying the scheme to contract us out of the new State pension arrangements. The background reading list necessary to understand the present Bill runs to at least 10 items. We should, I think, consider whether it really remains sensible to attempt to embody in primary legislation a scheme of this complexity, which will inevitably need fairly frequent amendment to keep it up to date. The time may be coming—as it did for the Civil Service in 1972—when the scheme needs to be consolidated not in a further Act but in a system of rules which can be adjusted rather more easily. This is a point for the longer term, but it is an important one on which the Government would welcome the views of the House, particularly in this Second Reading debate.
§ Mr. Tim Rathbone (Lewes)
The Minister mentioned the establishment of rules for the future of the pension fund and suggested that many Members would welcome that, but it would be inequitable if those rules embraced a particular sys- 622 tem of pensions based on a hypothetical salary, which is the case now and which is unique to the House of Commons, when that system is not available to the rest of the country. I hope that the Minister does not have in mind the introduction of rules on those lines.
§ Mr. Smith
The hon. Member is straying on to a matter on which there is an item in his name on the Order Paper. There are certain oddities about our situation. There is another oddity on which the hon. Gentleman may reflect. There are a number of people who are being recommended to take a higher salary and who are voluntarily taking a lower one. That is the source of one difficulty. It is a point that causes a great deal of concern to hon. Members. I understand that there are some other public servants who get pensions based on a higher reckonable salary. Some civil servants are in the same category as hon. Members. They had a salary increase recommended but it was not paid. The appropriate analogy for the parliamentary scheme is other public service schemes.
The question of rules will have to be considered carefully, but it is not a matter which concerns us tonight. Hon. Members will realise the difficulties. I was casting a fly on the waters in the hope of receiving general endorsement for the proposition that we should move in a different way in future.
As I have said, I do not at this time of night wish to weary the House with an explanation of all the considerable detail of the Bill. That can properly be left for Committee, when I hope to provide background notes on the effect of the various clauses to assist hon. Members who may be interested, in the hope that that may clarify some of the complications that appear on the face of the Bill.
I hope that I have satisfactorily explained the main purpose and features of the Bill. It is no more than a modest but useful measure. I commend it to the House and ask hon. Members to give it a Second Reading.
§ Mr. Speaker
Order. I should have told the House that I have not selected the amendment in the name of the hon. Member for Somerset, North (Mr. Dean).
§ 10.36 p.m.
§ Mr. Francis Pym (Cambridgeshire)
The House will be relieved that the Government have eventually introduced the Bill and grateful to them for doing so. The House will appreciate the way that the right hon. Gentleman—I take this opportunity of congratulating him on the fact that I may now refer to him in that way—has introduced it. He will find that many points of doubt and criticism will be raised in the debate.
The Top Salaries Review Body was appointed in January 1975—three and a half years ago—and reported in July 1976 —two years ago—on pensions and some other matters. Many hon. Members feel that the delay between that report and the Bill has been unnecessary and regrettable. The Minister explained that there were pay policy restrictions in 1976, but they were created by the Government. They released themselves from that constriction in August 1977—nearly a year ago—and we have got the Bill only towards the end of June 1978.
The Bill gives effect in full to chapter 3 of the Eighth Report and we welcome that fact that the Government have responded in that way, but after two or three years circumstances have already changed. That will be reflected in later speeches. Those years have seen the greatest degree of inflation ever known in this country-15 per cent. last year, 17 per cent. the year before and 25 per cent. the year before that. At times of such inflation, pensions naturally assume greater importance because it is retired people who are the hardest hit. After such a gap in time, it is no wonder that new views and attitudes will emerge in the debate, criticising to some extent the Bill before us.
Inflation was the inspiration of certainly the second half of the amendment of my hon. Friend the Member for Somerset, North (Mr. Dean) which was not selected. Obviously, hon. Members who retired by 1964 without any pension are among the hardest-hit members of the community. More than any other group, they will be feeling the pinch and, like any other organisation, we are naturally concerned about our colleagues who retired in those circumstances.
In the light of the events I have described, the Review Body might well take 624 a different view if it were in session now—that is to say, sitting two or three years after its deliberations, which were before the dramatic expansion of inflation.
The trouble over pensions and the criticism that I think will be lodged arises, at least in part, from the illogicality of paying Members of Parliament one salary and regarding their salary as another figure for pension purposes. We know that there is a notional figure for pension purposes, which is an anomaly. The anomaly has arisen because the Government have failed adequately to remunerate Members of Parliament. I believe that that is the view of the House. Clearly they have not done so in accordance with the recommendations of the Review Body on Top Salaries. The debate is not about the salaries of Members of Parliament, but it cannot be denied that salaries and pensions are inextricably connected.
Clause 12 of the Bill increases the contribution that Members will make to their pensions. There will be some element of controversy about whether it is fair or right that the contribution should be increased from 5 per cent. to 6 per cent. Presumably the notional salary will be increased as well. I imagine that that will take place in a Bill or order relating to Members' salaries.
If the contribution made by Members is to increase, presumably the notional salary will have to be increased. That will exacerbate the criticism that is felt by hon. Members on both sides of the House about the present arrangement. The first half of the amendment of my hon. Friend the Member for Somerset, North refers to that anomaly, which derives from the fact that the Government, to put it bluntly and crudely, have funked acting on the recommendations of the Review Body.
§ Mr. Pym
It is as may be. The right hon. Member for Bermondsey (Mr. Mellish) sought to suggest that no Government had done it. I was saying as a matter of historical fact that one Government had done it. I happen to know that the Labour Opposition at the time thought that the Government's acceptance was entirely right. They were slightly envious that a Government had had the courage to do that.
The anomaly to which I was referring derives from the fact that the Government have resolutely refused to act upon the recommendations of the Review Body. They have done so in respect of the 1976 recommendations, but not without a considerable degree of pressure. I do not think that it was volunteered. I know that my right hon. Friend the Member for Taunton (Mr. du Cann) has been active in trying to persuade the Government to take action, and no doubt other hon. Friends and Labour Members have been no less assiduous in bringing pressure to bear upon the Government.
We know that the salaries of Members of Parliament are soon to be reviewed. There will be great interest in the House about how the Government decide to handle the matter. How is the present anomaly to be adjusted? It is appropriate to draw to the attention of the House what the report of the Review Body on Top Salaries, Cmnd. Paper 6574, says about Members' salaries. Paragraph 4 states:we feel bound to express our concern at the consequences of continuing to undervalue the demands on those elected to govern the country…we are perturbed that, whereas our recommendations for increased allowances have been accepted in full, Members' salaries have been increased by little more than one-third of what we recommended. We consider this imbalance between salaries and allowances to be wrong in principle and unwise in practice. We are also perturbed by the establishment of two different levels of salary for pension purposes and other purposes…The only way to avoid these and other difficulties…is for Members to vote themselves a realistic salary.626 That is relevant to the Bill, because for pension purposes we have a notional salary which would not exist if the salary were at the level recommended in the report. The Minister said that it was a good thing that the Government were able to refer such matters to such a body. I think that those were his words. Indeed, he referred to it, but he is accepting the recommendations only in part. It is all very well to take credit for the recommendations which are accepted, but the right hon. Gentleman cannot then argue that it is equally reasonable not to accept the other recommendations.
I certainly feel that constitutional implications underlie the level of remuneration for Members of Parliament. Obviously I cannot go into this matter tonight, but it is significant. The words in the report, one chapter of which we are accepting, are extremely important and highly relevant to the consideration that we shall have to give to Members' salaries whenever the Government bring forward the legislation.
I should like to raise three matters concerning the Bill. First, I want to draw attention to Clauses 6 and 7 and the distinction between widows and dependent widowers for certain benefits. I understand the background and precedents in other pension schemes, but I think that many hon. Members will feel that this division is, to some extent at least, inappropriate in this age of nondiscrimination.
Secondly, I should like to refer to Clause 2, particularly subsection (8)(b). This clause deals with the ill health of Members:III-health pensions based on service as a Member.That subsection will apply only if the Member or ex-Member can satisfy the Trusteesthat on the day of the poll in that election his ill-health was such as would prevent him from performing adequately the duties of a Member of the House of Commons.When people get on in life, illness and indisposition are to some extent variable. I wonder whether it is right to say that it must be on polling day, and only on polling day, that the illness is to be acknowledged. It seems entirely human and natural that a Member or an ex-Member could be fit on polling day but not very fit on the eve of the poll or on 627 the day after the poll. It seems curious phraseology to say that medical certification is requiredon the day of the poll".I suspect that some amendment there might be considered with advantage, fairness and humanity.
Thirdly, there is the question of pre-1964 service. I particularly welcome the extension of the number of pre-1964 years of service which can be counted towards service from 10 to 15. I am sure that that is right. But I am equally sure that there will be particular concern about those MPs who retired before or shortly after that date. They are small in number, but they must be in very straitened circumstances now.
The report, in paragraph 34, states:If it were the desire of Parliament as a whole that some additional provision should be made for those Members who had retired before the introduction of the present pension scheme, it might be appropriate to give consideration to an arrangement in parallel to the State pension arrangements for the over-80's.I think that this matter will have to be dealt with in Committee. I am not sure whether Parliament will think it right to confine it to the over-80's, although no doubt some among that small number of ex-Members will be over 80. I am sure that hon. Members will wish to probe this area more deeply in Committee. Indeed, that is the purpose of the amendment tabled by my hon. Friend the Member for Somerset, North.
Those are three comparatively minor matters. I am sure that hon. Members on both sides of the House will wish to raise many others.
I welcome the fact that at long last the Government have introduced the Bill and accepted in full the recommendations in the report. It is a matter for regret that there has been such delay, particularly as the economy, inflation and the general social situation have changed so dramatically. I am sure that this will have an effect on what lion. Members feel would today be appropriate.
I think that the Review Body on Top Salaries might take a different view if it were sitting now. I do not know whether the Government intend to ask the Review Body to review the matter yet again. But it would seem highly desirable to ask it to look again not only at pensions 628 but at Members' salaries, because everything has changed so much.
I think that it is an error for us to get behind in the adjustments that we make in our salaries and arrangements from time to time. It would be wise for us to keep up to date, and I hope that the Government, who do not have so much longer to live, will, as long as they live, bear in mind their full responsibility as a Government for deciding what arrangements for Members' salaries and pensions shall be made and ensure that we do not allow ourselves to get as out of date as I believe we are.
§ 10.52 p.m.
§ Mr. Cledwyn Hughes (Anglesey)
The purpose of my brief intervention is to thank my right hon. Friend the Leader of the House and the Government for honouring the commitment that my right hon. Friend gave the House on several occasions that the recommendations of the Boyle Report would be implemented. I, too, congratulate my right hon. Friend the Minister of State both on the manner in which he introduced the Bill and on the honour that was conferred upon him. It augurs well for the future that his first speech as a Privy Councillor was a short one.
I support my right hon. Friend warmly in what he said about the need for a consolidation measure at the earliest possible time to deal with the pension arrangements of hon. Members. The Bill will give effect to chapter 3 of the Eighth Report of the Review Body, and it remedies serious defects in the existing scheme. Clauses 6, 7 and 8, in so far as they help widows and children of deceased Members, are especially to be welcomed. I hope that the Bill will be passed speedily so that this part of it will become effective as soon as possible. It is very much in the minds of right hon. and hon. Members that many of our right hon. and hon. Friends have passed away and that their widows have suffered because this measure was not in force.
No one could argue that the Bill is over-generous. Nor should it be. But there is a need for people to realise that the position of Members of Parliament is quite different from that of people in most other occupations and professions. For example, the tenure of office of Members of Parliament is uncertain. A Members 629 frequently gives up the position in life for which he has been trained, but he may serve in this House only for a short time. It may be argued that a Member goes into his position in this House with his eyes open. That is true. That is what some of the newspapers say. Yet Members of Parliament should he treated with some consideration. A Member cannot hope to achieve a pension in the region of half pay, such as civil servant or a local authority employee can expect. The average Member serves for about 15 years, and that shows that the average pension must be modest.
Members of Parliament are unable to plan in advance as people in other walks of life are able to do. That is for the simple and obvious reason that we do not know when a General Election may occur. A Parliament may last for 18 months or less, or it may run for the full five-year term. Members may therefore have no alternative but to continue well beyond the age of 65 because they cannot afford to retire before that age, although they would often like to do so and their wives would be even more glad if they were to retire at the right time. This cannot be a satisfactory state of affairs. I hope that the Review Body will be asked to look at this point carefully in due course.
This may not be the appropriate moment to discuss the salaries of hon. Members, although the right hon. Member for Cambridgeshire (Mr. Pym) referred to the matter. Of course, there is never a proper time to discuss the salaries of hon. Members in this House. That is the reason why I belive, and have believed for a very long time, that the question should be taken out of our hands.
I hope, however, that the leaders of all political parties in the House can agree that the least that can be done is to reactivate the Review Body at once after the next General Election, whatever the result of the election may be. There are many other matters to be looked at. One of them, if I may say so in passing, is your own position, Mr. Speaker. But I shall not embarrass you by going into any details about that at this stage.
The Bill is an important step forward. It does no more than implement recom- 630 mendations which were made to the House two years ago. Its cost is negligible. I wish it a speedy passage.
§ 10.56 p.m.
§ Mr. Edward du Cann (Taunton)
I agree with every word that the right hon. Member for Anglesey (Mr. Hughes) has said. Since I have pressed the Leader of the House as hard as anyone to introduce a measure to implement the plain and clear recommendations of Boyle, and I think that the right hon. Member for Anglesey and I, separately and together, have seen the Leader of the House some half a dozen times, perhaps, about this matter, I would like my first words publicly, as it were, to be of congratulations and best thanks to him. I add a further personal word to the Leader of the House. That is to say how good of him it is to be here with us this evening for the debate on this matter.
This may be a complex matter, as the Minister of State has said, but it is, in fact, just a simple updating of our pension arrangements. It is no more than that. It is giving us, after some considerable delay, a fair deal in this matter. I think that it is right to say very clearly that it is a beginning, and it is only a beginning.
As the Minister very rightly said, it would be a good thing if we could consolidate all this pension legislation and set up some method of easier handling. I entirely agree with that.
There are two matters for discussion. The first is this system and the alterations that it makes to the calculation of pensions, the contributions, the rights, how dependants are treated, exceptions and the rest. Secondly, there is the level of remuneration upon which pensions are based. As my right hon. Friend the Member for Cambridgeshire (Mr. Pym) said, these matters are inextricably interrelated. Both are relevant, because one cannot have a pension without a scheme and rules and, of course, the actual amount that is paid out by way of pension needs a yardstick from which to flow—that is to say, the salary. The question to which the House should address itself in some respect in this matter is on what salary level pensions should be based.
631 It is necessary to go back a little into history. In 1971 there were the first references to the new Review Body. There had been no increase in Members' salaries since the implementation of the Lawrence recommendations in 1964. Then, in 1972, the Boyle recommendations were implemented in full, with the good will of the whole House—eight years later, after eight years of delay. In 1972, the Review Body on Top Salaries, the Boyle Committee, began a fresh and comprehensive review of Members' and Ministers' salaries. It was from that that the proposal flowed that Members of Parliament should be paid a salary of £8,000 a year. In 1977 the theoretical pay rate for pension became £8,208, although, as has already been stated, the basic pay of a Member of Parliament is very much less than that.
As the right hon. Member for Anglesey said, our own remuneration always seems to be a difficult and embarrassing subject for us to discuss. I am not altogether clear as to why that should be so. It is made much more difficult, I suggest, by the long delays that seem always to supervene between reviews. It is made very much more difficult by the low salary levels from which the discussions begin. And it has been made much more difficult still, I say in all seriousness to the Leader of the House, by the tendency that we have lately developed to improve the allowances because we think that the public, by and large, will agree to those, while still keeping pay very much lower than it ought to be.
I would say that this is a House of Commons matter and that it is for the House of Commons to debate and decide it. I am fortunate to earn a living outside the House, and it is perhaps easier for me to speak and to act freely than it might be for others who are Members of this House and who are not so fortunately placed. Any politician is a man of opinions. I am certain of my own, which I hope the House will approve and which, I think, have a bearing on these matters.
First, I believe it to be discreditable for this House of Commons to tolerate the establishment of committees or commissions to make recommendations on subjects on which we already have all the facts. Secondly, when those commissions 632 or committees, however they are appointed, have reported in good faith, I think it is contemptible that their recommendations are not accepted because, for example, it is not convenient for the Government of the day. Thirdly, my experience in this place has taught me that it is usually not reasonable to wait for Ministers, of any Administration, to take an initiative. Waiting for Ministers is like waiting for Godot, and he, you will remember, Mr. Speaker, never came.
The position nine months ago, the period of human gestation, was this. We had a clear recommendation from Boyle on the pensions of Members of Parliament. I do not believe that we had the least prospect of legislation. I believe that it was necessary to press the Leader of the House, for this was something that could easily be done without embarrassment to the Government of the day and totally within Government pay policy. For those reasons—and I think that this should be said—the executive of the 1922 Committee and the executive of the Parliamentary Labour Party, under the leadership of the right hon. Member for Anglesey met and talked and considered the matter and decided to make joint representations to the Leader of the House. I have already paid tribute to the right hon. Gentleman for the typical courtesy with which we were always received and for his eventually accepting our recommendations. I hope the House will think that co-operation between the two main parties in this House is healthy and may be useful in other respects. But in my view, for what my opinion is worth, it is a beginning, and only a beginning.
I should never argue that no bounds should be set either to the pretensions of Back Benchers—we are hardly noted, any of us, for our modesty—or that the price that the nation must pay for democracy should be unlimited. There is much to be said for public examples of modesty or restraint on the part of Members of Parliament. We have a duty to set an example, and it is undoubted.
But what are the facts? Since 1964, a date that I have already mentioned, 14 years ago, Members' salaries have fallen considerably behind the general movements in remuneration and in prices. A recent parliamentary Question asked 633 what the 1965 basic salary would be now —I am speaking of a Question asked in September 1977—to have the same purchasing power as in 1965. The salary then was £5,250. To give the same purchasing power, the salary at that date would have had to be £10,264. The Library—our diligent researches—worked out that the figure of £8,000 on which our pensions are based, recommended in 1975, by Boyle, would have been £10,883 by the end of 1977. I suppose that if one extrapolates the figure and takes it to the end of the year it will certainlyy be over £11,000, and probably more like double the amount that Members of Parliament are receiving today.
While we rejoice at the Bill, this updating, this fairness as I have described it, let us be under no illusion. The figure on which the pension is being based in future is far lower than in justice and fairness it ought to be.
By international standards, and not merely as a question of what is right according to some yardstick which was considered and fixed by the Boyle Committee a year or two ago, the same applies to pay, only the contrast is more marked. As The Times wrote a little while ago, by international standards we are badly paid—two-thirds of the amount paid to a Member of Parliament in Canada, Italy and Germany, about half that paid in France and Australia, less than half that paid in Holland, and one-third of that paid in the United States. It is not surprising that The Guardian describes our remuneration as "inadequate" and says that itought to be substantially increased.the Economist calls us "poor relations", and according to the Sunday Times we arethe worst paid in the Western World.The late hon. Member for Wycombe, Sir John Hall, who took a great interest in these subjects, tragically died before he was able to see the fruits of some of his work. If right hon. and hon. Members will be diligent enough to look back to a Question which he asked on 24th January 1977, they will see just how bad the situation has been hitherto in regard to pensions. The Lord President of the Council gave him a long and detailed answer of comparatives at that time.
634 There is an unanswerable case for Members of Parliament to be remunerated properly. There is no reason on earth why Members of this House should be underpaid and as badly underpaid as they are at present. Salaries in this place should be adequate—not so big as to be a tremendous attraction, nor so light as to involve hardship, as I am bound to say is currently the case for some active Members of Parliament, for some pensioners and for their widows. I think that the country should know that.
Though we may rejoice about the Bill, I do not believe that we are doing a proper job even now. I do not think that the Bill is complete. The right hon. Member for Anglesey asked a very important question which bears on Clause 16, which provides for a reduction in lieu of income tax to be made in refunds of contributions to former Prime Ministers, Speakers of the House of Commons and Lord Chancellors. If the Leader of the House replies to this debate, I hope that he will be good enough to tell the House whether he thinks that the arrangements made today for these old and great servants of our nation are appropriate and adequate. The researches which I have made indicate that they are not, and here is a matter which I believe should be looked into.
None the less, I hope that the House will welcome the Bill. Amendments are possible. Whether it will be possible to make the amendment to which my hon. Friend the Member for St. Marylebone (Mr. Baker) referred—what might be called the Lomas amendment covered by Early-Day Motion No. 252, which has now been signed by 217 Members of Parliament—I do not know. But this is a beginning.
If I might recommend the next stage, I remind the House that the Leader of the House has indicated that some time soon, perhaps next week, there will be an announcement about increases in Members' salaries. I echo warmly what the right hon. Member for Anglesey said. We must take this subject out of the political arena altogether if we can without in any way resiling from the duty that we have to decide the matter.
Pay is in a muddle, and we all know it. This Bill is a muddle because it is based on a notional sum, as my right hon. Friend the Member for Cambridgeshire 635 said. Every responsible commentator knows that the subject is a muddle. It must be possible to establish a proper rate for the work that we do here. I echo the suggestion made to the Leader of the House by the right hon. Member for Anglesey that the Boyle Committee should be re-established immediately and asked continuously between now and the next General Election to update its thinking and assessment of the position.
I hope that my right hon. Friends in the leadership of the Conservative Party will echo what my right hon. Friend the Member for Cambridgeshire said about the need for a commitment on the part of both sides of the House to accept what the Boyle Committee recommends without equivocation in the name of common sense and in the name, above all, of endeavouring to ensure that democracy works effectively in that its handmaidens —since I am not allowed to use a term which imputes sex, perhaps I should say "hand persons"—are looked after in reasonable fashion by those whom we endeavour to serve.
§ 11.10 p.m.
§ Mr. G. R. Strauss (Vauxhall)
I agree very largely with the views expressed by the right hon. Member for Taunton (Mr. du Cann). We are discussing a pensions Bill, and a great deal of what he said was concerned with pay, which does not really arise in this debate. But I agree entirely as probably every other hon. Member agrees, that the pay which hon. Members get is inadequate and that it was very unfortunate that the Boyle Report was not accepted in full.
We know the reason, and it was very understandable. With the climate of the time, if the pay of Members of Parliament had been increased substantially there would have been an outcry against Members taking unfair advantage in voting themselves a substantial increase while the working people, under the various standstill arrangements that were in operation, were unable to do so for themselves. The political effect would have been serious—I think we all realised that —and, therefore, the Government felt that they had very good reason for saying that, for the time being there should be a limit on the increase.
§ Mr. Michael English (Nottingham, West)
Surely my right hon. Friend will 636 recollect that the £8,000 which Boyle proposed that we should have was proposed before this current pay policy. We have not yet received it, although the pay policy in nowise prevents us from doing so.
§ Mr. Strauss
I do not think that that in any way destroys the case I am making. If at that time the Government had increased our pay to £8,000, there would have been a veritable outcry, and the political consequences, and the consequences in the trade union movement and in the economy as a whole, might have been serious.
I agree fully with the right hon. Member for Taunton that there should be agreement now, before the General Election, by all parties in the House, that whatever the Boyle Committee recommends in its next review should be accepted by whatever Government are elected. That is the only way out of the difficulty. But it is for the leaders of the parties to decide whether they are to agree to that.
I agree also that the pensions paid are wholly inadequate and nothing like as good as they should be. I am Chairman of the Managing Trustees of the Pension Fund, and it is our duty to administer the two funds that exist to the best of our ability. I do not think that there is any criticism that we have not done it well.
But our other job is to see that Members of Parliament, as far as our advice carries weight, are receiving proper pensions and where there are anomalies in the pension system we recommend changes. The Trustees have gone into this matter thoroughly over the last two years, and they have drawn up a number of proposals which they have submitted to the Boyle Committee proposing changes which we thought would be acceptable. In other words, we have thought it quite pointless at the present stage to go beyond the principles which apply to the public service pension schemes, because that plainly would not be acceptable to Parliament and I doubt whether it would be acceptable to the public.
Therefore, we have limited our proposals to improvements within the public service pension principles which are in operation. Within those limits we 637 have made a number of proposals, and all the proposals before the House this evening are those which have been suggested to the Boyle Committee by the Managing Trustees of the Pension Fund.
I am glad that the Boyle Committee has accepted all these proposals. I am also glad that with one exception, which I shall deal with in a moment, the Government have accepted all the Boyle proposals. One proposal which was put forward by my Committee was not accepted by Boyle. That was very regrettable, and I hope that further consideration will be given to it. The Leader of the House knows what that proposal is. We suggested that pensions given to children of deceased Members were not adequate and should be brought up to the standard which exists in the public service pension schemes. We felt that pensions in respect of children should be quite substantially increased in order to bring them into line with existing pensions in the public service. In other words, the pension for each child should be not one-eighth of the eligible pension but one-quarter, and it should be limited to two children.
That might make a difference of several hundred pounds for a widow with young children. That is not an unreasonable request, because it is already in existence elsewhere. Apart from that, we must thank the Government for accepting the Boyle Committee's report, and we must thank the Boyle Committee for accepting all the views put forward by the Trustees.
I should like to emphasise that all our recommendations were unanimous. Equally, with regard to those recommendations which were not put forward, and which some hon. Members think we ought to have put forward, it was also unanimous that they should not be put forward, because in the circumstances it was thought that they were unreasonable. Therefore, the proposals before us tonight are the fruits of all-party recommendation and as such should be accepted.
In saying that, I agree completely that they are inadequate at the moment. I hope that the next time the Boyle Committee meets it will change the pensions system to something which is very much better. Having two tiers—£8,000 for pensions and £6,250 for salaries— 638 is utterly ridiculous. That should be altered. I do not know whether it is generally appreciated that Members who retired in 1974 get susbtantially higher pensions than Members who retire now. That is a ridiculous situation. All that requires looking into.
Meanwhile, all that the House can do is to say that at present pensions are inadequate, that there must be improvements and new proposals must be put forward in the next Parliament which I hope the Boyle Committee and whichever party are in power will accept.
§ 11.18 p.m.
§ Mr. Paul Dean (Somerset, North)
I rise to oppose the Bill. In doing so, I recognise that I shall be expressing a minority view which will receive no enthusiasm in any part of the House. I realise, too, that there have been close consultations within the House before the Bill was produced. Therefore, in that sense it is very much an agreed measure.
My opposition was expressed in a motion on the Order Paper. I am grateful to my right hon. Friend the Member for Cambridgeshire (Mr. Pym) for the measure of support which he gave to the two main grounds for my opposition, which are expressed in the motion in the following terms. That the Billfirst, continues to base pension rights on notional pay much higher than actual pay, thus giving Members and Ministers pension privileges which are denied to the rest of the community; and second, makes no provision for Members or the widows and dependents of Members who retired before October 1964.This motion is somewhat similar to a motion which a number of my hon. Friends and I had on the Order Paper and which was discussed when we last debated parliamentary pensions in 1976.
I should first declare an interest in pensions matters. I am a trustee of a number of pension schemes. Secondly, I in no way oppose the pension improvements in the Bill. Indeed, only recently have we begun to provide for ourselves pensions which are adequate by modern standards or are comparable with those in other jobs. As for pay, that remains wholly inadequate for the hours we put in and for the hazards of the job.
So, in opposing the Bill, I am not saying that we are overpaid or over-pensioned. I am saying that we are open 639 to criticism for adopting artificial pension devices to try to make up for poor pay.
§ Mr. Mellish
I respect the hon. Gentleman for what he is saying, but is not the logic of his argument that he should not oppose the Bill now but should try to amend it in Committee? That is the normal way.
§ Mr. Dean
I am grateful. As I develop my arguments, I may be able to invite the right hon. Gentleman's support for some amendments which I will put down in Committee, if it is possible to get them in order in the light of the Long Title.
I want to deal first with the position of those who retired before October 1964 and of their widows and dependants. They are entitled to no parliamentary pension. We have to remember that they served at a time when pay was even more inadequate than it is today, when allowances were small or even non-existent—there was no secretarial allowance, for instance—and many of the expenses of the job, which in most other jobs are met by the employer, had to be met wholly by our former colleagues in those days.
How many of those former colleagues are in straitened circumstances today? How many of them, having served their country and their constituencies for many years, are in poverty? How many of them, indeed, perhaps served as Cabinet Ministers and are in poverty today? How many of them are wondering whether Parliament has forgotten them when they see us improving pensions for ourselves but doing nothing for them?
The last time that we discussed these matters, in 1976, I asked how many former Members and Members' widows are receiving help from the Members Fund.
The Lord President replied:There are…24 former Members and 33 widows of deceased Members who are not eligible for pension from the pension scheme but who receive grants from the House of Commons Members Fund."—[Official Report, 12th July 1976; Vol. 915, c. 11.]I hope that those figures will be updated before the end of the debate.
It is a scandal that we should be debating improvements for ourselves tonight 640 when that number of our former colleagues and their widows have to go to a means-tested scheme to receive any assistance. Whatever the latest figures, I suspect that there are many others of our former colleagues who have not applied because they feel that it would be demeaning. I hope that at least we can get the facts on this.
§ Mr. Strauss
The answer to the question is that the numbers today are about the same as they were a year or two ago. It is a distortion to say that a number of older Members are in poverty. Those who apply—and anybody can apply—are treated with great sympathy. They can get from the Members Fund a substantial grant to take them right out of poverty, although they have contributed nothing. They are given considerable grants if they apply, and every application is treated with the greatest sympathy.
§ Mr. Dean
I am assured to hear that. But I still maintain that there is all the difference in the world between a pension as of right and one based on a means test, however sympathetically it may be administered and however generous the trustees of the means-tested scheme may be. There is a substantial difference between the two types of arrangements.
§ Mrs. Barbara Castle (Blackburn)
Is the hon. Member asking that the statutory scheme—as of right—should be extended to those who did not contribute before that scheme was introduced? If so, is he not giving to these persons pension privileges that are denied to the rest of the community? Does not his amendment embody a contradiction?
§ Mr. Dean
I am grateful to the right hon. Lady, because I am coming to that point. I recognise that the Boyle Report recommended against bringing in those who retired before October 1964. I accept that the traditional approach to pension schemes has been that those not in service at the time should not benefit. I suggest to the House, however, that most modern precedents have been in the other direction.
When the pension schemes in which I am involved improve benefits to those who are serving, they almost always provide on an ad hoc basis some improvements 641 for those who retired earlier and who could not otherwise benefit from the new arrangements. I remember distinctly that when I was a Minister dealing with war pensions in a previous Government, on at least two occasion when we improved benefits under the war pensions scheme for those in service we also improved the benefits for those who had retired, however long they had been in retirement.
§ Mr. English
Some play has been made about Members who did not contribute before 1964. I think I am right in saying that they were not allowed to contribute. This puts a different complexion on the matter. Will the hon. Member explain the situation of civil servants who did not contribute before 1964 or before any other date?
§ Mr. Dean
I am grateful to the hon. Member for his help. Before coming to civil servants, I should like to turn to a much more effective analogy and a more convincing precedent in favour of my argument. It applies to our own contributory pension scheme.
We have already conceded the principle—this is my answer to the right hon. Member for Blackburn (Mrs. Castle)—that service before October 1964 can count for pension purposes and that the cost shall be borne wholly by public funds. In other words, there is to be no contribution by the Member concerned. It can count for pension purposes for those serving after 1964 even if they had a break in service and returned, say, in 1966. The Bill increases the pre-1964 service which can count for pension purposes from 10 to 15 years.
I submit that we now have a contrast that is even starker than it was before the Bill was introduced—namely, that existing Members who can count 15 years' service before October 1964 for pension purposes can have the whole of that met from public funds. On the other hand, we have those who retired before October 1964 who get no pension and can count no service before 1964. I suggest to the House that that is neither fair not equitable.
The Boyle Report, in paragraph 34, suggested a possible solution. It referred to another precedent—that of the over-80s pension introduced for people outside this House in 1970. I believe that a limited parliamentary pension as of right 642 for former Members and their widows at the age of 80 is the least we can do. I hope very much that, if it is possible to devise an amendment that is within the Long Title of the Bill, the Government will give it sympathetic consideration.
I submit that we should no longer go on improving pensions for ourselves without some recognition of the difficulties of our former colleagues who retired 14 years or more ago and who have suffered the full rigours of inflation on their savings, with no parliamentary pension to help them. I suggest that modern precedents are wholly in favour of some pension for them. The parliamentary supplementary benefit—for that is what it is—through the Members Fund is no longer good enough. I suggest that we dishonour our former colleagues and ourselves as long as we allow that situation to continue.
My second argument is that it seems to me wrong to base our pension rights on notional pay which is much higher than actual pay. Our actual pay is now £6,270 a year, but our pay for pension purposes is the Boyle recommendation, which has been added to in recent years to bring the figure to £8,208 a year. I suggest that in doing this we are providing for ourselves pension privileges that are denied to the rest of the community.
The Minister was able to make no more than generalised remarks. I ask him to quote any pension scheme which can go before the Inland Revenue and obtain this type of arrangement. It is a device to make up for poor pay. It is an understandable device, and I would not necessarily complain about it if other sections of the community could do likewise. There is some flexibility within the Inland Revenue arrangement at the moment, and I do not intend to weary the House by going into detail. I suggest, however, that when we fix our own salaries and our own pensions we are under a special obligation to ensure that we do not act in a way that appears unfair to others.
In my view, the Bill perpetuates a bad precendent which was established in 1976. My fear is that it will become permanent. There is an arguable case for those who are retiring at the end of this Parliament and who otherwise would be trapped with a reduced pension indefinitely. I am all for making special arrangements 643 for them, but to go beyond that would be inequitable and difficult to defend to people outside.
I am sorry to strike a discordant note on this domestic occasion, but I believe that it would be wrong to let the Bill go by without expressing my misgivings on these two important points of principle.
§ 11.35 p.m.
§ Mrs. Barbara Castle (Blackburn)
Looking round the Chamber, I am struck by the fact that many hon. Members here have a direct or highly imminent interest in the provisions of the Bill. I include myself in that because I shall not run for Parliament again at the next General Election.
I believed that this was not a discussion about pay, but the arguments have seemed to widen beyond pensions to cover hon. Members' salaries and I could not help thinking how much better it would be if hon. Members had a trade union. It would then be clear that, just like anyone else, we were a sectional interest negotiating, quite legitimately, for proper remuneration.
I have always believed in an adequate remuneration for hon. Members. When I first became an hon. Member in 1945, the pay was derisory and it was argued that any increase in hon. Members' pay was unpopular in the constituencies. So it was, but I always said to my workers in Blackburn that if they wanted Members who were independent of outside interests and dedicated only to their constituents they would have to be paid a living wage.
However, I get a little worried about the coalition of self-interest that is growing up as we discuss how worthy we are of better treatment. How are we to get an adequate adjudicator in that situation? My right. hon. Friend the Member for Vauxhall (Mr. Strauss), a highly respected hon. Member who has done a marvellous job in pensions, put forward an astonishing doctrine when he said that he hoped that there would be a total commitment by both sides of the House that the Boyle Report should be accepted uncritically—whatever it said about hon. Members' salaries—by the next Government.
That is an extremely dangerous doctrine because it seems to imply that there 644 should be an exemption of immunity for hon. Members from the political pressures of pay policy that any Government must and will accept. I remember other highly deserving professions—it may surprise hon. Members if I quote the example of consultants in the NHS—who had their Review Body's findings decimated by considerations of pay policy with the introduction of a ceiling and a cut-off point. They had to accept it in the national interest—and quite right too.
I accept the integrity of the hon. Member for Somerset, North (Mr. Dean) in pension matters. I know his interest and dedication in these matters. I must tell the hon. Gentleman that I find no difficulty in accepting that pensions should be based on notional incomes. I believe I am right in recollecting that that happened to the consultants and others who suffered from interference with Review Body findings in the interests of pay policy. We are not the only ones to have found ourselves in that position. I find no difficulty in accepting that our pensions should be based on a notional income if it means that we have been refused our full arbitration award by a Review Body in the interests of the national pay policy.
I was a member of the Government who decided that there should be a cutoff point at £8,500. I supported it. The cut-off point operated against many professionals who had Review Body findings in their interests. I thought that it was right to accept that cut-off, and I did so in the interests of Members and Ministers. Britain was right up against it in 1975. By heavens, we would never have turned back the tide of inflation if some of us had not given a lead and accepted the denial of our salary awards.
§ Mr. English
All Labour Members agreed with and approved of the cut-off point of £8,500. However, we did not understand why the Cabinet of the day, before it introduced the present pay policy, said that we should not get the £8,000 that was recommended by the Commission, to which it was committed.
§ Mrs. Castle
These are inevitably and perfectly legitimately all matters of self-interest. We have to give some sort of national leadership. That is part of the price of being in politics. Despite an arbitration award on behalf of Cabinet Ministers, I was in favour of a cut in Ministers' salaries.
645 It may be said that that interferes with the proper development of differentials and salary relationships. I repeat that I am not suggesting that we should endlessly accept an inferior status for Members' pay. I am anxious to liberate Members from dependence on outside private income and interests. That is important. However, we have been through exceptional years in our national history. It was totally right that we should have given such leadership. Members have suffered. I am sorry, but it was inevitable that we should. I do not worry if there happens to have been created a slight anomaly whereby our pensions are related to notional pay.
The amendment of the hon. Member for Somerset, North remains contradictory when it states on the one hand that we should not have pension privileges that are not applicable to others universally but on the other hand asks for exceptional treatment for widows and the pensions of Members before the statutory scheme was introduced in 1964.
These are immensely complex matters. There will always be anomalies. One can only try to stick to broad guiding principles. I accept that it is imperative that we do not vote ourselves privileges that are denied to others. All that we have voted ourselves so far is the privilege of accepting reductions in our arbitration awards, which is an excellent example. I do not make any apologies for it.
I wish to raise a question of principle and one in which I cannot be said to have a direct interest. That is because if it arose within my family I should be dead. I refer to the widower's pension. This was touched on briefly by the right hon. Member for Cambridgeshire (Mr. Pym). My ears pricked up when he started, but what a throwaway line that was. It was almost an exit line over his shoulder. I believe that it should be built up as one of the major issues of principle before us. I maintain that it is intolerable that this House, which for some years has been busy equalising the rights of men and women, should in the Bill endorse, reinforce and perpetuate a gross injustice against one deserving section of our society—the widowers.
After all, we are discussing a superannuation scheme in which women Members have always had the same rights and 646 obligations as men. I have been a Member of this House now for 33 years. During that period I have always earned exactly the same salary as male Members of Parliament. If anybody had tried to pay me 75 per cent. of the male rate, I would have chained myself to the railings outside in protest, just as certain eminent ladies did a considerable number of years ago—an event that we shall be celebrating in the near future. I have always worked, I was going to say exactly the same hours as male Members, but, if we were to take a tally, if we were to clock in and clock out, I think that it would be found that women Members of Parliament pro rata had always worked longer hours than the men [Hon. Members: "No"]—because they are cursed with the obstacle of over-conscientiousness. Certainly our stamina is greater than that of the men and we are less flaked out at 6 o'clock in the morning after an all-night sitting.
It is indisputable that we have paid the same contributions as our male colleagues under every pension scheme which has been brought before the House. If the Bill goes through, the contributions of women Members will rise to 6 per cent., just the same as the men's.
Under the present scheme, the widow of a male Member gets half of what would have been his entitlement. Under the Bill, that will be supplemented by a short-term scheme which will help still further the widows of Members.
I ask the House to consider what a number of us probably never have considered—namely, what does our pension scheme do for the widower? If he is to get any of his wife's pension entitlement—this is becoming a slightly pressing matter in my own case—he must, according to Section 14(1) of the Parliamentary and other Pensions Act 1972,at the time of her death—it may not be later; it must be at the very moment of her death—beincapable by reason of age or bodily or mental infirmity of earning his own living and was wholly or mainly dependent on her".That is happening at the time when, under the pension scheme that I introduced into the House as Secretary of State for Social Services and which became operative in April this year, we have abolished for women the archaic and demeaning concept of dependency. Under 647 that new pension scheme the married woman's option is phased out. Women at work must contribute over a phasing-in period at the same rate as men and will receive the same pension as men in the same earnings range.
Yet for the husbands of women Members of this House we continue to perpetuate the demeaning concept of dependency. Really, this is to stand sex equality on its head. It is also to violate the contributory principle. That is why I bring this to the attention of the hon. Member for Somerset, North, who, I know, is involved in certain private pension schemes. All the best occupational pension schemes are getting rid of that attitude. Private schemes are increasingly incorporating pensions for widowers on exactly the same basis as for widows. The only logical application of sex equality, to which the House has been committed in Bill after Bill in the last few years, is to introduce not a widow's benefit but a survivor's benefit on equal terms regardless of sex. Why do we not do it? The logic of it is unanswerable. We have all paid for it.
There is a built-in discrimination which is actuarially unjustifiable. I shall explain why we do not do it. It is not because it would cost a lot of money. I asked my right hon. Friend the Lord President what would be the cost to our contributory pension scheme of giving widowers of Members pensions on the same basis as those we give to widows of Members. I asked what increase would have to be made in Members' contributions to meet the cost. The reply, given by my right hon. Friend the Minister of State, was:Since the Parliamentary Contribution Pensions Scheme has relatively few lady Members, no significant additional cost would arise if benefits were to be available equally to widows and widowers. Such a change would, however, set a precedent for comparable public service pension schemes where the cost would be very substantial."—[Official Report, 19th June 1978; Vol. 952, c. 331.]That is a marvellous new version of the servant girl's justification for her illegitimate child. The trouble is that it would be a very big one.
It was this creation of precedent that led the Treasury to forbid me as Secretary of State for Social Services to include a survivor's benefit when I was drawing up 648 the new State pension scheme which became operative in April. However, we made some progress in that scheme. At least, we did not drag in the discredited concept of dependency.
On the contrary, the White Paper on the better pensions scheme provided for equality of treatment for the widower where both he and his wife had retired. In that situation the widower's pension could be augmented by his wife's earnings. That may not be a complete introduction of the principle of equality, but it is a great deal better than the squalid criterion that the widower must be incapable, physically and mentally, of providing for himself.
In strict logic, therefore, in this year when we are celebrating the introduction of universal suffrage as the first step to equality, this Government, who have done so much to extend the concept of equality, should be bringing forward new changes to our pension scheme which would give the surviving husbands of Members of Parliament half the wife's pension entitlement, just as the surviving wives get half that of the male Members. Not all Members' wives are dependent on their husbands by any means.
I wonder what the House would say if at the Committee stage of the Bill I were to move an amendment to put before the word "widows" everywhere that it appears, not only in the Bill but in the Parliamentary and other Pensions Act 1972, "dependent and incapable of self-support". What if that were a criterion for a widow's pension? Everyone in the House would be horrified.
We cannot, of course, get too out of line with the provision for the generality of the citizens, but I believe that we can adopt the same principles as our State pension scheme. Therefore, I give warning to my right hon. Friend that when the Committee stage is reached I shall be moving very reasonable and very moderate amendments to start getting a realistic concept of sex equality by adjustments in the widower's pension scheme and a removal of the grotesque criterion for qualification that exists at present.
I hope that my right hon. Friend will consider my reasonable proposals very seriously and very sympathetically.
§ 11.56 p.m.
§ Mr. Kenneth Baker (St. Marylebone)
My interest in the Bill is not quite as imminent as the interest of the right hon. Member for Blackburn (Mrs. Castle). I hope not to benefit from its provisions for at least 22 years. I must remember to remind my electors of that hope and intention at an early opportunity.
Like many hon. Members who have spoken in the debate, I also welcome the Bill. I hope, however, that commentators outside the House will not believe that we are trying to create through the Bill a life of feather-bedded luxury for ourselves when we retire, because I believe that our pension fund is a very modest fund. I do not believe that if one were establishing a fund in the private sector one would immediately look at and consider the House of Commons Members' Pension Fund as an ideal fund and would base one's fund upon it. Indeed, our fund, as my hon. Friend the Member for Somerset, North (Mr. Dean) has said—he is a great expert in these matters—is falling behind many funds in the private sector, both in its provision and in the amount that we contribute to it.
Therefore, I very much hope that the impression does not get around that this is a lavish scheme and that we are doing rather well for ourselves. That is not so at all.
On a point of acrimony, perhaps, I must may that I very much regret that the Government did not bring in the Bill earlier, because there is considerable doubt whether it should not have been brought in in 1976. It is a matter of opinion whether it offended against stage 1 of the Government's incomes policy, because there was no statutory backing for that policy, so it can be only a matter of opinion, therefore, that the proposals in the Bill now before us offended against that policy.
That is a matter for debate. What is not a matter for debate is that the Bill should be made retrospective to August last year. I ask the Government to look carefully, before the Committee stage next week, at whether some changes can be made, because by not bringing in the Bill by August of last year all the dependants of our colleagues who have died since that time have suffered a permanent loss in benefit which cannot be made up. They 650 have suffered that loss as a result of the dilatory behaviour of the Government.
Therefore, I believe that it is incumbent upon the Government to see, before the Committee stage, whether some amendments or provisions can be made to allow those dependants of Members who have died since August of last year to benefit—of course, it is the dependants particularly who will benefit from the Bill—and to receive what I think is their right. If the Government had acted promptly, it would certainly have been their right.
The House is always in an awkward situation when it is debating its own pay and pensions. We are the only group in society that can determine absolutely what we pay ourselves and what levels of pension we set.
§ Mr. Joseph Harper (Comptroller of Her Majesty's Household)
We have made a very bad job of it.
§ Mr. Baker
That puts us in a very bad position, and, as the Government Whip has just said, we have made a very bad job of it. I am glad to get that support from the Treasury Bench. We have, indeed, over the years made a very bad job of it. That is one reason why we have said that we should ask an independent body headed by Lord Boyle, as it were to do this rather unpleasant task for us.
The whole concept behind asking Boyle to report is that Boyle should be accepted, because if he is not to be accepted we might just as well do the job ourselves, imperfectly as we can. The danger of asking Boyle to report and not accepting Boyle is that we are looking on Boyle as a sort of current bun from which one picks out the currants that one wants. As a result, all our pay and pension debates become a sort of catch-as-catch-can.
I argued from the Government Dispatch Box when introducing the Bill in 1972 just what the Minister argued, which is that we must stick to the principle of accepting the proposals in full. I accept that principle, but the Government have departed from it. I do not know why the Government have departed from that principle, but they have done so because they have not accepted the proposals of Boyle in full. They have accepted some of Boyle's proposals, and that puts the 651 House in an exceptionally difficult position.
I echo what the Chairman of the 1922 Committee said, what the Father of the House said and, indeed, what the Chairman of the Parliamentary Labour Party said, which is that we must move to a better way than we have at present of determining our own pay, allowances and pensions. I believe that the answer lies in having a reconstituted Boyle Committee after the election and for it to report to the House and for the House to decide upon those findings.
If the Government of the day, for various national income considerations, wish to phase or stage those recommendations, that is for the Government of the day to try to persuade the House to do, but this is basically a House of Commons matter and we as responsible Members of the House of Commons should surely be allowed to decide whether we favour or disagree with the findings of Boyle.
I support that, because if we move away from the principle of accepting Boyle in full we move immediately into the area of saying that there is a good case for pre-1964 Members. I think that there is, as my hon. Friend the Member for Somerset, North has argued tonight. I think that there is a very good case for what has been called the Lomas amendment, but we get into the area of picking and choosing once we abandon the principle of accepting the report in its totality.
We have debated these matters several times since I have been a Member. I hope very much that we shall move to a better system. As the Government Whip said, we have done very badly for ourselves. The only Assembly that pays its Members less than we do is the Assembly of Luxembourg. I do not know where Luxembourg stands in the pecking order—perhaps the great aunt three times removed—but it pays its Members less than we do. The Irish Parliament pays its Members rather more than we do. It is one of the ironies of the last 100 years of our history that the Assembly that meets in Eire pays its Members more than we do. I think that they were rather lucky to get away with that.
I believe that the House should take a much stronger stand as a House. We as Members of Parliament should take a 652 much stronger stand. I believe that we should be quite robust in rebutting the accusations which are made that we are trying to make a very cosy position for ourselves in our pay, allowances and pensions. That is not the case. It is evidently not the case. This is a slight improvement along the road. I hope that the Bill will go through basically as it is, but I believe that what should come out of it is a very much better system of making these arrangements on a permanent basis.
§ 12.5 a.m.
§ Mr. Robert Mellish (Bermondsey)
I have been very impressed with most of the speeches that I have heard from both sides of the House, because I have listened to almost every debate on the salaries and conditions of Members of Parliament in the last 32 years. I always found it all very interesting to listen to and all very personal.
Looking back over the years, I remember that it was I who initiated a motion demanding an increase of pay for Members of Parliament. I remember Lord Shawcross, a gallant Socialist, walking into the Chamber in his dinner jacket at the tail end of the debate and supporting the motion warmly, which almost ruined our case. I remember the late Sir Winston Churchill, when he was Prime Minister. He had a lot of sympathy for Members of Parliament, but he really was not too enthusiastic. He brought in a system giving us an additional allowance per day, but only from Monday to Thursday. I remember saying to him—I suppose that I was as crude then as I am now—"I don't understand this. I eat on Fridays, and I come here on Fridays. Why can't I get paid on Fridays?" He looked at me as though to say "I've never heard of you before". Anyway, he was not much interested. But we have had all sorts of systems.
My right hon. Friend the Member for Blackburn (Mrs. Castle) quickly and conveniently forgets history when she wants to. She had better be reminded of it. I have taken an interest in Members' salaries by making speeches on the subject and getting some of the venom, too. Much of it came on television. Certain of my hon. Friends appeared on television with me on one occasion following an argument that Members should 653 get more money, and they said "not until the old-age pensioners get more". That was the great theme. I remember getting hundreds of abusive letters. I remember, too, that one hon. Member—I had better not name him, because he is still a Member—got hundreds of letters of praise. But I am that sort of person. I thought it was right to get up and say that an MP's salary then, as now, was lousy, rotten and, for the job that he did, an absolute disgrace.
The history, which my right hon. Friend the Member for Blackburn has conveniently forgotten, was that Boyle came in because for years and years we had tried to solve this problem by this type of debate, when we tried to resolve it ourselves with silly motions put down by various individuals of all different factions, and then rather shamefacedly going through the Lobbies and voting.
My right hon. Friend says glibly that we ought to have a trade union. Of course, that is silly too. It is silly in the context of the trade union movement, and I know as much about the trade union movement as does my right hon. Friend, because I was actually born in it. So that is out, too.
What we did was that Lord Houghton, as he now is—then the right hon. Member for Sowerby—as the key man, brought forward the motion that took this matter right outside the orbit of this House and gave it to an independent committee which was to be set up. We did not know then that Lord Boyle was to be the chairman. I remember that the right hon. Member for Penrith and The Border (Mr. White-law) took a prominent part, and I remember that he was extremely co-operative and sensible and picked up this idea at once.
The result was that we made history by, for the first time, putting the matter to an outside body. But who were these people? Let us get that on record. First of all, of course, there was Lord Boyle. There was a trade unionist on the Committee, one of the most eminent of all. There were tycoons from private industry. They were representative of the whole range of our society. When they spoke, this was not some trade union cabal saying what we should get.
§ Mr. Mellish
With respect, my right hon. Friend did not give way to other hon. Members. I am not sure that I ought to give way to her.
§ Mr. Mellish
In that case I will give way to her. Anyone who gives way to my hon. Friend the Member for Nottingham, West (Mr. English) must be in trouble.
§ Mrs. Castle
Does not my right hon. Friend agree that, instead of having an ad hoc body appointed by the Government to adjudicate upon us or anyone else, it would be better to have our salaries linked to those of some group of people whose wages and conditions had to be negotiated by a trade union?
§ Mr. Mellish
Now my right hon. Friend has moved into another area. That is not what she said earlier. However, I want to keep to my theme.
The Boyle Committee was established, and none of us knew who would be on it. But, when its membership was announced, even the national newspapers, which have never been our friends, admitted that it was indeed a body absolutely above suspicion in that it represented all strata of society. However, the irony is that, although the Boyle Committee has, over a number of years, said things about this House and its membership which are to the credit of the House and its membership, they have not been accepted.
One of the suggestions which have already' been argued and debated is that we should link an MP's salary with, for example, the assistant secretary rank. But we know who the biggest opponent of that is, and I will remind my right hon. Friend the Member for Blackburn—the trade union movement. Of course it is, because if we linked an MP's salary to the rank of assistant secretary, whose salary today would be about £11,000, when the unions went to negotiate for the assistant secretary they would be told "Watch it, brother. You give it to that lot, and you have to give it to that other lot in the House of Commons". It was the trade union movement itself that did not like the idea and did not want it.
I was thinking of mentioning the newspapers again, but I had better not because there are some which are not very friendly 655 disposed towards this House which spend all their time attacking us, and it really is quite a scandal. But, in fact, it is now conceded that the Boyle Committee was the ideal body to do the job.
I defend why the Government did not implement the last recommendations of the Boyle Committee. I was here when it all took place, when this £6,000 and £8,000 malarkey came into being. The truth is—we were all here at the time and we knew the atmosphere—that we could not have introduced what Boyle recommended, the £8,000 a year. If we had, the percentage increase for MPs would have been way over anything and everything that we were asking others to accept. I have always understood and been considerate about that.
But I say this to my right hon. Friends. There comes a time when the House really has to have the guts to say "This is a report made by men and women of calibre and, therefore, this is what should be done". I cannot treat with scorn, as my right hon. Friend the Member for Blackburn did, the idea that there should be a concordat between the two major parties that whatever the Boyle Committee recommends will be implemented by the next Government.
Like other Members, I am on my way out now; it does not matter so much for me. But it certainly matters for those who are yet to come, and the time is coming when we have to say to the Press and the public "This House is something that we are proud to be Members of, and if you are doing a job of which you are proud you must make it incorruptible".
We are not asking for great salaries. We only want to make sure that the men and women who come here to serve their nation will be paid properly in a way recommended by a Committee whose objectivity is unquestioned. Whatever the Boyle Committee recommends, let it be implemented. Let us not go on with this appalling anomaly of getting a salary on the one hand and a pension much higher on the other.
I say this to my right hon. Friend the Leader of the House. I hope that he will be Leader of the House for many years to come, but I must tell him that the present situation cannot go on. We must change it. The right hon. Member 656 for Cambridgeshire (Mr. Pym) made an excellent speech, and I agree with him that the time is well overdue to take this matter out of the ordinary orbit of the House and for us to have the courage to tell the truth to our people and trust them.
I represent a constituency where the wages are not very high. I remember an incident with regard to the salaries of Members. At the time when we were getting £1,500 a year, a character in my constituency came up to me and asked "Do I understand that you MPs are getting only £1,500 a year?" I replied "Yes, that is right." He asked "Is it a fact that you are able to decide the salaries for yourselves?" I replied "Yes, that is right." He replied "Serves you bloody right." That just about puts it in a nutshell.
§ 12.15 a.m.
§ Sir Nigel Fisher (Surbiton)
I agree entirely with all that the right hon. Member for Bermondsey (Mr. Mellish) has said about pay. Of course, it was absolutely right to set up the Boyle Committee and absolutely wrong then totally to disregard what that Committee recommended. However, I shall not follow the right hon. Gentleman in any detail, because I want to be very brief indeed at this late hour, especially when many of my hon. Friends still want to take part in the debate.
As one of the Managing Trustees of the Parliamentary Pensions Fund from the Conservative side of the House, I want to support our Chairman, the right hon. Member for Vauxhall (Mr. Strauss). I also want to thank the Minister for introducing the Bill and the Lord President for having brought it forward, not before time and not without some pressure from the Trustees, from my right hon. Friend the Member for Taunton (Mr. du Cann), the Chairman of the 1922 Committee, and from the right hon. Member for Anglesey (Mr. Hughes), the Chairman of the Parliamentary Labour Party. On this occasion—I thought absolutely rightly, because it is a House of Commons matter—they made joint representations to the Leader of the House.
The proposals before us tonight give effect to the recommendations of the Boyle Committee, to which I should also like to pay tribute, because Lord Boyle and the members of his Review Body gave very sympathetic consideration to 657 the suggestions which the Trustees of the Pensions Fund submitted to them.
There was only the one omission to which the right hon. Member for Vauxhall referred which disappointed us. That was with regard to the small improvement in children's pensions which the Trustees had recommended. We merely wanted a rise in the rate of those pensions from one-eighth of the former Member's entitlement to one-quarter, subject to a maximum of two children eligible at any one time, and we hoped that children's pensions could be continued up to the age of 17—at present it is 16—without the child necessarily continuing in full-time education. The cost of doing so would have been absolutely negligible, because only 12 children's pensions are being paid at present. It would have had the effect of putting the children of hon. Members on the same footing as those of civil servants, teachers, National Health Service employees and all other public sector workers.
I do not understand why Members' dependants should be treated less favourably than those in other branches of the public service. I believe that the right hon. Member for Vauxhall wrote to the Lord President on this point, but the Government did not feel able to go beyond the recommendations contained in the Boyle Report. If I may say so, the Government are somewhat selective in their treatment of Lord Boyle's reports. When it suits them, they stick rigidly to Boyle, but when it does not—as in the case of Members' pay—they ignore Boyle altogether. I hope that the Lord President will be prepared to reconsider the position of children during the Committee stage of the Bill.
In other respects the Bill seems to me comprehensive and fair. Indeed, at my age of, alas, 64, and after more than 28 years' service in this House, I really feel that I should almost declare an interest when I support the Bill because when I look particularly at Clauses 1 and 10 I see that they are virtually tailor-made to suit my particular circumstances!
I am glad that the Minister referred in passing to one point—not precisely a pensions point—which arises out of Early-day Motion No. 252. It seems wrong that a Member elected in February 1974 and defeated in October 1974 could 658 have received severance pay of three months salary after serving for only a few months, whereas a Member who has served for 20 years or more and who retires through ill health can receive nothing more than his pension—although if he had been defeated in that election he, too, would have received three months' salary.
Hon. Members who have to retire through ill health in, say, their fifties would find it hard to obtain alternative employment quickly and three months' pay would be a great help at a difficult time. To give it to them would be a humane gesture—important to a few individuals, and at very little cost to the State.
I was informed by the Table Office that I should be out of order in referring in this debate to Members' pay, so I threw away some carefully prepared notes. However, a great deal of latitude has in fact been allowed to hon. Members on both sides. I am very glad that it has. I totally agreed with everything said by my right hon. Friend the Member for Taunton. However, there will no doubt be another opportunity soon to refer to this matter in more detail, so I shall say no more on that tonight.
I would only underline the point made by my right hon. Friend the Member for Cambridgeshire (Mr. Pym) that it is complete nonsense to base pensions on a notional figure, as the Government have had to do because our pay is so derisory compared with that in any other comparable legislature in the world. Pensions should obviously be based on pay, which should be far higher than it is today.
§ 12.22 a.m.
§ Mr. Michael English (Nottingham, West)
I should like to ask one relevant question. Will the Government permit amendments to the Bill on the lines suggested tonight? To take a simple example, the possibility of pensions to 12 children is clearly something about which an amendment should be possible. But it is not, because the Bill has a very restricted Title and there is a Money Resolution and a Ways and Means Resolution. Therefore, I hope that whoever replies for the Government will do as was done in the case of the Speaker's pension Bill—not the present Speaker but a previous one—and say that if the House desires such 659 amendments, technicalities will be overcome and an appropriate Money Resolution will be put down by the Government so that there will be no question of 12 children losing the possibility of a pension merely because of the technicality that no one but a Minister can move that they should have it. I see the Minister nodding and I am grateful to him. It would be inappropriate if that happened merely because of a procedural technicality of the way in which we deal with money in the House.
My right hon. Friend the Member for Blackburn (Mrs. Castle) said that we have a terrible problem in these matters because we may create precedents. The Expenditure Committee, in its report on the Civil Service, touched on pensions, a matter of some interest because many Civil Service pensions are inflation-proofed. In times of high inflation, they are a matter of some concern to the public because no private firm can afford to keep up with such inflation proofing. I do not think that the right hon. Lady need worry about the precedent we might create in improving Members' pensions.
There are 7,090,000 people who are affected by public sector pensions. Of those, 3,900,000 are in schemes to which they contribute and for which there are actual pension funds. These include people in local government, public corporations and so on. Then there are 1,950,000 who actually contribute but have no actual pension fund, only a notional one. These include every teacher in the land and the 1,125,000 in the National Health Service, as well as odds and ends like the United Kingdom Atomic Energy Authority.
Then there are 1,085,000 who pay no contributions whatever, and receive pensions from no fund whatever. These are 750,000 in the Civil Service, and 335,000 in the Armed Forces. There is no precedent that will be created by dealing with Members of Parliament, except for one very small and interesting group of people. There are only 155,000 people out of over 7 million who are in the same situation. They are the only ones, apart from us, who pay contributions but receive their pensions from a totally unfunded pension scheme. They are the police and the firemen.
660 It might be of some interest to my right hon. Friend the Member for Blackburn that whatever precedent we create for ourselves might form a precedent for the police and firemen but for no one else in the land. I do not mind creating a precedent for the police and for firemen. I think that they well deserve it. Conservative Members may wish to consider that when they are advocating an appropriate pension for Members of Parliament they are also advocating them for the police and firemen. This is a matter of some importance. We have discussed the question of pay policy for Members, but I do not think that I should mention the possibility of creating a precedent for the police and firemen in the context of pay policy.
No Government have ever decided whether they regard Members of this House as self-employed—635 small businesses—or as employees. We are treated far worse than employees. Outside the House we would be appalled if someone produced an arbitration award and it was turned down promptly—not on the principle that it did not conform with a pay policy, but on the principle that it did not conform with a pay policy that might be introduced a few weeks or months later. The Leader of the House is shaking his head. I have been discussing this issue with someone with whom he too has discussed it—the retiring general secretary of the Transport and General Workers' Union. The reason we did not obtain our award was nothing to do with pay policy, but was in order to persuade Mr. Jack Jones and others that there should be a pay policy. In order to persuade members of the general council of that fact, we had to forgo what we were entitled to before any incomes policy was produced.
Of course, we should conform to any incomes policy that is applied to the rest of the community. In other words, we should have had £8,000, plus £6, plus son of £6, plus 10 per cent. But in order to have a pay policy, some of the sacrificial lambs comprised Members of this House, who, by the standards of other people, are underpaid.
There is an obvious and simple principle by which Members of Parliament should be paid. No civil servant has the power, which a majority of Members of this House possess, to pass almost any 661 piece of legislation. We are restricted in passing legislation in only one respect. We may not pass a law to extend the term of this House without an election and without the consent of the House of Lords. Perhaps we may have to pass some other things in two Sessions, but anything else we may do. We may even pass a law, as has been done by this House in the past, to have somebody executed. We may do anything we wish.
In the United States Congress, which has less power because it is restricted by a federal constitution, there is a simple belief that no civil servant should be paid more than a member of Congress because in the United States civil servants have less power. A civil servant is a member of the Executive and a member of the Executive in the United States has to obey the law, and the law is changed and determined by the two Houses of Congress there. There are people equivalent to our Ministers who are paid more than are members of Congress, but civil servants are not.
The clear principle which should be appropriate to Members of this House is that they should be paid more than their subordinates, the civil servants in the United Kingdom. Merely to state that principle, which has never been slated in this debate, shows how far behind we have fallen in this country. We genuinely believe as a House of Commons that our subordinates should be paid more than we are paid. We carry such actions into effect, and I wonder whether possibly the way in which we govern the remuneration of those who are concerned in Government in this country has something to do with the way in which government in this country is not as effective as perhaps it once was in the nineteenth century. But we are, strictly speaking, talking not of pay but of pensions.
My right hon. Friend the Member for Bermondsey (Mr. Mellish) said that he thought Lord Boyle's Committee represented every stratum of society. I gave evidence to that Committee, and I think that Lord Boyle, Lord Plowden, Lady Seear, and the worthy gentleman who was once permanent secretary to the Lord Chanceller are eminent, capable and competent people, but I do not think they represent every stratum of society. Indeed, three-quarters of them are in another place, and that I have never 662 regarded as representing every stratum of society, even though a small proportion are life peers put there by my right hon. Friend the Prime Minister or one of his predecessors. Up to now, many things have been done for us, or even against us, which we have had no opportunity to talk about. For example, only recently the trustees of the Members' pension fund decided to opt us out of the State pension scheme. I hope that in Committee we shall have an opportunity to rectify that.
In the Bill that applies to most members of the community, anyone who wanted to do that was supposed to consult the trade unions representing the employees and tell the Occupational Pensions Board that this had been done. We have no trade union. There is doubt about whether we are employees or self-employed, so the Trustees, acting entirely within their legal jurisdiction, decided, first, that they would act as employers and advise Mr. Speaker, as our nominal employer, that he should opt us out of the State scheme and, secondly, that they would act as employees, consult themselves and advise themselves to opt us out of the State scheme.
If they had opted us in, we would have been forced to pay an extra £5 a week in contributions. It may be that, as the Trustees and their advisers suggested, hon. Members would not have wished to do that, but we were never asked. There was no debate in the Chamber or in a Committee room upstairs. Hon. Members could have been asked to go to one of the Committee rooms where it could have been put to them "If you wish to opt in to the State pension scheme, you will have to pay an extra fiver a week. If you do not, you will not have to pay that extra contribution, but, of course, you will not get the extra corresponding benefits. Which would you prefer? Hon. Members were never asked. They were treated in a more authoritarian way than any employer in the land would dare to treat his employees. I am glad that the average employer can no longer treat his employees in the way in which hon. Members are treated.
I was impressed by the speech of the hon. Member for Somerset, North (Mr. Dean). I can say with a clear conscience that I have no personal interest in the treatment of hon. Members who retired 663 before I was elected in 1964. I agree with the hon. Member for Somerset, North that it is a total disgrace that they should not be treated adequately. Some hon. Members have said that those people did not contribute. Not one of our 750,000 civil servants contributes a single penny, or ever has, towards his pension. No hon. Member before 1964 contributed a single penny towards his pension, but I do not see why he should not get one, in the same way that all the civil servants, members of the Armed Forces and others who do not contribute get their pensions.
I hope that the principle of the hon. Member for Somerset, North will prevail and that Ministers and those on the Opposition Front Bench will realise that some justice should be done to hon. Members who retired before 1964 and will not allow technicalities to stand in their way, but will ensure that justice is done.
§ 12.40 a.m.
§ Mr. David Walder (Clitheroe)
I shall comment briefly on the question of comparability, which has run through the debate as a sort of theme. It applies equally to pensions as to pay. Pay is founded on the initial absurdity that it is referred to the Review Body on Top Salaries. Top salary it certainly is not.
There is the myth that somewhere in the public service, or in various selected sections of the public service, it is possible to find an exact parallel to other positions, other duties and other tasks, and that at the end of it we shall find some magical sum that will be the right and proper one to to pay to a Member of Parliament. The whole concept is a complete myth.
We have heard in the past that we have the parallel with the under-secretary. We all know that Members of Parliament may carry out other occupations while an under-secretary may carry out only one occupation. I carry out one other occupation and no other, namely, writing books. However, the under-secretary cannot moonlight. He is not a true comparison.
When dealing with the pension scheme I find that we are striving in Clause 1 to get near to the mythical public servant with which we compare ourselves. However, we find ourselves in a curious situation. It seems that at 62 years we 664 can retire advantageously. I believe that for the civil servant the equivalent age is 60 years. He receives certain benefits attributable to his years of service and we do not.
§ Mr. Walder
Precisely. The curiosity of our position is that we may start our service in this place at 62 years. It is possible to be elected to the House for the first time at that age. It might be thought that these are Committee matters, but they are points of detail that lead me to my main argument that search as we may we shall not find true comparability.
Our pension scheme over the years has been an uneasy system. It has been rather like a house decorator with layers and layers of unmatching wallaper pasted one over the other but unfortunately the previous layer shines through.
I give a little support to the hon. Member for Nottingham, West (Mr. English), who gave me some. I hope that it is not out of order to report, without identifying, a conversation that I had with one of the class of community with which the hon. Gentleman compared Members. One of the police officers in the House passed the cryptic remark to me not so long ago "You made a right mess of your pension fund, and so have we of ours". To that extent, I think that the hon. Gentleman and I agree.
I do not think that we shall find some magic formula. I do not think that we shall find that by trade union representation, as suggested by the right hon. Member for Blackburn (Mrs. Castle), who, with her customary courtesy, has now departed the House. It was my last opportunity to interrupt her. I do not think that we shall agree about trade union representation. Therefore, I am driven inevitably towards something like the Boyle Committee, something that we can see as reasonably impartial. It does not have to involve every stratum of society, but let it be something that is able to take into account our position in this place and to judge our special conditions. The Boyle Committee was the first body to be set up that considered our peculiar working conditions, and considered them properly.
665 For my final point I turn to the Minister who introduced the Bill, which I welcome in a limited way because it is, after all, a limited Bill. The Bill goes along the road towards what my right hon. Friend the Member for Taunton (Mr. du Cann) suggested in his admirable speech. If we are to look for a body to examine our affairs, be they pensions or pay, it must be something like the Boyle Committee and have changes of membership.
Any system of comparability—and it would be artificial comparability—at which the House arrived would be regarded by various sections of the community as unfair. The nearest that we can get to fairness is to have our financial situation judged by a committee such as the Boyle Committee.
§ 12.45 a.m.
§ Mr. John Stokes (Halesowen and Stourbridge)
I hope that the fact that we are discussing this important Bill after 10 o'clock—indeed, at quarter to one in the morning—with about 20 Members present does not mean that the Lord President, who has been here throughout the debate, but for the moment has left the Chamber, does not consider it as important as I believe it to be. I am sorry that he did not agree to my request during questions on business last Thursday to discuss our salaries at the same time as we discuss our pension arrangements, because pensions are based on salaries and the two subjects, as we have seen tonight, must be closely intertwined.
Pension matters are extremely complex. Therefore, I welcome the Minister's suggestion that in future our pension arrangements should be governed by rules rather than by a complicated series of Acts of Parliament.
Like my right hon. Friend the Member for Cambridgeshire (Mr. Pym), I deplore the delay in bringing forward the Bill. I hate to introduce a discordant note into what is a House of Commons, not a party, matter, but I suspect that the Lord President does not entirely have his heart in this matter.
As hon. Members know, I have spent the last 30 years or so since the war dealing with pensions and salaries. I found Parliament the most difficult and confusing, if I cannot say employer, perhaps I can say task master that I have ever come across.
666 I should like now to refer to what was said by my hon. Friend the Member for Clitheroe (Mr. Walder). I do not think that the House will ever quite make up its mind about the kind of people that we are. I can see a case for paying us no salary at all and, therefore, no pension. That situation persisted for the greater part of England's history and at a time when, on the whole, our affairs were much better regulated than they are now. But I do not believe that most people would think that today this Chamber should be filled entirely by extremely rich people. Therefore, the alternative must be to pay us a realistic salary. I do not say that we should be paid the rate for the job, because no two Members, let alone people outside, could possibly give an accurate job description.
However, I cannot for the life of me see a case for paying ourselves exceptionally low salaries. Exceptionally low salaries must lead to exceptionally low pensions. Perhaps the one good thing about the European Assembly, which I do not like, may be the influence that it must have on salary and pension rates here.
I think that our salaries and pensions should be related, at least to some extent, to those paid by the best employers in this country—say, companies such as ICI or Shell, if not quite up to the lush standards of the Civil Service whose members, as we know, do not contribute one penny towards their pensions. We all know, and I am surprised that it has not been mentioned tonight, of the cases of hon. Members who have stayed on when they wished to retire simply because they could not afford to do so. That seems to me quite scandalous and we have the remedy for it in our hands in this Bill.
Apart from the level of our salaries, the main weakness of the scheme must be the presumption of 40 years' service. There is confusion over the two "salaries" we receive. There is the actual salary that the public think we receive, and the other salary that some of us actually receive, which is lower because we disclaimed a rise some time ago. The notional salary for pension purposes of just over £8,000 should by now be £11,000 to take account of inflation since 1975. The level of salary is fundamental to the working of the pension scheme.
667 It is fair and reasonable to say that 40 years' service is what someone would expect in the private sector or in many other occupations. It is not fair here where the average length of service is only about 15 years. Therefore, to have a low level of salary and the 40-year term of service will lead to extremely depressed pensions. If we can attain a better salary level and a more realistic period of service—say, 30 years—that would go some way towards transforming our pension scheme.
I welcome all the recommendations. I particularly welcome Clause 9, which enables Members to purchase additional years of reckonable service. Perhaps the Lord President will confirm later that payments to this end will be free of income tax, which is an important factor in payments of this kind.
I have no objection to the increase in the Member's contribution from 5 to 6 per cent. if that will lead, as the presumption must be, to higher pensions.
I conclude by asking a number of questions. When will the wretched notional salary for pension purposes be brought to an end? This is a thoroughly unsatisfactory arrangement, as we have heard. Will the Government make an announcement on the subject before the next General Election? If we do not tackle it now it will continue as a festering problem.
On pensions, we have an overriding duty to our older Members. If we do not act with firmness and resolution now to put salaries and pensions on a proper basis, no one else will do it for us. When we debate the question of salaries, on which the pensions are based, which I hope we shall do very soon—I believe possibly next week—I hope that the House will insist on Boyle's £8,000 being put into effect forthwith. Further delay will only cause greater complications, and the nettle must be grasped now.
I support what my right hon. Friend the Member for Cambridge said in asking that the Review Body, which does a very good job, should be asked to sit again and recommend up-to-date salary levels for Members of Parliament. I hope that all hon. Members will try to persuade the Government to accept that. But let us remember that this is a House of 668 Commons matter and not just a Government matter.
§ 12.54 a.m.
§ Mr. Michael Morris (Northampton, South)
I believe that I am the youngest Member to speak in the debate, and therefore, I hope, have the longest time to go before drawing my pension. I should like to pay a warm tribute to my right hon. Friend the Member for Taunton (Mr. du Cann) and the right hon. Member for Anglesey (Mr. Hughes) for the way in which they made their contributions tonight. They went beyond concentrating on the details of the Bill, and widened the scope of the debate. I hope that they have ensured that never again will this issue be brushed under the carpet.
My right hon. Friend the Member for Cambridgeshire (Mr. Pym) was right to say that there should be a commitment and an undertaking by both Front Benches, before going into a General Election, that the review that is carried out will he implemented in full, whatever it may be, when it is completed after an election.
I wish to comment on the point made by the right hon. Member for Blackburn (Mrs. Castle). I am married to a full-time practitioner in the National Health Service. I see no reason why I should be discriminated against if I were unfortunate enough to be a widower. But the right hon. Lady's point would have carried considerably more conviction if when she was Secretary of State for Social Services she had fought the case then. She did not do so. However, having said that, I support the case that she has made.
The point that I want to make, and the reason I have remained in the Chamber to make it, is that I think that it is incumbent on the Government and particularly the Boyle Committee to recognise that parliamentary service is not the same as service in the Civil Service or service in the private sector. The nearest comparison is with Her Majesty's judges. I think I am right in saying that their pension scheme is based on 15 years' service.
It seems to me that the Government and the Boyle Committee need to recognise that relatively few Members get to the House before the age of 40. We are nearly all just about 40 when we become 669 Members. At best, we are unlikely to do more than 25 or 26 years' continuous service, if we are lucky. That point needs to be taken on board by the people who review these pension arrangements. They need to recognise that we believe that it is tolerable that people should retire on two-thirds of salary. But none of us will serve for 40 years. Occasionally someone may be fortunate enough to serve for 40 years, but the vast majority will not serve for anywhere near that period. Frankly, they will not get a half of their salary as pension.
Therefore, I urge the Government, when they next reconstitute the Boyle Committee, to ask the Committee this question: is 40 years an appropriate length of time, or should not Members of Parliament be considered in a similar light to Her Majesty's judges and an assessment be made as to what should be an appropriate length of service for the basis of a pension?
§ 12.58 a.m.
§ Mr. John Smith
The hon. Member for Northampton, South (Mr. Morris) said that he thought that he was the youngest person to contribute to the debate and was, therefore, very objective about it. I am afraid that I am the youngest person to contribute to the debate, and therefore I must be even more objective than his good self.
The main points that have been made in the debate are not surprising. They were obvious points that hon. Members who have thought about the pension scheme would be bound to make. We shall have a Committee stage, and I hope, therefore, that hon. Members will acquit me of discourtesy if I do not go into enormous detail on all the points made, because we shall have another opportunity, and perhaps a more suitable opportunity, to do that.
I thank the right hon. Member for Cambridgeshire (Mr. Pym) for his very kind personal remarks about myself. He surveyed the situation and complained that we were a little slow in bringing forward the Bill. None the less, he said that he was glad to see it. He raised some questions, without going into them in detail. No doubt he will return to them in Committee if he wishes to pursue them. However, he gave a general welcome to the Bill, as, indeed, did right hon. and 670 hon. Members in most parts of the House, with one solitary exception—the hon. Member for Somerset, North (Mr. Dean).
My right hon. Friend the Member for Anglesey (Mr. Hughes) and the right hon. Member for Taunton (Mr. du Cann) stressed that the Bill was really only a fair deal after some delay. I think that it is absolutely right to stress that we are not making any revolutionary proposals for the pension scheme. The proposals are very modest. All that they do is to bring up to date the Members' pension scheme in the light of improvements which have been made in other public service pension schemes. That is worth putting on record.
There have been references to Civil Service and judicial pension schemes. To be fair to the Civil Service, it must be remembered that, although contributions are not made, the fact is taken into account in the Pay Research Unit and in the method of establishing the salary. That fact, too, should be borne in mind.
The right hon. Member for Taunton asked me about the reference in Clause 16 to the pensions paid to the Speaker, the Prime Minister and the Lord Chancellor. He will be aware that in para. 102 of its report the Review Body on Top Salaries considered the pension arrangements. It considered that the arrangements would be satisfactory if the salary increases that had been recommended were implemented. Clause 16 deals with a small taxation point and tidies up an anomaly that results from the 1972 Act.
That underlines the point made by the right hon. Gentleman, that it is one thing to talk about a pension scheme and how it is organised, when perhaps the reality is its relationship to the salary and to the yardstick. To that extent, I think that right hon. and hon. Members were fully in order in referring to the salary levels, because there is not much point in talking about a pension scheme without a reference to the levels, and the levels in turn flow from the salary level that is determined.
My right hon. Friend the Member for Vauxhall (Mr. Strauss) referred to the submissions which the Trustees of the pension fund had made to the Review Body. I am glad that he did so, because the House is indebted to the initiative which the Trustees took in putting forward detailed recommendations and also 671 for the realistic and practical way in which they put them forward within the limits of political possibility. A great deal of what has emerged from the Review Body is the result of the initiative which the Trustees took in putting forward these recommendations.
My right hon. Friend raised a point about children's benefits. I hope that in Committee we shall be able to go into this in a little more detail than we have been able to do today, and I await the presentation of the argument on that occasion.
The hon. Member for Somerset, North has two grounds of objection to the Bill, although how far he will pursue his objection to it I am not yet clear. The first point that he raised was on the position of pre-1964 Members. I think that everyone has sympathy with Members who retired before we had a proper pension scheme and who may be in difficult circumstances, but I think that my right hon. Friend the Member for Vauxhall effectively answered the argument in his intervention during the hon. Gentleman's speech.
We have to take into account the fact that there were no contributions, however unfortunate that was, and that there is a serious difficulty of principle in catering for people before 1964. This is another matter to which we may return later, but the arguments were rehearsed in the Boyle Report, and there is serious difficulty for the Government in overturning the recommendations of the Boyle Report on that matter when it was thoroughly gone into by the Boyle Committee itself. The Committee felt unable to recommend that former Members with no service after the introduction of the parliamentary scheme should be entitled to a pension from the scheme. In rejecting the proposal that accommodation should be made for pre-1964 Members, Boyle took into account the fact that the Members fund does exist to help former Members in case of need, and I think my right hon. Friend the Member for Vauxhall said that effective assistance is given in circumstances of need. One would wish to cater for everybody, but there are serious problems of principle in catering for people before 1964.
§ Mr. Paul Dean
Will the Minister comment on the suggestion by the Boyle Committee that the House of Commons might like to consider doing something similar to the over-80s pensions? Will he at least put down a Government amendment so that we may discuss and vote on that suggestion?
§ Mr. Smith
I shall consider that suggestion, but it should be understood by the House that it is limited in scope. It applies only to the over-80s. I do not know the present age levels of people who were in Parliament and left before 1964, or in 1964. But it is limited to that extent.
There is another difficulty, though. There are other employees in the public sector and the private sector who retired before schemes were introduced and for whom no retrospective provision is likely to be made. I am informed that there may be hundreds of thousands of employees in the public sector and the private sector, and one genuine difficulty that we face is that if we are making provision for ourselves and for some of our colleagues who were in Parliament before any scheme was introduced, ought not there to be similar provision made for other people, especially people in public sector occupations, who were in a different position?
I cannot give any commitment that the Government will introduce such an amendment. They have considered this matter very carefully and come to a certain view about it. But certainly I will think again about what the hon. Member for Somerset, North said, although I hope that he will understand that I am not committing the Government to introducing any amendment.
My right hon. Friend the Member for Blackburn (Mrs. Castle) spoke eloquently and with force about sex equality in the pension scheme. I think in strict logic—she depended heavily on strict logic—there is very little that one can say against her argument on its merits. The difficulty again is the extension of the principle to other people in the public sector, and it might well involve a very large expenditure of public funds. I am told that if there were to be strict sex equality throughout the public sector pension schemes, putting widowers in the same position as widows, 673 it might involve expenditure of up to£20 million. Obviously this is a very serious matter. But it would be a little difficult to write amendments into the Bill to take account of such an important principle given the time scale that we want to achieve in passing the Bill. But no doubt the matter will be investigated more closely in Committee. The main difficulty that we see in it is the extension of the principle to other public sector schemes.
§ Mr. Michael Morris
Unless this House debates that issue, it will continue to be cast aside. No Department has been prepared to discuss it. I believe that it is the job of this House to discuss it.
§ Mr. Smith
I have no doubt that the House will discuss the issue in Committee, because my right hon. Friend the Member for Blackburn has indicated her intention to put down amendments. She is a lady of her word when it comes to that. So we shall be debating it in Committee. I thought that at present I should put the other side of the argument. We shall have to reach a conclusion in Committee. I am not making any objection to the principle of widowers being dealt with in the same way as widows, but there is always a difficulty in moving towards the establishment of such a principle and I am just expressing some caution about the difficulty in the way of doing so. It arises principally from the fact that there would be repercussions on other public sector pensions.
My hon. Friend the Member for Nottingham, West (Mr. English) asked about the attitude the Government would take towards amendments tabled in Committee. It is extremely difficult for me to say in advance whether amendments would be in order. It is not the intention of the Government to restrict hon. Members in proposing amendments simply on the ground that limited additional expenditure would be incurred. However, the Government would see more difficulty in accepting major increases in expenditure or increases which would invalidate the proposed contribution rate contained in the Bill. There is, of course, a correlation one with the other. I hope that my hon. Friend will accept that the Government will approach any amendments 674 with good intentions, in the light of what I have said.
§ Mr. Smith
I do not think that there is anything further that I should go into in detail, bearing in mind that we shall be having a Committee stage. I hope that perhaps the hon. Member for Somerset, North will think again about his opposition to the Bill. I can understand the reasons why he objects to certain provisions, even though I do not agree with him. But to object to the Bill would be to stop from coming into effect much needed improvements in benefit to deserving individuals.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Coleman.]
§ Committee this day.