§ Motion made, and Question proposed, "That a sum, not exceeding £1,005,800, be granted to His Majesty, to defray the Expense of Half Pay and Retired Pay to Officers of the Navy and Marines, which will come in course of payment during the year ending on the 31st day of March, 1914."
§ Colonel YATE
The point I wish to raise on this Vote is in connection with commutation of retired pay. I mention this matter because it is one of great importance to the Navy. Personally, I am adverse to any large commutation of pensions, because I think in many cases officers after commutation lose everything and are left in considerable poverty. Pensions are, after all, deferred pay granted to men for service, to the State to make provision for themselves and their families in old age. Therefore, if commutation is allowed, it should only be allowed on a small scale and for the good of the officers. I also think that the State should not make a profit on the commutation of those pensions. The Chancellor of the Exchequer, some two years ago, acknowledged that the profit the State made had amounted to at least £200,000 out of the commutation of pensions for officers in the Service. That was only a rough estimate. His words were:—It It is not possible to state definitely the amount of profit which has accrued to the Exchequer in respect of pensions partially commuted, but, by a partial investigation, it is estimated that the profits in favour of the Exchequer of about £200,000 would result from partial commutation.Possibly, a more careful investigation might show a larger profit to the State. In these cases the National Debt Commissioners get the money from the Savings Bank, which pays 2½ per cent. They lend it to the Treasury at 3½ per cent., and the Treasury lends it to the officers and charges them 5 per cent. for commuting their pensions, and makes a profit of 1½ per cent. on each pension commuted. The total amount paid in partial commutation of pensions as per the return up to the 31st December, 1912, under the Commutation Acts of 1871 and 1882, was £6,000,000. Of this sum, £4,500,000 was for pensions wholly commuted, and the sum paid for partially commuted pensions, upon which an estimated profit Of £200,000 931 was made, amounted to £1,588,276, and there has been a considerable extra profit from that date up to the present time. This question of the commutation of pensions has been rightly taken up by the Government of India. I have a copy of the Orders issued upon the subject on the 30th September last. Under these Orders of the Government of India the proportion to which commutation is allowed is not to exceed one-fourth of the pension except in exceptional circumstances, and under no circumstances can a British officer under the Government of India commute more than one-third, whereas in the British Service he can commute one-half provided that not less than £80 is left. The point I ask the right hon. Gentleman too consider is this: I suggest that the limit for naval and military officers in England should be decreased to one-third instead of one-half, and that there should be a proviso that £120 should be left instead of £80; and my final point is that this commutation should be made upon a 3½ per cent. basis in England, the same as in India, and not upon a 5 per cent. basis. I say this is a most important question for the Services, and I ask the right hon. Gentleman to take it into his consideration and to raise it with the Chancellor of the Exchequer, in order to get fair terms for the officers.
§ Sir FREDERICK BANBURY
I agree with what my hon. and gallant Friend says as to the disadvantage of commutation by people who get pensions. In the majority of cases the only result is that the pension is lost and that they are far worse off than if they simply continued to draw their pensions. But I do not quite follow the argument of my hon. and gallant Friend when he desires that the sum given by way of commutation should be made larger. If the sum is made larger the rate for commutation will be greater, and therefore the disastrous effect which the hon. and gallant Gentleman says arises when pensions are commuted would continue, whereas, if the amount to be given is rather smaller, then the temptation to commute is also reduced.
§ Sir F. BANBURY
I do not quite follow that. My hon. and gallant Friend objected to the State making a profit.
§ Sir F. BANBURY
It seems to me to be an important point. If the State makes a profit there will be a larger amount of money to distribute, and therefore the temptation to obtain commutation would be greater. I also understood my hon. and gallant Friend to say that the Admiralty borrow the money from the Savings Bank, which pays 2½ per cent., and that the Savings Bank charges the Admiralty 3½ per cent. The 2½ per cent. is what the Savings Bank gives to the depositors, but they have to provide for all their expenses. I do not know what the amount is, but if the Savings Bank lend the money to the Admiralty at 2½ per cent. there would be a loss; there must be something for working expenses. Whether 3½ per cent. is the right amount of course I cannot say, but I do think myself that it is rather a good plan that it should be known that if a pension is commuted the full amount should not be taken and that the State should make something out of it. My reason for saying so is that it is not a good thing to encourage people to commute their pensions. That is so in all classes of life. The temptation to get a lump sum of money is, I am afraid, great, and very often it is put into a bad investment or is spent in one way or another. The idea of the State is not to give a lump sum down. I am obliged to admit that for once I think the Admiralty are right in not acceding to the request of my hon. and gallant Friend.
§ Sir J. D. REES
I rather agee with the hon. Baronet. I, like every retired servant of the State, have seen very many painful cases of the commutation of pensions, which really make me wish that commutation was altogether forbidden. I do not think it would be unreasonable if it were done because the State gives pensions, not only for the benefit of the officers, but also in some measure to ensure that those who served it in former times should not fall into a state of degradation and poverty which, in a sense, would bring discredit upon the State. Of all classes of people those in the enjoyment of pensions are the most trustful and credulous. No one is so easily relieved of his capital as a man who has no capital, but raises it by the commutation of the pension. Nor can I, seeing the way the taxpayer is bled, regret the fact that something comes back into his pocket in the case of commutation which otherwise would be wasted on speculation on which public servants are most ill-fitted to judge 933 and in which very often they fall a prey to those who induce them to speculate.
I rose to ask the right hon. Gentleman a question in reference to the Appropriations-in-Aid. This Vote is for half pay and retired pay. We find that on page 168 there is an item "proportion of contribution from the Government of India on account of His Majesty's ships in Indian waters." That sum is the same as last year. I do not understand how that can be a fixed and recurring item. I do not know exactly what it is. If it is for one of His Majesty's ships serving in Indian waters or the Persian Gulf, then I understand the Government of India is contributing towards the pay of the officers during that time. I wish to know how can they contribute to the half pay and retired pay of the officers there, because when they are receiving retired pay they are not serving there, and when they are serving there they are not receiving retired pay. My contention is that these Estimates should make clear what the expenditure is in regard to these very large Grants, and I should be glad to have some explanation. There is another item, "proportion of repayment from the Government of India on account of services rendered by His Majesty's ships engaged in the suppression of arms traffic in the Persian Gulf." I quite agree with this expenditure because it will probably save the lives of thousands of our soldiers, and I am glad this repayment is being made. I do not, however, quite understand what it is for, or why the proportion estimated is the same as for last year, because these operations are not constant and continuous, but vary according to the activity of this illicit traffic in arms. These remarks apply equally to the contribution of the Australian Cornmonwealth and the Dominion of New Zealand on account of naval expenditure, but there we find that the provision for the current year is only half of what it was last year. That does not appear to be a kind of recurring item like the Indian contribution, although so far as this particular matter is concerned as to the charges, the Commonwealth and the Dominion of New Zealand would be in the same position as the Empire of India. If the right hon. Gentleman will explain that point, I shall be very glad.
§ Dr. MACNAMARA
The matters referred to by the hon. Member opposite are governed by the regulations. The 934 question of policy is hardly a matter for the Treasury, and all we have to do is to make the payment to the National Debt Commissioners. I hardly know in these matters how far my jurisdiction runs, but I have taken careful note of the points which have been raised, and if I have any jurisdiction I will make representations in the right quarter. With regard to the points raised by the hon. Member for Nottingham (Sir J. D. Rees), he asks why we take certain sums in reduction of Vote 13 which is for half pay and retired pay in respect of officers serving in the Persian Gulf. I think it is a very fair thing to make a charge of that kind for the period of time they are serving in the Persian Gulf.
§ Dr. MACNAMARA
We think the sums taken in respect of the officers for half pay and retired pay is a fair amount for the services rendered in the Persian Gulf.
§ Dr. MACNAMARA
Here we are dealing with the retired pay. We have certain contributions from the Government of India, and we apportion a certain amount of that contribution in respect of half pay and retired pay of those serving there in the interests of the Government of India.
§ Sir J. D. REES
There is a distinction made between His Majesty's ships in Indian waters and those engaged in the suppression of arms traffic.
§ Question put, and agreed to.