1. Lieut.-Colonel DALRYMPLE WHITEasked the Minister of Pensions whether he is now in a position to announce the decision of the Government with regard to any further stabilisation of the rates of war pensions?
§ The MINISTER of PENSIONS (Major Tryon)The Government have carefully considered in the interests of pensioners the practicability of a settlement of pension rates for a longer period than for the year to March, 1927, already announced.
As the House is aware, pensions for the Great War were, on the advice of a Select Committee of this House, brought into definite relationship to the cost of living. They were increased to their present rates in 1919 on the basis of an increased cost of living represented by the index figure of 115 per cent. in excess of the pre-War cost. After an initial period of 3½ years ending in March, 1923, which was for special reasons subsequently extended for a further three years to March, 1926, they were, by the terms of the Royal Warrant, made to vary up or down if the average cost of living changed by at least 5 per cent. That cost does, in fact, now show a substantial decline from the figure of 1919, and if the rates of pension were reduced proportionately the annual cost of pensions would be lower by approximately 6½ million pounds.
It has, however, always been the view of the Government that the operation of the Warrant in regard to rates should, in the interests of pensioners, be conditional on a reasonable stability being reached in the cost of living, and the Government long ago intimated that under present conditions they were not in favour of a reduction of rates. A settlement of the rates in perpetuity is not at present attainable consistently with the interests of all parties concerned, but the Government have come to the conclusion, after full consideration of all the known factors affecting the matter, that, while maintaining the present relationship of pension rates to the cost of living, a substantially larger measure of security can reasonably be given to the pensioner than has already been announced.
The Government have, therefore, decided that, as regards the operation of Article 24 (a) of the Royal Warrant on the rates of pension, and other allowances for the classes of beneficiary provided for by the Royal Warrant and subject to the present terms of the Warrants, and the War Pensions Acts, no change in the present rates shall be made so long as 594 the average cost of living, as certified by the Ministry of Labour, lies somewhere between a given maximum and minimum figure. The minimum figure for this purpose will be 60 per cent. in excess of the pre-War cost of living, while the maximum is that already provided by the Warrant, namely, the cost of living in the year 1919.
With a view to giving still further security to the pensioner, the average cost of living will be, not the annual average originally prescribed by the Royal Warrant, but an average over three years, and the average will not in any case operate before 1929. The effect of this settlement will be to give stability to the present rates for at the very least three years from 31st March, 1926, and from all present indications for an even longer period.