§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a Second time."
§ 7.54 p.m.
§ Mr. MICHAEL BEAUMONT
I beg to move, to leave out the word "now," and, at the end of the Question, to add the words, "upon this day three months."
I regret that I have to make some remarks upon this Bill before the Minister has had a chance of explaining it, but it is probably well known in the House. In various guises we have met it before. It originally came before us as a private Member's Bill in the last Session, when I, among others, was instrumental in causing it to make no further progress. Like all or nearly all purely Departmental Measures from the Ministry of Health, it has a thoroughly attractive and seductive exterior, but when investigated it is thoroughly unsound and dangerous. What this Bill does, the Parliamentary Secretary will tell you, is to legalise certain illegal actions taken by local authorities. I hope the House will pardon my giving a small explanation of the Bill, but it is necessary to do so in order that my remarks may be made clear, as we have not had the advantage of an exposition from the Parliamentary Secretary.
The position when the economy cuts occurred was peculiar as regards local government officers. It was decided at that time, rightly or wrongly, that it was necessary that all official salaries should be immediately reduced, and the Government servants under the direct employment of this House had an immediate reduction in their salaries—teachers, police, Army and Navy, Members of Parliament, and other more or less useful servants of the State—but the local government officers, while in some respects in an analogous position, were servants, not of this House, but of the local authorities. It therefore became necessary, if they were to come into line with the rest of the public servants, that the local authorities should come to special arrangements each with its own employés. There could be no all-round cut. Let 729 me at once pay a tribute to the very generous spirit in which these local government employés did in fact come forward and, in a majority of cases, voluntarily offer a substantial reduction in their salaries, in abrogation of the agreements under which they were working, as their contribution in the national crisis. As I am sure every hon. Member will agree, the way in which they took that action was worthy of the highest praise.
The question came, as it came over all the cuts, wherever there was any form of contributory pensions scheme, as to what was to be the effect of the cuts as regards pensions. As far as this House is concerned, I will only mention the case of the teachers, but it was decided—I am making no comment on the decision now, but shall leave that to the hon. Member for Caerphilly (Mr. Morgan Jones), whom I see waiting, tiger-like, for his spring—that the teachers' pensions should suffer the same cut as their salaries; that is to say, that their contributions and those of their employers should be reduced and, consequently, that the final sum for pension should be reduced. Actually in that particular case, owing to the peculiar way in which their pensions are assessed, those reductions would in most oases be very small. Then came the question of what was to happen to local authorities, whose employés are employed under various schemes. They do not by any means all have the same superannuation, and it is interesting to note that this is the first occasion on which a Bill is being passed in this House to deal with the whole field of local government servants' pensions.
§ Mr. BEAUMONT
The right hon. Gentleman opposite says "No," but I thought that that was so. Some local authorities accepted the cuts and carried out what was then, I understand, their legal obligation, by applying the cuts to the pensions. Certain other authorities, either knowingly or unknowingly, applied the cuts but said that they should not apply to the pensions. That was an illegal act, and this Bill is an indemnity Bill to indemnify those authorities. The local authorities which had not the power under the law as we passed it to make cuts without reducing pensions did so in 730 some cases, and, as I said, they did it knowingly, and this Bill is to indemnify them. The Bill originally introduced in the last Parliament by the hon. Member for Central Wandsworth (Sir H. Jackson) went much further and allowed all local authorities, as far as I can remember, for all time in the future to make that alteration and to exempt pensions from the cuts. If that were the case to-day, I should be opposing this Bill far more bitterly than I am. The Government realise that that would be extremely difficult, and they are in the difficult position of these authorities having done this thing and come to certain agreements with their employés. What action should the Government take?
My objection to this Clause is two-fold. In the first place, we say that local authorities should not be allowed to play fast and loose with the law. Laws govern local authorities just as they govern private individuals, and they should be upheld. I am convinced that for every case where this was done unwittingly there were three cases in which it was done with a deliberate attempt to evade the obligations of the cuts. Therefore, we say that it is a most dangerous principle and precedent that local authorities who evade the law and act in a sense contrary to that in which Parliament has determined should be allowed to escape with an indemnity in this manner. Secondly, we say that you are giving under this system a preferential treatment. You are penalising certain authorities that have kept the law as against certain others who have broken it. That is to say, that the employés of the good authorities which have kept the law are going to be in a position to say to their employers, "If you had broken the law we could have got our pensions all right, and now we have to suffer because you are law-abiding." It is an incitement for local authorities in future to ignore laws if they do not happen to like them and if they can get away with it.
I am not arguing the point whether pensions should or should not be affected by the cuts, but I cannot see why an exception should be made in the case of local government officers. Local government officials are a very deserving body of people. The faults of the local government system are not their faults, and in many cases the officials are deserv- 731 ing of the highest praise. I have every sympathy with the teacher who says, "Why should my pension be affected when the director of education or a clerk in the education office gets away with it without a cut?" There can be no question of altering it as far as the teachers are concerned, but we do resent very much that local government officers, because they are not servants of this House, but are servants of the local authorities, should have preferential treatment. No one who remembers the discussions on the Economy Bill and the Debates on this matter could doubt for a moment that if it had been possible for this House to deal directly with local government officers, their pensions would have suffered as the teachers' pensions did. They are in a different position. Why should they, because they are only employed indirectly by the State, have preferential treatment? In view of the moderate character of the Bill, I am not going to press my opposition to undue lengths, but I want to place it on record that I think that this is a most dangerous precedent, and that this is a Measure which ought not to have been introduced.
§ 8.5 p.m.
I beg to second the Amendment.
The Bill deals with only a small field, as I understand it, because if hon. Members refer to it, they will see that it is only a question of such local government officials who had received from the local government authority which was their employer an undertaking or, as the Bill says, an understanding, that their case would not be affected by the cuts. It does not therefore apply to all local government officials by any means. The Bill, however, opens up a much bigger problem than that. The question of the cuts in salaries and wages under the various economy orders applied over a large field, and, as far as pensions are concerned, they have been treated very differently in different parts of our public life. With regard to civil servants, I would refer hon. Members to the report of the Comptroller and Auditor-General on the civil appropriation accounts last year, where it will be discovered that the higher ranks in the Civil Service who may retire during the period in question will receive their pensions worked out on a scale of their nominal salaries as opposed 732 to their abated salaries. That section of employés has been treated very generously. I do not want to say anything which implies any criticism of any local government officer or civil servant.
I want to indicate to the House that there is a difference in the treatment between various branches of the public service. The teachers, on the other hand, as I understand—owing to this Debate coming on unexpectedly I can only give the general facts and not the actual references—the teachers who came under the economy cuts and have since been pensioned have had taken into account the fact that theirs was an abated salary and not the nominal value that it would have been except for the cuts. There you have a difference between the higher grade in the Civil Service on the one hand and the teachers on the other. The police, I find, are like the higher grade of the Civil Service and get their pensions on the unabated salaries. That is to say, though their salaries and wages have been reduced by the cuts, their pension rights are not affected. We therefore have on the one hand the police and the higher grade of the Civil Service dealt with in one way, and teachers dealt with in another. But let the House observe that Parliament has not legislated on the subject in any way up to now. We have not as a House been aware of this fact and the Government have not asked us to deal with the problem.
In this case, as I understand it, certain local authorities acted illegally in giving an undertaking to their employés that they would give them their pensions on the basis of their unabated salaries. The undertaking may, or may not have been ultra vires, but on the assumption that the local authorities could give it, the Parliamentary Secretary asks us as a House to give retrospective legislative sanction to action taken by the employers of the particular local government officers. Although we have technically moved the rejection of the Bill, it is not the desire of anybody in the House to do anything that will break an undertaking, honourably given no doubt by the employers concerned to their servants, who honourably accepted it. It therefore places the House in an awkward position because we are not dealing with those who are servants of the House and the Treasury will not be responsible for any of the cost at any 733 stage of the proceedings, as is indicated by the fact that the name of the Financial Secretary is not on the back of the Bill. Owing, however, to some difficulty that has arisen, we have to give sanction to this honourable undertaking, and therefore we are practically forced to agree to the Bill.
I agree with my hon. Friend that it is right that somebody should put in a caveat on behalf of the House and the taxpayers and ratepayers at large that this is an unfortunate affair and that we hope that no one will consider it as a precedent, because we realise, and I am sure that the Government realise, that before very long they will have to make up their minds on this very difficult question. They cannot say, and I cannot say, whether the cuts are going to last any length of time, but it stands to reason that if we are to anticipate that the cuts in salaries and wages are to continue for a considerable period, both in local government service and in the Civil Service, obviously it must come to the consideration of this House what is to be the position with regard to the whole pensions system. It does not really affect the question whether they are contributory or non-contributory so far as the essential matter of principle is concerned. The principle is that if you have a certain nominal salary and if it is reduced by cuts to a lower level, are you to consider your salary what you get or what you ought to get? That principle opens up the question of the expenditure of hundreds of thousands, if not millions of pounds in future. That is why we are really sorry that we should have been driven into the position that, in order to make good an honourable undertaking given by people who may or may not hace been the right people to give it, we have the power to condone a principle which, judged on its merits, the House might very well not wish to condone.
It must be remembered in all these cases with regard to pensions that in whatever Vote passes through this House there are tremendous and growing pension charges, and in a time like this, when the national and local finances are in a somewhat parlous condition, it is not right that under cloak of a no doubt very proper and just Bill of this kind, we should formally assent to any principle 734 without a much greater Debate than will come to-night as a result of the Finance Bill having collapsed at an earlier hour than most people expected. Therefore I enter a caveat that this House will have to deal with the problem on far larger lines than appears from this Bill. Though I certainly have no desire to divide the House against it, I do not see how we can avoid passing it in the circumstances which have arisen, but the House wilt seriously have to consider before very long what action it proposes to take to remove the anomalies which are to-day, to-morrow and every week arising with regard to the differences in the treatment of pensions of civil servants, policemen, teachers, and a great many other grades of civil servants and employés of local authorities. It is because this is the only way in which we can call attention to that fact and to make these observations on the Floor of the House, that I Second the Amendment.
§ 8.15 p.m.
§ The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare)
I pologise to the House for the fact that owing to the popularity of the Finance Bill I was not here in time when this Measure came on. I would assure the House that my absence indicates no lack of courtesy, and in fact I was, I think, only five seconds late, but my hon. Friend the Member for Aylesbury (Mr. Beaumont) forestalled me. I do not object very much to his description of this Bill, but perhaps it will be better if I explain it in my own way as shortly as possible. I hope to be able to show the House that it is really a humble Measure, a non-controversial Measure, and at the same time a Measure of justice enabling local authorities to keep faith with their employés. The House will remember that in the autumn of 1931, when sacrifices were demanded of the nation, the Government asked local authorities to discuss with their employés whether they too could not join in making their sacrifices by accepting a reduction of their remuneration.
The House will probably know that in certain cases local authorities cannot reduce the remuneration of their employés without their consent. In order to encourage their consent in certain cases those local authorities said, "If you agree to a cut in your remuneration we think it right that your pension shall not be 735 reduced." I do not imagine for a moment that they were suggesting anything which they knew to be illegal; the whole field of superannuation law is so complicated that I imagine they thought they were acting within their powers. At any rate there was an honourable obligation entered into between the local authority and its employés, the employés saying, "We agree, in the interests of the nation, to accept so much reduction in our pay," and the local authority saying, "Very well, as your pay governs the rate of your pension, we shall consider that no reduction has been made as far as pensions are concerned." All the Bill does is to give effect to that agreement. The House will also remember that the London County Council promoted a Bill to remedy this state of affairs as regards the area under their control. The House will further recall that my hon. Friend the Member for Central Wandsworth (Sir H. Jackson) introduced a Bill of rather wide scope and with certain elements of controversy in it, as my hon. Friend the Member for Aylesbury and my hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) have indicated. But we thought that at this time of the Session there could be no controversy if we enabled those local authorities which I have described to carry out their honourable obligations.
I do not think it is necessary to go into the details of the Bill, except to say this, that Clause 1, which is really the operative part of the Measure, relates to cuts first made between 30th September, 1931, and 1st April, 1932, on the understanding that superannuation rights were not thereby affected, and provides that any remuneration reduced on such understanding and received within a period of five years from 1st October, 1931, shall be treated as not reduced from the point of view of superannuation rights or contributions. Other provisions define the category of local employes covered by the Bill and make the operation of the Act retrospective as from 1st October, 1931. With this explanation, and admitting the contention of my hon. and gallant Friend the Member for Gainsborough that there are many anomalies in the law, and that we may at some time have to consider the whole problem of pensions, I hope the House will give a Second Reading to this Bill.
§ 8.19 p.m.
§ Mr. GREENWOOD
I find myself in what is to me a strange position, that of supporting the Government. I believe I am right in saying to my hon. Friend that this is the first time I have been behind them in any Measure he has introduced. Admittedly the whole situation is anomalous, and the case which the hon. and gallant Member has made against the Bill is true in that we have not, as a matter of fact, adopted a national policy on what is to happen to people who enjoy certain statutory pension rights based upon their salaries now that their salaries have been reduced as a result of the economy fever of the National Government, but I feel that the hon. Members who are temporarily, very temporarily, opposing the Second Reading are trying to have it both ways. It is admitted that the pensions of certain of the higher classes of civil servants are based retrospectively on the salaries they enjoyed prior to the cuts.
When the right hon. Gentleman says it is admitted, it is admitted as a fact, but it does not follow that it is admitted as being the right thing.
§ Mr. GREENWOOD
I am on the point that the hon. and gallant Member and his friends cannot have it both ways. They cannot say first that we should not create a precedent and then point out that precedents have been created, and it is the fact that certain grades of civil servants are obtaining pensions based upon their pre-cut salaries. Teachers, as I understand it, fall rather into an intermediate position, because their pensions are based on their previous five years' salaries, and therefore those who resigned in 1931 would suffer no cut and those who resigned in 1932 would suffer only a very, very small cut. There are also categories of public officers who are not affected, but it seems to me that the fact that other people are not being affected is no reason why, if we can put matters right as regards one group of public officers, we should refuse to do so.
Local authorities acted in perfect good faith, I am quite satisfied, when, at the instigation of the Government—I am not approving of the policy—and as part of the deal on salaries, they agreed that pensions should not be touched. It has to be remembered that the period 737 through which we are now passing is an exceptionally difficult one. Those who are going to be affected are the older Local Government officers, who ever since the pension schemes were introduced have been paying regularly year after year on the assumption that their pensions would be based upon the salaries which they were enjoying during that period of years. If arrangements had been made to deal with the pensions of those who are going to retire 10, 15, or 20 years from now there might be a case to be made, but having regard to the fact that the people affected are those who paid their dues under the old scale it seems to me that there is no moral case whatever against the Bill. I would have liked to see a wider Measure, and I agree with what was said by the hon. and gallant Member that we are in rather a muddled position about the whole thing, and the passage of this Bill may create other problems. But taking the Bill as it stands it seems to me that Parliament has no alternative—and I say this as no friend of the Government— but to support the honourable undertakings given by local authorities in pursuance of the Government's own policy. I hope that the hon. Gentlemen who have so boldly come forward to make their protest will let it stand where it is and will give the Bill a Second reading.
§ 8.24 p.m.
§ Sir HENRY JACKSON
I want to assure the House, speaking on behalf of the National Association of Local Government officers, that they welcome the introduction of this Bill as evidence of the interest which the Government, and the Ministry of Health in particular, are taking in the officers of the local government service. I think it is worthy of note that this is the first occasion upon which the Government of the day have introduced a superannuation Bill dealing with local government officers. It is evidence of the Government's desire that the prejudicial effect upon a large number of local government officers in respect of superannuation, as a consequence of their endeavour to make a contribution in a time of national emergency, should now to a certain extent be removed.
Hon. Members have been reminded that I introduced a Bill last year of much wider scope than this. I should like to 738 take this opportunity of expressing my gratitude to the officials of the Ministry of Health, and to the Minister himself, for the very kind and sympathetic consideration which he gave to that Bill last year. The House has also been reminded that it was not found practicable to get complete agreement upon that Bill, and that progress could not be made with it. While the Bill which is introduced tonight is not so wide in scope as the Bill which I introduced last year, the National Association of Local Government Officers and myself welcome, and very sincerely appreciate, the provisions which are contained in it. It is a very considerable step in the right direction. From the speeches which have been made, there is little doubt that the Measure will find its place upon the Statute Book before this Session is over.
There are one or two minor questions which I would commend to the Minister for consideration on the Committee stage. They do not touch the principle of the Bill, and I feel confident that he will be able to deal with them. The first is that the Bill as it stands is confined to the reductions in the remuneration which have taken place between 30th September, 1931, and 1st April, 1932. I am advised— and I think that there is no doubt about it—that in consequence of the issue by the Ministry of Circular 1222 on 11th September, some reduction had taken place before 30th September, 1931. I suggest to the Minister that perhaps he could ante-date that 10th September to a little earlier date, so as to include those reductions. On the other side, after the issue of the more recent Circular 1311 of 22nd March, this year, again, for the first time, I understand, certain local authorities made cuts in the salaries of their officers. I hope that the Minister will extend the date 1st April, 1932, so as to include those officers. These are very small matters of detail.
The Bill refers to reductions in remuneration. I am advised that there is still some doubt whether this expression will include cases in which the salary has not been reduced, but still remains at its original figure, and deductions have been made from the amount which would otherwise have been payable from time to time to the officer. That is a detail which I feel sure the Minister will put right in the Committee stage. I end where I be- 739 gan by saying that this great association, representing over 70,000 local government officers, for which great body of public servants it can speak, welcomes this Bill, and thanks the Government for what they have done.
§ Amendment, by leave, withdrawn.
§ Question, "That the Bill be now read a Second time," put, and agreed to.
§ Bill accordingly read a Second time.740
§ Bill committed to a Committee of the Whole House for To-morrow.—[Captain Margesson.]
§ The remaining Government Orders were read, and postponed.