HC Deb 10 June 1943 vol 390 cc917-28
Mr. Brooke (Lewisham, West)

I am grateful to my right hon. and gallant Friend the Member for Rye (Sir G. Court-hope) for his courtesy in being present, because I want to raise one or two questions concerning the House of Commons Members' Fund, and he is chairman of the trustees. The other day I may have caused him some personal inconvenience, I am afraid, by putting down a Question on this seldom raised subject for a day that was unexpected to him. If the fault was mine I should like sincerely to apologise. It is not in any spirit of criticism that I am bringing forward this subject to-day. Rather it seems to me we should pay our tribute to the trustees of this Fund. The Act which established it was passed just before the beginning of the war, so it has been running for three years, and I believe this is the first occasion on which there has been any opportunity or when any hon. Member has sought facilities to raise questions relating to the Fund.

I am sure I am speaking in the name of all hon. Members in expressing our gratitude to the trustees for the work, without publicity and without thought of material or other reward, which they have been doing in the administration of the Fund. I hope too that they will welcome the interest disclosed in the work of the Fund by the very fact of this Debate being held. Hon. Members probably realise that two important documents relating to the Fund have become available to them recently. A White Paper, the Accounts of the House of Commons Members' Fund for 1941–42, has been published, and within the last few days my right hon. and gallant Friend has also made available in the Vote Office an important letter from the Government Actuary, whom the trustees of the Fund had evidently consulted about certain matters connected with it. Hon. Members who are interested will find these documents of great importance, and the point I am going to raise arises out of both of them.

If we look at the fortunes of this Fund, to which we have all been contributing £12 a year for the past three years, we shall agree, I think, that the financial development has up to the present been favourable. There are four or five points I should like to mention. First, the experience up to date has been that about one-tenth of the amount collected from Members has been paid out in pensions, and nine-tenths retained in the Fund. As a result of that, a balance had been accumulated up to September of last year amounting to some £21,500, and so long as this Parliament continues it is likely that the balance will continue to grow at the rate of something like £7,000 a year. Hon. Members will naturally ask how many pensions have been granted from the Fund during these three years. We learn that three pensions have been granted to ex-Members of the House, and 10 to the widows of ex-Members. Of the three pensions granted to ex-Members, only one, I understand, is still in payment. In one respect the promoters of this plan of a pension fund have suffered disappointment. Hon. Members will remember that in the original Bill a Clause was inserted making provision for the receipt of gifts or bequests to the fund from any of our colleagues. I believe I am right in saying that the Fund has not attracted any such gifts or bequests. If that is the case, it is only one more piece of testimony to the unfortunately too well-known fact that the moment you put a statutory obligation on people, they cease to make charitable gifts in the same direction.

Lastly, there is a point which concerns us all. The statutory contribution which we make is £12 a year, but we are speci- fically debarred from treating that as a charge against our income for Income Tax purposes. That is to say, we do not receive the £12, but we have to pay Income Tax upon it as though we had received it. Rises in the rate of Income Tax have considerably increased that burden upon us. When the Act was passed, £12 was equivalent to about £16 gross on our income. With the Income Tax at 10s. in the £, it is now equivalent to something like £23 or £24 gross. If anybody is thinking of suggesting to a friend that he should enter the House of Commons, the friend should be reminded that owing to the operation of the Fund the salary of a Member is not £600 but about £576 a year.

I have given the main points which emerge from examination of the accounts up to date. I mentioned that some £21,500 was now accumulated in the Fund, and it is rising yearly. The Government Actuary has pointed out that this is not a lovely disposable surplus for the trustees to play with. On the contrary, about half of that represents the capitalised value of the pensions which are now in payment. Quite rightly, the trustees, when they determine to make a pension, do not leave it to chance whether they can meet that pension in future years. Though they hope that Parliament will not repeal the Act, and that they will continue to get in our subscriptions, they reserve in the Fund the capital value of the pension from the outset. It is necessary therefore to build up a considerable fund, in order that it may be able to continue to meet the pensions which have become payable.

The other half of the £21,500 is free. It is not yet earmarked for pensions. It is available for pension claims that may arise in the future. I very much hope that the trustees will not not be in haste to disperse that surplus, by seeking to take advantage of the one loophole given to them in the Act, whereby they may go slightly outside the restrictive conditions in special circumstances, and grant pensions to people who, on a strict interpretation, would not be qualified. The reason why it is clearly necessary to build up a considerable surplus is that a General Election lies ahead. We do not know what the fate of any of us will be. Every General Election turns a certain number of hon. Members into ex-Members of Parliament, and thereby will increase the potential claim for pension on the Fund.

The Government Actuary has indicated that if this Parliament goes on to the autumn of next year, there will be a free surplus in the Fund of some £20,000. I prefer to take a worse hypothesis, which is that this Parliament runs to the end of a 10-year life. If that happens, it will be very important for the Fund, because only Members who have served for 10 years in Parliament can derive benefit from it. If this Parliament should continue until the autumn of 1945, every hon. Member who has survived since the last General Election will become a potential beneficiary of the Fund. I calculate that there will be some £23,000 of free surplus by the autumn of 1945, and it seems as though there would be some 400 possible claimants. By "possible claimants" I mean this: There have been some 190 by-elections since the last General Election, and there will be a number more before this Parliament runs out. There will therefore be something like 400 sitting Members at the time of the Dissolution who will have had 10 years' service and may therefore become, at any time, applicants for the benefits of the Fund.

A free surplus of £23,000 would suffice to pay pensions at the full rate of £150 per year to about 16 ex-Members. It is quite impossible to say, and ridiculous even to conjecture, whether the trustees will be met with more than 16 good claims or fewer than that number, after the next General Election. We cannot tell what will happen to any of us. Neither can we tell whether those who retire or are defeated at the General Election will be in such circumstances that either they or their future widows will need to apply for benefit. This one point emerges. As a result of this long Parliament, I submit to the trustees that the peak demand on this Fund will be reached considerably earlier than anyone could have anticipated at the outset. As only those can derive benefit from the Fund who were contributors to it at some time after the Act was passed, all those who had ceased to be Members of Parliament before 1939 cannot be beneficiaries. In 1939 it looked as though a considerable number of years would pass before the peak number of claimants would be reached. We know from the investigation which was undertaken before the Act was passed, that in 1937 there were some 450 Members and ex-Members of Parliament who had given 10 years' service to this House.

I have pointed out that by 1945 we may well have 400 Members with over 10 years' service, and it strikes me that the peak level, the time when we may say that current claims on the Fund have risen to their peak, will be reached comparatively soon. That is to say, we should fairly soon be able to estimate what the average demand on the Fund will be. That was a thing which none of us could do when the Measure was going through. It was one of the reasons which made our Debates so conjectural, though I do not know whether it was actually one of the reasons which caused us to sit here discussing it until 8 o'clock one morning during the Committee stage.

The coming of a General Election affects vitally the number of pension claims by ex-Members which may be made, but it should not affect in the same way the number of claims that may be made by widows of Members. That number will move more gradually and not by fits and starts—at least I take it that that is the case. From a woman's point of view, a General Election may end her husband's Parliamentary life, but it does not necessarily kill off her husband. For all these reasons, it seems to me that at a relatively early date the trustees will be able to judge what is the average annual demand that is going to be made on their resources. After that—though this too must be conjectural—I believe the Fund will accumulate a real disposable surplus, and the trustees will have to consider then what shall be done with it.

My own belief—and this is the chief point I wish to put before the House—is that when that time comes the House should be fully consulted. There may then be—we cannot tell—a stronger case for reducing the contributions than for seeking to extend the limits of eligibility for pensions. One reason why I say that is that I always regret extra expenses imposed on Members of this House. We want to see the doors of this House opened as widely as possible to all citizens, whereas every additional financial burden attached to membership of the House tends towards limiting entry to people endowed with large private means or backed by the financial strength of some great organisation. I was made a little anxious by seeing that, within the past year, the trustees had evidently consulted the Actuary to inquire what would be the cost of relaxing some of the conditions.

Mr. A. Bevan (Ebbw Vale)

On a point of Order. This is a most unusual situation. There is no precedent for the discussion now taking place, and I am raising this point of Order in order that you, Mr. Speaker, may have an opportunity of guiding the House. It is in Order on the Adjournment for lion. Members to raise questions of administration, but what the hon. Member has been saying during the last 10 minutes relates to amending an Act that the House has passed. Surely it is improper to have a discussion of that kind on the Adjournment. All that the hon. Member can really discuss is the administration of the Fund by the trustees and not the amendment of the Act which set up the Fund. I suggest, therefore, that the hon. Member is now entirely out of Order in his proposals.

Mr. Speaker

This point of Order is of some interest. I confess that I have been listening to the hon. Gentleman with the increasing feeling that, in some of his suggestions, he was definitely talking about legislation, which would be wrong. In so far as the contribution to the Fund is already dealt with by legislation, it is also wrong to suggest that it should be altered. On the other hand, discussions of the administration of the Fund by the trustees is certainly in Order.

Colonel Sir George Courthope (Rye)

The questions which were raised by the trustees in their inquiry to the Government Actuary did not contemplate amending legislation but dealt only with power which exists in the present Act to moderate the 10 year qualification. The trustees asked the Government Actuary what would be the effect if they were to meet one or two rather distressing cases, because they would have welcomed the power to award a pension to the widow of a member who had not served the full 10 years. That was why they made the inquiry. As a result of the answer, we decided that we must not do so.

Mr. Bevan

May I further submit that if the hon. Member is to be allowed to persist in the line which he has been taking, it will be open to any hon. Member on the Adjournment, at any time, to bring this matter under review—a matter for which indeed there is no ministerial responsibility. I submit therefore that the speech of the hon. Member should be strictly confined to the question of administration of the Fund by the trustees, and that it should make no proposals whatever for amending the Act.

Mr. Speaker

Two points have been raised. The first was raised by the hon. Baronet. I quite understand that there must be administrative action by the trustees and it would be in order to discuss that matter. The second point, made by the hon. Member for Ebbw Vale (Mr. A. Bevan) I have not looked into. How far we may or may not discuss the Fund is a matter which I will consider. In the present case, I think it is for the general convenience of the House that we should do so even though I am not sure whether it is strictly in accordance with the Standing Orders.

Mr. Brooke

If at any time I was out of Order I must apologise to you, Mr. Speaker, and to the House. But at the time when the hon. Member for Ebbw Vale (Mr. Bevan) interrupted me I was referring to a question which the trustees had put to the Government Actuary, and that was quite clearly a matter of administration I hope you, Sir, and the House will allow me to pursue that matter one moment longer. The trustees, as their chairman has just told the House, in connection with their permissive power in special circumstances to make payments notwithstanding that all the requirements of the Schedule to the Act are not complied with, approached the Government Actuary to inquire what would be the financial effect if they did relax their rules in certain classes of case.

I wish to submit to the House that any substantial relaxation of the 10 years rule would be undesirable. This permissive paragraph was put in the Act to meet a case where a man had sat in this House for nine years and 11 months. That kind of case was actually brought up, as hon. Members will recollect, on the Committee stage of the Measure. It seems to me to be introducing a real change of principle to raise the question whether 10 years can, in certain cases, be reduced to a 7½ year limit, for this reason: In normal times no one can sit in this House for 10 years without having been a Member of three Parliaments, that is to say, without having faced the electorate three times. If that is reduced to 7½ years, it will reduce the number of Parliaments necessary for qualification from three to two. I want to say to the House and the chairman of the trustees that before any large change of that kind is; made, or indeed contemplated, the House as a whole should be consulted. But in winding up my speech I wish to express once again on my behalf, and I believe that of all my hon. Friends, our great gratitude to the trustees for the faithful manner in which they have been discharging their responsibilities for these three years.

Colonel Sir George Courthope (Rye)

I am very grateful to the hon. Member for West Lewisham (Mr. Brooke) for raising this, question and giving me an opportunity on behalf of my fellow trustees to say a few words about the position of this Members' Fund. I am particularly glad to do so because various letters which I have had from present Members and past Members and their representatives have conveyed to my mind the impression that there is a great deal of ignorance about the Fund. For instance, I had an application the other day on behalf of a man who was a Member of Parliament, but who ceased to be a Member nearly 40 years ago, and does not come within the qualification at all. I think it is well that a very brief statement of the position should be made and I am very glad that the House should be interested to hear it.

As my hon. Friend has quite accurately said, the normal income of this Fund is £7,300 a year, less certain amounts due to casual vacancies. On a Dissolution there will be another gap when the Fund will receive, for a short time, no money at all, but while the House is sitting we are getting over £7,000 a year. The general expectation upon which the Departmental Committee made its recommendations and upon which the Act was drawn, was that we might assume an average length of Parliament of something round about four years, and the Actuary was able to calculate the average number of Members who would either retire at the end of each Parliament or who would fail to obtain re-election. The service qualification laid down in the Act is ten years both for the Member himself, and for his widow after his death. The length of the present Parliament has upset calculations. If we continue for another two years or a little longer, every Member who has served throughout this Parliament will be qualified by length of service for a pension. I think one is bound to assume, as many of us are getting older, that there will be a larger than average number of retirements, and who can foresee how many unsuccessful attempts to obtain re-election may take place. Still less can we foresee how large a proportion of those who either do not seek re-election or fail to obtain it, will be in such a position that they will have to make an application upon this pensions Fund.

The trustees feel that we have to anticipate a rather heavy demand upon the Fund after the next General Election. My hon. Friend has given quite accurately tbe figures up to September of last year. I can bring them up to date in a few words. At the present time the accumulation in our hands is just over £26,000. The number of pensions which we have awarded has been three to ex-Members and 12 to the widows of ex-Members. Two of those ex-Members have passed away, and there is now only one ex-Member's pension being paid. Two of the widows have also passed away, and one has had an improvement in her financial position, and no longer asks for pension. So at the present time, nine widows are receiving pension, and at the present time the cost of pensions is £765 a year. The administration, including the expenses of the Fees Office and the Public Trustee, who is the Custodian Trustee, costs about £170 a year. I should like to express now on behalf of the trustees our appreciation of the admirable services which we are receiving from the officers of the Fees Office who do the accounts, and the Public Trustee and the Comptroller and Auditor General. We are under an obligation to prevent any charge from falling on the Treasury, so it is particularly important to see that the affairs of the Fund should be cheaply administered, and I am satisfied that they are.

Mr. Beverley Baxter (Wood Green)

How is the amount of the pension determined? Is there any limit or average?

Sir G. Courthope

Oh, yes, it is laid down in the Act that a pension to a qualified ex-Member must not exceed £150 a year, and must not bring his net income to a sum exceeding £225 a year. In the case of a widow, the pension must not exceed £75 and must not bring her net income to a sum exceeding £125. That necessitates an inquiry into means. I can assure the House that that inquiry is conducted as sympathetically as the Act of Parliament allows. If we go on at the present rate for another three years or so we shall probably accumulate something approaching the £50,000 Fund which the Departmental Committee recommended as the minimum reserve at which we should aim before contemplating any variation or coming to the House to ask them to authorise any variation.

I want to say a word or two about the actuarial capital position of these pensions. Some hon. Members will, no doubt, have read the Report of the Government Actuary which was ordered by the House to be published only a few weeks ago. It contemplates that a very substantial portion of our existing accumulation represents the capital value of the pensions already being paid. The mere nature of the case leads one to believe that at a time immediately following a General Election there will be a run of some kind on the Fund, and that subsequently, during the existence of the succeeding Parliament there will tend to be an addition to the accumulation, unless the pensions which we are actually paying year by year exceed the revenue of the Fund.

I cannot bind the Trustees of the future and I want to make it clear that I am only expressing the view which I myself hold, and which is supported by my fellow trustees at the present time. It is that if at any time—as after a Dissolution—there is a number of applications from qualified ex-Members or from the widows of qualified ex-Members, we ought not to be restrained by the capital actuarial position of the moment so long as we do not award annual pensions exceeding our annual revenue. I feel that we are entitled to assume that as the revenue is provided by Act of Parliament that that revenue will continue until Parliament repeals the Act. I doubt whether Parliament will do so, but in such a case one could reasonably expect Parliament to take on some responsibility for the commitments created under the Statute which was repealed. I do not therefore feel myself that the trustees are bound to limit their awards to the amount which is actuarially available after making the full capital provision for all existing pensions. This is only an expression of opinion, but we are not actually bound by the Act to maintain capital actuarial solvency. I think the occasion may arise when we shall feel free to go above it.

With regard to one matter raised by the hon. Member I am afraid I cannot deal with the question of Income Tax. I would like to be able to say that the £12 a year which is deducted from our £600, would, automatically be regarded as an admissible expense for the purpose of Income Tax, but that is not the case. It is not for me to defend that position but I am a little doubtful whether the Chancellor, under the present circumstances, would think the time appropriate to vary it.

There is one point I should like to refer to on the question of these contributions. Back-bench Members have their contributions deducted by the officials of the Fees Office, but the matter is not so simple in the case of Ministers. The Fees Office have to receive from the Department in which a Minister is serving, the appropriate amount of contribution for the period in which he has served in that Ministry. It is not always easy to get prompt payments. I hope that Ministers who hear me will endeavour to see that their Departments make their contributions as soon as possible, as it complicates the accounts when a substantial proportion of the sum due to the Fund dribbles in over an extended period. I should make it clear that at the present moment the interest which we receive on our investments—which is tax-free—practically covers the pensions that we are paying; so that we get practically the whole of the contributions of £7,300 a year, less fluctuations owing to vacancies, as an addition to the accumulated Fund. That is a very happy position to be in, but when a Dissolution-comes, if it is followed by a flood of applications—although I hope that no Member will be in such a position that he will have to seek a pension—it will be a different matter. I feel that so long as we keep our present reserve intact and award only pensions which will not exceed the annual contributions, we shall not be going beyond the limits of reasonable safety.