PENSIONS (INCREASE) BILL

HC Deb 06 December 1946 vol 431 cc653-97

Order for Second Reading read.

11.16 a.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I beg to move, "That the Bill be now read a Second time."

The object of this Bill is to amend the Pensions (Increase) Act, 1944. That Act provided for percentage additions to the pensions paid either from the Exchequer or from local rates to civil servants, teachers, police, firemen, local government officers, and the Royal Irish Constabulary. Under the Royal Prerogative similar increases were given under that Act to retired officers and other ranks of the Armed Forces drawing retired pay or pensions. The Act did not attempt to give increases to all pensioners who had retired from these occupations, but only to those whose pensions did not exceed £300 per annum for married people or single people with dependants, and £225 in cases of single pensioners without any dependants; and under the alternative scheme, to civil servants whose pensions had been varied downward as the cost of living fell in the years between the wars.

The object was, in so far as might be practicable, to mitigate real severe hardship caused by the rise in the cost of living during the war. This basic fact must be borne in mind. The House was not in 1944 and it is not now legislating for all central and local government pensioners, but only a limited class of them The 1944 Act was passed while the war was still on and when no one could accurately forecast the march of events nor say with certainty what changes would take place in the cost of living. It was deliberately made a temporary Measure, designed to expire on 31st December, 1945. The present Government came into office in the summer of 1945 when the war against Japan subsisted. As far as the 1944 Act was concerned, there were three alternatives before them. They could either have let the Act lapse at 31st December, 1945; they could have rushed through an amending Measure; or they could have kept the Act alive by including it in the Schedule of the Expiring Laws Continuance Act of last year.

The Government chose the last course, for very good reasons. It was unthinkable, in the view of the Government, that the Act should be allowed to lapse, and in their view, too, it was impossible in the time available, and in the circumstances then existing, to rush through an amending Measure, because, in a Bill of this kind, a large variety of interests have to be consulted. The Government of Northern Ireland is interested in a Bill of this kind; The local authorities and other bodies financially concerned are, of course, also deeply interested, and should also be consulted. Discussion with them was clearly, therefore, essential, and it would have been difficult to carry this through in the time at the disposal of the Government. Furthermore, it was felt it was far too soon after the cessation of hostilities—the war against Japan ended in August—to consider a permanent Measure to take the place of the 1944 Act. The Act, therefore, was continued, and will, unless something is done, expire at 31st March, 1947.

As those who took part in the Debates we had will remember, assurances were given from this Box to the House that before the Act did expire the whole matter would be considered with the bodies and organisations interested, in order that, if possible, a permanent solution should be found. We undertook—and I think those who have read the Bill will agree that, so far as we can, we have done so —to meet criticisms that were then made against the 1944 Act. A complete review has taken place during this year in consultation with those interested. We have consulted with the staff side of the Civil Service National Whitley Council, the various associations representing local authorities, the Trades Union Congress, the National Association of Local Government Officers, the National Union of Teachers, the Educational Institute for Scotland, and, through the Home Office, with the Police Federation and the Chief Constables Association. All of these bodies have been consulted, and their views on this subject considered. We have also been in touch with the Government of Northern Ireland. It would be misleading if, by saying that, I led the House to believe that this Bill carries with it the complete agreement of all those various bodies. That would be too much to expect. But I think I can claim that it does embody the greatest common measure of agreement that could be arrived at in the circumstances.

What does this Bill do? Clause 1 provides for substantial increases both in the upper income limits attracting pension increases and in the rates laid down in Section 1 of the 1944 Act, governing such increases, for the general body of retired civil servants, teachers, the police, firemen, local government officers, and the Royal Irish Constabulary. The income limits attracting pension go up from £300 to £450 in the case of those with dependants, and from £225 to £350 for those without. In addition, the first £52 of income, other than pension, will, as under the 1944 Act, be disregarded for this purpose. The rates of increase also go up from 30 per cent. to 40 per cent. for those on the lower pension ranges, and in the case of those receiving pensions somewhat higher, from 25 per cent. to 30 per cent. The Bill also provides for some improvement in the scale of increase under Section 2 of the 1944 Act. Hon. Members will remember that was an alternative scheme applying to civil servants. It raises the pension limit from £645 to £787 10s., and lays down a 5 per cent. increase in the rate of pension on pensions between £600 and £750, tailing off as the limit of £787 10s. is approached and reached.

Now, as to cost. The Financial and Explanatory Memorandum printed on the face of the Bill will have been noted by hon. Members. It will be seen that the overall cost, including the percentage increases given under the 1944 Act, will run now to about £12,000,000, of which £2,500,000 will fall on the local rates;— that is to say that this Bill almost doubles the cost of increases. Clause 2, as the marginal note indicates, makes a number of minor amendments to the principal Act. These correct flaws and anomalies which, in the course of experience, have shown us to exist in the original Measure. These amendments are somewhat technical in their character, and are, probably, best dealt with when we reach the Committee Stage. The most important of them is contained in Subsection (1) which removes an anomaly which may arise when a pensioner is also getting a non-contributory old age pension. The Subsection will enable local authorities to do what Government Departments have already been doing administratively—that is, to limit, if necessary, the amount of pension increase paid to prevent a pensioner suffering a greater drop in the amount of his old age pension. The House will remember that the non-contributory pension goes by stages of 2s. at a time, and even the mere presence or absence of a penny may make a difference of 2s. a week to the pensioner. The Government themselves have noticed this, and have made arrangements to see the pensioners do not suffer in this way. But local authorities were not in the same position; they were bound by statute to observe the letter of the law. This Section will enable them to follow in the footsteps of the Central Government. It is the Government's intention that the 1944 Act, amended by this Bill, shall embody a final and permanent settlement of this matter. Clause 3 implements that intention.

Neither Measure, as I have said already, attempts to alter the general structure of the superannuation code. Increases in pension rates have been given, and are justified on the basis of the substantial rise in the cost of living which has taken place as a result of the war, and the hardship caused to those on relatively small pensions. Provision is, therefore, made in the Bill to make these permanent where they apply. Provision is also made to limit such percentage increases to those cases where pensions will be or have been based on prewar or war time salaries. Provision is likewise made for the requisite adjustments to be carried through where the emolument on which the pension is based is partly on a war time basis and partly on a postwar scale. These arrangements will not operate until 1st April, 1947.

Finally, the Bill contains an enabling provision to permit, by Treasury regulation, any pension authority, not at present within the ambit of the 1944 Act, to pay increases to those pensioners at the rates laid down in Clause 1, if such authority so desires. The authorities we have in mind are those whose pensions are governed by statute. Others can do it now if they so desire and some of them, I am glad to think, have been doing it; but there are some that are bound by statute and cannot. This Clause will give the necessary authority and permit representative associations and unions and the employing body concerned to enter into negotiations. I think that briefly covers the main clauses of the Bill, which I think is an advance on the 1944 Measure. No doubt hon. Members in all quarters of the House will have suggestions to make for its improvement; we shall be delighted to hear what they have to say. I commend the Bill to the House.

11.31 a.m.

Mr. Osbert Peake (Leeds, North)

Those of us who foregather here regularly on Friday mornings are accustomed to having clear expositions of complicated matters from the Financial Secretary to the Treasury, and once again he has explained the provisions of the Bill now before the House with his usual clarity. There was a clear justification for the Act of 1944. The cost of living had risen at that time by about 30 per cent., and there was general agreement in the House that something must be done for past servants of the State and of local authorities who, as a result of the depreciation in the value of money, were suffering hard- ship. As the Financial Secretary said, it was a Measure brought in to mitigate the hardship caused by the rise in the cost of living, and the Chancellor of the Exchequer in 1944, the right hon. Gentleman the Member for the Scottish Universities (Sir John Anderson) made it clear, as indeed did other speakers, that these additions to pensions were ex gratia payments, necessarily made at the expense of other taxpayers, which, therefore, must be related to need. This Bill preserves the main structure of the 1944 Act. It raises the ceiling and increases the field over which pensions can be increased, and adds 10 per cent., in the highest class of increase, to the percentage addition. The test of need laid down by the Act of 1944 is preserved, as also are the tests of age or, alternatively, disability.

I should like to refer to one or two observations made during the progress of the 1944 Act through this House by the present Secretary of State for India, Lord Pethick-Lawrence, who has great knowledge of financial affairs, and who at that time spoke for the Labour Party During the Committee stage—I think he was replying to certain arguments adduced by the hon. Gentleman the Member for Rugby (Mr. W. J. Brown)—Lord Pethick-Lawrence observed: There are large numbers of people … like employees of public authorities … and employees of private concerns, who get no increases to meet their responsibilities, and others, who are ail going to be taxed in effect to meet this concession. I am not prepared to push the ceiling up to the sky. … I support the argument, within limits, for not raising the ceiling any further."—[OFFICIAL REPORT, 18th April, 1944; Vol. 399, c. 63.] That was in April, 1944, when the original Act was passing through Committee, and on the Third Reading, Lord Pethick-Lawrence said: I should be lacking in common courtesy if I did not acknowledge that the Chancellor had met the case which I put forward, not by myself alone, but on behalf of those who acted with me in this House. … We in this House had the double responsibility, a responsibility to those who pay as well as to those who receive … therefore, I commend the Third Reading to the House."—[OFFICIAL REPORT, 4th May, 1944, Vol. 399, c. 1521.] May I now go a little further forward and give a quotation from the hon. Gentleman the Financial Secretary himself? This matter was raised a year ago on the Expiring Laws Continuance Bill, and the Financial Secretary to the Treasury observed: All sorts of people are in the same position. There are the people living on small annuities, or savings, or small pensions not received from the State. The problem is not quite so easy as the hon. Gentleman would lead the Committee to suppose."—[OFFICIAL REPORT, 6th November, 1945; Col. 415, c. 1186.] I quite expected that we should hear from the Financial Secretary this morning some justification for the increased scales of pension proposed in the Bill. I thought he would say that the Government had great sympathy with these small people, and recognised that the cost of living index does not reflect the true rise in the cost of living. Or I thought he might have said that there had been a rise in the cost of living since the original Act was passed, or since November, 1945, at which time it was the same as it was when the original Act went through. But we have not had from the Financial Secretary a single word of justification for the Measure. He explained it very clearly, and told us that the various bodies representing local authorities and other pension authorities had been consulted, and that this Bill represented the greatest common multiple of agreement, but I wish he had given the House some justification in principle for the increases now proposed. After all, the Treasury has to hold the balance in these matters. As Lord Pethick-Lawrence made very clear, we have a double responsibility, both to those who receive and to those who pay, and I should have thought, therefore, that a Bill of this character required some justification in principle.

Of course, there is a strong case on grounds of sympathy. We all sympathise with these small people, we all know that the cost of living index, which I think is still 30 per cent. above prewar, does not really cover a great number of articles which are in common use and which householders need. We all know that all the things outside the index— the pots and pans, the window cord or the blind, the piece of rubber flooring for the bathroom—are not 30 per cent. but hundreds per cent. above their prewar cost. When we come to the smaller comforts, a glass of beer or a packet of cigarettes, the increases are on a similar scale, and I thought the hon. Gentleman would have said that he recognised that these people have to incur some expenditure which lies outside the ordinary cost of living index and, therefore, felt that they were entitled to some concession. The hon. Gentleman, however, has not really made a case. I daresay he has a case, and I hope when he comes to reply that he will state it, but it is very difficult to deal with a case which has not yet been made. The hon. Gentleman may be wise in that, having such a bad case, he is reserving it until we have all made our speeches and nobody can possibly reply to it.

I am bound to admit that, in considering this matter, I sympathise very greatly with the observations which I have quoted from the speeches of Lord Pethick-Lawrence. Under the Bill the smaller pensioners with up to, I think, £100 a year will get a 40 per cent. addition in place of the 30 per cent. addition under the previous Act. I am bound to admit that I compare this in my own mind with the position of the small annuitants, and people who are living on invested savings. I am reminded of the position of those who have saved and invested their money in the stocks of the British railway companies. They, on the other hand, are to get a cut of 40 per cent. in their already diminishing incomes, whereas these people, enjoying as they do the sympathy of us all, who have served for many years and have done good service, are to receive a 40 per cent. addition.

I think that a Bill of this character requires some statement to be made in justification of it, and I hope that at some stage in the Debate we shall have such a statement from the Financial Secretary. This seems to me to be only one of a long series of increases in various classes of pensions which this Government make almost every week. Last night, the Minister of Pensions was taking credit for some improvements in the case of Service pensions. These increases are continually being announced, each one in itself amounting only to a small sum of money —£1 million here, £2 million there, or £5 million to some other class of person. We have not had, since the Budget Debates, any real opportunity of reviewing the financial position of the country as a whole, and I hope that when the Financial Secretary replies, he may be able to tell us what is the total extent to which the Government have increased their financial commitments since the Chancellor opened his Budget, last April. I believe that in total it will be found to amount to a very considerable figure.

Expenditure on pensions is, of course, the easiest form of expenditure for any Government to undertake. It simply means crossing out a figure in the old Act, and putting in another figure in the new Act It is also the least productive expenditure which a Government can undertake. The comparison is often made between what the Government do for children, on the one hand, and for old people, on the other. There are many people who think that money spent on young people is, from the national point of view, a better form of expenditure than money spent on the old. One might say, I think, that financially the road to hell is paved with increased pensions.

There are a number of interesting points which arise on the Clauses of this Bill, particularly in regard to Clause 2, which we shall have to investigate more closely during the Committee stage. I am very glad that the case of the overlap with the old age pension is being dealt with under Subsections (1) and (2). That gave raise to a great deal of heart-burning. A man found that he got an increased pension under the 1944 Act, but the moment he obtained a £10 or £15 increase, his old age pension was cut down, under the means test arrangement, by a larger amount than his increase: Not only did the Act confer no benefit, but it actually resulted in an out-of-pocket loss. That was a very unexpected result of that Act. I am glad that under Subsection (1) power is taken to see that that cannot happen in the future. I am very puzzled about the provisions of Subsections (2) and (3), and we shall have to investigate them more closely during the Committee stage.

On Fridays, we do not as a rule debate very controversial subject, and it is unusual to divide the House. I must confess that I am not prepared; to undertake the thankless task of voting against this Measure, which will be represented as an act of public generosity to a considerable number of worthy people, whose circumstances have been greatly straitened, not only as a result of the war, but as a result of the inflationary policy which this Government are pursuing. Only the Government have full knowledge of our financial and economic position. They alone know how fast the American Loan is running out. They alone know how the negotiations for the discharge of the sterling balances are proceeding. They alone have full knowledge as to the success or failure of the export drive, and of the production drive. I must confess that it seems a little ironical that the Minister of Fuel and Power should tell us that there is to be less fuel in the coming months, and that only this morning the Minister of Food should make a statement of tremendous gravity about impending food shortages while, at the same time, we are increasing payments out of money, the purchasing power of which is steadily on the decline. There have been many pious utterances about the dangers of an inflationary spiral by Members of the Government, and these statements seem to us constantly to be belied by the actions they take. Worthy as the recipients of this largess undoubtedly are, we are bound to express our doubt as to whether these increases will not rapidly be rendered nugatory by further depreciations in the value of the pound sterling. I feel bound to express these fears, while saying that we are not prepared to go into the Division Lobby against this Bill.

11.48 a.m.

Mr. Burden (Sheffield, Park)

I would join with the right hon. Gentleman the Member for North Leeds (Mr. Peake) in congratulating the Financial Secretary on submitting this Bill with his usual clarity and brevity. I would also express thanks to him for the patient negotiations which have taken place since the end of last year. We have cleared away many of the difficulties, which were voiced in all quarters of the House, when this matter was last debated. It is true that there are still some blemishes in the Bill, but it would be ungracious to deal with them now, because they could, perhaps, be dealt with during the Committee stage. I do not propose to follow the right hon. Gentleman on his point about pensions being the road to another place, although I hope that his fears will not be borne cut by the facts. I should like to raise another aspect of this problem with the Financial Secretary, which may be dealt with under the Clause to which he made reference, namely, the enabling Clause.

When the Act of 1944 was under discussion, I called attention to the unhappy position of retired railway men on pitifully low superannuation figures. That brought a crop of letters from all over the country. The then Financial Secretary to the Treasury, the right hon. Gentleman the Member for the City of London (Mr. Assheton), gave a non-committal, but, I think, sympathic, reply. I believe negotiations went on, but nothing material transpired, and when the Act of 1944 was continued at the end of 1945, I again ventured to raise the matter. It is only right for me to declare an interest in this, because I happen to be a member of a railway superannuation fund, though obviously it can have no personal application. I ventured recently to put a question to the Minister of Transport, because although, as I have said, negotiations had been taking place, very little or nothing has been done.

I wish to thank the Minister for the Clause to which he has made reference: I believe it will remove whatever technical difficulties there may have been in the way of the railway companies applying the provisions of this Bill to their retired staff. But I would put a further point to the Minister. Under the Transport Bill which has now been tabled, there may be a change in the organisation and ownership of the railways in the future. But the Treasury drove either a very good bargain, or a very hard bargain, according to the point of view, in the amount to be paid to the proprietors of the railways for Government control of the railways during the war and after. The net result of that agreement has been that substantial sums have accrued to the Treasury. The agreement still remains in operation. This is the point I wish to put to the Minister: Will he agree that any amount which the railway companies have to pay into the superannuation funds, in order to apply the provisions of this Measure—?

Mr. Speaker

I do not think that the railways are covered or affected by this Bill in any way.

Mr. Burden

With due respect, Mr. Speaker, I was referring to the enabling Clause, which enables other authorities to bring their staffs within the scope of the provisions of this Measure. I was under the impression that if there were agreements between the railway companies and the Government, it would be possible for regulations to be issued bringing their staff within the scope of the Measure. What I wanted to put to the Minister was this: Will he agree that any additional expenditure of that kind shall be a legitimate charge in the working expenses of the railway companies, and not be deducted from the amounts payable as dividends, etc.? Obviously we cannot expect the companies, in view of the handsome profit which has been made by the Government, to foot this amount themselves. If we can get an assurance on that point, and if the railway companies apply the terms of this Bill to their staffs, I am sure that the Minister will have earned the gratitude of thousands of retired railwaymen who, at the present time, are suffering great hardship. With those few words, I welcome the Measure, and thank the Minister for it.

11.56 a.m.

Sir Ronald Ross (Londonderry)

This Bill has filled me with somewhat mixed feelings. There is clearly much good in it, both as regards clearing up points which were found to be slurs in the previous Act, and increasing the pensions of those who are—certainly in some cases of which I shall speak in a moment—in need of it. Yet it does make one think very hard about the problem which my right hon. Friend the Member for North Leeds (Mr. Peake) has mentioned, that is, that the Government's generosity goes to those who are pensioners of somebody or other, but it stops short of those who have to provide their own pensions. The professional classes and smaller people in business have generally to undergo an expensive education to fit themselves for their tasks. They rely on laying aside such sums as will support them and their families when they are too old to work. Of course, the actual value—"the purchasing power" is a favourite expression of hon. Members opposite—of those savings has decreased infinitely, and appears still to be decreasing. Instead of doing anything to help such people, many of them in much humbler circumstances certainly than the higher grade of what is described as the working class, the trend of the legislation of this Government tends to make their position even worse.

I do not propose to embark on the general argument of this Bill for any length of time but to address myself principally to a class in which I have always been interested—those loyal servants of the State, the pensioners of the Royal Irish Constabulary. I much regret that my hon. and gallant Friend the Member for Armagh (Sir W. Allen) is prevented by health reasons from being present today, because he has made the subject peculiarly his own. I welcome the increase in their pensions, particularly as regards the pensions that are on the scale described as the pre-Treaty scale, because those pensions were settled at a very remote period, and the value of money has decreased enormously since then, and these poor old men are very much in need of an increased pension in order to live in ordinary decency. I am glad that the means test upon them has, to some extent, been reduced. I am more particularly pleased to see the rise in the percentage increase from 30 to 40, because I think that that will apply to practically all the pre-Treaty R.I.C. pensioners. I do not think it will be found, on investigation, to be sufficient for those particular cases.

I hope that the House, as a whole, will acquit me of any desire to pour the financial resources of the United Kingdom into Eire, because if anyone makes such a suggestion, I think he is being unjust. I suggest that the Financial Secretary might review the whole scale of pensions of the pre-Treaty R.I.C. pensioners. It is one of the unfortunate defects of democracy and of Parliamentary democracy—because every system must have some defects— that the justice of a cause is sometimes apt to be judged by the number of votes it commands. I am afraid that the cause of the R.I.C. pensioners commands few votes, and they will become fewer every year It is a very small class. Many of them have to live in a country, Eire, where their services to this country are not appreciated. They live in a country which has a very much higher cost of living. Eire may be a rich man's paradise, and probably it is, for you can get anything for money, but the basic cost of living there is a great deal higher than it is in the United Kingdom.

If the Financial Secretary were to review the pensions of the pre-Treaty R.I.C. pensioners, those old men who went grey in the service of this country, I think he would be shocked by what he found, and I think he would consider that, in spite of the increase which no doubt they will get, their pensions are not adequate to meet their needs. These men are, in practically every case, much too old to do any work which would bring them substantial additions to their pensions. In so far as the Bill increases those pensions, and in so far as it removes the means test from a body whose higher ranks certainly did not get any very large pension considering their services, I welcome the Bill, although I certainly associate myself with the doubts which my right hon. Friend the Member for North Leeds expressed about the fact that the care of the Government seems to be concentrated entirely upon those who have pensions provided for them and to be hostile towards those who have to provide their own.

12.3 p.m.

Mr. W. J. Brown (Rugby)

The House will know that, for many years past, I have had a particular and peculiar interest in this problem. I am bound on this occasion, as on very many other occasions, to criticise, but I wish to make it plain at the outset that, although I have to criticise the Bill, I am very glad that I am dealing with the Financial Secretary to the Treasury on this occasion, and not with my right hon. Friend the Member for North Leeds (Mr. Peake). If the Financial Secretary is chastising us with whips, my right hon. Friend the Member for North Leeds would have been chastising us with scorpions, and I react from the harsh ungenerousness of his observations into an almost positive support of the Bill. Since this is important, I would like to say that I think the observations of my right hon. Friend the Member for North Leeds missed the essential point. I do not deny —nobody will deny—that the State has a responsibility to all old people, to all young people, and indeed, for that matter, to all people within its control. But the whole point about this situation is that the State has a special relationship to the people covered by this Bill because, unlike the rest of the community, these people were the employees of the State, who had given it a lifetime of devoted service. Therefore, it is no answer to the claim for justice here to say that there are holders of annuities, holders of insurance policies, and so on, rentiers living on dividends, whose income has diminished to an equal degree. But we have not the responsibility for that wide area of people that we have for the people covered by this Bill. That vitiates the whole of my right hon. Friend's approach to the Bill.

I would like to draw attention to the' Financial Secretary's statement that this Bill, whatever we think of it, is intended to be a final and permanent settlement of this matter. Because it is intended to be a final and permanent settlement, it behoves us to look closely at the Bill, and to ask ourselves whether it is just or right, because this will be our last opportunity. It is not the intention of the Government—and the Financial Secretary was very frank about this—that this should be a stopgap Measure, a Measure that will last two or three years and then be reviewed. It is meant to be a permanent and final settlement of the problem, and therefore, we must ask ourselves whether it is a just settlement. It would be ungenerous of me not to recognise that this Bill will bring benefit to a substantial number of people, and their state is such that any Bill which brings benefit to them is, to that extent, to be welcomed. But I put it to the House that whether one approves of the Bill or not depends almost entirely upon one's basic angle of approach to the problem. If the angle of approach be the angle of eleemosynary grants and charitable dispositions, then we may approve of this Bill, But if the angle of approach is that we want to see justice done, then we shall criticise this Bill extremely sharply indeed.

I cannot state the case for the Bill without telling the House a little of the earlier history of this matter, because the background determines the foreground of the problem. During and after the First World War, there was, as hon. Members will know, a sharp and protracted upward movement in the cost of living. That movement reached its height in November, 1921, when the cost of living index stood at 276 as compared with a figure for July, 1914, of 100. And because that vast increase in the cost of living could not be sustained either by serving public servants or by retired public servants, the Government of that day were compelled to do something about it. What they did was to arrange a cost of living bonus for the serving State servants, under which an increase was. given for every five points by which the index went up. It was an increase of 1/26th in respect of every five points increase in the cost of living. Conversely, it was laid down that there should be a corresponding reduction of 1/26th for every five points the cost of living came down. The bonus, was automatically and mathematically tied to movements of the cost of living index figure.

With regard to the retired men, something also had to be done, and what happened was that, in addition to their basic pension, they were given what was called a bonus pension which, like the cost of living bonus itself, automatically went up or down in accordance with the movement of the index figure. From 1921 to 1935, the cost of living went steadily down. From 276 in November, 1921, it had fallen, by 1935, to a figure of about 155. All the time from 1921 to 1935 — 14 years—the index was coming down, and the bonus of the civil servant and the bonus pension of the retired man automatically came down with it. There was no question of whether that was a hardship or not. There was no question whether the pensioner could live on the amount. The whole thing was utterly automatic.

In 1935 the Government consolidated the cost of living bonus with salary, and the cost of living bonus with the basic pension, and stabilised it there. If the cost of living had remained stable from that point on, that might have been all right. But as the House will know, 1935 represented the nadir of the cost of living curve. Having come all the way down from 1921 to 1935, from 1935 it went steadily up, and is still going up today. The pension, however, was not touched at all. As the years went by, the Government were compelled to do something about the serving State servants, and gave wartime increases, of an ad hoc character, which were not automatically related to the cost of living figure, but which did reflect the upward trend of prices. In respect of pensioners, this House did nothing whatever from 1935 to 1944.

I beg the House to remember that. For nine years of rising prices, we did nothing for our own retired servants, military or civil. It was only as a result of an agitation for which I myself was responsible when I returned to the House in 1942— an agitation which, I rejoice to say, was supported by my hon. Friends on all sides of the House, and which was not treated, and I hope will not be. today, as in any sense a party matter—that we ultimately got the Government to bring in the very inadequate 1944 Pensions (Increase) Act. It is that Act, the amendment of which we are discussing today, as the Financial Secretary has said. The basis of the 1944 Act was bad. That basis is retained today. We alter it in detail in this Bill. But we are retaining the essential principles of the 1944 Act. I hope to demonstrate that those principles are unjust and that we ought to have a different Bill from the one which we have before us today.

What would have been justice? It would have been justice, first of all, to do something about those nine years—nine years of rising prices in the cost of living. The 1944 Act did nothing about those nine years, nor does this Bill today. It would be justice, since there has been no hardship limitation on the reduction of pensions, that there should have been no means test with regard to increased pensions. One follows the other with automatic consequences—or ought to—because having imposed no downward limit on the pensions that were cut when the cost of living was going down, we ought not to have imposed an upward limit on the increase of pensions. But we had both the means test, no action in connection with the nine years, and the imposition of upward maximum ceilings. On top of that, when we were reducing pensions, we did not discriminate between married and unmarried pensioners, but when we started, very belatedly, to increase them, we did distinguish between married and unmarried pensioners, and gave a smaller increase in the one case than in the other.

The 1944 Act was basically an unjust Act. This Bill preserves the whole fabric, subject to modification in detail, of the 1944 Act. It improves somewhat the percentage increases. It puts somewhat higher the upward limits to which we can go. But it preserves the means test, and it preserves the distinction between married and single, and leaves thousands of pensioners without any relief whatever, and wholly outside the scope of the Bill.

Whenever we have an arbitration case on Civil Service pay, the courts are always invited to take into account the value of superannuation rates which will ultimately accrue to the civil servant which is valued at from 12½ to 15 per cent. of salary. This is in effect money withdrawn from current pay in order that it may be given at the end of the civil servant's public life. If, when he reaches the end of his public life, we pay these pounds back to him, after having deferred them, in units of money which have less than half of their purchasing power, it is my submission that we have not carried out our contract with the public servant. We are paying pounds which are not worth the pounds which we withheld under the pension system The pensioner does not get what he expected to get. While I do not blame the Government for the fact that the cost of living has risen—that is not part of my case today—if we do not increase the number of pounds which we give to the pensioner pro rata with the increased cost of living—if we do less than that— we are doing a grave injustice.

Would the House look for a moment to what this Bill does? The Minister of Labour tells us that the index figure is up by about 30 per cent. I agree with the observations of my right hon. Friend above the gangway that that 30 per cent., in modern circumstances, is notional. It has very little to do with reality. The common experience of all of us would be that the cost of living has increased by twice or thrice that amount. No one knows the position accurately because the budgets on which the index figure is based go back to 1904, and have practically no relevance to modern conditions. Suppose we say that the increase is 60 per cent Under this Bill, the maximum increase would be 40 per cent., and that would only be to the poorest class of pensioner. Between £200 and £400 it would be only 30 per cent. At £400 it would be only 20 per cent., and at £415 it would be only 15 per cent. Above £415 there will be nothing.

Mr. Glenvil Hall

I am sorry to interrupt the hon. Gentleman, who is extremely knowledgeable on these matters, and, as he has said, has done a great deal in connection with them; but he has forgotten that there is an extra £52, so that the upper limit is in fact £502.

Mr. Brown

I readily accept that correction. I intended to point it out myself later. It is true that the discounting of the first £52 of income does have the effect of making the actual ceiling higher than the nominal figures which I have read out, and I readily accept that. Whether the actual figure is £450 or £502, everyone in excess of £502 gets not a penny under this Bill. This does not only affect the public servant on the civil side, but it also affects the soldiers. The hon. and gallant Member for Petersfield (Sir G. Jeffreys), who has hunted with me on several occasions on this matter, and who, I regret to say, is too ill to be with us today, asks me—and I very readily do it—to call the attention of the House to the fact that this Bill fails to make good to the ex-Army officer the deductions taken away from him at an earlier stage when the cost of living went down. It neither does justice to the Army officer nor justice to the civil servant, the teacher, the policeman, and so on.

There is another very important point about this Bill. Under the 1944 Act, the civil servant could opt to be treated under one of two schemes. He could ask to be treated under Section 2 of the 1944 Act or under Section 1. This Bill improves option number one but leaves option number two unimproved, except in one respect which I will mention in a moment. What did Section 2 (1) of the main Act provide? It provided that where the pension did not exceed £400 there should be a 10 per cent. increase; between £400 and £600 an increase of 7½ per cent. and between £600 and £645 the pension was to be increased to £645. That is the measure of the wretched increases given to the public servant—at best 10 per cent.—and beyond £400 a year, 7½ per cent. with a cost of living rise of perhaps more than 60 per cent. Those figures are left completely untouched by the present Bill, except that the ceiling is raised slightly and a 5 per cent. figure inserted in respect of the area over which the ceiling has been raised. Subject to that there is no change. I do not understand, even on the basis of the Bill which I repudiate, how we can improve one option without improving the other simultaneously. I should have thought that those two things also went together automatically and consequentially but, as I say, option number two is left as it was, save for the increase of the ceiling and the insertion of a five per cent. figure.

I would beg the Financial Secretary to reconsider the whole lines of this Bill. The Government stepped off on the wrong leg on this from the beginning. Though the hon. Gentleman may say that this is to be their last and final word on the matter, nothing will prevent civil servants feeling an extreme sense of injustice, and nothing will prevent the soldiers feeling it and continuing their agitation, unless the final settlement to be produced represents something in the nature of rough justice. This Bill does not represent anything like rough justice, and I therefore appeal to the Minister to withdraw it and give us a better one. Nothing less than that, in my view, would meet the case.

Mr. Glenvil Hall

When the hon. Gentleman raised the point made by the hon. and gallant Member for Petersfield (Sir G. Jeffreys) referring to soldiers, was he referring to all soldiers and not only a certain class?

Mr. Speaker

Perhaps I should point out here that officers' pensions are dealt with by Royal Warrant so that they are altogether outside the Act which has been referred to.

Mr. Brown

I would respectfully submit that they are covered by the First Schedule.

Mr. Speaker

I was reading the Explanatory Memorandum where it says that those who are covered by prerogative instruments are outside the Act. That is to say, they are dealt with by Royal Warrant.

Mr. Brown

I would only say, Sir, that when we discussed this in 1944 we did deal with the situation of the ex-officers, and that they were certainly affected by the main Act of 1944. This Bill now before the House leaves the 1944 Act unchanged except so far as it alters it in detail.

Mr. James Callaghan (Cardiff, South)

May I pursue that point, Mr. Speaker, and respectfully suggest to you that Section 1 of the Second Schedule of the Act of 1944 defines the expression "authorised increase," and says that it means— … a pension granted, under any Order in Council, Royal Warrant, order of His Majesty, or regulations of the Air Council, in respect of service in His Majesty's naval, military or air forces. … That appears in the Second Schedule of the Act of 1944, which I understand you are now considering, Sir.

Mr. Speaker

I did not have a copy of the main Act at the time and I think I now have to withdraw the original objection I made.

Mr. Brown

It is rather tucked away in the back, Sir, and might easily be missed, but it is a fact that they are mentioned, and in so far as this Bill does not alter the provisions made with regard to soldiers their grievance, great or otherwise, remains. Perhaps I may read an extract from a letter which has been sent to me by the hon. and gallant Member for Peters-field, who says: Paragraph 3 is mean and unsatisfactory as it still fails to restore the reductions made at the 1935 stabilisation, and makes no restoration at all where the pension exceeds £787 net. The hon. and gallant Member raises two points there. One is that the Bill does not restore what was taken away when the cost of living went down, and the other is that in respect of people above the ceiling there is no increase whatever in this Bill. That is the case of all the public servants affected by this Measure. Therefore I ask the Financial Secretary to withdraw it completely and give us a really adequate Bill. If the hon. Gentleman tells me he cannot do this and that the Financial Resolution, wide as it is, is not really wide enough to enable him to do that, I beg him to look at every one of these Clauses, and let noble and generous sentiments flood his being while he does so. I would wish him to have a riotous outburst of generosity—if that is conceivable in the Treasury.

Mr. Callaghan

Look who, is sitting behind you.

Mr. Brown

The prospect is immediately chilled by the expression of the hon. Member for Orpington (Sir W. Smithers), so I will not plead for generosity now but only for justice. Must the Financial Secretary limit us to 10 per cent.? Must he limit the discount for the purposes of the means test to 50 per cent.? Can he not make it 100 per cent., and could he not also look at the 40 per cent., 30 per cent. and 20 per cent., and double them? Something of that order is needed to put this matter right. And if the hon. Gentleman tells me that this Bill will already double the existing cost and that that is a heavy burden, I ask him to consider the much heavier burden for the poor pensioner who does not get the money, and whose whole life has been built on the assumption that he would. I wish I could say that this Bill met with my approval, but it just does not. It falls lamentably short of justice and although, in the sense that one must welcome anything which gives any sort of relief to a heavily overburdened body of old people. I am bound to welcome the Bill, I must place on record my conviction that it falls far short of justice and will not satisfy the consciences of the people affected by it.

12.29 p.m.

Lord Willoughby de Eresby (Rutland and Stamford)

I do not wish to detain the House for many minutes on the Second Reading of this Bill which, I think, commends itself in principle to all parts of the House Some hon Members on this side may be rather doubtful about its financial expediency at the moment, although I gather that no such doubts or qualms worry the hon. Member for Rugby (Mr. W. J. Brown). I wish to raise the rather specially limited case already mentioned by the hon. Member for Londonderry (Sir R. Ross), concerning the senior officers of the Royal Irish Constabulary, some of whom happen to be my constituents, and who were excluded from the terms of Section 2 of the 1944 Act. There is an anomaly in the 1944 Act in this respect and I hope it will be possible for the Government to rectify it in the Bill.

As I see the matter, under the Act of 1944, junior officers of the R.I.C. whose incomes were under £300 married or £225 single were granted increases in pension and the benefit under Section 1 of that Act. In fact, they are specially mentioned as included under Section 1, in the reference made in Part 1, paragraph 4, of the First Schedule to the Act. Senior officers, on the other hand, with incomes or pensions more than £300 a year, were excluded from any benefits, small though those benefits may have been, by Section 2 of the same Act. The three arguments which, in the main, have been put forward by the Treasury for that seeming injustice and anomaly are, I believe, as follows: It is argued that, under the Disbandment Act of 1923, when the R.I.C were disbanded, those officers were safeguarded from any cut in their pensions. In fact, their pensions were not reduced in the interwar years when other pensioners suffered reductions. That is true, but the same applies to the junior officers They were granted increases under the 1944 Act, and it seems difficult to understand why the senior officers could not also have received the benefits of that Act.

I believe it is also argued that Section 2 of the Act—I am sure that the hon. Member for Rugby will put me right if I am wrong—applied only to pensioners covered by the Superannuations Acts, 1834–1943, and that the R.I.C. were not covered by those Acts. There is no question that, under the Victoria Act, 10 and 11, 1847, pensions to officers of the R.I.C. were made a responsibility of the Imperial Government and that they are now a direct charge on the Consolidated Fund of the United Kingdom. I therefore humbly submit, in that case, that they are covered by these Superannuation Acts. Again, I believe it is argued that the treatment which these gallant officers received at the time when the R.I.C. was disbanded was generous. No-one thinks that his own treatment in the matter of pensions is generous, but it is true that those officers were allowed to add 10 years to their service. On the other hand, many of the officers had prospects at that time of 20 years' service in that Force, if it had not been de-banded. Many of these officers were debarred or deterred from entering another police force by the threat that if they did so they would lose their pensions. Some of those who live in my constituency had to leave Ireland, for reasons of personal safety, and come to live here with their families. Nobody will deny that there has been a considerable rise in the cost of living since 1920.

I hope that the Financial Secretary to the Treasury will look into these points. The number of men involved is very small and the total amount of money will not be big. The amount will decrease every year, and ultimately it will be possible to rectify an anomaly and do justice to a very gallant and loyal body of men.

12.34 p.m.

Mr. Haworth (Liverpool, Walton)

I want to present the case of a body of people who cannot understand why they were not brought within the provisions of the Pensions (Increase) Act. I am referring to railway superannuitants. They are people who considered they were employed by the Government, on the Government control side of railway administration.

When Members of my party raised this question with the then Chancellor of the Exchequer in 1944 it was because those people felt that they were not being treated fairly. The strange reason was then given to them that they differed from civil servants because they paid for their superannuation, while civil servants' payments were not covered by deductions from their pay. That made it still more difficult for them to understand why they were not brought within the provisions of the Act. My hon. Friend the Member for Linlithgow (Mr, Mathers) raised the matter with the then Chancellor of the Exchequer, the right hon. Member for the Scottish Universities (Sir John Anderson). My hon. Friend was told at that time that the Superannuation Acts, 1834– 1943, did not include railway servants. The right hon. Gentleman gave an assurance, and he quoted the following statement made by the right hon. Member for the City of London (Mr. Assheton) that the Chancellor would make it possible for railway servants to receive these or similar pensions: All I can say is that, at the present time, the railways are subject to Government control, and if the railways come to the Government and made representations on that point my right hon. Friend the Chancellor of the Exchequer will give them very careful attention."—[OFFICIAL REPORT, 3rd March. 1944: V. 397, c. 1835.] That was his quotation from a promise made by the Financial Secretary to the Treasury. The Chancellor of the Exchequer went on to say: That is still the position. I do not think that representations have been made by the railways, but if they are they will certainly receive careful consideration as promises."— [OFFICIAL REPORT, 18th April, 1934; Vol. 399. c. 128.] I would ask the Financial Secretary to the Treasury two questions. Is it intended that Clause 4 of the Bill shall include the railways? It states that the Treasury may make regulations empowering any person or body of persons specified in the regulations to pay the like increases. If the answer to that question is in the negative, will the Financial Secretary give me an assurance that the promise made by the Chancellor in 1944 that he was willing to consider representations made by the railway companies, still holds good and that the present Chancellor of the Exchequer is also willing to consider any representations that may be made by the railway companies today?

If I may have a satisfactory assurance on those lines, I should be prepared to leave the matter there. If the hardships described by the hon. Member for Rugby (Mr. W. J. Brown) apply to civil servants, how much more must they apply to the people for whom I speak, and who have had no increase whatsoever? They are finding it very difficult to understand, since they have been servants of the State, why there is a difference in treatment between one body of State servants and another. I plead with the Financial Secretary of the Treasury to give this matter his careful consideration, and I hope that he will be able to give me an affirmative reply.

12.39 p.m.

Sir Waldron Smithers (Orpington)

It has become such a custom in these last few years to talk in hundreds, or even thousands, of millions of pounds, that we are apt to lose our sense of proportion about what these figures represent. The Bill deals with a relatively small proportion of our country's finances. It covers about £12,000,000. I must make a protest against the principle behind the Bill, for reasons which I hope to give as briefly as possible. The hon. Member for Rugby (Mr. W. J. Brown) asked the Financial Secretary to the Treasury—and I made a note of his words—for a noble outburst of generosity to pervade his whole being.

That is a very dangerous thing to say in these critical days. It is much easier to have a "noble outburst of generosity pervading your whole being" if you are dealing with somebody else's money. I beg of the House to face the facts and not let their hearts run away with their heads. Although there is only a comparatively small amount involved in this Bill, I should not be doing my duty if I did not try to point out the dangers. A lot has been said about the cost of living and the Chancellor recently gave me the figure of 9s. as the purchasing power of the pound sterling as compared with 1900 but I had it worked out on another equally authoritative basis that the figure is 5s., compared with 1900—

Mr. W. J. Brown

Is that the value of the pound?

Sir W. Smithers

That is the value of the pound now. If we go on increasing the Civil Estimates and unless there is adequate production behind those Estimates, the purchasing power must go down further and further. The Financial Secretary in his explanation of the Bill talked about the cost of living being "unforeseen". Of course, there have been some circumstances outside the control of the Government, but the rise in the cost of living is very largely due to the policy of His Majesty's Government since they have been in office. The Civil Estimates in 1901 were £47 million and this year they are £2,090 million. It is wicked to tell people that the State can look after them from the cradle to the grave unless they are told, at the same time, that we must have adequate production at world competitive prices if our paper pound is not to go down to nothing.

Of course, we are all in sympathy with the pensioners mentioned in this Bill. I know that I shall be accused by the Socialists in my Division of speaking against these pensions for these old people, but in view of the very serious statement we have had this morning from the Minister of Food, it must be remembered that these enormous increases in the Civil Estimates have to be earned. They must come out of industry. They must increase our costs of production and thereby impede or destroy our ability to compete in the markets of the world. Now that Ministers have left the Election platforms of 1945 and are faced with the responsibility of office and have to face the facts and the truth they are beginning to see the light. The other day the Prime Minister himself, speaking to the National Joint Advisory Council, said: … nor can the Government's social services be effectively implemented. The Parliamentary Secretary to the Board of Trade, on 5th November, said in this House: … it is difficult to see how it is possible for us to do all these many jobs and a good deal more, like building houses, expanding our social services, and so on. We cannot, therefore, have all we want now."—[OFFICIAL REPORT, 5th November, 1946; Vol 428. c. 1244.] Yet with two Ministers of the Crown making those statements—one of them the Prime Minister—the Government come to this House once again and ask for a further increase for pensions in our Civil Estimates. Unless this principle is stopped it will not only not do any good to anybody, but it will also do incalculable harm.

I see that Lord Wardington, speaking yesterday at a company meeting—and he should know something about the financial position of this country—said: The difficulties of exchange show signs of becoming an outstanding problem in the immediate future. We cannot afford to increase our Civil Estimates. We have to get back to production at world competitive prices. What is the good of £100 a week old age pension if the money is not worth anything and there is nothing in the shops? That is the position which we are approaching. Lord Wardington also said: No one can predict with accuracy when prices or wages will fall or how severe the effect of that will be … but the real test of statesmanship will come when deflation occurs. As he says, no one can say when that will happen, but I think it will happen quite soon.

I want to make a protest against the legislation by reference embodied in this Bill. It is almost impossible, and to reinforce my point I have brought with me six volumes of Acts of Parliament, all of which are referred to in this Bill. I do not know how anybody is going to look up and adequately study all the references which have been made. Even you, Mr. Speaker—with great respect to you; I am not blaming you in any way— through reference, had to be advised as to the question of certain officers, and if that reference had not been looked up and you had not been very generous about your decision, it might have happened, owing to this legislation by reference, that one class of people who ought to have come under this Bill and whose case ought to have been put forward would never have been mentioned.

Mr. Speaker

If the hon. Gentleman will allow me, I have looked into that point since and I have come to the conclusion that my original Ruling was perfectly right.

Sir W. Smithers

With great respect, Sir, my respectful congratulations. I wish to make another point about the wording of this Bill. Those of us who are not lawyers should be given some memorandum or White Paper in simple English to tell us what it means. I ask the House to look at Clause 3, where is says: Where the amount of a pension is determined by reference to an average rate of emoluments received over a period of service (in this subsection referred to as ' the relevant service') part of which was served before the last-mentioned date— Paragraph (b) of that Subsection says: The amount of the increase which could be granted apart from this paragraph shall be reduced in the proportion which the relevant service less the years begun as aforesaid bears to the whole of the relevant service. Suppose that was read out at a public meeting in the country as the kind of way in which the Government put words into an Act of Parliament. Not one person in a thousand could understand what it means. How do we know whether by all these references and all this vague thinking the Government are not in some way or another—I am not insinuating, Mr. Speaker—putting by a comfortable pension for themselves?

The right hon. Member for North Leeds (Mr. Peake) said that the Government find it much easier and much more popular to give away these pensions or to increase these pensions, but at the same time they are taking away by compulsion half the income of 1,130,000 shareholders. I do not understand how they can relate the policy of this Bill to the policy of cutting down what are in effect pensions saved by tens of thousands of small shareholders. We are warned to 'beware of false prophets, which come to you in sheep's clothing, but inwardly they are ravening wolves. I say that this Bill is the Government in sheep's clothing and in the Transport Bill they are in the skins of ravening wolves.

12.50 p.m.

Mr. John Edwards (Blackburn)

Like the hon. Member for Rugby (Mr. W. J. Brown), I have for some years been particularly concerned with the field of employment covered by this Debate. Those of us who have responsibility in Civil Service unions are not unmindful of the fact that there are limitations to State expenditure on State employees. Certainly anyone like myself, representing as I do in my trade union capacity, thousands of State employees who pass their whole life in the service of the Post Office, but get no pension at all, must be aware of the sharp contrast drawn within our ranks between those who get pensions and those who do not. I was a member of the staff side of the National Whitley Council at the time consultations were taking place before the 1944 Act was passed. I wish to support what the hon. Member for Rugby has said, that that Act did not give satisfaction to civil servants. My support of this Measure rests on the assumptions of the 1944 Act. I wish it were possible to start all over again and to think in terms of first principles. I cannot understand why the right hon. Member for North Leeds (Mr. Peake) should be in difficulty about this Measure, because it follows consistently and logically on the 1944 Act at every step—except one.

Mr. Peake

The difficulty I was in about the Measure was that, in breach of the usual custom whereby a Minister introducing a Bill adduces some reasons in support of it, we have had none so far.

Mr. Edwards

I am grateful to the right hon. Gentleman for his explanation. I think it is still true that anyone who was familiar with the 1944 Act, as the right hon. Gentleman obviously was, would have been able to say that, starting with the 1944 Act, this present Bill seems to be the logical extension of the principal Measure, except in one respect. In this Bill we find that the one respect in which it is not consistent is in the so-called Scheme 2. I think it is quite legitimate to say that it seems to follow, from what the Government now propose that they really ought to do something in respect of Scheme 2. I am not trying to challenge the principles of the 1944 Act. I do not like them, I am opposed to them, but, taking them for granted, I am anxious that we shall not create any anomalies.

One can go into details more properly on the Committee stage, but I think it would be worth while to look again at Scheme 1, to see whether in fact the greatest justice is being done by the 40 per cent., 30 per cent. and flat rate principle being applied. It seems to me that it might be possible to help the very small pensioners, and also to give greater justice to the people who come within the flat rate by some other principle. I was a little worried by what the Financial Secretary said about putting these pensions on a permanent basis. I am wholly in favour of deleting the expiry Clause from the main Measure. That seems to me to be sense. But I hope the Financial Secretary will give an assurance that, in the event of substantial changes in the cost of living, the Government will be prepared to look at this matter again, and that all he is seeking to do by making this a permanent Measure is to establish the principle, but not to say that for all time, regardless of what happens to the prices of things, these pensions shall stay as proposed under this Bill. With those words, I give my general support to the Measure. As I say, I do not like the principles on which the 1944 Act was based, but I think that in some small measure some people will benefit under this Bill. In fact it will give satisfaction in a number of quarters.

12.57 p.m.

Mr. Dodds-Parker (Banbury)

I would like to support much of what the hon. Member for Rugby (Mr. W. J. Brown) said. I do so having spent a number of years as a civil servant although, unfortunately, not long enough to have qualified for a pension. I think one of the attractions of the Civil Service should be that there is an adequate pension. It would be an increasing deterrent if civil servants found that when the value of money has so declined that what they hoped 30 or 40 years before would be adequate, in the event was found to be entirely inadequate. I support, therefore, much of what the hon. Member for Rugby said, while at the same time asking the Government to do their utmost to see that the value of money is stabilised, and not made even more worthless than at the moment by the policy of increasing inflation which we feel the Government are pursuing. I also wish to ask about the point adumbrated by my right hon. Friend the Member for North Leeds (Mr. Peake).

What yardstick are the Government using in judging the increases of pensions such as this? Hon. Members on all sides of the House will find that whenever a particular category of pensions come up for consideration, or when a Bill, or Royal Warrant, increases the pensions of one group, all the other groups affected immediately ask why they should not be considered. This Bill seems to be taking into account a further increase in the cost of living of about 15 per cent. since the last Act was passed in 1944. The pension categories which have been considered before this have not been considered on an equal basis because the increase in cost of living has grown. Although given an increase in 1945, by the end of 1946 this increase may not be considered still fair in view of the increased inflation in that twelve months. What yardstick is being used for all pensions? The point was nut to me by three persons during the weekend in regard to pensions of war widows, and why they should not be considered before civil servants. It is quite clear that such matters are under continuous consideration by the Financial Secretary and the Minister of Pensions, but it would help hon. Members on all sides of the House if the Financial Secretary would give some indication of the yardstick to be used in judging how these increases are being given effect.

1.0 p.m.

Mr. W. R. Williams (Heston and Isleworth)

I am sure the hon. Member for Banbury (Mr. Dodds-Parker) will forgive me if I do not follow him, particularly in regard to the second part of his argument, which seems to be to be better related to the Financial Secretary than to myself. With reference to the first part of his remarks, I am afraid time will not permit me to discuss one or two of the very interesting points which he made. Had time permitted I would have liked to make quite a number of submissions which I regard as important in connection with this Bill. Unfortunately, I feel that I would incur the displeasure of the Chair if I took up too much time and, therefore, I will limit my remarks to one submission which I think will commend itself to hon. Members on all sides of the House. My submission is that there is a good case for reconsideration of the proposed increase of 40 per cent. in the case of pensions not exceeding £100.

I think hon. Members will agree, as I am sure will the right hon. Member for North Leeds (Mr. Peake), that one of the original intentions of the 1944 Act, in the words of the right hon. Member for Scottish Universities (Sir J. Anderson), who was then Chancellor of the Exchequer, was to meet grave hardship cases. In the field of pensions not exceeding £100 per annum there are grave hardship cases. I wish to make it clear to the Financial Secretary that I am speaking on my own behalf as a Member of Parliament and not on behalf of any particular body. I know there have been many consultations, as he has indicated already, with a large number of interested organisations. I have no desire to mislead in regard to the contribution I am now making.

After a keen analysis of the Bill I have come to the conclusion that there are very good reasons why my right hon. Friend the Chancellor and the permanent officials' of the Treasury should have another look at this proposed increase. My reasons are that for many years, as hon. Members will know, I have been associated with the Post Office. It will be no news to a large number of hon. Members that there are thousands of faithful servants, such as postmen and others in some of the lower grades of the establishment, who will never have pensions exceeding £100 per annum. Those who retired between 1930 and 1939 have pensions in the region of 30s. a week. Only about half of the postmen retired after giving the full 40 years service required for the full pension. Therefore, only about 50 per cent. of them would qualify for the then maximum of 30s. If one adds 40 per cent. to the 30s., it barely brings these people to the level which the country has accepted recently in the case of old age pensioners under the National Insurance Scheme, of 42s. for a man and his wife.

With regard to the other 50 per cent., which includes some ex-Service people, they can never hope to qualify for the full pension. I know of thousands of these good people who are on pensions of 15s., 18s., 22s., and about 25s. a week. In my opinion, this is a case where the Chancellor of the Exchequer should have another sympathetic look at the position. I do not ask him to commit himself at this stage to any particular figure, but I think he ought to give the House an assurance that, on the basis of the original intention of the 1944 Act, he will consider the position again I am sure he will remember that many of these people were in excepted occupations and therefore were not qualified for the contributory old age pension at 65. I think this argument fully justifies me in asking whether the Financial Secretary will give an assurance that this point will be reconsidered, in order to see whether the percentage increase cannot be increased, in the case of those pensions not exceeding £100 a year, at least by 50 per cent., if not higher.

1.6 p.m.

Mr. James Callaghan (Cardiff, South)

I hope my hon. Friend the Financial Secretary will take note of the eloquent plea of my hon. Friend the Member for Heston and Isleworth (Mr. W. R. Williams). I am sure that he will not expect to have a reply this morning, but between now and the Committee stage it might be appropriate for us to consider whether some exploratory Amendment would not enable the Financial Secretary to give us a reply. We shall be very happy to assist him in whatever way we can. I thought, if I may say so as one Friday morning regular to another, that the right hon. Member for North Leeds (Mr. Peake) made a most skilful speech, upon which I congratulate him. I remember an advertisement for a new book on politics. It said, "Here is a book to be read now in order to see what is in store for us. Then put it away and take it down in five years' time, read it again, and you will see just how far it has been fulfilled." I have a feeling that if in five years' time we read the speech of the right hon. Member for North Leeds we shall find he has been able to balance himself most skilfully between giving his support for this Bill and warning us of the dire consequences that are to come if we pass it. I am sure there will be many references which can be taken out of that speech, on both sides, which will enable him to say what all politicians want to say on any occasion when they have to refer to their past speeches.

I must say that I thought his approach was a little unjustified in one or two instances. This is really not an occasion for referring to largesse. We are not giving away largesse in this matter. The right hon. Gentleman said, and I wrote it down, "This is an act of public generosity." It may be an act of public generosity but it is also a measure of elementary justice, and it is on that basis that this House ought to approach the problem. My hon. Friend the Member for Rugby (Mr. W. J. Brown) and my hon. Friend the Member for Blackburn (Mr. J. Edward) have both discussed details of this Bill and there is no need for me to go further into the matter except to say to my hon. Friend the Member for Rugby that I am certain when he gets to the "pearly gates" he will still be celestially dissatisfied, and I hope for the benefit of Heaven that he will be.

There is only one point I wish to put to the Financial Secretary, and it is on the question of time. We are now getting near to Christmas and I would like to inquire whether he can give us some idea of the intention of the Government with regard to getting the Bill through the House and through another place. I realise the limitations under which he is placed, but if he could possibly take note of the fact that these increases have been delayed and if he could get the Bill through all its stages by Christmas, so that it would operate as from 1st January, if it got the Royal Assent, it would be a New Year bonus which would be well worth while.

1.10 p.m.

Mr. Eric Fletcher (Islington, East)

I think I am right in pointing out that if we succeed in getting the Bill through this House and another place before Christmas, it will operate not from 1st January but from 1st December by reason of the provisions of Section I (4).

Mr. Callaghan

In that case it would be a Christmas box.

Mr. Fletcher

I have not had the benefit of hearing the whole of the Debate but I have heard sufficient to enable me to say that, speaking for myself and not representing any particular interest, I welcome this Bill very much. I want to make one comment on a point referred to by the right hon. Member for North Leeds (Mr. Peake). Clause 1 (4) seemed to me to introduce a feature into the Bill which, for all I know, may be without precedent, but which is not for that reason necessarily undesirable. That Clause provides that any increase of pension which becomes payable under the principal Act shall have retrospective operation. So if this Bill is enacted by Christmas these increases of pension will be dated back to the 1st December.

Those of us who have occasion to consider the operations of statutory instruments from time to time have to consider whether they should have any retrospective operation, and it does seem desirable in connection with this Bill that we should give consideration to the Clause which gives the Treasury power to make regulations empowering other bodies and persons who may be specified in the Regulations to make similar increases in pensions. I think the House will agree that it might be legitimate to antedate these pensions to a certain day of the month, and the House ought to know whether it is contemplated that the Treasury, in exercising the powers which will be granted under Clause 4, should grant power of retrospection to other organisations. If so I suggest that there ought to be some limit to that.

Mr. Callaghan

In the case of civil servants' agreements it is a common form that they should date from the 1st of the month on which they are signed.

Mr. Fletcher

I am much obliged, but the kind of regulations which I understand are contemplated by Clause 4 are those which oblige, for example, the London Passenger Transport Board to pay pensions granted by them to staff entirely employed by them or staff taken over from the London County Council and other bodies when the Board was formed. I think the House should be assured that in the regulations made by the Treasury under Clause 4 that, if there is embodied the principle of retrospective operation, it will not be unduly extended.

1.14 p.m.

Mr. Ralph Morley (Southampton)

I will not detain the House for more than two minutes at the utmost, but I should like to express the thanks of the teaching profession to His Majesty's Government for having introduced an amending Bill to the 1944 Act. About four months ago a deputation representing nearly all the interests concerned waited on the Chancellor of the Exchequer and certain suggestions were made to him. They asked for increased percentages and the raising of the ceiling for the application of the means test. Their recommendations for the most part have been embodied in this Measure we are discussing, and, therefore, we welcome it. The teachers throughout the country are disappointed that the means test has not been completely eliminated. A teacher's pension, unlike a civil servant's pension, is a contributory pension and teachers claim that the pounds they receive in pension should have the same value as the pounds they contributed, and apart from any private income they may have from investments —and very few have that—they think they have a claim for percentage increases because of the increased cost of living.

There are two further points I wish to put. The first point is, Will the Government consider the case of the widower when dealing with pensioners who have no dependants? I suppose that a widower comes under the category of a pensioner without dependants, but a widower has to pay a housekeeper to look after him and I am informed that, to some people, to maintain a housekeeper is more ex- pensive than a wife. Perhaps the Government will be able to make a concession to that particular class. Secondly, we have been awaiting this Measure for a long time and pensioned teachers have suffered hardships for a considerable period. Therefore, I would ask the Financial Secretary to the Treasury to bring this Measure into operation as early as possible, and if at all practicable to make it retrospective in some degree. Apart from these points, I cannot agree with the hon. Member for Rugby (Mr. W. J. Brown), who said that the Measure should be withdrawn, because it does effect substantial improvement in pension, and those improvements are welcome.

1.16 p.m.

Colonel Wheatley (Dorset, Eastern)

I only want to ask a question in view of a reply received from the Financial Secretary to the Treasury on a Question I asked him a little while ago about Service pensions, in which he referred me to this Bill. I was quite satisfied with that, but, in view of the comments made by some speakers this morning on the question of Service pensions, I should like to ask him whether this Bill does cover those Service pensioners who were unable to serve in the last war and, therefore, did not come under the regulations in regard to increased pensions. They are a very deserving type of pensioner. They have very small pensions and for many years 'they have had a pretty hard time. Some of them were pensioners who rose from the ranks and were too old to get any other job. I should like an assurance by the hon. Gentleman when he replies that these people are covered by this Bill.

1.18 p.m.

Mr. Glenvil Hall

In case I forget, I should like to say at once, in reply to the hon. and gallant Member for Eastern Dorset (Colonel Wheatley), that the cases which he envisages are covered by this Bill. We have had a very interesting and comprehensive debate well up to a Friday mornings' standard. On Friday mornings the people who are really interested in the subject under discussion come here and normally, almost entirely, know something about the matter under review so that we do get useful contributions from them. Today, Northern Ireland has joined with Scotland and England in dealing with this Measure and I hope the result, when we come to the Committee stage, will be fruitful. I am very sorry that the hon. Member for Rugby (Mr. W. J. Brown) will not be with us on that occasion. Alternatively, he has been a thorn in the flesh and a comforter to the Treasury in these matters for a good many years. It will not be quite the same thing without him: he will be on the high seas instead of joining with us in making this Measure as good as it should be made.

I think the right hon. Member for North Leeds (Mr. Peake) was a little unfair to me. He is not usually so. He said it was a breach of the usual custom that I had given no reasons whatever why this Measure should be introduced. I am not sure about the breach of custom, but what I am clear about is that in the course of my speech, brief though it was—I made it brief in order to have as long a discussion afterwards as possible—I gave reasons for the Measure, which were implicit in every line as well as explicit in some of the things I said.

We have been discussing this subject now since November, 1945, when I was castigated with great force by the hon. Member for Rugby, and when I did nothing but turn the other cheek to him, because I knew my conscience was clear. Since then the House has been well aware that this Act would come to an end unless something was done. The Government gave a most solemn assurance that something would be done. From week to week and from month to month in this House Questions have been asked; and it was generally known, I thought—and if the right hon. Gentleman was unaware of it, I am sorry—that consultations were going on with all the organisations interested, and that, in due time, this baby would be born.

Mr. Peake

We may have known that a baby was going to be born, but what we wanted to know, and what I sought to inquire, was, why was the baby to be born?

Mr. W. J. Brown

Because of the antecedent circumstances.

Mr. Glenvil Hall

The reason why the baby had to be born and was being prepared for birth was, that by common consent, from almost every quarter of the House, it was felt that the present Measure did not go as far as it should do in the existing circumstances. The right hon. Gentleman himself said that everything was going up in price. If prices are going up, whether reflected in the present cost-of-living index figure, or not, it is quite obvious that the shoe must be pinching those who are least able to bear it; and that it was necessary some increase of pension should be given. The right hon. Gentleman quoted from Lord Pethick-Lawrence, then a Member of this House. I would remind him, in passing, that it was a small group of Labour Members, with the hon. Member for Rugby, who got the ceiling increased whilst the Bill was going through the House, and it was when those figures were under discussion that Mr. Pethick-Lawrence, as he then was, indicated he realised that we were dealing with public money, that there were thousands of people in a similar situation who were not civil servants who would have to help find the money, and that the limits then agreed were not in those circumstances unreasonable.

Since then we have come to the conclusion that a higher limit is necessary, and I think—and I am pretty sure the right hon. Member for North Leeds really agrees—that the increases are justified, and that wheras £300 might at that time have been not unreasonable, in the light of the fact that a war was on and that it was a temporary Measure, something more is necessary now. We have made the ceiling £450, and we have done that in consultation with the various authorities and bodies concerned. We have to remember that the Exchequer is not alone in this matter. We have had to consult with the local authorities, who have to bear part, at least, of the cost, and we have had to take the greatest common measure of agreement.

The right hon. Gentleman asked me to explain Clause 2, Subsections (2) and (3). I shall not attempt to answer all the technical and individual points that have been raised, but, perhaps, as another hon. Member referred to the difficulties of understanding what some of the Clauses mean, I may briefly tell the House what Subsections (2) and (3) of Clause 2 do, in fact, mean. Subsection (2) puts right a small slip in the 1944 Act. There, it is provided that where there are two pensions being drawn, one a Service and the other a Civil Service pension, they shall be aggregated, and in making provision for that in the 1944 Act, it was overlooked that we had to marry it to the £52 disregard. So far this cannot be done and this Subsection, if the House agrees to it, will put that right.

Subsection (3) deals with another matter. As the House will know, when someone has passed from the Civil Service to the police service and goes on pension, or passes from the police to the Civil Service and eventually goes on pension, the final employing authority pays the pension. Normally, however, it is, and should be, entitled to recover a moiety of the expenditure on such pension from the previous employing authority. As the law stands at present, and unless this Bill is passed, the police authority can recover from the Exchequer, if a man goes from the police into the Civil Service; but, if he goes the other way, from Civil Service employment to the police, it is impossible for us at the Exchequer to recover anything of the cost towards his pension. It is an administrative matter, and that Subsection will put it right.

The short answer to the hon. Gentleman the Member for Londonderry (Sir R. Ross) is not that there is anything wrong with this Bill, although there may be things wrong with it in the eyes of some. So far as his criticism is concerned, it is not levelled against the Bill but against the original rates of pension paid to the officers of the Royal Irish Constabulary to whom he referred, which is going back rather a long way, because some of these pensions were given more than 20 years ago. It is hardly a matter I can deal with here, although I do sympathise with him and with them.

Sir R. Ross

Of course, the term "officers" means police officers of all ranks, and it is the lower ranks with whom I am most concerned.

Mr. Glenvil Hall

I know

Sir R. Ross

All I am asking the hon. Gentleman to do is to look at those rates of pension which are still now drawn by those members of the Royal Irish Constabulary on the pre-Treaty scale, and consider whether he thinks those are rates on which old men can live in peace.

Mr. Glenvil Hall

I took the point very clearly. My point is that it is the fact that the original rates were so poor, and not anything which is happening under this Bill, that is at fault. My hon. Friend the Member for the Park Division of Sheffield (Mr. Burden) raised—as he has done before, for he is a great friend of the railwayman in this matter, and the railway-men have much for which to thank him —the question of including railway-men in this Bill. We have discussed this before, and, doubtless, will discuss it again when we reach the Committee stage. One of the difficulties of including people like railwaymen, Port of London Authority employees, and those employed by the London Passenger Transport Board, in the Bill is that their inclusion would make it a hybrid Bill. That was our difficulty and if it had been construed by Mr. Speaker as a hybrid Bill, that would have made a good deal of difference to the time necessary to get it through. We have every sympathy with the point of view expressed by my hon. Friend and others who have spoken in the same sense. We feel this Clause should do the trick. It would be for the unions concerned—and I am glad to think they are powerful, and cover the great majority of the people concerned—to get the employing body to act through what I might describe as the usual trade union channels. Some it the railway companies, if not all, have already brought the pensions of some of these people up to, in some cases, I think, the 1944 Act standard.

Mr. Burden

I think the position is that some of the railway companies have brought the pre-Consolidated Superannuation Fund pensioners up to the pension rates of the new Consolidated Fund.

Mr. Glenvil Hall

I accept that correction which, of course, is right. The fundamental point I want to make is that they are aware that many of these rates are very low, and have done something to improve them; but there is no reason why they should not go further under this Bill when it becomes an Act; and in addition, if there are going to be changes through a Bill that will shortly be before this House, then, obviously the trade unions concerned will be in a much stronger position, because they will be able to approach the railway companies in the full knowledge that they have the State behind them.

I think I have covered the main points raised, and I do not want to detain the House, but I should perhaps say this to the hon. Member for Rugby. Most of his criticisms were levelled at scheme two, which comes under Section 2 of the 1944 Act. It is, of course, true that a good deal of criticism has been levelled at the provisions of that Section. It will be possible, if things turn out that way, to consider amendments to it if they are thought just and reasonable. As the hon. Member said, the Financial Resolution has been drawn pretty wide in order that we can ventilate these matters in debate. As he and hon. Members behind me know very well, the staff side of the Whitley Council have been interested in this Section, and have made various suggestions. I can assure him and the House that these suggestions will be looked into with the utmost sympathy. I cannot, of course, say that anything will be done, it does not altogether depend upon me, but I can say that we shall ask the House to do what we think right and proper. In association with the staff side of the Whitley Council, we will look into this. I am sorry I cannot say the same about Service officers' pensions. My hon. Friend's point, I think, only covers the higher paid pensions, such as admirals' and generals', and those on pensions above £787 10s.

Mr. W. J. Brown

Not quite—there are really two points. One is that everybody earning more than £787 10s. is automatically outside the scope of the Bill, but if he is getting less than £787 10s. the same criticism applies, namely, that the increases proposed by this Bill do not restore what was taken away when the cost of living was taken away.

Mr. Glenvil Hall

There is a difference of opinion on that. I think we discussed it last November, when we did not quite agree, for one thing, on the cost-of-living index at the time the rates and scales were stabilised. I think my hon. Friend said that it was something higher than 55 and we asserted, with the experience of the Treasury behind us, that the rate was 55. Actually it was stabilised at 55 when the cost of living was at 40, but this is hardly a matter we can go into in any great detail now. It is one to which we might come back in Committee.

The hon. Member for Heston and Isleworth (Mr. W. R. Williams), the hon. Member for East Islington (Mr. E. Fletcher), and the hon. Member for Banbury (Mr. Dodds-Parker) also asked me questions, which I will answer before I sit down. I think the same points were touched upon by my hon. Friend the Member for South Cardiff (Mr. Callaghan). It is true that as the Bill now stands its provisions will take effect from the beginning of the month in which it receives the Royal Assent. We hope that its passage through this House will be speedy, and we also hope, in so far as we can control these things, that its passage through another place will be equally speedy, in order that the increases may be given at the earliest possible moment to those who will be entitled to them. I can give the assurance that we will do our best to speed up things. The fear of the hon. Member for East Islington was that we might go back too far. We considered that point when we went into the question of the date from which these increases should apply. This matter has been debated and discussed for a good many months, and there is something to be said for the view that the increases ought to be dated back a bit. We came to the conclusion, however, that in dealing with the local authorities there might be a legitimate feeling of grievance if we went too far back, and at the moment the compromise is that it will apply from the beginning of the month in which the Measure receives the Royal Assent. As I say, I hope that will be soon.

I will take due note of what the hon. Gentleman the senior Member for Southampton (Mr. Morley) said about the widower who at present ranks as single. Whether we shall be able to do anything for him I do not know, because the whole thing is based on hardship and whether a person has or has not dependants who look to him for support. Whether a man is single or married, if he has dependants he gets the extra amount, but if he is single or a widower with no dependants, he comes into the lower category. However, we will look at it in the light of what has been said. The hon. Member for Banbury wanted to know what yardstick we used in fixing these rates. The only yardstick used, of course, are commonsense and hardship in relation to the cost of living today and the pension which the individual draws. Finally, in reply to a question by one of my hon. Friends behind me about this Measure being permanent—I think the hon. Member for Rugby raised this too— nothing, of course, is permanent in this world and I was not using the phrase in that sense.

Mr. W. J. Brown

If the Government want to be permanent, this had better be permanent.

Mr. Glenvil Hall

I used the phrase to mean that another amending Measure following this is not contemplated; it is not temporary in character, but, so far as we know, permanent. As the years following the war mount up, salaries will be based more and more on the cost of living of the post-war years, but here we are dealing with a class of people whose pensions are based upon prewar or early war-period salaries, and it is the worst paid of those, with the lowest pensions, whom we desire to help. As hon. Members know, most Civil Service pensions are based either on the final year or on an average of the last three or five years service. That being so, it is not I think an unreasonable assumption that after March, 1947, which is the date we have given in the Bill, most salaries will have embodied in them any bonus element which may have been granted because of a rise in the cost of living during the war. It would be unfair to the general body of taxpayers, and unfair to those who have retired on small pensions, to allow people who retire in the years that lie ahead who will have their pension based on a much larger average salary to draw in addition these extra percentages. It was only in that sense that I meant that this was permanent. Nothing in this world is permanent, not even pensions increases.

Mr. Haworth

With regard to the hon. Gentleman's reply about railway superannuation, he implied that any settlement must be made by the railway companies and the unions. The unions have been trying for a long time to get some agreement with the railway companies, but unless the Chancellor is prepared to agree, as his predecessor did, to consider any representations made by the railway companies and the unions, we cannot make any progress whatsoever. Will the Financial Secretary give an undertaking that he will consider any representations that may be made to him by the railway companies and the unions together?

Mr. Glenvil Hall

I think I can give that assurance on behalf of my right hon. Friend. It is, of course, for him to agree, but I think I can say that he would be very willing to receive any representations made to him and to consider what was said.

Lord Willoughby de Eresby

Will the Government consider whether senior officers cannot be brought in under Section 2 of the 1944 Act in the same way as junior officers are under Section 1?

Mr. Glenvil Hall

The short answer is the answer I gave—it is only a partial answer, because we are not dealing with these matters in Committee—to my hon. Friend the Member for Rugby, namely, that it these officers come above the ceiling which has been set, they obviously cannot come within the scope of the Bill. Short of that, we would be ready to consider the position of those referred to by the hon. Member to see if anything can be done.

Question put, and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the Whole House, for Monday next.—[Mr. R. J. Taylor.]

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1. PENSIONS (INCREASE) [MONEY] 304 words