§ Order for Second Reading read.
§ 4.41 p.m.
§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)
I beg to Move, "That the Bill be now read a Second time."
In the course of his Budget speech, my right hon. Friend the Chancellor of the Exchequer said:There is another class of pensioner I have had to think about—that is the public service pensioner—the retired school teacher, civil servant, local government officer, policeman, fireman and others, and also the long-service pensioner of Her Majesty's Forces. Some of these people were given some help under the Pensions (Increase) Acts of 1944 and 1947. But I am satisfied that the circumstances are such that some additional help is now called for, I am calling a conference of the authorities concerned to see what should be done. The measure of additional assistance should not, I consider, exceed 5s. to 7s. 6d. a week—say, up to a total of £20 a year."—[OFFICIAL REPORT, 11th March, 1952; Vol. 497, c. 1301.]This Bill is, of course, brought forward to implement that undertaking.
As my right hon. Friend then indicated, a number of discussions have taken place on this matter. I had a most helpful talk with the representatives of the T.U.C. and also with the representatives of the local authorities, who are, of course, very much concerned in this matter as a substantial part of the increases under this Bill fall upon them. We have also had the advantage of the views of the Staff Side of the National Whitley Council. All those bodies have given us very useful advice, but I do not think that I need to point out to the House that responsibility for the Measure as presented to this House is the responsibility of Her Majesty's Government.
Perhaps I might begin by describing the background. The pensions with which we are concerned under this Bill are, in general, what can be described as contractual pensions. Most of them are earned by service, and in some cases are contributed to, and are calculated not on the basis of subsistence or of need but on the basis of the salary earned, generally during the concluding years of an officer's career.
2062 They are, that is to say, contractual pensions, not what one might broadly describe as social security pensions. It follows, therefore, that in strict principle there is a case for saying that such pensions ought not to be supplemented when the value of money changes. In point of fact, however, successive Governments, both in 1944 and in 1947, took the view that a strict application of that principle would result in very severe hardship, and particularly in hardship in connection with those pensioners who are at the bottom of the scale.
Consequently, in both those years—1944 and 1947—legislation was enacted to provide increases in respect of pensioners towards the bottom of the scale, and in both cases the arguments used by successive Governments in support of those Bills was that they were Measures for the relief of hardship. I ought to point out to the House that the principles followed in both those Measures, as well as a good deal of the machinery used in them, have been adopted in connection with the present Measure, and this Bill is put forward to the House by the Government on the basis that it is right for the Government, in its role of ex-employer, to relieve, or seek to relieve, real hardship among its ex-employees.
But, just as on the two previous occasions, this Bill is not brought forward as part of a general revision of pensions in the light of the changed value of money. Its aim is the lower one, if I may say so, the humbler one, of relieving real hardship among ex-servants of the State. Indeed, were it suggested that we should go further and review all pensions in the light of changing conditions and changing economic and financial circumstances, that would raise many problems, not least the problem of why former servants of the State, unlike their fellow citizens, should be insulated from the effect of the falling purchasing power of the £.
These great broad issues do not arise on this Bill. This is a Bill of more limited purpose. It works in this way: it leaves in full force the increases given under the 1947 Act, with which the right hon. Member for Colne Valley (Mr. Glenvil Hall) was certainly very familiar at the time, and which he no doubt recalls in some detail today. But this Bill not only adds to the amounts paid to the beneficiaries of the 1947 Act; it also includes 2063 certain additional categories to which I will refer in a moment.
The classes of people covered by this Bill are set out in detail in the First Schedule. All that I need do at this stage, therefore, is to summarise that Schedule by saying that they included retired members of the Civil Service and of staffs of local authorities, teachers, police and firemen. In addition, there are brought in for the first time pensioners who in 1947 were not Government pensioners but in respect of whom the Government have since, under other legislation, taken over the role of ex-employer.
That is to say, there are some pensioners of the voluntary hospitals who when they retired were pensioners of those hospitals. Those hospitals have since been taken over under the National Health Service Act, and consequently, though the Government never directly employed those people, they have taken over the role of ex-employer to them, and it was, therefore, thought right to bring those pensioners within the ambit of this Bill. The same is true of another category of people who were taken over under the National Insurance Act. They were former employees of some of the friendly and provident societies. Responsibility for their pensions was taken over under that Act.
The Bill does not deal directly with the position of retired members of the Armed Forces. The reason is that, by age-long custom, pensions of members of the Armed Forces have been dealt with not in legislation but under Prerogative Instrument. I can tell the House that my right hon. Friends the Secretary of State for War, the First Lord of the Admiralty and my noble Friend the Secretary of State for Air intend to grant to retired officers and other ranks in that way increases in retired pensions similar to those proposed in this Bill.
Subject, I am told, to the relevant conditions, the full increases provided in this Bill in respect of civilians will be available to those Service pensioners—officers and other ranks—who were pensioned under the Regulations in force before 1st September, 1950, the date when a new system of Service pensions came into operation.
At this stage I ought perhaps to make it clear, because I have had a number 2064 of inquiries on the matter, that the Bill does not cover former employees of the nationalised industries. The reason is that the nationalised industries are not Government Departments. Under the statutes put through by the late Government, they were set up for many purposes as independent trading organisations with a large degree of independence, and conditions of work, and so on, are negotiated direct by the boards with the trade unions concerned. To prevent any misunderstanding, in view of what is perhaps the peculiar position of the nationalised industries, I thought that I ought to make it clear that they do not come within the ambit of the Bill.
Clause 1 (2) sets out the income limits within which the pensioner has to be if he or she is to receive the increases given under this Bill. In computing the income of the pensioner for this purpose we shall preserve the provisions of the 1947 Act under which the first £52 of income is not taken into account. That disregard, to use the technical term, remains.
§ Mr. Boyd-Carpenter
If the hon. Gentleman wants to pursue that line and to say that it is a means test, it is of course, a means test which was imposed rather more rigidly by the late Administration.
§ Mr. Boyd-Carpenter
No doubt the hon. Gentleman, if he has the good fortune to catch your eye, Mr. Deputy-Speaker—and I can congratulate him on being able to do so with considerable frequency—will be able to develop that line of argument. I am seeking to explain the provisions of the Bill. Any points which arise later will no doubt be replied to by my right hon. Friend the Minister of Education, if she has the good fortune to catch your eye, Mr. Deputy-Speaker, at the conclusion of the debate.
The income limits are laid down on the principle which I indicated as being the principle behind the Bill—the relief of hardship. I am not concerned to argue that there may not be hardship in greater or lesser degree in respect of people with incomes far above £550 a year. I certainly would not argue any 2065 such proposition. But when one is seeking to relieve hardship there is a case for concentrating the limited resources at one's disposal upon those whose incomes are least; that is to say, those who, in any stark computation of need, have the greatest need.
That principle, whether hon. Members agree with it wholly or partly, is the principle that was applied not only by the Coalition Government in 1944, but by the late Administration in 1947. They brought forward their proposals on the basis that they were designed to relieve hardship.
§ Mr. Anthony Marlowe (Hove)
Whatever may be the merits of some form of means test in this matter, is it not the case that under previous legislation disability pensions are taken into account in assessing need. Does not my hon. Friend consider that a great injustice to ex-Service men is involved and that the matter ought to be considered?
§ Mr. Boyd-Carpenter
The £52 disregard was originally linked with the question of disability pensions. In the first legislation I understand that it was originally provided that the disregard related only to Service disability pensions, but it was widened as it was thought at the time wrong to confine the disregard to that particular kind of income. On the broad merits of the question, I would only say that we are at the moment at the Second Reading stage of this Bill. No doubt my hon. and learned Friend will be able to deploy his argument if he also has the good fortune to catch your eye, Mr. Deputy-Speaker. I am seeking to explain the provisions of the Bill.
I think that my hon. and learned Friend will find that there is a link between the £52 disregard and an original desire, very much akin to his, to exempt from these calculations all Service disability pensions. We have taken the view that the income limits prescribed in the 1947 Act are, in present circumstances, too low. The 1944 Act income limits were £300 for a married man or a man or woman with dependants, and £225 for a single person. They were raised in 1947 to £450 and £350 respectively.
This Bill proposes to raise them further to £550 and £425 respectively. It is the fact that increasing the income limits has 2066 precisely the same effect as increasing the disregards. This is largely a matter of the way in which one approaches the problem. Therefore, our proposal can be looked at either from the point of view of raising the income limits or increasing the total disregard. The result from the point of view of the pensioner is precisely the same.
I do not seek to underrate the hardships which people on a higher level of gross income suffer. The case for imposing some income limit, or some limit on the disregard, rests upon the desirability of relieving those who are faced not so much with the problem of maintaining a reasonable standard of life, but with the problem of maintaining life at all—of concentrating it on the poorest section. That is the purpose for which this limitation is imposed.
The amount of the increase is set out in the Second Schedule. We are going a little bit further than my right hon. Friend forecast in that part of his Budget speech which I quoted earlier when he said that the measure of additional assistance should not exceed 5s. to 7s. 6d. a week, or up to a total of £20 a year. Actually, the increases we propose in respect of a married pensioner, or a pensioner with a dependant who retired before 1st April, 1948, is £26 a year, and the increase for a pensioner without a dependant is £20 a year.
During our discussions we came to the conclusion that the figure included in my right hon. Friend's Budget speech was perhaps a little on the low side. There is also the practical convenience, which mathematically minded Members will have ascertained already, that £26 a year cuts up very neatly into 10s. a week. There are, therefore, certain administrative advantages in a round and tidy figure of that character.
Also, though, for the reasons I gave earlier, comparisons in this matter are not very helpful, it is material to point out that the increase for the Service disability pensioner on the 100 per cent, rate is the same—10s. a week—and the increase for the old age pensioner under the National Insurance Scheme is 6s. 6d. for a single man and 12s. for a married man. The figures in this Bill, then, have a certain relativity to other changes outlined in my right hon. Friend's speech.
2067 It will be seen from the table in the Second Schedule that the increases grow less as the date of retirement is after 1st April, 1948. The reason is that in general these pensions are based upon salaries ruling during the last few years of service. Public servants who retired after 1st April, 1948, have the advantage reflected in their pensions of the higher rates of salary ruling after that date.
What we have sought to do by the somewhat elaborate provisions contained in the Bill is to secure that the addition tapers off so as to secure that the actual amount of pension received by pensioners of the same rank or grade remains roughly the same regardless of their year of retirement. It has not been possible completely to even that out. There is a variation of a pound or two in respect of certain classes, but, so far as it is technically possible, we have tapered off the increase so as to secure that those who retired later than 1st April, 1948, shall receive substantially the same amount of pension—that is, the basic pension plus increases—as those who retired before, and I think that that approach will appeal to the House as being reasonable and fair in the circumstances.
Paragraph 2 of the Second Schedule also introduces a limitation to the effect that the increase shall not in any case exceed one-third of the annual rate of the basic pension. That is done simply to secure that there is not a disproportionate increase in the amount paid in respect of very small pensions. It is intended, if the House is good enough to approve this Bill, to bring its provisions into operation on 1st October, 1952. That is the earliest date by which the somewhat complicated arrangements by a whole variety of paying authorities can be completed.
Clauses 2, 3 and 4 are necessary to secure the carrying out of the general intentions which I have sought to outline in connection with a wide variety of special cases of pensioners whose pensions are paid under different enactments. If hon. Members will look at these Clauses, they will appreciate the appalling complexity of the task of actually putting into effect the intentions which I have already outlined. For example, in the case of widows and children of deceased firemen, their pensions and allowances are mostly 2068 paid on flat rates, not related to the firemen's rate of pay, and have not been amended for some years. Consequently, the scheme of tapering off to which I have referred obviously is not applicable to that sort of pension.
We have sought, therefore, to get over the administrative difficulty and to give them the maximum increase permitted under this Bill by conferring powers upon my right hon. and learned Friend the Home Secretary to make consequential arrangements by Statutory Instrument. These Instruments will be subject to the negative Resolution procedure, so that the House will be able to retain control over them. Similar provisions under subsections (3), (4) and (5) of Clause 2 apply to policemen.
A Bill of this sort is, of course, based on the best judgment which the Government can exercise between the various considerations involved. There is the question of the position of the local authorities, who are concerned in respect of the financial liability which falls upon them. There is the question of seeing that the Government behave as a good employer should, but, equally, the Government realise that the pensions which they pay to their former employees are raised by taxation from a very large number of people, many of them people of limited means. It is necessary, therefore, for the Government, at the same time, to be fair to ex-employees and to the taxpayer who foots the Bill.
The numbers involved are 250.000 already receiving pensions, who will receive increases, and 70,000 more, who will receive increases but did not receive them under the Act of 1947. Those figures are exclusive of the numbers concerned in the Armed Forces, because, as I have already indicated, this Bill does not deal directly with their cases.
The cost to the local authorities will be a little more than £2 million, and something in excess of £4 million to the national Exchequer. At the same time, it is a matter upon which opinions may well differ honestly and sincerely as to whether we have, in this matter, balanced properly the somewhat conflicting considerations which I indicated a moment ago. I can only say that, since my right hon. Friend's announcement, we have given very careful thought and study to 2069 this problem, and we present these proposals to the House as a carefully-considered series of proposals which we believe strikes a reasonable balance between those conflicting considerations.
They will, undoubtedly, bring some very much needed relief to an admirable and hardly-tried section of the community; and the fact that, even at am time such as this, when we are beset with grave economic problems and faced by the imperious need for public economy, we have taken this step, should be a clear indication that the British Government has not forgotten, and does not intend to forget, those who have given them good service. It is in that spirit that I commend the Bill to the House.
§ 5.6 p.m.
§ Mr. Glenvil Hall (Colne Valley)
I should like to begin by congratulating the Financial Secretary to the Treasury on what I think will be agreed in every quarter of the House has been a very lucid and full description of what this Bill proposes to do.
As he indicated, it touches the lives of at least 320,000 people who are either already on pension or about to enter what, in the minds of some, is that very blessed state. Ex-civil servants, police, school teachers, firemen, officers of various grades in the local government service, and the Royal Irish Constabulary, some of whom I suppose are still left, all come within the four corners of this Measure.
In the intervention that I propose to make I should like the House to bear in mind that the object of the Bill is to increase certain pensions and the reason for this, which was clearly explained by the Financial Secretary, is to alleviate the hardship caused by the rise in the cost of living.
I was glad that the hon. Gentleman said that the Government have no apology to make for introducing a Measure of this kind. There are some, I know, and not necessarily altogether on that side of the House, who have thought that the introduction of a Measure of this kind a mistake. They argue that the cost of living affects all sections of the community, and that special legislation should not be introduced to help one section alone at the expense of the taxpayer. As the hon. Gentleman indicated. 2070 there is a very good answer to criticism of this kind.
These people have been employed by the State, and the State should act as the best employer should. We have to remember, too, that the best employers outside even now assist those of their staff who have retired on pension by giving them supplementary allowances to meet the great rise which there has been in recent years in the cost of living.
There is another reason, which the Financial Secretary did not give, but which we should take into account when considering a matter of this kind. It is that the Government—any Government—can, more than many other agencies, affect for good or ill the cost-of-living index and the value at which the £stands at any given time.
A good example of this can, I think, be found between what happened in the First World War and what happened during the war that ended in 1945. During the First World War, the cost of living was allowed to soar and when the first Pensions (Increase) Bill was introduced in 1920 the cost-of-living index had reached the figure of 255. When the third Pensions (Increase) Bill was moved by the then Conservative Chancellor of the Exchequer—if one might so describe him—in 1944, the cost-of-living index showed only a rise of 30 points.
The remarkable difference between those two figures was due to the fact that during the Second World War we had, as a people, learned a great deal about these matters, and had, by common consent on the part of all shades of opinion, both inside this House and outside, taken steps to keep down, as far as possible, the cost of living and to keep prices of commodities steady. In any case, the principle that the House should legislate and help State employees who have passed into retirement has undoubtedly now been accepted for several generations.
As I have already indicated, and as I think the Financial Secretary indicated, we had our first Act of this kind in 1920. We had another in 1924 and a third in 1944, and there was another, the last before the introduction of this Bill, in 1947. How should we judge this Bill? I listened to the Financial Secretary very carefully and he, apparently, could find 2071 no fault in it. At the same time, I felt there was in most of what he said an attempt to forestall criticism which he no doubt realised would come from this side of the House.
When we on these benches looked at the Bill, we tried to judge it quite fairly by those tests which we felt should be applied to it. I think two tests can be applied. The first is: should we try to examine it through the eyes of a pensioner who retired, say, in 1938 and compare the purchasing power of the pension then paid to him, together, if one likes, with the increases since added to that pension by the Acts of 1944 and 1947, with its purchasing power today? I think that if we judge the proposals by this test the Bill must fail lamentably, because it does very little to close the very large gap which undoubtedly exists between the purchasing power of such a pension when first paid in 1938 and its purchasing power today.
The Financial Secretary may say that is not a fair test to apply and that the test which should be applied is the one which the then Sir John Anderson, now Lord Waverley, sought to apply and which the hon. Gentleman himself seeks to apply this afternoon, when introducing the Bill. In 1944, when the then Chancellor of the Exchequer introduced his Bill, he said that its aim was not to make additions to all pensions but to concentrate such assistance as could be given in helping cases of real and grave hardship.
Does this present Measure satisfy the test laid down by Lord Waverley in 1944? I think that the more we look at it and examine its provisions and the more we work out examples of just what it will mean to various classes of pensioners, the more we must agree, if we are fair to ourselves, that this Bill fails to meet the situation. This Bill aims to model itself very largely on the 1944 and 1947 Acts. But there are differences of a very substantial kind, and it is to those differences that I wish to draw the attention of the House.
Those two Acts upon which this Bill is based gave percentage increases on pensions up to a given income limit. As the hon. Gentleman has reminded us, in the 1944 Act the limit was £225 for those without dependants and £300 for those with dependants, and under the 1947 Act 2072 £350 for those without and £450 for those with dependants. We quite realise that this Bill is an advance on these previous Measures and that we now have the income limits raised to £425 and £550 respectively. But I must point out that there is nothing in this Bill for those who elected to take advantage of Section 2 of the previous Acts under which the income limit went as high as £787 10s. There is a great difference between that figure and the £550 which is the highest income limit allowable, apart from the £52 disregard, under this Bill.
I want to ask the right hon. Lady who, I believe, is to reply to the debate, why, in this Bill, nothing has been done for those who previously elected to take their increase under Section 2 of the earlier Measures. Another question I wish to ask her—the hon. Gentleman did not really deal with this point—is why has the percentage basis been thrown overboard? Hitherto, in every Act of this kind increases have been made on a percentage basis, but in this Bill that has disappeared. The percentage basis was not something invented by a Labour Government which has to be avoided like the plague. It was invented by a Conservative Government at least 30 years ago, and it has stood the test of several Measures of this kind.
It seems to us, therefore, that there is no reason at all why it should have disappeared in this Bill. In its place we have the astonishing table which is to be found in the Second Schedule. It ranges from £26 or £20, according to whether the pensioner has any dependants or not, down to £6 and £4 in the case of those who retired on 31st March, 1952. It is an astonishing feature to find in a Bill of this kind. Not only does the table deal harshly with certain sections and types of pensioners, but it also departs from what one would think would be the right way of helping those who are suffering from hardship in this way.
If one analyses it, the proposals come to this: that the pensioner in the most favoured position, that is, the pensioner who overcomes all the limitations which are set forth—who drew his pension before 1st April, 1948; satisfies the means test laid down; has one or more dependants; has a pension not smaller than £78 a year, that is 30s. a week, or not greater than £550 a year—who, I say, 2073 surmounts all these hurdles can receive, under this Bill, the magnificent sum of 1s. 5d. a day. But if he does not satisfy the conditions; if, for example, he went on pension this year, if he has no dependants and if he cannot satisfy the means test, he will get, as I work it out, something like 2d. a day added to his present pension.
In our view that is not good enough, particularly when it is realised what the cost of living is today, that there has been a serious time-lag over many years for many of these people, that the cost of living even now is rising and that we do not know how much higher it will go.
§ Mr. Spencer Summers (Aylesbury)
So that we may be quite clear, would the right hon. Gentleman say whether he is taking exception to the principle of tapering off to which my hon. Friend the Financial Secretary referred earlier?
§ Mr. Glenvil Hall
I did not know that there is any tapering off here. One has or has not to comply with certain conditions.
As I understand, the reason why those who retired in 1951, for instance, will only have an increase of £6 or £4 to their pensions is due to the fact that their salary has probably gone up in the meantime and, therefore, a certain amount of that is taken into account when their original pension is computed. But tapering off, in the sense in which we understand it normally and in the sense in which it was used in the 1947 Act, is not to be found in this Bill.
§ Mr. Boyd-Carpenter
There may be some misunderstanding here. I used the expression "tapering off," as the right hon. Member will recall, in connection with the table which appears in the Second Schedule. I hoped that I had made myself clear. I certainly tried to make it clear, and if I did not do so it was my fault, that the effect of this would be to ensure, as far as possible, that the total pension—the basic pension plus the increase obtained by the pensioner—would be the same whether he retired in 1948, 1949, 1950, or so on. The intention was to level up, but the higher level of pension at later retirement would not require the same levelling up to reach the same level as the others.
§ Mr. Glenvil Hall
I take that point very clearly. In that sense. I suppose there has been a tapering off. I was coming to that and I was going to make the point immediately. Perhaps I may now be permitted to do so.
§ Mr. Summers
I do not think that the right hon. Member has answered the point. Does he take exception to the scheme in the Second Schedule devised to ensure that a pensioner retiring, for instance, in 1948 shall, in fact, secure the same final figure as a pensioner retiring in 1951?
§ Mr. Glenvil Hall
Certainly when the figures are as small as they are here and as derisory as they are in this table. It seems to me and to many of my hon. Friends that this table is an astonishing provision which means absolutely nothing when one examines it in detail. No one is going to tell me that a table which runs, as this one does, in a neat scale year by year in sums of £5 in the second column from £26 to £6, and in sums of £4 downwards from £20 to £4 in the third column, means anything at all to anyone who understands what has been happening during these last few years.
It is incredible to me that anybody could stand at that Despatch Box—if the Financial Secretary did so stand and argue, though I did not understand him so to do—and argue that from 1948 to 1952 the difference between those who retire in each of those separate years can be assessed at £5 each year. Changes in the cost of living have not worked out in that way. The cost of living during the last five or six years has certainly fluctuated, but it has not fluctuated as neatly as that.
I can only imagine that this table was elaborated without much regard to actuality. It looked neat to start at £26 and to taper off by sums of £5 down to £6. But I cannot imagine that when that table was elaborated anyone could think that we were doing justice year by year to people who retired in 1948, 1949, 1950, 1951 and 1952. I should like the right hon. Lady the Minister of Education, when she winds up the debate, to tell us how this table has been elaborated. Is it really, as the Financial Secretary said, that it has been done because it was essential to taper off the amounts which pensioners would receive so that 2075 their pensions should approximate to actual fact according to the year in which they retired?
I ask the Financial Secretary whether, even now, it is not possible to revise the Money Resolution. As we read it, it is extremely tightly drawn. So far as my researches have gone, it is much more tightly drawn than any of its predecessors attached to similar Bills, certainly those introduced in 1944 and 1947.
§ Mr. Boyd-Carpenter
May I be allowed to clear up that point at once? So far as it has been practicable, this Money Resolution is based upon the 1947 model.
§ Mr. Glenvil Hall
I cannot accept that. I have examined it. One of the things which appears in this Money Resolution and which was not contained in either of its predecessors, as far as my memory serves me, is that the date of the coming into operation of the Bill has actually been put into the Resolution. I appeal to the Financial Secretary to take out that provision so that when we come to the Committee stage we can consider whether something should not be done to make these increases, poor though they are, retrospective.
In 1944 the Bill was passed in May and the increases were dated back to 1st January of that year. I believe that we passed the 1947 Bill in either January or February and that the increases were dated back to 1st December. For the life of me I cannot see why this Bill should be dated as far ahead as it is. If the cost of living had not brought difficulties to these people for many, many months already, there might be something to be said for dating the Bill forward to 1st October.
But the argument that it is essential to give the Civil Service time to work out the amounts that will accrue cuts no ice at all. We could still pay the increases when the Civil Service was ready with the figures, and it is as easy to pay them in arrears as it is to start the thing off neatly, after getting the figures completed. There is really nothing whatever in that argument. If the hon. Gentleman can do very little else, I would ask him to keep an open mind on this question and, when we come to the Money Resolution, to delete that portion which refers to the date from which this increase 2076 should operate, so that something can be done, even now, to ante-date it.
I should like to say something about the means test. I know that the hon. Gentleman will say that the means test appeared in the Act which the Labour Government passed and that it has appeared in all the Acts dealing with this matter up to now; but, as he probably knows, there is very strong resentment among pensioners over this particular provision. They do not like it, and we can all understand why.
Why cannot we agree to drop it? After all, there are many safeguards in the Bill. The amounts that are to be granted are very small indeed and it seems to us that it would not cost a great deal if, at last, we could get rid of this particular form of inquiry.
There is no means test when the pensions are granted. As the hon. Gentleman said, they are given on the basis of the salary received, the type of job which is done and the length of service given. When a pension is given to someone retiring we do not ask whether he is married, whether he has any money saved, whether he owns his house, or make any of the inquiries which now have to be made before a person can qualify for this increase. I think we should be acting in a dignified manner if we at last realised that all Governments in the past have been at fault in this matter, wiped the slate clean and abolished the means test altogether so far as these increases are concerned.
There has been a heavy fall in the value of money. I know that this Bill does not touch pensioners with, say, a pension of £800. To many people that may seem a large sum to draw by way of pension, but a pension of £800 in 1938 is only worth about £360 now, and I think we ought not to forget that when we are considering these matters.
I would remind the Financial Secretary that the House has recently been considering—and still has to consider on Third Reading—the Finance Bill. During the passage of that Bill through the House many millions of pounds were given away by the Chancellor of the Exchequer, much of it in response to pressure from his own back benches over the Excess Profits Levy. We are not asking here for millions of pounds from the Treasury. Far from it. We are only asking that justice 2077 should be done, as the hon. Gentleman himself said, to a very deserving body of people, many of whom are living on extremely small pensions and who would value every concession that we can possibly make.
I would draw attention also to the inclusion of the one-third rule which is to be applied. It means that if a man has a pension of £51 he cannot possibly qualify for the £26 which is laid down in the table. He has to have a pension of at least £78 per year before he can qualify for the full amount. That is not helping the hardest hit. It means that those with higher pensions can qualify for the full amount whilst, because of this one-third rule, the man on a small pension is to get less than the maximum.
When the Chancellor introduced his Budget he announced a savage slash in the food subsidies, and went on to say that although this would mean a loss of £165 million to consumers—and add to the cost of living for all of us—we should not complain because we were most of us to get something back by way of Income Tax remissions.
Many thousands of these pensioners do not pay Income Tax, but they have had to suffer this slash in the food subsidies with the rest of us. Prices have already gone up, but the full effect of the changes made in the food subsidies has not yet been felt, and the astonishing thing is that we are discussing this Bill today when it is, quite frankly, already out of date. The cost of living has already overtaken the very niggardly and mean upward changes which are visualised in this Bill.
Although we do not intend to vote against the Second Reading of the Bill we shall have something to say when we reach the Committee stage. I therefore ask the hon. Gentleman to consider the criticism made during this debate, to see whether even now it is not possible to improve the Bill. I know that Members in all quarters of the House are anxious that we should do our best for these pensioners but, quite frankly, this Bill is not good enough. I hope, therefore, that we shall, not merely as parties but as a House, agree to improve this Bill so that it may cease to be what it quite definitely is now—a mean, poor, and niggardly Measure of which the Treasury should be ashamed.
§ 5.38 p.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
No one who had only listened to the speech of the right hon. Member for Colne Valley (Mr. Glenvil Hall) would have imagined that this was the first Measure of its kind since 1947. When they heard him say that this Measure failed lamentably they could not have guessed that since 1947, while the cost of living increased even more rapidly than between 1944 and 1947, year after year—nearly five years altogether—was let slip by the previous administration without any measure of relief being afforded at all. The right hon. Gentleman sat down with the words that this Measure was already out of date. If this Measure is already out of date how much more out of date was the 1947 Act long before the party opposite went out of power.
The right hon. Gentleman concentrated his criticism very largely upon the fact that the percentage basis—it was not a perfect percentage basis—embodied in the 1947 Act had been abandoned in this Bill and that a flat rate increase, subject to the Second Schedule—to which I shall come to presently—had been accorded. He failed to perceive that this flat rate increase means that there will be a larger percentage increase for the smaller pensions and that my hon. Friend is thereby literally carrying out his undertaking that the resources available would be concentrated upon giving the greatest help to those who suffered the greatest hardship.
The provisions of the Bill mean that there is the maximum percentage increase for the smallest pensions.
§ Mr. Douglas Houghton (Sowerby)
The smallest pension is subject to another restriction—that is, the increase may not exceed one-third of the original basic pension.
§ Mr. Powell
Quite so. But in the 1947 Act the application of the percentage principle up to £100 had almost exactly the same effect.
The right hon. Gentleman appeared to have difficulty in apprehending the purpose of the scale in the Second Schedule. He failed to see that the increases in retiring salaries which have been taking place over the years since the war have automatically resulted in an increase in 2079 retirement pensions; and when he criticised the tapering off in that Schedule, he should have recollected that the 1947 Act itself embodied precisely the same principle.
The gradual rise of leaving salaries was then foreseen, and it was provided by Section 3 that the increases under that Act should be reduced in proportion to the amount of qualifying service which was rendered after 1st April, 1946. Thus the right hon. Gentleman's own Act embodied exactly the same principle as is contained in the Second Schedule to this Bill.
The right hon. Gentleman criticised the means test, as he called it. But we have to face this question: are we to apply the resources which are available for this purpose where there is real hardship or are we to spread them more generally? Hon. Gentlemen opposite must come clean on this question; they must realise that when they are asking for the abolition of the means test they are asking that less should go to the pensioner who is in the most hardship.
§ Mr. Glenvil Hall
Would the hon. Gentleman explain what he means by that—unless he means that there is only a certain amount which is divisible? We were not arguing that there was only a certain amount, and even the Money Resolution does not set forth the amount.
§ Mr. Powell
Of course, it is always the privilege of an Opposition to claim on any Measure that the resources which could be devoted to it are unlimited. But a Government, which has to apportion the national resources, has to lay down that sum xis the sum which can be devoted to a particular purpose. I am saying that for this purpose sum xis devoted most directly to the relief of real hardship by virtue of the provisions which are stigmatised as a means test.
One of the categories which will be affected by the Bill is that of retired teachers, and I want to draw my hon. Friend's attention to an existing provision of the Teachers (Superannuation) Acts which is causing hardship to retired teachers, who, in these days, are hard pressed. It will be within his knowledge that a great many of them obtain a very welcome supplement to their small superannuation by part-time work. That 2080 work is usually part-time teaching; but it is nearly always part-time work either paid for by the State or supported by State grants.
Wherever that takes place, the effect upon their superannuation is governed by Section 6 (2) of the Teachers (Superannuation) Act, 1925. I will not trouble the House with the whole subsection, but the relevant words say that where in any quarter the salary and emoluments plus the quarterly rate of superannuation exceed the quarterly rate of salary at retirement, then the superannuation shall be reduced accordingly. I want to draw the attention of my hon. Friend to the great hardship, and I think injustice, which results from this provision.
§ Mr. Powell
I am sorry that the hon. Gentleman does not wish to have this matter ventilated. I shall not detain the House long upon it.
§ Mr. Powell
Most of the work which these superannuated persons obtain differs in amount quarter by quarter. The majority of teaching work is, of course, done in the last quarter of the year and the first two quarters of the following year. The result is that, however hard they work, very few of them can earn their full retiring salary, which was presumably the intention behind the 1925 Act.
I have an example before me which will perhaps make the point clear to the House. A constituent of mine, by part-time teaching work, earns, in the four quarters of the year, the following sums: £140, £104, £135 and £19—the last being in the summer quarter. The result is that, since his retiring salary was £150 a quarter and his superannuation is £38 a quarter, he loses part of his superannuation in two quarters of the year without any corresponding offset in the other two quarters, when he is below the maximum. Thus, instead of being able to earn up to his leaving salary of £600 a year, he is, in fact, unable to increase his income beyond about £540.
I cannot believe that this was the intention of Parliament in passing the 1925 2081 Act, and I would point out to my hon. Friend that the disregards in this Bill are upon an annual basis. Indeed, the standard of living of pensioners of the kind with which we are dealing in the Bill is most reasonably expressed on an annual basis.
I suggest to my hon. Friend, therefore, that he would be meeting a real hardship and helping many of the classes of pensioners to whom this Bill is directed if, either in this Measure—and I cannot see the impossibility of embodying such an amendment in this Measure—or by other means, he substitutes for the quarterly basis of Section 6 (2) of the 1925 Act a different basis which will enable the presumed intention of Parliament to be achieved and a pensioner, by part-time work, to bring his total annual earnings up to the annual rate of his leaving salary. I hope that my hon. Friend will bring that point to the attention of those concerned.
§ Mr. Powell
That raises a larger question, and I am on the narrow issue that at present a superannuated teacher cannot bring his earnings up to the leaving salary by reason of the quarterly assessment which was written into the 1925 Act. I think this is an injustice and I hope that in some way it can be dealt with. Nevertheless, I do congratulate my hon. Friend and the Government on having belatedly, after five years, devoted attention in 1952 to the effect on this class of person of the rise in the cost of living since 1947.
§ 5.49 p.m.
§ Mr. Ralph Morley (Southampton, Itchen)
The point which the hon. Member for Wolverhampton, South-West (Mr. Powell) has made is one with which nearly all on these benches will have considerable sympathy, and particularly those who are ex-teachers. There is, however, nothing which can be done in this Bill to remedy that matter. With the utmost deference to you, Mr. Speaker, the hon. Member was out of order the whole time he was referring to this issue. It can be remedied only by an Amendment to the Teachers (Superannuation) Act. I hope that when an amending Bill is introduced in connection 2082 with that Act, the observations which the hon. Member has made on this matter will be duly taken into account.
Many retired public service pensioners will welcome this Bill because, of course, it does add something, if not very much, to their retirement pensions, but I think that there are a large number of them who will think that the provisions of this Bill are very meagre indeed, and who will be disappointed that the Treasury has not been able to be more generous in this particular instance.
I suppose that one of the inducements to young men and women to enter the public service is the knowledge that at the end of their service they will be entitled to a certain pension. I think that there is, if not a contractual obligation, at least a moral obligation upon the Government to ensure that the value of their retirement pension shall be equal in purchasing power to the value which they assumed it would have, in accordance with the figures then in vogue, when they entered into the public service.
So far as the teaching profession is concerned, the teacher's pension is a contributory pension, and teachers generally are of opinion that they should receive in their pension £for £in value with that which they contributed, and if there is a very serious decline in the value of the £which was not foreseen and could not have been foreseen at the time when the pension scheme was first drawn up, then I think there is a moral obligation on the part of the Government, or of the local authority concerned, to increase the pension in order that the standard of life may be the same for the pensioner as he thought it would be when he first entered into the pensionable service.
The amount proposed in this Measure certainly does not make up in any way for the increase in the cost of living since 1938. I will take the most typical case among teachers—the case of the male teacher from a Class III area who retired in 1938. His pension then was £183 a year. Since that time he has received a 30 per cent. increase under the 1947 Act, which was the equivalent of £54, and which brought his pension up to £237 a year. He will receive, under the proposal in this Bill, an additional payment of £26, bringing his pension up to £80 more than it was in 1938.
2083 That is to say that, while the pension in 1938 was £183, his pension now, under the terms of this Bill, will be £263; but since 1938 the cost of living has increased by 119 per cent. Therefore, the equivalent value today of the pension he received of £183 in 1938 is £400 a year, not £263 a year which he will receive when this Bill becomes law.
In fact, even with the additions made by this Bill to meet the increased cost of living of 119 per cent., he will have received an increase in his pension of something like only 45 per cent., and even with the increase in this Bill, undoubtedly, the pensioner's standard of living will be considerably lower than he anticipated that it would be when he retired in 1938.
Even if we suppose that the Act of 1947, which was introduced by my right hon. Friend, did what was necessary at that time and restored the position of the retired teacher, the retired teacher will now get under this Bill an increase of £26 a year. That, in fact, is less than the percentage increase in the cost of living upon the pension he was receiving after the increase had been made in 1947.
As between 1947 and 1952 when this Bill comes into operation he will have received an increase in his pension of just under 11 per cent., but the cost of living since 1947 has risen by 35 per cent., so that, even assuming the 1947 Act gave the retired pensioner his correct position—and I do not think it did give him his correct position: it was not generous enough in its provisions—then this Bill does not restore the position because it gives him an 11 per cent. increase of pension to meet a 35 per cent. increase in the cost of living.
I should like the right hon. Lady, when she replies to the debate, to tell us how this figure of £26 was fixed. It does not bear any relation to the increase in the cost of living. It does not bear any relation, so far as I can discover, to any ascertainable figure or collection of figures. What was the motive which induced the drafters of this Bill to fix this increase at £26 for married people and £20 for single people?
Why should there be—and I think this argument will appeal to the right hon. Lady—this difference between the 2084 married pensioner and the single pensioner, the pensioner without dependants, so far as the teaching profession is concerned? Of course, the great majority of the retired teachers who are on pensions are women teachers, because women are in the majority in the teaching profession. It is not their fault that they are not married, because until recently a woman who became married had to give up her occupation as a teacher. I fail to see why she should be given less increase than the married person.
There is also the question of the widower whose wife has recently died and who will be classified as a single person and will get £20 instead of the £26; and yet, on account of the fact his wife has died and he has been deprived of her assistance, in order to obtain necessary assistance he may be put to considerable expense. I hope that at the Committee stage this anomaly of the differentiation between the married pensioner and the single pensioner may be eliminated.
It is true, of course, that the ceiling has been raised in this Bill. The ceiling has been raised by £100 for the married pensioner and £75 for the single pensioner, and that is a concession which will be welcomed, I have no doubt, by a good many pensioners, and will, as the Financial Secretary has just said, bring into the scope of the increase a good many people who were not brought into the scope of the increase granted in the 1947 Act.
But we still believe—a number of us—that the ceiling might have been pushed up a little higher—pushed up another £50, at least. If it had been pushed up by another £50 I think it would have brought in nearly all the retired teachers who are at present drawing pension, except, perhaps, just a few retired teachers who were headmasters or headmistresses of very large grammar schools.
Finally, while the increase has been made in the pension—it is true of only £20 or £26—and while the ceiling has been heightened, the figure of £52 of private income which is to be disregarded remains just the same as it was under the 1944 Act and the 1947 Act. The value of money has fallen considerably since 1944, and to some considerable extent again since 1947. Surely there is a very strong case for raising to £80 or £100 the £52 which is to be disregarded. 2085 Very often people come to me and say that they are penalised because they have been thrifty, because they have saved a little money.
By saving a little money these people have been able to buy an annuity of £70 or £80 a year, at the age of 65, and now that there is the £52 figure £18 of that annuity is taken into account in fixing their "ceiling." This penalises thrift to a certain extent. If the amount was £52 in 1944 there is a very strong case for raising it now to somewhere in the neighbourhood of at least £100.
I must declare my interest in this matter, because should I be defeated at the next General Election, and be no longer a Member of Parliament, this Bill will give me another £20 a year on my teacher's pension. That is not a great deal but, as Yorkshiremen say, "it's summat."
§ Mr. Morley
I do not want to argue the difference between a Yorkshireman's "summat" and a Yorkshireman's "nowt". The £20 will buy me 2 ozs. of tobacco a week, and to that extent will be welcome.
In many respects this Bill is very disappointing. I think that the Government could have made the figures a bit higher than £26 and £20; they could have put in figures which have more relation to the increased cost of living since 1947; they could have pushed the "ceiling" a little higher, and I hope the right hon. Lady will explain why they could not do so. The £52 which is to be disregarded, which has remained the same since 1944, might, in all the circumstances, be raised to £80 or £100, and I hope that in Committee we may be able to move Amendments to those effects which will be favourably received by whoever is responsible for the Bill then on behalf of the Government.
§ 6.3 p.m.
§ Mr. Raymond Gower (Barry)
It appears that a considerable number of hon. Members wish to contribute to the debate and I shall not detain the House for any length of time. I should have thought, in the context of present conditions, and without seeking to make any party point, that hon. Members on both sides would have welcomed this Bill somewhat more warmly than they have. We have been told that it is niggardly 2086 and totally inadequate; and numerous other expressions have been used. I thought that my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) made some quite pertinent remarks in reply to such suggestions.
The right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) referred to the peculiar nature of the figures in the Second Schedule, but his remarks seemed to be not so much a criticism of those figures or of their relation to the cost of living as a criticism of the retirement pensions as they were, which the differentials in these figures seek to reconcile. I think that that is the reason why the figures are there in this form.
§ Mr. W. R. Williams (Droylesden)
Would the hon. Gentleman explain further what is in his mind? It is not clear to us.
§ Mr. Gower
It appeared to me that the right hon. Gentleman's remarks were not so much a criticism of the cost of living as of the retirement pensions prevailing when these people first became entitled to their pensions. As the Financial Secretary told us, these figures reconcile those pensions to some degree. They not only increase them, but they seek to reconcile them.
Without in any way seeking to make a party point, I think that the cost of living is a real consideration, however it is occasioned. It does not matter much to any of us whether the rise in the cost of living is occasioned by adverse circumstances in world markets or by cuts in food subsidies. The fact remains that over a period of years there have been rises in the cost of living, and when we are judging the value of these increases, how the rises were occasioned is not important.
During the lifetime of the second of the two Administrations of the party opposite—that is, roughly between March, 1950, and October, 1951—whether or not we attach great importance to such figures, the official index is stated to have risen by about 18 points. I do not say the official index is a perfect guide. I think it is a very imperfect guide. But the fact remains that the official index was then drawn up on roughly the same basis as it is now. I am advised that during the lifetime of the present Government the cost of living, based on a similar index, 2087 has risen only about four points. We are told that even when the reductions in food subsidies take effect the total effect of the official index will be in the neighbourhood of 8| points.
If these increases are inadequate—and it might well be pleaded that they are—to cover a rise of 8½points in the cost of living, or even if they are inadequate to cover a slightly larger amount, an increase was certainly long overdue to cover the greater rise of 18 points during the 18 months of the previous Government. I think that a great deal of time can be wasted in arguing whether one Government or another is more responsible for an increased cost of living, in whatever way it has been caused.
§ Mr. Harry Wallace (Walthamstow, East)
I appreciate the point the hon. Gentleman makes about the rise in the cost of living and not wanting to waste time by comparing one Government with another, but does he not appreciate that we are now trying to do justice to people who were pensioned as long ago as 1938, who have been left now in a very bad condition. What is the hon. Gentleman's conclusion?
§ Mr. Gower
I will come to that in a moment.
The hon. Member for Southampton, Itchen (Mr. Morley) advanced the somewhat idealistic suggestion that a pension should represent to the pensioner its actual purchasing value—he will correct me if I am wrong—as he conceived it would be at the time he began to contribute for it. That is something for which we could all wish, but to be fair, that kind of argument takes us very far indeed. It might similarly be argued that someone who is not entitled to a pension at all who has saved £200, should now be entitled to go to the bank and say, "This money is reduced in value and I should have a larger sum in return for it."
§ Mr. Morley
In the case of public servants, the Government of the day have a contractual and moral obligation. In the case of the man the hon. Gentleman has just quoted the Government have no such contractual and moral obligation. The Government have, of course, an obligation to keep down the cost of living as much as possible and to keep the value 2088 of money stable, but that is not the same obligation as they have to the public servant and his pension.
§ Mr. Gower
The Government of the day issued him with certain legal tender which he rightly conceived to be of a certain value, and he might say that some years later he should be entitled to go to the Government and say, "These notes have depreciated in value, and just as a pensioner is entitled to an increased sum to compensate him, so I, being a person not having a pension, should be allowed to exchange these notes for a larger sum of money."
We could pursue that argument further. A poor person who has been thrifty and invested his savings in a small house for which he receives a rental would be just as much entitled to come along and say, "This rental has depreciated in value; I should be entitled to have a larger rent." That kind of argument can lead to involved and, possibly, dangerous fields of controversy.
I respectfully submit that in the context of our national situation, as we see it at present, this Bill is one which the House should welcome. I believe that hon. Members opposite will not divide against it. I cannot see how they can. After all, in this country—and this is a great defect in political life as I see it today—the average person is completely ignorant of the very delicate position in which we stand.
Some of us who know the position of our economy, and who have heard tell of the difficulties now of obtaining cargoes for shipping and the greater resistance to our exports abroad, must realise that all these things and social services and pensions—all very desirable—are making us, with our vast population, hostages to fortune, and, therefore, I submit that this House should not only say that this Bill must have a Second Reading but it should welcome it.
Finally, I am glad to say that I have been told to welcome the Bill by my own constituency branch of the National Union of Teachers. They instruct me in a letter to attend here today and support the Second Reading of this Measure. In justice to them they also state that they consider that these increases are not entirely adequate, that the Bill does not remove the means test—a matter which has already been referred to—that, in 2089 their view, the income limitations for the granting of increases are not sufficiently high and that the amount of income—and I do not think that this has been stressed—to be disregarded has not been increased.
§ Mr. George Thomas (Cardiff, West)
Do I understand that apart from all these arguments, they support the Bill?
§ Mr. Gower
Yes, not only do they instruct me in the opening paragraph of their letter but, after telling me all these things, they say, in their closing paragraph:While pointing out the deficiencies indicated above, we shall, nevertheless, be glad to be assured that you will attend and support this Bill on Second Reading, whether in its present form and/or improved.
§ 6.14 p.m.
§ Mr. W. G. Cove (Aberavon)
I do not intend to delay the House for long, but, quite frankly, I have given some amount of thought and study to these proposals and I can find neither rhyme nor reason in them. The proposals are irrational, and, so far as they attempt to be rational, they are derisory. There is no doubt about that. I take rooted objection to the approach to this problem which was adumbrated by the Financial Secretary to the Treasury this afternoon.
The hon. Gentleman approached the problem of the pensioner from the point of view of hardship. He gave me the impression that this Bill has really no relation at all to what is generally called contractual pensions, that is, the pensions of teachers and civil servants, which are related to their occupation. Their occupational pensions are vitally different from what I would conveniently call charity pensions—pensions which are given either in major content or partially to meet cases of poverty and hardship. We know the defence of the hon. Member for Wolverhampton, South-West (Mr. Powell) because we have read the book which he wrote in conjunction with the Minister of Health.
What are the pensions—I will mention only two—received by teachers and civil servants? They are deferred pay. I remember that when the 1925 Act for teachers was going through the Committee stage, the then President of the Board of Education, Sir Eustace Percy, argued that teachers' pensions were deferred pay. If these pensions are 2090 deferred pay, ought they not, therefore, to be protected from the tremendous devaluation owing to the rise in the cost of living? I know that in the case of civil servants they do not pay a contribution, but I believe that they still argue—and I have seen their arguments—that they pay a contribution by indirect means, and that it is taken into account that they get free pensions in the assessment of their salaries. In the case of teachers, they pay a direct contribution. I say that the State has no right to deduct from the present salaries in order that it may be deferred pay and then give back, in debased coinage, what has been taken from teachers years ago.
Here is another point. In the case of public servants such as teachers—and I think I am correct in saying that this also applies in the case of civil servants—what does the State say? It says, "You must retire at a certain age. You must go; you are no longer fit, owing to your age, to carry out the duties which you are supposed to carry out." In the case of the teacher who retires optionally at 60 and compulsorily at 65, the State says, "You must go." Yet the State has taken from them pension contributions for many a year, and it then says, "You must go and have this deferred pay in deflated value."
I say that that is entirely wrong. I will not go into the details. We will discuss them in Committee, but I should like to know from the Front Bench opposite what relationship there is between £26 a year and £20 a year to the increased cost of living. It is, I think, because, as the Minister himself said, 10s. a week is a convenient sum for the pensioners to get. There is no rhyme or reason in it otherwise.
What protection from hardship is there for the lower paid pensioner? It is a negation of the principle relating to hardship, because, if it is a case of hardship, the hardship lies with the lower paid pensioner yet this one-third provision will penalise the lower paid pensioner more than the better paid pensioner. That seems to be a complete muddle.
We resent very much the introduction of the means test in this matter. [HON. MEMBERS: "The Labour Government introduced it."] I like the way the Tory Party hides behind the omissions and commissions of the Labour Government. 2091 It is wonderful what excuses they can find. I should like them to stand on their own feet and be virtuous in their own right and not hide behind what the Labour Government did in 1947 If it is wrong, then it is wrong.
§ Mr. Marlowe
The hon. Gentleman misunderstands the point. He used the word "introduction," endeavouring to imply that this is being done for the first time. He knows that that is inaccurate.
§ Mr. Cove
That is exactly what I was saying. It is no good hon. Members excusing themselves for what they are now doing by saying that it was done by the Labour Government. Even if the Labour Government did it, that does not necessarily make it right. Now is the day of salvation for the Tory Party in relation to this. The proposal is irrational, there is no rhyme or reason in it and the amounts are inadequate.
§ Mr. Cove
Financial Resolutions are very tricky things, but if I had a chance I would put down an Amendment to raise the amount. I cannot guarantee that because it depends on whether or not it would be in order. If I had my own way I would reject the Bill. I fundamentally disagree that the problem should be approached from the point of view of hardship. I profoundly disagree that the Bill should tinker with poverty; it does not remove poverty and there will be poverty galore when it is in operation.
I hope that during the Committee stage we shall be able to exert enough pressure to raise the amounts, to abolish the objectionable terms embodied in the Bill and to get the State to do the proper thing by its servants and make the Bill reasonable and worth while.
§ 6.24 p.m.
§ Miss Irene Ward (Tynemouth)
Like most hon. Members, I welcome the Bill. There is no doubt that six years of Socialist Government have very much exaggerated the difficulties of the people covered by the Bill. We have heard a great deal about regulations and statistics, but there is a special point which I should like the Financial Secretary to 2092 bear in mind. The rise in the cost of living in relation to essentials creates great difficulties for people with low incomes, and, although there are signs of a fall in the cost of living in certain directions, unfortunately the cost of essentials such as food, heating and rates remains high and is increasing. It is essential to bear that aspect of the situation in mind when we look at the problems of these people.
My hon. Friend drew attention to the fact that in the Bill the Government were accepting responsibility for hospital servants who were not servants of the Government before the passing of the National Health Service Act. I realise from his remarks that he is sympathetic towards covering the pensions problems of those people. I have been asked to draw his attention, on behalf of the Royal College of Nursing, to an omission. As a result of his sympathetic reference to this section of the community and his admission that it is the duty of the Government to protect these people, I hope he will be able during the Committee stage to include the section to which I shall refer.
I understand that the Bill covers nurses on pension who were in the service both of the local authorities and the voluntary hospitals when the Act was passed—nurses who were then working and have since retired—and also nurses whose pensions were supplemented by the voluntary hospitals. Owing to the increase in the cost of living between 1945 and 1948, some voluntary hospitals supplemented the pensions of their nurses who had retired from their own funds. I have no doubt that this problem may equally apply to other hospital officers, though their specific case has not been put to me. However, I should like my hon. Friend to understand that I am speaking for the whole range of people who were in the service of the voluntary hospitals.
There is no provision under the Bill, if I am correctly informed, for applying the pensions increase to nurses who were employed by voluntary hospitals unless they were drawing the supplementation. The opinion expressed by the Royal College of Nursing is that if the Government feel under a moral obligation—as they do—to give pensions increases to nurses who were covered in the way I 2093 have indicated, there is also a strong moral obligation to cover by pensions increases under the terms of this Bill other nurses who were in retirement and were already in receipt of pensions from the voluntary hospitals. I hope the Financial Secretary will turn his mind to this problem, because I am certain he would not wish an injustice to be done to a very deserving section of the community
I want to raise another point. My hon. Friend pointed out that the Service pension increases would be covered by Royal Warrant. I notice that there is a special provision in the Bill for dealing with widows' pensions under the Fire Brigade Pensions Act, 1925, and the Police Pensions Act, 1921. My hon. Friend explained that, owing to the administration of these Services, there had to be a special provision in this Bill to cover these particular cases, but he did not say about the Service pensions whether, in fact, the widows of Service men were equally covered, nor did he say whether there was to be any increase in pensions under a Statutory Instrument for the widows of Service men who had lost their husbands in peace-time and not through the exigencies of war. I hope that I shall be able to receive some assurance from my right hon. Friend when she winds up the debate that this very deserving section of the community will also be covered.
I want to add one other reference to the points that have been made about the application of the means test. I have received from a very reliable source one or two points which support the very reasonable request that my hon. Friend the Financial Secretary should look again at this question of the application of the means test.
What worries me is that, though I know that in the Budget the Chancellor did his best to cover certain sections of the community on low income level who have to cope with the withdrawal of the food subsidies, I am not entirely satisfied that the Treasury have sufficient knowledge of the human problems which sometimes are examined with greater sympathy and support in other Government Departments. I think that the Ministry of National Insurance, the Ministry of Labour and the Ministry of Health have a greater contact with the 2094 ordinary lives of the people, and I am not entirely satisfied that there has been sufficient investigation into the problems of the people whom we are trying to protect in this particular Bill.
I want to read two or three points that are made by a reliable correspondent about the application of the means test to teachers. One of the objections to the proposed scheme is that it does not differentiate between the pensioner who retired on his or her maximum pension and the pensioner who had to retire prematurely owing to ill health and on a smaller pension. It sets up two different scales of pension for the same scale of compulsory superannuation contribution. It takes no account of the pensioners' estate other than that part which is liable for Income Tax purposes. In other words, there seem to be a great number of anomalies which might well, in the interests of those concerned, be examined, if not by my hon. Friend the Financial Secretary to the Treasury, then by other Government Departments which are more closely in touch with the lives of the people.
The increase in pensions which is denied to the thrifty pensioner would be taxed as earned income, whereas the income from his or her thrift which prevents him or her from getting the increase is taxed as unearned income. That is a very important point indeed, because it imposes a hardship on the thrifty as against those who, perhaps through no fault of their own, have not been in a position to save. The statutory contributory pensions are not subject to a similar test, and there is no question of a means test when increases of wages or salaries are given to active workers to meet the increased cost of living. This is a very important point and deserves very close examination.
Though I think this Bill will be extremely beneficial to a very deserving section of the community, I still think that it has been based too much on the Bill which was introduced by the Socialist Government. In my opinion, it was not a very satisfactory Bill from the point of view of these particular people whose cases I have endeavoured to present to the House this afternoon.
I want to make one other point. Many hon. Members have raised the question of the one-third limit. Certainly I have 2095 no knowledge, and I have never heard any real discussion, on the subject as to how many pensioners there are who are on very low pensions.
§ Mr. W. R. Williams
Would the hon. Lady accept the assurance from me that there are thousands of them, and that most of them are in that category?
§ Miss Ward
I readily accept the hon. Gentleman's statement, but I have not heard discussed the problem of this kind of pensioner, from the point of view either of the human or the financial aspect, and I should be much happier if I had this particular picture presented in such a way as would convey to me and to the House the extent of the problem.
If I may, I will return for a moment to the nursing profession. I rather emphasise that profession, because we have heard a great deal said this afternoon about teachers and civil servants. Therefore, I am spending a little more time discussing the problems of the nurses. I know there are a large number of nurses who have very small pensions indeed. There is substance in the allegation that the people on low pensions are not getting sufficient increase to enable them to meet the very difficult problems of living which they have to face today.
There is another point. If that one-third limit is imposed on a very low pension, it means that the single person may have an advantage over a pensioner with dependants. If an additional amount is allowed for a dependant and it is divided with the statutory limit imposed, we may get above the limit more easily than in the case of the pension of a single individual. That particular aspect of the situation wants further consideration by my hon. Friend.
I conclude by saying that I very warmly welcome this Bill. I am very glad that my hon. Friend introduced it today, and I am glad that its terms are better than the original ones mentioned before, but I want to impress with all the power that I can command that it is this section of the community which is most up against the problem of living today. The problems of these people require the greatest and the most careful examination. I hope that my right hon. Friend can assure me when she replies that, even though no positive action can be taken in the Bill—we do not want to delay its 2096 passage to the Statute Book—she will see that it is conveyed to other Departments that it is necessary to look at the problems of these people, who have had the worst deal of all out of the period of Socialist government.
§ 6.41 p.m.
§ Mr. Harry Wallace (Walthamstow, East)
I hope that the hon. Lady the Member for Tynemouth (Miss Ward) will forgive me if I do not follow her and attempt to deal with all the points she has raised. I want to confine myself to the essential points of the Bill. I will, however, ask her to consider her appeal against some sort of general picture of the Civil Service. I would ask her to think of 250,000 people with an annual rate of retirement of between 10 per cent. and 5 per cent., and she will realise that thousands of people are leaving the Service every year, mostly people of older age. If she multiplies that number by five, 10, 15 or 20, she will get some idea of the number of people who are now trying to exist on very low pensions.
I would ask the House not to forget the point which is made in the Financial Memorandum to the Bill, that there was an Act in 1920, another in 1924, another in 1940, another in 1947, and there is now another in 1952. The pensioner is always left well behind in the adjustment of income to cost of living. I am not criticising the present Government any more than I criticised the previous Government when I say that it is time something was done to see to it that the pensioner has not to wait for three, four or five years before he gets this adjustment. It is an obligation on the House of Commons to move quickly to help these people
Let me give the House an idea by taking as an illustration the case of an old colleague of mine. His pension in 1939 was 25s. a week. That is pretty much the pension which most of the people in the Post Office get. The maximum pension is half a man's wage, but he is a lucky man who leaves with 40 years' service and gets the maximum pension. We must visualise men and women with between 20 years' and 30 years' service, allowing for late recruitment, late entry into the Service or medical disqualification.
Take this case, in which the pension was 25s. in 1939. In 1944 it was adjusted 2097 to 32s. 6d. That was not under a Socialist Government. In 1947 it was raised to 35s., an increase of half-a-crown. That was under a Socialist Government and was related to the cost of living. When the increase comes along under the present Bill it will be just over 8s., and the total which the pensioner will get will be 43s. 4d. That increase from 25s. to 43s. 4d. represents an increase in the cost of living of 120 per cent., according to which that man ought to be receiving about 52s. 6d.
That is the picture. I am not criticising. I recognise that what is now proposed is acceptable, but it is not enough. I hope that when the Bill goes to Committee it can be improved. If the right hon. Lady can give some indication that that is to happen I shall be very pleased. The limit of one-third of the basic pension is unreasonable. I have just given an example, in which it seems unreasonable to apply the restriction of one-third to the pension of 25s. The matter should be looked at again.
I would emphasise another point which has been made by some of my hon. Friends, because I think it is important, about what we call the "disregard income" of £52. It is unfair to keep that figure, and the Government should alter it to £104. I ask the Government to give consideration to that point. Hon. Gentlemen who support the Government will probably endorse my point of view of this matter. In the same way I appeal that the income limit which is now taken into account ought to be disregarded. I do not see why income from other sources should be brought into the picture at all when we are trying to restore partially the purchasing power of these people.
Those are the points which might very well be looked at and improved in Committee. I know there is the question about the terms of the Money Resolution but, having heard the Financial Secretary's reply to an hon. Gentleman on this question, I am hopeful that there will be scope for improvements. I would remind the House that the increase in the cost of living since 1947 has been 35 per cent., and that the present proposal does not meet that increase, even when we take the most favourable figure, £26. We scale downwards and not upwards, so that many people will not get anything like 2098 adequate recognition of the rise in the cost of living.
I hope that when the Bill goes to Committee a real attempt will be made to make adjustments and to improve the Measure as much as possible. I hope that £26, which is now the maximum figure, may be improved to £52, or anyhow that an increase on the £26 will be made.
§ 6.49 p.m.
§ Commander J. W. Maitland (Horncastle)
This is the fourth time that the House has considered a Measure to increase pensions. The Bill and the method of making the increase are a monument to the fact that contributory pensions were not designed to work in a world of continuing inflation. I do not think however that, basically, this is the right way to do it. For one reason, a Bill like this gives the illusion, or the impression, that things are a little bit better for the pensioner. What it does not do is to attack the out-of-date machinery of the Acts which grant the pension. They are the ones which want reconsidering. The anomalies about which we are talking today are their fault.
It is an important matter to discuss the pensions of the teaching profession in this House, for it is the only occasion when we can make any financial difference to the teachers. Their salaries are behind the iron curtain of the Burnham Committee, which is something we cannot touch. Let us be honest about that. Therefore, when we are considering pension increases, it is relevant to consider the whole purpose of a pension.
The purpose is to provide something on which a man or a woman can live when they retire. It is also, or should be, an inducement to enter a specific profession. The security which it offers is a very proper inducement which a Government or an authority can offer to people to come into their service. Owing to the way in which the cost of living—or, as I prefer to call it, inflation—has increased in this country, that inducement no longer exists. Yet we take no action, as I think we should, to try to increase that inducement.
For example, my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) referred to something which has 2099 always worried me. It is that a pensioned teacher cannot earn more than a certain amount of money which makes up his or her income to the salary which he or she was drawing when they left the service. Whatever Government is in power, I maintain that this is an entirely wrong principle. Heaven knows we are short of teachers. The entire education system is in a very serious position because of the shortage of women teachers, and we may have to alter our whole outlook and methods of approach because of it. Pensioners ought to be able to earn as much as they can without having their pension altered in any way.
That is a principle which I believe is absolutely right. I ask the right hon. Lady to separate the pensions of teachers from the other matters contained in this Bill, and to see if she cannot produce a consolidating Measure which will overcome all these anomalies. I know the difficulties, because I know that she has a considerable debt to the Treasury round her neck in regard to these pensions. It may not be good politics to try to destroy these anomalies in this way, but I am absolutely certain it would be good government to do so, and I ask her to take courage and reconsider these matters by giving thought to the method I have suggested.
§ 6.54 p.m.
§ Mr. W. R. Williams (Droylsden)
In view of the time, I shall have to curtail a number of things I wanted to say about this Bill. First I want to refer to a meeting I had in Liverpool a few weeks ago, when I met between 300 and 400 pensioners from the Post Office. It was quite clear to me, having spent the best part of 20 years with them, that a large number of those people were suffering seriously from the deflated value of their pensions. I was sorry to see one or two looking rather more shabby than of old, and I felt certain that they had found it difficult to make ends meet with their pensions, specially those who had gone on pension between 1935 and 1940.
The hon. Lady the Member for Tyne-mouth (Miss Ward) doubted whether there would be many people in the service who would come within the ambit of this one-third. I want to explain briefly how that can be.
§ Mr. Williams
I do not know what the distinction is, so I will leave that to the hon. Lady. I think the House will recollect exactly what she said. The reason why I wanted to give her the assurance which I sought to give was that a large number of people, particularly in the Post Office, do not enter the service until they have reached an advance age because they are ex-Service people. Therefore, even if they serve until they are 60, or in some cases 65, they will not have a full pension. Thousands have gone from the Post Office after 10 or 15 years' service. It does not leave much to the imagination of the right hon. Lady to think what their pensions would be when calculated in eightieths of the wages.
I do not want to make any party matter out of what I am about to say. Too many of us are in glass houses to be able to throw many stones from either side of the House. I am satisfied that the pensioners from the Civil Service and the other authorities have a good deal to complain about to both major parties in regard to the time-lag in meeting the changes that have taken place in the value of money and of pensions. In 1920 there was a lag of five years. In 1944 we had a lag of four years. Now we have a lag of five years from 1947.
§ Mr. J. K. Vaughan-Morgan (Reigate)
But this Government has acted with considerable more alacrity than its predecessors.
§ Mr. Williams
I said I was not trying to make any party point, but we were not in Government in the early inter-war years. For the benefit of the hon. Member I will repeat what I was saying. Whichever party has been in government, the delay in trying to meet the position has been absolutely unreasonable and illogical. Every year that the position is ignored is a serious matter for a person whose expectation of life of necessity becomes a limited one.
Now I want to make a point in regard to the amount. For the life of me I cannot see why it has been decided on £26 per annum. Unfortunately I had to attend another meeting and did not hear the opening statement of the Financial 2101 Secretary, so I do not know whether any reference was made to the reasons for this. As far as I can see, the amount is not related to anything specific. It cannot be related to the cost of living, because that has gone up 35 per cent. since 1947. It cannot be related to the general increase of wages outside, for that increase has been at least 28 per cent.
It cannot be related either to the National Insurance retirement pension or to National Assistance. It cannot be related to any of those things, because there is no comparison between the figures. For instance, under the National Assistance scales husband and wife have received an increase of 47½ per cent. since 1948, and a person living alone with house commitments and so on has received 46 per cent. Married couples living on the National Insurance retirement pension have had since 5th July, 1948, an increase of 30 per cent. and single persons have had an increase of 25 per cent.
So far as I can see, a large number of people who come within the ambit of this Bill will not get much more than between 11 or 12 per cent. and 18 per cent. which, in effect is only practically half what they ought to be receiving if they are to be given reasonable compensation for the increased cost of living.
I find that in the case of civil servants the average pension is about £169. If the pension was on the basis of the National Assistance Board they would be getting an increase of £81 5s. If it was on the basis of National Insurance it would be £51. If it was strictly in accordance with the cost of living it would be £39, but what they are actually going to get is £26. I suggest that it is well worth considering how we are going to relieve hardship on the basis of these figures, because the basis of the amendment of these successive Acts has been to try to remove hardship which has accrued to pensioners because of the changing cost of living in this country.
The majority of the civil servants were not eligible to come under the old National Insurance scheme and were not entitled to old age pensions in their own right as contributory pensioners. The bulk of them, on very low pensions, as many of my hon. Friends have sought to prove, are not in a position to live without 2102 recourse to National Assistance. I think that is wrong.
I do not want to make any distinction between civil servants and other members of the community, but I should like to repeat what has been said before: there was a contract between civil servants and the Treasury. In fact, in most arbitration proceedings with which I have been associated, it was generally accepted that for sick benefit and pension superannuation rights about 12½per cent. was regarded as an equivalent. Therefore, for all these years these people have been making an equivalent contribution of 12½per cent. and when it comes to the question of enjoying their pensions they are obviously not getting the value of the contributions which they have indirectly made to the fund.
I want to refer to this question of the time lag. I do not want to try and devise ways and means. The right hon. Lady will know as well as I do that it would be rather difficult for anybody, without giving very full consideration to the matter, to determine how frequently there should be reviews, but I certainly think that these old people are entitled to more frequent reviews than at five or four yearly intervals. If some machinery can be devised whereby the increased cost of living can be more closely equated and related to current events, that will be much appreciated by the pensioners.
I should like to refer to the matter of retrospection. I really cannot see why the Government cannot back-date this Measure. I cannot see any reason why it should be 1st October, 1952, having waited since 1947. I am not blaming anybody; from the point of view of the pensioner it does not matter if it is a Socialist Government or a Conservative Government that does this. What I am saying is that, having kept these people waiting for five years, through whatever cause, it is unreasonable to ask them to wait until 1st October, 1952, for this increase of £26 per annum at the maximum. I should like the right hon. Lady to consider that and to bear in mind that there are already precedents. The precedent was already established in the case of the 1944 and 1947 Acts in which there was some measure of retrospection.
If the right hon. Lady and the Treasury cannot go back to 1st January of this year, which I regard as a reasonable date, why not 1st April? Why not make some 2103 approach to this question in order to meet the cost of living which has been rising since 1947 and which, according to the Chancellor of the Exchequer, is bound to rise between now and 1953?
From my experience of being in the Civil Service for the best part of 30 years and being connected with it for the best part of 40 years, I despair of ever getting the Government to be regarded as the best employers or even amongst the best employers. It is not unreasonable, however, to ask them to be of the number of good employers. Good employers have been treating their pensioners better than the Government have been treating theirs. Let us leave out the party issue; all I ask is that we should try and make amends and increase the amount. Even if we only increased it to £39, that would make a big difference to those people who have very small pensions. I ask that this Measure should be retrospective to 1st April of this year, and that some effort should be made in the future to try and prevent this lag which is imposing so much hardship on so many of these people.
As to the question of the means test, if we introduce into a means test the assessment of a house occupied by a man who has been trying for a lifetime to save enough to buy it, then in my opinion we are mean in the extreme. We ought seriously to consider this figure of £50 and see whether we cannot at least double it and bring it into line with what the Government have done in other directions. I hope that these points will be considered by the Treasury, and that on the Committee stage we shall be encouraged to put down a few Amendments calculated to improve the condition of these people.
§ 7.8 p.m.
§ Mr. Anthony Marlowe (Hove)
The hon. Member for Droylsden (Mr. W. R. Williams) said that he found it difficult to follow the basis upon which the new rates were to be paid, and he added that he also wanted to avoid any question of party politics. To some extent I agree with hon. Members opposite who think that the increases are insufficient, but I do not think the hon. Gentleman can keep the question of party politics entirely out of our discussion.
I do not myself wish to introduce party politics at this stage, but there is no doubt 2104 that the principle upon which the Government have had to act is the amount of money which they have available to spend on this project. The amount of money which they have to spend is obviously largely conditioned by the state into which the country has been brought over the last four or five years. Equally the cost of living cannot be entirely separated from that factor, and that also must be, in the opinion of many, a question which is closely connected with party politics.
However, I agree with the hon. Gentleman that these increases do not go far enough. It is said that some 320,000 people are affected by this Measure. In spite of all the changes made by the Representation of the People Act, 1949, which limited my constituency to some 70,000 people, my correspondence is driving me to the conclusion that the whole of the 320,000 people affected by this Measure live in my division. I am bound to bring to the notice of the Government that there is among many, and particularly among retired civil servants, a large degree of dissatisfaction at the rates which are proposed in this Bill.
I want to deal with the principle which should affect the rate at which a pension should be paid. I think that the recipient of a pension has something in the nature of a contract with the payer that when he leaves his employment he will be able to enjoy a certain standard of living and have a reasonable prospect of a pension providing for that standard of living in the days of his retirement. It is abundantly clear that nowadays these rates do not allow that principle to be carried into effect.
An enormous number of people are finding that the money is, in effect, nearly halved. In many cases, particularly of those who retired before the war, and whose pensions have been increased under the 1944 Act and the 1947 Act and will be increased under this Measure, pensioners are finding that the purchasing power of their pensions, even after the increases are taken into account, are virtually halved. A person who may qualify for £500 finds that the actual relative value of his pension is about £250, and all he is getting by way of addition is a meagre increase of £26. So, while his pension is halved, his increase is about 5 per cent.
2105 I regard that as unsatisfactory, and I hope that the Government will think again about the amount which should be devoted to this purpose. The Government have agreed to considerable expenditure in other directions, and I find it difficult to find a more worthy project on which they could spend their money than that of providing money for the retired people for whom they are responsible.
I should have preferred to see another £4 million—which is the cost to the Exchequer under this Bill—taken from the £40 million to be provided for the medical service and allotted to this scheme. That would have enabled the Government to double the amount they could give these pensioners. Perhaps I should not go further than that, because those of my constituents who are not pensioners are doctors. I feel that it would not have been difficult for the Government to have found another £4 million to double the amount they are making available under this Measure.
One aspect to which I wish to refer, and on which I interrupted the Financial Secretary, is the question of taking into account disability pensions when applying the needs test. I regard it as most unfair that ex-Service men in receipt of disability pensions should have the amount deducted before the amount of their entitlement is taken into account. It really means that disability pensions are being taken from them because the disability pension is taken into account when assessing needs, so that the man who has a disability pension is brought on to exactly the same level as the man without a disability pension.
The Financial Secretary to the Treasury also said that he hoped the Government would show an example of being good employers. I am bound to say that I do not think that in this particular Measure they do so. My hon. Friend knows the figures supplied to the Treasury of the pension measures which have been taken by the banks, for instance, which show that they have dealt with this problem in a far more generous way than have the Government. They have not, for instance, put on a £500 limit. They have kept pace with the problems from year to year and given bonuses and increases related to increases in the cost of living. In that way they have shown themselves to be good employers and 2106 have set a standard from which the Government are falling in the Bill now under consideration.
The real trouble is that we are dealing with the problem only at stages of four or five years, as we have been doing over the last decade or more. The difficulty is that we allow the gap to get too wide to be able to bridge it economically. I think this problem should be dealt with in an entirely different way. The time has passed for using old legislation and trying to amend it. This Measure is merely an amendment of the 1944 Act and the 1947 Act, and I suppose that in due course another amending Measure will have to be introduced.
It is an unsatisfactory procedure to deal with the problem by amendment at three or four-yearly periods. The time has come to recast the whole of this system and try to introduce a comprehensive Measure which will give pensioners an amount relative both to their original entitlement and to the present cost of living. An entirely new calculation is required and the whole method needs to be recast.
I realise the difficulty with which the Government are faced today and that, much as they would like to, it is not easy for them to vote vast sums of the taxpayers' money to provide increased pensions. In the end it has all to come from the taxpayers' pockets, and questions have to be nicely balancd as to how much the working taxpayer is prepared to vote from his income to provide for his fellows who have ceased to work.
I reiterate my view that this Bill does not go far enough. The cost of living rises are seriously affecting large numbers of our people who are entirely dependent on pensions and they are experiencing—as is shown by cases frequently brought to me—very considerable hardship in the present situation. I hope that, before the Bill is finally disposed of, the Government will find that, by searching round in other directions, they can discover some more money to increase the £4 million which it is proposed to devote to this project.
§ 7.18 p.m.
§ Mr. George Thomas (Cardiff, West)
When the Financial Secretary opened this debate this afternoon, he referred to a number of organisations which had been 2107 making representations to the Treasury over a long period, concerning the dire need of those who were pensioners and who had once given service in one of the branches of the public service.
The National Union of Teachers has been very prominent in its dealings with the Treasury, in its support for the T.U.C. and in its co-operation with civil servants in seeking at least the minimum of a decent existence for those who have given long and honourable service in that profession. In the teaching profession it is customary to refer to pensioners as the "Old Guard," as those who, having given honourable service themselves, still seek to keep guard over the ideals of the profession.
These people, by the very nature of things, are not able to fight much for themselves. They are outside the normal activities of the local associations of the unions of the professions concerned. But none the less, during the past two years—not the last six months let me concede at once—there has been a rising tide of indignation in the teaching profession that so many of our colleagues have been existing in utter and abject poverty.
While we welcome the introduction of any measure which will improve the lot of these pensioners, we are bound to say that this is a disappointing Measure in view of the need which has to be met at the present time. Every hon. Member will be aware from his own bitter experience that it is no use expecting too much if it is a Bill for which the Treasury is responsible. I do not want to ride the hobby horse of another of my right hon. Friends, who says that all evil springs from the Treasury. It may be that he is correct; maybe he is not. But I suggest that the Treasury is undoubtedly responsible for the means and parsimonious approach to this increase in pensions.
A means test always works harshly on someone, and it usually works most harshly upon those at the bottom of the scale. It is bound to in the very nature of things; and those pensioners who will be prevented from obtaining the £26 increase, because already they are not getting enough money to entitle them to it, will be, I think, a standing disgrace to the Treasury for their approach to this Bill.
2108 I hope that the Government will have second thoughts on this question, and I trust hon. Members will allow me at least to remind them of this; that my attitude on the means test in the 1947 Act was expressed quite as freely and as forcibly when I was on the Government side of the House as I seek to express it tonight now that I am on this side of the House. I think it is—dishonourable may be a strong word—but it is certainly unworthy of a Measure designed with the best of motives, to make life sweeter for those no longer contributing to the economic wealth and resources of our nation.
I realise that it is on Committee stage that we shall have to seek to alter certain details, but I am bound to bring the attention of the Government Front Bench to the £52 a year that dependents are allowed to earn before their income is taken into consideration. That £1 a week today is nothing compared with what it was at the original time of insertion into these Acts. We can trace it back to the 1944 Act, and the value of the £ at home—whatever is happening today abroad, and I am told by the newspapers it is getting better abroad—is getting worse at home.
§ Mr. Thomas
I never pose in this House as an economist, but I know that on the home front the value of the £ is deteriorating all the time. This £1 a week that dependants are allowed to earn is a derisory figure which I earnestly hope the Government will be prepared to reconsider.
This question of the date on which the scheme shall come into operation is important. Why it should be delayed till the autumn, till October, when hon. Members on both sides of the House concede that the matter is urgent now, is more than I can understand. Surely it is possible for the Government to expedite the work which has to be done to calculate the increase to be given to pensioners and to see that these people can have their urgent needs met sooner than 1st October.
With regard to the speech of my hon. Friend the Member for Droylsden (Mr. W. R. Williams), who speaks in the country with such eloquence on behalf 2109 of the Post Office workers, I am convinced that if it were possible for the Government to find the necessary resources to back-date the payment for the doctors, it is bound to be possible for back-dating to take place for these pensioners. I feel that the Government have a special responsibility to these people for the depreciation of their superannuation. The Government came to power pledged to restore the value of the £. They are pleading for time and we must allow them time——
§ Mr. Thomas
—for the operation of their plans to take full effect. But in the meantime the only evident result of their policy, the only evident result of the Budget, has been to make life harder for these people; and it is wrong to tell them, "Hold on till 1st October and you will get a small increase."
My last point deals with the argument of the Financial Secretary that he had fixed this £26 a year because it worked out at 10s. per week and so it was an easy figure to calculate. The next figure down in the scale works out at 8s. 0¾d. a week. That is hardly an easy administrative figure.
§ Mr. Thomas
I notice that the £16 works out at 6s. 1½d. a week, and the £11 at 4s. 2¼d. a week. Is that an easy figure to administer? The £6 works out at 2s. 3d. a week. I think the Financial Secretary had no argument on that score, and I trust that when the Minister of Education replies she will concede that the figures are inadequate; that the date is too far retarded; that the allowance for dependants are insufficient and that they will be given further consideration during the Committee stage of the Bill.
§ 7.29 p.m.
§ Mr. J. K. Vaughan-Morgan (Reigate)
I shall not detain the House for more than a few minutes, and I wish to devote my remarks entirely to the subject of the disregard, as it is called, that is to say, the amount of income of £52 per annum which is allowed. This disregard has been in existence since 1944. It has been 2110 referred to by a number of hon. Members on both sides of the House during this debate and, to my dismay, I find myself considerably more in sympathy with the views expressed on this subject by the majority of hon. Members opposite than with those which have been expressed by hon. Members on these benches. The main difference between us is that I am a tyro in these matters. I can take no responsibility for what was introduced in an Act in 1944 or was maintained in an Act in 1947. That does not apply to some of the hon. Members opposite, with one or two exceptions, who have attacked the principle.
My hon. Friend the Financial Secretary to the Treasury, referred in his speech, quite rightly, to the principle that the money should go first to those who are in the greatest need. He justified the means test on those grounds, and I think on those grounds alone. But before the matter is so summarily dismissed, we ought to have some regard to the other ancillary affects of this means test.
It has certain other social and economic effects. We ought to consider the effect on savings and investment. It is a serious deterrent to many civil servants, who, looking back over the last few years, if they have made efforts to build up their savings and to make investments, to think that because they have been successful—and they must have been very clever if they have been successful in their investments—their pension is accordingly reduced. That is unjust and in the long run it is unwise.
From the figures issued every week by the National Savings Movement, we see that week after week there is a net figure of dis-saving. That is inevitable in the period of inflation through which we have been going these last few years; it is bound to happen. But it is wrong, it is bad for our economy, and we should look at it very closely to see whether we should not abandon this principle of the means test altogether. In the long run it is bound to have bad effects on our economy if we discourage people from saving.
The second aspect to which I should like to give consideration is the circumstances of those who on their retirement take up some other form of work, either 2111 to eke out their pension or to make up their income. That has become part of the pattern of employment in the years since the war. It was probably unknown in some respects before the war. It has now become more common, and it is a good thing. It is welcome and is encouraged as part of the Government's policy.
The Government have recently appointed a committee under the chairmanship of my hon. Friend the Parliamentary Secretary to the Ministry of Labour to look into the whole question of retirement ages and to see what can be done to encourage people to stay longer at work. It seems to me that the Treasury are out of touch with the policy of the Ministry of Labour in this matter; they do not seem to know what has been going on during the last few months. It is time that they brought their views into line with the expressed policy of the Government in this regard.
Finally, I ask my right hon. Friend the Minister of Education, who is to reply to the debate, to say what would be the cost of abolishing the means test altogether. I have tried to give the reasons why I think it is socially and economically harmful. We might, perhaps, be told what the cost would be in relation to the £4 million that the Bill is to cost. At the same time, I should like to know what would be the effect if the amount of the disregard were raised, as has been suggested, to, say, £104 per annum, which is a far more realistic figure and much more related to the decline in the value of money since the £52 disregard was first introduced. I hope that we shall have a real answer to the question of what we gain by having the means test at all, and I hope that in due course we shall have the good news that this blemish is to be removed from an otherwise excellent Bill.
§ 7.35 p.m.
§ Mr. A. Hargreaves (Carlisle)
Like most other hon. Members I welcome the Bill because, however inadequate its provisions may be, we all recognise that to those who are suffering and whose pensions are at the lower end of the scale the Bill means a great deal. I add my welcome, therefore, to the words that have been uttered in that strain this afternoon.
2112 One of the points upon which I should like to say a word is the fact that new categories are brought into the Bill, especially those pensioners who during the time they were working were employed by the voluntary hospitals, and those who formerly were employees of the friendly and provident societies. The Government have, of course, accepted responsibility for the people now performing those duties. In my view, it is right that they should accept responsibility for the superannuitants who were formerly performing those duties and whose work has now been taken over by the Government.
I should, however, like the Financial Secretary to examine how far certain sections of the hospital and nursing professions have been overlooked in these provisions. I am thinking especially of nurses who were employed by district nursing associations, whose pensions would now be paid by local authorities, and of people who in the past were not employed directly by voluntary or municipal hospitals—people like Queen's nurses, who were outside the scope of the local authority hospitals or of the voluntary hospitals.
Those who retired prior to the war, or at the beginning of the war, retired when they were drawing salaries that were wretchedly low and which reflected themselves in the very poor pension and superannuation arrangements that were made for them. I should like the Financial Secretary to examine the pensions prospects that confront the people who were retired prior to the operation of the 1944 Act.
There is another body of people who are deserving of consideration and who, in my view, fall in precisely the same category. Here I want to declare my interest, because I have been a committee member of a superannuation fund for a good many years, having been elected by thousands of contributors. There are a number of us who function as a committee, and therefore my interest and knowledge of the work of superannuation is, perhaps, more closely in contact with the conditions which face superannuitants.
Apart from our regular monthly committee meetings, we have an annual meeting, to which are invited not only the present contributing membership of the fund, but also the superannuitants of 2113 the fund. Therefore, the committee is confronted year by year with the cases of people who have been retired on superannuation for, in some cases, very many years.
As is the case in regard to most superannuable employment, the great difference in the salaries paid to these people before the war and the salaries paid in 1950 and 1952 is reflected in their superannuation. The result of that difference is that pensions or superannuation payments now based on present day salaries are very greatly in excess of the superannuation being drawn by people who have been on the fund for 10, 11 or 12 years.
Here is, I repeat, a case that is presented to us almost monthly. I am dealing here with the case of contributors to this special fund, but what I say applies to all railway servants. This special fund is the Railway Clearing System Superannuation Fund. There is an annual meeting to which superannuitants are invited, when the case which is concerned with their problems is presented on their behalf. In my view, they are in somewhat the same position as the people who are being brought in for the first time by the provisions of this Bill. They represent what I would call a new category of persons who, because of nationalisation, look to the Government for help in connection with their pre-war scales of superannuation.
Representations have been made, not alone by the committee but by the Railway Executive representatives who also sit on the committee of that fund on behalf of those superannuitants. Representations were made prior to nationalisation to the separate railway companies which had established superannuation funds, and since nationalisation representations have been made to the Railway Executive and to the British Transport Commission. That has been done not only by the superannuation committee members but by the trade unions whose members are members of the superannuation fund.
It can fairly be said that one can understand, at least to some degree, the position of the British Transport Commission when confronted with these demands, limited in this House as they have been, in their attempts to secure that their business shall be conducted on 2114 the basis of an economic return for their services. As we know, this House has made it difficult for the British Transport Commission to recoup themselves fully. We have seen that in recent times.
Another point is that the British Transport Commission say, "Here we are dealing with members of superannuation funds, whose numbers are limited." The funds naturally do not cover all the employees. A large proportion of the people employed by the Commission are not members of any fund, and indeed are not pensionable. The people employed by the Road Haulage Executive have no superannuation provision made for them at all. Accordingly, it is fair to say that the Commission ought perhaps to make superannuation provision for those people to whom it is at present denied before they seek to improve the wretchedly low pensions of pre-war superannuitants.
Government action has made it much more difficult for the Commission to accept completely the obligations which they undertook under the 1947 Act. Further, it is an undoubted fact that these people in the railway superannuation funds represents a body of superannuitants, many of whom retired before the war and in the early years of the war, who have had no increase whatever. This Bill refers to increases already given in the Acts of 1944 and 1947. The people to whom I am referring have had no opportunity whatever of having their superannuation payments related in any way to the present-day cost of living.
Therefore, I would ask that some means be found of bringing this group of super-annuitants within the scope of the Bill, in the same way that other categories have been brought within its scope because of the Government's recognition that they have been brought within the ambit of Government service. I ask the Financial Secretary to examine the proposition which I am making, and to indicate whether within the scope of the Bill this undoubted hardship which exists among railway superannuitants who retired either prior to the war or in the early years of the war can be met.
There is another point which has not been so far mentioned in this debate, and which I think is worthy of consideration for a moment or two. I refer to the amount which will fall to be paid under this Bill by the local authorities. That 2115 £2¼million cost, as the Bill is at present drawn, will, in cases within my knowledge, throw a very heavy burden indeed upon some authorities which have found it difficult in recent years to make provision to meet the deficiency in their superannuation fund. I am not in the least arguing that local authorities should be encouraged to attempt to evade their responsibilities in this connection, but I suggest that some of the local authorities at least will find it very difficult indeed to accept added obligations such as confront them in the terms of this Bill.
I reiterate the welcome which I gave to the Bill in my opening words. I ask that the cases of exceptional hardship and very great need to which I have attempted to draw attention shall be considered and a means sought whereby they can be brought within the provisions of this Bill.
§ 7.49 p.m.
§ Mr. C. H. Gage (Belfast, South)
I am glad that this Bill has been introduced by a Conservative Government. I have a very high regard for the right hon. Member for Colne Valley (Mr. Glenvil Hall). I always listen to his views with respect, and I was therefore sorry to hear him today, at the outset of this debate, describe this Bill as a miserable and niggardly Bill. I thought that it was a little out of his character.
I know that any Government which introduces a Bill to increase anyone's remuneration or pension is taking on an ungrateful task. Those whose pensions have been increased say they have not been given enough, and those who have been left out say that they ought to have been included. Very few remember to say, "Thank you" for what has been done for them.
I agree with almost everything which has been said from both sides of the House this afternoon about the means test. Hon. Gentlemen have been indignant about it, though none of them has risen to the heights of eloquent indignation—not even the hon. Member for Cardiff, West (Mr. G. Thomas)—expressed in 1947 when the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) blandly explained, for reasons that it was not necessary to go into at any great length, it was desirable to keep the means test.
2116 The great fault of the means test is that it encourages extravagance and penalises thrift. That is the real argument against it. The person who has saved up his money is in danger of being penalised as compared with the person who has spent all he has had. It was interesting to notice that today almost every hon. Gentleman who has spoken attacked the means test. The right hon. Gentleman the Member for Colne Valley asked why it was in the Bill. He, if anyone, ought to know. It is no doubt in this Bill for the same reason that it was in the 1947 Bill—because the Treasury want it so.
It is the case, as the hon. Member for Cardiff, West said, that the Treasury are winning: we are not. I look forward to the time when this abominable tax will be taken from Measures relating to pensions. Having said that, and that many people are ungrateful to Governments which introduce Measures of this nature, I must confess that there are one or two matters which I wish to raise with the Minister of Education. We have heard a good deal about school teachers. I want to refer to an equally deserving body of people, namely the police whose pensions are dealt with in this Bill.
First, I wish to discuss the question of the police who are affected by the Police (Overseas Service) Act. I wish to know which of the various police affected by it will be assisted under this Bill. There were two kinds of policemen who went to serve under the Police in the Overseas Police Force. There were the non-reversionary police and the reversionary police, the difference being that the reversionary police were seconded from their own forces and allowed to count for pension their service abroad when they returned home.
But the non-reversionary police were senior officers. It was represented to them that they should assist overseas. They were required to resign before they were able to join the overseas force, and they resigned on a proportion of their pension. I am not clear whether the increases will apply to these non-reversionary police who resigned when it was represented to them that they should serve abroad until 1952, and that they should draw the proportion of the pension they have earned together with the salary they were paid in the Control Commission.
2117 Of course, that was an attractive prospect, but I think that these men were harshly treated. In most cases they were not allowed to serve until 1952. They were declared redundant after two years and they had to come back home on the small pension which they had previously earned. In many cases they would still have been serving in their own police force. I am not clear from the Bill whether their pensions will be increased. This is important. Many of the men were fairly senior officers. It is important that they should know whether their pensions will be increased or whether only the pensions of the reversionary men who came back to the police forces will be increased.
I turn to a matter which to many of us who sit for Ulster constituencies is of the greatest importance. I wish to discuss the position of the Royal Irish Constabulary—what is left of them—and their widows. They are also affected by the provisions of this Bill. The Royal Irish Constabulary should need no introduction to this House. I do not think that I am exaggerating when I say that they were an heroic band of men who did their duty by the country who employed them when at times it was not very pleasant and not very easy to do.
When I tell the House that their casualty rate was one in 20 killed and one in 12 wounded, hon. Members will realise that that was probably the highest casualty rate of any force, including the Armed Forces, at that time. But there is a difference. While in 1916, 1917 and 1918 men were being killed, with their comrades in Flanders, their comrades in Flanders left widows who got a pension. The widows of these policemen who were made widows before 1918 got no pension. They never received a penny from the country which employed them.
I hope that this is a matter which it may be possible to remedy under the provisions of Clause 2 of this Bill. I see that the right hon. Gentleman the Member for Colne Valley shakes his head. I have great respect for his view.
§ Mr. Glenvil Hall
I was not really shaking my head in disagreement. My memory is that we thought of this when the 1947 Act was under consideration. All we can do is to add increases. Of course, 2118 the increase has to be the same as it is for other types of pensioners. The real trouble with the Royal Irish Constabulary is the smallness of the initial pension and the fact that many of the widows do not qualify.
§ Mr. Gage
The trouble is that the Police Pensions Act of 1921—the police did not get a pension before that date—gave pensions to the widows of policemen who had become widows after 1918, and it gave gratuities to the widows of policemen who had become widows before 1918. But as the Royal Irish Constabulary were then in the process of being disbanded, the widows of men who were killed before 1918 get nothing, though the widows of those killed in 1919 did get something. I think that has only to be stated for the House to realise the injustice that was done to these men.
Now I come to the second class of widows of the Royal Irish Constabulary, that is, the post-1918 widows, who did, in fact, obtain a pension. I think they are a class for whom something can be done under the Regulations to be made by the Secretary of State, because there is here a most extraordinary anomaly. On the disbandment of the Royal Irish Constabulary, many of these men went into the Royal Ulster Constabulary, because they were asked to do so, because the new force was being formed, and because their knowledge and discipline would be of value to it.
In 1948, when the National Insurance Act was being passed, provision was made for the pensions of widows of policemen to be brought up to 26s. per week at the discretion of the authorities, but the Royal Irish Constabulary were left out of that by an oversight. The result that has come about is this, and I think I can best show it by means of this illustration. Let us assume that two men joined the Royal Irish Constabulary in 1910. In 1922, when the force was disbanded, they joined the Royal Ulster Constabulary. One of these men married between 1910 and 1922; the other did not. After they had both joined the Royal Ulster Constabulary, the second man married, and we will also assume that they both died in 1940, leaving widows, and that they both had 30 years' service—12 years in the Royal Irish Constabulary and 18 years in the Royal Ulster Constabulary.
2119 The widow of the man who married while he was serving in the Royal Ulster Constabulary can have her pension brought up to 26s. per week, while the widow of the man who married while he was serving in the Royal Irish Constabulary cannot do so. Nobody can justify that position, which has come about through one of these extraordinary legislative anomalies, because the basic pension that comes from R.U.C. funds is governed by the later Act of 1949 which was passed in Northern Ireland and is similar to our 1948 Act, and, therefore, the widow is qualified for an increase up to 26s. a week, while the widow of the other man, whose basic pension comes from R.I.C. funds, is not.
When I raised this matter with the right hon. Gentleman the Member for South Shields (Mr. Ede) when he was Home Secretary, he made a very pertinent observation about it. He said that he well understood the ill feeling which would be caused where we had two widows living in the same street, whose husbands had had precisely the same service, one of whom received an increase in her pension, while the other did not. That is an anomaly which might well be remedied under the Regulations to be made in connection with this Bill.
Finally, I want to touch on only one other matter, which is concerned with the pensions of the Royal Irish Constabulary themselves. At the time of the disbanding of this force, by an Act of Parliament passed in this House in 1922, these men were given pensions commensurate with their length of service, but the Bill, as originally drafted, provided that their pensions would be suspended if they took up any Government service or any service which was remunerated by monies provided by Parliament, and the men were so informed.
Many of them would have liked to go into the Civil Service, and, indeed, they were ideal people to be taken into the Civil Service. They thought to themselves, "We cannot take any Government service, or our pensions will be suspended." At the same time, there came a tremendous demand for men to go into the Royal Ulster Constabulary, which was then being formed. It was explained to them that it was their patriotic 2120 duty to do so, and that their knowledge and experience were required.
These men therefore thought, "Well, we are asked to go into the R.U.C., and. if we do not, our pensions will be suspended in any event if we go in for Government service." While they were being asked to do this, many of them were being threatened—indeed, many of them were being murdered—for doing it. In spite of that fact, large numbers of them, to their credit, did join and form the Royal Ulster Constabulary, and their knowledge, ability and discipline were of the highest value.
After they had joined the Royal Ulster Constabulary, the Bill was amended—it did not become law until later—to provide that only those men who joined the police force should have their pensions suspended. The result was that these members of the Royal Irish Constabulary who had disregarded the appeal to do their duty and had gone into Government service, got their pension as well as their salary, and, indeed, such is the irony of the position that some of them, who went into the Civic Guard in Eire, got their pension as well as their salary. Only those men who did what their enemies tried to prevent them doing—because people were shot for doing what hon. Gentlemen in this House thought it was their duty to do—only those men were penalised and had their pensions suspended for the whole of the time they were serving in the Royal Ulster Constabulary.
I have always thought that that was a tremendous hardship. I have always hoped that, in some way, something could be done to assist these people. Unfortunately, I cannot see that this Bill will help them, except to give them the general increase in respect of their pensions. It will not make up to this very deserving body of men the pensions which they have lost all these years and which their fellows who have gone into some other form of employment have obtained.
The Royal Trish Constabulary needs no introduction from me. This force had a very high casualty rate. These men did their duty nobly at a time when it was difficult to do it. They had no memorial, nor do they ask for one. All they ask for is justice for themselves and their widows.
§ 8.9 p.m.
§ Mr. William Ross (Kilmarnock)
The hon. Member for Belfast, South (Mr. Gage) started his speech rather unkindly, I think, with his reference to my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall), who had described this Bill as miserable and niggardly. If there was any implication in the speech which the hon. Member later delivered, it was that something very much worse than that had happened to men of the Royal Ulster Constabulary.
§ Mr. Ross
The whole point is that, in singling out my right hon. Friend, the hon. Gentleman showed remarkable neglect of all the other speeches that have been made in the debate, because my right hon. Friend only said in straightforward terms what was implied in every other speech that has been made, if we ignore one speech which came from the hon. Gentleman sitting beside him. The language he used is not nearly so strong as that of the letters I have been receiving from the people in my constituency who are affected by this Bill. I do not think there is any section of the population for whom hon. Members have more sympathy than these people who have almost frantically been trying to cope with the cost of living during the postwar years.
I think we should appreciate the difficulty of the task of the Treasury. It was partly touched on by certain hon. Members who have spoken in this debate. Here we have an all-embracing Bill covering public servants, postmen. Post Office workers, policemen, teachers and firemen. We are trying in this one Bill to cover many different superannuation schemes. Some of them are contributory and some non-contributory, and those which are contributory are not all contributory at the same rate. Again, in each scheme we have the further division of categories of people whose pensions are based upon entirely different rates because of the change in salaries throughout the years.
While appreciating the difficulties that the Treasury were in, and while I am grateful that they have recognised the need at this time for making some 2122 increase, I cannot be as generous in my praise of the Bill as was the hon. Lady the Member for Tynemouth (Miss Ward), who warmly welcomed it. I must frankly confess my extreme dissatisfaction and disappointment that, while recognising the need for the Bill, the Government have given us a Bill of this nature and that in it they have been so niggardly and so mean.
In introducing the Bill this afternoon, the Financial Secretary said that it was to take account of the change in the value of money, in other words, that it was a matter of hardship caused by the rise in the cost of living. I think that in itself shows a certain kind of pessimism and' that the Government have given up all hope of making the dramatic gesture of bringing down the cost of living, and have instead brought in this Bill.
The point is that the 1944 and the 1947 Acts were to do the same thing, and, more or less, they did, because on average the 1947 Act increased pensions by about 20 per cent., which was equivalent to the rise in the cost of living. But from 1947 to the present time the cost of living has gone up by about 35 per cent., and no one is going to suggest that the scale of pension increases suggested in the Bill, even without the means test, will compensate for the rise in the cost of living. I really think that the Treasury and the Government should be ashamed of themselves for coming along with this Bill and for suggesting that it will meet this special hardship.
The sections of the population which the Bill is designed to help do not always ventilate their grievances, and in many cases their very reticence discloses the hardship which they suffer. I think it is our duty to put their case as fairly as we can. We had no indication from the Financial Secretary today on what the scale was based. It was all very neat and tidy, and there was a progressive diminution according to the formula of either £5 or £4, according to whether there was a dependant.
What is the reason behind it? The formula certainly cannot be based on salary increases over the years. It is difficult to determine why there should be the dividing line of 1st April, 1948. The suggestion that £6 is adequate compensation for the married pensioner who has at least one dependant and who started 2123 drawing his pension in March of this year, is entirely disproved by the figures which the Chancellor gave. We must remember that the pensioner with one dependant is himself going to contribute 3s. a week to the Treasury through the loss of food subsidies. That comes to nearly £7 16s. a year. Then the Financial Secretary comes along and says that such people are going to get £6 subject to a means test. The thing is fantastic.
We have heard something about teachers' pensions. I have a fair knowledge of their position. They are people who contribute 5 per cent. of their salary in order, presumably, to get some effective protection against economic stress in retirement, and even to get something beyond a minimum subsistence. The position today is that many of these people are struggling to exist. According to the figures in the Report on Education for 1949, there are in Scotland alone over 2,000 male pensioners with less than £224 a year and 5,600 women pensioners with an average of £134 a year.
While that is bad enough when we consider that these pensions are the result of 40 years' contributions and service, the needs of that smaller section of the teaching profession who have had to retire owing to a breakdown in health are even more urgent. There are 137 men in this last category whose average pension is £126 a year and 836 women who are trying to exist on a pension averaging £91 a year. Can we wonder, in view of these conditions, that there are no young men or women today rushing to get into the teaching profession? Those thinking of entering the teaching profession are bound to be adversely affected by such considerations.
I am very glad that the Minister of Education is present, and I know that she is probably very sympathetic about this matter. I want her to use all the influence she has—and she must have some—with the Treasury to consider the effect of the plight of those of the teaching profession who have been forced to retire on such meagre pensions owing to ill health upon recruitment. The very fact that under the 1947 Act 78 per cent. of the retired teachers received the increase by right of hardship, subject to 2124 a means test, shows that difficulty of the position.
Why has 1st April, 1948, been chosen as a sort of dividing line? How does that affect the old guard of teachers referred to by my hon. Friend the Member for Cardiff, West (Mr. G. Thomas)? They are the teachers who retired during and just after the war, the teachers whose pensionable salary was calculated according to the old rates of pay before we had the Teviot scale in Scotland and the new Burnham scale in England.
The maximum pension which women could obtain in those days was £150 a year, and that was obtainable only by those who were working in cities in Scotland and in the industrial counties. Those in the scattered rural areas usually retired with a pension of about £110 a year. The point is that they did not receive any of the benefit of the new salary scales. In their teaching life of 40 years they had the worst conditions that the schools of this country have ever known. We grouse today about school buildings and the size of classes, but they are as nothing compared with what those people had to endure.
Yet those people are lumped together with the people who retired in 1948 and who will have had three years on the new salary scale which will come into the calculation of the five-year period prior to retirement. Those people who retired earlier are bound to be about 72 or 73 years of age at least. They have had the rawest of raw deals all their lives in the matter of salary; and as a result of the way in which this Bill is framed they will have to pay the penalty now to the end of their lives. While I consider that the scales laid down in this Bill are 100 per cent. inadequate even to come anywhere near to parity with the cost of living, the people who retired before 1945 and between 1945 and 1947 are even more unjustly dealt with by this drawing of a dividing line at 1st April, 1948.
I hope that when we come to the Committee stage the Treasury will not be as obdurate as we have known them to be in the past. I do not know whether the smile on the face of the Financial Secretary is one which should lead me to hope for a change of heart or whether it is a smile which should lead me to 2125 despair. If there is no change of heart, it will certainly not be for the want of effort on the part of those on this side of the House. Judging by the speeches which have been made from this side, I am hopeful that the joint efforts of the House will improve the situation of all who are affected by this Bill and will bring a greater measure of social well-being and comfort to those older pensioners, whether they be teachers or Post Office workers, who make up those sections of the community who have had the worst of it on fixed pensions during the last 10 years.
§ 8.24 p.m.
§ Mr. Norman Cole (Bedfordshire, South)
We should welcome the introduction of this Bill if only for the reason that it is five years since we have had a Bill dealing with this subject. It was high time that we had such a Measure to make up the leeway of the intervening years.
I should like to touch upon one point about pensions which, to my knowledge, has not yet been referred to in this debate. There is envisaged in every salary paid to every pensionable employee the fact that a condition of that salary is the prospect of and the contract for a pension on retirement. As hon. Members know, that is a condition which is taken into account very much by those who put their sons and daughters into industry as opposed to local government or the Civil Service. I should like to draw the Government's attention to the need to maintain the quality of the contract and of the pension so as to ensure that we have a flow of people into local government and the Civil Service.
In view of that contract which is implicit in pensionable service, I regret very much that it has not been possible to make larger increases in these pensions. I realise that there is a limited amount of money available for this purpose, but I ask those responsible for these payments whether it is not possible to grant increases in the scale more commensurate with the change in conditions during the past five years.
By the same token, I regret that it has been necessary to perpetuate the principle of the means test laid down in the 1947 Act. If it is not possible to increase the scales laid down in the Schedule to this Bill, at least some greater disregard might 2126 be allowed when computing the amount on which the pension is to be based. In many cases the amount of disregard allowed in this Bill might mean a hardship to those concerned. I think that the cost to the State would not be considerable if that disregard were increased to something more commensurate with present conditions.
I endorse what has been said from the other side of the House about the operative date of this Bill. I, too, believe that it might be put back to 1st April this year rather than put forward to 1st October. Five years have gone by since the last increases were put on the Statute Book and this small concession of a few months at a small cost to the Treasury might be allowed in the course of the passage of this Bill.
I wish the Bill well. I have many pensioners in my constituency who will be affected by it and who will welcome the fact that, after this long period of five years, this Bill has been introduced. I hope that before it is passed into law it will be possible to add some of the improvements suggested by hon. Members in the course of this debate and so make the lot of the pensioners even better than is envisaged in this Bill.
§ 8.30 p.m.
§ Mr. A. Edward Davies (Stoke-on-Trent, North)
I wish to endorse the plea of the hon. Member for Bedfordshire, South (Mr. Cole), and to ask whether it is not possible to give the limited benefit of this Bill to pensioners before 1st October. These people have been waiting a very long time; they are having a very thin time, and have been, as my hon. Friend the Member for Kilmarnock (Mr. Ross) showed us, for a number of years. He referred to pensions of £91 and £110, and it does not take much imagination to see what a time they must be having in these difficult days in trying to make ends meet. Also, they are not paid very frequently; they are paid quarterly, and that does not help matters.
Why cannot the date of 1st October be improved upon? In introducing the Bill the Financial Secretary said it was because of the complicated nature of the operation; that some consideration had been given to this but that it was not found to be a practical proposition to do it earlier. Recently we have had before 2127 the House a number of equally complicated Measures, and some even more complicated. For example, a short time ago we had the National Assistance Draft Regulations, and we were glad to know that it was possible to introduce these new scales from 16th June. It was only a few weeks ago when we had the first knowledge of the Government's intentions.
I do not advance these instances to complain that they ought to have been delayed until October, but to suggest that they must have been very complicated operations, and I hope that serious attention will be given to this matter. If it is not possible to pay out before 1st October, cannot there be some backdating of the Measure to give credit to these good folk so that they will have the money a bit later in the year?
The Financial Secretary said that, apart from the categories enumerated in the Bill—the civil servants, local government officers, policemen and firemen—there were two other categories who would benefit by its provisions. He referred to the staffs of the voluntary hospitals and employees of the friendly and provident societies. My hon. Friend the Member for Carlisle (Mr. Hargreaves) has drawn attention to the difficulty of another well-deserving section of the community. Unfortunately, in these times of rising prices, it is the person with a small annuity who catches the cold, who is suffering worst. We know from our knowledge of the railway industry—and it may be so in other industries—of men and women who before the war retired on a small annuity of, say, £120 a year or a little bit more.
§ Mr. Davies
And some on less. They are having a very thin time indeed, because none of these good folk qualifies for any statutory benefit. They joined the service many years ago; because there was a pension at the end of it, it was an attractive occupation, and I presume they took that into account when they joined the service; they felt it was some provision against the time when they would have to stop working.
In the event, since 1937 and 1938 their income has been very severely restricted 2128 and inadequate to their needs. Assume that a man gets a pension of £120—some, we are told, get less—which is 46s. a week. The other day we had before the House the National Assistance Draft Regulations—and we were glad that they offered some improvement—which give a man and his wife 59s. a week and a rent allowance in addition.
Here is a contributory scheme for people who have served the public well, who get £120 a year, or 46s. a week, but because they were in a certain occupation they were exempted from the requirement to join a statutory scheme of insurance. Therefore, they have no call upon any statutory benefit, and their only alternative is to go to the National Assistance Board. That must be done by anybody getting less than 59s. a week with rent to pay, and perhaps sickness in the house.
I have in mind an old colleague of mine who had to work all his life on the railway, and who had an invalid wife requiring special sustenance and treatment. In the course of time he became almost blind, but he had to subsist on his 46s. a week, with no right to a statutory benefit; and I daresay he was too proud to go to the National Assistance Board. As my hon. Friend the Member for Kilmarnock so rightly said, these good folk are reticent about their conditions. We realise the problems of the Ministry of Transport in this case.
The Financial Secretary, while making some provisions for the folk in the voluntary hospitals and the friendly and provident societies, distinguished them from what he called the people in the employment of the trading services, where they are on a profit and loss basis. I would say that there are a limited number of people here involved, who have every right, as I have demonstrated, to go to the National Assistance Board and to ask to be treated equally well as the unfortunate folk who have no other income.
If these people find themselves in the position of having belonged to a private section of industry which has been taken over by the State in the last few years and they are thus deprived of going to their erstwhile employers, they have some claim upon us or upon somebody for consideration, and I want to know where the Financial Secretary draws a line in these matters.
2129 What is the difference between the man or woman who has served in a public industry and finds himself or herself in that position, for the reasons I have given, and someone in another service whom he is prepared to accept? The fact is that the whole subject of superannuation, pensions, contributions, National Assistance and insurance wants examination and some daylight let into it. One hon. Member described it the other day as a Ruritanian situation. I hope that, although the hon. Gentleman may not be able to meet us in this matter, he has listened carefully to what we have said and that he will use his influence with the Treasury and his colleagues in the Government to give some consideration to the unfortunate people to whom I have referred.
§ 8.37 p.m.
§ Mr. Charles Doughty (Surrey, East)
I do not want to detain the House, but I should like to welcome this Bill as a step in the right direction. While listening to the hon. Gentleman the Member for Kilmarnock (Mr. Ross), who is no longer in his place, I had to read the Bill again to make certain that we were increasing the pensions and not decreasing them. We are, in fact, increasing them on behalf of a very deserving section of the community, namely, the older class of pensioners.
In many cases, the younger pensioners who have just qualified for pensions, apart from having a larger pension, are able to supplement them by obtaining employment. We always like to do something which we are able to do in life, and this Bill is no exception to that general rule. I think that the hon. Member for Belfast, South (Mr. Gage) said that those who bring in Bills for increases of this kind get no gratitude and, having listened to a large part of this debate, I am inclined to agree with that remark.
It is in fact an increase in the right direction and, in view of the very serious financial situation of the country—and as hon. Members have said that this is not to be a political debate, I will not deal with that matter further—it is clearly not possible to do more than has been done at the present moment. It is important, however, that these pensioners, small as they will find the increases to be, should notice that the cost of living, which so vitally affects this class of person, is 2130 decreasing so rapidly that whereas they saw until recently their pensions becoming rapidly less and less, now the diminution is becoming much slower. So we welcome this Bill very much indeed.
There are, however, certain matters on which I should like to ask the Financial Secretary one or two questions. I agree with the hon. Member for Reigate (Mr. Vaughan-Morgan) who said that this Clause, which reduces the amount of increase for people with an income above a certain level, is undesirable because it discourages thrift, and the more we discourage thrift the more we are discouraging one of the most sound of English virtues—saving for one's old age. If people save and then find they are penalised because of it, we shall lose one of our strongest attributes. The Government have already been asked what it would cost to omit the provision. If the sum is so small that this can be done we shall do a great deal of good by encouraging thrift. I hope it will be done.
I endorse what has been said about railway workers who retired in days when they were working for companies whose names we still treat with affection though they are no longer with us. I have written to the Financial Secretary about this on one or two occasions, and the answer is always "We have no control over the Transport Commission." If the Transport Commission has ears—I sometimes doubt that it has—I ask it to hear the words of this House.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
What about the engineers, the pottery workers and the cotton workers?
§ Mr. Doughty
They are not in the Transport Commission and so I cannot ask the Transport Commission to listen to their complaints, though I have no doubt they are justified. The men whose employers have ceased to exist are not subject to the advantages of the Bill because they were not public servants in the ordinary sense of the term, and they are left between the devil and the deep blue sea. I leave the Transport Commission to decide which it is, and urge it to do what it can for the old faithful employees of the former railway companies.
The old L.C.C. hospital staffs and other hospital staffs are covered by the Bill and will, no doubt, welcome this as much as do others who are finding life difficult in 2131 their old age. I hope that the provisions of the Bill will to some extent relieve them. I welcome the Bill and shall support it.
§ 8.42 p.m.
§ Mr. George Wigg (Dudley)
The hon. Member for Surrey, East (Mr. Doughty) stumbled over a cliché when he told the House that the Bill was an increase in the right direction. That was not quite what he meant, unless he will tell us when an increase can go in the wrong direction.
§ Mr. Doughty
I can tell the hon. Gentleman the difference between plus and minus. A minus increase goes in the wrong direction but a plus increase, like this one, goes in the right direction.
§ Mr. Wigg
The hon. Gentleman's explanation is about as clear as his earlier statement.
Hon. Gentlemen on both sides of the House have dwelt on categories of workers who have had the advantage of remaining to the end of their working lives in relatively lucrative employment and have established homes and settled down in the localities where they were working. The Bill deals with another category which has not had that advantage. The penultimate paragraph of the Explanatory Memorandum says:As with the existing Pensions (Increase) Acts, similar increases will be granted by Prerogative Instruments outside the Bill to former members of the Forces. The cost in their case is estimated at £2 million per annum, but the full amount will not become payable immediately, because increase is not normally payable until the pensioner reaches the age of 60.I shall soon be out of order if I say much about members of the Forces. Yet it is clear that the principles laid down in the Bill govern not only the pensioners mentioned in the First Schedule but also increases which former members of the Armed Forces will not receive. The case of former members of the Forces can never be put in the House. There is no Bill for them, and the Prerogative is not tabled in this House, so that we never get an opportunity, except on the occasion when we debate annually the Service Estimates, to raise the many anomalies which exist in Service pensions and which are very great indeed.
2132 I ought to declare my own interest, because it is just conceivable that I might possibly benefit by this provision. I am not speaking on my own behalf, but on behalf of the many thousands of former members of the Forces, who, when they joined the Forces, thought that at the end of their working life they were going to get a square deal, just as the teachers, the postmen and the policemen thought. Yet when the time came they found that they were getting anything but a square deal, and they could not do anything about it.
The results did not end there. One of the reasons for the lack of recruits to the Armed Forces, and also of teachers and of those other categories mentioned in the First Schedule, is that Governments in the past—and, let it be said, Conservative Governments for the most part—have not thought clearly on this. These people depended on the honesty of previous Governments to get a square deal and they have not got it.
I do not believe that this Government will tackle the problem, but in the not-far-distant future once again we shall have a Labour Government. We shall not tackle this problem in any piecemeal fashion; we shall have a Ministry of Pensions which will bring within its ambit all the pensions, not only those payable under the First Schedule but those payable to the Armed Forces and every branch of the public service, so that the whole problem can be looked at. We shall realise that what we are granting is not a pension, but a deferred payment.
The young man who joined the Armed Forces, the police, the teaching profession or the fire service anticipated a square deal, even though the day when he would get it seemed a long way ahead. He anticipated that if he gave loyal, honest and honourable service, then at the end of the day he or his dependants would be looked after. What do we find? Once again the Government have come to the House, having aroused very great hopes of the increases which they proposed to give, and once again they have produced the rather pitiable increases which are embodied in this Bill.
The disappointment that is felt does not merely end in a protest by those who consider themselves robbed. The effect permeates the whole of the public service, because many men, advising their sons 2133 and daughters as to their future career, will tell them, "Look what has happened to us. Make sure you avoid the same kind of treatment." I hope, therefore—and here I address my remarks to my hon. Friends on this side of the House—that my hon. Friends will join with me in the not-too-distant future when we can put pressure on a Labour Government in order to right a wrong which has been perpetrated during the last 40 or 50 years.
§ 8.48 p.m.
§ Mr. Douglas Houghton (Sowerby)
The remarks made by my hon. Friend the Member for Dudley (Mr. Wigg) are doubly welcome, because he has referred to an aspect of this Bill which has not been mentioned very much in the course of our debate today. We miss the contributions by many hon. Members on both sides of the House which we are accustomed to hear when matters affecting the Armed Forces are under consideration. I have sat through all the speeches, and I am sure hon. Members will agree that we have had a thorough, serious, thoughtful, constructive but critical debate.
This Bill has been welcomed from both sides of the House, but not a single hon. Member has given it unqualified approval. I thought, judging by the early part of his speech, that the hon. Member for Surrey, East (Mr. Doughty) was going to turn completely averse and associate himself with the observations of my own Member, the hon. Member for Reigate (Mr. Vaughan-Morgan), who criticised one of the features of this Bill, namely, that part where it lays down that a pensioner's income is to be disregarded in arriving at his total income for the purposes of the overriding conditions of this Bill. Try as he did, without having said a single word about the Bill, he failed miserably in the end.
I am sure that the right hon. Lady and the Financial Secretary will both take note of what has been said in this debate. I wish that the Financial Resolution were not drawn in terms which, if left unaltered, will preclude the alterations which have been pressed upon the Financial Secretary from both sides of the House. We shall come to that point shortly. Before coming to the contents of the Bill, I want to address a remark or two especially to the Financial Secretary.
2134 Is legislation the most suitable and satisfactory way of dealing with the pensions of State servants? This is a serious point, which was put by my hon. Friend the Member for Kilmarnock (Mr. Ross), when he described the comprehensive and complex nature of the Bill, with which we are trying to put an umbrella over a very wide variety of superannuation schemes in the public services. When the wages and salaries of public servants are under discussion they do not come before this House. The last thing this House would wish is to become an appeal tribunal or arbitration court dealing with matters which it is much better to leave to negotiation and agreement between workers and employers.
Recently a wage settlement was reached in the Civil Service which cost the Exchequer more than double the whole of the annual pension bill for the Civil Service, yet that was dealt with by negotiation in the ordinary way. We are discussing a very much smaller amount of public expenditure now, merely because it happens to be a superannuation and pensions matter. This is the third superannuation change we have had since the war, solely for maintaining the value of superannuation payments.
This matter is outside the scope of the negotiating machinery of the Civil Service National Whitley Council, of which, I ought to disclose, I have long been a member. It is outside the scope of the Burnham Committee and of the Whitley Councils for the local government service. We cannot arbitrate in the matter of superannuation and pensions. However grievous the discontent may be with the level of superannuation, there is no tribunal to which the vast army of public servants can go except this House.
This remedy depends upon the expedients of the political situation, the Parliamentary situation, whether there is going to be a general election, whether there may be a general election, or what the public will say if there is one. The minds of hon. Gentlemen have to be brought to bear upon a matter which, basically and fundamentally, is one of conditions of service, and should be negotiated between the workers and their employers. For this purpose, this House is acting today as the employer, in the name of the Crown, of the public services. We are now, so to speak, a meeting of shareholders, with the directors sitting on the 2135 Front Bench and the leaders of the commute of shareholders on the Front Bench opposite them.
We are debating matters which are part and parcel of the conditions of this great public service to which this House frequently and deservedly pays tribute. I suggest to the hon. Gentleman that he should consult with his right hon. Friend the Chancellor to see whether there is a better way of doing this. He should consider whether an enabling Measure would permit of regulations to be made by the Treasury or by the appropriate authority after proper discussion and negotiation with the workers concerned.
§ Mr. Houghton
No, I am putting it to the Treasury now. It is not within the scope of the constitution of the Staff Side of the National Whitley Council to suggest to the Government or to this House that it should surrender its legislative control of the superannuation of the Civil Service. It might be regarded as presumptuous, if not impertinent. Since, however, I am not inhibited in either direction, I would say that it is a matter which should receive the consideration of Her Majesty's Government.
The hon. and gallant Member for Horncastle (Commander Maitland), my hon. Friend the Member for Waithamstow, East (Mr. Wallace) and several other hon. Members have referred to superannuation in the public service as being an important factor in its conditions and in the inducement which is offered to candidates to enter Her Majesty's service. Part of the conditions of service which are held out as an attraction to those who are considering entering the Civil Service, the local government service and the teaching profession is that at the end of a long and continuous period of service there will be a pension which, calculated on an accepted basis, combining length of service with pay at its conclusion, will give reasonable expectation of a pension providing a standard of life suitable to the position and length of service of the officer concerned.
There is no doubt that the failure of present superannuation arrangements to 2136 give that confidence to intending candidates is responsible for a considerable reluctance to enter Her Majesty's Civil Service, the teaching profession, local government service and the Armed Forces of the Crown at the present time. There is undoubtedly an all round slump in recruitment to these posts, and it is one aspect of conditions of service which should receive the close attention of Her Majesty's Government.
§ Commander Maitland
What the hon. Gentleman is saying is most interesting. Would he distinguish between contributory pensions and non-contributory pensions, because they have to be tackled from a different angle. How much of his remarks apply to which?
§ Mr. Houghton
There are many different considerations arising as between a contributory and a non-contributory pension. So far as the non-contributory pension is concerned, although many people think that those who are in non-contributory pension schemes do not pay for their pensions, the truth is that they do; because as soon as they negotiate with the Treasury or go before an arbitration tribunal, the value of the pension is taken into account. As my hon. Friend the Member for Aberavon (Mr. Cove) said, that pension is deferred pay and, when it comes to be paid, retired public servants expect it to have a currency in purchasing power which will not leave them considerably worse off than they expected to be, and as they were assured they would be by the conditions laid down at the time of entry.
What are the principles underlying our approach to this Bill? The hon. Member for Wolverhampton, South-West (Mr. Powell) invited us on these benches to "come clean." He said that we must be frank about the question as to whether we would spread the resources over a wider field or give relief to the needy cases. Our approach—my approach, at all events—to this matter is: What is an honourable obligation as between employer and employee when the time of retirement comes?
If the hon. Member is suggesting that in this gigantic enterprise of The United Kingdom Limited we have only a certain sum of money that we can disperse on pensions, and he is asking us to say to 2137 whom that restricted amount should go, then clearly on these benches we would say without hesitation that it must go to those most in need. That would be the principle underlying our approach to this matter.
§ Mr. Powell
I take it, then, that the hon. Member draws the conclusion of, and is in favour of, what is called the means test in this case?
§ Mr. Houghton
Not at all. What I am about to say is that I do not accept the proposition that there is only xpounds that can be devoted to the pensions under the Bill.
It is always a complex matter, from which there can be many opinions on the same question: Can the country afford it? If I am asked to dwell upon whether the country can afford more than the expenditure which is provided for in the Bill, I should have to roam over the whole economic situation and especially examine very critically indeed the financial policy of the Government. I should ask, for instance, whether it was necessary to distribute to people with high incomes——
Mr. Deputy-Speaker (Mr. Hopkin Morris)
I hope that the hon. Member will not be tempted to pursue that.
§ Mr. Houghton
That just shows, Mr. Deputy-Speaker, how irrelevant was the observation by the hon. Member in the first instance. I pass from his irrelevant comment and say that the State should find the amount of money to provide a reasonable basis for compensation for loss of purchasing power of the pensions of its own employees.
The Financial Secretary referred to the higher benefit which is coming under the Bill than that mentioned by his right hon. Friend the Chancellor of the Exchequer in his Budget speech. But we on these benches, while grateful for the small, meagre increase beyond the amount mentioned in the Budget speech of the right hon. Gentleman, still do not agree that this £26 is enough.
In the speech of the then Chancellor of the Exchequer in introducing the Pensions (Increase) Bill in 1944, Sir John Anderson, now Lord Waverley, defined the principles upon which His Majesty's Government were then approaching this problem. He said that it was 2138to provide increases for the lower ranges of pensions, in order, so far as may be practicable, to mitigate really severe hardship.As against that statement of principle, however, there was another which was made by Mr. Pethick-Lawrence, now Lord Pethick-Lawrence, who on the Second Reading of the Bill said:I am in agreement with the Chancellor of the Exchequer that legalistically interpreted, the public pensioner has no precise right to any increase in his pension. The strict law of his contract has been kept, but the fact is that underlying all contracts for payment at some future date there is an assumption, unwritten and unspecified, but nevertheless implied. That is the stability of the purchasing power of money. Unless this is substantially maintained all time-contracts are meaningless."—[OFFICIAL REPORT, 3rd March, 1944; Vol. 397, c. 1761, 1777.]We have to approach this matter combining three principles: the principle of the reasonable obligation of an employer to his retired servants who have given long and faithful service to him; the principle of alleviating the severest hardship more liberally, perhaps, than the hardship which is not so serious; and thirdly, the principle that even over a wide range of pensions benefits, there should be some compensation for the fall in the purchasing power of money, even though really grievous hardship is not present.
After all, as the Prime Minister said a few days ago, quoting, I think, the late Earl Baldwin about the many-sidedness of truth, we would agree that hardship is of great variety and of varying degrees of depth. Hardship is relative. There is no doubt that some pensioners, although probably outside the scope of this Bill, are suffering considerable hardship because their standard of life has collapsed in the present economic situation. They are not enjoying the fruits of their retirement which they understood to be part of the expectation of their contract of service.
Is the amount enough? No, Sir, it is not. Why is it not enough? It does not compensate for the rise in the cost of living since the last pension increase in 1947. The cost of living has risen 35 per cent. since then and the maximum increase that this Bill provides is an increase of less than 24 per cent., tapering down at the £530 point to 3.77 per cent., and nothing after that.
The Financial Secretary said that this Bill brought in categories of people who were excluded from the previous Act, 2139 but the Bill also excludes from benefit under this Measure people who received a benefit in the 1944 and 1947 Acts. I refer to the special alternative, to the hardship scheme contained in Section 2 of the 1944 Act and in Section 3 (3) of the 1947 Act. There there was a special class of citizens for whom a percentage increase in their basic pension was provided for on both occasions without a means test and with a ceiling much higher than that imposed for the other beneficiaries under previous Acts.
The Government on this occasion have left that category of civil servants outside any further benefit under the present Bill. The hon. Member for Tynemouth (Miss Ward) followed her customary debating tactics of first striking a blow at those of us on these benches and then, while we were wondering what had happened to us, striking a blow at her Front Bench.
§ Mr. Houghton
But on this occasion the hon. Lady was more severe on these benches than on hon. Members opposite.
§ Mr. Houghton
In the course of her remarks the hon. Lady asked a question: "The Treasury, are they human?" I suppose I ought to know. I have had 30 years close contact with them, and I can assure the Financial Secretary that when he has had as long as I have in dealings with the Treasury there will be much less spring in his step than there is now.
§ Mr. Houghton
The hon. Gentleman has no idea how, comparatively speaking, my feet drag compared with his. My first contact with the Treasury was when Sir Russell Scott was Controller of Establishments. He confessed, some hon. Members may remember, to being an inverted Micawber, merely waiting for something to turn down. He bequeathed that unenviable reputation to all his successors. I say to the hon. Lady, in answer to her question, the Treasury have been much more human in the last six years of the Labour Government than I have ever known them before. They have certainly not been allowed to play their customary tricks on the public service 2140 under the Labour Government as they used to previously.
§ Mr. Houghton
If the hon. Lady is asking me why the Government are doing something now, I will say that they are doing something now in advance of the further rise in the cost of living which their own policy makes inevitable; and they are anxious to give the increases while they can give as little as possible. That really is the principle underlying the whole approach of Her Majesty's Government to improvements in the social services, the National Assistance scales and the National Insurance benefits, as well as the pension increases under this Bill. We say therefore that the amount of the pension should be substantially increased, and we look for the opportunity of doing that during the Committee stage.
The next point is whether the limits of income are right in principle or fair in the incidence proposed under this Bill. I agree with what a number of hon. Members said about the suitability of retaining this feature of the Bill at all. But it is in the Money Resolution, and obvious difficulties lie ahead. Nothing is resented more deeply in the public service than the imposition of a means test—not a needs test, but a means test—which has sole regard to their total income without any regard for their needs, and which imposes an overriding limit on the benefit they can get under this Bill.
It is no use hon. Gentlemen opposite saying, "Ah, but it was in the 1944 Act; it was in the 1947 Act." Whenever we suggest a change or an improvement, hon. Gentlemen opposite are tempted to say. "You did not change it," or. "It was in your Bill," or. "You did it when you were in office." But are hon. Gentlemen finding great satisfaction in being able to make that kind of reproach? Their own actions should be beyond reproach, because our turn is coming, when we probably shall get more satisfaction than they out of reproaches for the failure of the present Government to do the right thing. And, as my hon. Friend the Member for Aberavon said, virtue in their own right——
§ Mr. Houghton
In my humble opinion the best interests of the nation and the Labour Government are synonymous terms.
The overriding limit of income should go, and I think also that it follows that with it would be removed this vexatious question of the disregard of the first £52 of income. But if this objectionable feature of the Bill is retained—which is a humiliation to many thousands of public servants, who feel this is not the treatment to which they should be subjected by the Government and the country—surely the disregard of the first £52 of other income should be increased. It has been increased in other directions, and there is every justification for greater latitude in the provisions of this Bill.
There are two other points. One is the extension of the time scope of the proposals. That is a term invented by the Treasury—they should never be allowed to utter anything without it being vetted by Sir Ernest Gower. They describe the Second Schedule of the Bill as an extension of the time scope of the provisions of the Bill; that is to say, it allows for a modified increase to be given where the pension has begun on a date later than 1st April, 1948.
I quite appreciate the principle underlying this downward escalator approach. Whether they are the right amounts in the right time intervals needs to be more thoroughly examined when we come to the Committee stage. But I think that in principle one must accept some justification for reducing the pension increase in most cases where retirement has been so recent as to enable the initial pension to be calculated on the higher salary level. I express no opinion whether the incidence is right and fair, pending further examination.
Also, there is the question of the date of operation. Why should it be 1st October, 1952? Is this related to the increases which are being given in National Insurance benefits? If so, I should like to point out that the National Insurance benefits were increased for the bulk of retirement and widows' pensions 2142 last October. If there is to be any relationship between those two that factor must be borne in mind. If, of course, it is merely for administrative convenience, I suggest that some retrospection is justified on the facts of the case, and it ought to be given. It was given on two previous occasions. There are no insuperable administrative difficulties now which make it impossible to give some degree of back-dating to the provisions of this Bill.
I admit that the great virtue in the mind of the Financial Secretary of the amount of £26 a year is that it makes the arithmetic so much easier—it is exactly 10s. a week. I am grateful to the hon. Gentleman for doing that sum loudly for the benefit of all the illiterates in the House. It is exactly 10s. a week, but the Treasury which can manufacture the Excess Profits Levy can surely cope with some of the vulgar fractions and decimals which may be involved in dealing with a pension increase which is not of quite such a tidy amount.
One of the vices of the Treasury is their addiction to nice round figures, usually on the low side—kept on the low side because they are nice and round. They are anxious not to have them higher if they become awkward and square or rectangular or triangular, or if they present some other geometrical inconvenience.
I hope that consideration can be given to this matter. This Bill is all right as far as it goes, but it does not go anything like far enough. There are some features which should now be eradicated from our pension law. They are resented. They inflict humiliation on public servants of long service and faithful devotion to the State. They are no longer justified in the light of present conditions. The amount given falls below the barest increase necessary at the lower end of the pension scale to meet the increased cost of living. It bears no relation to the increase in wages which has taken place since 1947.
The pensioners of the State are not a pressure group. They have no big trade unions to knock at the door loudly and consistently and go to arbitration or take other courses open to trade unions in the course of their business. They exert little or no pressure upon the House. They do not importune hon. 2143 Members. They wait patiently outside and hope that honour and decency will prevail in this House and that we will see that this large number of retired public servants are given justice and a square deal at the hands of hon. and right hon. Gentlemen on both sides of the House.
We must urge upon Her Majesty's Government, in the name of hon. Gentlement opposite, quite apart from hon. Gentlemen on this side of the House, that it is necessary to improve this Bill before it reaches the Statute Book. Otherwise it will be another blot on the records of this House for not having treated its retired public servants as fairly and honourably as I am sure that the public at large would wish us to do.
§ 9.20 p.m.
§ The Minister of Education (Miss Florence Horsbrugh)
The hon. Member for Sowerby (Mr. Houghton) told us a great deal about the difficulties of dealing with the Treasury. He said how inhuman it was. I am sure, however, that every hon. and right hon. Member has realised that, in spite of the inhuman treatment and all the other difficulties, the hon. Gentleman could still put forward with fulness and vigour all, or nearly all, that he felt about the Treasury and a great deal about what he felt on this Bill and of the pensioners.
I think that, when we look back on this debate—and I think we shall come to the same conclusion on reading it in HANSARD tomorrow—we shall find that the Bill has been welcomed by practically every hon. Member who has spoken, though almost every one has said that it should have gone further. I confess that that is exactly what I thought would be said. Of course, it is quite natural that it should be said, because it is quite clear that, if it were possible to pay out more for pensioners from the Exchequer and from local government funds, we would all like to do it.
In some of the speeches we have heard, the suggestion has been made that we could improve our pension law in relation to the different Acts which have been passed. It has been pointed out by several hon. Members that various anomalies could be put right. But this Bill does not deal with the various anomalies and does not try to deal with 2144 all the various Pensions Acts. It really does quite simply one thing; it tries to arrange the best way of giving a supplement to State pensioners and local government pensioners who, having retired some years ago on a lower salary, are not receiving anything like the same pension as those who retired on the higher salaries later. That is the aim of the Bill.
I know that a good many hon. and right hon. Gentlemen have pointed out that they consider that the supplement which is suggested in this Bill does not deal with the whole of the rise in the cost of living. They have said, "After all, this is a contract between the Government and their employees—a contract that there will be a pension of a certain amount—and it is up to the Government to see that, when that pension is paid, and all the time it is being enjoyed, the value of the pension shall be the same." That has been the argument of a good many hon. Members who have also said that, after all, a pension is simply deferred pay.
Both these points were answered by hon. Members who spoke from this side of the House, and particularly by the hon. Member for Barry (Mr. Gower), who pointed out that, if the pay had not been deferred but had been invested, the beneficiaries would certainly find now that, because of the fall in the value of money, they were not able to buy as much as they did before. I think we must face the situation that no Government could at any time say that they were absolutely bound to see that any pension paid by them would have exactly the same value 10, 20 or even 30 years later and that they felt themselves bound, if there was any fall in the value of money, to make it up. That is the first fact that we have to face.
Having faced that fact, we are trying in this way to see whether, when the value of money has fallen and when there is real hardship, we can at any rate give a supplement to the pensioner so as to decrease that hardship; but we are not saying—and my hon. Friend, in introducing the Bill, made this very clear—that all pensioners of the State must have their full value of pension without any regard to a fall in the value of money, and they alone in this country. We would all agree that it would not be 2145 fair, because it really means that would be saying to the taxpayers and ratepayers of this country that the difficulties caused by the fall in the value of money are not to fall on State pensioners but that we have to get rid of their difficulties at the expense of the taxpayers and ratepayers.
We all know that that sort of thing is quite impossible. The whole community is bearing the burden of the fall in the value of money today. We are trying to decrease the hardship of these pensioners in the lower pension groups because of the hardship which we know they are suffering, and this scheme is merely giving a supplement to those people.
I know it may be said that we should have gone further. Indeed, right hon. and hon. Members have asked why we did not go further. They have said, "We welcome the Bill, but we would rather have more than £26; we would rather have no income level, and rather have more than the £52. Push them all up." The answer, quite clearly, is that what we are trying to do is to help those who are up against real hardship as State pensioners. But we cannot consider the other income groups because we do not feel that we should take from the taxpayers and the ratepayers the money that would be necessary to do that. We feel that we must deal with real hardship.
The right hon. Member for Colne Valley (Mr. Glenvil Hall) raised several points when he opened the debate for the Opposition. He, like every right hon. and hon. Member opposite, said that he did not want a means test or any discussion as to the level of income—in other words, increase all the pensions. At the beginning of his speech he said, as did several other hon. Members, that he welcomed the Bill, but later he said that it was meagre and mean, and that he wanted its provisions to take effect earlier than 1st October.
I have listened to the debate and I realise the sincerity and earnestness of all hon. Members who have taken part in it. They are really anxious that these people who, some have said, have been suffering for several years past should have this benefit as soon as possible. But it strikes me as strange that this subject was not raised last year or the year before. Why have hon. Members opposite only now found out that this is a pressing 2146 matter and that there is this great need among certain sections of pensioners? Why could they not have found what they have called "this modest amount of money" last year or the year before in order to deal with the difficulty?
§ Mr. Glenvil Hall
I am much obliged to the right hon. Lady for giving way. She surely realises, because her hon. Friend the Financial Secretary made this quite clear in his very lucid speech this afternoon, what has really brought this matter to a head. It is the fact that when the Chancellor opened his Budget earlier this year he slashed food subsidies by £165 million and undertook to make up the loss to the great consuming public in various ways, and this, as he said, was one of the ways.
§ Miss Horsbrugh
I quite agree with that point but if the right hon. Gentleman had listened to this debate as I have he would know that one after another hon. Gentlemen got up and said that this has been a pressing problem for years, that we should not have waited so long, and that the last review was in 1947. five years ago.
I was asked whether I would give an assurance this evening that we would review these things very much more quickly. It was pointed out that the years have gone on and that these people have been suffering a long time, and that there is no reason why we should not do this more quickly. I am sure the right hon. Gentleman will agree with me that, having listened to such remarks, I have the right to say that if hon. Gentlemen opposite had realised the difficulties several years ago and had been so anxious for this increase to come about as quickly as possible, especially as according to them the sum involved is so small, then it is a great pity they did not do it last year or the year before, in which case the pensioners would not have had to wait until October this year.
The right hon. Gentleman asked me why on this occasion, as compared with the 1947 Act, we have a flat rate whereas then there was a percentage rate.
§ Mr. Callaghan
Before the right hon. Lady leaves the point, what is the reason for making the date 1st October when she has the opportunity of substituting an earlier date?
§ Miss Horsbrugh
I shall give my reasons for the date. All I am saying is that the right hon. Gentleman the Member for Colne Valley and his party could have substituted for next October the year before.
§ Mr. Callaghan
I fully followed, and indeed took that point, but, if I may say so, the right hon. Lady has still the responsibility to tell the House why she chooses a date on which this Bill will come into operation which is later by comparison with the earlier Bill. In that Bill the effective date for its operation was a date earlier than the date on which the Bill became an Act.
§ Miss Horsbrugh
I am coming to that point and I shall repeat what has been said already by my hon. Friend the Financial Secretary when he introduced this Bill. I think the hon. Member for Cardiff, South-East (Mr. Callaghan) did not hear that statement but he can read it tomorrow in HANSARD.
The right hon. Member for Colne Valley asked why there was a flat rate basis in this Bill whereas there was a percentage basis in the 1947 Act. I think that he knows the 1947 scheme extremely well, and I am sure he will agree with me that that scheme was based partly on a flat rate and partly on a percentage. I think the present scheme, providing for a flat rate throughout, is simpler.
The right hon. Gentleman also asked whether the tapering off of the scales had been arranged on any definite basis. He asked whether we had merely said, "We will begin with £26 and next year we had better bring the sum down by one-fifth." I have here a list of the increases in these pensions. That list was looked at very carefully. Although, as this scheme has come out, it may seem a rather tidy scheme, it is merely based on rises that have taken place in pensions. I will not trouble the House with the list, but roughly speaking the tapering off is quite clearly connected with those rises.
The hon. Member for Itchen (Mr. Morley) again brought out the point that it was the duty of the Government to see that the pension had the same value throughout the pensioner's life. I have already dealt with that point and have made clear what we think. I have indicated that a scheme like that is not possible and that what we are doing is to try to give supplementary assistance to 2148 those who are suffering the greatest hardship.
The hon. Member for Aberavon (Mr. Cove) did not like anything at all about this Bill. I have heard him speak like that more than once in this House, but I always look back with some interest to one occasion when I experienced quite a different feeling when the hon. Member addressed the House. I always remember that when I made my maiden speech in 1931 I was followed by the hon. Member who spoke very nicely about me at that time. But I did not altogether expect that he would ever do it again. He told us that he did not like the Bill at all, that he would like to vote against it and to have nothing to do with it. I think the point of view of the hon. Member for Itchin was a more sensible one. He, at any rate, said that the Bill was "sum-mat." I am sure that the pensioners would rather see us proceed with this scheme for a supplementation of the pension than take the view of the hon. Member for Aberavon.
My hon. Friend the Member for Tynemouth (Miss Ward) asked about the position of nurses. I ask her to realise how complex that question is. She knows that I have always taken the greatest interest in the nursing profession, and I can assure her that we will look into the matter very carefully before we come to the Committee stage of the Bill. The subject of nurses' pensions is almost more complex than some of the other cases, and that is saying a good deal. My hon. Friend also asked whether the Service pensions included the pensions of Service men's widows, and the answer is "Yes."
§ Miss Horsbrugh
Yes. I was going to say "Service widows." The widows of Service men and officers are included. It is not only the men. I think that was the point my hon. Friend was making.
§ Miss Ward
No. It was not whether it was officers and men. My question concerned the widows of men in the Services who died in peace-time, as opposed to those who were killed because of enemy action, who are covered by the Ministry of Pensions. I referred to those who served in peace-time and died in pursuit of their Service, through 2149 normal circumstances and not through enemy action.
§ Miss Horsbrugh
I can at any rate tell my hon. Friend that I will look into that before the Committee stage. Perhaps I had not quite understood the point she was making.
My hon. and gallant Friend the Member for Horncastle (Commander Maitland) pointed out a great many anomalies in the pension scheme and gave us some examples of the teachers' superannuation scheme. I am well aware of some of them, and I should like to see these anomalies got rid of, but it is not on this occasion in this Bill that we can do that.
My hon. and learned Friend the Member for Hove (Mr. Marlowe) asked whether the disability pension was taken into account. I would refer him to the speech made by my right hon. Friend the Chancellor in introducing the Bill in 1944. It was quite clear that the disability pension would not be taken into account, but the fact that other sums were not taken into account brought the amount for everybody up to £52.
Several hon. Members posed what is always the difficult problem in anything to do with pensions on these scales, namely, whether thrift is being discouraged, and whether pensioners are discouraged from taking up work——
§ Mr. Marlowe
Reverting to the question of disability pensions, I do not think my right hon. Friend grasped the point. The point I have in mind is that the disability pension is not an additional disregard above the £52. Therefore, anybody who has the £52 disregard gets nothing extra by qualifying for a disability pension. The point I am trying to make is that there ought to be a distinction in those cases.
§ Miss Horsbrugh
What I was referring my hon. and learned Friend to in the speech of my right hon. Friend the Chancellor was that they began by disregarding the disability pension; then there were other sums which they thought ought to be disregarded, so they made the total disregard £52.
§ Miss Horsbrugh
My hon. and learned Friend may say that it is no good, but the fact was that they put in the disability pensions but thought there ought to be some other disregard for other people, and so they put the whole thing together at the £52.
Let me return to the difficulty which crops up over and over again, namely, whether we are discouraging thrift and discouraging pensioners doing work because it would be of no advantage to them as they would lose part of their pension. We are always up against that problem when trying to deal with cases of real hardship. In this case the supplemental pension is for hardship. If someone is able to earn more his hardship is not as great as those who cannot earn more. We all know some of these elderly pensioners and what a difficult time they are going through.
I think that it is not possible to get an absolutely complete and balanced judgment and to put it into legislation. We want to see bow we can give extra help to those who, in a great many cases, cannot help themselves and who are in real hardship, and at the same time to feel that some opportunity is being given to those who can help themselves to do so, and to encourage them to go on working. I think that it is a psychological problem, and that it is in the interests of many of the older people to go on working; but the main thing is to see that there are supplementary pensions for those who are in real hardship and cannot in any way help themselves.
The hon. Member for Belfast, South (Mr. Gage) asked me several questions on the subject of the police forces and the Royal Irish Constabulary. As to the police forces, the answer to his question is this. He was discussing the case of overseas police forces, and those members who had not a right of reversion to the home force. If there is one who has not a reversionary right and who has retired from the home police force with a pension before joining an overseas force, that home force pension will attract the new increase, provided that he has the necessary qualifications. Members of overseas police forces who are not getting a pension from a home police force authority but who are getting a pension from an overseas police force authority will also get the extra supplementary pension.
2151 On the subject of the Royal Irish Constabulary, I will first deal with the widows. I fully appreciate, as I am sure every hon. Member appreciates, the difficulties which the hon. Member put before us. I should like to tell him that many of these difficulties are being looked into at the present time, apart from anything to do with this Bill. As to the actual point which he raised, the pension of the widow whose husband was in the Royal Irish Constabulary will attract the supplementary pension.
The point which the hon. Member was putting to the House was that some widows—and I will not go into the details which he explained so clearly—do not get a pension at all because of certain circumstances, and some widows do get a pension. We cannot deal in this Bill with those who are not getting a pension, although we are looking into some of the difficulties separately. The widow who is getting a pension will get the supplementary pension as well.
§ Miss Horsbrugh
We had the strange case which the hon. Member for Belfast, South gave us of some who had gone into the Civic Guard in Eire and who get a pension, while some who had gone into the Ulster Constabulary did not get a pension. I have looked into this problem, and I have given the answers about the subject which concern the present Bill. I can only assure the hon. Gentleman that the other problems are being looked into.
As to the general point of view on the Bill as a whole, I began by saying that I know that, perhaps with one exception, all hon. Members are at any rate glad that this Bill has been introduced and that this small addition—and I am not saying that it is anything more than a small addition—is to be given to the pensioners who retire and who are in real hardship. I realise, as we all do, that we would like to do more; but the fact is that when the Chancellor of the Exchequer announced in his Budget that he hoped for some plan of this sort, he put the limit at £20 and it has now been raised to £26. The scheme broadly follows the scheme of 1944 and 1947——
§ Mr. Callaghan
It does not follow it in one respect. The right hon. Lady is choosing a date, 1st October, which will be after the date when the Bill is passed. She has promised the House that she will tell us why.
§ Miss Horsbrugh
If the hon. Gentleman would not be so impatient, I might get to that point. I agree that the previous date was not 1st October and I agree that in both cases there was such a long wait that the date had to be in retrospect, but I still say that the Government took office late last autumn and have had to deal with a problem which has been known over the last two years to right hon. Gentlemen to be urgent. We are now dealing with the problem speedily and those who criticise us for not having brought in the scheme earlier should think of what they themselves could have done.
§ Mr. Edward Davies
Does not the right hon. Lady propose to say something about our request for consideration to be given to other categories, such as railwaymen?
§ Miss Horsbrugh
In introducing the Bill my hon. Friend said that such categories were outside its scope. Apart from making that statement, I doubt whether I should be in order in dealing with their difficulties. My hon. Friend explained that, if they are to be dealt with, these categories must be dealt with through the nationalised boards.
§ Mr. G. Thomas
Does the right hon. Lady's speech mean that she is not conceding anything as a result of our debate, either in relation to the target figure of £550 in one instance and £425 in the other, or in relation to the one-third stipulation? Is she sticking to all that?
§ Miss Horsbrugh
The figures have been worked out very carefully with a balance which we think is the best balance. They have been worked out according to a good scheme, and if we were now to destroy the scheme we should destroy the whole benefit of being able to give this sum of money to supplement the pensions of those who are suffering real hardship.
§ Bill accordingly read a Second time.
§ Committed to a Standing Committee.