PENSIONS (INCREASE) BILL

HC Deb 10 March 1954 vol 524 cc2246-69

Order for Second Reading read.

3.50 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."

The purpose of this Bill is to carry into effect the increase in the pensions of certain civil servants who are affected by the stabilisation of 1935 which has already been announced in the White Paper, Cmd. 9092, which was laid before this House a few days ago. This Bill, of course, deals only with the case of civil servants affected by these changes. The members of the Armed Forces, in respect of whom similar treatment is being provided, are, of course, dealt with under Prerogative Instruments.

This Bill is required because the pensions of civil servants, unlike those of the Armed Forces, require legislation. Perhaps, however, I may be allowed to announce—ifor it has not already been announced—that retired officers holding King's Commissions in the late Indian Armed Forces will also receive corresponding benefits under a separate Prerogative Instrument. That was not announced by my hon. Friend the Parliamentary Secretary to the Ministry of Defence in the Defence debate, but, as the decision has been taken, I am sure it would be the wish of the House that these people should know their position.

The Bill itself, as hon. Members who have studied it will appreciate, is of commendable brevity. The subject, however, as the right hon. Member for Colne Valley (Mr. Glenvil Hall) will agree is of appalling intricacy, and it would help the House to understand what is proposed if for a moment or so I sketch in the background.

Civil servants' pensions, unlike those of members of the Armed Forces, are not based on a separate pensions code, but, broadly speaking, upon certain proportions—depending on length of service —of the salaries earned in the last three years before retirement. As a consequence of that, which has been the position under Civil Service superannunation law for many years, the fact that after the First World War Civil Service salaries contained an element of cost of living bonus operated also on their pensions. Pensions are governed by salary, and as total salary included an element of cost of living bonus, the cost of living bonus operated indirectly on pensions.

Another fact affecting pensions of the civil servants with whom we are concerned was that in 1921 there was imposed what was described as a "super cut" under which cost of living bonus was cut out altogether in respect of certain senior levels of civil servants and reduced in respect of a good many more. That "super cut," by reducing the salary, also had its effect upon the pension.

The next stage was the Treasury Minute of 20th March, 1922, which, for some odd reason, took effect as from 21st February, 1922. That Treasury Minute laid it down that that part of a civil servant's pension which was based on the cost of living element in his retiring salary should itself move in either direction with the cost of living.

This somewhat complex series of arrangements is set out with considerable clarity, and, I regret to say, at some length in paragraphs 8 to 25 of the White Paper to which I have already referred. The effect of these arrangements was that the fluctuations in the cost of living operated somewhat differently on the pensions of civil servants as compared with those of members of the Armed Forces, for, as I have tried to explain to the House, the cost of living operated on that part of a civil servant's pension which was based on the cost of living bonus element in his salary.

The proportion which that bonus element bore to the total salary varied from grade to grade and, consequently, the alteration which alterations in the cost of living effected in the salary did not result, as with the Armed Forces, in a completely even, proportionate reduction or increase as the cost of living moved, but in a very wide variety of change in the percentage movement of the civil servant's salary.

Perhaps that is best illustrated—it is a somewhat complex state of affairs—by the fact that when the 1935 stabilisation took place the pensions of all members of the Armed Forces affected were 9½ per cent, below the 1919 level of pensions. The reduction in the pensions of civil servants, however, was as a result of this a wholly different variety of percentage reductions on the 1922 level. They run out, in extreme cases, to a reduction of 24 per cent., while other reductions are well below 9½per cent.

I thought I ought to explain that to the House because while both the members of the Armed Forces and civil servants were affected by the 1935 stabilisation, they were affected in a different way inasmuch as the Armed Forces pension was down by a definite overall percentage on 1919, whereas the Civil Service pension was down by a whole variety of percentages on 1922.

The next stage of the background is the consolidation itself which took place both for civil servants and for members of the Armed Forces, in 1935. It was based, as the House knows, on a decision announced by the then Government in 1932, and that decision, so far as the Civil Service was concerned, was based on a recommendation of the Tomlin Royal Commission which sat at that time to consider Civil Service pensions.

Both for civil servants and for members of the Armed Forces restoration of those reductions has, in part, been affected by the Pensions (Increase) Acts of 1944 and 1947. Under those Acts, both pensioners of the Armed Forces and pensioners of the Civil Service have been dealt with. Broadly, the effect of those Acts, so far as the people with whom we are dealing are concerned—and, in particular, I am concerned with Section 2 of the Act of 1944 as amended by the Act of 1947—has been to restore the full 10 per cent, in respect of all pensions of under £400 a year, and something less than 10 per cent, of all pensions between £400 and the rather odd figure of £787 10s. Above £787 10s., nothing has been restored.

As hon. Members will see from the terms of the Bill, it is based on the foundation of Section 2 of the Act of 1944 as amended in 1947, and is, indeed, framed as an amendment to those Statutes. The substance of the Bill is really to complete the work of those Acts, that is, to ensure that under those Acts and this Bill taken together everyone, including in this Bill now the higher ranges, shall get a 10 per cent, increase above the 1935 stabilisation level.

To put it another way, those who have already had their 10 per cent, back under the previous Acts get nothing under the Bill, those who got less than 10 per cent, back under the previous Acts get whatever the figure is made up to 10 per cent., and those who had nothing under the previous Acts get the full 10 per cent, under the Bill. The Bill can really be looked at as completing the work of the Section 2 side of the 1944 Act as subsequently amended.

As hon. Members of a mathematical frame of mind will have worked out, this is not a restoration of the 9½ per cent. reduction which applied to the Armed Forces. As I said, different percentages applied to the Civil Service. It is a mathematical fact that 10 per cent, of 90.5 is not the same as 9£ per cent, of 100. The difference is small, but this is not a restoration, and the figures will therefore, not precisely coincide.

Nor does the Bill embody the restoration of the 1919 or 1922 systems. That is to say, it is not proposed to restore the systems operating for a good many years between the two wars under which public service pensions moved up or down with the cost of living. Experience showed how unsatisfactory such a system was and what intense ill-feeling and difficulty it gave rise to. I ought to make it clear at this stage that the proposal is not to restore either the 1919 or the 1922 systems.

What the Bill does is to go some way to meet the point that the 1935 stabilisation did, in the event, operate somewhat severely on those who had worked or retired under the old system under which pensions moved with the cost of living

I want to make clear who are affected by the Bill. It does not affect the pensions of those who retired before 21st February, 1922. That is the date which the Treasury Minute to which I made reference provided as the date for the introduction of the system of variation of Civil Service pensions with the cost of living. Neither does it affect anyone who retired after 31st March, 1949. That is because anyone who retired after that date retired after three years, which is the full averaging period, on the postwar rates of Civil Service salary and was, therefore, not really affected by the 1922 and 1935 systems.

Mr. Anthony Marlowe (Hove)

Could my right hon. Friend deal with the cognate position of retired officers? They were not affected by the Treasury Minute to which he referred. May I take it that these date limitations will not apply to them when the necessary warrants are being drafted in their case?

Mr. Boyd-Carpenter

I am dealing only with the Bill, which deals only with the position of civil servants. I know that my hon. and learned Friend is particularly concerned about the members of the Armed Forces, but I do not think I should be in order to discuss—nor should I be called upon to do so—what will be in the Prerogative Instruments which will be produced by my right hon. Friends and in one case, my noble Friend, the Ministers in charge of the Service Departments.

The dates are fixed on the basis of Civil Service pensions, and it is to them that my argument relates. Indeed, the justification for them is, as my hon. and learned Friend will appreciate, that after the final terminal date of 31st March, 1949, anyone retiring will have the full benefit reflected in pension of the increase in Civil Service salaries made after the war.

Mr. Glenvil Hall (Colne Valley)

The date given in the Financial and Explanatory Memorandum is 1st April, 1947. I realise that there has to be an average of three years, and I assume that the right hon. Gentleman is taking that into account, but he has several times mentioned a date in 1949. No doubt he is right, but perhaps he would explain why that is.

Mr. Boyd-Carpenter

If the right hon. Gentleman will look at the Financial and Explanatory Memorandum, he will see— its language is perhaps not as clear as it might be—that the final sentence of the main paragraph refers to …an average rate of emoluments over a period of service beginning on or after 1st April, 1946… The position is that nobody retiring after 31st March, 1949, will benefit under the Bill. There is a tapering arrangement; otherwise, people retiring on certain dates would get an unfair benefit as against others. It is a very complicated matter, but I gather that the right hon. Gentleman understands it.

As the White Paper indicates, the best possible calculation that we can make of the number of civil servants affected is about 3,000. I must explain to the House why it is, regrettably, impossible to give a precise figure. As I have already explained, the Civil Service pension is not based on a firm code. It is not like that in the Armed Forces for, say, a major or a lieutenant-colonel. It depends on a formula of retiring salary, or salary during the last three years, and length of service.

There are also various factors which affect whether or not a civil servant will come within the benefits of the Bill. One of those is whether his salary, and, therefore, his pension, was increased by war bonus during the 1939–45 war. It is impossible, without taking each case, literally one by one, to give the House a precise figure. No one regrets that more than I do, but I should be less than frank with the House if I did not say why it was. The best figure that we can get is about 3,000, and the best figure that we can obtain, based on that, of the cost to the taxpayer is, with the same calculation, about £60,000.

Mr. J. T. Price (Westhoughton)

Will the right hon. Gentleman give a tentative figure for the capital value of these concessions? The figure will be determined not only by the salaries, but also by the respective ages of the people who are to receive the concessions.

Mr. Boyd-Carpenter

That would involve an even more detailed analysis case by case. As I understand the reasoning of the hon. Gentleman, one would have to take the ages of the recipients, and calculate the figure against expectation of life tables current at the moment in respect of people of those ages. Though I will consider that, it seems to me in the highest degree improbable that I could produce a figure which would be of great value. In any event, my first reaction is that it would involve calculations on the basis of the facts of each recipient, and that would involve a great deal of work.

Mr. Price

The figures are relatively small in this case because the right hon. Gentleman said that only about 3,000 people would be affected. I do not think it would be a good thing for the House to allow a transaction of this kind to go by unnoticed. Apparently, no real actuarial advice has been submitted to the House. If we were dealing with 30,000 people instead of 3,000, I should certainly require to know what the capital cost would be. Has the Government Actuary submitted any figures?

Mr. Boyd-Carpenter

I take the hon. Member's point. From our point of view, it is not a matter on which an actuarial calculation of the capital value would be very helpful, because, as I am explaining, the step is taken for somewhat different reasons. If such a figure can be obtained without putting undue work on public servants, which I am sure the hon. Gentleman would not wish, I will endeavour to give it to him at a later stage of the Bill.

As I have explained, some of the 3,000 will get a small benefit on the basis that they have already had the greater part of the 10 per cent, back, and others will receive the full 10 per cent. A number of payments will be quite small. The theoretical maximum to which they could go in any one case would be £150. That would be in the case of the retired permanent secretary with 40 years' service. Frankly, I am not in a position to say that there is an actual case current at the moment, but that is the theoretical maximum.

As I have already indicated, this does not embody a return to the 1922 system but is rather a measure of relief to people affected by the termination of the 1922 system. Nor does it involve a departure from the general principles affecting public service pensions, which have been followed over a number of years by a succession of Governments. Those principles are set out with considerable force and clarity in paragraphs 36 to 39 of the White Paper, and I need only summarise them in this way.

I would say that the normal principle of these Crown pensions is that, in the Civil Service, they are based on salaries. In the event of a serious fall in the value of money, the line taken by a succession of Governments—by the Coalition Government in 1944, by the right hon. Gentleman opposite the Member for Colne Valley in 1947, and by the present Administration in 1952—has been to concentrate on the lower levels of the scale what relief it is possible to give.

That was, in fact, the line taken in Section 1 of the 1944 Act and in subsequent Acts. The fact that in this case relief is being given to persons higher in the scale is due to the very peculiar and special circumstances of these people having served under another system which shifted with the cost of living and who, as the event proved, have found that the termination of that system in 1935 has borne rather hardly on them.

The Bill itself, as I hope I have already made clear, is framed as an amendment to the 1944 and 1947 Acts. Clause 1 (1) operates simply to remove the limit of pensions in respect of which the increase is given. That is to say, it abolishes the £787 10s. limit which the 1944 Act, as amended, provided. The effect is to secure that to the extent that Civil Service pensions based on pre-war scales have not been increased by 10 per cent, they shall be increased up to that figure.

The House may be interested to know how this operates. Broadly, it will give about 2½per cent, increase to most of those whose original pension was between £400 and £600. That is because they have already had back 7½per cent. It will give 5 per cent, on pensions between £600 and £750, because, broadly, they have had back 5 per cent. It will give 5 to 10 per cent, on the quite small number of those pensions between £750 and £787 10s., and possibly the whole 10 per cent, above that.

Clause 1 (2) simply repeals Section 1 (3) of the 1947 Act which this Act replaces. Clause 1 (3) provides for the change to operate as from 1st April this year. If the House approves this Bill it will take effect—in the sense of making the increases—as from 1st April. It will not, of course, be possible for these payments to be made on 1st April, but if the House approves the Bill I understand that it will be possible for the payments made under it as from 1st April to be paid at any rate by the early summer.

The Bill introduces no changes in the general principles affecting public pensions. It is a modest attempt to do something to meet the deep sense of grievance which a number of retired Crown servants feel because the 1935 stabilisation turned out unfortunately for them. The House will realise that in present circumstances there are difficulties greeting any money claim made upon the taxpayer. But I hope that this Bill will demonstrate the willingness of the State to meet in some measure a grievance which some of its old servants—is a rather special position and in rather peculiar circumstances—feel at the way things turned out for them.

Sir Ian Fraser (Morecambe and Lonsdale)

I apologise for interrupting my right hon. Friend in his peroration, but before he concludes could he make it clear whether the means tests which were an essential part of the two Acts are now removed for all—not only the new categories coming in but the old ones as well?

Mr. Boyd-Carpenter

It was very adroit of my hon. Friend to diagnose that I was embarking on my peroration.

This provision deals with one half of the pensions increase field. It deals with what one might call the automatic increases—that is, the increases originally made at the lower levels under Section 2 of the 1944 Act to which I have referred. It deals with those who suffered a reduction under the 1935 stabilisation. The other half of pensions increase to which, as my hon. Friend has said, means tests are applied, is broadly the hardship side of pensions.

That is based on the principle that, in general, in those cases of public pensions, relief has, under a succession of Governments been concentrated upon those at the lower end of the scale. This provision does not affect either the amount of those hardship pensions or the conditions under which they are given. It relates to the other category whose claim for attention is that they suffered from the 1935 stabilisation. It does not deal in any way with what I broadly call the hardship cases.

As I was saying, this Bill deals with quite a separate case. There is a small section of former Crown servants who, as hon. Members know, feel deeply that the way in which things worked out for them after 1935 has given them very special grounds for complaint. It is certainly true that things did not work out well for them. The circumstances are special or peculiar. I should have thought that they were very unlikely to recur, as we are not introducing, or re-introducing pensions moving with the cost of living. It therefore seems right to make some contribution, at any rate, towards meeting their grievance, and perhaps in so doing to introduce a little human feeling into the necessarily impersonal operation of the great administrative machine.

4.18 p.m.

Mr. Glenvil Hall (Colne Valley)

I am sure that the whole House is greatly indebted to the Financial Secretary to the Treasury for the very lucid explanation he has given of the atmosphere in which this Bill has been founded, and the situation upon which it has been based.

I agree with him that this is a very complex subject. I am one of very many still in the House who remember the introduction of the 1944 Bill by the right hon. Gentleman who is now Lord Waverley. He was ably assisted by the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton)—who I am sorry is unable to be in his place today—who then occupied the honourable and great position now occupied by the Financial Secretary.

The 1944 Act covered teachers, the Royal Irish Constabulary—who seem to crop up in quite a number of Measures which come before this House from time to time—and local government officials, as well as civil servants. But Section 2 to which attention is being drawn this afternoon applied only to civil servants. As I understand, only those who had suffered from the cuts—due to the fact that part of their salaries had been paid to them in the shape of war bonuses— could take advantage of Section 2 as an alternative. I assume that it must have helped very many of them because I understand that most of those who suffered cuts took advantage of that section.

The right hon. Gentleman has said that the 1944 Act was designed to relieve hardship caused to pensioners on small incomes as a result of a rise in the cost of living. This Bill is much more restricted in scope. As the Minister ex- plained, it covers only civil servants, and only a very small section of civil servants. Therefore, while we on this side do not oppose the passage of this Measure, in fact, we heartily welcome it, we realise it for what it is, and that it does nothing for many thousands—I think their number is 100,000 at the present time—of people who are living on very small pensions, certainly those who are living on pensions below the maximum of £400. They are, as the Minister has indicated, outside the scope of the proposals of the Bill.

This Bill came as a great surprise to me, as it must have done to many other hon. Members of the House. It was not foreshadowed in the Queen's Speech as one of the great Measures which this Government intended to introduce this Session. In fact, judging by the pronouncements made by various Ministers in the House, including the Prime Minister himself, such a Bill was the last thing the House expected. The Financial Secretary, therefore, can imagine with what lively interest some of us looked forward to his Second Reading speech.

We have had, of course, the advantage of seeing the White Paper, Command 9092, which has been presented by him. I do not know whether he wrote it himself or whether, as so often happens, it has been fathered upon him by Treasury officials. I have not the slightest doubt, however, because of the great interest aroused in this matter, that the White Paper must have been scanned by most members of the Government, including the Prime Minister himself.

Whoever is the author or authors of it, it really is an astonishing document. We have realised for some time that Ministers, led by the Minister of Transport, are supreme actors in this particular field. They are always publishing White Papers. Whether any particular White Paper is to be the final word on the subject it is usually impossible to say, because, more often than not it is shortly followed by another which contradicts the one immediately preceding it. But in this White Paper they certainly surpass themselves.

This is a one Clause Bill, although for at least 3,000 people it will have a far-reaching effect. But it seems to some of us that to produce a White Paper running, as it does, to nearly 12 pages for a Bill of this kind is an astonishing thing, par- ticularly as three-quarters of the White Paper is dedicated to the task of showing that nothing whatever ought to be done in this particular field, and that nothing further is to be done and then ends by indicating that although the arguments against doing anything are so strong as to be unanswerable, nevertheless the Government propose to do something.

We cannot, on this side, believe that the Bill has been produced because the Government have at long last seen that an injustice has been done to a number of civil servants. I think we all know that this Bill is the result of the pressure which has been brought to bear on the Government and doubtless on individual Ministers in that Government, including some pressure by retired officers themselves who are drawing their pensions under the 1919 code.

They have, quite wrongly in my view —I think, the White Paper brings this out very clearly—accused the Government of broken faith. It may well be that the 9½ per cent, cut, having been made, should be restored but the charge that every Government since 1935 broke faith with this particular group of officers, is, I think, quite without foundation.

Whatever reasons there may be for producing this Bill or for giving the 10 per cent, to the officers who retired under the 1919 code, we on this side of the House approve and support the Bill as well as the Prerogative Instruments which will be presented later. Although we on this side are anxious to see the Bill on the Statute Book, we are also anxious to effect certain improvements in it. I ventured to interrupt the Financial Secretary when he was speaking to ask him whether, when he mentioned 31st March, 1949, he actually meant that date. If he is to reply to the debate later perhaps he will make it quite clear whether, when he spoke of 31st March, 1949, he was thinking of some tapering arrangement to offset one of the anomalies which this Bill will create, and which we on this side are anxious to see rectified before the end of the Committee stage.

I gather from what the right hon. Gentleman said that this rectification is what the Government have in mind, and I also understand that it will be possible to do it by regulation and that neither the present Long Title of the Bill nor the Financial Resolution on the Order Paper will prevent the Treasury from carrying out that undertaking. That answers one of the chief criticism which we have against this Measure.

Between now and the Committee stage there will be other matters which we desire to ventilate. Now is not the time and, therefore, I shall end by saying, as I said earlier, that this is a measure of tardy justice to a section of retired civil servants which, while it does not go as far as it might, does do something for a very deserving body of people. After all, during the period to which the Bill refers civil servants suffered 16 cuts in their pay. Retired officers never suffered the diminution of their pensions to anything like that amount. It may be that the Government had no real desire to put this injustice right, but they have been forced to do it by the pressure to which I have already referred. Nevertheless, we on this side of the House welcome the Bill.

4.30 p.m.

Mr. Anthony Marlowe (Hove)

This Bill is only part of a larger operation, the other part of which is not carried out by legislation but by a Prerogative Instrument. However, there are certain principles common to both operations.

I want my right hon. Friend to consider, first, the position of those who have had increases under the Pensions (Increase) Acts, but which have not yet fully restored them to their pre-1935 rate, it seems to me that the Treasury has not yet fully realised that complete restoration is not being made in a large number of cases, because it has been represented that by the action decided upon by the Government what was previously lost has been fully restored. That is not so.

There are still a number of cases in which pensioners, in spite of having had increases under the 1944 Act, the 1947 Act and, possibly, also, the 1952 Act, are still not back to where they were. They have two grievances. One is that they are not back to where they were and the other is that in any event, if they are under the system under which they believe themselves to be, that is to say, the sliding scale system, they would have to go still further before they were back where they were.

I shall now give some figures which will not apply precisely to civil servants because their deductions were made against bonuses, but I know of the case of an officer of the Armed Forces who was receiving £300 a year. The 9½ per cent, cut reduced that to £271 10s. He then received a total increase of 10 per cent, under the Pensions (Increase) Acts and is now receiving £298 13s. Although only by a small amount, he is now receiving less than his original pension of £300.

Although a large amount cannot be involved in such a case, it leaves a man with a considerable sense of grievance. I hope, therefore, that in the process of this legislation the Treasury will take care to ensure that every case is at least brought back to the amount of the original pension, because, otherwise, it is not accurate to say that the cut has been restored.

Taking the £300 a year man as an example again, the original arrangement was that he had his pension fixed at £300 and there was a tolerance of 20 per cent. either way which was adjustable with the cost of living, so that his pension could go down to a minimum of £240 or up to a maximum of £360. However, once the cost of living went up beyond that, he did not receive more than £360.

Again, therefore, it is a misconception to think that there has been anything like restoration. What the Pensions (Increase) Acts have done for the man in the lower scale is to restore his pension to about £300—taking that instance —but that does not satisfy this pensioner now. He does not say, "I have had my pension restored." He says, "My pension should now be £360." So what this decision has done in effect is to restore only about one-third of the original entitlement. Instead of 9½points or 10 points, something like 30 points is required to give the man what he had originally.

Those of us who have been interested in this matter and have pressed the Government about it are grateful that they have at last seen that we have reason on our side. I assure my right hon. Friend that we appreciate the fact that our case was listened to and that, to some degree, it has been met. However, I do not want my right hon. Friend to think that he could by any stretch of the imagination call this full restoration because it is not. Many of those affected will continue to feel some sense of grievance, but those who have spoken to me about it are grateful that their case has been recognised. They are still more grateful for the fact that the Government have now agreed to do what, only three months ago, they said was impossible.

I do not denigrate that attitude, because it takes courage to admit that one is wrong. It is now recognised that what the Government said three or four months ago in the strongest terms could not possibly be done has now been done and I, for one, am always glad to see the impossible being done.

4.37 p.m.

Mr. Douglas Honghton (Sowerby)

I want to congratulate the hon. and learned Member for Hove (Mr. Marlowe) on the modesty with which he has received his victory. I think there must be a special explanation why there are not more of his hon. Friends on the benches opposite to share in the credit which is undoubtedly due to them and to him for the pressure brought to bear on the Government in this matter.

This is not the first time that pressure on behalf of retired officers of the Armed Forces has been the spearhead of a movement which has brought consequential benefit to civilian pensioners. I have never understood why retired officers should command such strong sentiment on the benches opposite when there is so little support, generally speaking, for civilian pensioners who, after all, have served their country in many cases longer, sometimes in conditions of equal danger, but who, strangely, are without friends when it comes to considering the conditions of their retirement.

I think I am right in my recollection in saying that the first Pensions (Increase) Bill after the war, in 1944, was built largely on the strength of feeling in the House about the position of retired officers of the forces, although it brought all the benefits to retired civil servants. And here this afternoon we are considering a Bill, which is, so to speak, consequential upon the major question which is not before the House, as the hon. and learned Gentleman rightly said, because the procedure is different in connection with pension changes for the Armed Forces.

As the hon. and learned Gentleman said, this Bill does not give full restoration and there are some fine points of recalculation which we may have to go into when the Bill is considered in Committee. There is a background to this Bill which is of profound public importance, however, and that is how the provision for retirement is to be regarded as part and parcel of conditions of service.

Pension provision is part of the conditions of service. In appointing the recent Royal Commission on the pay and conditions of service of the Civil Service, presided over by Sir Raymond Priestley, the terms of reference were comprehensive. They linked pay, hours of work, holidays and pensions. The only limitation placed upon the consideration of pension was that it had to be looked at within the framework of the existing superannuation Acts.

A pension is a promisory note. It is an assurance of certain provision for retirement which must be accepted as part of the general conditions of service, and there is no doubt that the pension provision is regarded by all who enter the public service, in whatever branch they work, as an important feature of the conditions of service. Many a time, when trade unions in the Civil Service and when those representing public servants have discussed these matters with the Treasury or have gone to the arbitration tribunal, the value of the pension element in the conditions of service is regarded as an important feature of the case.

I think that the big question of policy which lies behind this Bill, as it has been behind the Pensions (Increase) Acts of the past, is to what extent does the employer, even though it may be the State, recognise some implied obligation towards the servant or worker or officer in regard to the standard of retirement provision which the money benefits are originally intended to give? There is no doubt that many civil servants feel themselves badly treated because, after a lifetime of service, when they have expected to have a certain standard of living provided by their pensions on retirement, they find that owing to the fall in the purchasing power of money and other economic changes, they are not getting what they expected to have and what they regarded as a fundamental part of what they accepted in the first place as their conditions of service.

After all, those in the public service give up the glittering prizes of industry, commerce, financial operations and speculation for a steadier life, for something which is perhaps less trying to the nerves. It suits those of equable temperament, of a studious disposition and with a cautious aproach to all matters, for which successive Governments have reason to be grateful because they are saved many a time from impulsive action or rash decisions. Civil servants who undertake this solemn and often tedious duty do not claim from the State during their working lives excessive rewards for what they are doing.

After all, the highest paid official in the Civil Service is getting less for his services than many quite small traders such as grocers, butchers, garage proprietors, executives and directors of companies. The modest emoluments of those even in the higher ranges of the Civil Service certainly carry with them some obligation for the future. These people are given a reasonable working day from some points of view. I have no doubt that they may be regarded as having adequate, if not liberal, periods of leave, though in the higher ranges of the Civil Service pressure of work itself has robbed those benefits of their reality.

The pension arrangements are inseparable from the other conditions of service, and yet the Government—not only this Government but previous Governments—have tended to regard some restoration of the purchasing power of the pension as a matter of grace and as a thing normally to be given only to relieve conditions of hardship. That has been a great disappointment to the civil servants who occupy the middle and higher range posts in the public service and whose pensions were regarded as somewhat above the low water mark but were, nevertheless, from their point of view, quite inadequate to give them the standard of life which they felt they were entitled to regard during the whole of their service as an essential part of their conditions of service.

Under the 1944 Act as amended by the 1947 Act, there was a limit to the amount of pension which could enjoy an automatic percentage increase without regard to family circumstances, marital status or other financial resources. Apart from that provision, the needs test came into operation. Under the 1944 Act as amended by the Act of 1947, the ceiling for the automatic increases on a progressively smaller percentage basis was £787 10s—this odd figure to which the Financial Secretary referred, which was the top of the escalator by the time the adjustments had been made to pensions up to £750 a year. Beyond that there was nothing.

Under this Bill the smaller percentages below 10 per cent, are lifted to 10 per cent, and the ceiling is lifted completely so that there is no need for an escalator Clause as part of these conditions under the new Bill, though provision is made to avoid an arbitrary distinction between retirement on one day and the next by providing that the percentage increase may be given to those who retired on an average rate of emolument over a period of service which began prior to 1st April, 1946.

As I understand, a civil servant who retired any time up to 31st March, 1949, may be covered by the provisions of the Bill unless it so happened that he was not on an averaging basis and was given a pension basis on emoluments received before April, 1947. I hope that that is quite clear, and that there will be no arbitrary anomaly as between a civil servant who retired on one date and a civil servant who retired on another.

I should like to continue for a moment on this general question to which I think further attention will have to be given. The Financial Secretary, in his admirably lucid explanation of a complicated subject—I know how complicated it is because I have been a member of the Staff Side of the Civil Service National Whitley Council ever since this pension increase problem began—recalled that at one time after the First World War there was an arrangement whereby the cost-of-living bonus element of pension was subject to quarterly adjustment by reference to the average of the cost-of-living index figure, and he said how much that arrangement was criticised—that it was regarded as unsatisfactory by many pensioners not to know from one quarter to another what their pension would be, and that it was also undesirable from the point of view of administration because it involved much recalculation of pensions.

I am not sure whether the Financial Secretary was absolutely right in saying that the Tomlin Commission of 1929–31 recommended specifically the discontinuance of that arrangement, though I agree entirely that the effect of that recommendation was to discontinue the arrangement. The Royal Commission of 1929–31 recommended the termination of the cost-of-living bonus arrangement in regard to salaries and the substitution of consolidation. It naturally followed from that that the periodical adjustment of pension rates by reference to the cost of living should also cease.

But what are we to do to safeguard the legitimate interests of those who have retired with pensions based on their rate of pay at the time of retirement, and who may be the helpless victims of economic change over which they have no control and against which they are manifestly helpless to exert trade union power for redress? Those in work at least have the power of negotiation through their trade unions to see that any hardship caused by economic changes should be remedied, as far as circumstances permit, by wage changes, but when a worker has once retired he no longer has that negotiating power. He depends almost entirely on the sympathetic approach of those who are responsible.

I do not know whether there is any possibility that the present Royal Commission, which I call the Priestley Commission, might consider the problem in its review of the conditions of the Civil Service generally. I understand that there may be some difficulty about certain matters connected with superannuation being put to the Commission. There may be some question whether the terms of reference permit the Royal Commission, if it sees fit, to consider some plan of adjustment of the retirement provisions in circumstances of economic change, variations of the price level, differences in wage rates or in conditions where there may be a signal improvement in the national income.

If the Priestley Commission is to be barred from considering what may be done about a pension once it has been fixed at the date of retirement, then it is being unnecessarily inhibited from dealing comprehensively with conditions of the Civil Service as a whole. It is important that in looking at the conditions of service the full range of pension provision should come under review. I hope that the Financial Secretary will consider whether this is a matter which might suitably be within the terms of reference of the Commisssion. If it is not, we shall be faced with this kind of Bill—

Mr. Deputy-Speaker (Sir Charles MacAndrew)

This is very important, but it is rather outside the Bill.

Mr. Houghton

With great respect, Mr. Deputy-Speaker, I have just come back to the Bill. As you rose, I said that unless this were done we should be faced with this kind of Bill, one Bill after another. I am obliged to you for directing me to the next point in my speech.

Even now under the Bill, or outside it, there are civil servants who say, "What about those who retired after 1949 whose pension rates are already suffering from the ravages of changes since then?" Those who retired after 1949 can receive pension increases only if they go through the needs test and the limits provided by the Act of 1952. No civil servant who retired after 1949 can get any automatic adjustment in his pension. He must be subject to the hardship conditions of the 1952 Act.

I am certain that shortly we shall be hearing from retired civil servants—indeed, we are hearing from them already —to say that while the Bill is reasonably satisfactory as far as it goes, it does not go far enough. It does not go far enough in point of time. It cannot be complained that it does not go far enough in the range of pension, because there is no ceiling imposed on those who will qualify for the improvement under the Bill; but changes have taken place since 1949 in salary scales in the Civil Service, in wage rates outside and in the index of retail prices.

Already there is a noticeable deterioration in the value of the financial provision for those who retired after 1949 for whom no restoration is provided in the Bill. That underlines the need for a comprehensive approach to the problem on a policy basis, not leaving it to ad hoc changes, especially with the rather lengthy procedure of legislation in this House.

I come to my final point, which I believe to be of great importance. It is a question I have asked repeatedly. Why is it that to change one penny in the superannuation Acts we have to go through the whole gamut of legislative procedure, when wage rates and other conditions of service can be altered by negotiation and by awards of the tribunal without the specific approval of Parliament in this way? It appears to me that the retirement provisions of the public service might well be the subject of independent consideration from time to time upon which the House could receive advice from an independent examination of the relationship between retirement provisions and the earlier expectation as part of a man's conditions of service.

I know that this does not arise directly on the Bill though we see from time to time that Bills have to be introduced to deal first with one aspect and then another of this troublesome and complex problem. If this House is overburdened, as many people think it is, with a great deal of detail and matters which might suitably be transferred to other bodies, at least for examination and report, surely this is one of the questions which could be remitted. Why cannot this part of the conditions of service in the public service be transferred to those responsible for dealing with the other conditions of service?

It may have been that, originally, this House desired to keep firm control over the authority to pay pensions in the public service, because of patronage and other abuses which perhaps existed at the time of the first superannuation Acts at the beginning of the last century; but in modern conditions there is no need for that control to be exercised in its present form. For a great deal of public expenditure the authority of this House over the Estimates is enough. Why do we have to have all this difficulty in bringing about, usually belatedly, changes which anybody would have seen long before were needed and could be made with little cost and little difficulty. These Bills have to push their way in a crowded legislative programme and very often on that account they get put aside.

I certainly support the Bill. I am sure that what it does will be most welcome among those public servants, both civi- lian and ex-officer, who felt for so long that they were suffering from a grievance. I cannot for a moment pretend that we have heard the last of pensions increases in the public service, and that probably goes for many vocational pensions schemes outside.

5.0 p.m.

Mr. Boyd-Carpenter

By leave of the House, I will reply to one or two points raised in this short debate. As the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) himself made clear, the Bill deals only with the development of what one may call the Section 2 cases under the 1944 Act. It does not purport to deal with the hardship cases dealt with under Section 1. So far as the present Government are concerned, those cases were dealt with, of course, in the Pensions (Increase) Act, 1952, which related solely to cases of that kind. My hon. and learned Friend the Member for Hove (Mr. Marlowe), I am sure, will not expect me to anticipate all the details of the Prerogative Instruments that my right hon. Friends will shortly be producing. I am sure they will pay due attention to what my hon. and learned Friend has said on the subject.

Mr. Marlowe

What is the procedure in connection with those Instruments? Are they laid before the House, and are they debatable?

Mr. Boyd-Carpenter

Speaking from memory—I do not wish to be held to this—they are laid, but are not subject to Parliamentary procedure; but it is certainly not for me to lay down what the procedure is, and I only say that that is my recollection. I think that my hon. and learned Friend, with his adroitness in matters of Parliamentary procedure, will, no doubt, secure in one way or another that he will be able to say something about them.

The only general point I would make on what he said is that he was perfectly right in saying as a matter of mathematics that a 10 per cent, increase on 90.5 is not the same as a 9.5 per cent, increase on 100. The point, of course, here is, if one may use the term "restoration," that this is not intended to be a precise restoration of the pre-existing position. In particular, as I went out of my way to say, it is not intended to be a restoration of the 1919 or 1922 systems under which these pensions fluctuated with the cost-of-living index.

The hon. Gentleman the Member for Sowerby (Mr. Houghton) will not, I am sure, expect me to follow him in the considerable excursion he made into the extremely important and general question of public service pensions. He speaks on that subject with probably more experience than any other Member of the House, and I listened to him with interest, but, as he knows, this Bill is to deal with the situation arising in the case of these pensions which fluctuated with the cost of living.

This is not a great and ambitious Measure, such as the one the hon. Gentleman was desirous of discussing. It is a specific and limited Measure. It has had, I am glad to say, so far as it goes a not unfriendly welcome, and I hope that the House will now be prepared to give it a Second Reading.

5.3 p.m.

Mr. Ralph Assheton (Blackburn, West)

I apologise for not having intervened earlier, but I was absent from my place on another public duty.

I wish to bring forward a small point brought to my attention in a letter. Perhaps my right hon. Friend would be good enough to take it into consideration. Following the 1947 Act, there are excluded from the benefit of the Bill pensioners who retired on unaveraged salaries on or after 1st April, 1947, or on averaged salaries where the averaging period began on or after 1st April, 1946, the reason being that higher rates of pay from that time produced improved rates of pension for those men.

However, those higher rates of pay were slow in their effect on pensions, and were not very much at the best. It appears that some of those men who will not get the 10 per cent, will be left in a worse position than if they had retired at the earlier date. I wonder whether my right hon. Friend would take that into account. Possibly the point has already been raised. If necessary, it could be considered in Committee.

Mr. Boyd-Carpenter

By leave of the House, I would say that I am aware that there is the small and rather complicated point to which my right hon. Friend has referred. I will certainly not only con- sider again the issue which there arises but, in particular, what he has said about it. As my right hon. Friend recognises, it is rather more of a Committee point, but it can certainly be looked at before the Committee stage, and I am grateful to my right hon. Friend for having given me advance notice of the matter.

Mr. Glenvil Hall

This is the point which some of us endeavoured to ventilate earlier when, unfortunately, owing to another engagement, the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton) could not be here. I referred to it as a tapering arrangement. [Interruption ] No? But I thought the greater included the less and cases such as the one of which the right hon. Gentleman has just given an example would be covered by what one may call the tapering arrangement. This would allow those whose pensions did not come under the average to qualify, as the right hon. Gentleman indicated, and would permit pensions to be paid at the higher rate up to 31st March, 1949. If that is not correct, perhaps we can say something about it when we discuss the Money Resolution, though it is rather tightly drawn.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Mr. Vosper.]

Committee Tomorrow.