HC Deb 28 February 1957 vol 565 cc1524-36

Motion made, and Question proposed, That this House do now adjourn.—[Mr. E. Wakefield.]

9.59 p.m.

Mr. Arthur Palmer (Cleveland)

I wish this evening to raise an issue which is of considerable importance to the proper control and conduct of nationalised industries. The issue which I want to raise is one that is well known—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. R. Thompson.]

Mr. Palmer

The issue is one that is quite well known to the Paymaster-General and to his hon. Friend the Parliamentary Secretary. It relates to the pensioners of the Central Electricity Authority, of the area boards and of the Scottish boards, although I appreciate that the question concerning the Scottish boards is, perhaps, rather more the concern of the Secretary of State for Scotland. Although I am dealing this evening with the electrical aspect. I am correct in saying that by implication its relates to the gas industry also.

This is a subject of some little complexity and these pension matters are not always easy to follow, but I will be brief in giving the facts to the House. The electricity supply industry was nationalised on 1st April, 1948. It was at that time an industry with a high degree of pensionable employment; it was no stranger to pension schemes and all that goes with them. Those pension schemes applied in the main equally to municipal undertakings and to company undertakings before nationalisation. The municipal pension schemes were, of course, those schemes which were normal to all the local government services. The companies had their own schemes, but one thing in common to all these pension schemes, whether company or municipal, was that they were contributory.

In the 1947 Act, the broad principle was accepted that the new management of the industry—the electricity boards— undertook responsibility for all the pension obligations of the old undertakings. The boards undertook responsibility for pension obligations in relation to those who had already retired and to those who were likely subsequently to retire from the electricity supply industry. In the nationalisation Act of 1947 for the electricity supply industry, as with all the nationalisation Acts, every existing pension right was preserved.

Subsequent to nationalisation, the Central Electricity Authority—then the British Electricity Authority—brought in its own pension scheme. The majority of the more elderly employees, however, as they had only a short time remaining before retirement, preferred, naturally, to remain in their existing schemes.

It is common ground between both sides of the House that since the war and under Governments of both parties—I am not seeking to make any party point—the cost of living has risen. To deal with that state of affairs, there were Pensions (Increase) Acts for State and local government employees in 1947, 1952 and, more recently, in 1956. In that way, modest increases have been given to the Civil Service and to the local government service for those who retired from such services before 1st April, 1952. That is the important key date in all these proceedings.

The nationalised industries, however, were not included in the provisions of those various Pensions (Increase) Acts. When I put the question to the Financial Secretary to the Treasury during the Second Reading debate on one such Bill, he said that the nationalised industries were not included because they were publicly owned but separate commercial trading undertakings and would have to make their own arrangements. Of course, as the right hon. Gentleman would agree, the Minister must approve such arrangements. Anyhow, comparable increases were eventually granted to the ex-local government pensioners of the electricity supply industry following from the 1952 Act. Nothing was immediately given, and formally could not be given, under the provisions of that Act, whether it was related or not, to the ex-company people. They received nothing.

It may he argued that they had, in a formal sense, lost nothing, that they were still entitled to every right which they enjoyed at vesting date. But when we say that, I think we should take into account the fact that if the industry had not been nationalised it is quite possible that the separate electricity companies, either out of the generosity of their hearts or because of pressure brought to bear upon them, would probably have granted increases. Therefore, to argue that the ex-company people lost nothing is to make the quite hypothetical assumption that nothing would have been granted to them if the industry had not been nationalised.

As the hon. Lady the Member for Tynemouth (Dame Irene Ward) knows quite well, a number of Questions on this matter were put down from both sides of the House. I certainly think that I have done my share of questioning, but others have joined in with Questions about this matter. Something should be done we said for the ex-company people. Great pressure has been brought to bear on the Central Electricity Authority and the area electricity boards by the trade unions and other people in the industry. As a result, an improvement was granted in November, 1955. A belated increase was given to the ex-company people, the very first since nationalisation. It was quite a modest increase and was roughly allied to that received by the ex-municipal people under the Pensions (Increase) Act, 1952.

I now come to my point of criticism. It is a criticism of the Ministry which the right hon. Gentleman the Paymaster-General so worthily represents on the Front Bench at the moment and which is now the responsibility of his noble Friend in another place. When the industry itself —and this is a most important point—wished to make the payment retrospective to April, 1954, which I think would have been quite reasonable since these company people had waited so long, the Ministry, very meanly, made the date simply November, 1955, and that only after very long delay and much questioning in the House.

Unfortunately, that is not the end of the story. Worse is yet to come. In the meantime the Pensions (Increase) Act, 1956, had become law. As in the case of the 1952 Act, this Measure was not applied to the nationalised industries on the grounds that they were separate publicly-owned commercial undertakings. When the right hon. Gentleman's predecessor was asked what he proposed doing about it, he said, very tamely, "I am waiting for the industry itself to submit its scheme"

In the autumn, the Central Electricity Authority submitted a scheme, and from all I understand it was an extremely good one. It was an all-round comprehensive scheme which would have given something to the ex-municipal people to which they were fully entitled, because, after all, their colleagues in the direct public services had already received it, and it would also have given something to the ex-company people. In that way both sets of pensioners for which the industry is responsible would have been covered.

The industry itself was anxious to make payment on an all-round basis. There is no question here of the employers in the nationalised industry holding back. They were anxious to treat well and properly their own ex-employees. What has happened? I have asked Questions and so have the hon. Lady the Member for Tynemouth and some of my hon. Friends After four months' delay a scheme of a kind has at last been approved. Frankly, I think that the decision made is mean again in the extreme.

Dame Irene Ward (Tynemouth)

Hear, hear.

Mr. Palmer

I am glad to hear the hon. Lady's support. I know that she feels very strongly, as I do, on these matters.

The minimum increase only has been made. In fact, the Minister has made the barest possible increase that he can make without running the risk of legal action being taken against him in the courts under the provisions of the 1949 Electricity Act. That increase has been given, once again, similarly to the ex-local government people. It has been made retrospective to 1st April, 1956, which is the date generally of the start of the Pensions (Increase) Act, 1956, for those who retired before the industry's vesting day in 1948. It is right that those people's pensions should have been made retrospective to that date, because they were never nationalised and were retired before nationalisation.

But what about those who have retired since vesting date in April, 1948, but before 1st April, 1952, which is the operative date for the Pensions (Increase) Act, 1956, anyhow? Here is yet another example of meanness. They are to have theirs simply back-dated, I understand, to the date of resolutions passed by the Authority for altering the scheme. As far as I know, these resolutions have not yet been passed. This means that these poor people are to have even less than their colleagues in the municipal service, who retired before nationalisation. But even they are slightly better off than ex-company people, who are to get nothing at all.

This is an action of which I cannot approve. It is one of extraordinary harshness. It is discrimination against ex-company pensioners. There is no justification for it, and remember the Authority wishes to make the payments to all. It is also a discrimination against a section of ex-local government pensioners who are likely to be made worse off than they would have been made without nationalisation, though that is not the fault of the nationalised industry.

I do not know what cash saving is involved. It might be £20,000 or £50,000 or even a little more, but the number of people affected is just a few thousand and they are growing older and more tired all the time. They are men of all grades in the industry and quite a few women probably also who have grown, as we can say without too much sentiment, old and grey in the service of this great industry. Why are the Government treating these pensioners of great public services worse than they treat their own employees? The short question in fact is whether the Minister or his noble Friend is to blame for this action or whether the blame may properly be placed at the door of the Chancellor of the Exchequer?

10.15 p.m.

Mr. John Edwards (Brighouse and Spenborough)

I merely want to—

Dame Irene Ward

On a point of order, Mr. Deputy-Speaker. I will not take a minute, but I should like this point to be cleared up. I also asked for an Adjournment debate on this subject, and I received a message from Mr. Speaker to say that it would not be in order because it entailed legislation. Naturally, I did not intervene when the hon. Member for Cleveland (Mr. Palmer) was making such an excellent case, with which I heartily and absolutely agree, but I really do not see why there should be discrimination against this side of the House and why I should receive a message of that kind. It is very unfair on those people whom I represent who are ex-gas company, people. I feel extremely annoyed and angry about it.

Mr. Deputy-Speaker

That is not a point of order with which I can deal. I listened carefully to the hon. Member for Cleveland (Mr. Palmer), and he never suggested legislation.

Dame Irene Ward

The point is that I asked if I might raise exactly the same case on behalf of ex-gas company employees, and I was told that I could not have the Adjournment half-hour for that purpose. I am not suggesting that my application was made before that of the hon. Gentleman. I was told that the subject that I wished to raise on the Adjournment would not be in order because it would entail legislation. If Mr. Speaker had already looked at this case and allowed the hon. Gentleman to raise it on the Adjournment tonight, I should like to know why I was told that it would be out of order for me to do so. I think it is most unfair discrimination.

Mr. Deputy-Speaker

I do not know what the hon. Lady was going to do, but, as far as I could hear, the hon. Gentleman certainly never suggested legislation.

Dame Irene Ward

Neither did I propose to do so.

Mr. J. Edwards

I desire to reinforce what my hon. Friend the Member for Cleveland (Mr. Palmer) has said, and to point out that what he has had to say mainly about electricity staffs applies equally well, as has been said by the hon. Lady the Member for Tynemouth (Dame Irene Ward), to gas staffs.

When the Government are applying their 1956 Act, they do not discriminate. If they are concerned with former employees of the health services, they do not ask whether persons were employed in voluntary or municipal hospitals but treat them all the same. I cannot understand why when it comes to these services there must be discrimination, especially when, as I understand, the boards concerned do not want to discriminate.

It is intolerable if staffs formerly employed by the gas companies are not to get benefits which those formerly employed by municipalities are to get. It is indefensible. There is not a single argument which can be advanced in favour of picking and choosing in this way. Nor can I see why there should be different dates in operation. Why should the date for some people be 1st April, 1956, and that for others a later date?

I intervene merely because on a previous occasion I had correspondence with the right hon. Member for Sutton Cold-field (Mr. Geoffrey Lloyd) when he was Minister of Fuel and Power. What did he tell me when I wrote to him on precisely this kind of issue? He said he could not interfere in negotiations between the unions and the boards. Now, apparently, when the boards want to do something, the Minister thinks he knows better. I believe this to be quite wrong, and I ask the right hon. Gentleman, whose sense of fairness we all know and appreciate, to reconsider the matter and ascertain whether a fairer arrangement can be made.

10.19 p.m.

Dame Irene Ward (Tynemouth)

I will not take a moment, because I also want to hear my right hon. Friend's reply.

I want to put it on record that I happen to have had a history of association with the Newcastle and Gateshead Gas Company, and I have seen, and know, all the men who worked for that company over very many years. Yesterday I saw the Minister of Fuel, who told me that regurelations would have to be laid. Consequently, I am looking forward to being able to pray against them.

When I made representations to my right hon. Friend on behalf of the ex-gas company employees, I was told in a letter that because of the economic circumstances the Minister could not meet the claim that was put forward. I said to myself that if the economic circumstances of our country were such that we had to treat ex-employees of the gas and electricity companies in the way we are treating them, the Quicker we pack up the better.

10.20 p.m.

The Paymaster-General (Mr. Reginald Maudling)

The debate was intended to be primarily concerned with pensions in the electricity industry, although we have strayed a little beyond that subject. The answer to the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) is that the Ministerial responsibility arises because the Minister has to approve schemes, whereas in wage negotiations, the Minister does not enter into the matter. By the Statutes which nationalised these industries, the Minister has to approve changes for pensions schemes.

Various points were raised by the hon. Member for Cleveland (Mr. Palmer) concerned with the ex-company employees and the ex-municipal employees. He had only one point to make about the ex-municipal employees. It concerned the date from which the increases in pensions are to become effective relative to the Pensions (Increase) Act, 1956, in respect of those pensioners who retired before vesting day, and of those who retired after vesting day and before 1952. All I can say on that is that no announcement about the date on which payments should become effective has been made. I must not anticipate what anybody may say in the Houseobviously—but I do not think that the hon. Member is correct in saying that a decision has been made about the date from which these payments are to be made.

Dame Irene Ward

The Minister said that it has not.

Mr. Maudling

I am grateful for that.

Turning to the question of the ex-company employees, the point concerned the date from which the last increases became effective. The hon. Gentleman said that it was wrong that the last increase was not made effective back to 1954. I must take issue with him on that, because the point at which these things are decided is the point at which the Minister makes his decision.

After all, recommendations are made to him and he has to study them carefully, with a number of factors not necessarily affecting only that industry. The operation date on which the decision is made is when the Minister decides to confirm or reject the proposals. It was in April, 1956, that the Minister reached his decision in this case and, in fact, it was back dated six months to November, 1955. I do not think that one can reasonably assume that whenever increases in pay or pensions are made, they should automatically be back dated to the time which someone or other decides would be desirable. In those circumstances, the back dating of six months from April, 1956, to November, 1955, was not wholly unreasonable.

The major point made by the hon. Member was the difference between the treatment of ex-municipal employees and ex-company employees. This is a very serious and important topic. When the industry was nationalised, there were taken over people who had been engaged in electricity supply, some municipally employed and some employed by companies, many of them having different conditions of work and different pension rights. I do not think that it can be said that there was any obligation on the public authority, when taking over those concerns, to bring everyone up to the level of the best pension rights.

After all, it will be found right through industry generally that some companies pay rather lower salary scales and higher superannuation benefits. It is probably true to say that, in general, public services pay a lower remuneration during a man's employment and a higher superannuation; while in private industry it is the reverse, higher remuneration in working years and possibly a less generous scale of superannuation when a man retires.

Mr. Palmer

The right hon. Gentleman is, I think, incorrect about the electricity supply industry in particular, because national salary and wage negotiations have been conducted since the early 1920s and the scales were similar.

Mr. Maudling

That may be so, but there are promotion prospects and many other matters to be considered. I cannot accept that there was an obligation, when the industry was nationalised, to bring all the employees who were taken over to the same superannuation rights possessed by the people in the most favourable position.

As for the Pensions (Increase) Acts, it has never been accepted by any Government that the increase of pensions to ex-public employees granted by the Pensions (Increase) Acts of 1944, 1947, 1952 and 1956 should be any precedent for increases of pensions in other spheres, even including nationalised industries. Therefore, I do not think it is reasonable to say that because ex-municipal employees received an increase in pension, other people outside that sphere should necessarily enjoy the same increase. After all, these ex-municipal employees are deriving their benefits from the Pensions (Increase) Acts in respect of many years' service rendered to local government, and I think that is an important point to bear in mind.

Mr. Palmer

The great point here is that the employers in question, that is, the electricity boards, are anxious to make these payments to both groups of employees, and that it is the Government who are standing in the way, not the employers.

Mr. Maudling

I am not denying that for a moment. I am only trying to distinguish between two groups of employers, and I think it is right that we must draw that distinction.

The people in local government until vesting date, 1948, had earned for themselves through many years of service to local government certain rights to pensions from the local authorities, and in effect, on nationalisation, the electricity boards were made the paying agents for the local authorities, paying the pensions which, apart from nationalisation, would have been paid by the local authorities. Therefore, it is important that when by Act of Parliament the pensions paid by the local authorities were increased, those increases should be made applicable to those who were formerly employees of the municipal electricity undertakings.

I cannot accept that there was any necessary and inevitable connection between them and the people who were employees of the companies, whether they retired before the vesting date or retired between the vesting date and April, 1952. I think there is a clear distinction in the rights which were acquired in the course of work by people who were working for municipalities and people who were working for companies, and I think that the obligation in respect of the one differs from the obligation in respect of the other.

So far as the ex-company employees are concerned, the Government have recognised an obligation—the obligation of a good employer—to give ex-company employees increases in their pension, and there was, as the hon. Gentleman said, an increase of pension in November, 1955—

Mr. Palmer

They are now behind.

Mr. Maudling

—not related to the increase in the public service pension because, as I said, there was no necessary connection between the two.

My argument is that it is proper in principle and in practice to draw this distinction between two types of pensioners, because one has rights accruing from many years of service to local government and is entitled to carry with him into retirement his rights as a former local government employee, while with the ex-company employee it is very difficult to determine what pensions increase he would have secured if the company had not been nationalised. The award of 1955 was intended to do for these people the sort of thing the good employer would have done, and that is the principle upon which the pensions of ex-company employees have been dealt with and will be dealt with in the future.

I have endeavoured to deal with the various points which the hon. Gentleman put forward, not, I am quite certain, to his satisfaction, because these are difficult and very arguable points, but I have tried to make clear the reasons for the Government's decision both in the timing of the increases for ex-municipal employees and also the timing that affects the increases for the ex-company employees, and I have tried to explain the reasons of principle which underlie the Government's decision in the matter of pensions schemes for ex-municipal and ex-company employees respectively.

Dame Irene Ward

May I, before the debate is adjourned, ask my right hon. Friend why he has not given us an explanation about the Minister of Transport being able to negotiate with the assistance of the Chairman of the Transport Commission and to do very much better for the ex-railway superannuitants who were employees of private companies? If they can do that, why cannot my right hon. Friend do it in respect of ex-company employees in gas and electricity?

Mr. Maudling

I could not deal with the transport scheme because this Adjournment debate is concerned only with electricity.

Dame Irene Ward

The right hon. Gentleman ought to know.

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.