§ 10.33 p.m.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins)
I beg to move,That the Draft Local Government Superannuation (Benefits) (New Towns Staffs) Regulations, 1958, a copy of which was laid before this House on 9th July, be approved.
§ Mr. Speaker
It seems to me that these Regulations and the following Regulations relating to Scotland might be discussed together, if that is agreeable.
§ Mr. Bevins
I am obliged to you, Mr. Speaker, and I am sure that the House is also, for that suggestion.
Perhaps I may give the House a short explanation of the content of these Regulations. They are somewhat exceptional, because they have been produced to meet exceptional circumstances. They are designed to assist officials of the new town corporations who might otherwise suffer severe financial hardship through no fault of their own when their work with one of the corporations comes to an end and they become redundant. They might become redundant if a corporation were dissolved, or if it had its activities reduced or transferred to another body.
372 Quite clearly, such situations are bound to arise in the case of organisations like the new town corporations which were set up to undertake specific and limited responsibilities. Our experience at the Ministry—and I am sure that this is also true of the Scottish Office—is that, for one reason or another, these officers may find difficulty in getting back into the local government service or into any other service where their superannuation rights are preserved.
Under existing legislation, these officers would be entitled only to the repayment of their own superannuation contributions, plus interest, and nothing more. They would not be entitled to the benefit of contributions which had been paid on their behalf by their employers. The Regulations provide that an employee who has completed at least five years' service and has become redundant may acquire special superannuation rights.
These rights are, broadly, of two kinds. In the first case, if the employee is within ten years of pensionable age he can elect to defer his pension until he reaches pensionable age or he can take a reduced pension immediately. In the second case, that is to say, if he elects to take a reduced pension immediately, the nearer he is to his pensionable age then, obviously, the smaller the reduction in the pension would be. If, on the other hand, the employee is not within ten years of pensionable age he can only take a deferred pension.
The employee must be able to show that he has done his best within a period of twelve months of leaving the service of the corporation to obtain employment which is reasonably comparable with the job he has done with the corporation and which would allow his superannuation rights to be preserved. I think that this is only right, because the Regulations are meant to assist only those people who have tried and who have failed to get suitable alternative employment which preserves their pension rights.
These Regulations have been accepted by all the local authority associations concerned on the understanding that they are not treated as a precedent. The idea of frozen or deferred pensions is, naturally, one which these associations would not like to see extended, and we have no reason to believe that it will be.
373 As I said before, the circumstances here are exceptional and we feel that the Regulations go a long way to help those who may lose their jobs through major decisions of policy affecting the new towns corporations.
§ Mr. G. R. Mitchison (Kettering)
Can the hon. Gentleman tell us whether there is not a parallel for this freezing arrangement of pensions? I thought that there was either in the local government service or in the Civil Service. It is not a new arrangement, is it?
§ Mr. Bevins
As far as I am aware there is no precedent for Regulations of this sort in the Civil Service. I am, of course, speaking subject to correction, but I am not aware of any similar case which exists in the Civil Service.
§ 10.40 p.m.
§ Mr. Martin Maddan (Hitchin)
I wish to raise two points on these Regulations. I am not clear whether they apply to people who have come into the service of a development corporation without first having been in local government service. I am interested in that because, if people who have not been in local government before are also covered by the Regulations, it gives added strength to the next point I wish to make.
People who work for development corporations are working in great industrial enterprises by building and developing new towns. They are not engaged in the same sort of work as a local government officer or civil servant. They should be encouraged to have an industrial outlook on their activities. Whether they retire, or are dismissed because of redundancy through the winding up or curtailing of the activities of a corporation, one, two, or even twenty years before retiring age, it seems that if they wish they should be able to draw a lump sum in lieu of pension.
It does not matter if a man is 63, 53, or 43, if he is in an industrial type of job he should be able to have severance money such as is paid by ordinary private industrial companies or development companies. He might want to go to Canada to start life afresh as an architect or engineer. He might want to go to another part of the country to set up on his own in business. Why should he not be able to have a lump sum, whatever 374 his age, or many or few years before normal retiring age?
The answer we may hear is that that might lead to a situation in which when a man reached 65 he would not then have a pension, but these are responsible people and in this House we should not encourage a grandmotherly State. These Regulations enshrine the philosophy of the grandmotherly State. I beg the Minister, if I am right in what I have said, hastily to correct this situation by bringing in two more Statutory Instruments, one for England and one for Scotland, to enable people to draw pensions in a lump sum if they so desire.
§ 10.43 p.m.
§ Mr. Richard Body (Billericay)
I wish to add a word of welcome to these Regulations. They apply only to a few hundred—at the most a few thousand—people, but those concerned will be indebted to my right hon. Friend for introducing them.
However, I agree with my hon. Friend the Member for Hitchin (Mr. Maddan) about the grandmotherly nature of part of these Regulations, and in that respect I hope my right hon. Friend will look at them again. In reading them, albeit a lawyer, I have had some difficulty in understanding what they mean. I wonder, therefore, whether my right hon. Friend would consider letting the employees concerned know in more simple language the nature of the Regulations and just what they are entitled to under them.
§ 10.44 p.m.
§ Mr. G. R. Mitchison (Kettering)
The hon. Member for Bettericay (Mr. Body) might refer to the Explanatory Note at the end of the Regulations, which is both short and lucid.
As to the hon. Member for Hitchin (Mr. Maddan), I can only say that I regard the servants of the development corporation working in the new town of Corby, in my constituency, as public employees and not, on the whole, as industrial agents or servants. That does not seem to be a natural analogy. They are doing substantially the same kind of work as local government servants, and ought. I think, to be treated in the same way. These Regulations apply, of course, to employees who are contributory employees under the Local Government 375 Superannuation Act, 1937. They do not apply to other people, so this seems to me to be the right method of tackling the problem.
I can only say to the Minister that I have looked carefully at these Regulations, and that they seem to me to be a very sensible and reasonable method, on the one hand, of preventing people, having retired, just sitting down and doing no more about it, and, on the other, of providing for the undoubted difficulty of these people, many of whom have given very valuable service indeed to bodies where there was new work for them, and where their experience was useful and yet had to be adapted to that new work. I think that they deserve good treatment in the matter of pension; and that these Regulations meet, and fairly meet, a real need of a slightly new kind.
§ 10.46 p.m.
§ Mr. Thomas Fraser (Hamilton)
As has been explained, the Regulations make certain provisions for those servants of development corporations who lose their jobs, because of the corporations being wound up within ten years of the retirement age, and who do not, within twelve months, get further local government employment. Many of those people, though not all, were previously in local government employment, but some were in the Civil Service before they got their employment with the development corporations.
From what the Minister has said, and from one's reading of the Regulations, one gathers that the provisions apply to the person who loses his job with the development corporation—because it ceases to exist—and who does not get into local government service within a period of twelve months. Is it not conceivable that he goes back into Government service? I wonder what the position is then.
We are here assuming that we are dealing with the person who would normally be in the employment of local government, and there is for them the provision that I have just mentioned. If, however, he goes back, instead, into central Government service, would the provisions apply in the same way as they would if he were going into outside employment, or not able to get employment at all?
With your permission, Mr. Speaker, and that of the House, may I say that I have noted what my hon. Friend said about publicising, in simple form, the effect of the Regulations, but my experience of those who are employed in local government, and in the Civil Service, is that they very quickly get to know on which side their bread is buttered—whether it be superannuation, salaries, or anything affecting their own interests—and I do not blame them for that. It is very natural that they should. Nevertheless, I will see whether anything can and ought to be done.
The question has been raised whether these Regulations apply to people who go direct into the service of the new town corporation without previously having been in the service of a local authority. I think that Regulation 3 makes it clear that that is the case, and that it is not necessary for a person to have come into the service of a development corporation from a local authority.
Regulation 3 reads:These regulations … shall apply to any person who, being a contributory employee in the employment of a corporation, ceases to be employed in any of the circumstances mentioned in paragraph (2) of this regulation and who, at the date of so ceasing to be employed, has completed five years' service:The answer to that question is "Yes," provided that they join the local government superannuation scheme when they commence their service with the new town.
The second question was whether we are wise, in these Regulations, not to make provision, or at least alternative provision, for the payment of either lump sums or compensation for loss of office in the case of an officer whose employment is terminated on grounds of redundancy. I am advised that if lump sums were to be paid, whether they were compensation for loss of office or simply lump sums in lieu of pension, the superannuation funds of the new town corporations would become liable to Income Tax. That is one consideration.
The other consideration, and, I think, the major one, is that the granting of lump sums is contrary to general Government policy in circumstances where the obvious intention is to provide superannuation for people. Clearly, a majority of the people serving with the new town 377 corporations will have come, in the course of the last ten years or so, from the local government service and, assuming that they are 35, 40 or 45 years of age, their desire will be to return to local government service and to have their superannuation rights preserved more or less intact. Therefore, I cannot offer any hope that these Regulations could be modified or redrafted in the sense suggested.
The hon. Member for Hamilton (Mr. T. Fraser) asked whether these Regulations would apply in the case of an officer who left the employment of a new town corporation and went into the Government service. The answer is that under Regulation 4 (1, b iii) alternative employment may be in another service covered by transfer rules made under Section 2 of the Act of 1948. The Civil Service is one of those services, so the answer to the hon. Gentleman simply is, "Yes."
§ Question put and agreed to.
Thai the Draft Local Government Superannuation (Benefits) (New Towns Stalls) Regulations, 1958, a copy of which was laid before this House on 9th July, be approved.
§ Draft Local Government Superannuation (Benefits) (New Towns Staffs) (Scotland) Regulations, 1958 [copy laid before the House, 9th July], approved.—[Mr. J. N. Browne.]