HC Deb 20 July 1962 vol 663 cc885-97

2.2 p.m.

The Minister of Health (Mr. Enoch Powell)

I bag to move, That the National Health Service (Superannuation) (Amendment) Regulations, 1962, a draft of which was laid before this House on 5th July, be approved. It may be convenient if we also debated the second Motion— That the National Health Service (Superannuation) (Scotland) Amendment Regulations, 1962, a draft of which was laid before this House on 4th July, be approved. The two do not differ in any material respect.

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

I think that will be convenient.

Mr. Powell

The Regulations cover two separate matters in the two substantive Regulations which they include. The first, in Regulation 3, relates to provision for early retirement. The second, in Regulation 4, relates to improvement of superannuation benefits.

The provision in Regulation 3 for early retirement with accrued pension and lump sum benefits applies in two events —in the event of redundancy and in the event of the retirement of the officer concerned being in the interests of the efficiency of the National Health Service. Those are the two alternative circumstances sot out in Regulation 3.

The major modernisation of the hospital service which was outlined at the beginning of this year in the Hospital Plan, Grand. 1604, will be carried out over such a period of time and in such a way that little redundancy of Health Service Officers should result from it. All hospital authorities will be particularly concerned to ensure that the plan As put into effect in such a way that redundancy is kept to a minimum. I do not believe that there is any disagreement with the statement which appeared in paragraph 51 of the White Paper that … it will be rare for difficulty to arise in finding posts elsewhere in the Service for staff who want them. But I was very glad that on 5th March the hon. Member for St. Pancras, North (Mr. K. Robinson) said: We all agree that the redundancy will be very small …"—[OFFICIAL REPORT, 5th March, 1962; Vol. 655, c. 14.] Nevertheless, it is right that provision should be made for the small minority of exceptions, and this Regulation deals with that instance where an officer whose redundancy is in question is 55 years of age or more and where, therefore, there may occasionally be real difficulty in finding suitable alternative employment in the Health Service and where the sensible course is that he should retire a few years earlier than he otherwise would have done. The effect of this Regulation is to secure that where he has had ten years' service and has attained the age of 55, it shall be possible, where the retirement takes place on grounds of redundancy, for him to enjoy at once, as from the date of his retirement, his accrued pension and the lump sum payments to which he is entitled.

The same Regulation provides for earlier retirement where that is in the interests of the efficiency of the Service. This provision is similar to provisions which have existed in earlier schemes for health services and that which exists in the Civil Service. It is a benefit not only to the Service that an elderly officer who can no longer fully adapt himself to the requirements of his work should be able to take somewhat earlier retirement, but it is very often to the benefit of those individuals themselves who may, by no fault of their own, foe subjected to an intolerable strain by the necessity of confronting duties to which they are no longer fully equal.

I think that the House will welcome the opportunity which the Regulation provides, and which will be exercised under strict safeguards, for officers over the age of 55 and with a minimum of ten years' service to retire where that is in the interests of the efficiency of the Service. Those are the two sets of circumstances in which Regulation 3 provides for earlier retirement with accrued pension and lump sum benefits.

I now come to Regulation 4. An investigation by the Government Actuary in 1955 disclosed that the superannuation contributions made in respect of practitioners were more than sufficient to produce the scales of superannuation benefit in the case of practitioners who had entered at the normal age. But, of course, in 1955 the great majority of practitioners in the Service had entered at later than the normal age. Since then, naturally, the balance has tilted and more and more of those in the Service are normal-age entrants. In the Government's view, the time has now come when the contributions and the benefits should be brought into a closer and more correct relationship.

This could cleanly be done in one of two ways—either by reducing the contributions, or by increasing the benefits. The professions were unanimous in saying that they preferred that it should be done by increasing the benefits. The Regulation, therefore, adjusts the basis on which the pension and the lump sum benefits are calculated. From the coming into force of this Regulation, on 1st September, superannuation in future will be equivalent to 1½ per cent. of the practitioner's total remuneration before 1st September and 1¾ per cent. of his total remuneration after that date. Similarly, the lump sum benefits—the smaller contingent where there is a right to a widow's pension and the larger where there is not—will be adjusted, in the same way. So also will be other lump payments such as the death gratuities.

That, then, is broadly the effect of Regulation 4, to raise the scales of practitioners' superannuation benefits to accord more closely with the value of the contributions in the case of a new entrant at normal entry age.

I should like to make it clear that there are respects in which the professions concerned would have liked to see these Amendments to the superannuation scheme carried further still, but I do not think that there is any doubt or disagreement that the improvements which these Regulations make are in themselves right and desirable, and in the Government's view they meet the requirements of the case both as regards the small range of redundancy which may occur, and as regards superannuation benefits for practitioners.

2.11 p.m.

Mr. Kenneth Robinson (St. Pancras, North)

Apart from a brief formal statement to the House earlier this week about the waiving of the Royal Prerogative on the Uganda Bill, this is, I think, the right hon. Gentleman's first appearance at the Dispatch Box since his elevation to Cabinet status. I congratulate him most warmly on his promotion. It is the first time in twelve years that the Minister of Health has been in the Cabinet. I know that this will be a source of great satisfaction to many people who work in the National Health Service, and I am also sure that they will hope, as indeed we on these Benches do, that the right hon. Gentleman will now be able to argue on more equal terms with the Chancellor of the Exchequer for an even greater share of our national resources to be devoted to the National Health Service.

As the right hon. Gentleman explained, these Regulations cover two different subjects. Regulation 3 is a part of the general arrangements for redundancy in the National Health Service which the Minister recently introduced under an administrative circular. We have already protested about certain aspects of these redundancy arrangements, and I do not think that it would be appropriate to pursue this at any great length today, but I repeat that the arrangements as a whole are, in essence, parsimonious, and we were surprised to find that they were far less favourable than the terms being enjoyed by Health Service staffs from the inception of the Service until about two years ago. It would have cost the right hon. Gentleman so little to have been generous or indeed fair, on this occasion, to the staffs. He has succeeded in saving a trifling sum of money,,but I believe that in so doing he has further forfeited the confidence of Health Service staffs.

We have no criticism to make of Regulation 3, and we have no intention of opposing these Regulations. Obviously we must welcome the reduction to 55 of the age at which superannuation can be granted, but this is only a step in the right direction. I think that it is appropriate to remember that one can still have in the Health Service an officer aged 54, who has given the best part of a quarter of a century's reckonable service to the public, but who will on retirement get no more than the aggregation of his contributions returned to him, and the chances of such a man getting another worthwhile job are pretty slender.

As I understand it, there are arrangements in other forms of public service whereby superannuation rights in such a case can be frozen so that the full entitlement to pension can be drawn at whatever age is fixed—perhaps in this case the age of 55—when the man reaches it. I wonder why it was not possible to do that in the new arrangements which the right hon. Gentleman has made for the Health Service.

One other aspect of these Regulations to which I should like to refer is the decision to deduct from the lump sum payment which is made when superannuation begins the terminal payments that are made under another aspect of the general redundancy arrangements. Payments are made up to 26 weeks to an officer who is made redundant while he is looking for another job. Should he not succeed, and in the meantime reach the age of 55, he can be superannuated, but these Regulations provide that the terminal payments shall be deducted from his lump sum entitlement.

This seems a little mean and unnecessary, and I wonder whether the right hon. Gentleman would look at this again. Even if he is not prepared to give way on the principle, I wonder whether he would consider the Income Tax position in these circumstances. As I understand it, the terminal payments are treated as income for tax purposes. When they are deducted from the lump sum payment on retirement, which is not taxable, may I have an assurance that the tax already paid will be automatically refunded? In other words, if a man received his lump sum payment he would get it tax free. In these special circumstances his terminal benefits will be deducted, but tax will already have been paid on them. Surely it is only equitable that that tax should be refunded to him the moment he retires? Possibly the right hon. Gentleman will be able to reassure us that it will be automatically refundable, but if there is any doubt I hope that he will clear up this matter with his right hon. Friend the Chancellor of the Exchequer.

On the second of these Regulations, Regulation 4, naturally we can only welcome the fact that the benefits under the practitioners' superannuation scheme are now to be brought into line with the level of contributions, as was recommended by the Government Actuary. The Minister did not make quite clear why this decision had been taken. Was it in fulfilment of any undertaking given to the profession at the time the Government Actuary reported that this step would be taken after a certain length of time? Was it in any way connected with the Pilkington package deal, or was it just a sudden rush of generosity on the part of the right hon. Gentleman? At any rate, we welcome the Regulations but the welcome we give them is without prejudice to the dissatisfaction that we have already expressed about the nature of the redundancy arrangements as a whole.

2.18 p.m.

Mr. Carol Johnson (Lewisham, South)

As we expect from him, the right hon. Gentleman has fully and lucidly explained the Regulations. On this occasion I detected a more gentle and sympathetic presentation of the case than the right hon. Gentleman usually displays.

I recognise, as did my hon. Friend the Member for St. Pancras, North (Mr. K. Robinson), that so far as they go these Regulations are commendable, but in view of the background against which they are to come into operation I think that we must ask ourselves whether they go far enough. We all join in the hope that redundancy on any substantial scale will not arise as a result of the reorganisation in the hospital service to which the right hon. Gentleman referred, but the possibility of redundancy does in fact arise, and the presentation of these Regulations is an indication of that possibility. We must therefore recognise that there will be some staff for whom employment cannot be found within the Health Service when they come to be displaced. Therefore, we must look at these Regulations to see how they would fare.

As the right hon. Gentleman told us, he is making special provision for people over the age of 55 years who have at least ten years' service to their credit, and who would not otherwise be entitled to a pension. In these cases, pensions are provided, and all that is welcome. It is all very nice and tidy, and if only everyone adversely affected by the Hospital Plan could fall into this category, everybody would be completely satisfied. But, as the right hon. Gentleman knows, life is not as tidy as that. There may be cases of staff retiring under the age of 55 who are unable to find other employment in the Health Service, and in many cases they will have a very large number of years' service to their credit; not merely 10, but perhaps even 20 or 30.

What is to happen to them? As I understand it, they will have their superannuation contributions returned to them, and they will get the terminal benefit, to which my hon. Friend referred, but nothing else. In these circumstances, I must ask the Minister if this is fair and just. Does it not show indifference to the fate of individuals many of whom may have given long and loyal service, and who may have to suffer merely as a result of a national plan which is intended to benefit the community as a whole? If they have to be displaced and cannot be absorbed in other parts of the Health Service, why cannot their existing pensions be frozen, as my hon. Friend suggested, so that when they reach the age of 65, which would have been the normal retiring age, they can become entitled to it? Otherwise, it appears to me that unless they find within one year some other employment to which their superannuation benefits can be transferred, the whole of their working life for pension goes entirely by the board.

There is another point in connection with the Regulations to which I wish the House to give its attention. It is provided that in the interests of efficiency, an officer aged 55 or over may be retired before the normal retiring age on grounds of inefficiency, and the right hon. Gentleman referred to this. On this provision, I should like an assurance from the Minister that when he comes to lay down the procedure for dealing with this type of case, there will be provision that any officer so affected may be represented, either by his union representative or somebody else on his behalf, and also that there will be some provision for appeal.

Another aspect of the matter to which I ask the right hon. Gentleman to give his attention is that inefficiency, where it does exist, may sometimes be due entirely to ill-health. As the right hon. Gentleman knows, there are existing provisions whereby officers may retire on grounds of ill-health and get a pension. In these circumstances, the pensions will be much more beneficial than the provisions now made on grounds of inefficiency, and I should like some assurance from the Minister that these new provisions will not be used to prejudice an officer's pension on health grounds in appropriate cases. I should be grateful if the right hon. Gentleman will deal with those two points when he comes to reply.

2.24 p.m.

Sir James Duncan (South Angus)

I, too, wish to congratulate my right hon. Friend on becoming a member of the Cabinet. We all hope that he will enjoy his work here. With the financial knowledge which he has gained in the past, I am delighted to know that the Cabinet has been strengthened by such a man.

I wish to make some fairly short comments on these Regulations. The first is that there is no explanation, either in the Regulations or in the Explanatory Note, of the cost of this scheme. I am quite prepared to agree that the first part of the Regulations is due to my right hon. Friend's desire to increase efficiency in the hospital service, and we moist all agree with that. If people have to retire early on redundancy or other grounds, we roust agree that it is right, but is it going to save money or to cost more? It is very difficult for an hon. Member reading these Regulations to know which it is to be.

The other point I wish to raise concerns the doctors. One-quarter per cent. increase is very little. I wish to ask how often the auditor of the accounts reviews this pensions fund, because I hope that in another five years it might be possible to increase the pension by a little bit more, if the figures warrant it. Doctors who are practising, particularly in rural areas, although they are well enough paid, have to look forward to being forced to retire on pension at 65, and they cannot normally practise after that. Once they are out of the realm of National Health benefits, I understand that it is impossible nowadays for them to continue in private practice. They are more or less bound to be living in retirement on their pensions, plus what they may have saved, so that the pension becomes more important than ever.

I wonder how often the accounts of the pensions fund are reviewed, so that it may be possible in future to increase the pension by at least another ¼ per cent., say, in another five years' time, so that the younger doctors who will not be retiring for, maybe, 20 years, can look forward to increased pensions. I speak with some personal knowledge, because a member of my family is to retire fairly soon, and it will not benefit him very much if he is to get ¼ per cent. additional pension in, say, five years' time. It will make very little difference to him, and so I hope that it may be possible to do better for the doctors as the days go by.

2.28 p.m.

Mr. William Hamilton (Fife, West)

I have always taken the view, and I think most hon. Members would agree, that the State should be a model employer. I am sure that there must be many ex-Ministers now wondering whether that is the case, and, probably, wishing that they had been in the National Health Service and getting a benefit under these Regulations.

I want to ask one or two questions, particularly of the Under-Secretary to the Scottish Office, since the Minister said that the two Regulations are well-nigh comparable. When the right hon. Gentleman talked about the question of redundancy being negligible today, I must say that we in Scotland hear the word "redundancy" in a very different connotation from that in which it is used in England. I want to ask the Under-Secretary just how much redundancy is likely in Scotland. I appreciate the very great difficulty, indeed, almost impossibility, of answering that in any exact terms, but the hon. Gentleman will appreciate that if there is any redundancy in Scotland, how very much more difficult it will be for a man to find alternative employment in certain parts of Scotland.

I want to refer particularly to paragraph 3 (b) of the Scottish Regulations, which provides: that the officer's retirement is in the interests of the efficiency of the service. My hon. Friend made reference to this extremely vague phrase, which is wide open to abuse. I echo his question: what exactly do the Government intend shall be the machinery for dealing with this kind of case? There must be a right of appeal for any officer who is subject to redundancy on that ground. Further, is there any entitlement in respect of those with less than ten years' service, or those under 55 years of age? I have said that a man who is declared redundant at 54 years of age in my constituency, and in many places in Scotland and the north-east coast, would be extremely hard put to it to find alternative work.

Lastly, have the staff associations concerned been fully consulted, and do they wholly agree with these Regulations? My impression is that they are very far from satisfied with them. I would be glad if the right hon. Gentleman would enlarge on that matter in his reply.

2.33 p.m.

Mr. Powell

First, I want to thank my hon. Friend the Member for South Angus (Sir J. Duncan) for his very generous expression of good will, and also the hon. Member for St. Pancras, North (Mr. K. Robinson), coupling with it the hope—although it is none of my business—that this may perhaps have made him a shadow Cabinet Minister.

At whatever point the line is drawn in provisions of this kind it will be easy to argue that those persons who fall just below it are placed in a difficult position. The line of 55 years of age which has been chosen for the purpose of Regulation No. 3 is in line with the general practice in the public services, where 55 is the minimum age for going on to pension. That is the broad reasoning behind the choice of that age.

Where the officer concerned is below the age of 55, or where his service is less than 10 years, the compensation provisions outlined in my administrative Memorandum will apply. The question of freezing pension in cases of redundancy is one of those matters in which the staff associations, or some of them, would have wished to see compensation carried further, but the House will appreciate that it would not directly or immediately help the redundant officer, who is helped under the present arrangements either by a terminal payment or by being provided with his pension.

The third point made is the question of deduction of the amount of compensation from the superannuation benefits. These are two alternative provisions. The compensation provision is essentially a payment to bridge the gap in a man's life caused by his redundancy, and the fact that further employment cannot be found for him in the Health Service. But the provision in Regulation No. 3 will put him on full retirement benefit from the moment of his ceasing to be employed. It would therefore be an unjustified duplication if he were to be paid for the transition to other employment and also the full benefits to which he is entitled on retirement.

I can set the mind of the hon. Member for St. Pancras, North at rest on the taxation point. I am assured that terminal payments, or compensation, as we have been calling it in this debate, will not be liable for tax.

The hon. Member also asked whether, in respect of Regulation No. 4, there was some specific undertaking which the regulation fulfils. The answer is that the situation has developed since 1955, with the gradual building up in the Service of a higher proportion of normal age entrants. The Government have had the matter under careful consultation for many months with the professions before arriving at the solution in Regulation No. 4, which they regard as acceptable.

Here I can answer the question put by my hon. Friend the Member for South Angus. These Government Actuary's reviews take place every seven years, and another review, for the period 1955–62 is on foot at the moment. But he will not be misled into thinking that this is a matter of a quarter per cent. What it does is to add a quarter per cent., or one-sixth, to the annual brick which is laid each year that a practitioner remains in the Service. Therefore, the amount of addition to the total superannuation benefit may in some cases be very considerable, and even after the five years which he mentioned it will be appreciable.

He also asked what would be the cost of Regulation No. 3. I hope that it will be very small. We all hope that cases of redundancy to be dealt with in this way will be few and far between. It is for that reason that it is not possible to give any useful estimate of the cost over the years—but that this will, in any economic sense, be a true saving, I have not the slightest doubt under either head, because the modernisation of the Service which is implicit in the hospital plan brings with it endless possibilities of increased efficiency and there would be advantage in the elimination from the Service of elderly officers who are no longer fully efficient in the jobs they are trying to perform.

The hon. Member for Lewisham, South (Mr. C. Johnson) asked about the procedure to be adopted in cases of early retirement in the interests of the efficiency of the Service. I accept the point which he and the hon. Member for Fife, West (Mr. W. Hamilton) made, that these are circumstances in which proper safeguards are needed in the interests not only of the individual but of the public service, to ensure that there are sound grounds for the decision.

I propose, in a circular, to indicate the procedure which is to be followed in these oases. It will include the right to a personal hearing by the employing authority, in the presence of two assessors, one of whom will be appointed by me. The officer concerned will have the right to be represented by anyone whom he wishes—trade union official or otherwise. In addition, if early retirement is recommended as a result of that hearing, a full report will have to be made to me, and it is my decision whether the provisions are invoked. I shall have to be told of the opinion given toy the assessors in cases where the officer asked for a hearing.

I shall endeavour to ensure that hospital authorities apply stringent safeguards—which will be under my direct surveillance—in the use made of this new provision.

Mr. Glenvil Hall (Colne Valley)

I am trying to Change my memory. To what extent does this march with the provisions made for the ordinary civil servant? Are the provisions announced by the right hon. Gentleman batter or worse than those?

Mr. Powell

They axe different in a good many respects, because the superannuation system of the Health Service is mot fully comparable with that of the Civil Service. I would rather deal with the detailed matters directly with the right hon. Member than, to use his phrase, charge my memory. But these are two different schemes. We are dealing with two quite different and separate systems; the contributory system of the National Health Service and the non-contributory system of the Civil Service.

I shall be anxious to ensure that the safeguards which are applied in working Regulation No. 3 are effective. I can also assure hon. Members that they will not prejudice the rights of officers where health grounds are in question.

Finally, I can say on behalf of my Scottish colleague that the modernisation of the hospital service in Scotland is not expected to involve redundancy on any greater scale, if on as great a scale, as in England and Wales, that in Scotland there has been equally full consultation with the associations and that what I said about the attitude of the staff associations applies to both countries. With those explanations, I hope that the House will approve these Regulations.

Question put and agreed to.

Resolved, That the National Health Service (Superannuation) (Amendment) Regulations, 1962, a draft of which was laid before this House on 5th July, be approved.

National Health Service (Superannuation) (Scotland) Amendment Regulations 1962 [draft laid before the House 4th July], approved.—[Mr. Galbraith.]