§ 11.18 a.m.
Before I call the first Amendment in the name of the hon. Member for Sowerby (Mr. Houghton), in page 1, line 10, I suggest that it would be for the convenience of the Committee to take with it the next two Amendments, in the name of the hon Member for Manchester, Blackley (Mr. E. Johnson), in page 1, line 10, at end insert:
and in line 11, after "began", insert:
- (a) if the pension began not later than 1st April 1938, twenty per cent.;
- (b) if the pension began after the last-mentioned date but not later than 1st April 1946, fifteen per centafter the last-mentioned date but".and the two Amendments in the name of the hon. Member for Sowerby, to Clause 2, page 2, line 9, at end insert:
and in line 21, at end insert:
- (a) if the pension began not later than 1st April 1950, thirty-one pounds;
- (b) if the pension began after the last mentioned date but not later than 1st April 1952, twenty-seven pounds;
- (c) if the pension began after the last mentioned date but not later than 1st April 1954, twenty-three pounds.(2) The adjusted rate of pension under this section and section I of this Act shall not exceed the amount of pension which would have been payable to a pensioner had he retired on 31st March 1962, after the same length of pensionable service and from the office in respect of which the pension is payable.and to discuss them all together.
§ Mr. Douglas Houghton (Sowerby)
I beg to move, in page 1, line 10, at the end to insert:
What you have suggested, Sir Robert, will, I think, be convenient to the Committee.
- (a) if the pension began not later than 1st April 1950, eighteen per cent.;
- (b) if the pension began after the last mentioned date and not later than 1st April 1952, sixteen per cent.;
- (c) if the pension began after the last mentioned date but not later than 1st April 1954, fourteen per cent.
694 This Amendment proposes to improve the percentage increases for pensions granted earlier than 1st April, 1954. For all pensions which began after 1st April, 1954, we leave Clause 1 as it is. For pensions which began before 2nd April, 1954, we propose higher percentage increases of 2 per cent. in each of three two-yearly rests. That is to say, for pensions beginning after 1st April, 1952, but not later than 1st April, 1954, we propose an increase of 14 per cent. instead of 12 per cent. as is proposed in Clause 1. For pensions beginning after 1st April, 1950, but not later than 1st April, 1952, we propose an increase of 16 per cent. instead of 12 per cent. in the Clause. For pensions beginning not later than 1st April, 1950, we propose a maximum of 18 per cent. instead of 12 per cent. in the Clause.
In the Amendment in Clause 2, page 2, line 9, to insert the new paragraphs (a), (b) and (c), which is to be discussed with the one I am now moving, we are proposing corresponding changes in the scale of the age additions. Here, again, we propose that the age bonus, as I will call it, shall rise by the same two-yearly rests and by steps of £4, as shown in Clause 2, so that the maximum addition for age for the pensioner over 70 will be £31, instead of £20, for those who retired not later than 1st April, 1950, £27 for those who retired in 1950–52, and £23 for those who retired in 1952–54. As regards the rest of the scale, it would remain as in Clause 2.
The Amendment to Clause 2, page 2, line 21, to insert the new subsection (2), which is also part of this group of three, is a stop Clause which provides that the improvements that are proposed in these Amendments shall not raise any pension beyond the level of currently awarded pensions for corresponding status and length of service.
Now for the practical effect of these Amendments, and here I regret that I shall have to trouble the Committee with a few figures to show by illustration what is the effect of what we are proposing to do. Let us take first the case of a clerical officer in the Civil Service who retired in 1947–48. His existing pension for 40 years' service is £295. The Bill proposes to raise the pension from £295 to £330 for a pensioner, if there are any of that vintage, still under 70. For those over 70, 695 the Bill proposes to raise the pension from £295 to £350. The Amendment which I am moving and those associated with it would raise the pension to £348 in this case, instead of £330 for a pensioner under 70, and to £379, instead of £350, in the case of a pensioner over 70.
For a similar officer who retired in 1951–52, his present pension is £295, which the Bill proposes to raise to £330 in the case of a pensioner under 70 and to £350 in the case of a pensioner over 70. The Amendment I am moving and those associated with it would give a pension of £342 for a pensioner under 70 and £369 for a pensioner over 70.
I will not trouble the Committee with other illustrations affecting other grades and persons in other public services, but it is only right that I should point out to the Committee that these Amendments would raise some pensions granted in, say, 1947–48 to a level higher than those granted for comparable grade and service several years later to persons who retired in 1951–52, and, indeed higher than the corresponding pensions which began in the year 1955–56.
I have gone into all this very carefully, and I am bound to admit that this would be a feature—an anomaly, if the Committee chose to call it that—in the rhythm of the scale increases in pensions in chronological order. At the same time, I should point out that this particular feature would be confined to comparatively small pensions, and would not occur higher up. The reason is that, in earlier Pensions (Increase) Acts, smaller pensions received higher proportionate increases than medium and higher pensions, and then, through the 1959 Act, percentage increases were granted on the actual pensions as they then were, with the result that percentage additions were made to pensions which had been variously and unequally adjusted previously by flat rate increases. That explains how it comes about that this clerical officer, whose case I have illustrated and who retired in 1947–48, is now receiving the same amount of pension as a clerical officer who retired in 1951–52, and is receiving only £13 a year less than a clerical officer who retired in 1955–56. The effect of the earlier pensions increases has flattened out the differences between the earlier and the later pensions.
696 So it follows that, if we attempt to improve the earlier pensions by percentage increases, which we are bound to do in order to keep within the Money Resolution, some anomalous results are unavoidable. It requires either skilful mathematics, which I do not possess, or a stop Clause—a clumsy attempt which I have already made—to eliminate these anomalous features from the proposals I am making.
The third of this series of Amendments is the stop Clause which I have just mentioned. I doubt whether what I have put on the Notice Paper would affect anyone at all. The more appropriate ceiling would be at the 1956 level of pensions, so as to stop the Amendment from increasing the earlier pensions to a level higher than that which the Bill proposes to give for pensions granted in 1955–56. After 1955–56, no further anomalies of the kind I have described occur.
I considered whether, in drafting this stop Clause, I should put in the date 31st March, 1956, instead of 31st March, 1962, but then I discovered that some pensions which began before 1955–56 are already a little above those which began in the year 1955–56. Certain local government officers, for example, who retired in 1951–52 will, under the Bill, receive a higher pension than their contemporaries who retired as late as 1957–58. Long experience teaches me that one receives no thanks for moving any Amendment which deprives people of benefits which are already in a Bill, so that I think the only thing to do is to plough my way through these Amendments, warts and all, in the hope that the Committee might think they will produce something effective and more acceptable than the proposals in the Bill.
The truth is that although a simple, easily understood scale of percentage increases looks nice and tidy, stepped up by 2 per cent. for each year in rhythmic scale, this is not a satisfactory or indeed a fair way of doing it. There are other methods, though admittedly they would be more complicated and they would not be free from some disadvantage. But in any case, I cannot take time, and probably it would not be in order in moving the Amendment, to lay them before the Committee. I 697 must therefore use the implements which are forced into my hand by the Bill and the Money Resolution.
I am not unduly put out by the anomalies, if they are anomalies, which these Amendments would create. Some similar anomalies are already there, and people have grown used to them. They have been there since the 1956 Act. I know that in the public sector probably more than in other places the comparative grievance is the most bitter of all, but time is a great healer, and when things have been there long enough they are accepted. The anomalies which the Bill will perpetuate in local government pensions will not disturb the peace and tranquility of the pensioners' world. These were brought about because in the 1956 Act, when it was before the House, there was a desire on both sides of the House to correct what seemed to be a major flaw, and in correcting that, other minor anomalies crept in.
What is the case for tampering with the scale in the Bill? Why do we wish to top up still further the earlier pensions? A simple and straight answer is that those who have been retired longest have suffered most and for the longest time. They are also now the oldest in age. Many of them who were in higher positions or grades are now receiving no higher pensions than many who have retired more recently from lower grades or positions, and even after the Bill becomes effective, people who retired ten years ago will receive considerably less than if they had retired last year.
I can give one or two examples of pensioners over 70 who will receive the maximum benefits under the Bill and who retired ten years ago. A postman who retired in 1951–52 would need a further increase, over and above the increases granted by the Bill, of 16½ per cent. to bring him up to the level of comparable pensions granted last year. A clerical officer of 1951–52 vintage would need a further 15½ per cent., an executive officer a further 19 per cent. and an administrative principal a further 27½ per cent. to bring them to the level of current pensions. The Amendments increase the pensions by only a further 4 or 5 per cent., expressed 698 as a percentage increase on the new adjusted rate under the Bill.
It may be asked, "What is the basis of these additional increases?" The Minister may ask me, "What is your formula?". I wish that I could satisfy myself about my formula, as I have no doubt the Minister wishes that he could satisfy himself about his. The truth of the matter is that there is no formula, as I said on Second Reading; this is a pragmatic approach to the problem, based on the Government's judgment on a number of relevant considerations. They have the advantage, perhaps, of being nice round figures both for my Amendments and in the Bill. We must not despise nice round figures. In negotiation in the Inland Revenue many years ago, when I asked the Board of Inland Revenue why they were proposing a certain figure, the director of establishments said, "It is a nice round figure". He thought that that was abundant justification for it. Of course it must be related to something reasonable, but in the absence of a body of principle on which to work, all we can attempt is to do justice as we see it and to relate the interests of one body of pensioners to those of another.
I suppose that the only principle which we could say is well sanctified by being in print, and which has never been modified in print, is the now presumably obsolete White Paper of 1954, Cmd. 9092. Paragraph 44 reads,The fundamental principle of public service pensions, that once awarded they are not normally subject to change in either direction, has been upheld by successive Governments. It has also been endorsed by Parliament. Her Majesty's Government are in no way prepared to abandon it.That is what they said in 1954, although I think that events have shown that if the Government have not abandoned that formula, at least they have retreated from it.
I saw in the Treasury hand-out of 31st October that after describing the basis upon which pensions are calculated, they said,There is no provision for them to be altered once they have been awarded, but when hardship to pensioners has been caused by marked increases in the cost of living, it has been the policy of successive Governments, like any other good employer, to give some help by means of Pensions Increase Acts. These Acts 699 have never been designed to give full compensation for rises in the cost of living but to give a measure of relief from hardship.This leaves the Government free to do almost as they like, subject only to the salutary judgment of the House of Commons, which occasionally they get in full measure and which they certainly got in the debate on the Private Member's Motion which was passed without a Division on 25th May this year.
But pensioners have no idea when relief will be given or how much they will get when the Government propose a change. They have to form themselves into pressure groups, with no machinery for negotiation, no machinery for arbitration, no redress except through the House, and here we are trying to provide it for the sixth time since the war.
I thought that the general tenor of the speeches on Second Reading was firmly in favour of some better method being found than this ad hoc hit-and-miss method of doing it. Meanwhile, however, we have to try to patch things up until that better way has been found. I do not want to prejudge the efforts which I hope will be made to find that better way. Various ideas have been mooted, but I do not think that we can easily decide upon them until we are clear about the place and the purpose of occupational pensions in the wider context of conditions of service, and probably in the even wider context of the social and economic conditions of the community as a whole; and perhaps also in relation to the current level of wages, either generally or in particular occupations.
One thing is certain. There is no substance in the 1954 doctrine of the immutability of pensions—that is, that once they are fixed they stay fixed unless the employer is moved by hardship to bring relief. I do not know where that doctrine comes from. I know of no sanction for it in any document ever published from an authoritative source. Indeed, there is evidence that if one goes far enough back there is sanction for the contrary view that pensions are flexible, like pay, and should be adjusted to meet changing circumstances.
Another interesting suggestion, which was put by the hon. Member for Manchester, Blackley (Mr. E. Johnson) in the debate on the Address, was that all past 700 pensions should be kept in step with currently awarded pensions, but a few paces behind. Even if past pensions were brought up only to the levels of five years ago and kept five years behind it would be an enormous advance. But one may ask, why five years behind?
After considerable hesitation, and going over this ground a great deal, I am now strongly in favour of relating pensions to current levels of pay in the corresponding grades or sections of occupation. There is a case for harmonising the relationship between pensions and current pay. Some body of responsible opinion should examine this proposition.
§ Mr. Houghton
I am trying to justify my own pragmatic and ad hoc approach embodied in the Amendments. I realise that they cannot be satisfactory until supported in a wider sense by independent opinion. Anyway, I think the suggestion has been thrown out more than once that this whole matter should be referred to a body of independent opinion.
I do not want to get further out of order, and I have some most attractive arguments here which I am sure would impress themselves very considerably on the Chief Secretary, but I will try to summarise them by saying that we must remember that, with occupational pensions, on the first day of retirement current pay is cut in half. That is the first blow. In some cases, of course, the pensioner will get a little more than half pay if he has earned additional credit by extra service.
He thus starts his retirement on half pay. Then he finds that, from the first week of retirement, his half pay begins to melt away both in terms of purchasing power and in terms of relativity with the pay and pensions of those who come afterwards. Pay goes up, the pensions stay put. Thus, pensions fall behind. In conditions of social and economic advance pensions suffer, and, of course, in conditions of inflation they suffer more.
Another aspect is that pensions never command the same public attention as does pay. People, I suppose, are concerned with pay because of all the 701 dramatic sanctions which workers can threaten to impose if their wishes are not granted. Pensioners can only protest. Their cries may not be heard for they have no threats to splash the headlines. For instance, let us contrast the public interest in railwaymen's pay with the appalling indifference to the conditions of railway superannuitants. These superannuitants are not in the Bill but they provide a dramatic illustration of the point I make.
These Amendments settle no principle but are an attempt to give a marginal advantage to those who are older and who have been on pension through the leanest years of all. They went through the bitterest experiences of the means test, together with the limitations of the earlier pensions increase measures from 1947 to 1956.
I believe that hon. Members of this House are the only workers who still endure a means test for their occupational pensions, and that their vocation is the only one where there is a compulsory contribution on people who cannot possibly benefit from the scheme. So we know what this sort of situation means.
The State owes these pensioners restitution for lamentable treatment in the past, but indeed this can never be paid for in full—certainly my Amendments do not do it. They do nothing more than advance the older pensioners of longer retirement a little further up the scale. This will still give those who retired ten years ago less than the full compensation for the rise in retail prices which the Treasury's hand-out to the Press said that these sucessive Acts never attempt to do. Why do they not attempt to do so? The retail price index has risen 62 per cent. in ten years. These Amendments would give a total increase from the beginning of less than 60 per cent. to a clerical officer over 70 and less than 45 per cent. to those under 70. There is nothing unreasonable about that. The Amendments are extremely modest.
I hope that the right hon. Gentleman will be able to say that he is prepared either to adopt these Amendments or something like them. I provide this relief to him: we shall not seek to divide the Committee on these Amendments. What we cannot get by persuasion 702 we shall not get by vote. In any case this is an all-party effort. The Committee is united on this. Members of goodwill on both sides are anxious to do their best for these retired State servants and it would be no service to them to bring any sense of disunity and friction into the Committee. Having regard to this and the atmosphere created on Second Reading, I hope that we shall have a response which will bring satisfaction, comfort and benefit to those we are trying to help.
§ Mr. Eric Johnson (Manchester, Blackley)
I am grateful to you, Sir Robert, for allowing my Amendment to be discussed together with that of the hon. Member for Sowerby (Mr. Houghton). As the Committee is aware, under the provisions of Clause I the maximum increase of 12 per cent. applies to those whose pensions began only six and a half years ago. My reason for putting down my Amendment is that I think that this is far too recent a date for giving the maximum increase, because a great many people have pensions which began very much earlier and are at a very much lower rate.
The hon. Member gave various examples and I do not want to quote figures. It is quite evident to the Committee already that this is not a once-for-all Measure. There will certainly have to be another unless we can find a better way of dealing with these pensions.
The hon. Member was good enough to refer to a modest suggestion I made during the debate on the Address. It would be wrong to pursue that any further now, but I would point out that we shall find, if we join the European Economic Community, that we are the only member nation to adhere to the principle of inmutability and that the rate recognised by the Six is the current rate. If we have to harmonise our social services with those of the Community, we will find that we have to have yet another Pensions Bill of some kind, because the Treaty of Rome calls for collaboration in this respect between the various member countries.
In the last paragraph of the Financial and Explanatory Memorandum which accompanies the Bill, it is said that pensioners of the Armed Services will be 703 granted similar increases by Prerogative Instruments outside the Bill. I suppose that we can presume from that that the same percentage increases from the same dates will apply to former members of the Armed Services.
The hon. Member cannot pursue the subject of Service pensions on this Amendment.
§ Mr. Johnson
I was trying to show that what we do in the Bill directly affects the Services because of the wording of the Memorandum.
§ Mr. Johnson
Would it be right for me to say that what we do in the Bill will directly affect people who are not included in the Bill?
The hon. Member can make a passing reference, but I cannot permit him to go further than that.
§ Mr. Johnson
I am sorry if I transgressed, Sir Robert. My Amendment is on a rather smaller and more modest scale than that of the hon. Member for Sowerby. It asks for a greater increase only in the case of those who retired before 1938, and in their case I have asked for an increase of 20 per cent. If my right hon. Friend were to accept the Amendments of the hon. Member for Sowerby, I would be highly delighted, but I should be happy if he would accept my suggestion in the case of those who retired rather earlier.
I have not calculated the cost of my proposal, but I have been advised that the increases which I propose, 15 per cent. before 1946 and 20 per cent. before 1938, would not create the anomalies which the hon. Member for Sowerby feared might arise from his proposals. What my Amendment about those retiring before 1938 would do is to make the maximum increase payable to those who retired not six and a half years ago, but twenty-four and a half years ago.
The numbers affected would not be very large. It would affect more members of the Armed Services than former civil servants, because there can be very 704 few surviving civil servants who retired at the age of 60 or 65 forty-three years ago at the same rate of pension which was being paid in 1919, for they would now be 103 or 108 years old, but there are some 5,800 former officers alive today whose pension is at the 1919 rate. Even if we think that what is done in the Bill is adequate for the pensioners who are mentioned in it, which I do not, it is not adequate for those who will be indirectly affected.
I hope that my right hon. Friend the Chief Secretary will be able to assure the House that the Royal Warrant will not be too rigidly tied to what we do today. My right hon. Friend the Leader of the House, in answer to questions yesterday about next week's business, said that the Royal Warrant would not be ready for next Friday and he mentioned the possibility of our referring to it in debate. If that is so, I should like an assurance that the Government's mind is not altogether closed to making some variation and taking some action which will give greater protection to those who retired a very long time ago.
§ Dr. Horace King (Southampton, Itchen)
This morning we have a Committee of friends and it is characteristic that there are Amendments from both sides of the Committee seeking to do what we are all trying to do. There is no argument about the principle of the Bill. As the Chief Secretary said on Second Reading, all the questions which we are discussing are questions of judgment. He has to reconcile the claims of the community with those which we are pressing for those whose pensions have shrunk. There is no argument in the Committee about the other principle which the T.U.C. and public service pension pensioners have set forth that there should be a weightage for the increases for those who retired earliest and for those who have the smallest pensions. What we are trying to do is to push the Government along the line of increasing the benefits for those who retired earliest and those whose pensions are smallest.
There can be no question about the simple fact that pre-1956 pensions have fallen in value compared with those awarded after 1956. The Government recognise the moral case of pensioners who retired in 1956, 1958, 1959, and 1960, as compared with those who retired 705 in 1962. What they do not recognise so far is that there is a case as between pensioners who retired after and those who retired before 1956. In our Amendments we seek to extend the escalator which the Government have rightly introduced in respect of post-1956 pensions. We are arguing that it is wrong to fix the arbitrary date at 1956, and that is what I want to prove to the Chief Secretary.
I am always tempted to use my own salary in 1945 as an example. I have no interest to declare, for I forfeited my pension rights to come to the House a long time ago. The salary I was drawing as a schoolmaster in 1945 is about one-third of the salary I would draw for exactly the same piece of work today. If I had been at the age of retirement in 1945, the pension I would have drawn would have been roughly one-third of the comparable pension for the same job today. But it would have been not much more than half the pension which I could have drawn in 1956, and the disparity between the 1946 position and the 1956 position, although not as great as that between the 1956 and present positions, is still great.
When the last Pensions (Increase) Bill was in Standing Committee upstairs, in 1959, my good friend the hon. Member for Bath (Sir J. Pitman) examined the salary increases of one of the public service groups. He found that in 1946 there had been a big increase, an increase in 1950, an increase in 1953, an increase in 1955 and a big increase in 1956. The Minister's proposals take care of the big increase which took place in 1956, but fail to make any allowance for other increases between 1946 and 1956. So far he has corrected the evil in respect of the post-1956 pensioners, to distinguish between 1956 pensioners and those who went on pensions years before 1956.
I am sorry to weary the Committee with figures, but they are important. I gave one or two on Second Reading and I have gone back to the documents of the Public Service Pensioners Council, which all hon. Members will agree to be honest and factual. I give the comparable 1946 pension figures of a number of people compared with the 1956 pension figures. In 1946, the 706 pension of a Scottish teacher is represented by the figure of 49 per cent. of the present figure. In 1956, it was 62 per cent. The disparity there is between 49 per cent. and 62 per cent. For a policeman, the disparity is between 47 per cent. and 68 per cent. For a L.C.C. public servant, the disparity is between 65 per cent. and 75 per cent. For the fire brigade, the disparity is between 40 per cent. and 47 per cent. For the Post Office the disparity is between 64 per cent. and 77 per cent.
All these people with these fantastic disparities between the 1946 figures and 1956 figures benefit in exactly the same way under the Bill unless they are over 70 and are caught up in Clause 2. If one considers the very old pensioners, the pre-1946 pensioners, some of the very old women and men who are still alive, who retired in 1939 or 1940, the disparities are even greater.
What we are arguing this morning is that just as we have taken care of the 1956 position onwards, so we ought to look back to the 1939 to 1956 period and make some distinction between these various groups of pensioners. I do not expect the Minister to say that he will accept word by word either our Amendment or the Amendment in the name of the hon. Member for Manchester, Blackley (Mr. E. Johnson), but I hope that he will concede that he will do something about it, that he will add at least one new escalator. I like the attractive Amendment of the hon. Member for Blackley. If the Minister cannot go as far as we want him to do, I ask him at least to go as far as that Amendment suggests.
When we turn to the Amendments to Clause 2, again, we are dealing with an issue of judgment, but I think that it is more than that. Both sides agree that people over 70 require special consideration. There are the physical difficulties of increasing age. There are the material consequences of fairly long retirement. There is the fact that, at 70, problems of old age are becoming more acute, and the fact that the people with whom we are dealing in Clause 2, and who are to get this little extra lump sum, have been longest exposed to inflation. They need to replace things which have worn out. Again, there is the smaller capacity of the very old 707 pensioner to help himself. He has to buy aid.
I put those points to the Committee, not as my own, but as the points put on Second Reading by the Chief Secretary himself who, in his other habitat, was a splendid Minister of Pensions and National Insurance, handling just such problems as those with which we are dealing in Clause 2. We say that if those things are true about the over 70 pensioner, they become more true, the more his pension is eroded. They are more true of the pensioner over 75 or over 80 than they are of the pensioner over 70. The further back one goes, the more the principles which the Chief Secretary set out on Second Reading apply. So, just as we want to increase the percentage, to extend the percentage escalator by our Amendments to Clause 2, back into this group, we want the lump sum to be increased in respect of the very old pensioners.
The cost of this second group of Amendments could be only very tiny. All that we are asking is that the Government should give the very old pensioner another £11 a year, just over 4s. a week. Just as, in welcoming this new principle in Clause 2 we have said that we should give a lump sum to some people because their pensions are so small that a lump sum would be so much more beneficial than a percentage increase, so the little amount that we are asking the Government to give by the Amendments in Clause 2 will be of tremendous benefit indeed to some of these old pensioners whose pensions are based on very meagre salaries compared with the present salaries paid throughout the professions. They are very meagre indeed, partly because there has been an upscaling of most of the public servants about whom we are talking, and partly because the cost of living has expanded out of all recognition.
I hope that the Minister will respond to the pleas, which I am certain will be made from both sides of the Committee, that he should reconsider these excellent Clauses, 1 and 2, and amend them along the lines for which we are asking.
§ Dame Irene Ward (Tynemouth)
I have not attempted to put down any Amendments of my own, nor have I added my name to the Amendments proposed from 708 both sides of the Committee. This is not because I do not fully support them, but because I have not a mathematical, but only a simple, mind. I sometimes think that women are much more realistic in these matters than men, and I am always delighted when I find some men who take the trouble to go into the details of life. I have always thought that men much more enjoy talking on the big scale—and they have a right to—than women enjoy talking about detail, so I want to make only this observation, and make it as forcibly as I can.
I think that the date, 1956, is absolutely ridiculous. I agree with every word that that has been said about trying to improve the position of the older pensioners. I am not in the least impressed by all the arguments that were put forward by the Treasury about it getting mixed up with pensioners who got their pensions after 1956 and the like.
What really staggers me is that when we come to big problems the Treasury generally produces the most realistic arguments, and we can get over almost any difficulty that arises, but when we get down to dealing with small details the Treasury mind is as flat as a pancake. It never seems to be able to find any answers at all. If the Treasury could not find the answer, I think that this House could have, and it is quite clear from the terms in which the Amendments have been moved that it would have been possible to find a more reasonable and generous way of meeting the very difficult situation of the older pensioners.
I cannot understand why, in matters of this kind, my right hon. Friend, before bringing in a new Pensions (Increase) Bill, does not set up a committee of people who have the knowledge and could advise him about this matter. He would then have our ideas to put before the Treasury before the Bill is produced, and would obviate the necessity for moving Amendments such as those which have been moved today.
I am sorry that the hon. Member for Sowerby (Mr. Houghton) gave a present to my right hon. Friend by saying that the Committee was not to be divided on the Amendments. I should have liked the Committee to have been divided, because I think that the Government would have been defeated, and I think that 709 occasionally a defeat on humanitarian problems is very good for any Government. I am, therefore, rather sorry that my right hon. Friend has been given this present, because of course it makes his position much easier.
§ Mr. W. R. Williams (Manchester, Openshaw)
What is there to prevent the hon. Lady doing that herself?
§ Dame Irene Ward
There is nothing to prevent my doing it myself, but I would have preferred it to be done on the Amendments, and by the Committee as a whole. Incidentally, if I were the only one to say "No", I might not be able to find another Teller, so that nothing would happen as a result. That is why I am sorry that the matter will not be pressed to a Division. But hope always springs eternal; perhaps my right hon. Friend will meet the case that has been put forward so rightly by those who have already spoken.
I want to refer to the question of immutability. I shall not go outside the rules of order, but I have to ask my question in a term which relates to the widows of Service pensioners. My recollection is that some years ago, probably in about 1952, the basic pension of Service widows was increased——
Order. I am sorry to interrupt the hon. Lady, but that is just the sort of thing that she cannot do in Committee. In the Second Reading debate passing references to Service pensioners were allowed, but to go into detail in Committee is right out of order.
§ Dame Irene Ward
I am not going into details, Sir Robert. I am merely saying that the principle of immutability was broken. I shall not even refer to the direction in which it was broken, or mention which section of the community was affected. All I want to point out is that there was an occasion when the principle was broken. My right hon. Friend can confirm this; it was done because the basic pension had not been increased for 100 years. It should not be very difficult for my right hon. Friend, with his very active brain, to say from the Box what the occasion was, and what section of the community was affected by the breaking of this principle. I will go no further than that. I have made my point quite clearly. Everybody knows the matter to which I have referred.
710 In the Second Reading debate I raised the question of what will happen to those who draw National Assistance. I want it made quite plain that these bonuses——
Order. That has nothing to do with the Amendments we are discussing. I must ask the hon. Lady to keep within the bounds of order. What happens to people on National Assistance has nothing to do with the purpose of these Amendments, which is to enlarge the scope of what is being done under Clauses 1 and 2.
§ Dame Irene Ward
If I am supporting an increase in bonuses I want to know whether the bonuses will be at the full rate. I am certain that when my right hon. Friend replies he will make some reference to the cost; at least, it would be odd for a Treasury Minister not to make some reference to it. Am I not in order in asking whether my right hon. Friend will not set off against that cost the saving in National Assistance? That is surely drawing up a proper balance sheet.
If the hon. Lady is trying to advance, as an argument for increasing these rates, the fact that some saving would be made in National Assistance I cannot rule that entirely out of order—but she must not pursue the matter too far.
§ Dame Irene Ward
Thank you very much, Sir Robert; I will not pursue anything too far. I merely want to know what will happen. If my right hon. Friend advances the problem of cost I want him to set against that the saving in National Assistance. I will not go any further than that. I have raised the matter only because I noticed how cleverly the Financial Secretary refrained from answering my question on this matter during the Second Reading debate.
I support the Amendments wholeheartedly. They are tremendously important to the arguments which are being directed to the question why we cannot have a variation in the scale and an increase in the percentages. I know that my right hon. Friend will bring forward all sorts of arguments about it. The point is that there are two aspects to be considered. There is also the Prime 711 Minister's pledge. The Prime Minister did not say anything about being caught up in the difficulties of finding better circumstances for the very old. Therefore, that point must be dealt with as well.
Nobody can say that a 12 per cent. increase in a pension first drawn twenty-five years ago could possibly enable the recipient to share in the increased prosperity of many members of the community. When pledges are made by my Prime Minister I expect them to be kept. I hope that the Treasury realises that.
I will not say much more. I have already got into very deep water. If the discussion goes on for very much longer I shall have to leave to catch a train. That will probably he a very good thing for the Financial Secretary, because I will not be here to point out that he is not answering the question I have put. I support the Amendments, and hope that in the future the Treasury will see that before it puts forward a scheme selecting a date which is not satisfactory to anybody who knows anything about the problem it obtains the advice of people who do know something about it.
§ 12.15 p.m.
§ Mr. George Thomas (Cardiff, West)
I am very grateful for the opportunity of following hon. Member for Tyne-mouth (Dame Irene Ward). I always feel like calling her the "hon. and gallant Lady". If I may say so without causing her offence, she reminds me of Boadicea.
§ The Chief Secretary to the Treasury (Mr. John Boyd-Carpenter)
The hon. Member is being an hon. and gallant Gentleman in saying that.
§ Mr. Thomas
I have a very warm corner for Boadicea, so the hon. Lady is all right. She has once more championed the cause in respect of which we have become accustomed to hearing her voice.
We are all concerned about the very old pensioners. In my division lives one 712 of Cardiff's most distinguished former head teachers, now in her 92nd year. She retired from the service of the local authority before I started to teach, in 1931. She is receiving a pension of which the House ought to be ashamed, for when people have served in honourable positions and have devoted forty years of their lives to teaching, or to some other public service, they are entitled to a certain standard of living which reflects the appreciation of the community of the service that they have given.
These very old retired pensioners have to be looked after. My former headmaster, who cared for me in the grammar school at Tonypandy—which is a good place to go to school—died only a fortnight ago, a very old man. His pension was unworthy of those responsible for it.
Not only do old pensioners have to meet the same increases in the cost of living, but they require more comforts. They need someone to be paid to look after them. It is a great humiliation that people who have served in the public services for over 40 years, and who have, in many cases, contributed to a pension scheme, should be driven to the necessity of having their pensions supplemented by National Assistance. One of the objects of the Amendment is to ease the lot of those people particularly, and I was grateful to my hon. Friend the Member for Southampton, Itchen (Dr. King) for the careful attention he gave to the details of the pensions of these people.
I believe that the lump sum ought to be increased and that the date of 1956 is out of touch with reality. I congratulate the Minister on his approach to this question. I have never found the right hon. Gentleman unsympathetic, although I have disagreed with him very often. I consider that his heart is often better than his judgment. But on this occasion I believe that he is genuinely trying to meet a public need. I ask only that he go this step further. It would not involve a great cost to the community, or upset the balance of the Bill. I consider that this is a reasonable Amendment and one which the Minister could easily accept.
§ Mr. G. R. Howard (St. Ives)
I wish to ask one question and I hope that I shall be in order in doing so. I believe 713 that the pensions of certain people who work in the Palace of Westminster are on at least five different scales. I do not know whether the 1956 figure is the best. But I wonder whether something can be done to level up the pensions of older people by making an adjustment in the portion which is tax-free. Were they given a slightly larger tax-free amount it might bring their pensions into line with the pensions of other people. Such a form of increment would cost nothing and might be of considerable help.
§ Mr. E. Shinwell (Easington)
The hon. Lady the Member for Tynemouth (Dame Irene Ward) is always threatening to vote against the Government. I am eagerly awaiting the occasion when we may witness that remarkable phenomenon, the time when the hon. Lady will screw up her courage to the sticking point. It is obvious that that will not be today because the hon. Lady is going to catch a train and she will pursue that objective rather more logically than the objective which she had in mind when she addressed the Committee.
During the Second Reading debate I made a speech which occupied four-and-a-half minutes of time, and no doubt for that I earned the gratitude of hon. Members. I promise that I will not detain the Committee much longer than that today. On that occasion I welcomed the Bill. But on reflection I have come to certain conclusions about it. One is that this Bill is miserably inadequate and is not based on any sound principle. My hon. Friend the Member for Southampton, Itchen (Dr. King) said that we had to exercise our judgment in such matters and of course we have to do that. But we must have regard to matters of principle. After the speech of the right hon. Gentleman last week—which I did not happen to hear but which I have succeeded in reading in the OFFICIAL REPORT—I came to the conclusion that this Bill is not based on any sound principle.
There are certain principles to which we must have regard. I should have thought one was the increase in the cost of living over a period of years since these pensions were first conceded. My hon. Friend the Member for Sowerby (Mr. Houghton) has displayed a remark- 714 able industry in matters of this sort, which is commendable, and I am sure that he has earned the gratitude of those affected. He referred to this aspect of the question and so I shall not pursue it.
It is obvious that pensioners, particularly those who have reached a venerable age and who received their pension several years ago—people who occupied important positions in the Civil Service, in municipal corporations and the like—are concerned about the value of money which they receive in the form of a pension. This is one principle to which the right hon. Gentleman has paid no respect at all. My hon. Friend the Member for Cardiff, West (Mr. G. Thomas) said that the right hon. Gentleman was very sympathetic, and of course he is. But he is in the hands of the Treasury. I have had ample experience of the Treasury over the years, dating from the time when I was a member of the first Labour Government in 1924 and of succeeding Labour Governments, and I know how difficult and negative the Treasury can be. There is no sympathy to be obtained from the Treasury, none whatever. But I agree and concede that the Minister is sympathetic. I have had experience of that, and have other hon. Members, in connection with pension matters.
In this connection I am primarily concerned with the problems of those who retired several years ago. It seems to me that there is a penalty in having been born too soon—I am not making this a personal matter, but that is how it seems to me. Had one been born, say, 40 or 50 years ago and had to receive a pension, if one were available, circumstances would be different. But the pensions of people who were born many years ago and have now reached a venerable age of over 70 years—having regard to the fact that wages and salaries were on a very low scale when they were employed in the Civil Service and similar offices—are obviously on a low scale. These people have had to wait many years for their pensions, while the cost of living has been rising, only to find that this ad hoc principle—if it can be called a principle—is to be applied to them.
There is not much between the Amendment of the hon. Member for Sowerby and that of the hon. Member for Manchester, Blackley (Mr. E. Johnson) and the Minister. My hon. Friend the Member for Itchen said that 715 in certain cases it might amount to about 4s. a week, which is not a great deal. But that amount might bring added comfort to people who are affected.
I noticed that during his Second Reading speech the Minister referred to certain categories of pensioners and to the effect on some of the smaller pensions of older pensioners. The right hon. Gentleman said:If one takes the case of a postman who retired early in 1956 with forty years' service and is now over 70, his present pension of £4 5s. 9d. goes up by 17s. 10d. to £5 3s. 7d."—[OFFICIAL REPORT, 9th November, 1962; Vol. 666, c. 1320.]12.30 p.m.
No one, surely, would regard that as an adequate pension. If there is no other income available, that person obviously must apply for National Assistance. That surely is not a desirable situation in which these people should be placed. The same applies, to quote the right hon. Gentleman again, to a policeman with a period of service of thirty years with a current pension of £7 4s. 3d., which goes up by £1 4s. 11d. to £8 9s. 2d. When one compares the present proposals with recent increases for members of the police forces, some of whom I understand are in receipt of £1,000 a year—I am not objecting to that; I am far from complaining about it—the right hon. Gentleman must agree that the proposals are miserably inadequate.
These people have had to wait a long time for this legislation. I am sure every hon. Member has had correspondence from associations concerned with this matter and from pensioners themselves. In spite of all the agitation, in spite of all the pressure exerted on the Government by hon. Members, it has taken many months before the Government came to the conclusion that something should be done. In these circumstances, the Government surely could be more generous.
In the short speech I made on Second Reading last week, I referred to anomalies. My hon. Friend the Member for Sowerby said that pensioners get accustomed to anomalies, and no doubt they 'do. Working-class people get so accustomed to poverty that they hate to give it up. That is one of the reasons why occasionally they vote for the Conservative Party. Although pensioners 716 may be accustomed to anomalies, that is no reason why we should not exercise a little generosity. Having regard to the fact, which is obvious, that there is very little from the financial point of view between the Government's proposals and those of the Amendments, I think that the right hon. Gentleman could see his way to be more generous.
§ Sir Eric Errington (Aldershot)
I wish to ask the Chief Secretary to deal with two points which worry me. We have to look at the total income of pensioners and see that it is adequate to meet the situation, but there are two matters that I am not certain about and I should like my right hon. Friend to tell us what is the position.
The first point concerns terminal grants. I know that it is not in order to refer to Service matters, but pensioners who have been able to obtain terminal grants on leaving their work have been put in an infinitely better position than those who did not have such grants. I do not know what the situation is in the Civil Service, but in considering the dates at which it is appropriate for increases to be given it seems very important to know if and when terminal grants were first paid.
The second point is of a similar character and relates to National Health Insurance. Once again, I have in mind the Service pension, but it must arise in the same way in regard to civil servants. It was not usual, before 1948, for National Health Insurance to be paid by those in the Services. The result was that, generally, they were infinitely worse off than those who subsequently were able to join the National Health Service scheme, which increased their total income.
I should be glad if the Chief Secretary would deal with these matters, because it seems that the dates are very important in considering whether or not the overall income is adequate. If a widow is given a pension of £150 and her husband was unable to be insured under the National Health Insurance scheme, that £150 is her total income. It is quite inadequate. If, on the other hand, it is over-doubled by the fact that she is in the National Health Service scheme, an entirely different position arises. For that reason, I think that the situation should be corrected.
§ Mr. W. R. Williams
I must apologise for not being here last Friday to listen to a debate on a subject in which of course I am naturally very interested, but unfortunately that was through circumstances completely out of my control. I therefore apologise for not having been in my place to deal with this matter which is very important to thousands of men and women with whom I served for the best part of 40 or 45 years. I have, however, read HANSARD very carefully. I think it was one of the best debates in connection with a Pensions (Increase) Bill that I have ever read.
The House itself has changed in its attitude towards this matter in the last 10 or 12 years. I am satisfied, also, that the Minister has changed. He has mellowed and become extremely liberalising in his attitude since we had our first discussions on Pensions (Increase) Bills. I believe that his term of office in the Ministry of Pensions and National Insurance has done the right hon. Gentleman a great deal of good. It has brought him into very close contact with life as it is in actuality for millions of people on small salaries, small pensions and generally small incomes.
In reading HANSARD I think I detected a tendency for the House to realise in a more significant way than ever before the need for Parliament and the community to start dealing with these pensions in a more sympathetic and generous way. I must congratulate the right hon. Gentleman on what I regard as a very fine effort to try to bring these old people more into the picture in an age in which we are all talking about the affluent society and the prosperity coming to us. I congratulate the Minister and think it a very good effort, but I am not saying that it is a perfect effort. If I thought that, I should not be supporting these Amendments.
In the early days it needed from some of us a great deal of effort to try to get the House to appreciate that we should even look at the question of hardship. Those early discussions on pensions Bills were marked with a great deal of indifference to the question of hardship. We departed from that years ago and the last two or three Bills have shown that if there is hardship this House is prepared so far as it can to try to remove it.
718 We have now gone a step further. In the Bill we say not only that we must prove hardship on the part of the old people but that if we can prove that they are not marching step by step with us towards the better, fuller, higher life there is a responsibility on us to find ways and means to enable them to do so. That is obvious from last Friday's debate.
It is also obvious from that debate—I now come to the point of the scales and percentages—that we now realise that there are pre-1956 and post-1956 periods. We now believe, rightly, that the people who have really suffered or have been dragging their feet in relation to the new standard of life are those who have been retired for the longest time and on the smallest pensions.
I will not waste time showing the effect of that on, for instance, postmen. There is, I am sure, no need for me to tell the Committee that the pensions of postmen, even at the maximum after forty years' service, are very small. Also, some postmen were not covered by the National Insurance Acts, and, therefore, the pension represents the sum total of their income.
We are now trying in the Bill to go back a little and cover that period of extreme hardship. As the right hon. Gentleman has said, it is a question of personal judgment. The Minister judges that the percentage scales outlined in Clause I represent the way to do it. He says, in effect, "If you do not do it very much in this way, you will create certain anomalies."
I have been dealing with anomalies in the Civil Service for the best part of forty-five years. I have never known a scheme put into operation or an award made by a arbitration court which did not result in some anomalies. I am not afraid of anomalies. I am used to them. If merely the creation of anomalies is preventing the right hon. Gentleman from adopting some of the Amendments. I hope he will forget it. There are some bright boys in the Treasury who by consultation with interested bodies, will quickly help him to overcome the little anomalies which may be created.
If I may put it vulgarly on this occasion, I ask the Minister to fall over backwards in this matter. As I have already emphasised, he has shown a magnanimous attitude. Why should he 719 not go one step further and accept our table? I like the Amendment proposed by the hon. Member for Manchester, Blackley (Mr. E. Johnson), because the further back we go the greater the hardship and the need. I do not mind if the Minister adopts that Amendment. I am not too sure which of our own Amendments I prefer. If I were an old-age pensioner I think I would consult a crystal gazer to discover whether I was likely to live long or not, and the Amendment I supported would depend on that information. Whichever Amendment the right hon. Gentleman adopts, I am sure he will be meeting a great need.
I know thousands of the people concerned. I nearly had to declare an interest when I rose, and I am still not sure whether I should or not. I belong to veteran societies. If the Minister wants to find out the way to calculate the lump sums, he should read some of the journals published by the veterans societies, particularly the Post Office one, because they have a very good habit of offering congratulations to their nonagenarians and octogenarians in chronological order. That will give the Minister an idea how little some of these concessions will amount to. Some of my hon. Friends have suggested that some concessions would mean only three or four shillings to an individual. In many cases it is only a matter of £9, £10 or £15 a year. It might be said that they would amount in aggregate to £1 million, £2 million or perhaps £3 million. I do not know.
§ Mr. Houghton
The best I can do for my hon. Friend is to say that the cost of our Amendments would amount to between £2½ million and £3 million. That is all.
§ Mr. Williams
If that is so, I take it that the proposals as a whole will cost in the ultimate about £23 million a year. It is in order to make the Bill a satisfactory one that we ask for another million pounds or so. Having done so well, does not the right hon. Gentleman think that he will be spoiling the ship for a ha'porth of tar if he does not grant what we ask for in order to help those who are in great need of assistance?
As I said, I do not care which Amendment the Minister accepts, but I shall 720 be very disappointed indeed if, after hearing the appeal from a united Committee—it is united in the common effort to ensure that justice, equity and fair play are accorded to these people—he puts the Financial Secretary up to say some of the things he has said in the past. I hope that our cogent arguments will have an effect upon the right hon. Gentleman and his colleagues and that at a later stage, maybe in another place, the right hon. Gentleman will see how far it is possible to concede the principle embodied in some of the Amendments.
§ Mr. Donald Wade (Huddersfield, West)
I support the concluding remarks of the hon. Member for Manchester, Openshaw (Mr. W. R. Williams). He put the matter very eloquently.
The right hon. Member for Easington (Mr. Shinwell) said that hon. Members had had a considerable amount of correspondence on this subject. I have had many letters from pensioners. One correspondent wrote:Any Bill is better than no Bill at all.I would not necessarily apply that generalisation to all legislation, but it can fairly be applied to a Pensions (Increase) Bill.
It may be that there would have been no such Bill before the House had it not been for the pressure exerted on the Government. Nevertheless the Bill is before us, and we have reached the Committee stage, and we have to consider whether the Bill can be approved. Everyone will agree that there are many anomalies. I do not suggest that the Amendment would remove all of them. I am not worried about whether it will create new ones. I think that it will have one effect which we should commend: it will help to bring about a fairer spreading of the increases. This is important.
I do not propose to try to display the same skill as that displayed by the hon. Member for Sowerby (Mr. Houghton) in bringing in the wider issues. However, the Government are in the difficulty that their proposed increases are not based on any clear principle. On Second Reading, the Minister said that he could not accept the principle of parity. Put simply, this means that two public servants may have given the same length of service; they may have had the same 721 responsibilities; they may have reached the same position and retired at the same age, but they may receive entirely different pensions because of the date when they retired. Many people think that this is unfair.
On the other hand, it seems that the Government have now departed from the principle of immutability, if not actually abandoned it. The question with which we are faced on the Amendment is whether any other principle can be applied. I should prefer to see pensions related to current pensions, or, at any rate, related to the changing value of money, so that the pension today is worth the same in real terms. To put it in another way, I should prefer to see pensions related to changes in the cost of living.
I assure the Government that there is a great deal of feeling upon this subject. We must recognise that much of the feeling is due not only to the real hardship felt by a number of pensioners, but also to a ser se of injustice because of the disparities. The proposal we are discussing, namely, a percentage increase according to the date of retirement as in the Bill and as proposed in the Amendment, goes some way towards meeting this feeling. It is a compromise, but it is a compromise in the direction of what I call a fairer spreading of the increases.
I agree with other hon. Members that an increase of 12 per cent. as a maximum, even with the £20 for those over 70, is not enough and will result in a continuation of great inequalities and hardship for some older pensioners. After all, it is older pensioners who are often in the greatest need. I do not propose to go into many complicated calculations. Taking £100 as a basic figure for a pensioner who retired in 1940 or earlier—there are pensioners at that very low level—the increase will be £12. If a pensioner is over 70, there will be an additional £20. Thus, there will be an increase of £32 per annum.
The increases in respect of pensions granted between April, 1956, and April, 1957, are very much more. In some cases the pension may be as much as £500 per annum, in which case the increase would be £50, plus £17, making a total increase of £67. It is clear that the consequence of the proposal in the Bill, which we seek to amend, is to bring 722 some benefit, but proportionately less, to many older pensioners. Examples can be taken from all walks of life—lowergrade civil servants; local government officers; policemen; Post Office workers, and teachers, not to mention railway superannuitants, who do not come within the terms of the Bill.
I should like to quote from two letters I have received, simply because they bring this problem home to us. The letters are written in very reasonable terms. This is true of most of the letters I have received. These letters are from two retired teachers. One writes:Speaking on behalf of retired teachers, my pension since 1959 is £224 per annum and I had over 40 years' teaching service.ֵ Many of the older teachers have very indifferent health, which makes life all the more difficult for them to live on small pensions. Fortunately, in my case I have good health.The next letter is from another retired teacher who, for twenty-six years, was a head teacher in a responsible position. She retired in 1940 on a pension of £155. She writes:During the twenty-two years"—of her retirement—I have had to sell my home and use my savings in order to live, in respectable poverty … When I have paid my rent, and paid for heat, there is very little left for food, and none whatever for clothing. I have to rely on kindly relatives to replenish my clothing.It is not every pensioner who has kindly relatives to help with clothing.… Every time I hear of something going up in price now, I shudder and wonder however am going to manage. We pensioned teachers of the 1940 period must be the pension anomalies' of our profession… I do hope that our plight will soon be realised, and that we shall soon be put in a deserving position in the pension schemes, because of the long years of faithful service we gave to the State in our time.I thought that it was fair to quote these letters. These people served the community for a long time. They have been retired for a long time. Because they retired a number of years ago, their pensions are very small indeed.
The Amendment, which would raise the increase for older pensioners from 12 per cent. to 18 per cent., would provide a modest improvement. I should be willing to accept the Amendment tabled by the hon. Member for Manchester, Blackley (Mr. E. Johnson). The Minister may argue that if these very old pensioners have no other income 723 they are entitled to receive the appropriate financial benefit from the National Assistance Board. I am relating this specifically to the Amendment. The same point will arise when we consider the armed forces, and particularly the widows of those who died before 4th November, 1958.
I must limit myself to public service pensioners. There are some who are not entitled to National Insurance retirement pensions. As I understand, they are not entitled to the old-age pension. They rely solely on their public service pension. Where, owing to retirement having taken place a long time ago, the value of the pension has fallen to such a low level that they become entitled to National Assistance, the increases in the Bill and even those proposed in the Amendment will not necessarily benefit them. This is the point made by the hon. Lady the Member for Tynemouth (Dame Irene Ward).
It would be helpful if we could have an answer on that, because a number of older pensioners are puzzled about this. I will put the question in the very simplest terms. I am sure that the right hon. Gentleman is aware of it. If, after this increase, a pensioner is still entitled to some financial grant from the National Assistance Board, will the increase, either that proposed in the Bill or that proposed in the Amendment, have any effect at all, or will it merely mean that there will be a reduction in the amount of the National Assistance grant? That is the point, and it would be a help to have the answer to it.
Broadly, I am in favour of the proposal in the Amendment because, although it leaves many anomalies unanswered, it goes some way to meet the points made by all those hon. Members who have spoken.
§ 1.0 p.m.
§ Mr. Eric Lubbock (Orpington)
My hon. Friend the Member for Huddersfield, West (Mr. Wade) has concentrated, as have other hon. Members, on the plight facing the older pensioners even with the increases given by this Bill. I, too, want to refer to that, but I should first like to endorse the welcome given to the Government's departure from their adherence to the so-called principle of immutability. After all, what does that phrase amount 724 to? It is just a complicated way of saying that the State has hitherto been a bad employer.
The hon. Lady the Member for Tyne-mouth (Dame Irene Ward) spoke of the "Treasury mind". I do not know why she should confine her criticisms particularly to the Treasury. That Department may be in the dock over this, but the pledge to keep up the incomes of retired civil servants with the general standard of living was made by her right hon. Friend the Prime Minister, who said that the Government were determined to see that those retired people who were living on fixed or nearly fixed incomes should share in the general prosperity.
If that means anything at all, it means that one has to make sure not only that the income of retired public servants keeps pace with the cost of living but that it is increased by an additional sum to enable them to share in the increases resulting from the rise in productivity of the nation as a whole. This Measure does not by any means meet that requirement, nor do these Amendments. Nevertheless, I support the Amendments as being some step in the right direction.
We must very seriously consider the position of the older pensioners, who are suffering as those who have retired more recently do not. The pension which a retired head teacher received in 1938 was £350. Successive Pensions (Increase) Acts have increased that pension to £532 —an increase of less than 50 per cent. on the pension originally awarded. During that period the cost of living has increased by 199 per cent., and £532 is less than half the pension of £1,125 that would have been received by the same person had he retired today. That cannot possibly be fair.
As bas been pointed out, this is the only country where the principle of parity is not accepted. We have been told by one hon. Member that the principle is widely accepted in the E.E.C. In France, for example, an increase in pay apparently automatically entitles the pensioner to a similar increase in his pension. I quote France as an example, but the same thing applies in Belgium and other countries. As we are contemplating going into the Common Market, we should take that into consideration. Incidentally, the retirement 725 pension in Germany amounts to 75 per cent. of salary, which is a lot more than people get here.
In considering whether the proposed increases are adequate, we have to remember that there will be continued erosion of the pensions before the introduction of the next Pensions (Increase) Bill. I mentioned this in the Second Reading debate, but I re-emphasise it now. No one can tell at present when the next Pensions (Increase) Bill will be brought forward, but it is inevitable that if things go on as at present, such a Measure will be needed every few years but it will need agitation by hon. Members and their constituents before it is brought in.
When it may be necessary for us to do something on those lines, the Government may say, "We can't do anything at the moment because the economic situation does not warrant a large increase in public expenditure." That being so, the only long-term solution is to provide for automatic increases. I know that we are not discussing that in relation to this Amendment, and I mention it only to illustrate the argument that it is important that we make sure that the increases provided by Clause 1 are as large as possible, as we may have to wait quite a long time before the introduction of another Pensions (Increase) Bill.
Before this Measure was introduced, the Public Service Pensioners Council expressed the hope that it would show consideration to the older pensioners, and pointed out that under the last Act public servants who retired at any time between 1939 and 1952 received no greater increases than did those who retired in 1952 although, in many cases, the pensions of the former were related to pre-war salary scales. I think that we have made the same mistake in this Bill by not providing for much larger increases for those people who retired in, say, 1939, than are given to those who retired in 1956. These Amendments would enable us to go part of the way towards meeting that situation, so I will support them.
§ 1.7 p.m.
§ The Financial Secretary to the Treasury (Mr. Anthony Barber)
I think that you will agree, Mr. Hynd, that since you have been in the Chair—and 726 the same applied under your predecessor—the discussion on the Amendments has in some respects ranged somewhat wider than their precise terms, but I would say, with respect, that this has been for the convenience of the Committee. I therefore hope that in trying to answer some of the points that have been made I, too, may be permitted to say one or two things that I might otherwise have said during any discussion on the Question "That the Clause stand part of the Bill". If we proceed in that way it might convenience the Committee and, perhaps, save time in the long run.
The hon. Member for Manchester, Openshaw (Mr. W. R. Williams), who is not present now, made some kind personal remarks about my right hon. Friend the Chief Secretary. Perhaps I might say to those hon. Members now present and who are most concerned with these matters that, with so many other matters with which my right hon. Friend has to deal in his capacity as Chief Secretary, he might well have concerned himself only with the principles of the proposals in the Bill—and also the proposals for the Armed Forces—and not with the details. In fact, since my right hon. Friend arrived in the Treasury in July, he has concerned himself with many of the details with which we are dealing today and, of course, with the enormous amount of work necessary for the preparation of the Bill itself—
§ Mr. Houghton
Were not the proposals on the Chief Secretary's table when he arrived? I am very anxious that he should have full credit for all he does, but we should not overlook the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) who, had he been able to remain in office for a few days longer, would have had the pleasure of making the announcement.
§ Mr. Barber
No, the proposals were not on my right hon. Friend's table when he took over, and I can assure the hon. Gentleman, who knows the complexity of these matters, that there has been an enormous amount of work to do since July.
The hon. Member for Orpington continually used the word "immutability," but the sense in which he used it, I thought, represented a misuse of the English language. It seems extraordinary 727 to talk about immutability of public service pensions when they have already been increased five times since the end of the war and, in this Bill, will be increased to the extent of about £22 million. It may be that the hon. Member for Orpington would like some of his constituents to receive even larger pensions, but to suggest that there is something immutable about public service pensions is, with respect, nonsense, and those who receive these pensions will know it to be so.
§ Mr. Lubbock
The increases which have been provided under successive Pension (Increase) Acts have always been stated to be out of the goodness of the Government's heart and the Government have not departed from this principle.
§ Mr. Barber
That is because the pensions paid to retired members of the Civil Service are not paid as of right. The Crown is not bound to pay pensions and because they are not paid as of right the increases are not paid as of right. On the other hand, local government officers who draw pensions are in a different position and the hon. Member for Orpington will see that the increases provided under the Bill are mandatory on local authorities. If the hon. Member wants to raise the greater question of the position of the Crown in these matters, that certainly would not arise on the Amendment.
My hon. Friend the Member for Tyne-mouth (Dame Irene Ward) raised the question of National Assistance, and although she has had to leave to catch her train, perhaps, since this point was also referred to by the hon. Member for Huddersfield, West (Mr. Wade), I might be in order in saying a brief word about it, although I recognise that it was ruled earlier that this subject should not be dealt with at great length. My right hon. Friend the Chief Secretary was wondering at one moment whether the whole of the speech of the hon. Member for Tynemouth was out of order, because he pointed out that Boadicea would clearly be a Service pensioner.
All I would say now on the question of National Assistance—and, since I intend to be brief, I hope that I will be permitted to answer this specific point—is 728 that, fundamentally, National Assistance is based on need; the extent of which is determined by Parliament, which lays down the scale payable. This applies to all classes of people, whether sick, unemployed, old, those in receipt of public service pensions, dividends and unearned income provided they are not in full-time work.
It follows that within such a scheme—and of course, the disregards are laid down and approved by Parliament—the needs of public service pensioners are, I would have thought, no greater than those of other recipients of National Assistance. To make special provision for public service pensioners regarding National Assistance would be to put them in a more favourable position than other members of the community in the National Assistance scheme. For this reason I think that, on reflection, hon. Members will appreciate that the general rules, which are of general application for those who apply for National Assistance, must apply in these cases.
§ Mr. Barber
My hon. Friend the Member for St. Ives (Mr. G. R. Howard) asked whether there might be a special adjustment of the tax position for certain categories of older pensioners. While this matter was raised only in the course of the debate on the Amendment I must tell my hon. Friend frankly that I cannot see any prospect of a special tax concession for the older public service pensioners. However, I would remind my hon. Friend that there are considerable tax advantages available to older people and also to those with small incomes. I hope that my hon. Friend will bear in mind how much has been done in the past few years by way of extending age relief, which must be of help to many of the people he has in mind.
I hope that the hon. Member for Sowerby (Mr. Houghton) will acquit me of any discourtesy if I deal with some of these points before coming to the Amendment. My hon. Friend the Member for Aldershot (Sir E. Errington) asked two questions: first, about the Forces terminal payments. Briefly, this 729 grant was first introduced in 1950 and has been revised three times. The Civil Service lump sum he referred to is payable to men who retired since 1909 and women since 1935. Those in service on those two dates could opt to retain their previous conditions, that is, the higher rate of pension, but no lump sum.
My Hon. Friend's second question concerned National Insurance pensions. A National Insurance pension is provided in return for contributions and those who have not paid contributions are not eligible for benefit. Public service pensioners who retired before 1948—which was the date mentioned by my hon. Friend—are in no special position but are exactly the same as any other person.
§ 1.15 p.m.
§ Sir E. Errington
Have Civil Service pensioners all along been eligible to pay National Insurance contributions? I think that it was in 1948 that Service personnel were able to pay National Insurance contributions for the first time.
§ Mr. Barber
It is difficult to give my hon. Friend categorical answers "off the cuff". I do not think that he is quite right in the last part of that intervention, but perhaps he will allow me to consider the matter further and get in touch with him later.
§ Sir E. Errington
This is a rather important matter, because the date would provide the basis for considering particular increases. There is no doubt that those who are not in receipt of National Insurance benefits are suffering considerably. This suffering could have been avoided had they been able to insure themselves under the National Insurance scheme.
§ Mr. Barber
Although I do not have the exact details with me I can assure my hon. Friend, without doubt, that in considering the extent to which increases should be provided under the Bill and the way in which the amount of cash available is to be distributed—bearing in mind the age and difference of retirement, and so on—those sort of factors were taken into account. I cannot, however, give specific answers "off the cuff" to the questions he raises. I hope that he will appreciate that I have done the best I can without his having given me 730 notice of his intention to raise these points.
§ Dr. King
The simple facts are that while some of these very old pensioners were able to contribute to a voluntary system and they thus are qualified for full National Insurance benefits, many were not able to contribute—were not even given the option—and these do not receive the National Insurance retirement pension.
§ Mr. W. R. Williams
I think that it was in 1926 and later in 1930, that some people were allowed to make voluntary contributions. However, the bulk of the people were outside that voluntary scheme.
§ Sir E. Errington
I am anxious to know when civil servants were able to join the National Insurance scheme.
§ Mr. Barber
My right hon. Friend the Chief Secretary tells me that civil servants have been able to contribute voluntarily to the National Insurance scheme, if within the income limits, since 1925. I am sorry I could not answer that point before.
Having answered some of the points raised in discussion, I would now like to turn to the Amendments in the name of the hon. Member for Sowerby and other hon. Members.
§ Mr. Shinwell
Is it possible for the hon. Gentleman to tell us whether he intends to accept the Amendments before he begins to argue about them?
§ Mr. Barber
I think that it would be best if I went through the points at issue and dealt with them as fairly as I can and then, when I have considered them and the Committee's reaction, make up my mind.
I was about to say that I had not realised until almost the end of the speech by the hon. Member for Sowerby that deep down in his heart the purpose of putting down the Amendments was to enable Members of Parliament to retire on half-pay. I sympathise very much with his objective, but I hope that he will acquit me of any discourtesy if I do not pursue it on this occasion.
The hon. Member went on to refer to the possibility of some other method of dealing with this whole matter of pensions increases in the public service, but 731 this arises under a new Clause, which I understand has been selected, put down by the Liberal Party. Your predecessor in the Chair, Mr. Hynd, prevented the hon. Member for Sowerby from going on any further and stealing the clothes of the hon. Member for Huddersfield, West if they had fitted him.
The combined effect of the first two Amendments is to substitute for the uniform increases under the Bill of 12 per cent. in Clause 1 and £20 in Clause 2 on pensions beginning on or before 1st April, 1956, some new provisions for these earlier pensions. I will not worry the Committee by going into further descriptive detail about the Amendments, because the hon. Member for Sowerby described them clearly and at some length. I recognise that these are important Amendments and it is useful that we should have an opportunity of considering what I might call the tapering provisions in Clauses 1 and 2.
I think that the most convenient way of dealing with this series of Amendments, the three in the name of the hon. Member for Sowerby and the two in the name of my hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) would be for me to consider, first, the effect of the first two Amendments in the name of the hon. Member for Sowerby and then see how they would be affected by his third Amendment, that is to say, the new subsection which he proposes should be inserted in Clause 2, and, lastly, deal separately with my hon. Friend's Amendments.
I can see the attraction of any proposal to give yet further increases to certain categories of pensioners but, in answer to the right hon. Member for Easington (Mr. Shinwell), I am sure that the Committee would be wrong to accept these Amendments. The hon. Member for Sowerby said that the object of the Amendments was to help the older pensioners, but this is just what we have tried to do in the Bill. If one looks at Clause 2 and considers only two aspects of it I should have thought that it was abundantly clear that here, more than in any previous Pensions (Increase) Act, we are trying to help the older pensioners.
In the first place, Clause 2 operates only where the pensioner has attained 732 the age of 70, and if one looks at the tapering provisions it will be found that the figure of £20 is relevant only in the case of pensions beginning not later than 1st April, 1956. Therefore, what we are trying to do is to ensure that a significant proportion of the whole cost of the Bill, £22 million, is directed to those who retired early and who are now older than the average pensioner in the community.
I gave some specific examples, when I wound up the debate on Second Reading, of the way in which this would affect older pensioners living on small incomes. I will not go over the whole ground again, but I would remind the Committee of one example I gave. It was in answer to the hon. Member for Sowerby, who referred to somebody with a pension of £80 a year—one of the smallest pensions—penhaps because he served for only a comparatively short time and then got another job.
That pensioner with £80 a year or less, an old man over 70 who retired before 1st April, 1956, will receive increases under the Bill of no less than 37 per cent., that is to say, 12 per cent. under Clause 1 and 25 per cent. under Clause 2. If to that is added the increase he received under the 1959 Act he will have had a total increase of 41½ per cent.
The first and paramount reason why I must ask the Committee not to accept the Amendments—and the hon. Member for Sowerby said frankly that he did not wish to press them to a Division—is the question of cost. The hon. Member said on Second Reading that this was the best Pensions (Increase) Bill of all time, but I do not blame him or any other hon. Member for wanting to make it more generous. I know, however, that he will be the first to agree that the Committee simply cannot ignore the financial implications of these proposals.
I think that I heard the hon. Member say in an intervention that the cost of these proposals would be £2 million to £2½ million a year, but, of course, we cannot consider these proposals in the Amendments, in so far as they affect the Bill, without also having at the back of our minds the additional cost which would result if they were applied to the Armed Forces, as I am sure the Committee would agree they would have to be. The Amendment to Clause 1 would 733 cost £2.2 million. If we add the additional cost of a similar provision for the Forces, that would bring the total cost of the Clause 1 type of increase to £2.8 million. Similarly, the Amendment to Clause 2, together with the consequential provisions in respect of the Forces, would cost another £2 million. The effect, therefore, of accepting the Amendments would be to add almost £5 million to the present cost of the Government's proposals.
§ Mr. Barber
It would be more convenient if I came to my hon. Friend's proposal later. I will try to deal with that question then.
To put this figure of £5 million in perspective, I ask the Committee to bear in mind that the total cost of the Pensions (Increase) Act, 1947, and the corresponding increases for the Forces, was only £5.8 million. The cost of the Government's proposals on this occasion is more than £22 million, and, bearing in mind the interests of the taxpayer which, as I said on Second Reading no Government can ignore, I do not believe that we would be justified in making these substantial additions to the cost.
The hon. Member for Huddersfield, West, to whom I listened with care, made a comparison between an increase of 12 per cent. plus £20 under Clause 2 on an odd pension of £100, and an increase of 10 per cent., that is to say £50, on a 1957 pension of £500. The hon. Member misunderstood the way in which the Bill will work. It is a misunderstanding which it is easy to make and this point has been misunderstood by several hon. Members who have spoken in the debate.
The misunderstanding is that it is thought that the increases under the Bill are only to be made on the original basic pensions. In fact, if one looks at the Bill closely one sees that the increases under the Bill are calculated on pensions as they are increased under the earlier Acts and not on the basic pensions. I thought that I ought to mention that to the hon. Gentleman because it makes a very considerable difference in 734 certain cases to the amount of increase which the pensioner will receive.
The hon. Member for Sowerby referred to the question of anomalies, and this is something to which the Committee should give considerable attention. The hon. Member for Sowerby very fairly and frankly said that if his Amendments were accepted some rather strange anomalies would arise. The cumulative effect of past Pensions (Increase) Acts is that in many categories of public service pensions the pension which is now being drawn by a pensioner who retired at any date before 1939 to about 1955 or 1956 is very much the same.
If we were to extend the progression of these 2 per cent. steps back before 1956 as proposed by the hon. Gentleman in the first Amendment before the Committee, this would have the consequence, as the hon. Gentleman frankly admitted, that some who retired earlier would actually be drawing more than those who retired at a later date. I cannot see that this is the sort of consequence which hon. Members would really want to arise, and yet it would be, as I see it, inevitable if we were to follow the hon. Gentleman in his Amendment or, indeed, to do anything analogous, even if we were to alter the drafting in any way.
The hon. Gentleman said, on this question of anomalies, if I recollect aright, that time is a great healer and pensioners in particular get used to anomalies. I think that it is one thing to put up with a few minor anomalies, but it would be quite wrong deliberately to create wholesale anomalies of this kind which undoubtedly would follow from these proposals which we are considering.
The sort of cases which I have in mind would occur, for example, in the general division of local government officers and also among male certificated teachers. In these cases if these Amendments, or indeed anything on these lines, were written into the Bill, the pensioners who retired round about 1955 or 1956 would in many cases be drawing less than those who retired earlier.
§ Mr. Houghton
But those who retired in 1956 have not been robbed for as long as those who retired in 1947.
§ Mr. Barber
If the hon. Gentleman will consider the effect of Clause 2 and the sort of case which he has in mind, he will realise that we are doing a considerable amount for this type of person. Indeed, I tried in my Second Reading speech—and I do not wish to weary the Committee by going over the arguments again—to go into the specific instances raised by the hon. Gentleman. If one looks at the speech of my right hon. Friend the Chief Secretary to the Treasury, and mine, hon. Members will get a fair and objective idea of the way in which this Bill will benefit the older pensioners, particularly those on small incomes.
We have had a long discussion, and I hope that I shall be pardoned for replying at some length, but I should like to tell the hon. Gentleman that it would be possible to avoid these anomalies, which the hon. Gentleman so frankly admitted would arise if his Amendments were accepted, if we were to pay even larger increases to those retiring in more recent years. But I think this would be going very much further than the hon. Gentleman himself had in mind. Indeed, I believe that it would really involve a quite unjustifiable use of public money.
I say this because we would then be paying more than is really necessary for the relatively recent pensioners. But this would be the only way of avoiding the gross anomalies—and they are very serious; they are not the minor anomalies which exist at present—in-herent in the Opposition's proposals. Of course, presumably because the hon. Gentleman himself would not want to suggest that, it has not been put down in any of the Amendments.
§ Mr. Houghton
I said in the course of my speech that if the stop Clause were moved to 31st March, 1956, it would almost eliminate the anomalies that I admitted. I said, however, that the reason I had not done that was because some anomalies already existed. It would not be beyond our ability, if we were to put our minds to it, to draft a safeguarding Clause which would leave existing anomalies undisturbed, because 736 they are there already, but would avoid creating new ones. I am sure that the hon. Gentleman will agree that this is not an impossible exercise and I frankly explained how I tried to deal with the complications that I had discovered. I hope that the hon. Gentleman will not make too big a meal of this, because it would be unfair to do so.
What we are trying to do is to bring those who retired earlier nearer to the level of pensions of those who retired more recently. If the hon. Gentleman will address himself to that proposition and not get bogged down in detail too deeply, it will be more for the convenience of the Committee.
§ Mr. Barber
This is precisely what I have done. When I saw these Amendments I devoted myself to just those sorts of points. All I can tell the hon. Gentleman—and there are those who are more expert than I in these matters and who have had more experience—is that I can find no way of doing what the hon. Gentleman wants to do without getting involved in wholesale anomalies. In other words, I cannot see how one can possibly do what the hon. Gentleman has in mind unless one is prepared to accept the anomalies, or, alternatively, increase the pension increases for those who have retired more recently, which was not one of his proposals, and which, for the reasons I gave, would not be justified.
§ Dr. King
Before the hon. Gentleman leaves the question of anomalies, may I put this point to him? He is arguing that the effect of accepting all the Amendments would be to increase the anomalies. Is he also saying that to accept any of them would do so? Could he, for instance, accept an Amendment to Clause 1 or to Clause 2 without creating those anomalies?
§ Mr. Barber
No. The Amendment to Clause 1 would certainly create the kind of anomalies which I have mentioned. As for the Amendment to Clause 2, much the same sort of considerations apply, although I would have thought that in that case, for reasons with which I will not weary the Committee, the anomalies would not be so serious as those under Clause 1.
Before I come to the third Amendment in the name of the hon. Member for Sowerby I think that at this stage 737 it would be convenient if I were to refer to the two Amendments which are linked, the second being consequential, in the name of my hon. Friend the Member for Blackley. Of course, I recognise the objective which my hon. Friend has in mind, but ignoring for a moment the question of cost about which he asked me—and I can only tell him that the cost would be significantly less if we included the Amendments in his name than the cost involved in the Amendments put down by the hon. Member for Sowerby—there would be very real difficulties.
Perhaps in this case I may give the Committee an example of the sort of anomaly which would arise if we were to do what my hon. Friend has suggested. I have not been able to go into this in great detail, because the Amendments were placed upon the Notice Paper only this morning. For example, a Civil Service clerical officer who retired after forty years' service in 1938 would receive a total pension, including increases under both Clauses 1 and 2 of the Bill, of £384, as compared with the £359 of a man Who retired after similar service in 1955. Corresponding figures for an executive officer would be £516 for a pensioner who retired in 1938, but only £494 for a pension beginning in 1955.
I give these examples as an illustration of the way in which, if anything on these lines were to be accepted by the Committee, the later pensioner would be receiving less than the person who retired many years before him. With respect to the Amendments Which my hon. Friend the Member for Blackley has put down, they do not seem to take into account the very large benefits which the older pensioners, and particularly the smaller ones, have already had.
For example, a pre-war pension—and even these have been increased—of £100, has been increased under existing Acts to £197, and, under the first two Clauses of the Bill, these pensions will be increased by a further £44 or 22 per cent. of their present rate. The pre-war pension of £200—those pensions beginning before the war, now at the level of £343, will be increased similarly by £61 or 18 per cent.
738 I have detained the Committee for a long time, but I must briefly refer to the other Amendments in the name of the hon. Member for Sowerby, which refer to what he called his stop Clause. All I want to do is to ask the Committee to consider whether the proposed new subsection to Clause 2 would mitigate in any significant way the sort of anomalies which result from the first two Amendments to Which I have referred.
§ Mr. Houghton
I will gladly excuse the Financial Secretary, if that is the wish of the Committee, from examining in detail the third Amendment in my name. In my earlier remarks I did say that I doubted whether it would apply to anyone. In any case, it does not achieve the purpose which I set out to achieve in this stop Clause. The hon. Gentleman has dealt with the substance of what I put to the Committee, and points which other right hon. and hon. Gentlemen have put to the Committee, on the first two Amendments, and I do not think that we need trouble to go into the third.
§ Mr. Barber
I am most grateful to the hon. Gentleman. In that event, I can now conclude by saying to the Committee that, quite apart from any drafting points, which I have no doubt we could put right, I must advise the Committee not to accept these Amendments, primarily because of the considerable cost involved, and, secondly, because of the very serious anomalies which, however we try to do what he wants, would necessarily follow.
§ 1.45 p.m.
§ Mr. E. C. Redhead (Walthamstow, West)
I confess that I am not surprised, though, nevertheless, still disappointed, at the response which the Financial Secretary has made to this series of Amendments. I do not propose to follow him into what I think are futile arguments now about the question of the immutability of these pensions, except to say that I frankly welcome the Financial Secretary's acknowledgment of the fact that we are no longer dealing with that sort of argument, and to express the hope that Treasury "handouts" when we are considering these matters in future will quietly drop the whole thing, accepting that we have got away from that basis and should turn 739 our minds to questions of the future and not past practice in this regard.
Neither am I concerned with questions of myth, philosophy or doctrine—call it what we will. Our purpose in the series of Amendments on the Notice Paper is not concerned with academic considerations. We are concerned with what we conceive to be justice and equity for those for whom the Bill caters. The purpose of these Amendments has been welcomed by both sides of the Committee, and it has been constantly emphasised that we are wishing to extend further the benefits to pensioners who have been retired the longest.
The Financial Secretary said—and I acknowledge it quite frankly, as he did on Second Reading—that this Bill takes a very definite step in that direction by the provisions of Clause 2. The hon. Gentleman invoked the argument of percentage increases overall. He invoked, as he did on Second Reading, the effect of what is now proposed as an increase of 12 per cent. in the higher ranges of the table in Clause 1, whereas since the last Act there has been an increase in the cost of living of only 9 per cent. When the hon. Gentleman attempts to suggest to our minds that, therefore, there is a kind of reserve or advance payment for the pensioner to protect himself against the possibility of a further rise in the cost of living, I suggest to him that he cannot possibly make that kind of comparison unless he takes the whole period in which the pension has been paid.
Notwithstanding the attempt to quote percentages of the cumulative effect of past Acts and the first two Clauses of this Bill in relation to people over 70, it still remains demonstrable that many of these pensioners, indeed the greater number of them, who have been retired longest are not even now being compensated for the real measure of loss which they have suffered in the real value of their pensions since the date of original retirement. However, even if this Bill, like the 1959 Act, concedes higher percentage increases, and gives special supplements to those over 70, those who have been retired longest, the cumulative effect is still not sufficient to compensate them for the inadequacies of earlier Pensions (Increase) Acts.
The Financial Secretary has rested his resistance to these Amendments in part 740 on the ground of the anomalies that they would create. It has been frankly stated from this side of the Committee that we recognise that there would be anomalies. The Financial Secretary goes further and says that it will be impossible to devise any means of overcoming these anomalies without creating another set. Indeed, I said something to a similar effect during the Second Reading debate last week. I hope the hon. Gentleman will recognise, as I hope the Chief Secretary will recognise, too, that these anomalies are the direct result of the character of this Bill and of the outdated, ad hoc and rough-and-ready method which we have adopted in the whole series of these Acts. He should address his mind to the wider issues that have been posed in this debate.
Here we are concerned with these Amendments on behalf of those who compel sympathy from both sides of the House and with our sense of justice, and it has to be recognised that in more recent discussions the whole mood of the House has changed. We no longer want to limit ourselves merely to relieving the degree of absolute or even severe hardship. We are concerned now to do real justice to those concerned.
Some arguments have been made and some examples have been given of the effect of these Amendments, and my hon. Friend the Member for Sowerby (Mr. Houghton) quoted the case of the Civil Service clerical officer. I know that it is easy to discover a case which is very largely a theoretical matter, and that the effect in the case of some of those pensioners who retired a very long time ago is marginal. They get slightly more than those pensioners whose pensions have begun only at a subsequent date. I think it is relevant to draw the attention of the hon. Gentleman to the fact that when we quote examples of men who retired in 1947 and 1948, we are not referring to a very great number of people, and that, in any event, there has been the contention in support of this Bill that, while it does not pretend to be perfect, it is based on considerations of rough justice.
There is, then, surely justification in "wearing" some of the marginal anomalies that would arise from some of the Amendments inasmuch as the great benefit which the oldest pensioners 741 might get from it compared with pensioners who retired more recently would surely he some measure of compensation for the greater time that they have suffered depreciation in the real value of their pensions in former years.
But it is not true that the anomaly persists at all levels. The further one goes up the scale the more one discovers that these marginal anomalies disappear. It is certainly true in the case, for example, of the Civil Service principal who retired in 1947 or 1948 and received a pension of £605, currently receives £774, and under the provisions of the Bill would receive £867 or, if 70 years of age. £887. His pension would be raised by the Amendments to £944. This is still less than the more recent pensioner would receive on retirement from the same grade but markedly less than what would be received by an administrative principal retiring today, who would enjoy a pension of £1,284.
I said on Second Reading that I was not concerned to argue the case about what is sometimes called precise parity. I appreciate that there are difficulties about it and that certain anomalies would flow from precise application. But I want to emphasise an important point when we are making comparisons between current pension and past pension. Certainly this is true in the case of the civil servant. For years the Civil Service scales of pay did not measure up to the principle which has since been accepted flowing from the Royal Commission's Report on fair comparisons, and until that principle was accepted, and, furthermore, applied as a result of fact-finding machinery which had never been open to Civil Service organisations before the Report of the Royal Commission, then Civil Service salaries clearly were below the standard which the Royal Commission in 1953 said was the right and proper one.
That means, in effect, that all those who retired from the Civil Service on pensions related to the salaries that they were receiving before the implementation of the Royal Commission's recommendations suffered not only in respect of the pay during their serving years but also for the rest of their lives in respect of the debased level of pensions that that brought about. Therefore, the argument for bringing the pension level of those 742 pensioners who have been retired the longest nearer in relationship to current rates of pension represents, I suggest, an act of common justice towards those who had to endure losses in earlier years, and the arguments against parity are weakened when one takes that consideration into account.
The Financial Secretary has rested himself primarily on the consideration of cost. It has been suggested that the Amendments would cost in the neighbourhood of £2½ million to £3 million more. On Second Reading and now the hon. Gentleman has begged us to be mindful of the cumulative burden upon the taxpayers which would follow from Amendments of this character. I am not unmindful of that consideration. But before the hon. Gentleman frightens us too much on that score, I suggest to him most earnestly that, as in many other respects, the cost of remedying an unjust situation is the measure of the past injustice which has been endured, and we should never lose sight of that fact.
Finally, if the folk with whom we are concerned in these Amendments are not helped quickly to the limit that is possible—the differences between us here are of degree, as to how far we can go in helping those whom we regard as the most deserving categories—and unless we do it now, it is a salutary thought that many of them will be beyond redress for past injustice or any further help by the time we get round to the next pensions increase Measure.
§ Amendment negatived.
§ Question proposed, That the Clause stand part of the Bill.
§ Dr. King
I do not want to refer to the very interesting debate that we have had. There are some new matters that I wish to raise.
I would point out for the record that my hon. Friend the Member for Manchester, Openshaw (Mr. W. R. Williams), whose absence was commented on by the Minister, was only temporarily absent and has been back in the Chamber throughout the whole of this debate.
Boadicea has been brought into our discussion. I would point out that the various anomalies which troubled the Financial Secretary do not trouble me so much as the fact that if Boadicea had retired, as she probably would have 743 done, about the year 56 she would have been placed on exactly the same basis as some of those who retired in 1956.
The Clause, it is estimated, will cost the local authorities £5 million a year. This was estimated in the County Councils Association when I was discussing the matter with it, and it was done on the assumption that the total cost would be £22 million and that £17½ million would come from the Ministry. It is apparent, therefore, that the cost to the local authorities will be between £5 million and £6½ million. The local authorities have not got the money for this expenditure from the Government in the general grant. We are assuming that the expenditure will begin in the current financial year. So even in the current financial year the local authorities will be facing expenditure of between £2 million and £3 million.
I ask the Treasury for an assurance that if there is to be a supplement to the general grant this year it will take note of the new extra burden on the local authorities, and that if there is not to be a supplement this year, in the general grant formula for next year allowance will be made not only for the new responsibilities which the local authorities are taking on next year but for the responsibilities which they have incurred this year in meeting their part of the obligations under the Bill.
My other points are more detailed, and I do not know whether the Minister will be able to answer all of them. First, in the prior discussions which took place on the Clause, the County Councils Association raised the question of certain voluntary bodies for which the Association is empowered to do certain jobs. I quote from a letter from the Association:… pensions paid by virtue of an admission agreement under section 15 of the Local Government Superannuation Act. 1953, do not qualify for increases under the Pensions (Increase) Acts unless specified in an appropriate Order in Council.I understand that the example which the Association has in mind is the District Nurses Association, which it has financed, and by so doing it undertook responsibility for superannuation provisions for district nurses. I understand from the County Councils Association that though they are not covered specifically by this 744 Bill, the local authorities would have the power to carry out the spirit of the Bill by giving them the increases granted by it, and that those increases would be recognised by the Treasury.
A similar paint arises with nurses. At a certain moment in history, nurses had the choice of coming in under the National Health pension scheme or staying in the old federated superannuation scheme. Some opted for the latter. Those who joined the National Health scheme have received the full benefit of these pension increases, and will have this one. I shall not be satisfied, and I am sure that the Committee as a whole will not be satisfied, if those nurses who opted out and remained in their old schemes cannot have also the benefits of this Bill.
I understand that a similar position arises with the University Teachers Federation. Do these teachers come within the scope of Clauses 1 and 2? I understand that the Treasury is sympathetic to the points I am raising but that some of them cannot be written into the Bill. But, in one way or another, either by recognition of local authority spending involved in implementing the spirit of the Bill or by some kind of regulations, the Treasury can bring these little groups into the scope of this Measure.
Another point which, though a detailed one, is important, is the question of police widows and their orphaned children. Apparently these are not covered by Clause 1. When the Bill comes into operation parallel regulations will be made under the Poke Pensions Act. In previous debates on Pensions (Increase) Acts we have received an assurance from the Government that there was a close relationship between the kind of increase granted under those Acts and the sort of increase granted under the Police Pensions Act. A friend in the National Association of Retired Police Officers writes:… we are seeking your support during the Committee stage of the new Bill for an assurance that the increase of pensions to widows and children which are not directly increased by the Bill, will, in fact, receive the same Increases in the ministerial regulations provided for in the Bill as if they had been included in the Bill.The reason for this anxiety is that the term "corresponding" was used in the 1959 draft Bill, but when Regulations were drawn the 745 maximum increase was 4%. This was later adjusted to the assurances given during the Committee stage of the 1959 Bill that the increases would be the same.I hope that the Treasury can give that assurance today, or will convey to the appropriate Department that the whole spirit of this and every stage of the Bill, as indeed of the last Act, is that we are seeking to ensure for all public servants—including police widows and orphans—the justice they deserve.
§ Mr. Houghton
I shall not detain the Committee more than a moment. For the record it should be said that our earlier discussions on pensions drawn by various grades of public servants for differing, periods of service have generally been related to a person who has had forty years pensionable service. One of the features of this Clause, however, and one that must not be overlooked, is that a great many people started with the disadvantage of having nothing like the whole of their service reckoned for pension. Has the Financial Secretary to the Treasury any figures available of the sort of zones in which pensions will fall after the proposals in Clause 1, and, for that matter, in Clause 2 become operative?
My judgment is that there are scores, if not hundreds of thousands of relatively low pensions, lower than they would have been had a good deal of the unestablished service which does not count at present been reckonable for pension. For instance, after the First World War a great many ex-Service men were recruited to the public service far beyond the normal age. There is no doubt that between 1919 and 1934 large numbers of ex-Service men were given posts which were temporary to begin with, sometimes unestablished to follow and subsequently in many cases made permanent and pensionable only after a long period.
In all these cases the pensions being drawn will not be for forty years pensionable service, so that the relief they will get under Clause 1, while welcome, and while it will improve the value of the pensions they are drawing, will still leave many in conditions of considerable hardship.
746 It will not be surprising to the Financial Secretary to know that since last Friday my postbag has been larger than usual. Probably that applies to many other hon. Members who spoke in that debate. One of the strongest pleas in these letters is that restitution should be made to those who even now are heavily handicapped by previous service not being counted for pension. I think that it is worth making the point that when we are quoting, for purposes of illustration, pensions applicable to officers in various grades after forty years pensionable service, those cases are not typical of the large mass of public service pensioners who have not got forty years pensionable service. In many cases they have forty years service but not pensionable service.
If the hon. Gentleman has figures to give to the Committee they might help to keep the matter in perspective. If they are not available now perhaps he may let us have them in reply to a question put down at the convenient date. But we should have regard to the practical applications of Clause 1 to many people who served during a period of serious underpayment in the public sector and, in addition to that disadvantage, found that much of their service did not count for pension anyway.
§ Mr. Redhead
I want to raise a point concerning the position of those overseas service pensioners who are being brought for the first time within the ambit of this legislation. The qualifying conditions for increase that will be applicable under the Bill are conditions specified under Section 1 of the 1959 Act and they are rendered applicable in this instance by subsection (3) of Clause 1.
Included in that list of qualifications is that of the minimum age of 60 before the benefits become payable under the Bill. I have a question to put to the Financial Secretary about those overseas service pensioners who will be brought within the ambit of the Bill under Clause 3. Has consideration been given to the fact that, Whereas 60 may well be the normal age of retirement for United Kingdom civil servants, that is not the case in respect of Colonial servants? Normally, they retire at the age of 55, and in same cases even earlier.
I can appreciate that it might be thought that a man who is allowed to 747 retire from the public service at the age of 55 still has some years in which he might reasonably look forward to the opportunity of some other form of employment, but it is relevant to bear in mind that the opportunity of these people to retire at 55 is closely related to the conditions of their service in overseas countries. It is a concession which takes account of the rigours and sometimes uncongenial circumstances of tropical climates, and it is right and proper to allow earlier retirement in such conditions.
In those circumstances, therefore, we can equate age 55 in the case of the overseas service pensioners to age 60 for normal retirement in this country. I wonder whether consideration has been given to this fact, not just accepting the qualifying conditions of the 1959 Act, or whether the peculiar circumstances of the Colonial Service pensioners, now brought in for the first time, may have been overlooked. I appreciate that there are certain instances of other public service pensioners in the United Kingdom who retire at 55, but who will nevertheless be conditioned to age 60 for the benefits of the Bill. However, in their case it is not always a concession because of the rigorous character of their service so much as the requirements of that service for youthful strength and fitness, so that the position is somewhat different in that regard.
A similar point arises in this connection in regard to the pensions of widows of overseas service pensioners, for whom the qualifying conditions are such that widows would not receive these benefits until they were 40, or unless they had dependants or were in bad health, whereas there is no age provision in the regulations governing the payment of widows' pensions in the case of other public servants. It seems wrong to differentiate between widows merely on the ground of age. I ask the question in the hope that there is a satisfactory explanation, but also because it would be a pity to part with the Clause if there has been any degree of oversight.
§ Mr. Barber
It may be convenient if I deal, first, with the point made by the hon. Member for Walthamstow, 748 West (Mr. Redhead). I am not so sure that my answer will be very satisfactory to him, but I can assure him that we carefully considered the age from which the pensions increase should apply in the case of what might be called, broadly, the overseas officers. In reaching our conclusion, we had very much in mind the fact that it is more general for this type of officer to retire earlier than would be the normal case, although, as the hon. Member fairly admitted, quite a number of categories of public servants in the United Kingdom retire before the age of 60.
Having said that, I must tell the Committee quite frankly, that, bearing in mind all the representations made to us that we should top up overseas pensions to the level to Which they would have been increased if the United Kingdom increases had applied to them we concluded that our proper course in the matter of age limits was to apply the same principles and rules as would be applied in the case of United Kingdom public servants.
I think that this is right. Those hon. Members who have listened to the repeated pleas made on behalf of overseas officers will recognise that what was being sought was that these officers should be put in the same position as their counterparts in the United Kingdom, so far as that was possible. Of course, I recognise that their terms of service are different and that many of them would retire at an age earlier than might have been the case in the United Kingdom if, for example, they had joined the United Kingdom Civil Service. I do not think that I can add to that except to assure the hon. Member that the matter was considered carefully.
§ 2.15 p.m.
§ Mr. Redhead
In the light of his reply, will the Financial Secretary say how it comes about that, notwithstanding that general view of our overseas service pensioners, the arrangements made in respect of Palestine pensioners accepted in principle the payment of increases at age 55?
§ Mr. Barber
I could not answer that question off the cuff, but in this Bill we are considering the whole range of public servants who have served overseas. I do not know offhand, but it may be 749 that in this matter, as, I am sure, in one or two others, the Bill is not in conformity with What has been done for certain limited categories of pensioners in the past.
The hon. Member has raised a matter of basic principle. We had to decide fairly early in our consideration of what sort of assistance we would give to overseas pensioners whether we were to proceed on the basis that the objective was to top them up so as to bring them into line with officers who were serving in this country. That was the principle which we accepted. It was put to us again and again in the House and elsewhere, and I can do no more than tell the hon. Member that we considered it most carefully and that this was our conclusion.
The hon. Member for Sowerby (Mr. Houghton) made a number of observations and asked whether I had certain breakdown figures of the zones, as he called them, where the increases took place. I do not have them immediately to hand, but I will do my best to answer his questions if he will put a Question on the Order Paper, or, alternatively, I will write to him, whichever he chooses.
The hon. Member for Southampton, lichen (Dr. King) raised one or two matters. First, he asked about the cost of these provisions to local authorities and in particular about the possible reopening of the general grant settlements. So far as I can see, the total cost falling on the rates and not covered by specific Exchequer grants will be just over £5 million in a full year—14.6 million in England and Wales and £.45 million in Scotland.
I will not weary the Committee with the figures, but, as the hon. Member will appreciate, some part of the cost which I have described as falling on the rates will, in fact, be met by rate deficiency grants from the Exchequer. However, it is very difficult to quantify this. The Exchequer also makes general grants towards the cost of certain local authority services—education, health, child care, fire service, and so on, and certain medical services. As the hon. Member recognised, the amounts of those grants for the period up to the end of the current financial year have already been fixed.
750 The total additional expenditure by reason of the pensions increases proposed which is within the scope of general grants may amount to roughly £½ million a year, but I think that it will be generally accepted that this figure would not in itself constitute grounds for re-opening the general grant settlement in respect of what is likely to be only one-quarter of the year. In fairness to them, I should say that the local authority associations accept this position with the reservation that, if the grant for 1962–63 is reopened for any other reason, this expenditure should be taken into account.
The hon. Gentleman raised two further detailed points. The first was about the pensions of former employees of voluntary bodies, and the second the Federated Superannuation Scheme for nurses. I am informed that these may be dealt with by Order in Council under Section 3 (1) of the 1959 Act. I have the Section here, but. I do not think that the hon. Gentleman would wish me to go into the details of it.
The only other point he raised concerned the Police Pensions Act. Parallel action will be taken in the regulations to be made by the Home Office for police widows and orphans. If the hon. Gentleman would like the reference, it would be under Section 4 of the 1959 Act as applied by this Bill.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.