§ 11.5 a.m.
§ Mr. Daniel Awdry (Chippenham)
I beg to move,That this House urges Her Majesty's Government to reconsider their proposal that redundant civilian employees of the Territorial Auxiliary Forces Associations and Territorial Army Units, who are not eligible for pension under the Territorial and Auxiliary Forces Association Pension Fund and Endowment Assurance Scheme but have earned gratuity as provision against retirement in lieu of pension, should have that gratuity counted against any payments to which they are entitled under the Redundancy Payments Act, 1965.Next week the House will be debating the whole of defence policy, but this morning I shall be concentrating on what at first sight might seem to be a somewhat narrow point which affects the Territorial Army. But in fact, as I shall try to show, it affects a considerable number of people in all parts of the country who have given many years of service and many years of loyalty to the Territorial Army. An important point of principle is involved and I shall tell the story as briefly as I can.
I need not remind the House that by a single vote in the House the Territorial Army was drastically cut and reorganised in 1965. This was a bitter blow to many of us. I felt it very deeply because I 2100 have served for 14 years in my own county regiment, the Royal Wiltshire Yeomanry. In the coming years the country may discover that the virtual destruction of the T.A. was a tragic error. However, it would not be in order to pursue that today.
When the proposals for the reorganisation were first announced to the House by the Secretary of State for Defence, in the course of his statement he used these words:The reduction we shall be making in the size of the Reserve Army will mean that a much smaller number of Regular Army officers and men will be needed to help in its training and administration. Officers and soldiers who are required to retire prematurely will be given their compensation.The majority of civilians employed by the Territorial and Auxiliary Forces Association and some Army Department employees will become redundant. So far as we can, we shall offer them alternative employment; but, failing this, the normal superannuation arrangements will apply to Ministry of Defence (Army Department) employees and compensation will be provided for T.A. Association employees." —[OFFICIAL REPORT, 29th July, 1965; Vol. 717. c. 695–6.]Since then, there have been discussions about compensation between the Ministry of Defence and the Council of the Territorial and Auxiliary Forces Association. Recently the Redundant Association Officers Compensation Regulations, 1967, Statutory Instrument, 1967, No. 80, were laid before Parliament. These are very complicated provisions which we shall debate on another occasion—we have put down a Prayer against them—but they do not affect the issue which I am raising today. Many of the employees about whom I am talking will not qualify for the long-term compensation under these Regulations, because they will not have served a sufficient time. However, as I have explained, I am not dealing with the Regulations today and they are a separate issue.
Employees of Territorial Associations are divided into three categories for the purposes of compensation and redundancy. The first category is those who are members of the office staff and who contribute to a superannuation scheme. The second category are those who are members of the office staff and who were in employment in 1956, when the scheme was enlarged to take in T.A. unit employees, but who elected not to join a pension scheme but to continue to earn 2101 a gratuity instead. The third category is industrial staff who cannot be members of a pension scheme but who earn a gratuity.
The matter I am raising today affects the second and third categories only, in other words, those people who are entitled to gratuities and not to a pension. Those gratuities are described in paragraphs 191, 192 and 193 of the Territorial Army Civil Service Regulations, which govern the terms of contract of employees of Territorial Army Associations. In paragraph 192 it is stated:Gratuities will be awarded on the following scale:—The gratuities are paid if a person resigns or reaches retirement age. Their purpose is to encourage employees to give good service and remain in one employment, and I believe that the practice of paying them dates back to before the last war.
Provided that no gratuity shall exceed in total amount one year's pay.
- (i) For each year of service up to five years. One week's pay.
- (ii) For each year of service in excess of five years and up to ten years. Two weeks' pay.
- (iii) For each year of service in excess of ten years. Four weeks' pay.
The decision to reorganise the Territorial Army was taken in 1965, and in the same year the Redundancy Payments Act was passed. That Act requires employers to make lump-sum compensation payments to employees dismissed because of redundancy. For a man between 41 and 64 the amount of compensation under that Act is 1½ weeks' pay for each year of service.
I have a letter, which I shall read a little later, from a man who served the Suffolk and Cambridge Territorial Association for 20 years and is now 61. He qualifies for a gratuity of a year's pay, which is £1,025, and redundancy payment of £600. I mention those figures to show the size of the problem we are discussing.
We now come to the heart of that problem. The Redundancy Payments Act gives discretion to employers if they want to—and I emphasise that—to set off lump-sum compensation payments against redundancy payments, but they can pay both in full if they wish. I understand that the view of all the Associations is that both should be paid 2102 in full. They take that line because at the time of the passing of the Act in 1965 nothing was said to the Associations that full redundancy payment would not be paid to their employees.
Many employees realised very well that their jobs would come to an end in about two years, but they decided to stay on with their Associations to the bitter end, knowing that when they finally became redundant they would receive redundancy compensation as well as their gratuity.
In November, 1965, the Minister of Labour made the Redundancy Payments Regulations, 1965, Statutory Instrument 1965 No. 1932. Clause 5 states:An employer of a pensioned employee may, by notice in writing to that employee, claim to—At the same time as those Regulations were laid before the House, a leaflet was issued by the Ministry of Labour as a guide to employers, and I think that it is important that I should quote briefly from it. It states:
- (a) exclude the right of the employee to the redundancy payment to which he would otherwise be entitled; or
- (b) reduce the amount thereof …"Employers may set off pensions or lump sums which are paid immediately on redundancy or within a short time after and which satisfy the conditions in this leaflet. According to the amount of the pension or lump sum payable the redundancy payment due may be either reduced or extinguished completely. Employers are not compelled to offset pensions etc. in this way. If they choose to make the redundancy payment in full, despite the fact that they are also paying a pension, their rebate from the Redundancy Fund will not be affected (see paragraph 7 below).Paragraph 2, under the heading, "What benefits may be offset?", says:Apart from the benefits mentioned in paragraph 1(1)-(4) above—any lump sum or pension payable under a scheme or arrangement of which the object, or one of the objects, is to provide retirement benefits may be offset up to the limits laid down in paragraph 10 below; …"The heading to paragraph 7 is,How is an employer's rebate affected if he chooses not to offset?".The answer is:He will receive full rebate on the amount of the redundancy payment which he actually pays—i.e. in this case, the unreduced amount.No instructions upon the matter were issued to the Council of Territorial and Auxiliary Forces Associations throughout 2103 the whole of 1966, and that is very important to my case. It was apparently only by accident that last November a member of the Council's staff discovered that the Ministry of Defence intended that gratuities should be offset against redundancy payments. There was a certain amount of correspondence thereafter, and in a letter to the Council from the head of the responsible finance department in the Ministry, dated 6th January 1967, the following words appear:In view of the necessity of removing any doubts on this matter from the minds of Associations and their employees, I must ask you to send a letter to T. and A.F.A. Secretaries on the lines of the attached draft (which has been cleared with the Ministry of Labour) as soon as you conveniently can.I think that I should read part of the draft because it is important. It says:Associations have been asking for guidance on the extent to which gratuities payable under paragraphs 191–196 of TACSRs should be offset against payments under the Redundancy Payments Act 1965.The position is that the Redundancy Payments Act 1965 requires employers to make to redundant employees lump-sum payments not less in amount than is laid down in the Act. Where employers already have arrangements to make such payments, the Act does not require them to make further payments, except to the extent that the payments under the existing arrangements are less than those laid down in the Act. Accordingly, gratuities paid under TACSRs meet the requirements of the Act, but where the payment due under the Redundancy Payments Act exceeds the gratuity payment due, Associations must 'top up' the gratuity payment to the full amount due under the Act.The Ministry of Labour have confirmed that gratuities paid by Associations to redundant employees will reckon in full for rebates from the Redundancy Fund.I understand that the Ministry of Defence went rather further than that even, and asked the Joint Administrative Council to amend the T.A. Civil Service Regulations to comply with paragraph 106 of the guide to the Redundancy Payments Act, 1965. In other words, the Associations were asked to re-write the contract of service between themselves and their employees. Paragraph 106 of the guide, which comes under the headingEffect of the Act on existing redundancy schemessays:Employers who already make payments under existing redundancy or severance pay schemes are advised to make it clear in the provisions of the scheme that the payments 2104 under it will be in fulfilment or partial fulfilment of the employer's liabilities under the Redundancy Payments Act. If payments under the scheme are greater than those required by the Act, or if some payments are made in circumstances additional to those where the Act requires payments, employers are advised to add a provision to the scheme that redundancy payments will be made as required by the Act and the amount of such payment will be offset against payments due under the scheme.I stress the word "advised". Certainly they were not to be directed to do so, and the Council takes the view that it should not do so for two reasons: first, the gratuity is something that an employee has earned and is not in any way related to the payments to which he is entitled under the Redundancy Payments Act and, secondly, and almost more important because it is a moral point, if that procedure was to be used the employees should have been warned in August, 1965, and not in November, 1966. What the Council feels is that it is being asked to re-write the contract retrospectively.
The fact is that many employees could have left in August, 1965, taking their gratuity with them, and they really would have been no worse off than they will be if the Minister's decision is adopted. If they had gone away the present reorganisation would have been much more difficult. These employees feel they are being punished very much—for their loyalty.
I said earlier I was going to quote a letter, and I shall do so now. This is a letter written to my hon. and gallant Friend the Member for Eye (Sir H. Harrison), who is very sorry indeed that he is not himself able to be present here today. It is written from Suffolk and it says:I write to request that the following matter be taken up on the highest level possible.He then raises a matter which I do not intend to pursue now, and then resumes:The latest shock, which I consider grossly unfair, is that any redundancy pay due, which is approximately £600 in my case, will be offset against a gratuity. Having completed nearly 20 years in the employment of the Suffolk and Cambridgeshire T.A.F.A. I qualify for a gratuity of £1,025 which is nearly a year's pay. However long one was employed, no gratuity would exceed in total one year's pay. I have always been under the impression that this amount, or proportion of it according to service, would be paid to me on retirement or discharge without any stoppages. Reading the Redundancy Act of December, 1965. I was 2105 not aware of anything that might prevent me from receiving the authorised redundancy payment depending on service, etc., but this payment appears now to be offset against my gratuity. At the age of 61 I am now officially declared redundant with effect from 31st March, 1967, having received this notice on 8th February, 1967. I again contend that to be told that redundancy pay would be set against a gratuity only seven weeks before being declared redundant shows a terrific lack of consideration for an employee of any description. The point that I would respectfully ask you to take up on my behalf, and no doubt there are other employees in the same position"—I am quite certain there are—is that any redundancy payment due should not be offset against a gratuity.This really is a very unhappy story, and I hope that the Minister in his reply will be able to clear it up and put the people's mind at rest. The whole episode of dismantling the Territorial Army has indeed been a tragic one. It is now quite essential that the Territorial Army should receive a decent burial.
§ 11.23 a.m.
§ Colonel Sir Tufton Beamish (Lewes)
I am very glad indeed that my hon. Friend the Member for Chippenham (Mr. Awdry) has raised this question today. He has done it, if I may say so, with great clarity and fairness, and without any exaggeration. Easily the most important of the functions of Members of Parliament through the centuries has always been the redress of grievances. There is a serious grievance here, involving a substantial number of people, and I am, therefore, very pleased that my hon. Friend, who has great experience of the Territorial Army and feels very strongly about it, should have raised this question today.
He said, quite rightly, that this is a matter of great principle, apart simply from the number of people involved. I do not myself know how many are involved, and perhaps the Under-Secretary of State will be good enough to let us know. I do not think my hon. Friend has mentioned that. Certainly it would be interesting to know.
So far as I know this story—and I have studied it with considerable care—I believe that there has been a clear breach of faith in this matter, and I believe that the Government has set a thoroughly bad example in trying to force the 2106 Territorial and Auxiliary Forces Association, as employers, to breach the spirit of the understanding which has existed between them and their civilian employees. It may be that it is possible to argue on very narrow legalistic grounds that there is some sort of case for what the Government have done; but that the spirit of the understanding between employers and employees has been seriously breached I am in no doubt.
My hon. Friend has mentioned that the payment of these gratuities is long established and well understood and dates back to before 1939. I have no doubt from my study of this question that this system of gratuities has had as its main object that it should be a substitute for a pension fund, applicable after service between five and 20 years, minimum and maximum. Certainly there is no doubt at all in the minds of the civilian employees, or of the employers, that these payments were what I might describe as of a pensionary nature. They amounted to lump-sum retirement benefit in lieu of pension. That is what, in the minds of those who received or hoped to receive those gratuities, they amounted to.
I had assumed, since 1965 when the relevant action was taken, that the Secretary of State for Defence shared this view, and it certainly came as a complete surprise to discover 15 months later that the Ministry of Defence did not, in fact, take the view which my hon. Friend has expressed today. In the Ministry they must have known all along what the employers' view was. There is no doubt at all, and there never has been, in the minds of the civilian employees that these gratuities were in lieu of pension.
It certainly never entered their heads for one moment that they would lose the lot because it was going to be offset against redundancy payments to which they thought they would be entitled as well. They soldiered on, if that is the right phrase, those civilians for some 15 months, and by carrying on their work they help to keep things going in the Territorial Army during the reorganisation period. They showed great loyalty, and they naturally assumed that they were building up a bigger gratuity by doing so, only to find now, many months later, that this is simply not the case. 2107 There is not very much more that I can add to what my hon. Friend has said, but I want to support every word that he said, and I hope that the Under-Secretary in his reply will make it clear that the Government have had second thoughts about the matter. The amount involved is pretty considerable for many of these people—something like £1,000 or so for 20 years' service. They had hoped that that money would tide them over while they were looking for another job. It is jolly hard to find another job at this time with 600,000 on the dole. They did not know this was to happen, and they thought that they could use their gratuities to help them to manage during the time they were looking around. There is in this a human element that we simply cannot ignore. There is no doubt at all that these people have been thoroughly badly treated and, as my hon. Friend said, punished—for their loyalty.
§ 11.29 a.m.
§ Mr. Victor Goodhew (St. Albans)
I hope very much that notice will be taken of the arguments which have been put forward by my hon. Friend the Member for Chippenham (Mr. Awdry) and my hon. and gallant Friend the Member for Lewes (Sir T. Beamish).
I myself do not propose to speak at any great length today, but I cannot honestly believe that anyone in this House who voted for the Redundancy Payments Act thought it would ever be used in the way in which it is being used today. We all thought it was an Act designed to help people, to soften the blow of losing their jobs at a time when they would not normally have expected to lose them, and that the benefits of the Act would help them to bridge the gap between the end of one job and the beginning of another.
There are many people in these cases who have reached the age at which it is particularly difficult to get employment. At a time when there is considerable unemployment, it is much more difficult for a person or 45, 50 or 55 to obtain employment, and that is probably the age group covering most of the employees about whom we are talking.
It is mean and contemptible advice for a Government to suggest to the Associations that they should not pay their 2108 gratuities in full in addition to the redundancy payments which are the entitlement of everyone who is declared redundant. One cannot help wondering whether the party opposite, whose members talk so often about the rights of the individual and the need to look after individuals, has not lost sight of that fact in the advice which has been given in this case. I hope very much that the Minister will tell us today that he has had second thoughts.
I would put to him especially the fact that, at a time when the Territorial Army has gone through the very unpleasant traumatic experience of being cut down furiously, it is vital that those who are coming forward today should feel confident that they will be properly treated by the Government if they offer their voluntary service to the nation. I hope that he will bear that in mind.
§ 11.31 a.m.
§ Mr. Anthony Kershaw (Stroud)
I congratulate my hon. Friend the Member for Chippenham (Mr. Awdry) upon having seized his opportunity to introduce this matter. While it is one which affects a comparatively small number of people, nevertheless it goes to the confidence which the voluntary services and the Armed Forces have in the Government.
Unfortunately, this is not the first time within the last two or three weeks that we on this side of the House have had to call attention to the damage to confidence which the financial machinations of the Government have caused. Only the week before last, we were discussing the medical services in the Armed Forces in the same sense, and here we have yet another example of the way in which the Government clearly show that they have a contempt for the Armed Forces and intend to neglect them in ways which are sure to damage both the credit of the Government and the credit of any Government in the eyes of those forces.
I ask myself why we are faced with this brutal lack of sympathy towards the Territorial Army. I take it that no one had any doubt when the Redundancy Payments Act, 1965, was passed with such a fanfare that it was intended to secure benefits for the employee who had to move in a time of shake-out of employment, which would cushion him against that move and provide a sense of security 2109 so that he could go to another and more useful employment. Certainly those civilian employees of the Territorial Army with whom we are concerned today must have said to themselves, "There is a good scheme which we are glad to see. We have our own pensions to come and, when the reorganisation has been completed in a short time, it will be right to take advantage of the scheme to try to place ourselves in the future." No doubt they were satisfied with the promises which the Government apparently were making.
They can hardly have thought that, for the vast majority of them, the Redundancy Payments Act was designed to be a completely dead letter and that the payments would amount to less than the pensions which they had already earned for themselves and, therefore it would be totally irrelevant. One thing which they could hardly have guessed was that the Redundancy Payments Act was not intended to apply to them. That must have been a rude shock and an absolute surprise to anyone who had read the Act.
I cannot understand why the Ministry of Defence should take this line. In the advice given to employers in various pamphlets which have been issued and in the speeches of right hon. Gentlemen at the time that the Redundancy Payments Bill was introduced in the House, it was suggested that a favourable eye would be turned upon employers providing schemes for their employees as well as the Redundancy Payments Act. The Act was not designed to be especially generous, but to do something for employees who for one reason or another could not be accommodated in arrangements by their previous employers in other ways. It was tailored in a modest way to provide for everyone. It was not intended, of course, to provide an income for life to anyone who lost his job but to provide cushioning arrangements during the change-over period.
It is not fair that arrangements which people have made for themselves at their own expense and by their own exertions, either by contributions, by accepting a lower salary or by insisting on staying in one job rather than taking another, should be discounted and that they should get no benefit from them.
One of the most offensive features is the way in which, whether by negligence 2110 or intention, the Ministry of Defence concealed from people what the intention was. I understand that it was only a chance visit by an officer of the Territorial and Auxiliary Forces Associations which brought to light what the intention was.
I dare say that it was never the intention of the Ministry to skimp these payments. We are glad to know of the interest of the Minister of Defence (Administration) in the matter by his presence here. Seeing two Ministers and no one else opposite is very agreeable. Indeed, sometimes we are critical if Ministers are not present. I am certain that the hon. Gentleman unhesitatingly would have said, "Yes, go ahead and allow them to pay both." We know who is behind all this, and it is very sad that a Treasury Minister is not here to own up to his shortcomings. It is clear that the Ministry had a directive that it should see if it could get away with one payment if possible. No doubt the hon. Gentleman was just as horrified as anyone else when he was ordered to do that, though I must admit that he is looking rather cheerful at the moment.
The Minister of Defence (Administration) (Mr. G. W. Reynolds)
I am looking cheerful because I have heard the hon. Member for Stroud (Mr. Kershaw) make this speech about four times before.
§ Mr. Kershaw
I know that this is, to some extent, tedious repetition, but when we have a Government who go on doing these things, it is one's duty to point it out. Every time they welsh, we must run after them shouting, "Stop thief." The worse the Minister behaves, the more amiable he looks.
By what right does the Ministry of Defence order the T.A. and the T. and A.F. Associations not to pay these gratuities? If the Associations say that they intend to pay the gratuities and consider that redundancy payments must be made in addition, what is the position? Is it simply a case of the Ministry giving strong advice, or is it able to issue some order? I suppose that I should know the answer by reference to the Redundancy Payments Act, but I am afraid that I do not. I am sure that the House would like to know whether it is possible for the Associations to ignore the advice of the Ministry and go ahead on 2111 their own. I am sure that any private employer would know what to do. If he did not, he would have labour trouble on his hands, with representations from the trade unions in his factory.
I am sure, therefore, that it is the duty of hon. Members to speak for those who by custom are not allowed to speak for themselves. I believe, therefore, that my hon. Friend has done a great service to them and to this House by raising this important matter, and I hope that we shall have some elucidation of the position, and if possible some change of heart by the Minister before the day is ever.
§ 11.40 a.m.
§ The Under-Secretary of State for Defence for the Army (Mr. James Boyden)
Rather naturally I do not propose to go into the reasons for the reorganisation of the Territorial Army, which I was somewhat tempted to do. The ground was covered in great detail by my hon. Friend the Member for Dover (Mr. Ennals) when he moved the Second Reading of the Reserve Forces Bill on 10th May, 1966. I propose to give some idea of what the work of the Territorial and Auxiliary Forces Associations has been, and what the reorganisation will mean in terms of compensation, and so on, which hon. Gentlemen have requested.
The main function of the Associations has been to administer the T.A., and in particular to provide, maintain, heat, light, clean and furnish T.A. centres; to recruit and pay civilian staff of T.A. units and formations; to recruit for the T.A. and maintain liaison with a wide variety of local bodies; to provide, maintain, and furnish married quarters for the Regular Army instructors serving with the T.A.; to provide uniforms and personal equipment—which come from Regular Army sources—to members of the T.A.; and to provide and administer open air ranges. They also administer the Army Cadet Force.
Until the run-down in the numbers of the T.A. started nearly two years ago, Associations were administering about 110,000 members of the T.A. They will be responsible in future for administering about half that number. The functions which Associations are giving up are as follows: the recruiting and pay of civilian members of unit staffs; the provision, 2112 maintenance, and furnishing of married quarters for Regular permanent staff; and the provision of uniforms and personal equipment to members of the volunteers, though not of the Territorials. The total number of drill halls which they will be administering will be reduced from 1,300 to under 400. The work of administering the Army Cadet Force will continue.
There are at present 86 Associations, served by 59 paid, full-time secretariats. The future number of Associations has not yet been decided, but the number of secretariats is being reduced to 14. The reduction will not, however, take place until next year.
At the present time Associations are employing rather under 800 members of secretariat headquarters staffs, 4,750 civilians working with T.A. units, about 720 full-time caretakers and cleaners, as well as small numbers of other categories, such as range-wardens and those helping with the administration of the Army Cadet Force.
About 1,700 civilian employees will be required for units of the Territorial and Army Volunteer Reserve, so that about 3,000 will become redundant. The 1,700 civilian employees to whom I have referred will become civil servants and be transferred to the Ministry of Defence on 1st April, 1967. Their selection has been carried out in accordance with procedures agreed with representatives of the employees, and these procedures have worked very smoothly.
Rather more than half of the 720 full-time caretakers and cleaners are likely to be required for centres that are being retained for the T. and A.V.R. These, too, will be transferred to the Ministry of Defence, but not until next year.
Of the present members of secretariats, numbering under 800, over 300 are likely to be required in future, so that about 450 will become redundant, but, as the reorganisation of secretariats will not take place until next year, some will be able to find other jobs before then.
In addition to those unit employees who are being transferred to the Ministry of Defence, special competitions have been arranged for redundant clerical employees for establishment as civil servants in any Government Department. About 1,100 employees have entered for these competitions, the results of which will become known during March. 2113 I should stress that these competitions were arranged for these T. and A.F.A. employees alone, and their timing was arranged so as to reduce the break in their employment to a minimum. Successful candidates at these competitions will enjoy considerable advantages over ordinary entrants from similar, but open, competitions. Those who are accepted in their present grades will retain their existing salaries, and for all successful candidates Departments have been asked to reserve vacancies up and down the country, whereas in the normal course of events recruits over 40 from open competitions are not offered appointments outside the London area, unless they have special academic qualifications.
What I am endeavouring to show is the very considerable care which has been taken, and that considerable consultation has gone on with the employees over a whole scheme of arrangements for finding suitable posts for those who are redundant under this scheme.
I come now to the various benefits to which redundant employees and those transferred with their work to the Ministry of Defence may be entitled. Most of the non-industrial employees have belonged to a contributory pension scheme. Those who are transferred to the Ministry of Defence with their work will be able to reckon their service towards a Civil Service pension in accordance with Section 33 of the Superannuation Act, 1965, provided that they are prepared to have their assets in the pension fund transferred to the Exchequer. In all other cases, including cases where individuals are successful in the special competitions for entry into the Civil Service, those concerned will be able to take a paid-up pension at the normal retiring age of 65, or a reduced pension at an earlier age.
All industrial employees—together with a limited number of non-industrials who exercise a right to remain outside the contributory pension scheme—with a minimum of five years' service are entitled to gratuities which are paid when their services terminate—for any other than disciplinary reasons—at the same rates, and in the same circumstances as those payable to unestablished civil servants. Those serving on gratuity terms who are transferred to the Ministry of Defence with their work will be able to reckon 2114 their service with an Association for the purpose of a Civil Service pension or gratuity, as appropriate.
All employees with more than two years' service whose services are terminated because of redundancy are entitled to payments under the Redundancy Payments Act 1965. This Act does not require employers, who already have arrangements to make lump-sum payments to redundant employees, to make additional payments except to the extent that the payments under the existing arrangements are less than those laid down in the Act. The gratuities payable to redundant employees are treated as payments in fulfilment of the requirements of the Act. Where the gratuity is less than that laid down in the Act it will be "topped up" to the required amount.
Perhaps I might give some examples of how these payments work to show the way in which, at a certain age, and at a certain time of employment, actual sums of money will work out. Let us consider the position of someone who joined at the age of 30. After five years' service, at 35, at £12 a week as his finishing wage, he would get £60 as a gratuity. Under the Redundancy Payments Act, somebody outside in other industry under the same sort of conditions would also get £60. Up to about five years redundancy payment conditions are sometimes more favourable, but after that the gratuity arrangements are almost invariably much more favourable to the employer who is paying gratuities in the case with which we are dealing. After 10 years, at £12 a week, the gratuity would be £180, and redundancy payment for the same period of time would be £120. After 15 years the gratuity would be £420, and the redundancy payment £204.
For similar payments of £16 a week, the figures would be, at age 35, after five years' service, £80 gratuity, and £80 redundancy payment. After 10 years it would be £240 gratuity, and £160 redundancy payment. After 15 years, it would be £560 and £272 respectively.
I do not think I need go into details about the basis of these calculations, except to say that with minor exceptions gratuity payments are much more favourable than redundancy payments, but where they are not they are topped up 2115 to the equivalent of redundancy payments.
§ Mr. Hugh Fraser (Stafford and Stone)
This is very complicated. I should like to give an example of what happened in Staffordshire, in the case of a man who expected a gratuity of £1,000 but will now receive only £438. Are the Government proposing to top this up?
§ Mr. Boyden
No. He will get his £1,000, but not the lower figure of redundancy payments.
The hon. Member for Stroud (Mr. Kershaw) was very unfair in talking about our general attitude towards resettlement, compensation and transfer. I have already explained the number of ways in which the Government have gone to great trouble to absorb as many of these people as possible. It does not do his own case any good to use such extravagant language.
§ Mr. Goodhew
Surely the fact that the Government are taking so much trouble to absorb as many people as possible makes it all the more incumbent on them to take particular care to look after those who are not able to continue in the service?
§ Mr. Boyden
I shall deal with that point later, because a political question is involved. I want to give the full story of the Compensation Regulations before that.
Employees made redundant and those who suffer a reduction in emoluments as a result of the reorganisation of the Territorial Army may also be eligible for compensation under the Redundant Association Officers Compensation Regulations, 1967, which were made in accordance with Section 17(5) of the Reserve Forces Act, 1966, and came into operation on 31st January of this year. Compensation may take one or more of the following forms:
Resettlement compensation—for loss of employment only—is payable to those with at least three years' service, to assist a claimant while he is seeking other employment, and to cover the period necessary for the consideration of claims for long-term compensation where the claimant is eligible for this.
Long-term compensation, to compensate for loss of earnings, is payable until 2116 the age of 65 to an employee with at least eight years' service who has suffered loss of employment or a reduction of pay in the same employment. In the normal case the compensation can be varied at any time during the first two years after compensation is first assessed but at the end of that period compensation is fixed until the age of 65.
Retirement compensation is payable at the age of 65 to pensionable employees with at least eight years' service who are over forty at the time of the loss of employment or reduction in pay, to compensate for loss of pension rights.
In nearly all cases, with very minor exceptions, compensation takes the form of periodic, not lump-sum, payments. Payments are not simply in respect of the loss of employment, but take into account the emoluments of any alternative employment obtained.
I have not attempted to go into the details that apply to these methods of paying compensation. These are the general conditions and I hope that I have explained the careful way in which the Government have gone into the matter. There can be no question of the payment of both gratuities and payments under the Act, except as I have stated, by way of topping up—generally in respect of employees with less than five years' service. The purpose of the Act is to ensure that all employers make lump sum payments to redundant employees as good as those which are already paid by good employers. It was not the intention of the Act to make good employers pay twice.
During the debates on the Act I do not recall—and I find no record to this effect —that hon. Members opposite referred to this point. The general line of argument by hon. Members opposite in those debates was that redundancy payments should be kept at as low a level as was reasonably possible in respect of private employers. They are now making a distinction between Government, as an employer, and private employers.
§ Mr. Kershaw
If the Territorial Associations want to pay twice, may they? Are the Government the employer here? I should think not.
§ Mr. Boyden
The Government are not the employer. I should like notice of that question, but off the cuff I fancy 2117 that although the Associations have a legal right they have not the money. However, I would prefer to check that point.
In the Second Reading debate on the Redundancy Payments Bill the Joint Parliamentary Secretary to the Ministry of Labour said:Where an employer is already operating a scheme for redundancy compensation … Payments under his scheme will count as payment under the Bill and will attract rebate from the fund."—[OFFICIAL REPORT, 26th April, 1965; Vol. 711, c. 158.]This was not challenged by hon. Members opposite and was not pursued in Committee.
§ Mr. Goodhew
Surely this is not an employer's redundancy scheme, introduced as an alternative to the Government's scheme? This is a gratuity scheme instituted to encourage persons to come forward to work for the Territorial Army Associations—which is quite a different matter.
§ Mr. Boyden
The analogy is with those paid in the Civil Service, these being severance payments. That is the whole basis of the gratuities. This is the basic attitude. As for consultation with the T.A.F.A. Council, it was only when, in November, 1966, the Council Secretariat raised with the Ministry of Defence the method of offsetting gratuities against payments due under the Act that it was realised that the Council took a different view from that of the Ministry of Defence. This situation was dealt with very quickly and it was made clear that instructions should go out to clear up the general position.
It seems as though hon. Members opposite want a different standard for public money as opposed to private money, and I must tell the House that the Government will resist the Motion.
§ 11.57 a.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
Those parts of the Under-Secretary's reply which were irrelevant to the case put by my hon. Friend the Member for Chippenham (Mr. Awdry) were interesting and informative, but those which related to the Motion were unsatisfactory and bore evident traces of inadequate and insufficient briefing of the Under-Secretary. That is nothing 2118 new; we are quite used to his performances on footnotes and other such matters.
The first point which is clear, which has not been denied, and which the House should have firmly before it, is that the manner in which the Territorial Associations were proposing to act, wished to act, and always supposed they would be permitted to act is the manner in which a private employer might act. A private employer is not only entitled to do what the Territorial Associations want to do; in the Redundancy Payments Act provisions were made which implied public approval for his deciding to do so. In other words, the Territorial Associations wished to behave, intended to behave and thought that the Ministry of Defence intended them to behave, like a good employer.
They have now been told by the Ministry of Defence that they are not to do so; that they are to behave in a way in which no good employer would behave; that at the last moment—having led their employees to suppose, right from the beginning, that they intended to pay the gratuity in full, as well as any payments due under the Act—they should take the meaner of the two alternatives open to them under the law. So the Government are advising—or directing: we shall come to that alternative in a moment—the Territorial Associations to behave like bad employers.
Were a private employer concerned, they would applaud him for doing what the T.A. Associations want to do, but, when it is a public employer, the T.A. Associations—although they are independent statutory corporations—the Ministry of Defence, under the instructions of the Treasury, steps in to say, "No, despite what has been supposed and implied and conveyed hitherto, you must pay the minimum which it is permissible for you to pay under the law". That is intolerable and unworthy behaviour.
The ground on which the Government seek to justify this is that these gratuity payments are for precisely the same purpose as the redundancy payments under the Act, that they are, in the technical term, severance payments. This contention cannot for a moment be sustained. These payments, which have been made under a system now lasting for very many years and which fall due not only 2119 when the services of the employed are dispensed with but when he resigns voluntarily and when he reaches retirement age, cannot possibly be treated as severance payments.
They are quite clearly part of the remuneration of these servants, in part a provision for their retirement and the circumstances of their retirement if they remain in the service of the Associations for a long period. In the two instances which have been cited, it is perfectly clear that the substantial gratuity which the servant of the Associations was expecting was part of his remuneration, something which had been his inducement to stay on in his employment and to remain, right to the last moment, a consistent and loyal servant of the Association. Now, the Government say, "No, that is not what these payments were for at all. They were for a kind of safeguard against severance on redundancy." This is a trumpery suggestion, which cannot possibly be sustained in the light of the history of these payments and the conditions of employment under the Territorial Associations.
Finally, there is the question of good faith. The Under-Secretary has told us that the Ministry of Defence sprang into life only when the Council raised the matter with it, because, says he, the Ministry of Defence had always supposed that, of the two alternatives open to an employer, the Associations would choose the meaner. It had not even occurred, apparently, to the Ministry of Defence to inquire what the policy of the Associations would be. In 18 months, it had gone on in blissful carelessness, assuming that, of course, the Associations would behave like a less good employer.
It turned out that they were mistaken about the point of view of the Associations. They ought to have known—I suspect that they really did know—that the understanding between the employees and the Associations had been quite the reverse. So, to its meanness and its misinterpretation of these payments, the Ministry of Defence is adding a breach of faith at the last moment. It is overturning an understanding, which had never before been questioned, between the Associations and their employees.
We have now to consider the situation of these would-be good employers 2120 vis-à-vis their redundant employees. On this point, strangely enough, the Under-Secretary could give the House no guidance or information. We want to know whether the Associations have the right to behave like good employers—we believe that they ought to behave like good employers—or are permitted or enabled to do so, whichever the case may be.
The matter cannot be left here, for two separate reasons—first, the injustice done to a relatively small number of men. This House has always been concerned about injustice as much when it affected a few people as when it affected many. That is one ground on which this matter cannot be left here. The second is that this bad behaviour enforced upon an employing organisation will have its effects in future on confidence and morale in the new Territorial Army.
Whatever may be the differences between the two sides of the House on the future of the Territorial Army and its reorganisation, I thought that one thing had been clear in all the long debates we have had on it—that, right or wrong as the future organisation may be, we all of us want to give it the best possible chance of success.
We shall not do that if we start off with a quarrel of this sort, because the Ministry of Defence is trying to cajole or bludgeon the Territorial Associations into behaving as less good employers than they want to be able. I am afraid that this debate for us is, in view of the Under-Secretary's reply, only the beginning of the matter. We mean to pursue it.
§ 12.07 p.m.
§ Mr. Hugh Fraser (Stafford and Stone)
I have a Question on this subject early next week and I hope that, by then, the Under-Secretary will be able to come forward with a more reasonable proposal. This business is leaving a sour taste in the mouth of the Territorial Associations and doing great damage to individual men, who had this anticipation, which is now destroyed, that the Territorial Associations would perform and act as the best employer.
This is surely what the Government should seek to pursue—the policy of the best employer, a policy which does not entail the breach of faith which has undoubtedly occurred to a few hundred 2121 people. I hope that the hon. Gentleman will look at this question again, therefore, as, otherwise, its effect on the new Territorial Army will cause a good deal of unhappiness and grave embarrassment in some individual cases. What he has said is highly unsatisfactory, and we shall come back to this subject again by Questions and in a full debate.
§ 12.08 p.m.
§ Mr. Awdry
My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) has covered the ground so fully and well that there is little for me to add. I am grateful to the Under-Secretary for having replied. He has told us a little about the new Regulations, and about what the Government are doing for some employees, but has not dealt with the particular grievance which I raised. The decision which he has announced will be deplored by thousands of people who have served faithfully over many years. I am sure that we on this side are all deeply disturbed by the mean attitude of the Government, by what we regard as their immoral attitude. I must make it plain that we shall seek to raise this matter as soon as possible.
§ Question put and negatived.