HC Deb 30 January 1968 vol 757 cc1299-307

2.43 a.m.

Mr. John Tilney (Liverpool, Waver-tree)

I am grateful to the Minister for being here to answer the important points which I wish to raise briefly on the grants in aid set out in the Supplementary Estimates to the colonies of Seychelles and St. Vincent and the larger grant to Mauritius, about to become independent. These highlight what I believe to be a major error in our aid programme, and this error has been accentuated by devaluation. The large payment to Zambia for her contingency costs is also relevant because we, at the same time, expect her to pay the pensions of our overseas Civil Servants who served this country and Zambia when it was called Northern Rhodesia. This is a completely different policy to that adopted by France, Belgium and Holland for those who served their erstwhile colonies. There are approximately 20,000 overseas service pensioners, whose position is little known in this country.

We at present expect the developing countries of the Commonwealth and our still existing Colonies to meet the basic pensions of our old colonial servants, however great they may be. All we are prepared to do is to supplement the pensions to meet the rise in the cost of living if the territories concerned have not seen fit to do so. The result is often that pensioners receive their pensions from four, five or six Governments, depending on where they were serving. This is the result of the Public Officers' Agreements usually signed at the time of independence, and no doubt to be signed shortly for Mauritius.

Many developing countries believe that these agreements were to some ex- tent forced on them. Anyhow, the pensions appear in their budgets and not in ours and, therefore, are frequently unpopular overseas, even though Britain gives much more in aid than the cost of a pension to our own civil servants now retired and living in Britain or elsewhere.

I suggest that there are five results of this policy. First, although all were recruited by the Secretary of State for the Colonies, it has been a matter of luck where they were called to serve as to how great their basic pension is, and also whether this has been increased or decreased as a result of the devaluation of the pound.

I hope that the Minister will confirm that some countries have uplifted their pensions payable in this country by about one-sixth because of our devaluation which has not been followed by them; namely, Zambia, Malaya, Swaziland and Brunei. Some existing Colonies such as Hong Kong have increased their pensions through only partial devaluation by, in the case of Hong Kong, 5.7 per cent., and in the case of Fiji by 8.8 per cent. rather than by one-sixth.

This means that pensioners living here or in countries which have devalued equally with Britain will benefit, but that those living in Australia, South Africa or in countries which have not devalued will receive no benefit. But there are ex-Colonies and present Colonies which have not devalued, such as those in East Africa and Singapore, which have decided to pay at the new sterling rate. This means that pensioners here will get no more than before and those in Australia, South Africa and Canada will get less.

It may be said that where pensioners now live is their own choice, though Her Majesty's Government recruited them in Australia, South Africa and Canada and in other countries which have not devalued as well as recruiting them in Britain. But where overseas civil servants serve was not their own choice; they were told where to go.

The second result of this policy is that claims for income tax vary according to where the colonial servants served. This was started by Ghana which suddenly levied seven shillings in the pound on all pensions in 1963. I am glad to say that the position in Ghana is now much better. The problem seems to have been sorted out. But in the case of Ceylon, I am told that years may elapse before income tax over-claimed by Ceylon is repaid, and now that Ceylon has devalued by 20 per cent. and widows are paid their pensions in rupees their small pensions stiffer considerably.

There is also the case of Kenya and Uganda where pensioners are paid at the pre-devaluation rate but the tax is being deducted at the post-devaluation rate, which again will bear hardly on the small pensioner. It seems therefore that the Public Officers' Agreements are interpreted in different ways in different countries. Surely this is not satisfactory.

The third result of our policy is that for some time the pensioners get nothing at all for months on end. This happened to those who had served in the Eastern Region of Nigeria before the Federal Government took over the obligations of the East. How does the Minister expect the pensioners to live in the meantime?

The fourth result has been the request by the Government of Tanzania, a Government in which no civil servant actually served—

Mr. Speaker

Could the hon. Member keep within the Estimate under discussion?

Mr. Tilney

I understand, Mr. Speaker, bat I am worried lest in the Public Service Agreement with Mauritius the Minister will copy exactly what has happened in the case of Tanganyika. It is a most remarkable result which must be avoided at all costs in the case of Mauritius.

The Public Officers' Agreement between the United Kingdom and Tanganyika, Command 1813, is a very cryptic document. Section 5(iv) reads: Pensions payable outside Tanganyika after the appointed day shall be paid in sterling and shall be calculated at the official rate of exchange prevailing on the appointed day between the pound sterling and the currency in use in Tanganyika, notwithstanding any variation in that rate". Section 6, on options, says: For the purposes of this Agreement, in so far as the law, regulations or administrative directions applicable to the grant of a pension or to other conditions of service depends on the option of the person to or in respect of whom the pension is granted or is to be granted, or of the officer to whom the conditions of service apply, the law, regulations or administrative directions for which such person or officer opts shall be taken to be more favourable to him than any other law, regulation or administrative direction for which he might have opted. In the case of Mauritius, I hope that the Minister's ideas will be made clearer, because it is a ridiculous situation. If a pensioner opts to have his pension paid in Tanzania with the proceeds transferred to Britain, he will benefit by 16 per cent., whereas if it is paid in Britain through the Crown Agents, he gets no benefit, even though Tanzania has not devalued.

The fifth and final result is the great uncertainty for the future of pensions felt by all the pensioners. I cannot believe that that is what the Minister wants. Why not remove hostility overseas, give security to the pensioners and. indirectly. produce some Income Tax here rather than overseas by taking over all basic pensions? I am told that the cost of overseas pensions in February 1964 was about £10½ million for about 22,000 pensioners —

Mr. Speaker

Order. With respect. the hon. Gentleman is going rather wide of the Estimate.

Mr. Tilney

Mr. Speaker, this could be a book-keeping entry. I do not want any more money spent. However, it could be spent more wisely if this was done. I am told that the cost of the basic pensions paid through the Crown Agents was only £6 million in 1964. That must be a minute percentage of the great expenditure on aid as a whole, and it would be a declining commitment. Why not set the cost of all pensions —

Mr. Speaker

Order. The hon. Gentleman must take some note of what the Chair is saying. If he looks at the Estimate which he is discussing, he will see that it deals with grants to the Seychelles, St. Vincent and Mauritius.

Mr. Tilney

Yes, Mr. Speaker, and I am anxious that the mistake made in the past is not made again in the case of Mauritius. This is a matter of bookkeeping. I am not asking for more money. I ask that it should be spent more wisely.

2.53 a.m.

The Minister of Overseas Development (Mr. Reg Prentice)

The hon. Gentleman has raised an important subject, and he has done so with reference to the problems of Mauritius in the Supplementary Estimates. I hope that I shall be allowed to follow him in some of the wider aspects of his argument, in the sense that the way in which we have been dealing with the problems has been similar in relation to a number of territories in the past and perhaps will be similar in the future. The problems raised are of a general nature, although they are illustrated by the example concerned. Certainly I was hoping to be allowed to follow his general argument, which is related to what we did in the case of Mauritius and possibly will be related to other cases in the future.

I welcome the fact that the hon. Gentleman has raised this subject. He has raised it in the House on many previous occasions and has shown a close interest in it over the years. He is Vice-President of the Overseas Service Pensioners' Association, and he knows a great deal about the subject.

It is not a new problem. It has been raised many times, and the hon. Gentleman will not be surprised when I say that I do not propose to give him a new answer. The position of successive Governments on this has been the same.

Perhaps I might sum it up in this way. Before a territory becomes independent, the payment of pensions is recognised as being the responsibility of the overseas Government.

Entitlement to pension is part of the domestic legislation of the territory, an entitlement which applies both to indigenous public servants and to ex-patriate public servants. At independence the new government assumes the liabilities and the assets of the former government and this includes the responsibility to pay pensions to retired public servants. This will be the case for Mauritius, as it has been in previous cases.

As the hon. Member has recognised, at the time of independence it has been, and will continue to be, the practice to conclude a Public Officer's Agreement which safeguards the entitlement to pension of all the overseas officers and safeguards them against various risks-for example, against the risk of devaluation of the local currency. The hon. Member referred to devaluation of the £ sterling. which is a different problem. But usually there has been a specific safeguard against devaluation of the local currency.

Mr. Tilney

Not in the case of the Ceylon widows.

Mr. Prentice

I said "usually". I am trying to spell out the general rules which apply in these cases.

Following independence there will often be financial aid from this country to the country concerned. In assessing this financial aid account is taken of a whole range of factors, including the liability of that Government to pay the pensions to which we have referred. But this would only be one of a whole range of factors that govern whether a country is to get aid and, if so, how much it is to be.

If a country is to get budgetary aid, as some countries do—Malawi is an example, and there are other examples in Africa—widows pensions become a matter of arithmetic in arriving at it. In the generality of cases, we cannot quantify it in that way. I am merely saying that the fact they are responsible for these pensions is one of their liabilities which helps us to assess the economic position of the country concerned. Whether it gets aid, and how much, depends on this and how much we can afford as well as a number of other factors.

The hon. Gentleman referred to the uncertainty for the future in the minds of pensioners as one of his five consequences. I suggest that this is probably not the state of mind of a great many of them, and need not be, for two basic reasons. One is that the Governments to whom we have handed over independence over the years have met their obligations in almost all cases. There are very few exceptions. Secondly, the British Government have recognised an obligation to step in if there is a default.

Here I would refer the hon. Gentleman to an exchange of letters that took place between the right hon. Gentleman the Member for Mitcham (Mr. R. Carr) when he was Secretary for Technical Cooperation and the President of the Overseas Service Pensioners' Association. The right hon. Gentleman said, … if for any reasons it should so happen in relation to the payment of a pension that a pensioner found himself in financial difficulties Her Majesty's Government would feel obliged to take appropriate remedial action. That does not amount to a formal commitment to pay loan advances if there has been a default, but it has been understood since by the Overseas Service Pensioners' Association and by the British Government that this would in effect happen if there were a default.

In the case of Zanzibar, after the revolution there was a default for a time and the British Government made loan advances to the pensioners until the new Government of Tanzania took over the responsibility.

The hon. Gentleman referred to the example of pensioners from the Eastern Region of Nigeria. There again, there were ban advances from the United Kingdom Government to the pensioners concerned pending the moment when the Federal Government of Nigeria took over responsibility, which they have now done.

The hon. Gentleman also referred to the request which has been received from the Government of Tanzania that we should take over their liability for pensions. We are considering this, and we are prepared to discuss it with them. In the meantime, the essential point is that they are continuing to meet their obligations in full, and there is no suggestion that they will not do so. From the pensioner's point of view, I do not think that there is any cause for the feeling of insecurity to which the hon. Gentleman referred.

There is, of course, a certain uneveness in the way certain things work out, but these are not necessarily to everybody's disadvantage. The hon. Gentleman referred to the effect of devaluing the £ sterling. This means that some pensioners drawing their pensions in Britain and getting them from a Government which did not devalue are now drawing an enhanced pension, perhaps to the extent of one-sixth of the original, perhaps to a lesser extent. The hon. Gentleman mentioned various countries and the way they treat this. In a sense this has been a bonus for some pensioners, though not for others. Similar considerations apply to the tax position.

The hon. Gentleman took examples of people drawing pensions overseas who had been treated far worse than average, but there are many people who draw pensions overseas deliberately. Among the considerations which they have in mind is that they will pay less tax than they would if they were drawing their pensions in the United Kingdom. I think that in these various uneven aspects of the matter there are many pensioners who benefit, and recognise that they do, from these anomalies. If we were to adopt the proposals put forward by the hon. Gentleman, there would be many overseas pensioners who would not welcome the levelling out of conditions.

My more serious objection to the hon. Gentleman's proposals is one with which he is familiar. What he is proposing for the future in relation to Zanzibar, and for all previous cases, is that we should take over the payments of pensions, and at the same time reduce our aid budget to do this. This would have serious consequences, in that it would distort the aid programme for reasons which the hon. Gentleman and I would not want to take into account when allocating our aid. It would mean that some countries which at the moment do not receive aid from us would be relieved of the liability to pay pensions and therefore, in a sense, would be receiving financial assistance at the expense of other countries which needed it more. To pay the pensions of expublic servants in relation to certain countries, we might find ourselves having to refuse aid which helps to maintain public servants in other poorer countries.

Mr. Tilney

Surely it would be possible to deal only with those countries which were aided by us, and leave the others on one side?

Mr. Prentice

That would be possible, but I suggest that we would be getting the worst of both worlds, because there would still be two ways in which people would be getting their pensions, some from us, and some from the overseas government concerned, and there would still be the anomalies to which the hon. Gentleman referred in relation to tax and devaluation. We should also partially distort the aid to those countries from which we took over the liability.

I have studied the matter with great care. I have come to the same conclusion as was arrived at by my predecessors in both Governments. I realise that there are difficulties, but on balance I think that the way we are doing this is the right one, and therefore I cannot go any way to meet the hon. Gentleman's proposals.

Question put and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

Committee this day.