HC Deb 20 October 1969 vol 788 cc737-42
16. Mr. Boyd-Carpenter

asked the Secretary of State for Social Services what has been the result of his negotiations on the subject of abatement with the representatives of the pensions funds in connection with his proposed legislation.

The Secretary of State for Social Services (Mr. Richard Crossman)

I hope to make a statement and lay a White Paper on this subject early next month.

Mr. Boyd-Carpenter

Is it not becoming increasingly clear that a scheme of the nature of the right hon. Gentleman's scheme is very difficult to reconcile with healthy and expanding occupational schemes? Would he give an assurance that if this turns out to be the case he will amend his scheme so as to secure that occupational schemes are not prejudiced?

Mr. Crossman

It is true that the conversations which I have had with the representatives of the occupational schemes have taken longer than I expected, hence the delay in the statement. But I see no reason to believe that we shall not come to a satisfactory conclusion.

Mr. Lipton

Would my right hon. Friend say a word or two about the N.A.L.G.O. campaign in this respect, which seems to be based upon a variegated assortment of misunderstandings and misconceptions?

Mr. Crossman

I would not contradict a word of what my hon. Friend said, but there is a later Question referring to this matter.

Mr. Dean

Does the Minister realise that it would be very foolhardy to proceed with a line of policy which has had very substantial criticism from the representatives of over 12 million pensioners and members of pensions schemes in this country?

Mr. Crossman

The striking thing is that the scheme has emerged with extraordinarily little criticisms. The only discussion has centred on the precise terms of abatement and not on the nature of the scheme.

21. Mr. Fortescue

asked the Secretary of State for Social Services whether in his costing of the National Superannuation and Social Insurance Plan outlined in Command Paper No. 3883 he has taken into account the cost of paying increased pensions to existing pensioners; and what he estimates this cost would be in 1972, 1982, and 1992.

The Minister of State, Department of Health and Social Security (Mr. David Ennals)

It is not possible to estimate the cost of future increases. Command Paper No. 3883 proposes that increases in excess of inflation proofing should be a matter for the Government of the day. The estimates in the White Paper are, however, based on constant earnings and, therefore, give a realistic indication of the relative progress of income and outgo if benefits moved in line with earnings.

Mr. Fortescue

In the light of that reply, does not the statement by the Secretary of State on 23rd July, in which he estimated the cost of an alternative scheme put up by the National Association of Pension Funds, seem to the Minister to be somewhat misleading, if not perhaps untruthful? In the light of an earlier reply by the Secretary of State this afternoon, may I assure the Minister that for many of us on this side the fractional adjustments in abatement conditions are for from being the only controversial feature of the pension plan and that he may expect strenuous opposition to the plan as a whole?

Mr. Ennals

In reply to the last point, we look forward to a highly intelligent debate on the scheme as a whole. What my right hon. Friend was saying was that most of the attention of the public has been concentrated on these aspects—namely, the terms of abatement. When my right hon. Friend was involved in a discussion with the National Association of Pension Funds, he said how difficult it was to make projections into the future, but he said that if certain assumptions could be made certain figures could be produced. What one cannot at the moment say is what those assumptions would be.

Mr. Dean

Does the Minister of State recollect that the White Paper already makes clear that an increase in contributions will amount to over 30s. for many women, to nearly £1 for many men and to an average of 5s.? Is it not clear that these very high figures are already inadequate?

Mr. Ennals

No, that is by no means true. The White Paper also made clear that in the case of low-paid workers, on present rates they would pay less rather than more and that in 1972 we will have to compare the level of contributions with what would in any event have been a necessary increase in contributions in order simply to maintain our present scheme to cover the vastly increased number of pensioners as well as to increase the level of pensions.

28. Mr. Boyd-Carpenter

asked the Secretary of State for Social Services what reply he has given to the representations of the National Association of Local Government Officers about the effect on the pensions provisions of local government officers of his proposed pensions scheme.

Mr. Crossman

I have assured them that fears that the Government have designs on their occupational pension funds are totally devoid of foundation. I have reminded them that the new State scheme is designed to work in partnership with occupational pension schemes; and I have pointed out the valuable extra benefit cover the new State scheme will bring for the Association's members and their families, and the easement of the contribution burden on the lower paid among them.

Mr. Boyd-Carpenter

Can the right hon. Gentleman give the assurance, however, that it is not his intention to cut back or to diminish in any way the pensions or pension rights enjoyed as a condition of their employment by local government officers under their present scheme?

Mr. Crossman

Yes, I think I can say that we are not concerned to cut them back in any way. We are putting into force a new pensions scheme, which is for the first time an adequate earnings-related scheme. Such a scheme when in force will require adaptation by the other schemes which are in force—[HON. MEMBERS: "Oh."]—the right hon. Gentleman has known about it all the way through. What we are now discussing is the degree of partial contracting out which we can allow which will reduce the necessity for adaptation.

Mr. Robert Howarth

Is my right hon. Friend actually in negotiation with unions such as N.A.L.G.O., or is it a matter of the union making representations and of him replying by letter? Will he assure us that he is actually talking with N.A.L.G.O. in detail about these modifications?

Mr. Crossman

I seem to have talked to a great many N.A.L.G.O. branches throughout the country during the last few months but we have, between us, had three meetings with representatives of the N.A.L.G.O. executive. My main discussions have had to take place on a larger scale with the T.U.C., the C.B.I., the National Association of Pension Funds, the Life Offices and such big groups, because one cannot talk to every one of the 65,000 pension schemes concerned.

Mr. Dean

Does the right hon. Gentleman realise what a very disturbing answer he has given to my right hon. Friend? The question asked, if I may repeat it, was: can he give an assurance that the pension rights of members of the N.A.L.G.O. scheme will not be cut back or diminished in any way?

Mr. Crossman

I was asked whether I would cut them back, and I said that would not cut them back. [Interruption.] If I am asked whether or not, when the new scheme is in effect and the new terms of abatement are worked out, every one of the 65,000 schemes will remain totally unadapted, the answer is "No." Clearly, most of them will have to adapt to the new circumstances. The question I was asked was precisely how they will adapt.

Mr. Dean

Will the right hon. Gentleman then say how many people who are members of these schemes at present are likely to find their pension rights cut back?

Mr. Crossman

None of this can be discussed sensibly until we announce the new ratio between pension abatement and contribution abatement. When that has been seen, each scheme can judge what is involved and what contribution it will pay. It can then decide how to adapt to our scheme. It is clear that a number of schemes will not adapt at all but will be on top of our scheme. A number of schemes may even decide that ours is good enough and they will give up. In my view, the vast majority will adapt themselves to our scheme and together provide greatly improved benefits for their members.

41. Mr. Dean

asked the Secretary of State for Social Services what steps he is taking to revise his pension proposals, in view of the substantial criticisms sent to him by organisations representing large numbers of members of occupational and public services pension schemes.

Mr. Crossman

I do not accept the implication in the Question and I would ask the hon. Member to await the presentation of the Bill early in the new Session.

Mr. Dean

Does the right hon. Gentleman realise that earlier he failed to give an assurance that the pension rights of members of occupational pension schemes will not be eroded by the new State scheme and that his answer will cause profound disquiet amongst a large number of people who are members of such schemes and could do real damage to savings?

Mr. Crossman

That would depend on whether they had read the White Paper. I said that every scheme would have to consider how best to adapt itself to the Government's scheme. That adaptation would not include existing pension rights, which in no respectable occupational scheme can be eroded. What we are considering here is the future, not existing pension rights.

Mr. Molloy

Does not my right hon. Friend agree that the members of occupational schemes are entitled to see that their interests are safeguraded? At the same time, would he underline that the fundamental feature of this scheme is to provide reasonable security of pensions for millions of people who will not be entitled to them unless the scheme becomes an Act?

Mr. Crossman

I am grateful to my hon. Friend. He is quite right. Not only we on this side, but right hon. and hon. Gentlemen opposite should consider it a duty to strike a fair balance between the needs of those in occupational pension schemes and those in the Government's scheme. Inevitably, that balance will be based on very complicated calculations and assessments.