HC Deb 16 December 1971 vol 828 cc975-86

9.56 p.m.

Mr. Albert Booth (Barrow-in-Furness)

I beg to move Amendment No. 1, in page 8, line 7, after "by" ,insert "additional".

This is an Amendment to an Amendment which the Government moved in Committee. The Government Amendment had the effect of requiring that increases in pensions made under the Pensions (Increase) Act, 1971, should be paid out of the superannuation funds. The Government introduced the Amendment in response to a request by the local authority associations. The National Association of Local Government Officers was not consulted on this Amendment by the Government, and the association assures me that it had no advance information from the employers' representatives that they would seek this Amendment. We come to consideration of this Amendment afresh in the sense that it is one on which there has been no agreement between one of the principal unions involved and the employers.

Increases under the Pensions (Increase) Act, 1971, to local government officers are paid not out of superannuation funds but out of the general rate fund. Where an existing local government pensioner receives an increase under the Act the increase is met by the ratepayers of the last local authority which employed him. In the past this may not have been a very serious financial consideration, because previous increases have been infrequent and small. In relation to the total pension fund they have been very small indeed. However, now that annual reviews are taking place and much larger increases are being granted, the amount of money involved is significant in relation to the total of the superannuation funds. I understand that the increases now made may range up to 18 per cent.

The effect of the Amendment is to ensure that where an increase was made to existing beneficiaries of a supperannua- tion fund under the Pensions (Increase) Act, 1971, this would be made by increased contributions to the superannuation fund by the employers. Unless this is done, it is possible, in the terms in which the Bill stands, that the increase could be paid from past employers' contributions to the fund or, possibly, from interest on those past contributions, thus depleting the fund. I hope it is not the Minister's intention that this should be the case. My understanding of his words in Committee——

It being Ten o'clock, further consideration of the Bill, as amended, stood adjourned.

Ordered, That the Superannuation Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Rossi.]

Bill, as amended (in the Standing Cominittee), again considered.

Mr. Booth

I was saying that my understanding of the Minister's words in Committee was that the employer should reimburse the fund to the extent that the pensions are increased under the 1971 Act. I hope he will be prepared to accept the Amendment so that the wishes of the local government officers may be precisely framed in the Act.

The Parliamentary Secretary to the Civil Service Department (Mr. David Howell)

I am grateful to the hon. Gentleman for explaining the thinking behind his Amendment. I appreciate the anxiety about employers bearing the full cost of pensions increases, but I have looked closely at this Amendment and my advice is that, legally, this Amendment would not make the position any more certain than it is already. Furthermore, to proceed with the Amendment might have unintended and undesirable effects the other way. It might, for example, require the maintenance of a separate contribution related only to pensions increases, and this might point not merely to a separate fund but to many dozens of separate funds. This would stand the whole operation on its head since the starting point is to charge increases to the fund and not to set up special funds.

The subsection itself provides in paragraph (b) that the employers shall defray the cost of these increases by contributions. I did not leave the matter to rest on the legal phraseology. I added that the employers have already conveyed formally to the employees their intention—that is, the intention of the local authorities—in any event to bear the full cost of such increases. The employers gave this assurance because this could not be precisely nailed in law. The House will realise that the assessment of the cost of the scheme and appropriate contributions at any time calls for work by actuaries who will no doubt make assumptions as to interest rates, prices and so on. These assumptions and conclusions cannot always be wholly borne out by events. But the employers' intention is clear and unequivocal and is on record.

The exact form of contribution is still to be decided and will be a matter for agreement between the employers before the regulations can be drawn up. Before regulations can be made there will be effective consultation with staff councils. I hope the hon. Gentleman will feel that the purpose of his intention is met and that he will be prepared to withdraw the Amendment.

Mr. Booth

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Booth

I beg to move Amendment No. 2, in page 8, line 29, at end insert— (d) representatives of the trade unions, in membership of the Trades Union Congress Local Government Working Party on the passing of this Act, with members affected; (e) representatives of the trade unions in membership of the Trades Union Congress Local Government Working Party, with members affected.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

It will probably be for the convenience of the House if, with this Amendment, we discuss Amendment No. 4, in page 9, line 16, after "concerned", insert 'with representatives of trade unions with members in the Scheme', Amendment No. 5, in line 16, leave out "likely to be affected by the proposed regulations".

and Amendment No. 6, in line 18, at end insert 'who are likely to be affected by the proposed regulations'.

Mr. Booth

Amendment No. 2 contains what is probably our most serious criticism of the Bill in respect of the provision which it makes for local government employees. This and the three additional Amendments that we are discussing are addressed to the serious need to guarantee to unions the statutory right of consultation when their pension schemes are being framed or amended by regulations made by the Secretary of State. This matter was raised in Committee, and we had what I thought was a fairly profitable discussion upon it. However, I am disappointed to discover that the Minister has not responded to that discussion by tabling an Amendment giving this right to unions.

The Bill affects the pensions of very many employees, and the Government's failure to write into it the statutory right for those employees' representatives to be consulted in the framing of regulations implies a most archaic attitude towards industrial relations.

In drafting these Amendments, no small degree of difficulty has been created by the Government's Industrial Relations Act, since it is no longer possible to rely on what was the past definition of "trade union" as a result of policy difficulties as to whether a union registers under the terms of the Act. I hope that the Government will agree that we have overcome the difficulty in our Amendments by having recourse to the composition of the T.U.C.'s Local Government Working Party. Surely the Government will not refuse any union which is a current member of that working party the statutory right to be consulted if that union's members are to be affected by a scheme covered by the regulations.

The Amendment also addresses itself to the fact that, because of the problems created by the Industrial Relations Act, the present composition of the working party may not be able to remain the same for an indefinite period. In fact, there are already differences between the unions at present represented on the working party about whether to register and accept the limited protections and the grave restrictions which flow from registration, or not to register and run the risk of grave penalties in order to maintain what are considered to be essential trade union freedoms. Those differences may split the present working party.

The first part of the Amendment No. 2 deals with the existing membership of the working party. The latter part of it deals with the membership when regulations are made at any time in the future.

It will be clear that the Amendment is not related exclusively to the matter of consultation, and it will be open to the Minister to consult other unions whose memberships may be affected irrespective of their membership of the working party. The changes in local government and the reform of the Health Service which is taking place may result in members of certain unions who are now in local government service leaving local government service and becoming employees of the Health Service. Assuming that the responsibility of local government for services will not be changed completely, other people who are not local government servants at the moment may be coming into local government service. It is thus necessary, in making provision for consultation with representatives of unions whose members are affected, to have this wide possibility of cover.

Amendments Nos. 4, 5 and 6 relate to the limited number of people who are affected by local Act schemes. The Government, in drafting the Bill—we do not disagree basically on this point—have taken the view that different consultation rights may be involved. My researches reveal that only a limited number of local authorities have their own local Act schemes. Two of the bigger schemes concern Manchester and the City of London. In both cases, the local Act schemes cover all employees and staff members who are in what are known as the A.P.T. grades—the administrative, professional and technical grades. I do not think that this raises any difficult negotiating problems, provided that the Government accept the principle that the right of unions to represent their members when regulations are being made affecting their pension schemes should be absolute and statutory and not be determined by the Minister at the time.

However, there is another reason why it is of the gravest importance that members of the T.U.C. Local Government Working Party should have a statutory right to a say in the determination of their pension schemes in so far as they come within the Clause. I refer to the debate which has been going on between trade unions and employers for about eight years concerning contributions already made to the fund. Any new benefits to be provided under the schemes will be based upon and in addition to rights which have been accrued by contributions made by many local government employees and ex-employees over many years.

Local government officers are extremely worried whether proper appreciation has been made by the Government of the retrospective provisions which will be put in legislation to deal with this problem. The National Association of Local Government Officers contends that its members have for many years been paying contributions in excess of the amount required for existing benefits. Therefore, it takes the view, understandably, that it should have a guaranteed right of consultation in determining future calls upon this fund.

As evidence of the extra contributions over requirements, I refer to a letter from the Government Actuary's Department to the County Councils Association. The letter, which is headed, Contribution Rates for Local Government Superannuation", states: Rates of contribution required to provide the present benefits for new entrants to local government superannuation schemes have now been reassessed using the latest available statistics. These contributions include an allowance for the cost of pensions increase, so that they represent the value of all superannuation benefits granted to an employee, not just the benefits paid from the superannuation fund. These show that the current cost of providing the benefits which are now available range from 9.9 per cent. in the case of male officers entering at 20 years of age to 11.8 per cent. for officers entering at 50 years of age. For male servants, the contribution rate required to provide present benefits is 6.9 per cent. at age 20, rising to 10.;9 per cent. at age 50.

10.15 p.m.

I do not want to weary the House with all the rates. The effect is simply that contributions equivalent to 12 per cent. of an officer's salary have been made to superannuation funds to pay for benefits costing about 1½ per cent. less than the contribution, averaging about 10½ per cent. In the servant categories, for benefits which would cost about 9 per cent. the contribution has been about 10 per cent. There is, therefore, a large sum of money in these funds over and above what is required to meet present benefits, and a decision must be made about how that money is to be used.

It is indefensible to pass legislation which does not give the representatives of the people who made those contributions a statutory right to be consulted when the issue is being determined. There are a number of ways in which the excess contributions could be dealt with, but the fairest way is to provide for retrospective increases, since many of those who are retired are those who contributed to the building up of the excess of contributions over requirements.

That is, of course, only one consideration, but it is one rather special reason why the unions representing people employed in local government should have a statutory right to be consulted when a Statutory Instrument affecting their pension funds is being drawn up. It is by no means uncommon for there to be a statutory requirement to consult. In fact, it is fairly common to see in the preamble to a Statutory Instrument a requirement that the Minister should have carried out the consultations required of him by the parent Act.

I believe the right to consultation to be the minimum necessary for the unions concerned. They are not asking for a guarantee that their representations will even be reflected fairly in the Statutory Instrument. All that they are asking for is a statutory right to be consulted to be written into the Bill.

I hope that the Minister will accept the Amendment in order to achieve that end. If he cannot accept our Amendment I hope lie will say that an Amendment will be welcome in another place in order to achieve what we have in mind.

Mr. David Howell

I am grateful to the hon. Gentleman for setting out the purpose of the Amendments. I said in Committee that I would give further consideration to the wider issues raised by a similar point and that I have done.

As I understand it, the hon. Gentleman is concerned that, as a result of what I might for simplicity call the compulsory consultation Clauses, we have not given the trade unions and staff associations concerned adequate specific recognition and sufficient pride of place. That was the hon. Gentleman's worry in Committee, and he expressed it again tonight.

I have looked at this with care and in detail. I am more than ever certain that the Government and the Opposition are basically of one mind in the matter of the importance of the position occupied in relation to the Bill and the public service pension schemes by the various staff associations concerned. We share the same objectives in dealing with this matter. Equally, I am convinced that there are practical reasons why one cannot sensibly legislate on this as specifically as the Amendment would suggest. I am also convinced that this matter lends itself more readily and appropriately to a firm statement of intent, which I am ready to give today on behalf of the Government.

First, let us look at the wording in the Clauses: representatives of … persons likely to be affected … as appear to him to be appropriate. This can cover every legitimate representative organisation as well as individuals concerned. I do not think there is any dispute about that. The discretion in the word "appropriate", to which attention was called in Committee and which I know worries the hon. Gentleman, is not sinister or derogatory. It simply enables the Minister to ignore what one might call the "interloper", the unrecognised and unacceptable group that may try to horn in on the discussions and consultations.

The hon. Gentleman will remember the serious practical difficulty in the way of the Amendments moved in Committee. Any collection of staff, large or small, could form themselves into an association which one could hardly argue was not concerned with the form of the relevant pension scheme, and in this way One would force Ministers in future to hold consultations with breakaway associations, splinter groups and other ad hoc groupings which, in the terms of what would then be the law if we amended the Bill as the hon. Gentleman suggests, could demand equality of treatment.

Mr. Booth

I take it that the hon. Gentleman is not seriously suggesting that any union which is a member of the T.U.C.'s Local Government Working Party would fall within the description that he has given of an interloper or ad hoc body. These are bodies which are recognised within the whole of the trade union movement as having a serious and legitimate interest based on the very large number of people in local government service.

Mr. Howell

Certainly I do not dispute that. I am suggesting that, over and above all these bodies, it is always possible, as the hon. Gentleman knows, that splinter groups can form and be a grave embarrassment to existing staff organisations. Whatever the hon. Gentleman says, I do not believe that it could possibly be the wish of representative staff interests of the kind he has just described that this kind of development should take place, any more than it is the wish of managements. That is the first reason why, with the best will in the world about the place of recognised staff associations and unions, we believe that to try to push this proposal into legislation would be inimical to staff interests as well as to the management side.

Secondly, the Government are concerned more with the reality than with the appearance of parity of treatment and will do all they can to ensure that it covers all those who, by mutual agreement, are normally consulted and that it is flexible enough to go beyond this when occasion demands.

This is rather a good time, with superannuation discussions being current, to measure the range of consultations which appears to be acceptable to both sides at present, all schemes being up for review. I list the employees' representatives and the various ways in which they are formed to be in consultation with the managements of the public services. In the case of the Civil Service, consultation is in progress in the Joint Superannuation Committee of the National Whitley Council. In the case of local government, the employers' representatives are in consultation with the Trades Union Congress Local Government Working Party, which is mentioned in the Amendment. The forum in the case of the teachers is the Working Party on Teachers' Superannuation. Consultations on National Health Service schemes are in full swing in the Joint Superannuation Consultative Committee.

There is absolutely no risk of the Government under-estimating either these eminent bodies or the important organisations that they represent. However, they are not all standing committees, and they are constituted with varying degrees of formality, which could obviously affect the extent to which they could be legislated for. This illustrates the flexibiliy of approach which we believe to be necessary and which the staff movement itself clearly values as necessary so that it can decide at any one time how best it wants to represent itself.

Paragraph (d) of Amendment No. 2, far from achieving what I believe the hon. Gentleman wants to achieve, and what the Government certainly want to achieve, would not merely freeze in legislative form the body which is currently serving this purpose excellently from the point of view of staff and management—that is, the Trades Union Congress Local Government Working Party—but would also freeze it as presently constituted. I realise that the hon. Gentleman has added paragraph (e), which would compel the Minister to consult, not merely the working party's membership at the date of the passage of the Bill but its future membership at the relevant time. Therefore, if there were any different membership in between these two we should be in trouble straight away.

I am not making a frivolous point, because flexibility is needed. In a sense, the very nature of the double-barrelled Amendment recognises that there might be change.

All this is very cumbersome. If we had to legislate for a full spectrum of likely changes in the way of staff wishing to put forward representations we should be in a frightful mess. So with the changes in Amendments 415–6 which would compel the Secretary of State to consult all unions with members in the local Act scheme concerned. Apart from that, they would compel the Secretary of State to discover the membership of every union involved in the local Act scheme. They would mean consulting literally scores of unions over one Local Act scheme.

Therefore, I suggest, with the best will in the world, that the best interests of employers and employees are served by continuing the present arrangements as specified in the Bill.

If it will help, I am very ready to assure the House that it is the Government's intention to continue to consult through the bodies I have described or through any successor bodies which may be set up in agreement with the staff councils and that, as hitherto, this will not preclude our consulting individual associations where this is customary or is a sensible or appropriate thing to do.

I fully understand that there is a partiscular N.A.L.G.O. worry. My right hon. Friend the Secretary of State for the Environment will ensure in his sphere that an association of N.A.L.G.O.'s obvious importance will always be consulted by whatever means.

At the risk of tedious repetition, I remind the House of what I said on Second Reading about consultation. I referred to the letter from the Civil Service Staff Side, the essence of which was that the words "to consult" would mean no less than they said. I told the House, I told the Standing Committee, and I say for the third time now, that that is precisely what the Government meant by "consultation". I can tell the House again that this holds good not merely for the Civil Service but for consultations over other public service schemes, including those to which the Amendments relate.

The hon. Gentleman went on to raise a specific issue to illustrate the case for his Amendment where he thought that consultation was necessary. This would be an area, as would other areas, where the negotiations and the considerations would be conducted under the guarantee which I gave verbally in the House on Second Reading and in Committee, and which I give again now, of consultation. But it is true that the Government would not on this, any more than on any other aspect, be under a legal obligation, clearly defined, to consult specific bodies because, for the reasons I have given, although I am happy to meet the hon. Member's objections, freezing into legislation the staff associations involved would do no service either to the purposes of the Bill or to the staff interests.

For those reasons, having looked at it again after our good discussion in Committee, I must ask the hon. Member whether he would withdraw these Amendments.

10.30 p.m.

Mr. Douglas Houghton (Sowerby)

No Minister could have been at greater pains than the hon. Gentleman to satisfy us on this important but in many ways small point of difference. We had a good go at the matter in Committee. The Minister has enlarged on the reasons which still lead him to believe that the Government's version of the bodies to be consulted is better than ours. When the principle of consultation is placed as an obligation upon local authority employers for the first time, it is extraordinary that we should appear to be haggling over the definition of who should be consulted. The important concession seems to be lost sight of in subsidiary questions arising from it.

But this is how things are. I have been in this position many times in negotiations with the Official Side on the Civil Service Whitley Council, and it tends to feel that there is no pleasing us—"You go as far as you can to meet them but they always seem to want something more or something different." I had wondered whether we should not include an additional sub-paragraph specifying "Uncle Tom Cobbley and all" to make it clear that everyone was included.

It looks pretty comprehensive as it is. I do not know why it should be so difficult to include the word "unions" in this definition when the basis of the whole consultative process is the organised trade union. I mentioned a version of this in Committee—that, years ago, the definition of who should be consulted in the Whitley system was replaced by two organisations defined by name.

We are getting one lot of advice and the Minister is getting another. Our advice, from a very competent source, should not be unsound. This is a difference of opinion between persons of good will on whether this definition is good enough.

I do not feel able to accept the Minister's invitation to withdraw the Amendment. To do so would imply that we are convinced that he is right and we are wrong, and that is not our view. There is a way of dealing with this position, and that is the course we shall have to take.

Amendment negatived.

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