HC Deb 06 December 1972 vol 847 cc1313-27

4.3 p.m.

Mr. Julian Ridsdale (Harwich)

I am more than delighted at having drawn first place in the ballot to raise this subject on the Consolidated Fund Bill. On the last three occasions I have found myself speaking in the early hours of the morning. There are many subjects to be discussed on this Bill and I know what it is to miss a subject; therefore, I shall endeavour to be brief.

I am grateful to have the opportunity of drawing the attention of the House to the difficulties which are falling on a minority of elderly people who choose to spend their retirement abroad—140,000 out of a total of 7,647,000 retirement pensioners, according to December 1971 figures. Difficulties are being caused because from the time a national insurance pensioner goes abroad, no increase in the national retirement pension can be paid unless there is a reciprocal agreement existing, or, as the Under-Secretary of State for Health and Social Security wrote to me in a letter at the end of June: When National Insurance Pensions are increased in this country, pensioners who have gone to live in other countries are not entitled to receive the increased rates as long as they continue to live abroad or return to this country. They are entitled to receive pensions at the rate applicable in this country while they are here. But if they go abroad again their pension reverts to the former rate unless they become an ordinary resident here in the meantime. Some 140,000 pensioners are affected out of approximately 7½ million retirement pensioners. However, 46,000 are already covered by reciprocal agreements with the EEC and most other European countries except Spain and Portugal. That includes 16,000 retirement pensioners in Canada and 12,000 in the United States. Outside the 24 reciprocal agreements that exist with other countries, there remain approximately 94,000 pensioners. Some 53,000 are covered by generous reciprocal arrangements that have been made with Australia and New Zealand. Indeed, both these countries top up the retirement pensioners of this country.

The problem really concerns approximately 41,000 retirement pensioners who are scattered around the world, the largest number of whom are in South Africa, 6,700. There are 3,000 in Spain, 1,145 in Pakistan and 549 in India. I note that there are 2.500 in Poland. That number is composed largely of those who came here during the war, who worked here and then went home.

The problem has been drawn to my attention following some visits to Spain. Perhaps I should declare an interest. I have an 80-year-old father-in-law who has lived in the United States for the last four years, and an 80-year-old cousin living in South Africa. Therefore, I know a little about their feelings in facing the high cost of living in these countries.

But the problem facing our pensioners in Spain is obviously applicable to the 41,000 pensioners of this country who are now scattered around the world, and for whom no reciprocal agreement exists. This policy is hitting particularly hard the pensioners who over the last 10 years or so have been living abroad and who are now having to face increased costs with what will be a twice devalued £.

The law seems most unjust as it penalises a small minority of elderly people, the majority of whom have spent the whole of their working lives in the United Kingdom, who have paid the whole of their qualifying contributions here and who now live abroad. The majority of the pensioners who live abroad are mostly taxpayers in the United Kingdom and have been so all their lives. Some pensioners who have gone overseas have done so to be near their families who are working abroad, or for medical reasons, and who if resident here would be quite a cost to the National Health Service.

It seems particularly mean not to pay the pension increases, especially when one considers that such pensioners have reached an age when medical or nursing care is much more frequently required than in earlier life. I am sure that the consequential saving to the National Health Service outweighs the cost of any periodical increase.

In fairness to Governments in the past, the denial of such pension increases was understandable in times when the economic and financial position of the United Kingdom was desperate following six years of war and its aftermath. But that position no longer applies. That is shown by the fact that the Government have seen fit to ensure that periodical increases in public services and disability pensions have not been denied to pensioners under the Pensions (Increase) Acts 1969 and 1971 on the ground of residence abroad.

If such increases are allowed, increases in the National Insurance pension should also be allowed. The increase in the cost of living is worldwide and is not confined to the United Kingdom. I have been in correspondence with my hon. Friend the Under-Secretary of State and I know how much he bases the Government's case on reciprocal arrangements with other countries, and rightly so. But no reciprocal agreement exists with Spain, Portugal or South Africa. I hope that the Under-Secretary of State can assure the House that progress is being made with such agreements. It seems wrong, when the whole of a person's working life has been spent in the United Kingdom, when the whole of his qualifying contributions have been paid here, and when he continues to be a taxpayer, that the small increase should not be paid to him.

Alas, as we all know, increases in national insurance pensions are only in part real increases. The major part, particularly with inflation, is to compensate for the reduction of the constantly decreasing value of the pension, and to try to keep it up in real terms.

The inflationary reductions affect the overseas pensioners just as much as those who stay in the United Kingdom, and have done so more particularly during the recent floating of the £. During the period when those persons contributed to the national insurance scheme they paid for retroactive increases for those already retired. Surely they in their turn should he entitled to retroactive increases when others receive increases.

Although negotiations with Spain are at present held up, will the Under-Secre- tary of State for Health and Social Security tell us when he thinks an agreement with Spain will be reached? Can he say what other reciprocal arrangements are being negotiated? Those arrangements constitute the nub of the problem and will lighten the burden of payments which, morally, we should make to these pensioners.

For the present I am concerned with the narrow point of ensuring that increases in national retirement pensions go to the people entitled to them, not only to the retirement pensioners resident in the United Kingdom.

When he last wrote to me on the subject the Under-Secretary of State stressed that he wanted to keep a fair balance between what is paid to pensioners abroad and what is fair as regards contributors in the United Kingdom. During the summer he thought the policy was striking a right balance. But has he taken into account the savings for the National Health Service in hard cash each year, apart from the time which would otherwise have been spent by doctors and nurses? Surely that would outweigh the cost of periodical increases paid to such pensioners and the cost of supplementary pensions.

The Government must realise that social and economic policies in the United Kingdom vitally affect pensioners resident abroad, who are now bitterly experiencing the floating £ and thus suffering a reduction in their pensions and other income derived from their hard-earned savings left in the United Kingdom.

The Government have shown that they care about people living at home. I am grateful for the £10 bounty which is being paid to old-age pensioners. In December, 1971, I spoke of a 10 per cent. unemployment rate in one town. The £10 paid to each pensioner will bring the purchasing power in that town to £130,000 this Christmas. It will help. In that spirit I hope the Government will be equally understanding of this problem.

I estimate that the bill for what I am asking will total £10 million annually. I know that the question of priorities is involved in all expenditure. But I am sure that if the matter were put to the country as a whole, it would be accepted as a moral obligation and as a priority we should face. The majority of people in the country would believe it right to honour this kind of pledge to people who, during their working lives, have helped the country. If we press ahead with a reciprocal agreement we can substantially reduce the £10 million annually.

I therefore ask the Under-Secretary of State to amend the present regulations so that the pension increases can be paid to retirement pensioners living abroad.

4.14 p.m.

Mr. Edward Lyons (Bradford, East)

I am grateful to the hon. Member for Harwich (Mr. Ridsdale) for having raised this issue.

There are three principal reasons why people of retirement age go abroad. First, they often go to join their children who have made a new life abroad. Secondly, if they were originally foreigners or Commonwealth citizens who had settled in Britain, when they retire they think of returning to the country of their birth, and do return. Thirdly, there are those who, for reasons of ill health or because they have the resources to pay to live in a sunnier climate, decide to spend their retirement days near beaches and golf courses where the sun never sets.

I cannot speak strongly on behalf of those who retire to Spain and Majorca in that way. I feel that they have made a calculated decision and that they know what they are doing. None the less, questions of principle arise out of the Government's attitude towards the payment of pensions overseas. People who go overseas on retirement have paid their contributions in the same way as those who remain in the United Kingdom. The only difference between the two groups is that one stays and one goes. One has to decide whether the country regards it as desirable that people should leave and settle elsewhere in their old age or should remain. Many questions arise, some of which have been raised by the hon. Member for Harwich.

Have the Government drawn up any kind of balance sheet concerning the cost of paying increased pensions, as they come to pass, to those who have gone abroad in retirement, as against the savings to be expected because such persons do not use hospital services, supplementary benefits and welfare services?

Nobody suggests that old people should be driven abroad, but if somebody wishes to go to live with a son who emigrated 20 years before, do the Government wish to encourage that situation, or to discourage it?

The bulk of the 140,000 people drawing pensions while living abroad are covered by reciprocal agreements, in particular in Australia and New Zealand, which are signatories to such agreements. It is to those shores that most old people have gone who wish to join their children. But there are, for example, East Europeans, Asians and West Indians—particularly Asians and West Indians in my constituency—who are likely to hanker to return to their native shores to spend their declining days. Is it the Government's policy to put no obstacle in their way, or to discourage them from going abroad?

Those are questions to which I should like answers.

It is difficult, in logic, to sustain an argument that people should receive less money, simply because of where they are living, if they have paid the same contributions as everyone else, and have paid them for an equal length of time. I concede that if the numbers involved were very great there could be a drain on the balance of payments. But the numbers are so small—and the increases that we are talking about are liable to be so insignificant in relation to the numbers involved—that there can be no question of a drain on the balance of payments.

My speech consists of a series of questions.

I ask the Government to adopt a consistent policy towards all persons who retire, so that a man or woman, after having decided to leave these shores, should not have to choose the country of retirement carefully according to whether or not there is a reciprocal agreement in force.

The figures are not liable to be great, but with inflation galloping along they will be much greater in the future than in the past. Clearly, to a person choosing a residence abroad it will matter whether the pension he will receive is the pension paid at the time of departure, or will be susceptible to the annual increases which are likely to occur.

Those who live in certain countries may, apparently, find in future that they will obtain lump sum bonuses at Christmas, whereas others may not qualify for such a bonus. I presume that the lump sum payment will apply to pensioners living in countries covered by reciprocal agreements. If I am wrong, no doubt I shall be told so. I see the Minister nodding his head affirmatively.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

So that there may be no confusion about it, I should explain that I was attempting to convey to the hon. Member that I shall answer his question when I reply.

Mr. Lyons

I am sorry if I expected an affirmative answer. The Minister is keeping his cards close to his chest, so that we do not know what he will say. The conversion to occasional lump sum payments may in due course be used as a reason for not increasing pensions, or for not giving adequate basic pensions, so that those pensioners who have gone to a non-treaty country may find themselves penalised even further. I believe that with only 41,000 people excluded from the present arrangements the Government could afford a rational and consistent policy which does not depend upon a series of treaties.

Although there are 140,000 people living abroad, of whom 41,000 are not covered by an agreement, owing to the contraction of the world, the increase in the number of Britons emigrating and the larger number of alien and Commonwealth citizens living in this country, far more people will be retiring abroad in 25 years' time than do so at present. I suggest that in 15 years' time 500,000 will be retiring abroad, and in due course we shall face a substantial problem.

4.23 p.m.

Mr. John Wells (Maidstone)

I wish to speak briefly to support my hon. Friend the Member for Harwich (Mr. Ridsdale) in his carefully-worded plea for this comparatively small number of our fellow citizens who have retired abroad. Many hon. Members have received recently from a lady resident in South Africa a well presented document detailing the individual cases of a large number of our former constituents. I believe that the Minister has a copy of the document, and I hope that this well presented plea will be attended to. I see from it that I have no less than six former constituents among these unfortunate people, and that there are also a large number of ex-Service people in this category. Ex-Service people have had no fixed home in this country and have had no Member of Parliament to turn to and they may well have children or other relatives resident abroad. They may wish to go to live with or near their relatives in their retirement. That presents a particular problem for hon. Members who represent Service towns. I hope that the Minister will look sympathetically at the letter and will tell us what he intends to do about it.

I hope, too, that he will take us into his confidence and tell us what is the state of play over the attempts to obtain a reciprocal agreement with Spain. Spain creates the biggest problem after South Africa. We have read harrowing stories of people who have gone to live there and who have had to return because of the rampant inflation. This is very hard for them. Moving house in this country is costly enough, but moving house and selling property across a frontier is even more costly. The House is therefore entitled to some news about the Spanish situation, and if it is bad news I hope that the Minister will do everything he can to speed up the negotiations and to see that they reach a favourable conclusion.

4.24 p.m.

Mr. A. W. Stallard (St. Pancras, North)

I have no wish to detain the House for more than a few moments because I wish to speak also in a later Adjournment debate.

Mr. Speaker

I must protect the hon. Member from himself. If he rises now he will have no chance of catching my eye later, even if he now speaks for only a few moments. So he must make the choice.

Mr. Stallard

I still intend to express an interest in this subject, Mr. Speaker, and to congratulate the hon. Member for Harwich (Mr. Ridsdale) on choosing this subject. I have been pursuing the case of an ex-constituent who went to live with a relative and found herself in these circumstances. I have no intention of repeating the arguments that have already been put forward by other hon. Members but I should like to make my plea to the Minister to speed up reciprocal agreements wherever possible. I hope that he is not thinking of giving us the stereotyped reply that we have heard from all Governments in past years when we were told that pensions could be paid only to people resident in the United Kingdom, in order to maintain a balance. People who have left this country have also contributed to the pensions and to the benefits. It is therefore a little unjust that they are not now entitled to the increases and to the further benefits that accrue from past contributions if from nothing else.

I hope that the Minister will veer away from the usual stereotyped reply and take a fresh look at this matter. It is a problem for many of our former constituents who have had to live abroad with relatives. I took my former constituent's case as far as I could. I eventually wrote to the Parliamentary Commissioner quite recently, because I thought there might be grounds for an examination because of maladministration which resulted in disparity of treatment between persons in similar circumstances. The Parliamentary Commissioner found that there was no maladministration and that there was no case to answer in that respect.

I still believe that it will fall to the House in its compassion, if nothing else, to do something for these people, who deserve better treatment than they are getting and who, in many cases, are suffering severe hardship. Will the Minister take a new look at this, speed up the making of reciprocal agreements and give satisfaction to these people?

4.28 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Paul Dean)

I am grateful to my hon. Friend the Member for Harwich (Mr. Ridsdale) for raising this subject, and I am glad that he has drawn first place in the ballot and not 16th, which would probably mean a debate at breakfast time tomorrow morning. As he said, the law provides that a person living abroad receives his pension current at the time that he left the country or when he qualified whilst abroad. He does not receive an increase unless he lives in a country with which we have a reciprocal agreement under which each country has undertaken to pay the pensions and increases in the other country.

I am glad that my hon. Friend mentioned the importance of the reciprocal agreements. The number of countries with which we have these agreements has grown over the years. They now exist with 19 countries, and we attach importance to extending them. I hope to give a few details about negotiations in the course of my speech.

The hon. Member for Bradford, East (Mr. Edward Lyons) asked whether the £10 lump sum bonus would be paid in countries where increases apply. The answer is "No". The lump sum is paid only to those pensioners resident in this country at the appropriate time. For most people it is during this week.

The number of pensioners overseas at the end of 1971 was 140,000, of whom 46,000 receive pension increases. Unfortunately, this by no means gives the whole picture, which is much more complicated. For example, some British pensioners receive a pension from the country in which they reside.

The biggest groups of pensioners not covered by reciprocal agreements are in Australia, where there are 40,000 British pensioners, and New Zealand, where there are 13,000. Our pensioners in these countries can receive Australian or New Zealand pensions on arrival, but our pensions are often deducted and a balance paid. In other words, the actual income is at Australian or New Zealand pension level. In these cases our increases would not benefit the pensioners concerned. Broadly speaking, these pensions are paid on a means test.

Another country in which there is a sizeable number of our pensioners is Canada, where there are nearly 16,000. They are not covered by reciprocal agreements, but some can get the Canadian pension. It is estimated that about 24 per cent. may be eligible for the Canadian old-age security pension, which is payable after 10 years' continuous residence before the time of the claim. I quote those cases to convey to the House that the situation is much more complicated than just whether or not we happen to have reciprocal agreements with the countries concerned.

In Spain there are just over 3,000 of our pensioners. We are hoping to negotiate a reciprocal agreement, and we have put written proposals to the Spanish authorities for an agreement which would include pensions and under which our increases would be payable. Negotiations inevitably take time because when one is negotiating an agreement it is desirable to cover as wide a variety of needs as possible. Our pensioners are interested not only in the payment of a pension but in health services. The Spanish Government are interested in cover for Spanish workers who come to this country. I cannot say when agreement will be reached, but we are anxious to promote the negotiations as quickly as possible.

Mr. Wells

Can my hon. Friend say how many Spanish workers are resident and working here, particularly in the fruit marketing trades, because the number may be comparable with, or even more than, the number of our pensioners in Spain?

Mr. Dean

That is one factor. Off the cuff I cannot give a figure. I will write to my hon. Friend and see that he gets any information that we have.

South Africa was mentioned by my hon. Friend the Member for Maidstone (Mr. John Wells), amongst others. There are over 6,000 of our pensioners there and, as my hon. Friend said, a letter has come to my Department recently from one of them. I received a copy of it only a short time ago, but I shall study carefully its contents. Unfortunately, we are unlikely to be able to make a reciprocal agreement with South Africa, as that country has no pension scheme comparable with ours. There is a means tested pension available to citizens or to people with 15 years' residence out of the last 20, but many of our pensioners will not qualify for this on grounds of nationality, residence or means.

The picture, therefore, is complicated. It varies from country to country. It involves not only pension arrangements but other cash benefits and health services. Taxation is another feature which varies considerably and adds to the complexities. What is clear is that the reciprocal agreements are important. We intend to press ahead with them where-ever we conceivably can. We are anxious to get the most comprehensive agreement we can with as many countries as possible.

We also have to take into account the number of British people in the various countries who are able to qualify for a pension in the country in which they reside. As far as we know, ours is the only country, except Gibraltar, which pays its pensions abroad unconditionally, but pays increases only under reciprocal agreements. Most other countries either do not pay at all, unless there are reciprocal agreements, or pay both the pension and the increases. One or two countries reduce their pensions when they are paid abroad.

Mr. Arthur Lewis (West Ham, North)

As I understand it, if there is a reciprocal agreement a pensions increase is automatically paid. Does an ex-Serviceman drawing an ex-Service pension and a disability pension draw a pension increase? If he does not, what is the logic of his getting the ex-Service pension, the disability pension but not the old-age pension?

Mr. Dean

The answer to the first point, on whether the full pension is payable under reciprocal agreements, is that it usually is the case, but it depends upon the reciprocal agreement concerned. The practice differs on disability pensions. We pay both war disability pensions and industrial injury pensions, plus increases, regardless of where the person resides. There is a preference here that has existed for many years which the war pensioner and the industrial injury pensioner enjoys over the national insurance pensioner.

Mr. Brian O'Malley (Rotherham)

I understood my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) to be pursuing a further point. He was asking whether increases are paid to public service pensions, that is to say, ex-Servicemen, civil servants, teachers, members of NALGO and even Members of Parliament who go abroad. What is the position about the payment of annual increases under the public service schemes?

Mr. Dean

Again, the answer is that depends on the public service or the occupational pension scheme. I think I am correct in saying that under most public service schemes, if not all, increases are payable abroad. They are payable abroad in many cases under occupational pension schemes. Here again it depends upon the rules and regulations of the individual scheme.

As my hon. Friend the Member for Harwich said, the cost of paying for increases in all countries would be about £10½ million a year at present, but future annual costs are likely to be higher as our pension rates are improved and as the number of pensioners abroad increases.

Reference has been made to arguments used by successive Governments over the years against making changes other than through reciprocal agreements. It is easy to make out a case for almost any improvement in social security arrangements, but it is the job of the Government to decide the order of priority. Whatever we may feel on this issue, I think the House will accept that that still holds good. We have to weigh the merits of this case against the merits of many other cases which exist for more expenditure on the social services. That is one factor that must be taken into account.

Equally, the national insurance scheme is meant to provide for persons in this country. That is its primary intention. Successive Governments have argued that we cannot accept responsibility to maintain the income for people who have elected to live abroad, and the payment of frozen pensions anywhere in the world is a concession.

Another factor is that the increases, which are now provided on an annual basis, are related to social and economic conditions here, and are paid by employers and workers in this country. But even without the increases most pensioners abroad are receiving good value for the contributions they have paid to the scheme. Even if they have worked and contributed in this country for most of their working lives, the maximum contribution they could have made will be a great deal less than the pension they will receive. One set of figures will illustrate that. The maximum contribution to the scheme that any employed man could have made since 1948 is just over £700, whereas the present full rate of pension for a married couple is over £500 in one year. Therefore even pensioners receiving a reduced rate are getting a good bargain.

Another point is that the bulk of the money required to increase pensions comes from contributions and not from taxation. Persons abroad do not in any event pay taxes such as purchase tax, and if they pay income tax on earnings here they may not have to pay a similar tax in their country of residence.

There is also the question of entitlement under the National Health Service and the supplementary benefits scheme. This is based on residence in this country and not on the payment of contributions. I fully accept that there is a balance sheet argument, which was used by the hon. Member for Bradford, East. The fact that they are not in this country means that they do not require the facilities of the National Health Service. I accept that that is the other side of that argument.

I assure the House that the Government will carefully consider the points put during the debate. The whole question of our pensions abroad is being reviewed. I have tried to convey that it is a highly complicated matter, involving a great deal more than just the payment of pensions.

Mr. Arthur Lewis

Will the Minister also consider the fact that many areas, such as mine, are overcrowded. Old people are living in big houses, but will not leave for a number of reasons. They certainly will not go abroad if they know they will not receive the pension. Many of them might well go abroad if the circumstances were right, and they should be encouraged to do so if they want to, because that could relieve overcowding by helping to depopulate some areas. They could go to see their friends and relatives, and thus help the situation here. It might well help the Government with their housing problem.

Mr. Edward Lyons

As a supplementary point to that—

Mr. Deputy Speaker

Order. It is better not to have a supplementary to an intervention. Perhaps the Minister will answer first.

Mr. Dean

The Government will give full and careful consideration to the points made in this valuable debate, including that which the hon. Member for West Ham, North (Mr. Arthur Lewis) has just raised.

We are reviewing all the arrangements. They are highly complex. They must be considered in the light of a whole range of other priorities, all of which must be considered on their merits. Therefore I cannot give any commitment other than to press on with reciprocal agreements, which we all regard as valuable.

Mr. Edward Lyons

Will the Minister just answer this question—

Mr. Deputy Speaker

Order. Will the hon. Gentleman answer?

Mr. Dean

Yes, Sir.

Mr. Lyons

Further to what my hon. Friend for West Ham, North (Mr. Arthur Lewis) has just said, and what I asked, do the Government as a policy look with favour or disfavour on elderly people emigrating? Surely, certain consequences would follow the answer to that question.

Mr. Dean

I do not think I can be called upon in a debate like this to answer such a question. What I can say, and have already said, is that we favour reciprocal agreements with other countries where these are appropriate and can be negotiated.

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