§ 10.26 p.m.
§ Mr. Ronald Brown (Shoreditch and Finsbury)
I beg to move,That this House takes note of the Local Government Superannuation (Miscellaneous Provisions) Regulations 1973 (S.I., 1973, No. 313), dated 26th February 1973, a copy of which was laid before this House on 9th March.The House will note that the motion stands in my name and that of the hon. Member for Hampstead (Mr. Geoffrey Finsberg). In my view, the regulations should be opposed, but, as a matter of agreement in the House, the motion is merely to note them.
At the outset I pay tribute to the Minister for Local Government and Development, who has been extremely courteous to me personally in discussing the matter in correspondence. I have drawn his attention in letters to the complaint being made by local authorities at the proposal contained in the regulations. There is total opposition to regulation 4. There is total opposition in the Conservative and Labour Parties both in the House and in the country. There is total accord between the employers and the employees in local government in objecting to this regulation.
In the circumstances, when everyone else is against Regulation 4, it seems odd that only the Department of the Environment should be in favour of it. The onus of proof, therefore, rests on the Minister to show why all the people concerned in local government are wrong and he, the man in Whitehall, is right. I have heard him ask many times why local government should not be free to develop and carry on its work without interference from the man in Whitehall. This evening he must tell us why he believes that he is right and everyone else is wrong.
As I understand it, the Minister bases his argument on the concept that the bigger an authority is the better it can do the job. Those of us who have been involved in local government over the years have heard that argument many times. It was one of the criteria laid down by the Herbert Commission, the idea being that 929 if the London boroughs were made bigger they could do a better job. Many of us did not accept that at the time, and I can only say that I do not accept it now.
Apparently, the Minister justifies his "the bigger the better" concept by arguing that the scheme being put through is both a bigger and a better scheme. He claims that it is bigger because it brings in 300,000 manual workers, and he claims that it is better because some of the conditions formerly applicable are to be improved. In my submission, neither of those arguments is self-evident, although the tenor of the Minister's argument in correspondence with me and in the letters he has sent to the local authorities is that all is self-evident and he need give no further explanation.
If the Minister's view is right, and the bigger the authority dealing with superannuation funds the better it will be, why did he not refer the whole thing to the Civil Service? The Civil Service has a vast pension fund which could be used. Therefore, why not use the Civil Service? The Civil Service has better conditions and it is bigger and better. It has a vast computer which would be available for carrying out this work. If it was truly an advantage to be bigger and better, the Civil Service was the best home for this superannuation fund. As the right hon. Gentleman has chosen not to do that, he cannot claim that it is valid to argue "the bigger the better".
One of the complaints local authorities have is the manner in which the regulations have been laid. The Association of Municipal Corporations advises me that the Department has delayed bringing in the regulations for the last 12 months. I am told that within the last 12 months some members of the superannuation fund have retired on the promise that their scheme would be the new scheme when it was introduced. They have had to wait till now for the Department to bring in the regulations.
Regulation 4 does not make it mandatory on county councils to constitute a superannuation fund. I have heard argument in Standing Committee many times about the effect of "shall" and "may". I am, therefore, suprised that the obligation is only to maintain a superannuation fund.
930 The power is created by an amendment of the Local Government Superannuation Act 1937. Yet the 1937 Act was repealed by the Superannuation Act 1972. Which Act do the Government believe they are amending?
The saga of the regulations is even more open to criticism. First, the White Paper on local government reorganisation in February 1971 made no suggestion for termination of borough or district functions as to superannuation. Secondly, the Local Government Act 1972 made no suggestion of transferring the superannuation function or funds from boroughs to counties. In the Superannuation Act 1972 a regulation power was substituted for statutory—1937 Act—provisions. There was no suggestion or proposal to transfer function or terminate borough funds.
The Minister must explain why there has been this great delay. It has not been because of consultation. If he had heeded the consultations he has had, the regulations would not have been laid.
We are led to believe that in the autumn there will be a large and substantial regulatory procedure in which London will be included. However, that is hearsay. People talk to people in the Ministry and people in the Ministry talk to others who say, "It could well be so, because we ought to make London the same as the rest of the country"—
§ Mr. Deputy Speaker(Sir Robert Grant-Ferris)
Order. I am sure the hon. Gentleman will not mind my reminding him that London and everything to do with London is expressly and categorically excluded from the motion by the terms of the Act.
§ Mr. Brown
I am not sure, Mr. Deputy Speaker, how you interpret that to be so. As I understand it, the regulations are general ones of principle. Regulation 4 is designed to establish de facto that the county councils are responsible for superannuation funds. If that be so, it must follow that the evidence which is being offered to local government that it is the Minister's intention to come forward with a similar order to ensure that it applies to London and—
§ Mr. Deputy Speaker
If the hon. Gentleman will allow me, that may indeed be so, but it is not something with which we can deal at this moment. 931 I have to rule that London and the GLC is out of order on this motion.
§ Mr. Brown
I find that extraordinary. I can understand that that ruling suits the Minister and the Government, but it seems an extraordinary situation when the London town clerks and London boroughs have been told that these are matters of which they must take note and with which they are involved. When a question was put to the right hon. Gentleman by an hon. Friend of his he did not say "This does not apply to London". He answered the question by saying "I believe this transfer will be in the best interests"—
§ Mr. Deputy Speaker
These are arguments which can be used, but the hon. Member must realise that I have to construe the rules of order of the House. This motion is concerned with counties other than London. London is not concerned and is, indeed, in terms expressly excluded. I am sure the hon. Gentleman will find some other occasion on which he can raise the very important question of London, and, knowing him as I do, I am sure that he will accept my ruling that he must leave the GLC out of his argument, which was going on very well indeed until he brought London into it.
§ Mr. Brown
I shall obviously do my best to keep within your ruling Mr. Deputy Speaker. I am sure that London will be delighted to know that it cannot be referred to at any time as being included under this order. I shall see that that information goes to local government in London, and I am grateful to you for your ruling, Mr. Deputy Speaker.
Let me talk about other issues connected with this order. The principle which the Minister is enunciating is that these powers should be transferred from the districts to the county councils. One has to ask why they should be. Where is the evidence that any county councils are the right sort of bodies to have these powers given to them? If "the bigger the better" concept which the Minister has enunciated is right, let us look at the county councils to which he has referred as being bigger and better. He is transferring powers from authorities such as Birmingham, Liverpool, Manchester, Sheffield, Leeds and Bristol and giving them 932 not to London but to the Isle of Wight. That really is the bigger the better! We take these powers away from a massive conurbation in Birmingham with a population of 1,096,000 and give them to the Isle of Wight with a population of, I believe, 109,000. We have not got a borough in London with so small a population as 109,000. Yet it is proposed to give the Isle of Wight these powers because it is "bigger and better".
It is interesting to consider some of the other authorities. Look at Salop, one of those authorities which are said to be bigger and better. That has a population of 337,000. Take Liverpool with 607,000, Manchester with 542,000, Sheffield with 566,000 or Leeds with 738,000. So there are about six London boroughs and 13 metropolitan districts each with populations of over 300,000. They have vast resources. Westminster has a rateable value of £114 million, but it has to give up its superannuation fund to the Greater London Council. The Isle of Wight with a population of 109,000 and a tiddling rateable value of about £4.4 million will not lose its powers.
In his letter to me the Minister made an interesting comment, and I am sure he will forgive me if I read it. He saysWe have concluded that this heavy task can be more satisfactorily accomplished by the new county councils and, in London, by the GLC …".The Minister thought we were talking about London tonight. The letter is dated 24th April. It is up to the Minister to explain therefore why he has so concluded.
The letter goes on:It can be argued that the London boroughs have the convenience of being able to run all their superannuation records along with pay and conditions of service.The Minister appears to be trying to tear at the minute argument about size and yet when he begins to explain the matter he automatically brings London into the issue, although I suggest that he should not. He indicates that in London there is clear evidence that the authorities should be left alone.
§ Mr. Deputy Speaker
Even Ministers can find themselves out of order at times, and if a Minister began tonight in the course of the debate to talk about London I should rule him out of order as quickly as I would rule the hon. Member 933 out of order. The hon. Member had better leave the subject of London.
§ Mr. Brown
I suspect, however, Mr. Deputy Speaker, that the Minister will not want to talk about London now. He claims in the letter that it is possible to make useful savings in the calculation of transfer values. All the information I have received—I have been to everyone I can find who knows anything about these matters, to the treasurers, to the people of great importance from the borough councils and the London Boroughs Association—disputes this. I am told by the chief executive for the London Borough of Hackney that it has been said that there would be savings in administration from the operation of a central fund but it is thought that the only saving would be the elimination of the need to calculate transfer values where staff transfer from one London borough to another. Any saving is likely to be outweighed by the administrative work involved in the passing of information from the borough to the central office and from the central office to the borough on records of pay, conditions of service and similar matters.
I sought an up-to-date figure today of the transfers which will take place in local government. I am told that for London up to 15 to 20 per cent. of the staff of the boroughs change within the boroughs each year. That is an enormous changeover, and if it is suggested that all these changes have to be recorded it will be impossible to argue, as the Minister has sought to do, that there will be vast savings. That is not true. There is a great expertise about superannuation funds among the London boroughs.
§ Mr. Deputy Speaker
Order. I must ask the hon. Gentleman to leave the London boroughs and the Greater London Council out of the argument. The regulations are concerned with everything outside London. This is a definite ruling, and I know from my knowledge of the hon. Gentleman that he will respect it.
§ Mr. Brown
I am trying to do that, Mr. Deputy Speaker. I was only illustrating my point. The only sizeable authorities running such superannuation funds happen to be the kind of place I represent. I am the Member for Shoreditch and Finsbury. I can only speak 934 for the boroughs I am talking about. En passant, I am suggesting that we have the expertise and that it is in London that we have the only authorities of the size that we are referring to. There is a vast amount of expertise available in the districts which can be used without their having to go to county councils.
§ Mr. Deputy Speaker
That is as far as we need to go on that. The hon. Gentleman has made that point. I have been very tolerant of him. We must now return to the non-London elements. Perhaps the hon. Gentleman has been under a misapprehension. Perhaps another hon. Member, not representing London boroughs, should have been making this speech. The hon. Gentleman must now refrain from all reference to London.
§ Mr. Deputy Speaker
I understand that. In his usual excellent style the hon. Gentleman has made his point. Now that he has made it, and has received some tolerance from the Chair, I now direct him to leave that question completely.
§ Mr. Deputy Speaker
I do not wish to be unfair to the hon. Gentleman. I mean only that I direct him to refrain from further references to the Greater London Council and the London boroughs and to keep to the terms of the regulations as they relate to the Act. Section 1 of the Local Government Act says:For the administration of local government on and after 1st April 1974 England (exclusive of Greater London and the Isles of Scilly) …".Those are two very important places, but discussion of them is not in order tonight.
§ Mr. Brown
The Act does include the Isle of Wight.
What I want to complain about to the Minister is that the local authorities are 935 satisfied that he and his Department have made no case. On the contrary, he and the Department have been delaying the matter, making noises for a long time, and have in no way tried to justify what they are doing.
The local authority associations and the local authorities are more than satisfied that they are well able to continue running the funds. Vast amounts of money are involved. When a man belongs to a superannuation fund there is a contract between him and his employer. He will be the employee not of the county council but of the district council. It is unwarranted interference by the Minister to try to take away from an employee a contract he has with his employer and put it in the hands of someone else.
In his letter to me the Minister tried to adduce an extraordinary argument. He suggested that it made no difference because all that would happen if a man asked a question was that he would go to somebody, who would be designated, in his own authority to ask it and that that designated person would then ring the central fund and ask the same question and would then get an answer which he would transmit to the employee. If the employee did not quite understand it he would then go back to the officer designated to deal with these inquiries, who would contact the central fund for further guidance, and the designated officer would then return. It is a most extraordinary dialogue.
I was horrified to receive the suggestion that the employer will still have a rôle to play as he will act as a post box between the employee, for whom he is responsible, and the central fund, which will be responsible for the information.
The local authorities have made a powerful case. I should not have been intent upon representing their case unless I had tested its strength. The more I have examined it, the more I have tested the Government's argument, the more I have read the Government's letters to the authorities and the associations and the more I have re-read the letters to me, the more satisfied am I that the Government should think again.
We have, I hope, highlighted to the Minister during this short debate that he has brought forward a measure which is 936 based upon no common sense and has been rejected entirely by the whole of local government in England and Wales. He has also brought about a situation where people are rather afraid of his motive. I urge him to take the regulation back. It is a bad one. I do not believe that he can justify himself. If he could do so he would have taken the opportunity to do so. He has had more than enough opportunity but he has not done so yet. I suggest that we should consider carefully the regulations before we pass them tonight.
§ 10.53 p.m.
§ Mr. Geoffrey Finsberg (Hampstead)
I can see that I shall have a somewhat more difficult task than I first expected. This is an excellent opportunity to place on record the decision of all local government and to sound a warning to the Department of the Environment—I exclude the Minister because this is clearly a departmental suggestion—that it has not proved its case.
I complement the views of the hon. Member for Shoreditch and Finsbury (Mr. Ronald Brown). We speak on this issue, as he said, for the united voice and views of all the local authority associations, the AMC and, if I dare mention it, the CBA. This proposal is being slipped in by means of a paragraph in a circular dealing with local government superannuation. It is a matter which affects tens of thousands of staff. It does not deserve such cavalier treatment.
Recently my hon. Friend the Member for Bromley (Mr. Hunt) asked whether the Minister would reconsider his decision on this matter. My right hon. Friend said:'"No. I believe that this transfer will be in the best interests of the members of these funds."—[OFFICIAL REPORT, 18th April 1973; Vol. 855, c. 110.]I hope that my right hon. Friend does not mean that. I should make it clear that NALGO, speaking for the employees, and the boroughs, speaking for the employers, were opposed, and are opposed, to that decision. Surely they know what they want. It is an unfortunate phrase which is reminiscent of "The gentlemen in Whitehall know best." I thought that lesson had been learned many years ago. I would have hoped that the Civil Service would have learned that that sort of phrase does not please the House.
937 I quote from a letter from NALGO— not the London branch, although it was written to me from London. It says:I can assure you that the Association does support your Association's opposition to the proposals, in particular because as you say the outcome could be detrimental to Local Government staffs.Amongst many provisions the regulations insert a new subsection beginningAs from the date of their first meeting …As far as I know, one of the county councils referred to is the GLC, but it appears in the Local Government Act 1972. If this proposal were accepted, the fund would be about £350 million, too large for any one authority.
One of the arguments is set out by the Department in a letter to a town clerk who raised the issue. It talks about local authorities operating their own funds and makes comparisons and refers to authorities with lesser populations and rateable values. Wiltshire has a population according to the 1971 census, of 486,000 and a rateable value of £20 million; Northants has a population of 468,000 and a rateable value of £20 million; North Yorkshire has a population of 597,000 and a rateable value of £22 million; Oxfordshire has a population of 503,000 and a rateable value of £22 million; Buckinghamshire has a population of 485,000 and a rateable value of £22 million. The largest rateable value among those authorities, which are to be permitted to operate their superannuation funds, is £22 million. Camden has a rateable value of £35 million. I hope my right hon. Friend will note that.
The Department's argument is, in my view, fallacious. I examined the equity portfolios of two authorities to see what may be the effect on employees. An equity portfolio in March 1968, the date of the last actuarial valuation, showed that the first authority invested in 327 different equities; the second authority invested in 159. There was a similarity between the two in that 113 of the second authority's 159 were held in the same companies as the first authority's portfolio. The first authority happens to be the GLC, and the second Camden. I do not say that there is here an index of performance, but it is important to note that at the actuarial valuation in March 1967 there was a 938 surplus of £90,000 in Camden while the GLC had a deficit of £13 million.
I refer to this because paragraph 23 of the order talks of protected rights, and the protected rights to which it refers are those of the London Authorities (Superannuation) Order 1965. These are the employees of the former metropolitan boroughs of London, and the current order seeks to deal with and to change their position. They therefore have a particular interest in having their future pensions safeguarded. Having made the point about the actuarial surplus in the one and the deficiency in the other, let me say that if a new fund is created it may exceed £400 million, and, although it could have a greater spread of investment, if the judgment is bad there will be far more damaging effects than if there are 32 different judgments.
There are arguments about simplification, whether inside or outside London. I quote a borough treasurer:Naturally I have discussed the possibility of the transfer of the fund with my superannuation staff and they all share my concern. Indeed I have little doubt that some will try to transfer elsewhere within the Council's service prior to the appointed day and in this way the government's declared objective could be defeated. This is probably the reason why NALGO which is much closer to the feelings of individual officers than the TUC shares the LBA's opposition to the transfer.Whether or not the majority of the superannuation staff are transferred it is beyond contradiction"—this is the point to make about centralisation—that every borough would need to maintain a smaller nucleus of staff reasonably expert in some aspects of superannuation so as to take the daily administrative decisions necessary in the employing authority. The smallness of their number will leave boroughs much more vulnerable than they are under the present arrangements.I have my own faint suspicion that the proposal to create a large regional fund is the product of a tidy bureaucratic mind wishing to repeat the provincial pattern in London. I urge the Minister to recognise the depth of feeling and to tell his officials not merely that this will not do but that he cannot sell it to the House of Commons, which is the important thing that needs to be remembered.
I have known my right hon. Friend for about 24 years. I have known him 939 to be a man of flexible mind, not a man who is afraid to change his mind if it is shown to him that what was put to him originally and what he originally accepted is not necessarily right. I was comforted by two sentences from a letter by him on 15th February to the town clerk of Croydon. He said:I have discussed your points with the Secretary of State. While we agree that the matter admits of argument, it seems to us on reflection that the interests of the members of the superannuation scheme would best be served by adhering to the proposal to have a single fund for employees of the London Boroughs and the GLC.As I have said, they are particularly concerned because of their protected rights under paragraph 23.
As there are protected rights and as the Minister has admitted that the matter allows of arguments, I hope that, having heard the hon. Member for Shoreditch and Finsbury and myself explaining the situation in London, with illustrations en passant—although strictly in accordance with order, for, Mr. Speaker, you have been good enough not to rule me out of order—the Minister will say that having heard what has been said and being aware of the depth of feeling, he will bear in mind what we have said and the points made outside London by the AMC, which in this context does not deal with London. I hope that he will say that because we have spoken specifically about the transferred employees of the London Authorities (Superannuation) Order 1965, which was Statutory Instrument 621 of 1965, he will tell his officials that when they are working out the 700-page order promised for the autumn they must not tamper with the borough funds in London.
§ 11.5 p.m.
§ Mr Gordon Oakes (Widnes)
The Minister will be aware that right hon. and hon. Members on both sides of the House, the local authority organisations and NALGO are all critical of these regulations in one way or another. At first sight they seem to make improvements. Certainly it is an improvement that widows are to receive one-half rather than one-third of benefit. But, for some strange reason, the Government seem to have got themselves into an awful administrative muddle over local government superannuation.
940 My hon. Friend the Member for Shoreditch and Finsbury (Mr. Ronald Brown) pointed out that we have been waiting a long time for these regulations. Yet we know from circulars issued by the Department of the Environment to local authorities that they are by no means final. They are merely interim arrangements, and major regulations on local government superannuation are to be brought out in the autumn.
What can be going on when the Government find themselves in this position? They introduce temporary regulations and announce that further regulations will come later in the year which may be different from these or may incorporate them. Many people are wondering what exactly is to happen to their individual pensions. It may be that they are on the point of retirement and are waiting to see what the regulations are to be. Their anxiety is intensified because of the possible effect of local government reorganisation. They want to know quickly what their future pension position will be. Yet here we are considering regulations which have no degree of finality and which we know are not the end of the story, since other regulations will be coming along in a matter of weeks or months. How can a local government employee make up his mind, especially if he is in the throes of local government reorganisation, when the Government themselves do not seem able to make up their minds about the regulations?
Both my hon. Friend and the hon. Member for Hampstead (Mr. Geoffrey Finsberg) concentrated on regulation 4. I promise that no reference to London will pass my lips. I am concerned with the passing of the power to maintain a superannuation fund away from the districts and boroughs to the county councils. When we discussed the Local Government Bill in all its protracted stages there was no suggestion that the power to manage a superannuation fund would pass from the existing districts or boroughs.
As my hon. Friend pointed out, we are dealing with enormous concentrations of officers and populations in places like Birmingham, Manchester and Liverpool. Yet we have quite small county councils still in existence.
941 The future districts are extremely incensed at this further deprivation of power and its concentration at county council level. I cannot understand why the Government have not differentiated between metropolitan districts and non-metropolitan districts. In every other way the Local Government Act differentiates between the two. It accepts the fact that in urban areas, in conurbations, where there are metropolitan districts, those districts should have considerable powers. True, there are metropolitan county councils but most of the powers rest with the metropolitan districts. Yet there is nothing here to distinguish between non-metropolitan districts and metropolitan districts.
Surely the Government should have made such a distinction in deciding who should manage the superannuation fund. I do not know that it will be cheaper and that there will be a saving of money. There could be a wastage of money. A great deal of know-how has been built up, particularly by the cities and bigger authorities, in the management of superannuation funds.
Some of these authorities, wisely and prudently and to the benefit of their members, invest funds locally. They know their area well, and they can recognise a good investment. They want to use the money from the pension funds in the district where it is needed. Will the county councils be so solicitous of district needs? Will they invest in this country at all? A great deal of financial power will rest with the county councils in areas such as the West Midlands, Greater Manchester and Mersey-side. These funds might be placed in South Africa for all we know. The dispersal which is so important under the present system will disappear.
§ Mr. Ronald Brown
There is also the case of the housing authority which uses these funds and pays the interest back to the superannuation fund instead of to some speculative enterprise or to moneylenders.
§ Mr. Oakes
My hon. Friend is right. All authorities have used their powers wisely to get the best return on the money.
There are one or two other matters to which I wish to refer. The first concerns 942 regulation 14. This alters the existing scheme whereby the average of the last three years' remuneration is the basis for the pension and concentrates instead on the last year. At first sight this may seem to be an improvement for the local government officer but in certain circumstances it can act against him. There may be some officers who, as a result of reorganisation, find that their final year is not as good as the three previous years. It can also have an adverse effect upon local authority manual workers.
I cite the example of a bus driver whose eyesight fails. After 20 or 25 years he can no longer drive buses and is given a job in the depot, cleaning for example. That will be a lower-paid job. I would prefer that, instead of concentrating upon the last year, the regulation should say that it can be the final year or the best of the last three. That would be fairer to manual workers and officers who are displaced or demoted under reorganisation.
Regulation 12 gives a specific definition of a full-time employee. It defines a full-time employee, whether he be a manual worker or an officer, as someone who works 30 hours per week, whereas the previous regulations referred to a substantial period of time. That degree of flexibility having disappeared one must ask: why have the Government chosen 30 hours? Under the Redundancy Payments Act and other legislation a full-time employee is considered as someone who works more than 21 hours per week. Therefore, I ask: why the differentiation between 21 hours and 30 hours?
In the past there have been stories of part-time employees—particularly the humbler employees of local authorities, such as cleaners—who, having worked for a local authority for 20 to 30 years, found themselves at the end of that period not covered by local government superannuation. We hope that these regulations will give benefit to people who have given service, albeit in a part-time capacity, for a long period rather than react against them by the putting in of this period up to 30 hours per week.
Reference has been made to the confusion in which local authorities find themselves. I understand that the Department has suggested to local authorities but not in these regulations—that 943 there should be a payment of three months' salary to a widow whose husband dies in service and of three months' pension if he dies during his period of benefit. If so, why is that not in the regulations? I understand that the Department has told local authorities that it believes this should be put into effect now. This is government by decree again, because the treasurer concerned has no legal authority to make these payments. Therefore, if the Government intend this to be done it should be included within the regulations.
There are many things in the regulations which the Opposition greatly appreciate, but we think that they are late, that they are not fully effective, that they are interim, whereas they should be final, and that they have major defects to which we have referred.
§ 11.17 p.m.
§ The Minister for Local Government and Development (Mr. Graham Page)
I am grateful to the hon. Member for Widnes (Mr. Oakes) for his welcome of the majority of the regulations. Indeed, they go a long way to improve the superannuation position of local government employees.
I regret that these are interim regulations. The whole of the regulations, which we foresaw in Section 7 of the Superannuation Act 1972, have proved a herculean task. Discussions go on between the employers and the employees' organisations and new ideas are put forward which mean the redrafting of previous ideas, and so on. It has been a long task to work out all the regulations. Therefore, I asked that we should have interim regulations setting out the important points that had been settled. Hence, these regulations now before the House.
I regret as much as anyone that we have been unable to produce the full regulations. We have tried to alleviate the position by making announcements that they will date back, and in some cases we have perhaps overstepped the mark, as the hon. Member for Widnes pointed out, in anticipating what will be in the final regulations but could not be drafted in time for these interim regulations.
944 These regulations cover a number of benefits payable under superannuation schemes. They have the important effect of providing for the compulsory admission of whole-time manual workers who have completed 12 months' continuous service with the relevant employing authority. This is a major reform in local government superannuation schemes. Finally, they introduce various miscellaneous amendments, many of which will be of great advantage.
The main objection to the order during the debate has been against article 4, in which provision is made for the counties, under the new local government set-up as constituted by the Local Government Act 1972, to have control of the superannuation funds. The hon. Member for Shoreditch and Finsbury (Mr. Ronald Brown) said that he was totally opposed to the order, and that everybody was opposed to it. I am at a loss to understand how the hon. Gentleman can possibly say that in the face of the support for the order from the County Councils Association, the Urban District Councils Association and the TUC. My hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) said that NALGO opposed the order, but my Department received a telephone call from Mr. Hayley, the General Secretary of NALGO, saying that he did not support the opposition to the order tonight and that a meeting had recently been held which confirmed that NALGO did not support such opposition.
§ Mr. Geoffrey Finsberg
My right hon. Friend said that Mr. Hayley was the General Secretary. Mr. Anderson is the General Secretary, and Mr. Hayley is a fairly junior official.
§ Mr. Page
Mr. Hayley is the legal officer who has written to the Department on this subject. My hon. Friend is right in saying that Mr. Anderson is the General Secretary. What NALGO is worried about are the conditions of staff, but I think that in correspondence we have succeeded in satisfying the association on that subject. This is dealt with within the Local Government Act 1972 itself. On the staff side the TUC and NALGO do not oppose our scheme for putting these funds in the hands of the counties, so it is wrong for both the hon. Member for Shoreditch and Finsbury and 945 my hon. Friend the Member for Hampstead to say that everybody is opposed to this scheme.
The hon. Member for Shoreditch and Finsbury said that I had some idea that bigger authorities can do jobs better. I do not say that they can all do all jobs better. In fact, there are many jobs which one would not hand over to very large authorities, but where there are substantial sums of money involved and difficult problems to handle there are great advantages in having the schemes, as far as possible, within the hands of larger and fewer authorities.
There has been a considerable number of amalgamations and mergers of superannuation funds. Until local government reform there will be about 1,200 local authorities, districts and counties. Since 1937 there have been about 500 separate funds, which have over the years been reduced to just over 400 now. Already there has been that tendency to amalgamate the funds, and I believe that great advantage can be obtained from the further amalgamations within the new counties.
I think that anyone who first hears of local government superannuation schemes in the context of occupational pension schemes must be surprised that there are as many as 410 schemes in existence. There is one scheme for teachers, one for National Health Service employees, and one for the Civil Service, but in local government there are 410 schemes. That has come about because they have grown up over the years. Not until 1937 were there any compulsory rules about local government superannuation, and since then there have been about a dozen statutes endeavouring to improve on that scheme. It was because the superannuation rules were so inflexible and could be altered only by statute that, under the Superannuation Act 1972, we provided that in future they would be based upon delegated legislation; that is to say, their rules can be set down by orders which will come before the House for approval.
Although the funds of the districts will in future become the fund of the counties, that will be for the purpose of financial management. The individuals will still be the employees of their employing authorities. To that extent the employing authorities will exercise the important dis- 946 cretions over the entitlement of the individual employees. For example, it will be the employing authority which will decide whether there should be added years for efficiency, and whether a person should retire through ill-health and receive his pension earlier. It will be for the employing authority to decide about consent to purchase added years to include those in indirect service or even to add years in order to get a key man into its employment. All those things, touching the individual, will still be in the discretion of the employing authority, which will, in many cases, be the district.
It is in the management of a large fund that we see the advantage of the counties taking over. It is true that some of the counties are very small, but it is convenient that it should be on a county basis, and in many cases it will be a larger administration which can command the expertise of staff which will be so necessary in this future scheme.
The hon. Member for Shoreditch and Finsbury was right to say that it will be a bigger scheme. It is far more complex as it is now being worked out by the employer and employee associations. I promise the House that we will not include in the one major order the management side of the scheme. We will have a separate order, under which can be debated the question which has been debated tonight—whether control of funds shall be for the counties or the districts. Within that order we shall be able to debate Greater London and the London boroughs.
I did not agree with the hon. Member for Widnes when he praised the use of the superannuation funds for the purposes of an authority. The tendency over the last few years, certainly among the bigger authorities, has been to refrain from doing so. I would see some value in a restriction being placed on that use, so that only a small proportion of the funds could be used in that way. This may set at rest the minds of the district authorities, which feel that they will lose control over investment for the benefit of some larger authority to invest in that larger authority's undertakings. I would like to make some restriction on that.
The interests of members of superannuation schemes would best be served by our proposals to have county funds alone 947 after 1st April 1974. In that way the employing authorities which are not county councils will still be able to exercise their powers over the individuals' rights, the funds will be better administered and the expertise of staff will be better applied.
§ It being half-past Eleven o'clock, the debate stood adjourned.
§ Motion made, and Question proposed. That this House do now adjourn.—[Mr. Goodhew.]