PENSIONS OF MEMBERS OF PARLIAMENT (SURCHARGE) BILL (Hansard, 8 May 1973)

§ Mr. George Cunningham (Islington, South-West)

I beg to move, That leave be given to bring in a Bill to provide that, for as long as contributions to any reserve pension scheme established by legislation of this Session do not attract tax relief in the same way as contributions to occupational pension schemes, a surcharge of 50 per cent. (£112.50 per annum) shall be payable by Members of Parliament on their contributions to the Parliamentary Contributory Pension Fund to offset the tax relief which they receive. What I am seeking to do is take away from Members of Parliament the tax relief that we now enjoy on the contributions we make to our own Pension Fund. I am not allowed to do that directly by a Ten-Minute Bill, so I am obliged to provide that we should suffer a surcharge of the amount stated on the contributions we pay without getting any additional advantage in return. This may seem, on the surface, a domestic House of Commons matter, but I assure those hon. Members who have not come across the point before that this is definitely not so.

In each constituency there are approximately 10,000 people who, if a vote on the Social Security Bill goes a certain way, will be denied a tax relief, which we Members of Parliament give ourselves and will continue to give ourselves, if the Government get their way. I suggest that that is a situation of serious moral consideration and political content which no hon. Member can afford to ignore unless he has a majority of 25,000-plus.

This is not a party matter. It is a question of fair dealing and of honour. Some Conservatives—I am thinking of the hon. Members for Kensington, South (Sir B. Rhys Williams) and Belper (Mr. Stewart-Smith), who are in the Chamber, and of their hon. Friends the Members for Wells (Mr. Boscawen), Billericay (Mr. McCrindle), and Chorley (Mrs. Monks)— showed that they attached greater importance to fairness and honour in this matter than to obeying their party Whip when in Standing Committee they voted for or abstained on an amendment of mine which the Government will tomorrow try to kill.

The background should be known to all hon. Members, especially after the 217 excellent editorial in The Times yesterday. In brief, the Social Security Bill creates a new reserve pension scheme. All employees who are not in an occupational scheme will now have to contribute to the new scheme. It has been an established principle in this country for a long time, much stressed by the Conservative Party in opposition that contributions to pension schemes should attract tax relief.

There are 11 million people at the moment contributing to occupational schemes who get that tax relief, which is worth about £150 million a year to them. But the Government are saying that the approximately 7 million people who will contribute to the new reserve scheme should not get the tax relief. 1 hat would amount, under the amendment which has been made to the Bill, to approximately £25 million.

This tax relief is not unimportant to those people. It is the Government's own estimate that, of the 7 million contributors to the reserve scheme, between 5 million and 6 million will be taxpayers, so they will be abe to benefit from tax relief. To any taxpayer, the relief is worth 30 per cent. of the nominal cost of his contributions.

We all understand why the Government want to saddle the reserve scheme with this tax disadvantage. It is because they want as few people as possible to remain in the reserve scheme. There may be hon. Members who disagree with that point of view, but it is a legitimate and respectable point of view for Conservatives to held.

But what I suggest seriously to Conservative Members is that the device proposed to give to these contributions for pension purposes a tax disadvantage in essentially similar conditions to those applying to all other pension schemes is not a legitimate, permissible, or acceptable means of achieving that objective. The Government have made great play with the fact—it is their only argument —that they are arranging for the employer to pay more than the employee to the reserve scheme and that therefore that is as good as tax relief.

The point that hon. Members must take personally as well as seriously is this: in 1971, we gave ourselves a new 218 pension scheme. Until then, contributions for our pension were paid on a 50 50 basis by the Member and the Exchequer. Since 1971, we have paid three-eighths of the total contribution and the Exchequer has paid the remainder, five-eighths.

This change was made on the recommendation of Lord Boyle, in his report. In paragraph 71 of that report, Lord Boyle addressed himself specifically to this point. He said that he was recommending that that ratio be adopted because that was normal in the private pension field. The facts show that he was right. He said that he was also recommending it because that was the ratio that the Government were proposing for the State reserve scheme.

But Lord Boyle did not recommend that we should not get tax relief on our contributions and we have made no arrangement not to get tax relief. Consequently, we are enjoying tax relief on our contributions when the ratio of contribution is exactly the same as is proposed for the State reserve scheme. I suggest that, in those circumstances, for hon. Members to allow the Government tomorrow to whip them into the Lobby to kill the amendment which was made in Committee with the assistance of five Conservative Members would be more than unfair; it would be dishonourable.

If hon. Members are inclined to do so and to overlook the moral considerations, I would ask them to remember that between 5 million and 6 million people being gratuitously given this grievance will mean about 9,000 constituents in every constituency in the country, their wives, their husbands, and their grown-up and voting sons and daughters. That will probably mean about 15,000 voters in every constituency in the country. Let no hon. Member think that they will not know about it. We shall take care that they know all about it. As I have said, few hon. Members can afford a manifest grievance of that kind to be felt by such a large number of their constituents.

If hon. Members are not prepared to stop the Government tomorrow, the Bill at least allows them to be consistent and fair, and to take away from themselves the tax relief which they now enjoy.