TEACHERS (SUPERANNUATION)

HC Deb 28 November 1973 vol 865 cc417-62

4.12 p.m.

Mr. Roy Hattersley (Birmingham, Sparkbrook)

I beg to move, That this House, noting the reduction in the costs of the teachers' superannuation scheme revealed by the 1971 Quinquennial Valuation, calls upon Her Majesty's Government to reduce the contribution paid by teachers to their superannuation scheme to 6 per cent., thus bringing their scheme into line with practice in most of the public service ; to support a return to the ratio of costs sharing between the teachers and the local education authorities agreed by their representatives in the Working Party in 1972 ; and to allow half of all teachers' war service to be credited for pension entitlement as is the practice in the Civil Service.

Mr. Speaker

I have to inform the House that I have not selected the amendment in the name of the hon. Member for Ilford, North (Mr. Iremonger).

Mr. Hattersley

My first task is an unusual but pleasant one. It is to offer the Government the Opposition's congratulations on having accepted, or at least having decided not to vote against, the motion that we are moving. The wisdom of that decision in terms of improving the relationship between the teachers and their employers is obvious and overwhelming. I hope that because of it and because of the improved relationship which may stem from today's decision we are beginning a process of re-establishing the confidence of teachers in their employers and in the Government, and, therefore, a process of improving the morale of the teaching profession, which its unions believe to be at a lower point than at any time in this century.

In some staff rooms the bitterness is so great that neither confidence nor morale will be increased easily or quickly. It is no coincidence that the major city education authorities have pressed the Government to take the step to which they are now agreeing. But, despite the depth of the bitterness and the insecurity that many teachers feel, I hope that today can be the beginning of a new feeling of confidence that society is beginning to recognise their importance, to understand the crucial rôle that teachers can play, to meet some of their legitimate grievances and to listen to their understandable complaints.

As a result of the Government's decision to accept the spirit, the terms and, I suppose, the details of the motion—it is difficult to accept 6 per cent. in principle ; it has either to be accepted altogether or not at all—today is clearly a moment for rejoicing rather than for recrimination. But I know that the Secretary of State will understand that on a rather unusual occasion like today there are a number of questions to which the House and the country are entitled to be given answers.

The first question is : what prompted the Government to change their mind? The second is : why has the Department found it necessary over the past four months to adopt such an aggressive defence of the formula which it appears to be abandoning today? The third and most important question to which the House will want to know the answer is : what comments has the right hon. Lady on the damage which has been done to the education system by her insistence since 22nd June that she would not take the course which she is taking today?

The right hon. Lady looks puzzled when I speak of damage to the education system. I refer again to the feelings amongst teachers and the resentment which has built up since then. I hope that we shall be told why it was necessary to allow that resentment to increase when today we are in a position which we could have enjoyed over the past five months.

The House should have no doubt about the extent of the Government's change of mind and heart. Let me give three examples in case any doubts still remain. Administrative Circular 14/73 issued on 22nd June to local education authorities, without the unions which were parties to the agreement even being consulted, announced unilaterally the decision which is to be abandoned today.

In an Adjournment debate on 13th November the Under-Secretary hinted—and we were grateful for it—that there might be a change in the rules governing war service, and, therefore, a degree of notice was given on that part of the question. But in the hon. Gentleman's answer on 6th November about the general contribution level to the benefit scheme he was positive and certain that the step being taken today would not be taken.

I give a third example of the strength of the Government's case as it was until yesterday or today and, therefore, the extent of their change of heart and mind. Anyone who has seen the two papers which the Department of Education and Science produced to refute the arguments of the National Association of Schoolmasters and the National Union of Teachers will have been impressed by what might be termed their intellectual aggression. There is no doubt that when they were written the Government were firm that what they now intended to do should not be done. In the light of that the House and the country need a firm explanation why this remarkable, though welcome, change has come about.

Today The Times says that the Secretary of State has already explained to the teachers that she is sympathetic to their claim. I have to tell the right hon. Lady that the teachers are not aware of that explanation. If she has made the explanation, which might have led us to believe that the change of heart and mind was coming about, I am sure that she will refer to it as the debate proceeds. If she cannot do that, we need an assurance on two points, and if she can give it I shall accept it without qualification. We need to be assured that the shift of attitude today is the result of a genuine change in judgment on the teachers' superannuation scheme. We also need to be assured that it has nothing to do with political necessity and nothing to do with any estimate made yesterday or the day before of the voting strength in this House.

The Opposition tabled the motion for two reasons. The first was our belief in the justice of the teachers' case. The second was our conviction that a sign had to be given to the teachers that their interests were not constantly sacrificed and that their wishes were not constantly and invariably ignored. Therefore, we believe that this debate is, must and should be to a large degree about the morale of the teaching profession.

At this moment many teachers relieve that society totally fails to recognise and understand the importance and difficulty of the job that they are doing. That feeling is deeply reflected in their reaction to the proposals for reorganising their superannuation scheme. Sixteen unions have come together—a virtually unique occasion—to demonstrate their deep concern about the policy that the Minister proposed to adopt until today. That is an indication of the strength of the teachers' feelings when considered against the size of benefit with which the argument is concerned.

After all, the dispute between the teachers and their employers is about an adjustment to their salaries which will produce, for a teacher earning £2,000 a year, a gross increase in salary of about £15. In net terms it is £9 or £10 a year for most teachers.

Mr. J. C. Jennings (Burton)

Is that salary or pension?

Mr. Hattersley

Salary. Very few teachers can look forward to a pension of £2,000 a year. It is a gross increase of £15 on a salary of £2,000 a year. For most teachers that means taking home an extra £9 or £10 over the entire 52-week period.

Teachers have reacted with great strength and passion to what they believe to be the injustice of the original proposals. The strength of their feeling is totally disproportionate to the size of their possible financial gain. This for them has become a matter not only of principle but of respect.

In view of those two matters it is absolutely right and proper that the Government should have accepted their case, which I understand will add about £7½ million a year to the total local authority liability- In addition, they will gain in the relationship which will develop between the authorities and their teachers. I must therefore ask the Secretary of State, why was it not possible to spend that £7½ million to make the £15 on £2,000 a year available to the teachers in June or July of this year when it first became an issue? Had that been possible a great deal of ill feeling and disruption would have been avoided.

I turn now to the history of the dispute and to the terms about which we now do not argue today. The House will be aware that in June 1972 a joint working party recommended substantial improvements in benefit within the teachers' superannuation scheme. The level of contribution necessary to support the increased benefits was accepted by the teachers with great reluctance. It was accepted with reluctance because of their desire for the increased benefits and their belief that they were being asked to pay an unreasonably high share of the total costs of the scheme.

The total costs of the scheme were then believed to be 17.35 per cent. of the total salary bill. After much negotiation, it was agreed, with reluctance, that the teachers should pay 6.75 per cent.—an increase from 6 per cent.—and that the employers should pay 10.60 per cent.—an increase from 8.5 per cent.

The quinquennial valuation revealed that the total costs were not 17.35 per cent. of the salary bill, but 15.4 per cent. The argument therefore revolves around how the 1.95 per cent difference ought to be shared between the teachers and their employers.

The Government's original intention—nobody else's ; no local authority is to be blamed—was that the teachers should receive nothing. That was an extraordinary decision, made even more extraordinary by the bald announcement of it without consultation with the unions, and made yet more extraordinary by their complete reversal of it today or yesterday.

After that initial decision there was agreement that a saving of 0.15 per cent. should be offered to the teachers, representing half the saving on one element in the pension fund. The teachers inevitably said that that offer was unacceptable. They believed that they should revert to the 6 per cent. figure. The argument whether they should or should not return to that level of contribution has been the subject of a welter of actuarial argument and counter-argument in refutation.

I understand that the Government's argument—or the argument they once held—basically boiled down to the simple fact that the contributions to and the funds within the teachers' superannuation scheme had to be looked upon as two distinct and separate parts. The first part was the new entrant contribution which local authorities traditionally believed should be shared equally between the teachers and their employers. The second was the supplementary contribution which met deficits on the scheme as a whole, and was traditionally paid by the employers alone.

Certainly on that second element in the scheme—the supplementary contribution—the unions have always been and will continue to be unwilling to pay any of the deficits. The Government have therefore contended—I will correct myself again ; have contended until today—that any savings on that part of the scheme, since the teachers were not prepared, willing or able to pay any deficits, should benefit the employers, and the employers alone. That contention may be upheld by the sophistries of actuarial calculation, but I do not believe that it stands logical analysis for one moment.

The unions accepted the 6.75 per cent. liability with the greatest reluctance. More important, they accepted it in the belief that the employers would pay 10.6 per cent. They matched the teachers' total contribution with the employers' total contribution. They did not worry or concern themselves to argue how the employers' contribution was to be made up. They simply and, I believe, naturally and obviously, balanced what the teachers were to pay against what the employers were to pay. The basis of the 1972 agreement was that it should be split 10.6 per cent. and 6.75 per cent. That basis has now changed. Therefore, I think it is obvious that, as that basis has changed, the share within the equation which the teachers are required to pay must change. That is why we are so glad that, according to yesterday's decision, it is to change.

That the teachers' contribution should be reduced is especially true when we look at the nature and reasons for the saving on the supplementary contribution. In part, that is the result of the teachers' initiative. It came about because the notional fund which finances the scheme was being credited with unreasonably low interest rates. That situation has at least in part—by no means totally—been remedied. It needs to be remedied a great deal more.

The Financial Times today contains a reproof of successive Governments—not simply that which the right hon. Lady serves or that which I served but also the Government before that in which the right hon. Lady served—when it states that the teachers' superannuation scheme contains one of the worst examples of pension fund lending money at subsidised rates of interest to the employer's business. That is certainly true. Some of the notional interest rates were improved four years ago. As a result, there is a saving on the supplementary fund. The teachers are entitled to receive some of the benefits from that saving, not least because in part they contributed towards bringing it about.

In one of those aggressive DES notes, to which I have referred, there is a sentence which reads : To what extent teachers' associations contributed to these changes … is at best arguable. With respect, that is not true. The teachers' complaints about the notional interest rates on their funds are very well documented. The National Association of Schoolmasters made a minority report in the working party report on this point. Indeed the approach that was made to the Government about the interest that was notionally credited to the scheme was a joint approach by the teachers' unions and the LEA. There is deep resentment in the profession that the funds which it invests—or notionally invests—do not show a realistic return on capital, and I believe that by making the move which the Government have made today—and which I hope will be confirmed by the right hon. Lady—some of the resentment will be reduced.

Today offers an opportunity to do two other things, one of which I know the right hon. Lady will confirm will be done. I am referring to bringing the teachers' superannuation scheme into line and consistent with comparable schemes. In this welter of actuarial argument which the debate that has lasted since 22nd June has produced, an extraordinary variety of methods have been advanced for comparing one pension scheme with another. In reality there is only one important comparison, and that is between contributions paid and benefits received in one scheme compared with those in another.

If that is the appropriate and sensible approach, the two comparisons that must be made are between teachers and local government officers in the administative and professional classes, and between them and teachers in the National Health Service. Both those other services now pay 6 per cent. The National Health Service paid 6.75 per cent. until its own quinquennial valuation made it clear that an adjustment was necessary. The figure was then reduced to 6 per cent., which I understand is what the teachers are now to pay. That is a matter of simple justice, but another matter of simple justice must be observed if the teachers' claim is to be satisfied.

National Health Service employees had their 6 per cent. figure backdated to 1st April 1972. I hope that the arrangement which the right hon. Lady is to confirm this afternoon will have the same operative date as that which now applies to National Health Service employees.

I now propose to say one word—and one only—about credits for war service. I accept with great pleasure the right hon. Lady's announcement that war service will be credited for pension purposes. I do that for two reasons : first, because what happens in the Civil Service ought to apply to teachers ; secondly, because it is common practice in the EEC.

Many of us who supported entry into the EEC by voting on 28th October—if the right hon. Lady wants to be precise about it—would not change our view, despite the fact that things have not turned out as well as the Prime Minister promised on that occasion. We believed that one of the good things to come out of Europe was the floating of benefits of one kind or another up to the highest level within the Community. That ought to happen, and war service should be treated as service for pension purposes. I am glad that the right hon. Lady is to announce that that good EEC practice will be reproduced and duplicated in Great Britain from today onwards.

I am glad, too, that as a result of the package which the right hon. Lady is about to announce there may be an end to the growing discontent and disillusionment among teachers. That discontent and disillusionment is bad for teachers, and equally bad for the children whom they teach. One of the teachers' proper grievances is about to be met. I hope that today heralds a new attitude on the part of the Government about the teachers' other proper grievances, and that there will, therefore, be a good prospect of improving the education service, in which the value and importance of teachers is properly recognised.

4.35 p.m.

The Secretary of State for Education and Science (Mrs. Margaret Thatcher)

Like the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), I know that teachers are at present harbouring a sense of grievance. This in part may come from a feeling that their lot—certainly in parts of the big cities—has become harder in recent years, while their contribution to our society has been undervalued. New teaching methods are more demanding, discipline is more difficult, and there are special problems of deprived children. The raising of the school leaving age, desirable reform though it is, has added this year to the difficulties of teachers in the secondary schools.

Increases in pay are subject to the code for stage 3 of the counter-inflation programme, and there can be no question of any pay settlement for teachers going beyond the terms of the code. However, paragraphs 156 and 157 of the code leave some scope for improvement in pensions, and I have been seeking for some time ways of helping them in the pensions field. Of course, any arrangements made will have to be subject to the approval of the Pay Board to see that they come within the terms of the code. Naturally, I cannot commit the board, which is independent of the Government.

To take the last section of the motion first, that relating to war service, the Government have great sympathy with those teachers who, having spent their whole working lives since the war in teaching, will receive no pension credit for service in the Armed Forces in the Second World War. Since I received last June a deputation from the National Association of Schoolmasters, which has been taking the lead on this matter among the teachers' associations, I have been examining some of the possibilities in conjunction with my hon. Friend the Under-Secretary of State and my right hon. Friend the Secretary of State for Scotland, who have likewise received representations.

There are bound to be great practical difficulties and problems of definition in re-opening at this late stage the question of reckonable service of teachers who trained and joined the profession immediately after the war. The Government think, however, that it should be possible to work out in the teachers' superannuation working party an agreement on the basis that war service in the Armed Forces by a person who entered the teaching profession immediately after the war and who has given continuous service until the retiring age of 60 should be reckonable as to half for pension purposes.

There are, of course, teachers who trained and taught before undertaking war service. Many of them have paid contributions in respect of their war service. So some basis must be found for assessing the contribution for post-war entrants. To do otherwise would create an unacceptable anomaly among teachers. Inevitably, at this distance of time, we shall have to accept that there will be an element of rough justice, but I hope that the working party will be able to find a formula which will cover the majority of teachers affected.

Mr. Michael McGuire (Ince)

As the right hon. Lady has referred to war service counting for pension purposes, perhaps I may raise the case of one person who has encountered some difficulties.

The man in question qualified as a teacher before the war but, because of the job situation, was unable to obtain a teaching post. He was called up for service and completed nearly six years in the forces. On his release he took up a teaching post, and for a number of years he tried to get the Department—under various Governments—to agree that his war service should count for pension purposes. He was unable to get that agreement until—and I say this in all modesty—I took up his case.

The right hon. Lady spoke about rough justice. As I understand the position from replies that I have received from the Under-Secertary of State, the hon. Member for Chelmsford (Mr. St. John-Stevas), those who qualified as teachers before the war but were unable to get a teaching job and returned to the profession after doing their war service are able to count that service for pension purposes. Does not the right hon. Lady think that the Department should publicise the fact that teachers in that category have no need to go to the length of asking the appropriate local education authority to credit their war service for pension purposes?

Mr. Deputy Speaker (Mr. E. L. Mallalieu)

Order. The hon. Member is making a speech. He must not do that.

Mr. McGuire

I am sorry, Mr. Deputy Speaker, that I have developed my question to such an extent; but would the Minister give a promise that she will seek to use the fullest possible means of publicity to inform teachers that the position is as I have indicated and as has been indicated by my hon. Friend the Member for Birmingham, Sparkbrook (Mr.Hattersley); namely, that war service counts if the people involved were qualified as teachers?

Mrs. Thatcher

I am sure that the hon. Gentleman fully understands the particular case to which he has referred, but he will also understand that on that brief description I could not possibly take in all the details. I stand precisely on what I have said, which I believe is the point at issue. If the hon. Gentleman will contact me about it I will do my best for that case as I would for any other.

I turn now to the question of teachers' contributions, with which the first two sections of the motion are concerned. The motion is framed, and the teachers have put forward their claim, on the basis that where benefits and the relevant conditions of service of different schemes are substantially the same the employee's contribution also should be the same. In the only comparable local government scheme this is 6 per cent. The Government, and in particular, my right hon. Friend the Secretary of State for Scotland and I, who are directly responsible, are anxious to be able to do something to help the teachers in their present difficulties, if this can be done within the pay code. I do not, of course, know what the Pay Board would say about a 6 per cent. contribution, but the Government for their part will be ready to consult the local authorities, with a view to meeting the teachers if they will resume negotiations in the working party on this footing. This will affect the contribution of the employers—that is, the local authorities—and, of course, I cannot speak for them today.

So the Government are ready to accept today's motion in principle on the basis that the first and third sections can form a suitable framework for negotiation if the teachers are ready to resume discussions in the working party. I hope that they will be ready to do so and that they will accept what I have said today as an earnest of the Government's wish to help them wherever we properly can.

I have refrained from giving an actuarial lecture or taking up technical points. The main point, I believe, has been met, and the rest must be done in the working party and then submitted to the Pay Board. I hope that the teachers will accept this in the spirit in which is given by the Government.

4.45 p.m.

Mr. Ernest Armstrong (Durham, North West)

I begin, unusually, by congratulating the Secretary of State on two grounds, the first being the brevity of her speech. I suggest to other right hon. and hon. Members of the Government Front Bench that if they took more notice of Opposition motions we could have much better speeches. The right hon. Lady's speech is the best I have heard her make since she came to the House.

My second reason for congratulating her is that during the past six months she has done something which I have been trying to do all my life, but at which I have failed. I had never been away from school until I came to the House. I went from school to a college of education, and then back to school. I have been active in union work, but I have always deplored the fact that there have been various voices speaking in the name of teachers. It would be a good thing for the education service, and the children—and certainly for the profession—if the teachers could speak with one voice. It is a sad commentary on the profession generally that representations on its behalf are made by 16 different associations. Apart from my school activities I have been a chairman of a local authority education committee.

One of the sad things has been all these voices being put forward.

Local authorities, and the Department of Education and Science under all Governments, have used this disunity in the profession to push across their policy when it was not in line with good educational practice. The Secretary of State was very unwise, even today, to suggest that one union was leading another union, and that one union was leading the case. I have heard that kind of thing from representatives of the Department all my life. The Secretary of State has succeeded in uniting the 16 different associations which have spoken with one voice on this matter. They have felt cheated following the negotiations and the terms imposed as a result of the working party, and the decision of the Government and the local authorities.

I have been a member of a local authority and I am now a Member of Parliament. We have led people to believe that we are willing to listen only when a great fuss is created. No one can deny that during the past five years there have been more and more mass lobbies and there has been more and more rushing to the television studios to state a case, as well as more and more militancy among all sections of the community.

I have recently met teachers—who are most reasonable folk, the last in the world one would expect to withdraw their labour, or threaten to do so, folk who would never have dreamed of dissuading young men and women from entering the teaching profession—who were angry because they felt cheated and betrayed on this single issue of pensions. I have seen reasonable men and women become unreasonable overnight because they felt that they had been so badly treated on this issue.

I say to the Secretary of State that we can do what we like about buildings and resources in the education service but if we are to promote the cause of democracy and build the kind of community which she wants, and which I want, we must treat the teaching profession as key workers in the community.

It is a sad commentary that today many schools are almost like railway stations because teachers are moving in and out so quickly. I have never known teachers to be so unsettled as they are today. I support my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersleyy) in his view that morale is low. Morale is certainly as low as I have known it to be throughout my life. This is a serious matter.

The Secretary of State must remember that the results of the working party were accepted with greatest reluctance. There is no doubt about that. They were accepted by moderate, reasonable folk who, because of the overall benefits, felt that they could commit the teachers to a higher rate of contribution. As the Secretary of State knows, it was a majority vote, and there was a minority report. Where there are minority reports there are often situations in which reasonable people begin to say that unless they are militant they will get nowhere. That is a dangerous situation, particularly in the education service and the teaching profession.

Teachers also feel cheated because of the way in which the scheme is funded, or more precisely, the way in which it is not funded. The Government are fixing the rate of interest and the fund is merely a bookkeeping entry. Teachers feel that if they had had a properly funded scheme it would have ensured that their contributions would not have to rise and that the benefits would compare with those of other public service schemes.

No one can deny that any reasonably invested scheme would earn far more than the notional income allows. If we read the documents dealing with the new pension schemes now coming forward from the Government it will be seen that any well-managed superannuation scheme relies on investment income to carry a large part of the cost burden. The fact that this scheme is not funded causes great resentment throughout the teaching profession. All public servants, particularly teachers, have been harshly affected by incomes policy and counter-inflation measures taken by successive Governments.

We know that teachers are reasonable and moderate folk and have therefore tolerated conditions which have not been tolerated by others who have used their strength in a direct confrontation with the Government. The majority of teachers do not want a direct confrontation with the local authorities or with the Government. Because the teachers have been harshly affected by these policies, it is wise of the Government to accept our motion.

I have to say to the Minister that over and over again she has given the impression that what is happening in the education service is no responsibility of hers. I put it to her at Question Time recently and she told me that she had no responsibility for the fact that at present children are undergoing part-time education. Teachers have always regarded education as a partnership between the authorities, themselves and the Department. The Minister must take seriously this business of morale in the profession. The teachers have a great contribution to make. They must make it in cooperation with parents, the Department and the authorities. I believe that they are more than ready to do so. I also believe that today the Minister has taken at any rate a first step towards restoring some of that morale.

4.52 p.m.

Mr. J. C. Jennings (Burton)

I wish to begin by making two personal comments. First, I wish to declare an interest in that I am a teacher Member sponsored by the National Union of Teachers. There are two such hon. Members on the Conservative side of the House and four in a similar position on the benches opposite. It is wise, within the context of this debate, to make clear what are the responsibilities of an NUT-sponsored Member. He or she is expected—and I use the word "expected" instead of "required"—simply to advance the cause of education. He does not have to sign on any dotted line and he follows the dictates of his conscience and of his own party if he wishes. I have done so on a number of occasions when I have violently disagreed with the NUT and followed my own line.

Mr. Cyril Smith (Rochdale)

Do you get paid for it?

Mr. Jennings

You should know.

Mr. Deputy Speaker (Mr. E. L. Mallalieu)

Order. The hon. Gentleman must address me as a schoolmaster would address a class.

Mr. Jennings

I beg your pardon, Mr. Mallalieu. I should know how to address the Chair. The hon. Gentleman should know very well that there is payment because one of his colleagues was sponsored by the National Association of Schoolmasters and made a personal statement about it a short while ago. If my colleagues question this let me say that party funds benefit from such sponsorship at election times in a particular constituency. The same is true for hon. Members opposite. Let us not quibble or cast innuendos. We are here to advance the cause of education, particularly in this debate.

I am grateful that I have caught your eye so early, Mr. Deputy Speaker, because 18 years ago we had a similar debate when Lord Eccles, then David Eccles, Minister of Education, brought in a superannuation Bill in which he proposed to raise the teacher's contribution from 5 per cent. to 6 per cent. thereby earning the nickname "Mr. 6 per cent." In that debate I spoke strongly against the proposal and voted against my party on a three-line Whip—a traumatic experience then, although I have done it again since.

It is appropriate that in what is almost my last year of serving in Parliament I should once more be involved, in a different fashion, in a teachers' superannuation debate. I congratulate my right hon. Friend on her decision, announced in a brief but admirable speech. The hon. Member for Birmingham, Spark- brook (Mr. Hattersley) who is now absent—

Mr. George Thomas (Cardiff, West)

He is coming back.

Mr. Jennings

He always comes back. The hon. Gentleman asked, "Why the change in heart? Why the U-turn?" There is a good, strong reason. It is that my right hon. Friend has won her fight. Her fight against whom? First of all it was the Treasury.

Mr. Thomas

The same villain.

Mr. Jennings

The right hon. Gentleman should know that far better than I. She has won her battle there, and that is why there is the change. She could not come to the House and say that she intended to try to do this until she was more sure of her ground. The second battle she had to fight, particularly on the war pensions issue, was against the host of Whitehall Departments who said, "If you do that for teachers you do it for all the rest." She has proved to be wise. She has been imbued with a sense of justice on behalf of the teachers.

I have known for months of her sympathetic attitude towards the teachers on this question of war pensions and other matters. From my own observations there is no question of my right hon. Friend wanting a confrontation with the teachers.

Mr. Kenneth Marks (Manchester, Gorton)

I am intrigued by the suggestion that the Secretary of State has been fighting a battle against the Treasury and suddenly won yesterday. Did the hon. Gentleman not receive from the Department of Education and Science the complete answer to the teachers' case, issued by the Secretary of State, saying of the teachers, They cannot, therefore, reasonably contend they have any claim now to any share in the reduction now recommended. Is it not a fact that some hon. Members opposite simply would not support the Government?

Mr. Jennings

The hon. Gentleman is so naïve, parliamentarily and politically. He must know that while a Minister is performing a holding operation with a problem a facade has to be put up.

Mr. William Hamling (Woolwich, West)

Tell us about the other facades.

Mr. Jennings

Liberal hon. Members would not know that. But right hon. and hon. Members of the Labour Party know quite well that this is true and that it was a holding operation. While my right hon. Friend was preparing the ground and fighting her battle, she could not announce the result until she was sure of it. I take my hat off to her. She is a bonny fighter.

I turn to the question of funding raised by the hon. Member for Durham, Northwest (Mr. Armstrong). I raised this matter in the debate in 1955. I and many other hon. Members have raised it in many subsequent debates. We have a notional fund, which does not exist. A notional interest is paid and notion-ally credited to a notional fund—none of which exists. It is on this so-called notional but psuedo-actuarial basis that pensions have been reckoned.

Every Government have refused the demands from all sides of the House to fund the pension contributions. It has been a disgrace. I know quite well, as do most hon. Members, that it would be utterly impossible to fund the contributions as far back as when the pension fund was instituted. There is the other anomaly that when the fund was notionally started, the notional interest was 3½ per cent. That continued for some years. Then it became, gradually, 6 per cent., and that continued for some years, still under-valued. Now, thank goodness, it has improved. The latest figure, for the year 1973–74, is 11½ per cent. That is the rate being credited to the notional fund. In 1972–73 it was 9½ per cent., and in 1971–72 it was 8¾ per cent. The position concerning the notional aspect has improved.

The Government, and any right hon. or hon. Members who may form any other Government in the future, should regard it as urgent to look at the funding of contributions at some subsequent date to put the whole scheme on a practical, actuarial, financial basis.

The question of war service for pensions is very difficult. I have been putting one particular case to Ministers over many years. It concerns a man who is now drawing a pension, who went straight into the Army from school at the beginning of the First World War. There was no evidence of intention of his entering the profession, yet he started teaching as soon as he qualified after his war service. That service in the first world war is not counted. I hope that when I send that case again to a Minister, after the working party has looked at the whole question, it will be rectified.

I am highly satisfied with what I have heard this afternoon. Because of my deep respect, regard and affection for my right hon. Friend's ability and character, whatever she has said this afternoon, I tell my teacher colleagues here, in Burton, in the NUT or anywhere that I would have supported the Government tonight if a vote had been taken, and far more so now, because the present Government are worthy of support from hon. Members and particularly from a grateful teaching profession.

5.4 p.m.

Mr. Clement Freud (Isle of Ely)

On a day of hastily rewritten speeches from the Opposition side of the House and U-turns from the Front Bench, performed with the dexterity of advanced driving instructors, I am pleased that my first speech as the Liberal Party spokesman on education should be to support a cause on which the entire House is now agreed—the need to get a better deal for teachers.

As the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) pointed out, unison of opinion is not confined to the House but extends to all 16 organisations representing teachers, which shows not only the need for the Government's realignment of opinion but the justness of the decision to which they have come. As the Secretary of State so rightly said, it is essential to appreciate that the more timid and decent are the members of a profession, the more and not the less do they need the support of the Government, and I agree with the hon. Member for Durham, North-West (Mr. Armstrong): teachers feel that an industrial dispute is the last and most foreign action that they would take.

I should like the Minister, in spite of the volte-face, to examine what caused the process. In a nutshell, it was a superannuation scheme that ignored war service and was funded in a way which took no notice of present funding methods, to which the Government contributed a notional contribution and notional interest at a rate which the Secretary of State for Trade and Industry, the right hon. Member for Worcester (Mr. Peter Walker), or at least his erstwhile partner, would have shown to be a very long way away from current investment returns.

The teachers felt a deep sense of injustice, and the future of our children's education—indeed, of our own and our parents' education, because there is no age limit now—was vitally affected. Had the teachers asked for a substantial rise in pay—and I would have supported them—they would have had a very just case. But they were asking for a minimal amount of money ; a sum that I worked out at £16 a year and which another hon. Member has made £15 a year. A concession so small that it would take until phase 17 of Government policy before it was passed.

The teachers were asking for justice. They were asking to be brought into line with other professions, and they felt that it was scandalous that political rather than humane or judicial arguments should have been allowed to have caused such distress to a profession which felt quite genuinely that it had been discriminated against.

Writing to my hon. Friend the Member for Cornwall, North (Mr. Pardoe) on 24th August this year, the Prime Minister said that it was the policy of local authority that this cost for superannuation should be shared broadly equally by employer and employee. That is not the policy of local authority. The Prime Minister went on to say : On the other hand, there are the teachers' and the firemen's schemes where that contribution is 6¾ per cent.… The fire and police schemes admittedly give benefits at an earlier age than the other schemes.… There is no case for saying that teachers have been singled out for unfavourable treatment. If one looks at the superannuation funds for the other professions, one finds that for every £1 that a fireman pays, the local authority pays £2.67. For every £1 the policeman paid, the local authority paid £2.57. While I am talking about the police, it would be good to remember that their war service is not yet taken into consideration for superannuation purposes. Next, for every £1 British Airways personnel paid, the employers paid £2.33. For every £1 National Coal Board employees paid, the employers paid £2.32. Even in the case of National Health Service employees, for every £1 paid by employees the local authority paid £1.63.

What the Government, with their 6¾ per cent., aimed at was £1.33 for every £1 that the teachers pay. If that is not unfavourable treatment I would like to know what it is. I am delighted that the teachers are now to get £1.57 for every £1 they pay. It still seems to me to be far too low, but it is a step in the right direction. It is especially a step in the right direction in view of the vast amount of money which local authorities have made by their notional contribution.

I do not believe that the Minister is actually unsympathetic to teachers, but it has taken a long time for this to come across to the profession. I know that in my constituency the teachers will now cease to make wax effigies of the right hon. Lady, and with a few more moves on her part to better the teachers' lot, and especially the lot of teachers living in metropolitan areas, who need much more financial assistance than they are getting, I think that the teachers in my constituency will put away the needles which have been in such constant use.

Sir Harmar Nicholls (Peterborough)

Before the hon. Gentleman sits down—

Mr. Deputy Speaker

Order. The hon. Gentleman has sat down.

5.12 p.m.

Miss Janet Fookes (Merton and Morden)

I wish to follow my right hon. Friend the Secretary of State in the brevity of my contribution. However, though it is brief it is none the less sincere. I warmly congratulate my right hon. Friend on the announcements she made this afternoon.

The hon. Member for Durham, Northwest (Mr. Armstrong) spoiled for me what was otherwise a moderate and good speech by suggesting that my right hon. Friend seemed to slide out of responsibilities. No Secretary of State for Education and Science has done more for education, no matter in what sphere one looks. Whether it be in the reform of teacher training, nursery education, primary school building, whatever it be, my right hon. Friend has produced, and is producing, the goods. She has shown herself to be sympathetic to the position of teachers. I am sure that the representatives of teacher associations who have had close dealings with my right hon. Friend will know this, and I hope that they will make that known publicly.

Naturally, I welcome the lowering of the contribution on the teachers' side, but I am particularly pleased about the counting of war service. This is long overdue. I accept that it is only fair and just that those who were involved in war, who were actually under fire and who in a sense lost five or six years of their ordinary working life, should have that service counted. I appreciate that trying to work this out could present difficulties in practice, and I hope that we shall hold the line as regards war service and not find this being extended in an undesirable way.

I am not an actuarial expert and it seems strange to me as a layman that the teachers' superannuation scheme should not be funded properly. Perhaps my hon. Friend who is to wind up the debate will deal with this point.

I know that the announcements made this afternoon will give particular pleasure to teachers in my constituency. I can truthly say that on no other issue have I had such representations from teachers in all the unions concerned. I welcome the united stand, which is very much in contrast with some of the unhappy squabbles that there have been between the unions in the past. This is a particularly happy feature of the present arrangements.

I conclude by again saying how pleased I am with these arrangements. In passing, I cannot forbear wondering why the official Opposition, now so busy espousing this cause, did not do more during their term of office of no fewer than six years.

5.15 p.m.

Mr. Barry Jones (Flint, East)

I congratulate the hon. Member for Merton and Morden (Miss Fookes), not on her concluding remarks, but on her brevity. Indeed, I think we can all congratulate the Secretary of State on the brevity of her speech and at least on the clarity of its delivery. I shall not believe in her continuing rehabilitation—I thought I detected efforts in this direction—until I see brought before the House measures designed to restore the provision of free milk in primary schools in England and Wales.

It is no exaggeration to say that today is a day of victory for teachers, and particularly for their negotiators, who have managed, it seems, to get at least an indication that in the very near future they will have a signed and sealed victory. I recollect a lobby from the National Association of Schoolmasters and I have had strong representations from a number of branches of the National Union of Teachers, in particular the Deeside and Hawarden branch in my constituency.

At this point I declare an interest. Like the hon. Member for Burton (Mr. Jennings), I am a sponsored member of the National Union of Teachers, and I am grateful to the hon. Gentleman for so effectively laying on the line exactly what sponsorship entails.

In terms of cash this debate is about £16 a year less tax for the average teacher. However, in terms of principle this issue has united the profession in a way which has not been seen for perhaps a generation or more. For once the teachers have organised themselves into a solid, like-thinking phalanx with no thought whatsoever of this being a pushover for the employers. The teachers gained courage because they have been messed about and kept waiting for far too long over the last few months. The teachers are concerned about the way in which the Government's galloping inflation eroded the buying power of teachers' salaries, particularly the salaries of young married teachers. Most of all, teachers have said "Enough is enough", because they are furious at the intransigent stand of the Government over the teachers' London allowance. Therefore, in one way or another this administration has united one of Britain's most disunited professions.

A letter which Mr. Edward Britton, the General Secretary of the National Union of Teachers, has written to me states that so far reports in the newspapers and elsewhere do not deal with the operative date for the 6 per cent. rate. I wonder whether on behalf of the union I may ask that the operative date for teachers be the same as that for the health services—1st April 1972. In his letter to me the general secretary says : The circumstances in the Health Services were identical : Prior to 1 April 1972 the contribution was 6 per cent. From 1 April 1972 the contribution was increased to 6¾ per cent. After a Quinquennial Valuation the contribution of the employees reverted to 6 per cent. as from 1 April 1972. So I should like to ask the Minister to deal with this very important matter when he winds up the debate.

We are right to seek a 6 per cent. rate of contribution, because everyone here will agree that, in a Europe riddled with inflationary economics, superannuation arrangements have an increasingly important bearing on teacher recruitment, and if we have a better pension system we shall achieve better recruitment, especially in our great cities. We shall also have a better prospect of solving the very serious shortage of specialist teachers in secondary schools in the cities, because I understand that there is now a lack of mathematics teachers, science teachers and teachers of languages and crafts, particularly in those courses leading up to examinations and career opportunities. I hope very much that this point can also be dealt with.

We need the 6 per cent., because we must stop the bleeding away of able and experienced staffs in the big cities. The problem of replacing the experienced teachers is considerable, and better superannuation arrangements will certainly help in that direction.

5.22 p.m.

Mr. R. A. McCrindle (Billericay)

The hon. Member for Sparkbrook (Mr. Hattersley) referred to the resentment of teachers, and on this occasion I must echo that feeling. Certainly, in all the representations from my constituency, the unanimity of approach has never been more obvious than it has been on this subject. Therefore, I particularly welcome the line which the Government have chosen to take in this debate this afternoon, because I should have had considerable difficulty in going the whole way with the Government's position yesterday. Having said that, may I pay my tribute to the Secretary of State for Education and Science? When we look back at the 1970s, we shall perhaps see the right hon. Lady as one of the most underestimated Secretaries of State that this country has ever had.

This has been a very amiable debate, which might not have been expected, so I hope that I shall not develop a sour note. In a way, this debate is artificial in that pensions are only one part of total remuneration. It might have been better and more straightforward of the teachers' organisations, in putting forward these quite legitimate and supportable claims on pensions, if they had recognised that when pension contributions are reduced, total income is increased, no matter how marginally. It might have been better if we had debated, in one form or another, the total remuneration of teachers.

Had the announcement not been made today, there would have been no increase in the percentage contribution of employees between 1972 and 1974; it would have remained at 6.75 per cent. So it would have been difficult for the teachers to sustain the arguments which they were putting forward, unless, on the one hand, there was very considerable injustice and, on the other hand, it was unusual in other occupational pension schemes for reductions to be made.

I can tell the House from my experience, not in education but in pensions, that it is not at all unusual for reductions in contributions to be declared when a surplus has been accumulated in a fund. But, equally, I must say that it is more usual in those circumstances to increase the pensionable benefits. One of my criticisms of the teachers' organisations is that on no occasion when I met them did they put forward that possibility as an alternative. Nevertheless, I find myself in very substantial agreement with what has been said by the teachers' organisations.

If we look no further than the pure equity of the situation, there should be comparability with other similar schemes in both public and private service. I find it difficult to compare directly with other public service schemes, so perhaps I shall be forgiven if I draw a comparison between the teachers' pension scheme and private schemes with which I have been associated.

First, there is no doubt that contributions under a private scheme can come down, though it is more usual to increase benefits. Secondly, 6.75 per cent. would be a relatively high contribution for an employee to make under an occupational pension scheme. Thirdly, the employer's contribution is relatively low under the teachers' scheme, compared with private schemes.

The cause of so much of the heartache is that we have here an unfunded scheme, and I make no apology for possibly devoting the remainder of my speech to this very simple point. In a period when there is some stability of prices, an unfunded scheme is perhaps poor value, but in a time of inflation the benefits can be eroded and the whole effect can be quite catastrophic. I want to ask my right hon. Friend whether she will consider progressive funding. It is fine if we can now say that we have unanimity. The Government have moved and the hon. Member for Birmingham, Sparkbrook did not press them unduly, although some hon. Members did. There is therefore a temptation to leave the matter there. But if we do that, we shall find that this will not be the last time that we have to discuss this problem. I ask whether some form of progressive funding can now be entertained.

Under the Social Security Act, which was introduced by this Government, the basis of future occupational pensions in this country will be funded schemes with inflation-proof benefits on the basis of steady contributions, and with an employer-employee ratio of about two to one. Therefore, I am sure that funding is the answer to the problem of the teachers' pension scheme. With the greatest respect to my right hon. Friend, the tendency which I see in the Department of Education and Science, towards as nearly as possible a 50/50 split in contributions between the teacher and the employer, is quickly becoming out of date. If we had a fully funded scheme, then I believe that with a 6 per cent. contribution and no further increase at all in the employer's contribution a man now aged 45 could look forward to a retirement pension of about 10 per cent. more than he could conceivably look forward to under the present arrangements.

This whole matter of teachers' pensions should, if possible, be taken out of the sphere of Government policy—irrespective of the Government in power—and taken out of the phase 3 regulations as far as possible. A leading firm of consulting actuaries should be employed to establish how progressive funding could be commenced. While such a study is being pursued there is no reason why the employer's contribution should increase, and if a way can be found of funding the scheme in an up-to-date way it will not only improve the prospects for teachers' pensions, but, with some little luck, will make it unnecessary to have a debate of this sort in future.

5.30 p.m.

Mr. R. C. Mitchell (Southampton, Itchen)

I must declare an interest. I am not a sponsored Member of any teachers' organisation but I contributed for many years to the teachers' superannuation scheme, and I hope to live long enough to draw some benefit from those contributions, however meagre the benefit may turn out to be.

I believe that this is a good day for Parliament. It gives the lie to those rather cynical people who proclaim that back-bench Members of Parliament have no influence at all over the all-powerful executive. When I drafted my Early Day Motion a few weeks ago, which is now signed by almost 200 Labour Members of Parliament, calling for a reduction in the teachers' superannuation contribution from 6¾ per cent. to 6 per cent., with at least half war service to be counted for pension purposes, I never expected it to be successful. I doubt whether the hon. Member for Macclesfield (Mr. Winterton), who drew up a similar motion signed by, I believe, 20 Conservative Members of Parliament, expected that to be successful.

There can be no doubt that the teachers have an unanswerable case. I congratulate the teachers' organisations—the National Union of Teachers, the National Association of Schoolmasters, and the Joint Four—on the lucid and forceful way in which they have presented these arguments. I say, as someone who has had some experience of teacher union politics, that it is a great day when the teacher organisations stand shoulder to shoulder and speak with one voice.

I was rather depressed last week when we received from the Department of Education and Science that long document which purported to answer in detail the teachers' case. I say "purported" because it did no such thing. I expected that when we came to the debate today the Secretary of State would trot out all the old familiar arguments about why it was not possible to accede to the teachers' just demands. I am delighted, therefore, that today the Minister has agreed to accept the Opposition motion.

Two theories have been put forward to explain the Government's apparent change of heart. The first, put forward by the hon. Member for Burton (Mr. Jennings), is that the real stumbling block was the Treasury—a not unfamiliar situation when dealing with matters relating to teachers—and that the Secretary of State has won her battle with the Treasury. If this is so, I am sure she will be the first to admit that her hand was strengthened by the two motions on the Order Paper which showed that there was a real strength of feeling in this House in favour of the arguments put by the teachers.

The second possible explanation is that the Government Chief Whip had counted heads and came to the conclusion that if the Government had opposed our motion he could not guarantee a majority in the Division Lobby. Whichever explanation is correct—it may possibly have been a combination of both reasons—it shows that back-bench Members on both sides of the House retain the ability, when they work together in concert, to influence Government policy. As I said earlier, this is very good for parliamentary democracy.

Mr. McCrindle

On both sides of the House.

Mr. Mitchell

Yes, on both sides of the House. I hope, therefore, that the Secretary of State will not think me uncharitable if, having accepted the two immediate points at issue, I ask her to go a step further. There is no doubt that the whole of the arrangement for teachers'superannuation is entirely unsatisfactory. I should like the Minister to set up some form of inquiry, whether a Select Committee or a departmental committee, to go into the whole future of the scheme, including the possibility of partial or progressive funding. Many suggestions have been made on how the teachers' superannuation scheme could be improved. We know that it is entirely unsatisfactory at the moment. Let us have all these suggestions thoroughly investigated, and a comprehensive report brought to the House, so that we can discuss them, with legislation possibly to follow. If this is done, I believe it will remove a grievance which teachers have had for almost 50 years.

5.35 p.m.

Mr. S. James A. Hill (Southampton, Test)

This debate has a deflated feeling, for in politics, without an argument there are not many politics. I came here today with an open mind to hear the debate and, as I said to the local association of the National Union of Teachers, it would be up to the power of the debate to sway me into the Government Lobby. I know that there are several of my back-bench colleagues who were of the same mind.

I do not think that the Labour motion, signed by 200 members of the Labour Party, could possibly have done anything other than reveal the fact that there was nothing to fear. It was the Conservative back-bench Members who, quite rightly, felt, as I am sure my right hon. Friend the Secretary of State felt, that there was injustice in this superannuation scheme, that this scheme with a payment of 6.75 per cent. was unfair and should be brought in line with those of other comparable bodies. The credit for war service is admirable. It is only half to be credited, but this seems to be in line with most of the other schemes.

I am pleased that the hon. Member for Sparkbrook (Mr. Hattersley) mentioned the Community. He is quite right. The pensions and superannuation enjoyed by the professional people in the Community are far higher than we enjoy in this country. We have a long way to go to float upwards to that sort of provision.

Mr. Hattersley

I do not want to get into any more trouble than I am in already, but will the hon. Gentleman confirm that in the Community not only are professional pensions higher but so are the pensions of work people and manual staffs?

Mr. Hill

I can confirm that. This is one of the benefits of the Community, that their pension scales are so much higher than we enjoy in the United Kingdom.

I believe my right hon. Friend said that there would be a form of rough justice in the decisions that will be taken. I hope the justice will not be too rough. There are anomalies which must be dealt with. I have had correspondence With my right hon. Friend in the past and I have always found that she was willing to discuss anomalies.

So much has been said about funding that I am sure there is no need for me to take up any more time of the House on that subject, but I am sure that this is a matter which has to be considered. Back-bench Members on this side of the House are of the opinion that the professional teacher must not feel in any way that he will be at the bottom of the scale in further pension and superannuation schemes or, indeed, in relation to any funding which my right hon. Friend the Secretary of State may bring forward in the future.

I thank my right hon. Friend for her decision. Although we have had, as I say, a very deflated debate, we have got harmony between both sides of the House, probably for the first time for some months, and it is all due to my right hon. Friend.

5.38 p.m.

Mr. William Hamling (Woolwich, West)

A retreat by the Government produces harmony. That is marvellous! If only they would retreat from all the other major policies which are discussed in this House from time to time, we might have real harmony in the House.

I shall not pursue the logic of the speech by the hon. Member for Southampton, Test (Mr. S. James A. Hill) too far. He said that he was not influenced at all by the Labour Party back-bench Members' follow-up motion but he was influenced by the Conservative motion. In other words, he is not interested in the merits of the case ; he is interested in the label on the bottle. If it is Tory, apparently it is fine. I must say that is a singularly unfortunate appreciation of the merits of the teachers' case. That is what we are considering. We are not considering the merits of the Labour Party motion. The Government have accepted it. That is fine. What we are discussing are the merits of the teachers' case.

The hon. Member for Burton (Mr. Jennings), who I am sorry has left the Chamber, and for whom we on these benches have a great affection, for many reasons other than the fact that he is, like myself, a sponsored member of the NUT—

Mr. Hattersley

Another one?

Mr. Hamling

Yes, another one. He said that the Government hitherto have only been maintaining a facade of opposition. I thought that was marvellous—only a facade of opposition. I must say that it has been maintained for a long time, causing a great deal of distress and a great deal of misery—although that perhaps is not quite the right word. There was a great deal of heart-searching by the teachers.

Mrs. Thatcher

What about your Government?

Mr. Hamling

We happen to be talking about this 6½ per cent. That is what we are discussing. It is all very well for the Secretary of State to say "What about your Government?" but she is always saying how much better she is than we are.

Mrs. Thatcher

That is true.

Mr. Hamling

The record shows, in view of the financial burdens that we had to endure and in view of our record of building, which Government did the better job for teachers.

I started teaching a long time ago—in 1930—and to that extent I have another interest to declare. It has taken a Conservative Government to make teachers go on strike—

Mrs. Thatcher

No.

Mr. Hamling

Oh, yes. Never in all my time as a serving teacher did the strike notices go out in my school. I was the NUT correspondent and I should know.

Mr. S. James A. Hill

Times have changed since 1930.

Mr. Hamling

The teachers have become militant because of the Government's hard-hearted attitude. They were never so militant before the right hon. Lady became Secretary of State.

Mr. Fergus Montgomery (Brierley Hill)

Rubbish.

Mr. Hamling

They never came into the Lobby of this House in such an angry mood until the present Secretary of State took over.

Today we have seen the fox lay down and die. A leading parliamentarian once said on another parliamentary occasion : Look, they have shot our fox". In this retraction of months of opposition the fox has not been shot by the Secretary of State ; it has laid down and died. It would be interesting to know what is behind the Secretary of State's words. She said that the teachers should now go back to the working party and that provisions such as paragraphs 1 and 3 of the resolution should term the basis of negotiations. That is my recollection of what she said.

What does that mean in practice? Does it mean that all the teachers' demands will be accepted, or will they simply form the basis of negotiations? I do not want to be a Scrooge at this feast but I am always tempted to look carefully at what the Government offer. Are they saying that they will accept all the terms of the motion, that they fully accept everything in it, or are they saying that it should form a basis of negotiation inside the working party?

I hope that the Under-Secretary will be a little more explicit when he replies to the debate and will tell us what is the Government's policy. I know that it must be difficult for him because he is not the Secretary of State. This matter has been dragging on for a long time. There has been a great deal of private lobbying, a great many deputations and much private discussion and we should pay tribute to the many people inside and outside the House—apart from the Tory recalcitrants—who used their influence in persuading the Secretary of State to change her mind. We should congratulate the trade union leaders in the teaching profession on their part in these discussions. There is no doubt that there has been great concern among the teachers for a long time and that in many ways the profession has reached a crisis point.

When I started teaching we never had the sort of problems which now face the profession. There were large classes—I taught classes of an average size of 55, and that was 35 and 40 years ago. However, we never experienced the other pressures, such as part-time teaching and teacher turnover. In the schools in which I taught we would have people on the staff for five, 10 and 15 years, and they gave the school a degree of permanence. I can remember one man retiring from the staff at a school where I taught. He had been there for 39 years. I would not encourage that because within four months of retirement he had died of boredom.

There have been cases recently where a teacher has the job of checking that every class is covered for registration and assembly. It is terrible that a school with a comparatively small staff, of say 14 or 15, should be short of two or three teachers regularly week after week. All this bears out how low is the morale of the teaching profession and how great are the pressures upon it. To that extent the concession by the Government to public opinion will do something, even though it is a small gesture, to deal with the difficulties and anxieties.

The Secretary of State said she was powerless over the question of pay because it was a matter for the Pay Board and phase 3. It is not. It is a matter for Government policy, and my hon. Friend the Member for Durham, North-West (Mr. Armstrong) was correct in saying that the Government should not shuffle off their responsibilities. They have a great responsibility in the wider sphere of the rewards given to public servants in the teaching profession and elsewhere. They must accept that responsibility and not try to pass it off on someone else.

5.50 p.m.

Mr. John E. B. Hill (Norfolk, South)

The speech of the hon. Member for Woolwich, West (Mr. Hamling) was perhaps typical of his teaching days, in that he treated the House with an alternation of a benign mood and a rather severe one when he discussed the record of the respective parties in school building and the development of education. He had not done his homework as well as he should. I hope that he will look into the record in more detail.

Mr. Hamling

I did not start the discussion. The Secretary of State did.

Mr. Hill

The more homework the hon. Gentleman does, the better he will appreciate our contribution to education.

I agree with the hon Member for Sparkbrook (Mr. Hattersley) about a welter of actuarial argument, and I was delighted that he did not want to pursue it. The whole campaign has been characterised by an unusual degree of expertise, chiefly from the two major unions, the National Union of Teachers and the National Association of Schoolmasters, which have bombarded hon. Members with the most detailed mathematical argument bearing on the marginal but important subject that we are discussing. I could not help noting the coincidence of the great attention given to the pension contribution and a claim for a 25 per cent. pay increase, which is not relevant to this debate and falls outside the scope of phase 3. What is important today is that my right hon. Friend the Secretary of State, no doubt responding to the wishes of the whole House, has won her battle with the Treasury to get the superannuation scheme altered in favour of the teachers.

Although there is a great argument about interpretation, the salient facts about the old scheme are that if it were interpreted strictly, at any rate by Government actuaries and the Treasury, any margin up or down was likely to fall upon the employers, and the notional fund was credited with the prevaling rate of interest on Government long-term securities, as judged by the Government Actuary. Clearly, in that situation it is open to anyone to call in expert evidence and put forward different calculations.

My right hon. Friend was always in the difficulty that the Government Actuary is an independent person, like a district valuer. He will make his calculations of the scheme, and Ministers and everyone else must accept them as an interpretation of that scheme. I thank my right hon. Friend for winning yet another struggle with the Treasury. It demonstrates the staunchness of her support for the teaching profession as well as for education in general.

In a sense, I am much more interested in the inclusion of war service, which was previously a sad omission for many people, exemplified as never before in the Adjournment debate answered by my hon. Friend the Under-Secretary earlier in the month. That was about someone who had gone straight into the Services, having come from Australia to this country to teach, and who found that there was no question of interruption because he had never started. The rule that a teacher had either to have started teaching or to have been admitted to a college of education in order to qualify was too narrow.

I am glad that war service is being included, because on the whole teachers with war service are better teachers. They have had a wider experience of the world, under difficult conditions, and that width of experience broadens their teaching ability.

The one point I wish to contribute to a debate in which most has already been said is that we are in phase 3 and the question of pay is before Burnham and the question of superannuation and other benefits is negotiated separately. At a time when fringe benefits matter so much and, under conditions of phase 3, are taken into an assessment of what pay increases are allowable, it would be better to try to deal with pay, pensions and fringe benefits in the same negotiating body. I hope that the occasion of this change in the pension scheme will allow that suggestion to be seriously considered. It would be much more satisfactory for the whole of the conditions of service and pay to be dealt with as one. It might then be easier to see to what extent teachers were receiving pay, working conditions and living standards comparable with other professions.

We all want teachers to be contented members of the community. More than any other members of the community, they set an example not only to the young but to parents. If they are to be contented in a job that we know is trying and often exasperating, particularly if they are working in schools which await inclusion in an improvement programme, it is essential that they should not have a sense of injustice.

They had a sense of injustice. I am not sure that it was wholly well founded. There are obvious misconceptions in letters I have received, some of which talk of fraud and so on. Such things were probably written in the heat of the moment. We need a contented teaching profession, and I am grateful to my right hon. Friend for taking this step to make it so.

5.58 p.m.

Mr. Kenneth Marks (Manchester, Gorton)

I admire the nerve of the hon. Member for Norfolk, South (Mr. John E. B. Hill) in talking about school building in the middle of a period when there is a complete freeze on approvals of any school building.

I congratulate the Secretary of State on two matters. The first is that her policy until yesterday united the teaching profession. She is probably the only person ever to achieve that. Secondly, I congratulate her on her acceptance of the teachers' argument and thus becoming more deserving of congratulations. Perhaps I should also congratulate my hon. Friend the Member for Birmingham Sparkbrook (Mr. Hattersley) on uniting the House by his motion.

I, too, declare an interest. I am not a sponsored member of any teachers' trade union, but for 20 years I paid in real contributions to the hypothetical fund. I do not know where that money is, but I presume that some will come back one day. I must also declare an interest in that I shall benefit from the decision on war service, which will result in a considerable increase in my pension.

However, I see difficulties in implementing the war service provision. I doubt whether the teachers' unions would have gone to town on it so much if it had not already been granted to other public employees. As an example of the difficulties, I was in another superannuated occupation before I entered teaching, and that occupation went on nominally through the war. But I am sure the working party will overcome the difficulties.

I welcome the Minister's other decision. The amount involved is not much. The sum of £15 or £16 is probably £10 when tax is deducted. But the teachers were more incensed about the issue than about any salary negotiations or anything else I have ever known. They felt that they had been conned. By the use of certain statistics and as a result of negotiations it was agreed that their contributions should be roughly 40 per cent. After the use of further hypothetical statistics they were asked for a far greater proportion than 40 per cent.

The right hon. Lady has rightly understood that feelings in the teaching profession are not as they should be. Teaching, since I left the profession six years ago, has become a much more difficult job. That may well represent a part of the feeling. The hon. Member for Southampton, Test (Mr. James A. Hill) took some of the credit for the right hon. Lady's decision to change her mind and to accept the teachers' case. The hon. Member for Southampton, Test would have made a more effective contribution if he had signed the motion which other Conservative back benchers signed which urged that such action should be taken.

If the whole system is being examined, not only the possibility of funding should be considered. Hypothetical funding can be all right if the true rates of interest are taken into account and not the rates which were in operation years ago. It might even be possible to consider a pay-as-you-go scheme. I do not know the figures, but it may well be that the income from teachers' and local authorities' contributions represents a better return each year to the teacher pensions than does any other scheme at present.

We must examine whether the various Government Departments should be responsible for their own pension schemes. At the moment the Department of Education and Science is responsible for teachers' pensions and the Department of Health and Social Security is responsible for National Insurance pensions. Ministry of Defence pensions and National Health pensions. It would be helpful if the Department of Health and Social Security became responsible for all public service pensions. If that were so, perhaps we would not get the kind of reports sent out which were distributed to Conservative hon. Members last week. I am sure that the assembling of such expertise in one Department would lead to recognition of the need for better relations and to the equalisation of schemes.

The decision which has been made was made very late. Most of us heard about it at ten o'clock last night. Earlier in the day the final meeting on the rate support grant negotiations took place. I wonder whether the local authorities were aware of the Government's decision when that meeting took place? I wonder whether they had to bear in mind that they will have to find an additional £7½ million when the rate support grant is known? Of course, we shall not know the figures for about a couple of weeks. I am sure that is a matter in which the local authorities will be interested.

I hope that the Under-Secretary of State will take up the point which has been mentioned by some hon. Members—namely, whether the 6 per cent. will be back-dated to April 1972.

6.4 p.m.

Mr. Michael McGuire (Ince)

I apologise to the Secretary of State and to Mr. Deputy Speaker for previously having put a lengthy question to the right hon. Lady, which I put because I did not think that I would have the pleasure of contributing to the debate. There are so many interested parties who I thought would want to contribute. I must, like almost every other hon. Member, declare an interest. I am a sponsored member of the National Union of Mineworkers. I think that I am the only non-teacher from the Labour Party who has spoken. I apologise to the right hon. Lady for the length of my question. To use an inelegant phrase, I am sure that it caught her on one leg.

I welcome the right hon. Lady's statement on two accounts. First, it was good news. I know nothing about the argument which the teaching profession has had with her since 1972 about contributions. I know only what I have been told by a variety of interested unions. I thought that there were only two unions interested in teaching, but it seems that there are nearly a score. I have received many letters about the matter. Most hon. Members, if they are honest, will say that they welcome receiving individual letters rather more than receiving circulars. I have received many good-natured letters from teachers in my constituency and they have put me in the picture.

I always like to hear Ministers giving good news. I do not mind whether they are Tory or Labour Ministers. It must be a joy to them to be able to give such news, and I welcome hearing it. Secondly, I congratulate the right hon. Lady on the shortness of her speech. My right hon. and hon. Friends who occupy shadow positions should also be admirably brief. On these two accounts I give the right hon. Lady ten out of ten.

The matter which I raised earlier with the right hon. Lady—I admit that I did so at some length—is important. I hope that the Under-Secretary of State will deal with it. I do not ask him to do so at great length. The teacher concerned entered a teaching college and qualified before the war. Because of the job situation he was unable to obtain a permanent post. He had to get part-time teaching posts and odd jobs outside the profession which came along. He was called up and did five or six years in the forces. Immediately after being demobbed he obtained a teaching position. He has remained in it ever since—namely, 27 years.

The matter has been settled in that I have received a letter from the Under-Secretary of State which says that it has been settled. Proof had to be obtained that his war service was credited for pensionable purposes. His union organiser and the local authority officer responsible for recording pension service, said, "No, it does not qualify." The Department had also previously said that it did not qualify.

The letter which I received from the Under-Secretary of State said that such a case qualifies. This is a totally different case from those which I have heard put forward, and which I welcome, about those who joined the teaching profession after war service. The Minister's reply is that the kind of service to which I have referred in fact qualifies. When I told the teacher concerned the good news he told his regional organiser of the NUT. The organiser said, "They seem to be treating these queries about entitlement on a one-off basis." He meant that the Department relied on individuals to make their inquiries.

I want an assurance that the maximum publicity will be given to teachers who qualify, similarly to the case quoted. That is the main point which I wish to get on the record.

6.9 p.m.

The Under-Secretary of State for Education and Science (Mr. Norman St. John-Stevas)

In the absence of any contribution from the Opposition Front Bench. I seem to be the best "winder-upper" which the House has.

The important fact which has emerged from the debate, and its central core, was made clear at the beginning of the debate when my right hon. Friend announced that, subject to the counter-inflation code, the Government are prepared to meet in principle the teachers' case on their current grievances concerning pensions—namely, the 6 per cent. contribution and the question of war service, half of which she wishes to be taken into account for pension purposes. War service means war service. The phrase used by my hon. Friend the Member for Merton and Mor-den (Miss Fookes) was "under fire". War service does not mean national service as such.

This debate has been characterised not by polemic but by thoughtful contributions from both sides of the House. I have nothing against polemic in its place, but it is nice occasionally to get away from it and to be able to have a reasonable discussion rather than one in which one has to defend an indefensible position as best one can. I think we all suffer equally at different times.

The hon. Member for Flint, East (Mr. Barry Jones) said that it was a day of victory—I think he said a day of victory for the teachers. It is a day of victory, certainly, for liberality and common sense, and it should never be a term of reproach to anyone in this House when a Government give way to pressure of public opinion and to a case that is well argued and well presented. This was the point made by the hon. Member for Ince (Mr. McGuire).

I want to deal first with the point the hon. Member for Ince raised. We will certainly do our best to give publicity to whatever arrangements emerge from these discussions and also to the current arrangements for teachers' pensions. We would welcome there being wider knowledge of these facts.

I want to deal next with the important question raised by the hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and, in the latter part of the debate, by the hon. Member for Manchester, Gorton (Mr. Marks) concerning the date of operation of the proposals I have mentioned. Will this reduction in contributions be back-dated or not? The answer cannot be categoric. The National Health Service reduction in contributions, I am informed, did not go back to 1st April 1972, but to a then current date. We cannot be categoric about this because we can only accept this policy in principle. It has to be discussed in the working party. It has to be agreed by the local authorities, and it has, of course, to be subject to the decision of the Pay Board. But at this point I can say this, no more and no less : that the Government will be open to representations as to the date at which it should be brought into operation.

Credit for this happy outcome has been claimed by many. Whenever there is a victory there are many claimants for the credit, but when there are disasters the flight from responsibility is equally rapid. We have heard claims made by the National Union of Teachers, which has been more than adequately represented here today. Does the National Association of Schoolmasters have any sponsored Members? I would say about the NAS that it took a leading part in this campaign and individual Members on both sides of the House also have claim to a certain amount of credit.

In fact, I agree with my hon. Friend the Member for Burton (Mr. Jennings) that a great deal of credit goes to the Secretary of State herself who has, as he so graphically put it, consistently championed the teachers' cause. I would not use quite the same terminology as he did. He had a scenario in which St. George and the dragon had been replaced by St. Margaret and the dragon. It is not that I object to my right hon. Friend's canonisation, but it would be hardly suitable for me, speaking from the Government Front Bench, to cast my right hon. Friend the Chancellor of the Exchequer in the role of demon king.

But what I think this matter has shown to the House and to the teaching profession is something which perhaps has not been as fully realised as it should have been—that in the Secretary of State the teachers have a consistent champion. It is an important rôle for any Secretary of State to represent the interests of the teachers. In a sense, the Secretary of State is the head of the teaching profession as well as the head of the Department.

I congratulate the hon. Member for Sparkbrook. I do not think I have done that in the House before.

Mr. Hamling

It is a first time for the hon. Gentleman.

Mr. St. John-Stevas

It is a day of firsts for many. I think that the contribution of the hon. Member for Sparkbrook contributed considerably to the irenic mood of the debate and to the harmony which will, I hope, prevail until I have finished my remarks.

This was not a sudden decision. The hon. Member for Sparkbrook asked, quite reasonably, for an explanation of the change of policy. It was not sudden in the sense of a decision reached with no previous contemplation or thought.

My right hon. Friend, since the meeting she had in June with the NAS, when it represented its point of view both on war service and on the contributions to the pension fund, has been considering these questions. They have been a matter of constant discussion within the Department and amongst Ministers, and when I spoke in the Adjournment debate on 12th November on war service I attempted, without committing my right hon. Friend, to indicate that things were moving at that point in a direction favourable and sympathetic to the teachers' claims in relation to pension for war service. That point was acknowledged fully by the hon. Member for Sparkbrook.

I want to turn now to the question of funding, because it has entered into the debate and has not been disposed of by the decision announced today. It is inevitable that, in any discussion of teachers' pensions, the basic question of the scheme's present financial basis should arise and that we should have pleas for a change to an actual fund. It was touched on by the hon. Member for Sparkbrook but other hon. Members pursued it in greater depth—the hon. Member for Durham, North-West (Mr. Armstrong), my hon. Friend the Member for Merton and Morden, my hon. Friend the Member for Billericay (Mr. McCrindle), my hon. Friend the Member for Southampton, Test (Mr. S. James A. Hill), and the hon. Member for Southampton, Itchen (Mr. R. C. Mitchell).

The notional fund, like the House of Lords, is something which I do not think we would have invented today if we were starting afresh. It is something which we have inherited. We are operating a scheme which has existed on its present financial basis for about 50 years. Whether our predecessors of 50 years ago were wise or right to opt for the basis of notional funding which we now have is beside the point. I have no doubt that they acted in the genuine belief that they were doing their best for the teachers. But the economic and financial situation generally then was different from what it is now. The important fact that we have to deal with is that a notional fund was instituted. The Government have done no more than administer the scheme in accordance with the will of Parliament as ex-presed in the various teachers' superannuation Acts.

There has been some criticisms of the notional interest rates which have been in operation as being out of accord with current realities. If we look at the rates, we see that they are not unreasonable, In 1971–72 the figure was 8¾ per cent., in 1972–73 9½ per cent. and in 1973–74 11½ per cent. We are convinced that after such a long period it would be totally impracticable to change to an actual fund.

The most I can say in response to my hon. Friend the Member for Billericay is not that we should have an independent inquiry but that the whole question can be looked at in the next general review of pension arrangements for teachers. We must remember that we are dealing with what by any standards is a large superannuation scheme, with a membership of well over 500,000 teachers. The Government must also have regard to the possibility that a change of this nature in the teachers' scheme might well have to be followed by changes in other public service schemes which are run on the basis of notional funding or on a pay-as-you-go foundation. The schemes for the Armed Forces also come into this matter. These are all large schemes and their financies have over the many years they have been running inevitably formed an inextricable part of the Government's whole financial structure. Therefore, the cost to the Exchequer of changing from a notional to a funded basis would be a change involving the expenditure of funds amounting to hundreds of millions of pounds a year.

I am aware that income from contributions has so far exceeded expenditure on benefits. We do not attempt to deny that that is a fact, but it is the whole purpose of a funded scheme, whether the fund be actual or notional, to build up sufficient assets to meet any liabilities that may be extant at any time. Credit balances of a similar magnitude would already have accrued in an actual funded scheme. These balances are no more than a measure of the Government's liabilities in respect of benefits.

Implicit in the notional funding arrangements is the Government guaranteeing to pay these benefits in any circumstances. This may seem of little value at the moment when investment in equities, despite temporary setbacks, is still buoyant, but in pension fund matters one must take a very long-term view. The time could come when that guarantee could be of immense value. It is a guarantee backed by the full powers of the State and a guarantee over liabilities which amounts to over £4,000 million.

Mr. R. C. Mitchell

When was the last time when this guarantee was of great value?

Mr. St. John-Stevas

I was looking at the situation not in the past but in the future. There must have been some periods in the 1930s when equities were less buoyant than they are now, when the actual existence of that guarantee was of value.

Furthermore, this carries with it a Government undertaking to pay the not inconsiderable costs of pensions increase equivalent to an addition of well over 2 per cent. to the contribution rate which would no longer be forthcoming in any change to an actual fund. The cost of pensions increase would then have to be made either by the fund or, if it were unable to do so, by employers. If there were an actual fund teachers would pay the same contributions as they do now since that contribution is part of the new entrant contribution which in turn is determined on an assumption of an actual fund with average performance. However, the teachers, in common with other taxpayers, in addition to paying extra by way of taxes, would have to make good the lack of superannuation contributions going into the Exchequer. The question of the effect on teachers is, in the Government's view, the overriding consideration. Actual funding would not lead to increased benefits since the level of benefit is prescribed by the Government for the public service as a whole and of itself would not result in a reduction in teachers' contribution since that contribution is itself related to the new entrant contribution.

Education is now a community. That is something that we have tended to lose sight of because of the fierceness of the controversies in which we have recently been involved, but in the end everyone in the education world is in his own way working for the same ends. Ministers, Members of Parliament, teachers, education correspondents—and I place these in the order of ecclesiastical precedence, with the greatest at the end—all are involved in this educational cause. It is extremely important that at certain moments, such as the present, we should stress this point because it is a period when we have growing up not a pro-education lobby but an anti-education lobby. If those concerned with education are too unmeasured in their criticisms, the final casualty will not be any particular individual but the cause of education itself.

Teachers face grave financial problems, as the hon. Member for Sparkbrook pointed out. This is not a political point, much less a party political point. It is a social point. I would not go as far as the hon. Gentleman when he said that the morale of the teaching profession is lower now than at any other time this century, but undoubtedly teachers are slipping in relation to other professions and other workers.

The Secretary of State and I do not wish to see the teaching profession get into a position where it is in a situation of permanent confrontation either with the Government or with society, feeling that society is hostile to the legitimate claims of the teaching profession. I do not want to see that happen with students, much less do I want to see it happen with teachers.

We cannot solve a vast problem of that kind in a short debate such as this, but we have established a principle in this debate—and that is that, subject to the Pay Board's decision, the Government back the principle that the teachers' organisations have unanimously put forward on two important issues in relation to pensions. That is certainly something to be considered and it is something which I hope we can build on. I believe that it is evidence of the Government's concern in general and of the Secretary of State's concern in particular for the welfare of the teaching profession.

Question put and agreed to.

Resolved, That this House, noting the reduction in the costs of the teachers' superannuation scheme revealed by the 1971 Quinquennial Valuation, calls upon Her Majesty's Government to reduce the contribution paid by teachers to their superannuation scheme to 6 per cent., thus bringing their scheme into line with practice in most of the public service; to support a return to the ratio of costs sharing between the teachers and the local education authorities agreed by their representatives in the Working Party in 1972 ; and to allow half of all teachers' war service to be credited for pension entitlement as is the practice in the Civil Service.