CIVIL SERVICE AND POST OFFICE (SUPERANNUATION) (Hansard, 28 November 1974)

§ Mr. John Golding (Newcastle-under-Lyme)

I feel sorry for the Minister, not only because I have kept him up all night waiting for this debate but also because I am sure that, left to himself, he would not have wanted to turn down this claim. He is too good a friend of all Post Office staff for that. He may even have a personal interest. However, I fear that he may be defending a position forced upon him by the dead and shrivelled hand of the Treasury—and we all know how dead and shrivelled that hand can be when asked to hand over money.

As the Minister knows so well, an issue of great importance to many Post Office people, both working and retired, is that not all their years of service are counted in full for pension purposes. All the years since 14th July 1949 count in full, but not years of unestablished service between 1st January 1919 and 13th July 1949, which count half, or years before 1st January 1919, which in many cases do not count at all. Although most are in the Civil Service, many are out- 978 side, mainly in the Post Office. Of these a substantial number are members of the Post Office Engineering Union, of which I am an assistant secretary, but many are members of the Union of Post Office Workers, to which my hon. Friend the Minister belongs, and they, too, are affected.

The main groups affected are the ex-Service men of two world wars who joined the service as temporaries, the ex-Service men of the Second World War who entered directly and whose war service is not counted in full, civilians who entered as temporaries, both during and immediately after the war, and those who were in jobs that until about 1946 were classified as unestablished.

Around 1948, I worked with many temporary clerks who would at this time be retiring on inadequate pensions, but this morning I am particularly concerned with those who worked in the engineering department of the old Post Office, and more particularly those members of the Post Office Engineering Union, such as the factory grades, who served from 1919 entirely in an unestablished capacity until after the Second World War.

The question whether all service should count for pension purposes was last examined impartially by the Royal Commission on the Civil Service of 1953–55. After reviewing the evidence of the staff side and of the Treasury, in paragraph 743 of its report the Royal Commission said: It seems to us that there is no question of merit or principle outstanding. It is in fact now common ground that it is right that unestablished service should reckon in full; the 1946 decision certainly affords a precedent for retrospection of the kind claimed and supports the argument that if a certain treatment is right at one point of time it is also right at others. It is our view that the sole consideration is one of cost. The Royal Commission accepted the principle, pointed to the retrospection that had taken place earlier, and said that the sole consideration was cost.

Ever since, the unions concerned have been pressing Government to meet their obligations and to find the cost, although, to make it easier, the unions have agreed to waive the recalculation of gratuities and to negotiate a phased introduction. They have been unsuccessful. Unfortunately for the 500,000 or more people affected—200,000 of whom are retired— 979 the present Government do not seem to want to honour their obligation.

I quote from a letter from the Minister to Anthony Carter, who is the Secretary-General of the Council of the Post Office Unions. He said: The cost of meeting the claim would be several hundred million pounds spread over a long period of years and this has to be set against the priorities attaching to all the other parts of the Government's programme. The claim has been considered by successive Administrations and has been consistently rejected on the grounds that, quite apart from the merits of the claim, the cost was prohibitive. It was very carefully re-examined earlier this year, and I have now carefully reconsidered the matter myself. I am afraid, however, I see no prospect of accepting the reckoning of pre-1949 unestablished service in full. Two points need to be made. First, the reference to the merits of the claim is unfortunate. All associated with it had believed that that issue was finally settled by the Priestley Commission. We should have thought it unnecessary to point out that it was the lowest grades and the industrial workers who have been penalised hardest, that some men, such as Bill Brown of the factories, who died last year, have lost 15 years of pensionable service. Secondly, the use of the phrase "no prospect" is unfortunate.

Both references are unfortunate against the background of the pledge that Labour gave at the time of the 1964 General Election in response to approaches on the subject of all service counting. That pledge was: Labour accepts the principle that all non-established service should count for pension and will take steps, in consultation with the appropriate bodies, to improve on the earlier reforms introduced by the last Labour Government in 1946 and 1949". If Labour accepted that in principle in 1964, all that remains is to determine what improvements can be made on 1946 and 1949.

Personally, I should like to see the claim met in full, but I must make it clear that the Post Office unions stick to their 1965 offer: first, that they would accept that there should be no recalculation of lump sums already paid; secondly, they would negotiate gradual implementation; thirdly, and perhaps most important, that they would see their way to the settling of a reasonable limit.

980 The Government, in my view bound by the 1964 election pledge, should now negotiate with the Post Office unions on that basis. They should set a time limit and perhaps settle a reasonable financial limit. The unions could not be more reasonable and the Government ought to respond by making an offer. I hope that this morning the Minister will be able to reward both of us by making it clear that, although the Government cannot see their way perhaps in the coming few months to making an offer that in all justice they should make, at least there is hope in the future for the many pensioners who feel a great sense of injustice.

§ The Minister of State, Civil Service Department (Mr. Charles R. Morris)

I am grateful to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) for the lucidity with which he has put his case this morning and for the characteristically kind way in which he referred to what might be termed my vested interest in the subject of all unestablished service counting. Perhaps his comments in that regard will serve at least to demonstrate the sincerity of my approach to this issue.

I recognise that in raising this matter on the Adjournment my hon. Friend is reflecting the widespread and understandable concern of those who are affected. I hope that my hon. Friend for his part will equally accept that we should look at the problem in perspective.

This issue is but one aspect of the Civil Service pension scheme. I do not claim that the scheme is perfect, but I doubt whether I shall be seriously challenged when I say that it is one of the best in the country. We are proud—and this is not a matter on which we differ from our predecessors to any marked extent—that the scheme is one of the best, and we fully intend to keep it in the forefront of pension schemes generally.

It will, I feel sure, be conceded that substantial improvements in the scheme were made in 1949, and my hon. Friend mentioned that. That date has much significance in the context of this debate. Those improvements were followed by further substantial improvements in 1971 and 1972 when, among other improvements, public service pensions were inflation-proofed. That single improvement 981 has led to successive annual increases in pensions of some 9 per cent in the past two successive years, to be followed by an increase of 16½ per cent. on 1st December next.

These increases have benefited all public service pensioners. The cost of Civil Service pensions alone is now running at the level of £160 million a year. On all sides of the House, I am sure that we accept this cost as just and fair, representing as it does the reward in retirement for those who spend all or some part of their working lives in service to the State.

However, as reasonable opinion will accept, there is a limit to public expenditure. I am being invited this morning to push back the frontiers that we have now reached in the Civil Service pension scheme beyond 1949 and beyond even 1919, at least in regard to our treatment of unestablished service. I am being invited to say that because since 1949 we have regarded unestablished service as counting in full for pension purposes, we should now change the rules which operated prior to 1949. If we were to do that we should be increasing the cost of Civil Service pensions on this account alone by several hundred millions of pounds over the next 20 to 30 years.

But the costs would not stop there. How could we possibly justify changing the rules retrospectively in relation to this one class of case when there are many other classes who regard themselves as equally deserving, if not more so? As the Minister concerned, I receive many claims that by our current pension standards one particular group of individuals or another has been poorly treated at some time in the past, and, viewed in isolation, this is frequently the case. Consequently, as my hon. Friend has done this moring, I am being invited now to extend my compassion and to put right this particular case.

My hon. Friend has made the point, and he referred to the merits of the campaign to count unestablished service in full. But I am sure that he would not wish me at this stage to enter into an argument as to which is the most deserving case. He recognises, as most reasonable people do, that there is a well-recognised and widely accepted prin-ciple in both public sector and private 982 sector pension schemes—that successive improvements in pension schemes are not granted retrospectively to those who retired before the changes were introduced. If this were not the case, progress on improving pension schemes would have been much slower than it has been. To move away from this position would involve overwhelming costs.

When the Labour Government of 1946 conceded half reckoning of all unestablished service back to 1st January 1919 the change was justified on the basis that this was not new legislation retrospectively changing the conditions of service of members of a particular class. It was simply the tidying up of the past to remove major anomalies in the treatment of individuals in the same class resulting from the use of earlier discretionary powers. This is a most important distinction and one which I think many people have failed to appreciate.

Furthermore, 1st January 1919 was chosen to avoid an anomaly as between those who had served in the Armed Forces in the 1914–18 war, and whose records had been in large part destroyed, and those who had served in the Civil Service between 1914 and 1918.

It was the Labour Government of 1949 who introduced full reckoning of service from 14th July 1949, the date of the passing of the Superannuation Act of that year. During the passage of the Bill which became that Act there was considerable pressure for the retrospective application of this change right back to 1919. However, as it was argued at the time, to have conceded this claim would not have been simply the removal of an anomaly as between individuals with the same pattern of service but in the fullest sense a retrospective improvement of past conditions of service for all.

So we come to the Royal Commission of 1953–55. Looking at the Civil Service in isolation, it is perhaps not surprising that the Royal Commission concluded that the sole consideration was one of cost. However, without wanting to push the arguments too far, as I have indicated previously, few would dispute that there is room for more than one opinion on the question of the merits of this case. I am sure that, for the reasons I have already given, it is quite impossible to look at this question in isolation, even 983 within the Civil Service let alone over the wider public service sector.

My hon. Friend has referred to the willingness of the National Staff Side in 1971 to consider any system of gradual implementation. In 1965 and again in 1971 detailed examination was made of suggestions to this end proposed by the National Staff Side and of a number of variants thought up by officials. However, as was explained to the Staff Side, with supporting costing figures, no system of gradual implementation, which would be meaningful and not lead to serious anomalies as between individuals, could be found which would make a significant reduction in the cost.

Up-to-date costings show that the full cost for the Civil Service alone would be some £160 million over the first 10 years and some £70 million over the next 10 years—a total of some £230 million over the first 20 years. My hon. Friend referred to Post Office staff. When one takes into consideration the fact that Post Office staff and pensioners who have the same superannuation arrangements are included, one appreciates that this figure could well be increased by some 30 per cent.

984 I realise that there is considerable feeling on this subject among those affected. I have listened very carefully to the arguments so eloquently presented by my hon. Friend this morning. But I should be misleading my hon. Friend if I were not to tell him that it is difficult to recognise any new arguments in the case which he has put forward. I should be less than fair if I were to encourage false hopes or at present to hold out any hope of a change of view on the Government's part.

Equally, however, I am mindful that arrangements have been made for the Staff Side of the National Whitley Council to see Sir Douglas Allen, the Head of the Home Civil Service, to discuss this question. Understandably and quite naturally, I must not anticipate what the Staff Side will wish to say at this particular meeting, but I am sure that Sir Douglas Allen will listen as carefully to the arguments of the Staff Side as I have listened to those of my hon. Friend this morning.