§ 28. Mr. William Hamiltonasked the Minister for the Civil Service if, in the light of the demands to cut public expenditure, he will reconsider the policy of providing inflation-proof pensions to civil servants.
§ 30. Mr. Tim Rentonasked the Minister for the Civil Service whether he will make a statement about the inflation-proofing of Civil Service pensions.
§ Mr. Charles R. MorrisThere are some 250,000 Civil Service pensioners. Of these, 16 receive pensions of £8,500 per annum or more. The average pension paid to retired civil servants, who have given many years of loyal service to successive Governments, is £14 per week. The 477 average cost-of-living increase payable from 1st December in accordance with the provision of the Pensions (Increase) Act 1971 is £3.50 per week.
These increases will cover the movement in the retail prices index for the 12 months ended June 1975, and so will no more than reflect belatedly for the pensioner the large pay settlements for the work force during that period. As was done this year, the review under the 1971 Act next year will again be considered in the context of the economic situation at the time.
§ Mr. HamiltonWill my hon. Friend be a bit more specific and tell us exactly what the figure is additional for this year to provide this highly privileged section of the community with this kind of income? Will he give an assurance that, although one would not want to have retrospective legislation to deal with this matter, account will be taken of this privilege in future salary negotiations? Will he confirm or deny the figure produced by the Shadow Chancellor of the Exchequer that, if this provision were to be made out of capital instead of taxation, it would mean on outlay of £350,000 million, which is about three times the total private wealth in the whole of Great Britain?
§ Mr. MorrisThe statistics referred to by the Shadow Chancellor of the Exchequer are not matters for me. As a former civil servant, let me say that, contrary to the impression created in some Press reports, I cannot accept that civil servants are individuals motivated by self-interest. In the overwhelming majority of cases they are dedicated public servants seeking to make a positive contribution to community life. Occasionally I should like to see some recognition of this fact from certain individuals in the House.
My hon. Friend suggested that civil servants were in a privileged position. My view is that they are not. There are more than 1 million public service pensioners. In the circumstances of 1975 the Government decided that the existing arrangements for protecting pensioners in both the private and public sector should not be subject to the pay limit. Many good employers in the private sector give similar protection.
§ Mr. RentonIs not the Minister dodging the issue by using emotive words? 478 Will he come back to the point and tell us what is the additional cost? Is it not at the moment—from 1st December 1975—running at a cumulative additional cost of about £80 million a year as a result of inflation-proofing, and is not this cost bound to rise as inflation continues and more civil servants retire? Will the Minister consider appointing an independent actuary to advise him on perhaps introducing a limit in future of 5 per cent. of inflation-proofing, as happens in many private occupational pension schemes?
§ Mr. MorrisI have no reason to believe that the advice that the Government receive from Government actuaries is in any way open to question. Perhaps I should explain that there are more than 1 million public service pensioners, including civil servants, local government and National Health Service staffs, Service men, teachers, Members of Parliament and many others. The current annual cost of their pensions is £730 million. This will go up by £180 million, so that the average pension of about £14 a week will rise to £17.50.
§ Mr. Guy BarnettDoes not my hon. Friend consider the suggestion behind this Question totally disgraceful? Will he confirm that we are talking about the whole range of public service pensioners—people who have given a lifetime of service as nurses, in the fire service, and so on, as well as people in the Civil Service? Does not my hon. Friend think it ironic that when the (Increase) Act 1971 went through the House with unanimous agreement, the unions were then asking for pensions to be linked to wages, not to prices, and that it was by the insistence of the Government at the time that they were linked to prices?
§ Mr. MorrisI am grateful for the comments of my hon. Friend bearing in mind his experience of the Civil Service and of civil servants over many years. I am reminded of the comments made by the hon. Member for Guildford (Mr. Howell) when the legislation was going through. He described it as a far-reaching and overdue reform.