HC Deb 23 July 1976 vol 915 cc2337-47

'Notwithstanding any other provision of this Act, salaries of Members of Parliament should immediately be increased by 6 per cent. from £5,750 per annum to £6,095 per annum, being the maximum increase allowed under the present wage and salary guidelines and should be increased in stages as possible within any future wage and salary guidelines up to a maximum of £8,000, being the amount recommended by the Top Salary Review Body, and that these actual salaries as paid at any one time should be the Member's pensionable salary'.—[Mr. Rathbone.]

Brought up, and read the First time.

4.38 p.m.

Mr. Tim Rathbone (Lewes)

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this we may take Amendment No. 3, in Clause 1, page 1, line 13, leave out from 'or' to end of line 5 on page 2 and insert: 'whatever salary rate may have been recommended by the Top Salary Review Body for pension purposes'.

Mr. Rathbone

May I by way of introduction say that up until this morning we understood that this would be the first business on the Order Paper. Most particularly, I want to say that because my hon. Friend the Member for Somerset, North (Mr. Dean), who is a great expert on these matters, had to leave earlier in order to have a meeting with the Minister. Hon. Members who have taken an interest in these affairs will know that my hon. Friend has taken a great interest in this matter and has moved amendments in Second Reading and also in Committee. The same goes for some of my other hon. Friends who have had to leave because they had prior commitments outside the House.

A word of explanation about the aim of the new clause is particularly necessary in this instance since the gentlemen in the Press Gallery, when the amendments were originally put down, went out of their way to misinterpret them. I would like to make it clear that neither I, nor any of my hon. Friends who are supporting me in respect of the new clause or amendement, have been demanding salary increases for members of Parliament. Indeed, I and others voted against the increases suggested by the Government and passed a year ago, not because the increases were not deserved but because of the timing—cheek by jowl with the Government's announcement in respect of the battle against inflation and the £6 limit.

That is not to say that we do not feel the Government should not have acted earlier when they first received the Boyle Commission Report. If they had done so I believe they could have put up Members' salaries to the full amount recommended by the Boyle Report. Hopefully the Government are now wiser after the fact, but we are very much poorer.

As it is, I fear that they made a thorough botch of the whole thing by the improper timing and conclusion then, and they are now compounding it by improper timing now. It is a peculiar coincidence that we meet to discuss this question again, a year and a day after the last time we discussed it, and again within the shortest possible period of time after the announcement of Government measures to reduce inflation one way or another.

The reason for the new clause is that I and my colleagues believe that Members of Parliament should not receive unique and special pension treatment which is now sought by the Government in the Bill allowing, as it does, our pensions, like no one else's in the country, to be based on a salary level far above the salary we are actually being paid. The new clause and amendment seek to correct this.

Sadly, the Government have refused to change the Bill or amend this self-serving legislation, either at Second Reading or in Committee. We are seeking, once again, to persuade the Government to change it now.

I should further explain, for the elucidation of gentlemen in the Press Gallery, that it was not procedurally open to us to recommend that our present salary base be used for pension purposes because that would have been considered to be a wrecking amendment. Even before the Government issued their own proposed increase in Members' salaries, the new clause was put down in this form. Perhaps this point is made easier to accept by the carrying of the motion earlier today.

The new clause recommends to the House that the pensions of Members of Parliament should be based on the salary that hon. Members will be receiving as from 13th June. I believe I am right in thinking that after carrying the motion earlier this afternoon no further action needs to be taken and that it can be regarded as a fait accompli. That means that the new clause is very pertinent.

My hon. Friend the Member for Blaby (Mr. Lawson), with his quick eye, noticed that there was an arithmetical slip in the new clause, and he has put down amendments to it. I hope, Mr. Speaker, that if the new clause is carried you will be able to use your discretion, even though these are new amendments and starred, so that they may be incorporated. I would be very pleased to have them accepted as part of the new clause.

With regard to pensions for Members, we face a very different situation from that of someone who voluntarily forgos part of his salary but will receive his full pension entitlement at the time he retires. Certainly, in industry it is left to individual choice, in stark contrast to this piece of legislation which is Government dictation.

We are not in this House in receipt of a salary of £8,000, however much it is deserved and however strongly it was recommended by Lord Boyle in his Report. Therefore, that amount of £8,000 does not exist as a base for our pension arrangements. The fact that the Report recommends that as a salary base has no effect at all on the principle underlying my argument.

It must be the case in today's circumstances of high taxation that many men and women will be wondering whether they should dare to bend or break the untaxed limit which may be put aside to provide an adequate pension. With taxes as high as they are and with inflation continuing to run at an extremely worrying level, it is horrifying to think that people's minds are becoming concentrated on how to get round the rules.

It would be sad if ever the honesty inherent in the people of the country became bent, as sometimes happens in other countries. As Members of Parliament we need not have any such concern. Instead of breaking the rules we can change the laws on our behalf so that we, and only we, can calculate our pensions on a non-existent notional salary which is 60 per cent. higher than the real salary.

Mr. Albert Roberts (Normanton)

I agree with what the hon. Gentleman said about misrepresentation in the Press. I also agree with him that the question of salaries has been brought up later than it should have been. School teachers and other professional people received increases in April. Our increases have been brought up for consideration two months later. Will the hon. Gentleman bear in mind that we have given over £1½ million to the taxpayer by not taking the salary recommended by Lord Boyle?

Mr. Rathbone

The hon. Gentleman is turning the whole argument on its head. It is easy to look angelic by agreeing to take only half of a large amount that is promised, and it is nonsense to suggest that we are looked upon as good boys by the nation because of the action we took last year. It is entirely because the Government botched up the timing that we got into this difficulty. It was because of the railway men's strike that consideration was not given to the Boyle Report when it was received.

As my right hon. Friend the Member for Yeovil (Mr. Peyton) said, it is odd that we should be debating the Bill, when the Leader of the House told us recently that he is sitting uncomfortably upon the next report from Lord Boyle. The Leader of the House said: I should also inform the House that the Prime Minister has received the second part of the Review Body's Report dealing with ministerial salaries, Members' pensions and some minor matters affecting Members' allowances and facilities.… It is being printed and will be presented to the House as soon as possible". Yet here we are this afternoon passing a special Bill to give us special rights which will, presumably, be overtaken by the next Boyle Report.

Mr. Roger Sims (Chislehurst)

Does my hon. Friend agree that it is disgraceful that the House should know of the existence of the new Boyle Report but not have access to it when it is so relevant to the debate? Is not that yet another example of the Government's inability to organise their business?

Mr. Rathbone

I accept completely what my hon. Friend says. It is in sad contrast to the Lord President's advocacy of the parliamentary spirit and his defence of Parliament. On the same occasion, the Lord President said: in my opinion it would be shabby if the Government were to apply a different rule to Ministers from that which they seek to apply to the rest of the nation". That applies to our previous debate. The Leader of the House went on to say: We are seeking to apply the same rules in this House as we seek to apply to people throughout the country. I only wish that everybody else would do the same."—[Official Report, 12th July 1976; Vol. 915, c. 33–38] I only wish that the Lord President would do the same, but that is exactly what he is not doing by the Bill.

5.45 p.m.

In comparing the self-serving pension scheme proposed in the Bill with the way in which the Government's pay policy applies to the rest of the country, it will be seen that the Government's pay policy inhibits the ability of companies to provide properly for their staff. Perhaps the Minister will confirm that the maximum benefits that can be provided in a new occupational scheme are set as the minimum needed for contracting-out of the national scheme. By any established standards, these benefits cannot be classified as even moderately good.

The Government are proposing for us a scheme which is uniquely better than any scheme available to anyone else on two scores. First, it is based on the higher notional salary, a basis which is not available to other people through our tax laws. Secondly, it is index-linked against future ravages of inflation, a system that is not affordable under any normal commercial scheme.

The Bill is drawn so that we can be relieved by our own legislation and administrative action from one more of the financial restrictions which weigh so heavily on everyone else. One year and one day ago the Government broke the £6 pay limit in the week of its introduction and found a legal way of doing so. As always, it is easier for the Government because they do not have to break the laws; they can change them. By that action the Government were flying in the face of what they had said. They said that there should be no special cases, no exceptions. The former Prime Minister said that there was to be no jumping the queue before 1st August. That attitude is comparable to the Government weasel telling people to "Do as I say, not as I do".

The most worrying aspect of the Bill is that politicians will be encouraged to see themselves as a different race from other citizens. That danger was illustrated by the hon. Member for Sowerby (Mr. Madden) who said that he and other Members of Parliament were looked upon by his constituents as rather special people. If we are not careful—and if we pass the Bill unamended we are not being careful—that feeling will be reciprocated by all citizens. That is precisely the situation that exists in Russia and other countries which are dominated by a political dictatorship, whether of the Right or the Left.

The amendments are designed to reverse such a corrosive trend and to rebuild a small bridge between Parliament and people.

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

I am grateful to the hon. Member for Lewes (Mr. Rathbone) for the reasonable manner in which he presented his case. I accept his explanation for the absence of his parliamentary colleagues.

There are three features of the new clause on which the House has legitimate reservations. The first is that events have overtaken the figures referred to in the clause. Not only have events overtaken those figures, but our procedings earlier today have given legislative effect to the House's view of Government policy in that regard.

The second feature about which I believe the House has reservations is the indeterminate phrase in the clause—"in stages". It is true that the clause goes on to say within any future wage and salary guidelines", but the phrase "in stages" is indeterminate and the country has a right to know what it means.

The third reservation that I and so many of my colleagues have about the clause is that in a somewhat modified form it rehearses yet again the argument we had on Second Reading and in Committee about the propriety of basing a Member's pension on a notional salary of £8,000. It is regrettable that in the course of this continuing debate it has been implied that Members are putting themselves in a somewhat privileged position. The hon. Member for Lewes made much the same point. He said that Members were in danger of establishing themselves as a different race, that they were creating themselves as a special category by accepting the idea of establishing a pension rate for Members on a notional salary of £8,000.

I remind the House of the circumstances in which the salary of £8,000 was determined by the Boyle Committee. That is a completely independent body on which Members are not represented. It recommended that the rate for the job as Member of Parliament was £8,000 a year. It was because Members had regard to the economic difficulties facing the nation that they were prepared, and indicated their preparedness, to forgo £2,250 of that £8,000. What other section of the community—what other professional group—has forgone virtually 28 per cent. of a recommended salary increase emanating from a distinguished and completely independent review body?

It has been said that we are establishing a precedent. We are not establishing a precedent. Hon. Members will recall that the Boyle Committee examined and established new salary scales for the higher echelons of the Civil Service as from January 1975. The Government decided that those increases should be introduced by stages but said "If we are asking civil servants at these salary levels to forgo the increases recommended by an independent body, we should not ask them to forgo the pension entitlement attaching thereto."

Mr. J. Enoch Powell (Down, South)

Surely the Minister's analogy is fundamentally imperfect. Pensions in the Civil Service are not contributory pensions; they are non-contributory pensions. Therefore, all the Government are doing is saying "When the time comes eventually for you to retire, we shall pay you a higher pension than is proportionate to the present salary that we are agreeing to pay you now." It is different altogether to say in respect of contributory schemes "We shall notionally now credit you with the salary that is not being paid now." The Minister cannot rely on that analogy.

Mr. Morris

The right hon. Gentleman is perfectly entitled to put whatever construction he wishes on the point I have made. Civil Service pensions are non-contributory only to the extent that no contribution is made by the individual civil servant, but the individual civil servant forgoes part of his salary on the basis of the fair comparisons exercise which the Pay Research Unit undertakes. So it is not accurate to argue that Civil Service pensions are non-contributory. They may be non-contributory in one sense, but in another sense civil servants, irrespective of the grade, forgo part of their salary for pension purposes.

If the right hon. Gentleman takes exception to the analogy that I sought to draw with civil servants whose pensions are calculated on a notional basis, perhaps he will consider what happens to others. The pensions of consultants in the National Health Service are calculated on a notional basis, as are the pensions of individuals in the Services. The suggestion that Members' pensions should be determined on a notional basis in no way creates a precedent.

Mr. Rathbone

Am I not right in thinking that that is a quite different use of the word "notional"? It is a best estimate of what the total remuneration will be as the base for pension. This is a notional basis which is purely up in the sky.

Mr. Morris

I do not accept that construction of the phrase "best estimate".

The other major point referred to by the hon. Gentleman was that in some ways Members of Parliament were being grasping and greedy in establishing £8,000 as the notional basis for their pensions. I noted earlier in the day that the Leader of the House referred to the historical fact that Members of Parliament had been paid salaries for only a matter of 200 years. He was talking about a bicentenary, the fact that it was the 200th anniversary of the gentleman to whom he referred.

Mr. Powell

It is not the bicentenary of Members' salaries. This year is the 70th anniversary of Members' salaries. It is the bicentenary of an early proposal that Members of Parliament should be paid something, which lapsed in the seventeenth century.

Mr. Morris

I am grateful for the interpretation which the right hon. Gentleman has placed upon the comment made by the Leader of the House.

I want to establish the point that pensions for Members of Parliament have been in existence for only a little over 11 years. That is reality. Those who represent Members as being grasping and greedy and as being over-generously provided for overlook the fact that the maximum pension entitlement that any Member can receive currently, irrespective of how long he has served his constituents in the House, is a little over 21 years. That is the maximum pension, no matter what service he may have. That is the extent of the over-generous provision of Members' pensions.

It is certainly not over-generous. Anyone who talks to a widow who is obliged to exist on a Member's widow's pension will find that she does not consider that she is over-generously provided for. The hon. Gentleman referred to establishing a principle for Members of Parliament and for those in the private sector. I invite him to consider some of the rather generous provisions made under the "top hat" pension arrangements in the private sector by which certain executives, directors and managers can attract a two-thirds pension on a mere 10 years' service.

Division No. 276.] AYES [5.05 p.m.
Mitchell, David (Basingstoke)
Moate, Roger
Sims, Roger
Steen, Anthony (Wavertree)
Mr. Tim Rathbone and
Mr. Geoffrey Johnson Smith

It behoves hon. Members to consider that situation before singling out Members of Parliament for criticism.

5.0 p.m.

Mr. Dan Jones (Burnley)

The House ought to pay attention to the Minister's observation about widows. If this House has any compassion at all, we should remember that there are three widows whose husbands paid contributions into the fund and who are still awaiting the benefits to which they are legally entitled. Will hon. Members keep that fact in mind?

Mr. Morris

I am grateful for the intervention of my hon. and good Friend the Member for Burnley (Mr. Jones).

Mr. Rathbone

I should like to refer to the Minister's observation before he gave way to the hon. Member. The Minister was insinuating that no homework had been done. He insinuated that I had said that hon. Members were greedy and grasping. In fact I have done my homework and at no time did I insinuate that Members were greedy and grasping. I said that if Members did not accept this new clause, they would be self-serving.

Mr. Morris

I withdraw my imputation that the hon. Member had not done his homework. I withdraw it unreservedly, and if I have been discourteous to him, I apologise for my comments.

What phrase did the hon. Gentleman use? He said that Members of Parliament did not need to feel any concern about their pay and pensions. I believe that Members of Parliament do feel concern. If we did not have concern for our pay and pension levels, we should not be in the present situation.

I hope I have said sufficient to persuade the House to reject the clause.

Question put, That the clause be read a Second time:—

The House divided: Ayes 4, Noes 76.

Bishop, E. S. Harrison, Walter (Wakefield) Price, C. (Lewisham W)
Boardman, H. Hart, Rt Hon Judith Price, William (Rugby)
Booth, Rt Hon Albert Huckfield. Les Roberts, Albert (Normanton)
Boyden, James (Bish Auck) Hughes, Robert (Aberdeen N) Shore, Rt Hon Peter
Cocks, Michael (Bristol S) Jackson, Miss Margaret (Lincoln) Silkin, Rt Hon S. C. (Dulwich)
Cohen, Stanley Janner, Greville Skinner, Dennis
Coleman, Donald Jones, Dan (Burnley) Smith, John (N Lanarkshire)
Cox, Thomas (Tooting) Judd, Frank Snape, Peter
Crowther, Stan (Rotherham) Kelley, Richard Stallard, A. W.
Cryer, Bob Kerr, Russell Stewart, Rt Hon M. (Fulham)
Cunningham, G. (Islington S) Kilfedder, James Stoddart, David
Davidson, Arthur Latham, Arthur (Paddington) Strang, Gavin
Davis, Clinton (Hackney C) Leadbitter, Ted Strauss, Rt Hon G. R.
Dormand, J. D. Lee, John Thomas, Mike (Newcastle E)
Dunn, James A. McCartney, Hugh Tinn, James
Eadie, Alex MacKenzie, Gregor Tomney, Frank
Ellis, John (Brigg & Scun) Maclennan, Robert Wainwright, Edwin (Dearne V)
English, Michael Madden, Max Walker, Harold (Doncaster)
Fernyhough, Rt Hon E. Mahon, Simon Walker, Terry (Kingswood)
Fitt, Gerard (Belfast W) Mallalieu, J. P. W. Ward, Michael
Foot, Rt Hon Michael Marks, Kenneth Williams, Alan (Swansea W)
Freeson, Reginald Morris, Charles R. (Openshaw) Woof, Robert
Gilbert, Dr John Moyle, Roland
Golding, John Mulley, Rt Hon Frederick TELLERS FOR THE NOES:
Grant, John (Islington C) Owen, Dr David Mr. Alf Bates and
Hamilton, W. W. (Central Fife) Pavitt, Laurie Mr. Ted Graham.
Harper, Joseph Pendry, Tom

Question accordingly negatived.

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