HC Deb 11 July 1977 vol 935 cc20-1
26. Mr. Tim Renton

asked the Minister for the Civil Service whether he is satisfied that the figure of 1¾ per cent. deduction from Civil Service salaries for inflation-proofing of pensions remains correct at a time of 18 per cent. per annum inflation.

Mr. Charles R. Morris

It is totally mistaken to think that a civil servant pays only 1.75 per cent. of his salary for an inflation-proofing pension. This deduction is only one of the deductions made from civil servants' pay on account of their pensions and it cannot be reviewed in isolation from other aspects of Civil Service pay and pensions. No general review is possible while pay research is suspended as part of the Government's policy against inflation.

Mr. Renton

I have a feeling that I have heard that answer before from the Minister. Is it not correct that the deduction for inflation-proofing of the pension is 1¾ per cent.? Is it not also correct that, based on the three years of inflation since the Labour Government came to office, the deduction of inflation-proofing should be in excess for 20 per cent.? Does not this represent a great subsidy of Civil Service salaries which in the end, directly or indirectly, is paid for by the taxpayer?

Mr. Morris

I think that the hon. Gentleman is in error to suggest that the deduction should be as high as 20 per cent. merely because the inflation rate at some time or other might be moving at that rate. The Government Actuary gave a figure of 3 per cent. to the Select Committee on Public Expenditure.

Mr. Wrigglesworth

Does my hon. Friend agree that, despite the sniping from the Opposition on this issue, the people have welcomed the upholding of the pledges on pensions, not only in the public sector but in respect of old-age pensions generally, in the announcements of recent weeks? Will he tell us what response he has had from the trade unions and public service pensioners to the Prime Minister's announcement a few weeks ago?

Mr. Morris

I have received appreciable appreciation from the trade unions, Government pensioners and pensioners generally for the fact that the Government have honoured their undertaking to act in a fair and reasonable manner in respect of their position as an employer vis-æ-vis civil servants.

Mr. McCrindle

Does it remain Government policy that inflation-proofing should extend only to public service pensions, or do the Government recommend that private pensions should be equally inflation-proofed? In the latter event, has any guidance been given as to where private fund managers can invest for a return of 18 per cent.?

Mr. Morris

I accept that the hon. Gentleman is very knowledgeable about financial matters in the private sector. I wish that occasionally he did not demonstrate his obsession in relation to the Civil Service. I suggest that occasionally he looks at the Inland Revenue rules and the pensions enjoyed by many chairmen and executives of individual private companies who can receive pensions which represent two-thirds of their gross pay for as a little as 10 years' service. That is a state of affairs to which many civil servants would aspire.