§ '(1) With effect from the dissolution of the present Parliament, a Member's pensionable salary means the salary paid to him pursuant to a resolution of the House of Commons whether or not provision shall have been made in such resolution for a Member's salary to be regarded for pension purposes as being at a higher rate.
§ (2) Sections 1 and 2 of the Parliamentary and other Pensions and Salaries Act 1976 are hereby repealed.'.—[Mr. Paul Dean.]
§ Brought up, and read the First time.
§ Mr. Paul Dean
I beg to move, That the clause be read a Second time.
The purpose of the clause is to base pensions on actual salary, not on the much higher notional salary which now obtains. I argued this matter on Second Reading and, indeed, the last time that we discussed pensions in 1976, so I shall be brief in putting my arguments again today.
I submit that, with the present arrangements, we are giving ourselves pensions privileges which are denied to the rest of the community. This is indefensible, particularly as we are in a special position. Unlike almost anyone else, we fix our own salaries and pensions. In consequence, we are under a special obligation to 1321 ensure that we do not act in ways which appear unfair to others.
There is already much criticism of a number of aspects of public service pension schemes, notably about inflation-proofing. I do not share many of those criticisms, because I look forward to the day when it will be possible for all pensions to be inflation-proofed—at least, up to a certain level. But the fact is that this criticism, which exists strongly outside, also applies to parliamentary pensions. We are included in this valuable provision.
§ Mr. Michael McGuire (Ince)
Is not the fact of the matter that Members of Parliament—certainly Back Benchers—forwent about £2,500 for reasons which everyone understands? There was a bit of parliamentary arm-twisting, national psychology on wage policy, and so on. Much as I respect the hon. Gentleman, I think that he is putting the wrong gloss on this matter. I may be wrong, but I understand that, together with many of my Back-Bench colleagues, I forwent about £2,500. I do not think that the Government are doing me any great favour at all.
§ Mr. Dean
But many other people are in exactly the same position. Many people outside have also been disappointed in their expectations about increases in pay. The pay of many people was frozen absolutely during one of the pay policy phases. As a result of that they suffered in terms of their pension rights. If they retired during that period they suffered in terms of their pension rights permanently.
What I am saying is that we are creating for ourselves a privilege which is denied to other people. It is the distinction between what we are doing here and what is generally available outside which is the cause of criticism. I am not saying—perhaps this helps the hon. Member for Ince (Mr. McGuire)—that our pension scheme is over-generous. Far from it: only recently have we begun to introduce pensions which are adequate by modern standards or which are in any way comparable with those attached to other jobs. Our pension scheme dates only from 1964. By most modern standards of pension schemes that is very recent.
1322 Yesterday I was supplied with some figures by the Lord President. One has only to look at those figures to see that as a result of the recent introduction of our pension arrangements a large number of our former colleagues are excluded already. According to the information that I was given, at least 272 of our former colleagues are not eligible for a parliamentary pension because the scheme was introduced so recently. At least 31 of our former colleagues are aged 80 and over and receive no pension at all. There will be an even larger number of widows, because women tend to live longer than men.
Those figures clearly illustrate that only recently have we begun to introduce pensions for ourselves which are at all comparable with those attached to outside jobs. I do not criticise that aspect of the matter.
But we put ourselves in a false position when, as my right hon. Friend the Member for Cambridgeshire (Mr. Pym) said, having funked Boyle on pay, we then try, through an artificial device, to provide pensions for ourselves based on a notional rather than an actual salary. No one would deny that we are in an anomalous position. In the Second Reading debate my right hon. Friend the Member for Cambridgeshire said that this was an anomaly. The Boyle Report said the same. The Government stay that they are carrying out the Boyle recommendations.
Paragraph 4, on page 2 of the Boyle Report, states thatWe are also perturbed by the establishment of two different levels of salary for pension purposes and other purposes. We can sympathise with the reasoning which lay behind this decision, but we nevertheless regard it as anomalous.The authoritative Boyle Report says that this is an anomalous position. The anomaly was started in the 1976 Act and we are continuing it in this Bill. My fear is that it is now in danger of becoming a permanent anomaly in our pension arrangements.
Since we are in this unfortunate and, in my view, indefensible position, we must consider the special position of those of our colleagues who will be retiring shortly. To try to meet their special position, which they are in through no 1323 fault of their own, the new clause provides that the present notional salary arrangements for pension purposes should apply to Members who retire at or before the dissolution of the present Parliament. It provides that their pensions should continue to be based on the Boyle salary. Without that provision, through no fault of their own, they would find that for the whole of their pension lives they would be penalised because of the sacrifice that the House made, rightly or wrongly, in not accepting the Boyle recommendation.
I suggest that there are special reasons why we should continue this artificial arrangement for those who are to retire shortly, but to go on perpetuating that arrangement permanently for those who will continue to serve is indefensible and, in comparison with practice outside, it puts us in a position that we cannot sustain effectively.
§ 8.15 p.m.
§ Mr. McCrindle
I shall take only a few minutes to endorse the proposition of my hon. Friend the Member for Somerset, North (Mr. Dean). The whole question of a notional salary is not only an extremely dangerous basis on which to proceed when dealing with parliamentary pensions; it is a dangerous and emotive concept. The Committee has a responsibility to consider whether we should allow the possibility of this concept continuing after the Bill becomes law.
I have some sympathy with the hon. Member for Ince (Mr. McGuire), who said that he did not feel that the Government had done him any favours by taking a substantial amount in salary and, in return, allowing his pension to be based on a notional figure.
On the one hand we are buying ourselves a pension privilege and, on the other, we are continuing to have a disadvantage in salaries. One cannot separate pensions from salaries and conditions. If the truth were told—although this is not widely believed or welcomed by the public—we have for far too long been prepared to find a reason why our salaries, conditions and pensions should never be brought up to the levels that would prevail if we were to receive a reward comparable to that received by those who fulfil similar functions in other spheres of activity.
1324 I appreciate the difficulty of finding a true comparison, but we shall go on having these problems as long as Governments of both politcal complexions dodge the basic issue. The issue is that at some time Members' conditions, salaries and pensions must be looked at in a more rational and dispassionate light than they have been so far. What we are discussing is part of an age-old problem. Members of Parliament have never quite caught up.
I understand the Government's feeling. They wish to be decent and understanding to those who are looking forward to retirement at the dissolution of this Parliament. The Government find in the basis of a notional salary an escape exit through which they are only too pleased to walk. I am not here to criticise the Government for having taken that opening. I question, however, whether it is right to perpetuate, almost to institutionalise the concept of a notional salary for Members of Parliament when the concept of a notional salary does not appear to prevail in many other pension schemes. If the Minister takes that on board he must accept the clause.
If the Committee is serious it will tell the Government tonight that it understands why they felt that the concept had to be introduced in the first place, that it understands that they had no wish to be other than decent and understanding to our colleagues who will retire at the dissolution of this Parliament, but enough is enough, and if they go on perpetuating and institutionalising the concept of the notional salary they will simply be postponing the day when they are forced to look at the whole question of pensions, salaries and conditions for Members of Parliament.
§ Mr. Michael McGuire
The hon. Member for Somerset, North (Mr. Dean), I believe unwittingly, in trying to show why his clause was a good one indicated to the public at large that we had conferred upon ourselves by the notional salary arrangements considerable benefits. Subsequently he tried to explain that he did not think that our pension schemes were unduly generous.
I was one of those who took part in the to-ing and fro-ing by Back Benchers when we introduced the notional salary arrangement for pension purposes. Members were told that they would not get 1325 the Boyle Report recommendations, but that they would get some kind of increase. The notional salary was introduced partly to help our colleagues who had retired and to give death-in-service benefits to widows who needed them. The arrangement was agreed to out of a concern for Members who cannot help themselves—a concern that the hon. Member for Somerset, North has always shown. That was why we accepted a cut of about £2,500 an why the notional salary arrangements were introduced.
§ Mr. Ronald Bell (Beaconsfield)
Does the hon. Member agree that the motion that the House passed as that a proper salary for a Member of Parliament was £8,000 a year? The notional salary surely is the one that is being paid. We might all be in favour of that being abolished, but let us not use the words "notional salary" in the wrong context. The notional salary is the one that does not accord with the resolution.
§ Mr. McGuire
I take note of what the hon. and learned Gentleman said, but he must understand that I am simply trying to put the record straight.
It is worth considering what the public think of Members of Parliament. When Members' salaries are increased substantially or modestly the issue is usually a nine days' wonder in the eyes of the public. The public already believes that we are being paid a lot more than we are. It does not believe that we are being paid as badly as we make out. We are told to prepare for a backlash when we give ourselves reasonable salaries which, at any rate, are in no sense generous when compared with those paid in New Zealand, Australia, France, or Germany. In terms of pay and pensions we are not in the same league. The public generally thinks that we are much more generously paid than we are and that we have far better conditions than we have.
I believe that there would be no backlash. I believe that the man in the street believes that those who will not fight for themselves will not fight for anybody else. I have been a life-long trade unionist, and trade unionism provides a good example of what I am saying. Trade unionists protect the interests of themselves and their families. Like Members of Parliament, most of them move into executive posi- 1326 tions at a late age for pension purposes—usually at the age of 40 or 45. I have never seen any virtue in doing a job on the cheap. Trade unionists do not want anyone to do that.
I wish to echo the sentiments of the hon. Member for Brentwood and Ongar (Mr. McCrindle). We have taken out of our hands what some regard—I do not share the view—as an onerous and difficult task. We put the responsibility for determining our terms and conditions of salary and pension on to a committee. That is favourite practice in the House of Commons—if there is anything difficult, give it to a committee. Yet on three successive occasions we have ignored the fundamental findings and reasoning of that committee. We have picked out little bits as a palliative or sweetener, but have ignored the main recommendation. To use my right hon. Friend the Prime Minister's words, Lord Boyle is saying "Back us or sack us." There is no point in having a committee which does a lot of hard work and research and recommends a certain course of action if we are then to say that its recommendations would not be popular.
We had better get this matter straight once and for all. If we do, and if we secure the pension and salary conditions that we deserve, my right hon. Friend the Minister will find that the issue is not even a nine days' wonder. The British public will say that they thought that we were getting that much all along. That is what we should aim for as speedily as possible, and that is why I do not support the clause.
§ Mr. Gerry Fowler (The Wrekin)
I shall be brief. I rise to support my hon. Friend the Member for Ince (Mr. McGuire). If I have a weakness while at home it is listening to the radio—not the television—and anyway I rarely listen to it. I was listening recently to a quiz programme that my wife had turned on. One of the questions was "What is a Member of Parliament's salary?" The first answer given was £10,000, and that is exactly what one would expect to hear from most people on the basis of one's knowledge of one's constituents. I listened a few weeks earlier to a programme in which Sir Richard Marsh, who should know better, suggested that by adopting the notional salary arrangements we were somehow 1327 benefiting ourselves and cheating. We all know that what we did in 1975 was to cheat, if anybody, ourselves by depriving ourselves of a substantial part of the proper salary arrived at by the Review Body on Top Salaries. I share my hon. Friend's view that we cannot go on doing that. It is a pointless exercise in any event. If we thought in 1975 that we were setting an example to the rest of the country I can only conclude that nobody noticed.
It is not that I am suggesting that there has not been a substantial measure of restraint by the trade union movement in recent years; indeed, there has, thank heavens, and we are all duly grateful to it. But nobody noticed, in my experience. All that happened was that the newspapers carried the usual headline—"MPs vote themselves another rise."
In my view, it does not make the blindest bit of difference whether that increase be £200, £2,000 or £4,000 to get the proper level of salary for the job. We shall get exactly the same outcry for exactly the same period of time. Then everybody will forget it, both for good and for ill. They will forget it in the pejorative sense of blaming us for treating ourselves too well, and they will forget it, too, if we do not vote ourselves what we should be paid, in the sense of not following the example that we have set.
I hope that immediately after the next election we can dispense with all the nonsense that is causing us so much trouble on this Bill and pay ourselves a proper salary and, therefore, not have to have a notional salary for pension purposes. I urge both Front Benches to agree on that before a General Election campaign, so that we can take the acrimony and the political advantage out of the proposal of any party to pay a salary increase after a General Election.
§ 8.30 p.m.
§ Mr. Pym
The new clause, characteristically and ingeniously designed by my hon. Friend the Member for Somerset, North (Mr. Dean) is, in fact, an attack upon the concept of the notional salary. My hon. Friend was supported by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle). The two Labour Members who have spoken on the new clause said that they could not support it, but nevertheless, they were 1328 making precisely the same point—that it is wrong to have one salary which is the amount that we receive and a notional salary which is the basis of our pension.
That was referred to in the report of the Review Body on Top Salaries. Paragraph 29 says that the salary that the Review Body recommended in the year before—that was 1975—of £8,000 for Members of Parliament…was accepted by Parliament as the appropriate rate for the job but was not fully implemented it was decided…that it would be used as a notional salary for pension purposes.The report goes on to say:We point this out as one more manifestation of the disadvantages of not paying the proper level of salary for the job.It is not only my hon. Friend and those of us on the Opposition Benches who do not like the idea of a notional salary. I do not think that it has any friends on the other side of the Committee. This arose on the Second Reading. I am quite certain that it ought to be ended. I interpret my hon. Friend's new clause as being one of bringing the notional salary to an end, but it is not the only means, as he himself would be the first to acknowledge. The most obvious way of doing it is to adjust the salaries of hon. Members one way or another. That would be one way of doing it, and it could be ended more or less at once.
I think the whole procedure here is wrong, as I said the other night. The delay in implementing this report has simply made the discrepancy worse than it otherwise would be. But in this brief intervention from this Box, I want to ask how the Government propose to end the anomaly of the notional salary. I dare say that it is a question that the Minister would prefer to answer when he, or his right hon. Friend, presents to the House of Commons the Government's conclusions about how Members' salaries are to be adjusted, which I think is due in a week or two's time. I think that that point would be the very latest moment when it would be appropriate for the Government to say that the notional salary should be ended, because I think that it ought to ended as being a completely unsatisfactory and unacceptable way to proceed.
The hon. Member for The Wrekin (Mr. Fowler) said that by agreement this ought 1329 to be done immediately after the General Election. As a matter of fact, that is how it happened in 1970. I do not see any reason why it should not be done before the General Election. I am not sure that it is not better to do it in the dying days of one Parliament rather than the opening days of another Parliament. There is quite a good case for saying that.
After all, the Home Secretary has introduced a Bill to the House today to say that the election expenses are to be increased. That is normally done, as a matter of fact, in the dying days of a Parliament, and it seems to me quite appropriate. I think that hon. Members on all sides of the Committee would agree that it would be just as appropriate, and in many ways more appropriate, to do it in the dying days of a Parliament rather than in the early days of a fresh Parliament. But that is an opinion, of course, about which hon. Members may differ. Perhaps it goes a bit wide of the new clause.
§ Mr. Pym
It would happen, of course, if enough hon. Members on the hon. Gentleman's side wanted it to happen. That is my comment on that.
Anyhow, one way or another, the notional salary must be ended, and I hope that the right hon. Gentleman will tell us how the Government intend to end that anomaly. If he is not able to do so tonight, will he be prepared to tell when he introduces a motion about Members' salaries next week or the week after? Will he then say how the Government intend to adjust this matter?
§ Mr. John Smith
I think that the right hon. Member for Cambridgeshire (Mr. Pym) will have not been surprised at the wry grins on the faces of some of my hon. Friends below the Gangway, and, no doubt, behind me, as he uttered certain sentiments towards the end of his speech. I note that the right hon. Gentleman, speaking on behalf of the Opposition, is in favour of substantial increases in Members' pay before the end of this Parliament, and I am sure that that will be taken into account by my hon. Friends when they consider the matter. At least, 1330 that is how I interpret him, and I think that that is the only way one can interpret what he said.
As for the question put to me about the difference between notional pay and actual pay, I think that I must decline to answer that tonight because I do not think that it arises strictly within the context of the Bill, although it was raised on the new clause introduced by the hon. Member for Somerset, North (Mr. Dean). It is a matter to which the House will inevitably return, as has been signalled by many hon. Members in their speeches on the Bill, in the debate which we shall have on Members' pay at a date, I hope, not too long from now.
In introducing the new clause, the hon. Member for Somerset, North said, as he did on Second Reading, that he was concerned about the arrangement whereby Members' pensions are based on notional salaries for pension purposes because he felt that it was criticised outside the House. I think that he may be exaggerating that criticism a little, but I have no doubt that there is a feeling outside the House that it is perhaps a somewhat unfortunate way of going about these matters. If it comes to that, there is a fairly widespread feeling within the House also that it is an unfortunate way of going about things.
I suggest that the hon Gentleman ought to bear in mind, as my hon. Friend the Member for Ince (Mr. McGuire) reminded him, that the purpose of introducing the notional salary was to protect Members in their retirement against the background that Members of the House as a whole had decided in the national interest to forgo some of the promulgated salary. In a sense, if they had lost in their pension, it would have been a double penalty. That was the point which my hon. Friend the Member for Ince, supported by my hon. Friend the Member for The Wrekin (Mr. Fowler), was anxious to put on the record.
In my view, it was praiseworthy that Members of Parliament decided in the national interest to forgo an increase which had been recommended for them by an independent body. I believe that it was felt at the time—I certainly remember sharing that view—that it would be too much to penalise Members in their pension arrangements as well. 1331 That, I suggest, is the background to this matter.
The new clause raises major issues of pay policy as well as of pension policy. I believe that the hon. Member for Somerset, North will acknowledge that. These matters received a thorough airing last week on Second Reading, and I think that that was entirely legitimate since one cannot discuss pensions without at the same time discussing pay. We come back to that again and again in our discussions on the Bill. I think, however, that we shall have a discussion on that matter shortly, and I have no doubt that the hon. Gentleman will make his point then, just as the right hon. Member for Cambridgeshire will return to his theme.
There is one point which I must take up with the hon. Member for Somerset, North because he suggested—and his hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) rather more carefully suggested—that similar arrangements should be available to other occupational groups or that other groups did not have this notional salary arrangement. The short answer is that many groups do, and such arrangements for having a different notional salary now cover many other employees. Perhaps I should mention them so that not only the Committee but the general public may know about them: Armed Forces personnel, doctors and dentists, the judiciary and the higher Civil Service.
These are groups of employees who have not been paid the full salary rates recommended for them after independent review although those rates have been accepted by the Government as the proper rates for the job. It therefore seemed entirely right that prospective pensioners within these groups should be protected in the same way. I would argue, therefore, that where there is like and like, Members of Parliament will be treated no differently from, or be treated no better than, other groups are treated in relation to recommendations for their salary levels which have come forward
The alternative to having a notional salary was either to penalise Members of Parliament in a double sense, by penalising them in their pensions, or else to give pay increases well outside the Government's guidelines. Perhaps that is what the Opposition would have done, I do not know.
1332 The fact is that this notional salary legislation has been on the statute book for almost two years now. I think that it would be a great mistake to change it in the way proposed. As the right hon. Gentleman said, there are two ways of dealing with it—to pull down the pension or to jack up the salary. We are not dealing with the salary at the moment and that is a matter which the House will have an opportunity to consider.
I know that the right hon. Gentleman is trying to safeguard the position of hon. Members who retire at the next General Election. That is fully appreciated. The effect of carrying this new clause, however, would be to reduce for the future the level of parliamentary pensions, which would be a retrograde step and therefore I hope that the Committee will not agree to adopt the new clause.
§ Question put and negatived.