HC Deb 27 June 1978 vol 952 cc1335-48

(1) Section 7 of the Act of 1972 shall be further amended as follows.

(2) In subsection (3) for "one-sixtieth" in paragraphs (a) and (b) there shall be substituted "one forty-fifth".'—[Mr. Ronald Bell.]

Brought up, and read the First time.

Mr. Ronald Bell

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

I wish the Government were moving the motion on my behalf, but unfortunately I have to move it myself.

I very much regret that through the years we have these invidious debates about our own remuneration and emoluments. It is time the matter was sorted out and we had an automatic system.

I have been in the House for rather a long time, and I know that this procedure has gone on and on. I have heard many colleagues on both sides of the Chamber saying how embarrassing and undesirable it is that we should spend time debating our emoluments when we are sent here to attend to the affairs of the country. However, we have always avoided dealing with these subjects. We have adopted temporary expedients, and we are still in that position, as recent speeches have indicated.

The purpose of the clause is the replacement of the period of 40 years in the Parliamentary and other Pensions Act by a period of 30 years. At present, for an hon. Member to obtain a full pension—by which I mean a pension of two-thirds of the relevant salary—he must serve for 40 years. In practical terms that means that he would need to be elected first to this House at the age of 25 and never thereafter for 40 years lose his seat. That means in practice that no hon. Member will ever have a full pension unless he be someone so remarkable as Winston Churchill, Earl Winterton or Robin Turton, as he was. It is something that happens about once in a generation.

I cannot believe that it makes sense that we should base our pensions on sixtieths rather than forty-fifths. Some may regard my proposal as unduly moderate, in that 30 years is a very long time, bearing in mind the average age at which people may be elected Members. I suppose that the average is somewhere in the 40s, so even 30 years is a long time.

The present strange and totally inappropriate period was chosen by analogy with the public service. We have heard a great deal about that. We heard the other night on Second Reading about the compelling analogy with the public service. There is no compelling analogy. The public service is not a unitary thing. It is a very varied category, and inside it there are different periods.

Who, for instance, would be so foolish as to imagine that High Court judges should have to serve for 40 years to acquire a full pension? They could never do so. They are appointed at age 50, 55 or even 60. They would be 100 before they received a full pension. They are expected to serve for 15 years to receive that full pension. That is the public service. The reason for that provision is obvious. Without such a provision a judge would never receive a full pension.

Who imagines that normally people are elected to the House of Commons at the age of 25 or that it is in any sense normal for a person to retain his seat, through all the vicissitudes of politics, for 40 unbroken years? That is fairyland. It does not make sense. We could look around the world for comparisons, as we can with pay. I have had rather an "Australian day" today. I have been entertaining some of our Australian visitors from the Canberra Parliament. I asked them about this subject as a matter of interest and one said "Good gracious. We are expected to serve 20 years for a full pension." I said "May I quote you this evening in Committee?" He said "Of course you may." This was the Speaker of the Australian Parliament. In the Dutch Parliament there is a rather more complicated system, under which Members serve from six to 10 years for a full pension. But in Britain it is 40 years.

The whole system is based on the analogy of the public service, by which I greatly suspect is meant the Civil Service. People enter the Civil Service at the age of, perhaps, 16, 18 or 20 and have a lifetime career in it. They retire after 40 years' service at age 60 which is very nice. In addition, the pension is non-contributory. I know that I shall be told that Civil Service Pay Research Unit is supposed to take this into account in assessing rates of pay. Personally, I prefer Hans Andersen and Grimm. I see the point, however. When I look at the remuneration of Members of Parliament I think that someone must have taken that factor wrongly into account in our case.

There is no substantial argument against what I am proposing, except the argument, which I suppose will be put forward, that someone agreed to this. It will be said that there was awful pressure to get a Bill presented and the 1922 Committee and the corresponding body on the Labour side of the Committee had to join forces in an unfamiliar coalition, a sort of Lib-Con pact—

Mr. English


Mr. Bell

I am much obliged to the hon. Gentleman, who is keenly perceptive of these things and who will, I know, support me. It will be said that this pact had to exert pressure on the Leader of the House and that that was the only way we could get the Bill. It will be pointed out that it was agreed that we would ask only for improvements which were already embodied in the Civil Service scheme. For that reason it is suggested that we should feel debarred from doing something which every right hon. and hon. Member present knows to be absolutely reasonable and common sense.

There is no right hon. or hon. Members present who thinks that it makes sense for Members of Parliament to have to serve from the age of 25 to the age of 65 in unbroken membership to secure a full pension of two-thirds of the exiguous salary. Some career argument can be put up. I sympathise with the Minister of State. He is put up to do this job. He does not have the authority to agree to my new clause. It does not matter what I say, he cannot agree to it. He would have to go somewhere else, presumably to the Treasury. That is always the difficulty in these cases.

Mr. John Smith

If there is to be a very sharp increase in Members' contri- butions, it might be decent to ask Members as well.

Mr. Bell

I was not thinking of that in the least—certainly not. We have a contributory pension. I do not know why. If there is this compelling analogy with the public service, I point out that the public service has a non-contributory pension.

Mr. English

The hon. and learned Gentleman might care to ask the Minister why the police, the firemen and Members of Parliament should be the only three groups in the 7 million employees affected by public service pension schemes who are in the same position as ourselves of paying contributions to a fund which does not exist.

Mr. Bell

Inasmuch as the fund does not exist, there is no need really to bother about its state. These pensions are paid out of the Consolidated Fund of the United Kingdom—it is no good pretending to the contrary—and the provisions for a 5½ per cent. or a 6 per cent. contribution, or whatever it is, are purely put in as a matter, I suppose, of statutory procedure. I do not quite know what expression to use. There is no actual fund. It is not like the railway pensions fund, which owns pictures, candlesticks and all kinds of things. It is not that sort of fund. It is not the sort of fund which one might find any day at Mentmore. It is an actuarial fund. It is a nonsense and it does not pay for itself. The Treasury contributes two or three times as much as hon. Members, so what sort of fund is that?

When we look at the levels of emolument that we are talking about, I suggest that there is absolutely no reason why we should not make this obvious change, without any change in the contribution which hon. Members make. I simply put it forward in the clearest terms that a period of 40 years is nonsense.

This is a miserable little Bill. A tremendous lot of fuss has been made about it. It is quite long. It has a lot of clauses and endless provisions. Taking all the provisions together, the extra years and the much publicised advantages for children and widows, the whole thing, for a House of 635 people, is costing the Treasury £60,000 a year. I am surprised that the Minister dares to present it to the House. The only thing that can be said for the Bill is that, but for the activities of the Back Benchers on each side of the House, we should not have had a Bill at all, therefore we ought to be grateful for this one.

I challenge the Minister to offer any good and sensible reason why the new clause should not be accepted. I shall take it to a Division. I always take things to a Division as a matter of principle. If I can get another hon. Member to act as Teller with me, I shall divide the Committee. I do not believe in moving motions and then withdrawing them.

I challenge the Minister to give any single sensible reason why Members of the House of Commons should have to be Members for 40 years before they get a full pension. If we do not get this provision tonight we shall get it sooner or later. The Minister knows that. We are the only Parliament in the world with this ridiculous rule, or with anything remotely approaching this ridiculous rule. This provision will have to come. If hon. Members will have a little bit of courage—it is a free vote on each side—it could come tonight, and I hope that it will.

Mr. McGuire

I want to tell the hon. and learned Member for Beaconsfield (Mr. Bell) that I support his views. He rightly said that there are some people who think that the period should be reduced even to 30 years. I also support that. But he must not conclude that because I will not act as Teller with him tonight, I lack courage. I do not believe in engaging in fruitless exercises and having my colleagues dash from all parts of the building, knowing full well that there will be nothing in it at the end of the day. I do not consider that to be a demonstration of courage or anything else. I think it is a bit of nonsense. But I want to share the hon. and learned Gentleman's thoughts, and to fire a shot across the bows from this side of the House, because I think that he is absolutely right.

9.0 p.m.

I, too, have discussed pension arrangements with our Australian colleagues. I came here not as a young man, although I was younger than average. In spite of that, I would have to be 78 before I became entitled to a full pension which, I am told, is based on some kind of pub- lic service. I do not need to repeat the arguments against the new clause, because the hon. and learned Member for Beaconsfield demolished them very well. My Australian colleagues did not believe me when I told them the facts.

I said that I came into the House at a reasonably young age. I am glad to see present some of my colleagues who came in at the same time. Some of them came in a bit younger, but 38 is not a bad age at which to become a Member of Parliament. When I told our Australian colleagues that I would be 78 before I became entitled to the full pension, they did not believe me. They also did not believe me when I told them what our pitiful salary was. Quite frankly, they thought that we were mad.

The trouble is that the public at large has a quite different impression with regard to the salaries and pension arrangements of Members of Parliament. The level of salaries and pensions is pitched much higher in the public mind. The sooner we change that attitude and have a pension scheme which is related to reality, the better. The reality is that we have so many good examples. Judges are one. Judges are appointed to the Bench at a later age than Members of Parliament, because account must be taken of their experience, knowledge and distinguished career before they are appointed. In my opinion, 15 years is a reasonable time in respect of judges.

However, I believe that Members of Parliament should have something better than the present pension arrangements. When I retire I should like to think that it will be on a better pension. I believe that the present requirement of 40 years for full pension entitlement must be reduced. I think that 30 years would be an improvement. It would mean that a Member of Parliament who served for 15 years would be entitled to half pension, and the sooner we do that the better. I do not believe that the public would condemn us for doing so, especially if they want Members of Parliament to be drawn from all walks of life.

My own experience is no different from that of some of my colleagues who have worked all of their lives and become active in the trade union and Labour movement. Indeed, within the Labour Party one generally has to go through a kind of unofficial apprenticeship, and if he can get into this House before he is 40 I think it can be said that that person has done reasonably well. On average I think that Tory Members—this might even apply to Liberal Members—come into this House when they are a few years younger than Labour Members. That was my experieince in 1964 when I first came into the House.

In the past Back-Bench Members of Parliament have demonstrated that they can exercise power collectively and impose their will, or at least get a large part of their way. I believe that we must demonstrate this will—perhaps not tonight but at some later stage—on the matter of salaries which we must get right, and on pensions. Back Benchers must assert their authority and get what they are entitled to.

The public will not give two figs about it. They think that we have always enjoyed these benefits. Anyway, Harry Truman once said, If you can't stand the heat, keep out of the kitchen. I think that we should be able to take the criticism. We are educated politically enough to stand in our corner. Standing in our corner does not mean apologising for our miserable salaries and our miserable pensions.

I support the hon. and learned Member. I want to fire a shot across the bows of my own party, which is in Government. I would do the same if the Conservatives were in power. The hon. and learned Gentleman said that the Conservatives had implemented the Boyle Report for Back Benchers in 1972. He is absolutely right; they did. I hope that some day my Government will have the courage to implement provisions for Back Benchers, but tonight we are discussing pensions. I support the principle advanced by the hon. and learned Gentleman although I think that his terms were a bit too harsh. I hope to see the day when we achieve the 30-year category for Members of Parliament.

Mr. English

I support the hon. and learned Member for Beaconsfield (Mr. Bell) in principle also. However, like my hon. Friend the Member for Ince (Mr. McGuire) I do not see the point in having a Division at this late hour—late by the standards of this subject—especially when, unlike the previous Bill, there are no major whipping arrangements by either of the major parties.

This debate has shown the extraordinary weakness of the Bill and of the whole system that applies to pensions in the House. I believe that when this Bill was being considered the trustees of the House consulted the Treasury. That is a very unlikely set-up. I was taught years ago in the trade union movement that if you were arguing with the employer you should consult your own independent advisers, not the employer's advisers.

At the beginning of the discussion on this Bill we had the most appalling statement—which has never been contradicted—that there are still 12 children of hon. Members who retired before 1964 without pensions. This Bill does not cover them, no other Bill covers them, nothing covers them. That is the paltriness of the exercise. I do not think that the pensions of 12 children would break the Treasury. Nor do I think that the amendment of the hon. and learned Member for Beaconsfield would break anybody.

The Expenditure Committee said that there were 7 million people—one-third of the working population—who were affected by public sector pension schemes. These schemes are a mess. They are an absolute, complete and total mess. We described them as "a hotch-potch", using slightly more polite terms. Nobody in Government has ever bothered to look at them and see why these 7 million people should all be on different provisions.

There are contributions and no funds. There are funds and no contributions, strangely enough. There are notional funds, and the Civil Service itself arranges that it does not pay any contributions with the exception of about 1½ per cent. towards widows' pensions. Quite clearly there should be some order brought into this, not only for Members of Parliament but for those most immediately akin to us—the police and the firemen—and for all the other people on public sector pensions.

But for the weakness of successive Governments in arguing the matter against institutions such as insurance companies, we would have had a system of transferability of pensions throughout the land for everybody in employment. This Labour Government like other Governments, have, I regret to say, been too weak to bother about the situation. I believe that such a proposal would benefit the economy.

The hon. and learned Member for Beaconsfield wishes to bring us into line with other people. He said that Members of Parliament often came to this place late in their lives. But that is also the case with other jobs. There is transferability in some schemes, especially in the public sector, but that is not the case in this House.

I am sure that if I were to continue on that line of argument the Chair would rule me out of order, but economically I believe that it would benefit the country as well as every individual if there were transferability between all pension schemes. There is certainly no reason for such a mishmash, except that which can be laid at the door of inefficiency on the part of Government. There certainly is inefficiency. The Government's reply to the report of the Expenditure Committee on this subject was purely negative. The Government could not be bothered to try to sort out the mess which they themselves had created. We are now in a position where one part of the mess involves ourselves.

I strongly suggest that, although we must pass this Bill in this Parliament, the next Parliament leaves us only one course. We cannot propose what should be done, for we are not allowed to do so by the rules of procedure of this House. We may not propose an increase in expenditure. There is a lot to be said for that rule but what we can do is to propose reductions of expenditure. If the present position continues, whenever a Treasury Estimate comes before the House relating to every public sector employment, we shall have to propose in the next Parliament that that Estimate be reduced to the same level as that relating to Members of Parliament. Then at last it may be true that the taxpayer will save some money and it will be apparent that this House is perhaps a little under-paid, a little under-pensioned and, above all, that its widows and children are under-pensioned by comparison with legislatures abroad.

Mr. John Smith

My hon. Friends the Members for Nottingham, West (Mr. English), and Ince (Mr. McGuire), and the hon. and learned Member for Beaconsfield (Mr. Bell), who moved the amendment, referred to pensions and to the practice in other legislatures. I have no doubt that they were right in saying that this Parliament, in comparison with other occupations and other legislatures, does not particularly well provide by way of pensions for Members and dependants.

There is one small point in the remarks of my hon. Friend the Member for Nottingham, West which I must take up. He referred to the case of the 12 children. The number refers to children to whom pensions are now being paid. This matter was referred to on Second Reading by the hon. Member for Surbiton (Sir N. Fisher). That is a matter on which we have taken action, because I managed to persuade the Committee earlier this evening to adopt an improvement in the scheme in that respect. Therefore, we have dealt with the 12 children.

The hon. and learned Gentleman put the argument for a faster accrual rate and suggested that the scheme should be based on one-forty-fifth rather than one-sixtieth. He was right to say that on average Members of Parliament serve for considerably less than a full career in the House of Commons. In making comparisons with some other public service pension schemes, I should point out that the norm is one-eightieth rather than one-sixtieth. I understand that if a person worked for 40 years in the home Civil Service, he would receive a half-pension on retirement. So perhaps the parallel in respect of Parliament should be 30 years, because that would give one-half.

Mr. English

What contribution?

Mr. Smith

That raises another matter. I know that my hon. Friend expressed scepticism about the way in which Civil Service pensions are dealt with. The defence to that argument is that as part of the pay research process the full amount of the contribution paid by outside employers is typically about 5 per cent. and it is deducted in the course of deliberations. Civil servants also pay a direct contribution of 1½ per cent. of pensionable salary for widows and family benefits.

Mr. English

But we are not even paid the arbitrators' award.

9.15 p.m.

Mr. Smith

Perhaps my hon. Friend will allow me to answer one question before he asks another.

A further deduction of 1¾ per cent., calculated by the Government Actuary, is made to reflect the difference in pension benefits, including inflation proofing, between the Civil Service scheme and outside schemes. I say that so that all the information is put on the record.

I do not seek to argue that there are parallels with other schemes, or to go into a complicated analysis of the question whether our scheme is better or worse than others. Many schemes stand on their own, and one can get parallels and non-parallels within the public sector.

My main point is that this matter was considered carefully by the Boyle Committee. It considered the question of a faster rate of accrual and took on board the fact that it is rare for an hon. Member to serve the 40 years necessary to qualify for a full pension entitlement. The Committee said that it had been told that the average length of service of an hon. Member was 17 to 20 years.

It reminded us that certain other points had to be taken into account, including the fact that Parliament was not unique in being a late-entry career and that the 40 year accrual period was standard elsewhere in the public services, with one or two exceptions mainly related to particularly hazardous and demanding jobs, for example the police and the fire service—though I dare say that it could be argued that there are hazards in being an hon. Member, particularly in terms of security of employment, and it is certainly a physically demanding job. The Committee also noted that the judiciary had a special arrangement whereby judges served for only 15 years, taking into account the fact that they were not normally appointed under the age of 50.

One of the principles that the Government have adopted, for good or ill, is that we should not depart too far—in fact, we have departed in only one minor respect—from the recommendations of the Top Salaries Review Body. The Body received a number of representations on this point from hon. Members who were asked to submit their views. There is an interesting appendix to the report in which the suggestions of hon. Members are analysed.

The Committee also pointed out that some hon. Members will probably bring in a pension entitlement from other occupations. This is probably more true of hon. Members who are coming in now than of Members who came in some time ago. I have done a little checking among hon. Members who have been elected recently and I find that some, though by no means all, have a pension entitlement from another occupation. Of course, there is not the full transferability pension rights which my hon. Friend the Member for Nottingham, West rightly said was a desirable factor.

We must also consider the cost. It would cost nothing if we put the whole burden on to the Exchequer, but I do not know whether the House would approve of our doing that. The result of adopting the proposal in the new clause and providing that hon. Members should meet only half the cost would be an extra 4 per cent. on Members' contributions, increasing them from 6 per cent. to 10 per cent. If hon. Members wanted to improve the scheme on the basis of their paying half the cost, they would have to face the prospect of an extra 4 per cent. on their contributions, and I believe that a number of hon. Members would wish to consider the matter carefully before going that far, because 10 per cent. is a pretty hefty contribution towards a pension.

Mr. Ronald Bell

Can the right hon. Gentleman tell us how much judges pay?

Mr. Smith

I am not aware of the details. Offhand, I am not aware that they pay a percentage of their salary at all. There may be a notional deduction. I am not sure.

Of course, we could say that we should be like judges, firemen, policemen or civil servants, but we are dealing with fairly minor amendments to the scheme. No one has pretended that the Bill is a major innovation of our pension scheme. It is a modest Bill making a number of minor improvements. The hon. and learned Member for Beaconsfield said that this was not much of a Bill because it did not make massive improvements. I plead guilty to that charge, I have never claimed that it was any more than a modest Bill.

To accept the amendment would be to make a radical departure in pension arrangements. It may be a desirable departure. I am sure that we should all like better pension provisions and we are all aware that people sometimes do not take due account of the particularly demanding circumstances of being an hon. Member and of the acute lack of security of employment for many of us which is intrinsic in the democratic process. We are often misunderstood outside.

I do not know whether the hon. and learned Member for Beaconsfield will get anyone to tell for him. I rather agree with the criticisms of his attitude outlined by my hon. Friend the Member for Ince who said that it is not a lack of courage so much as a matter of discretion. My hon. Friend the Member for Nottingham, West backed those comments.

It is not through any lack of sympathy to try to improve Members' pensions that I argue that the Committee should not accept the new clause. It is out of character on a Bill which seeks to make minor improvements to seek to make a major change which would have consequences, in terms of contributions, which Members would have to consider very carefully before adopting.

Mr. Ronald Bell

I should feel much happier with that reply if the Minister had implied a little more explicitly that we might expect another Bill making major changes. He was right in his description of the Bill. It could not be more minor than it is. It is a minimus Bill. To that extent, I realise that the new clause is somewhat out of harmony with it.

It would be my intention to divide the House if there were anyone to divide the House with me. As we have a catering strike this evening, which has driven virtually the whole of the membership of the House away, except for the few Members who are present, and since those who are here lack the same aggressive approach which I entertain—

Mr. English

I hope that the hon. and learned Gentleman will make the point that such industrial action as may be occurring upon the premises and may be about to end is solely because our restaurant and catering staff do not have similar conditions to restaurant and catering staff in the Civil Service.

The Chairman

Order. The hon. and learned Gentleman may make the point, but we do not want to become involved in an industrial dispute, whether real or imaginary.

Mr. Bell

I think that I have quite enough on my plate—if I may use that expression—without taking on the Catering Department. In looking for a Member to support me in calling a Division, I was not really thinking of the catering staff.

I shall not ask leave to withdraw the motion and new clause, because that would be against my principles. I shall allow it to be negatived, in the feeling, perhaps, that that increases the probability of a further Bill in the coming Session in which a rather more reasonable approach will be taken, and when there will not be a strike by the catering staff to deprive me of the support which I may reasonably expect.

Question put and negatived.

Schedule 1 agreed to.

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