HC Deb 19 February 1981 vol 999 cc491-500

Order for Second Reading read.

6.16 pm
The Chancellor of the Duchy of Lancaster, Paymaster General and Leader of the House of Commons (Mr. Francis Pym)

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

The Bill has two main purposes. The first and, I think the House will agree, the most important, is to provide hon. Members who left this House before 16 October 1964 with grants from the Members' Fund. These former hon. Members had no opportunity to contribute to a pension scheme, or to benefit from one. Many are getting on in years and some now find themselves in difficult circumstances. This is a state of affairs which I know has been a source of anxiety on both sides of the House for some time. In the debate on the 1978 Parliamentary Pensions Bill, I said from the Opposition Benches: hon. Members who retired by 1964 without any pension are among the hardest hit members of the community."—[Official Report, 21 June 1978; Vol. 952, c. 623.] I know that this view is widely shared in the House. I am therefore glad to bring forward this Bill now, especially the proposals contained in clauses 1 to 3. The root of the problem is that the existing parliamentary pension scheme, which took effect from the time of the general election in 1964, makes no provision for those whose service ended before its introduction and who therefore had no opportunity to contribute to it. The principle of no restrospecton may sometimes seem a hard one. It is a fundamental feature of pensions practice that still affects hundreds of thousands of would-be pensioners in the public service and many in the private sector. Successive Governments have accepted that they could not justify an exception in the case of our own former colleagues.

Despite reviews of the pension scheme by the Top Salaries Review Body in 1971 and 1976, which confirmed existing arrangements, the position of pre-1965 Members has nevertheless continued to give rise to concern. Accordingly in 1978, the then Prime Minister invited the Top Salaries Review Body to reconsider this question. In February last year the review body, in its thirteenth report proposed a way forward based on the House of Commons Members' Fund. This is at present primarily a benevolent fund supported by an annual contribution of £24 by hon. Members and a £15,000 a year grant from the Exchequer.

The review body suggested that the solution was to establish new grants to be paid as of right from the Members' Fund to pre-1965 Members. This was a valuable proposal because it reconciled the principle of no retrospection with recognition of past services, regardless of need. On 14 February, last year, my predecessor told the House that the Government accepted in principle the review body's proposals and would introduce the necessary legislation. I feel sure that the proposed grants will be welcomed by the House today.

I shall describe briefly the main features that we are proposing. Clause 1 sets out who will be entitled, on application to the trustees, to the new grants. The grants will be payable to former Members with at least 10 years' service—even if that service was interrupted—who left this House before 16 October 1964 and to their widows and dependent widowers. There are three main conditions to be satisfied set out in the clause. It would perhaps be for the convenience of the House if I were to draw attention at this stage to the Government's amendments to clause 1. There are a good many pre-1965 Members whose service falls just short of 10 years, notably those who were in the House from 1945 to 1955 or from 1955 to 1964. The trustees of the Members' Fund have expressed their concern that these former colleagues will not qualify. Unfortunately, I have to say that a general reduction in the qualifying condition would be a prohibitively expensive way of dealing with it. It is possible, however, that fewer than anticipated of those with the required service will come forward and that would leave some slack in the fund. The Government amendments that I shall move formally later enable the trustees to go below 10 years in exceptional cases if the Government Actuary advises that such slack exists. This gives the trustees an additional measure of flexibility, which I believe they will welcome.

Clause 2 sets the level of the new grants at £1,000 a year to pre-1965 Members and £500 a year to their widows or dependent widowers. It provides for this House to vary the level of grants by resolution in the same way that we vary the existing limits on discretionary payments from the Members' Fund. It also makes clear that in assessing any additional discretionary grant, the trustees of the fund must take into account any payments being received from the fund as of right. In order to build up the fund to meet these new grants, the Government will be increasing their present contribution by £200,000 in each of the next 10 years.

Mr. Paul Dean (Somerset, North)

Although I warmly welcome this long-overdue reform of provision for our former colleagues, will my right hon. Friend give an assurance that the Government intend to use the powers contained in clause 2 to bring forward a resolution to vary and to increase the rates offered? The House will appreciate that a pension with no provision for increase against inflation is of no real value. I hope that my right hon. Friend can assure the House that the review will be regular, and preferably on an annual basis.

Mr. Pym

I am grateful to my hon. Friend for those remarks. The provision is there to be used. Although no interval is specified, I am sure that my hon. Friend will accept that we intend to make a review from time to time. The power to vary the rates of payment by resolution is consistent with the existing power under section 3 of the House of Commons Members' Fund Act 1948 to vary the limits on discretionary payments. We shall follow that same pattern.

The Government will make £200,000 available in each of the next 10 years. In all, we shall make £2 million available to assist pre-1965 Members of Parliament. That seems to us to be generous provision, and I hope that the House agrees. Clause 3 is a technical provision that will exclude the additional Exchequer contribution to the fund from the normal requirement that one-tenth of the fund's income be diverted to a separate special hardship fund. Clearly, that would be inappropriate in view of the additional funds that clause 2 will make available.

The second main purpose of the Bill is to make it easier for pension rights earned by hon. Members in outside employment to be transferred into the parliamentary pension scheme. In the same report in which the Top Salaries Review Body recommended the payment of grants as of right to pre-1965 Members of Parliament, a quite separate recommendation was made urging greater opportunity for participants in the parliamentary pension scheme—whether hon. Members or office holders—to transfer into the scheme pension rights that they had earned in outside employment.

At present such options may be exercised only within 12 months of first joining the pension scheme. A time limit is necessary to safeguard the financial stability of the pension fund, but the present limit means that hon. Members have no opportunity to review their pension position as their careers progress. The existing rules also mean that hon. Members who return after a spell outside the House have no second opportunity to transfer pension rights earned in the meantime.

The review body recognised those problems in its thirteenth report. It suggested extending the option period to five years, and drew attention to the desirability of a further option on appointment as a Minister. The Government have considered this question, and propose an arrangement that will provide hon. Members with the greater flexibility appropriate in view of the exigencies of a parliamentary career. It is something of an improvement on the review body's suggestion.

Clause 4 provides that there will be a 12-month option period on becoming a Member of Parliament, whether for the first time or after a break. There will be a similar option on becoming a Minister or other office holder, whether for the first time or after a break.

Mr. Robert Taylor (Croydon, North-West)

Does that mean that a new Member of Parliament or a former Member of Parliament who returns to the House can bring in funds from a non-index- linked pension fund, put them into the fund and receive index-linked benefits?

Mr. Pym

Different circumstances apply to different pension schemes. However the essense of the matter is that the person will be: able to bring into the scheme the pension that he earned previously, whether on the first occasion that he came into the House or on the second. I should need notice if I am to give my hon. Friend an accurate reply about index-linking. However, I shall advise him on that point.

Mr. Nick Budgen (Wolverhampton, South-West)

Surely the person would uncash the first set of funds and buy benefits in the House of Commons fund. As my hon. Friend said, those benefits would be indexed.

Mr. Pym

I think that that is right, but I should wish to be sure before giving any commitment. In addition, there will be a once-and-for-all option from the passing of this Bill, so that current Members of Parliament and office holders may benefit fully from the new arrangements. The retention of 12 months as the length of each option period will ensure that the financial position of the parliamentary pension fund is safeguarded. By the same token, there should not be any effect on the Exchequer contribution to the fund, as it is a question of transferring rather than creating pension benefits. These clauses rationalise the position.

I cannot and should not conclude without thanking Lord Boyle and his colleagues on the Government's behalf for making the recommendations that have led to this Bill. They have come up with two very helpful and sensible proposals and although they affect only a few people, they will be warmly appreciated. I feel sure that the whole House will be grateful to them, and I commend the Bill to hon. Members.

6.25 pm
Mr. Charles R. Morris (Manchester, Openshaw)

I welcome the Bill and I endorse the appreciation expressed by the Leader of the House to Lord Boyle and to the members of his commission for the recommendations that led to the formulation of the Bill. I couple the appreciation felt by this side of the House for their work with an expression of appreciation of the work carried out consistently over the years by Mr. John Wilkin, the accountant in the Fees Office and Mr. Dobson, and their colleagues for their devoted work on pensions on behalf of those who have served this House, and their dependants.

As the Leader of the House implied, the Bill gives effect to the recommendation contained in report No. 13—Cmnd. 7825—of the Boyle commission. It was recommended that hon. Members who left the House before the introduction of the present pension scheme should be entitled to grants from the fund as of right. Prior to 1964 there was no parliamentary pension scheme as such. The Bill provides justice to those who served their constituents and this House prior to 1964. However, it provides a qualified justice. I was very taken by the point made by the hon. Member for Somerset, North (Mr. Dean), when he rightly referred to the provisions contained in clause 2.

If hon. Members address their minds to clause 1 they will notice the provisos that have to obtain before the sums of £1,000 and £500 become payable. Indeed, the individual must have completed 10 years parliamentary service prior to 1964 and have attained the age of 65 or, as a result of mental or bodily infirmity, be incapable of earning his living.

Those qualifications must be met before an individual receive a pension of £500 or £1,000 per annum. In the context of 10 years' parliamentary service, £1,000 means a mere £2 a week for each year of parliamentary service. For the widow, £500 can be analysed as a mere £1 a week for each year of parliamentary service.

Mr. Nicholas Baker (Dorset, North)

I was interested when the right hon. Gentleman spoke about justice. I fully understand the extent of service that former hon. Members have given. Nevertheless, can the right hon. Gentleman give some parallels for what seems to amount to retrospective remuneration—well deserved as it is?

Mr. Morris

One cannot qualify justice by drawing parallels with situations that are not wholly equal. The parliamentary scheme did not exist prior to 1964. It has had a very limited life. Many retired Members are now living in straitened circumstances. It is, therefore, no more than justice that we should make this minimal provision to help those who do not qualify for parliamentary pension as such.

Mr. Paul Dean

Does not the hon. Gentleman agree that another important factor that should be borne in mind is that those of our colleagues who served both before 1964 and after 1964 were allowed to count their pre-1964 service for pension purposes? That adds to the desirability, as my right hon. Friend said, of providing modest assistance to those who retired in 1964.

Mr. Morris

I agree with what the hon. Member for Somerset, North says. He makes a valid point.

While I am somewhat critical of the scale of provision in clause 2, I recognise that the Bill helps Members with interrupted parliamentary service. I welcome the improved transferability arrangements. I welcome, too, the proposals relating to the buying of added years. But those two proposals will affect Members in a variety of ways.

The proposals sound attractive if a Member has something to transfer into the fund. The prospect of buying added years is attractive if one has the financial wherewithal to buy the added years. Some Members come from areas of activity and occupations where pensions either do not exist or are extremely poor. One can almost apply a rule of thumb to pension schemes in the private sector, certainly schemes for manual workers, who are well represented on the Labour Benches. The more muscle that the occupation requires, the worse the pension scheme will be. The former pension arrrangements for the coal industry and the pension arrangements for the steel industry and British Rail are by no means over-generous in the context of transferability or buying added years. Buying added years may produce a situation in which an individual Member has to pay in excess of £2,000 for each added year that he or she may wish to purchase. However, I welcome the proposals in this regard.

I should like to put one or two questions to the Leader of the House about the Bill as a whole. He rightly referred to the problematical take-up of the Bill. The explanatory and financial Memorandum, under "Financial Effects of the Bill", talks about expenditure of £200,000. But as far as I am aware, there is no list of former Members in the fees office. How will former Members who qualify under clause 1 know that this provision is to be made available? I believe that that will constitute a practical problem.

I hope that the Government will interpret generously the amendment standing in the name of the Leader of the House for those Members who have less than 10 years' service—assuming that the amendment is carried, as I hope will happen. Those who have served the House are entitled to a minimum recognition for pension entitlement, if they are pre-1964 Members.

I should also like to know what provision will be made to improve the figures of £1,000 and £500 in clause 2. Will the figure be subject to some form of indexation, or will it be varied from year to year?

In conclusion, I should like to express my appreciation once again to the Boyle commission; and I hope that the Bill will receive a Second Reading.

6.38 pm
Mr. Edward du Cann (Taunton)

I rise only to make some brief remarks. First, I thought that the right hon. Member for Manchester, Openshaw (Mr. Morris) did extremely well to take for his opening sentences words of praise and gratitude for the servants of this House. It is undoubted that we are devotedly served by a team of people whose loyalty is matched only by their conscientiousness. They are not always remembered. It is appropriate, in discussing either our own conditions or the conditions and pensions of those who have been Members of the House in the past, that we should remember with gratitude also those who do so much for us in so many ways.

My right hon. Friend the Leader of the House was entirely right—here he was joined by the right hon. Member for Openshaw—to pay tribute to an old friend of many of us on both sides of the House—Lord Boyle—whose conscientiousness in public service has been a characteristic of the whole of his working life. I am sure that all of us wish him well at present and always.

Thirdly—here I come to the main point that I want to make—we should express to the new Leader of the House—if I may so describe my right hon. Friend—our gratitude for having introduced this measure. We can argue whether the figures are correct, whether they should be considerably larger or marginally larger, or whether it is done in quite the right way, but at last we have this Bill. As the right hon. Member for Openshaw said, it is a matter of justice that it should be introduced. I am delighted that it is my right hon. Friend, with all his experience of this place and his feeling for it, who has the task of laying it before the House today.

All of us in our parliamentary experience are well accustomed to being asked for services of one sort or another in our constituencies and elsewhere. We are very often asked for services, but, if we render those services, it is not always that we are happy recipients of thanks afterwards.

As one who has pressed—and pressed very hard—successive Leaders of this House, successive Leaders of the Opposition and Prime Ministers for a long-overdue reform of this kind, I express my gratitude that at last we have it. It is greatly appreciated. It is something that the Parliamentary Labour Party and the 1922 Committee together sought to achieve, aided most strongly by Opposition spokesmen, including the hon. Member for Islington, South and Finsbury (Mr. Cunningham). It is appropriate now to say "Thank you" when at last, after a very long struggle, we have a measure which is, in truth, somewhat overdue.

The other characteristic of the Bill on which it is appropriate to comment is the introduction of the principle of transferability. I hope very much that one of the reforms to which the present Government will give much time in due course will be the opportunity for a greater degree of transferability of pensions in the private sector. The fact that this is a matter of practical difficulty very often inhibits a man from moving from one responsibility to' another, and our national life is the poorer as a result. It is entirely appropriate that Parliament, in its own affairs, should be setting an example.

We all know of old colleagues of ours in the House— without going into the matter in any detail—for whom the new measure, if the House in its wisdom decides to pass it, will bring pleasure and some substantial relief. With that practical and important effect of the Bill in mind, and the benefit that it will bring, I reiterate my thanks to my right hon. Friend.

6.41 pm
Mr. Robert Taylor (Croydon, North-West)

There can be no hon. Member who would dissent from anything that has been said concerning the Bill as it affects our former right hon. and hon. colleagues who were here before 1964. There must be a unanimous view on that part of the Bill. But there cannot be a unanimous view on clause 4, which relates to the present position.

When I intervened in the speech of the Leader of the House he appeared to be unsure whether anybody could transfer into this scheme from a non-indexed linked pension and get the benefits of index-linking. In a situation in which my right hon. Friend is uncertain, I must assume that one can do so.

Whatever my right hon. Friend the Member for Taunton (Mr. du Cann) says about transferabiity in the private sector, it is a very serious matter if people from the private sector can come into the public sector towards the end of their career, transfer their pension rights into the public sector, and be index-linked.

According to press reports, there has been considerable discussion in the Cabinet about the Scott report. There has also been a difference of view. Here we are endeavouring to extend the index-linked system for the benefit of ourselves, as hon. Members, and I do not think that I can willingly agree to such a proposal.

Mr. Michael English (Nottingham, West)

Will the hon. Gentleman give way?

Mr. Taylor

Not at the moment. I represent about 55,000 constituents. Of that 55,000, probably 5,000 are in the public sector, because my constituency happens to be near to the centre of London. That means that the other 50,000 are carrying the burden of the 5,000 who are index-linked.

I do not believe that there are any index-linked pension schemes in the private sector. Today we are asked to agree to a Bill which allows us—

Mr. English

On a point of order, Mr. Deputy Speaker. Were the measure applicable to ourselves, the hon. Gentleman would be out of order. It is applicable to people who have retired from this House before 1964.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The hon. Gentleman will be able to make his point, if he desires to do so, at a later stage.

Mr. Taylor

As the short title of the Bill is "House of Commons Members' Fund and Parliamentary Pensions Bill", I believe that I am quite in order in talking about parliamentary pensions. As clause 4 refers to transferabil-ity, I believe that I am in order there as well.

It is quite wrong for us to perpetuate a privileged position for hon. Members of this House, therefore I regret that, while I agree with much of what has been said by my right hon. Friends, I cannot support a Bill which allows transferability into a fund which is index-linked, and I shall vote against the Bill.

6.45 pm
Mr. Michael English (Nottingham, West)

I hope that nobody will take much account of the last remarks of the hon. Member for Croydon, North-West (Mr. Taylor), because the basis of the Bill is to provide some remuneration to those who retired from the House of Commons before 1964—and, of course, their widows. Presumably, they may have some other dependants, such as people who are physically disabled.

I should like to ask the Leader of the House a very simple question. Before 15 October 1964 the salary of Members was very small. What would be the present pension of a civil servant who retired before 15 October 1964 if that civil servant, on his retirement, received the same salary as a Member of Parliament at that time?

What 1 am asking, in other words, is this. If we are to give this small sum of £1,000 to former Members, or £500 to their widows, how will that compare with the sums that we are giving currently to civil servants who retired at the same time on the same salary?

6.46 pm
Mr. Pym

I thank the right hon. Member for Manchester, Openshaw (Mr. Morris), my right hon. Friend the Member for Taunton (Mr. du Cann) and other hon. Members for the very kind things that they have said about the Bill and the welcome that they have given to it. That is a matter of satisfaction for the House. It shows that hon. Members are pleased that we are introducing the Bill now.

I say to the right hon. Member for Openshaw that it will be noted by the trustees that in his view the amendment, if carried, ought to be interpreted generously by the trustees. I have no doubt that that is so.

I am not sure whether there is a list of former Members, but I know that the trustees, before the Bill was ever contemplated, gave a great deal of thought to how assistance could be brought to pre-1965 Members. It is largely on the basis of their thinking and the thinking of the review body that the arrangements now provided in the Bill were made. Nobody suggested, in the course of those discussions, that the difficulties that the right hon. Gentleman raised would be paricularly acute. I assume, therefore, that they are manageable.

I am not able, off the top of my head, to give the hon. Member for Nottingham, West (Mr. English) the comparative figures for a Civil Service pension for somebody who retired at the same rate of pay as a Member of Parliament. I shall certainly convey them to him later.

I have to tell my hon. Friend the Member for Croydon. North-West (Mr. Taylor) that at the moment it is possible to buy index-linked pensions by means of a transfer. If one is transferring in from a non-indexed linked scheme, one buys, as it were, fewer years, but at any rate one is able to do it now. The purpose of the Bill is to extend that provision so that someone who returned to the House for a second time would be able to bring into the scheme provided in the Bill any benefits that he may have had from a pension scheme while he was out of the House. The trustees recognised the anomaly, and we seek in the Bill, among other things, to put that right.

Mr. Leslie Spriggs (St. Helens): rose

Mr. Pym

I will give way in a moment. My hon. Friend adverted to the Scott report and the whole principle of index linking and indicated his opposition to that concept. That is a matter that is now a public debate as a result of the publication of that report. In due course, no doubt, we shall debate the principle of it here. If there were to be a fundamental change in index linking no doubt it would affect all hon. Members. We are not trying to make any special arrangements for index linking. We are simply trying to fit into the existing system arrangements that will suit Members not now covered.

Mr. Robert Taylor

My right hon. Friend said that it was to enable Members who had recently arrived, or who had come to the House for a second time, to benefit. Surely clause 4 gives existing Members the ability to tot up the scheme and to increase the index-linked benefits which are available to every existing hon. Member, whether he has recently arrived here or not. This is something to which I strongly object.

Mr. Pym

Yes. It will give an hon. Member who sits continuously a new 12-month option on first appointment as a Minister and again on reappointment after a period on the Back Benches. It makes that change.

Mr. Spriggs

My hon. Friend the Member for Nottingham, West (Mr. English) put a very pertinent point. The object of this question is that it shall be seen that there is fair play. He asked what a civil servant's superannuation would be if he were drawing the same salary as a Member of Parliament in 1964 and retired at the same time. What is his income as a pension now?

Mr. Pym

Amongst other things it would depend on the length of service of the civil servant concerned, but I will write to the hon. Member on that point.

Mr. George Cunningham (Islington, South and Finsbury)

On the previous point, will the Leader of the House stress the second point which he made a moment ago, that if a person brings non-index-linked entitlement into the Members' scheme which is index linked, he will not get the same number of years in that second scheme as he was entitled to in the first. That is surely the answer to the hon. Member for Croydon, North-West (Mr. Taylor).

Mr. Pym

I am grateful to the hon. Gentleman. That is indeed the position.

Mr. Alfred Morris (Manchester, Wythenshawe)

It was a clear implication of the speech of the hon. Member for Croydon, North-West (Mr. Taylor) that Members of Parliament were doing rather well for themselves. Will the Leader of the House remind the hon. Member of the case of a member of the European Assembly whose widow received a pension of £12,000 in respect of one year's service by her late husband? It is not good enough for the hon. Gentleman to give the impression that Members of this House are doing very well in comparative terms.

Mr. Pym

I think that we ought not to bring the European Parliament into this, if I may say so. This is a much narrower Bill. I think that I made an appropriate comment on the view which was expressed by my hon. Friend—a view that he was entitled to express, whether anybody else agrees with it or not.

Mr. English

I am grateful to the right hon. Gentleman for his usual courtesy. He has allowed several interventions. I am happy to accept the comparison of the same number of years of service of the civil servant with the Member of Parliament. I am sure that the right hon. Gentleman will appreciate that the fact that he did not instantly know the comparison shows that no comparison was made in putting his brief before him. That is highly relevant to the question that we are coming to shortly, namely, the number of years that civil servants serve in order to get their pensions improved, as distinct from those served by Her Majesty's judges and Members of Parliament.

Mr. Pym

Of course, different circumstances apply. It is not possible to give an absolute comparison unless one makes certain assumptions. I will write to the hon. Member and clear up that point.

Mr. Frank Hooley (Sheffield, Heeley)

I am sorry for the enormous number of interruptions which the right hon. Gentleman has had. If I understand the preamble correctly, the Bill will confer possibly new rights on every Member of the House at present because a new option can be exercised within 12 months of the Bill's being passed. Therefore, every present Member of the House could in certain circumstances benefit from this Bill.

Mr. Pym

Yes; if in their circumstances they judge that it is to their advantage, it would be possible. I think that that is the sum total of the points which were raised.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.— [Lord James Douglas-Hamilton.]

Bill immediately considered in Committee.

[Mr. Bryant Godman Irvine in the Chair.]

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