House of Commons (Members' Salaries and Pensions)

HC Deb 19 February 1981 vol 999 cc503-49

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

I think that it would be for the convenience of the House if the next four motions on Members' salaries and pensions were taken together. Mr. Speaker has selected the amendments to motion No. 3 and motion No. 6 relating to Members' pensionable salary and Members'salaries.

Mr. John Bruce-Gardyne (Knutsford)

On a point of order, Mr. Deputy Speaker. The proposition is that we take the four motions together. Will it be possible to divide on the individual motions separately?

Mr. Deputy Speaker

There could be a Division on each of the matters that are being discussed together.

7.11 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, in the opinion of this House, the ordinary salary of every Member in respect of service on and after 13th June 1980 should be regarded for pension purposes as being at the rate of £13,150. Last July the House accepted the Government's proposal that hon. Members' salaries should be increased by 9.6 per cent. The House will remember that that was less than the increase recommended, by the Review Body on Top Salaries under the chairmanship of Lord Boyle. When it came to the matter of the rate of pay to be used for pension purposes the House amended the Government's motion by voting for the full Boyle rate of £13,750.

The House also voted for the establishment of a link between Members' pay and that of a specific grade in the public service and for the accrual rate for Members' pensions to be increased from one-sixtieth to one-fortieth of final pensionable pay for each year of service.

As my right hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) said on 7 August, these three amendments raise considerable complexities because of the need to consider the repercussions for other groups in the public service and the implications for public expenditure. Accordingly, the Government prepared a factual paper which discussed the issues. It was circulated to all hon. Members on 23 October. My right hon. Friend told the House that it would have an opportunity to debate and vote on further Government proposals in the light of the paper. That opportunity has now arrived and I shall explain to the House our position on the three issues.

The Government remain strongly of the opinion that Members' pensionable pay should be £13,150—the actual salary rate that will come into payment for Members on 13 June. The House agreed to limit the increase for Members' salaries to 9.6 per cent. I am sure that that is both wise and helpful in present economic circumstances. I believe that today there is a growing sense of realism and restraint in pay claims which is very important. The decision taken by the House has not been without its influence in encouraging such constraint.

The Government are convinced that the same considerations apply to pensionable pay. The Government view is that Members' pensionable pay cannot be treated as if it were a free-standing issue. As the paper made clear, it has implications for the other groups for whom Boyle made salary recommendations.I know that some hon. Members think that the other groups are irrelevant to the case, but I do not share that view. The review body made recommendations in July on the salaries of the four groups then in its standing remit—chairman and members of the nationalised industry boards, the judiciary, the higher Civil Service and senior officers in the Armed Forces. At about the same time it made recommendations on the pay of Members and Ministers.

The Government considered all the recommendations together. They decided that the salary increases proposed should be reduced in every case in the interests of giving a lead to the rest of the country on pay restraint. As the Prime Minister explained in her statement of 7 July, the Government's approach was to propose a reduction of about one third in the general level of increase proposed by the review body. This reduction applied to all the groups involved and not only to actual salaries but to pensionable pay.

In addition, assistant secretaries and some senior principals in the Civil Service were given pay increases substantially less than was indicated by the evidence collected in the 1980 pay research exercise. They did not receive the higher rate for pension purposes, either. If the House were to say now, in effect, that the pensionable pay of hon. Members must be increased but that the other groups would have to be content with what they got, there would be a sense of grievance and injustice. Such a reaction would, at least, be understandable. I would think it justified.

The Government are convinced that such a decision would be wholly indefencible on the grounds of equity. I must, therefore, make it plain to the House that an inevitable consequence of an increase in the pensionable pay of the Members would be an increase in the pensionable pay of other groups. I do not want any misunderstanding. If there is a vote tonight to increase the pensionable rate of pay for ourselves beyond £13,150 it will be a vote for higher pensionable pay for nationalised industry board members, the judiciary, the higher Civil Service and senior officers of the Armed Forces.

I am one of the first to acknowledge that I might be wrong. However, if hon. Members were to insist on increasing their pensionable pay, which I sincerely hope they will not, many members of the public would feel that we were according to ourselves some degree of special treatment. As a result, they would be likely to feel justified in pressing their own claims that much harder. The House might not feel that that would be a fair reaction but it would be unwise to suggest, let alone to insist, that it would not occur.

The cost of voting for the higher rate of pensionable pay for all the groups would be about £1¼ Vimillion extra in this financial year and the next, and about £⅔ million per annum thereafter. At a time when the battle against inflation requires that everything possible be done to reduce the public sector borrowing requirement that surely is an increase to be avoided. I urge the House, even if against its own wish or inclination, to support the Government motion to make Members' pensionable pay £13,150.

Many hon. Members favour linkage in some form. I hope that the House will feel that my message is more sympathetic towards linkage. The Government remain sceptical about the appropriateness of linking Members' pay to that of any outside group or groups for a variety of reasons, not least because it would detract from the responsibility of the House to settle Members' pay directly in the light of prevailing circumstances.

The consultation that my right hon. Friend the Member for Chelmsford had with the parliamentary parties indicated that many hon. Members still support linkage. Indeed, there was a majority for it in the House. The idea floated in the Government paper for independent reviews every five years also found favour. These reviews would be coupled with a plan to link the pay of hon. Members with the pay of a selection of comparable occupations in other walks of life in the intervening period.

Therefore, we now propose that a Select Committee should be appointed to look at the question of linkage on the basis of independent reviews being held at the start of each Parliament, coupled with the use of what has been described as a basket method of adjustment during the rest of the lifetime of a Parliament. It was proposed by my predecessor that the review should occur every five years. I think that once in each Parliament is better and fits more naturally into our life style and cycle. We intend that the Select Committee should consider mainly the practicalities of such a system of linkage and how it might work. We would also be interested in its views and comments on the principle involved. I assure the House that in selecting Members for the Committee the Government will not seek to prejudice the outcome of the Committee's deliberations.

Mr. Bruce-Gardyne

Will my right hon. Friend confirm that the independent body that we have had apparently advising us on these matters—namely, the Boyle committee—has more often than not in recent years had its propositions amended, and quite rightly, by the Government of the day before being put before the House?

Mr. Pym

Yes. In common with the recommendations that come before any Government from various bodies, it is up to the Government to make up their own mind. It must be said that the variations that have been proposed for Members' salaries and pensions have not been accorded quite the warmth of welcome by hon. Members that sometimes one would like.

Mr. Nick Budgen (Wolverhampton, South-West)

Will my right hon. Friend explain the distinction between the principles of linkage and comparability? In doing that, perhaps he will also explain the Government's position on comparability. I understood that the Pay Research Unit had been abandoned, at any rate for this year. If there is no distinction between comparability and linkage, it seems a little odd that we are to set up a Select Committee when public employees have been told that the principle of comparability is at least in abeyance.

Mr. Pym

One is in danger of attempting to define too accurately the precise meaning of words. It is dificult to envisage the process that we have come to know as comparability. With whom are Members to be compared?

Mr. Budgen

That is another argument.

Mr. Pym

On the other hand, for a number of years hon. Members have thought that linkage to outside groups or one outside group—it used to be one grade in the Civil Service a few years ago but we now have another idea—might make a comparison possible. We are talking about the fine definition of words.

Mr. Charles R. Morris (Manchester, Openshaw)

Does the right hon. Gentleman accept that comparability establishes a rate of remuneration on the basis of a scientific study of an area of comparison whereas linkage merely selects a grade which has been subject to comparability?

Mr. Pym

At any rate, it seems from my consultations, and especially those of my right hon. Friend the Member for Chelmsford, that the idea of a Select Committee to investigate how the system might work and what might be involved will be acceptable. I think that some comments and views on the principle will be appropriate. There are many hon. Members, although not a majority, who are not in favour of the idea. It seems appropriate for the Select Committee to receive those views, which it can express to the House.

There remains the question of the accrual rate. In July the House expressed the opinion that Members' pensions should be one-fortieth of relevant terminal salary for each year of service rather than one-sixtieth as at present. I can understand the various reasons that led so many hon. Members to vote for that change. As can be seen from the paper that was circulated, we have gone into this complicated subject pretty thoroughly. As a result, the Government have tabled a motion that proposes that the accrual rate should remain unchanged but that the facilities for purchasing added years should be extended and improved. I owe it to the House to explain why we have come to that conclusion.

The first reason is cost. Increasing the accrual rate to one-fortieth would mean that the sums paid into the pension fund annually would have to be increased substantially. If hon. Members' contributions were not increased, the entire cost would have to be met from public funds. We estimate that that would increase the annual Exchequer contribution by about 60 per cent. to 100 per cent. Obviously that is an enormous increase by any standards. On the other hand, if the cost were met by hon. Members, there would, in practical terms, be virtually no change. It is already possible for hon. Members to achieve a position close to one-fortieth accrual by raising their contributions to 15 per cent. under the existing arrangements for purchasing added years. Improving the accrual rate in this way would have the effect of making added years compulsory. I doubt whether that would find unanimous favour. It is possible that it would not even find a majority in favour.

Secondly, the advantages of faster accrual may be more apparent than real, at least for some hon. Members. Many hon. Members enter the House in their thirties and fourties, so they may have 20 or perhaps 30 years before reaching retirement age. However, many will have earned pension rights in their previous employment. There are provisions for transferring these rights into the parliamentary scheme and hence earning extra entitlement. We have already approved proposals for further improving transfer arrangements.

Even if their previous pensions rights are preserved rather than transferred, they still count against the maximum pension allowable to hon. Members. That would be the position if the scheme were changed to one-fortieth accrual. That is a consequence of the Inland Revenue rules that govern occupational pension schemes generally. It would mean that some hon. Members might get no benefit out of an improved accrual rate.

There is a further point. However much some might wish otherwise, we must recognise that our remuneration is always the subject of outside interest. We are ultimately responsible for a great many pension schemes in the public service. These schemes are a matter of public interest. It is a fact of life that parliamentary pensions are included in that interest. We have recently published the report of the Scott inquiry, which was set up in response to the public's concern about index-linking. Our pensions are index-linked. In my view, it would be wrong to make a rather dramatic improvement in parliamentary pensions—at least for most hon. Members—while the report is still under discussion. I wonder what the reaction of the House would be if, for example, a one-fortieth accrual rate were proposed at this time for the Civl Service.

Mr. A. J. Beith (Berwick-upon-Tweed)

Why did hon. Members receive on virtually the same day that the motion appeared on the Order Paper a Bill from the House of Lords—the Judicial Pensions Bill[Lords]—which provides precisely for a one-fortieth accrual rate for pensions in that part of the public service?

Mr. Pym

I am not sure whether it is right to compare the pensions of hon. Members with those of judges. The arrangements for the judiciary are exceptional. As the hon. Gentleman knows, the arrival of the Bill from the Lords at such a time was, to say the least, coincidental.

It is for these reasons that the Government believe that the right way forward is to re-examine the present arrangements for purchasing added years. In that way hon. Members will be enabled to decide their pension needs in the light of their individual circumstances and to make their own choices. They will be able to make them within the limits laid down by the Inland Revenue. That seems proper and fair to individual Members.

At present hon. Members may buy added years in two ways. First, they may make what are known as periodical contributions up to the age of 65 years. Secondly, they may make a lump-sum payment within 12 months of entering the House. In general, periodical contributions are a good investment for many Members. However, it has been represented to the Government that they are of more limited help to more senior Members who may not be able to purchase very much more additional service within the Inland Revenue limits.

The Government accept that argument and are therefore proposing a new option to purchase added years by means of a lump sum. A once and for all payment is formidably expensive, so we are proposing a further refinement under which a payment would be made by instalments, with interest, over five years. That will be an attractive proposition to many Members. The burden of payment would be eased and in some circumstances could attract, at least, some tax relief. It will take time to work out all the details but if the House accepts the Government's arguments, we shall arrange for a suitable scheme to be laid as soon as possible. We have worked out an outline of the scheme in the light of what hon. Members said in July and in response to their clear desire to secure better pension arrangements.

I hope that the House will feel that the proposals now before it are a positive and appropriate response to the various opinions and requests made from both sides of the House. Accordingly, I hope that the House will support the motions before it.

7.30 pm

Mr. Charles R. Morris (Manchester, Openshaw)

I welcome your suggestion, Mr. Deputy Speaker, to take the motions together. I am conscious that many Members wish to speak and consequently I shall speak to the amendments in my name and that of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) about the notional pensionable rate of £13,750 and substituting fortieths for sixtieths for parliamentary pensions. My speech will be brief to enable other hon. Members to speak.

It is true to say at the outset that there is not one hon. Member who is not conscious of the political secsitivities surrounding Member's pay. However, I would argue that never has the House failed to set an example in pay restraint for the past 16 or more years.

My first point about the £13,750 figure as the notional pensionable rate is to remind the House that that was the figure recommended by the Boyle commission which made a recommendation in response to the Prime Minister who wrote in the following terms: I would be grateful if you would take this review. It is our intention to accept and implement the recommendation you make. Could an invitation have been conveyed in more explicit terms? But the Prime Minister who explicitly indicated that she would accept and implement the Boyle recommendation has now changed her mind. I do not argue about that. Prime Ministers are entitled to change their minds. But hon. Members recognise that Prime Ministers are not the final arbiters. The Prime Minister is not the final appeal court about the remuneration of Members of the House. The House is the forum in which to determine the level of Members' pay. No one can argue about the views expressed by the House on 21 July last year. The decision was convincing. It was overwhelming. But, having eaten her words on Members' pay, the Prime Minister is now back inviting the House to eat its words on the subject of the rate of pay for parliamentary notional pension purposes.

Churchill once commented to the effect that there is no better diet than one's own words, but what possible justification is there for the House to reverse the decision it made on 21 July last year? I am conscious of the point that the Leader of the House fairly made when he presented his view of the proposals. He said that the Government believe that it would be virtually impossible to allow the full Boyle commission rate for Members' pensions and not for the other groups, whose salary levels are determined by the Review Body on Top Salaries.

The one point that the right hon. Gentleman did not make was the amount of money involved in terms of £13,750. If that figure is taken as the notional pension figure, it represents £10 a year in terms of pension entitlement. That is the sum total of our arguments about accepting the £13,750 as the notional rate for pension purposes. If we do not support that figure we shall be denying £10 a year to those of our colleagues who retire from the House. That is the argument.

The Leader of the House argued that it would not be right for us to take that figure as the notional rate and to deny it to the other groups within the RBTS remit. What relevance have the other groups to Members' pay? The other groups are senior civil servants, members of nationalised industry boards and senior officers in the three Services. The pay of those groups bears no relevance to the pay of Members of Parliament.

The pay of senior civil servants is determined, as I said earlier,on the basis of fair comparisons. It is determined on the dictum laid down by the Priestley commission that Civil Service pay should be broadly comparable to that paid by good employers in the private sector. Successive Governments have established a Civil Service pay research unit to investigate scientifically the rate paid by good employers in the private sector. Members of the House do not have their fair rate of pay arrived at scientifically.

The only criterion which determines the rate of pay for Members of Parliament is public and political acceptability. The other groups in the RBTS do not have their rates of pay determined on that basis. Yet the Leader of the House says that if for notional pension rates we take the rate recommended by Boyle and endorsed by the House, in some way we shall be denying other people, whose pay is determined in a completely different way, some of their pension entitlements. I cannot see the validity of that argument.

The Leader of the House stressed that assistant secretaries in the Civil Service receive substantially less than is evidenced in the 1980 pay research exercise and that they would be affected if they were denied that rate for notional pension purposes. As a former Minister in the Civil Service Department, I know that assistant secretaries traditionally receive less than the pay research exercises reveal that they are entitled to. That is because they are in the middle of the heap of Civil Service grades. They are traditionally subject to the pressures of differentials. They always receive substantially less. Therefore, if the point made by the Leader of the House was valid on the basis of the 1980 pay research survey, it was equally valid on the basis of the 1975 pay research survey.

We have a duty to Members who retire. It would be parsimonious and niggardly to deny them £10 a year additional pension on the basis of the arguments of the Leader of the House. His final argument was that if the amendment is passed and all those groups receive the recommended rate:s, and if that rate is accepted as the basis for notional pension purposes, it will increase public expenditure by £1.25 million. He is right, if he includes the whole group. But if the improvement is restricted to Members of Parliament—who are entitled to it—the increase in public expenditure will be of the order of only £60,000 to £80,000. I do not want to give the impression that that is a small sum of money, but it is substantially less than the figure of £1.25 million used by the right hon. Gentleman.

There are alternative sources to public funding from which that £60,000 to £80,000 could be found. If the right hon. Gentleman is prepared to accept my amendment, I hope that he will consider funding it from the Members' parliamentary contributory pensions fund, or from an increase in Members' contributions. Even at this late stage, I hope that he will think again about that matter.

I wish to comment on the proposal to establish a Select Committee to consider increases in Members' remuneration. I accept that that proposal leaves the question of the basic Members' pay rate within the remit of the Boyle commission. The commission will examine the basic Members' rate once during the first Session of each Parliament. The Select Committee will consider adjustments by reference to increases in the remuneration of what is called a designated group. I assume that by that the Leader of the House means a basket of analogues in outside industry. The Select Committee will then make its recommendation.

I want to ask the Leader of the House a number of questions. What assurances is he prepared to give that such recommendations will not be subject to the same interference as the recommendations of the Boyle commission? On the question of the precise form of pay determination used for parliamentary pay, I am surprised that the method has never been publicly disclosed. I have indicated the basis and principles on which Civil Service pay is determined, but there has never been any identification of the criteria used to determine Members' pay.

Mr. Bruce-Gardyne

Surely there is no mystery about that. However scientific the right hon. Gentleman may imagine the activities of the Pay Research Unit to be, there is nothing scientific about Members' pay. It is determined in one way, and one way only. It is the only way that it can be determined—by vote of the House.

Mr. Morris

I am grateful to the hon. Gentleman for his comments. Members' pay is so politically sensitive that it is not unreasonable to question the criteria on which it is based. I do not know a Member who is not anxious to leam the basis on which Boyle arrives at his recommendations.

Sir Ronald Bell (Beaconsfield)

Is it not true that the question of Members' pay is politically sensitive because we make such a fuss about it? I have listened to the Government's proposals sympathetically. They are a method to make arrangements for the House to have a grand old fuss about the matter every Session.

Mr. Morris

I agree with the hon. and learned Gentleman. I sometimes feel that our debates add to the political sensitivity of the issue and, to some extent, to the public concern that inevitably follows.

The Leader of the House referred to the demand from some hon. Members—I was one—that Members' pay should be linked to the Civil Service grade of assistant secretary. I do not think that that demand ever came from any examination of the responsibilities either of hon. Members or assistant secretaries. Nobody considered the responsibilities of either side. The demand arose from a feeling among parliamentarians that they wanted to take Members' pay out of the political arena.

Mr. Bruce-Gardyne

That cannot be done.

Mr. Morris

I hope that we can do so, and that we are able to resolve some method to determine Members' pay on a fair and equitable basis.

I have previously expressed my appreciation for the service of the Boyle commission, the willingness of its members to undertake the study of Members' pay, and the improvements that have been achieved to date. I hope that the Select Committee, in its endeavours, accept that Members of Parliament are entitled to a fair rate of remuneration which reflects the responsibilities and realities of parliamentary life. I trust that the Select Committee will have the positive support of the Leader of the House.

Our amendment to item No. 6 in relation to Members' pensions seeks to substitute "one-fortieth" for "one-sixtieth" as the accrual rate for parliamentary pensions. That rate should reflect the political hazards and realities of parliamentary life, in the interests not only of hon. Members but in the interests of their families and dependants.

The current rate of accrual is one-sixtieth. My amendment seeks to make it one-fortieth. The letter of 23 October from the former Chancellor of the Duchy of Lancaster, particularly in paragraph 17 on page 9, invited us to accept that the parliamentary pension scheme, being broadly in line with those of the main public service schemes, influences such schemes, and that any improvement in the accrual rate of Members' pensions would be "repercussive".

That word took me back to the Civil Service Department, because whenever one takes any decision on pensions that word comes into play. Anybody who has served in the Civil Service Department has it pumped into him from the word "go". That is rightly so, because certain pension improvements in particular grades or areas tend to be repercussive.

With regard to the accrual rate, the Government are saying quite simply that, while for pay purposes we cannot be linked to a Civil Service grade, for pension purposes we cannot be unlinked. That is the contradiction in the Government's position, and that is the argument that we have had from the Leader of the House so far. We cannot be linked with the Civil Service for pay purposes, but we must continue to be linked for pension purposes. I give way to my brother.

Mr. Alfred Morris (Manchester, Wythenshawe)

My right hon. Friend is on a very important point. I sympathise with the Leader of the House. I think that he inherited a rag-bag of a memorandum. The letter of 23 October 1980 stated in paragraph 4: The Government believe that it would be virtually impossible to allow the full TSRB rate for Members' pensions and not for the other groups. Page 4 of the letter, say,s: But there are no outside groups whose work is comparable to that of MPs. The job of a Member of Parliament is unique." In order to underline the point, the former Leader of the House went on to say on page 5 of the letter, in paragraph 9: There is no outside group whose work is remotely comparable to that of MPs so private sector comparators seem out of the question. I sympathise with the right hon. Gentleman. If he tries to defend the letter of 23 October, he is trying to defend a ragbag of contradictions.

Mr. Charles R. Morris

I welcome that contribution. It demonstrates that my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) and myself not only believe in brotherhood but actually practise it.

Mr. Frank Hooley (Sheffield, Heeley)

I am sorry to interrupt my right hon. Friend but there is another major discrepancy in that civil servants retire at 60 while we are expected to go on to 65.

Mr. Charles R. Morris

My hon. Friend is absolutely right.

I return to my claim that sixtieths are unrealistic and take no account of the political hazards of parliamentary life. How many Members in the Chamber this evening can look forward to 60, 40, 30 or even 20 years as parliamentarians? Most of us are lucky if we can look more than five years ahead.

Mr. John Parker (Dagenham)

The average length of service in the House is 16 years. That is the figure to bear in mind.

Mr. Morris

I am grateful to my hon. Friend the father of the House. To think in terms of fortieths and sixtieths may be quite right in the context of the career of a civil servant, because that is a normal occupational career, But parliamentarians do not live that kind of occupational life.

Mr. R. A. McCrindle (Brentwood and Ongar)

I understand the points that the right hon. Gentleman is trying to make, but is he not overlooking the fact that Members coming to the House in the 1970s and 1980s who can expect, with luck, to serve for a maximum of perhaps 25 years, may bring with them already earned pensions from an occupational scheme, built up before we came to the House? That means that taking the sixtieths of the parliamentary scheme together with the entitlement that we have when we arrive in the House, some of us on leaving at retirement age might be at least as well off as on the one-fortieth basis that the right hon. Gentleman suggests.

Mr. Morris

I am grateful to the hon. Gentleman for the point that he makes, but I must take up some of the words that he used. He said that some of us would be lucky to spend 25 years as parliamentarians. Most of us would be extremely lucky. He then talked about the contributions that he was able to transfer into the parliamentary scheme. He was even luckier in that regard. I could indicate a host of Opposition Members from the mining industry, as well as small business men on the Conservative side, who have never made any provision for pension entitlement and are not so lucky as he. While I accept that the hon. Gentleman made a perfectly fair point, we are entitled to take a slightly broader perspective of the arguments about transferability.

Mr. Roger Moate (Faversham)

Before the right hon. Gentleman waxes too enthusiastic about fortieths, will he tell the House how he expects those fortieths to be funded? Does he expect them to be funded by individual Members or by the taxpayer?

Mr. Morris

I shall come to that point before finishing. The House may be relieved to hear that I intend to sit down very soon. I thought that the hon. Member for Berwick-upon-Tweed (Mr. Beith) was absolutely right and justified in referring to the rather odd coincidence that on the very day that we are being denied the improvements that I want to see in the parliamentary scheme the Judicial Pensions Bill[Lords] has been published.

I quote briefly from clause 2(2) of that Bill: The annual rate of the pension payable under this section to a person retiring from any office after 15 or more years relevant service shall be one half of his last annual salary. That is half pay after 15 years. Yet the same Government are adopting this rather unhelpful attitude in insisting that parliamentarians should be linked to civil servants for pension purposes.

The Leader of the House referred to the Civil Service pension scheme. He might have referred to other pension schemes in the public sector. While the Civil Service scheme is based upon sixtieths—it is actually eightieths, with a lump sum which makes it equivalent to sixtieths—other pension schemes in the public sector are surprisingly generous, considering the objections that we hear to fortieths for parliamentarians.

Mr. Michael English (Nottingham, West)

I presume that my right hon. Friend also remembers that there are 7 million people in those schemes. We are constantly told that there are only about 700,000 people in the Civil Service.

Mr. Morris

My hon. Friend is absolutely right.

I was about to refer to the Inland Revenue memorandum No. 12 provisions. Those provisions mean that retired employees can receive two-thirds of their retiring pay for as little as 10 years' service. It may be thought that I am talking about the top hat schemes in the private sector, about pension enhancement schemes that are restricted to a very select area.

Let me indicate the areas in the public sector where Inland Revenue memorandum No. 12 provisions obtain at present. They obtain within the British Steel Corporation, the National Coal Board, the British Gas Council, the Civil Aviation Authority—

Mr. Hooley

The National Health Service.

Mr. Morris

They exist with Cable and Wireless. When the Leader of the House said that we must continue to be linked with the Civil Service pension scheme he was being slightly disingenuous. He ought to have indicated the generosity of the pension schemes which exist in the public sector. They are enjoyed by members of nationalised industry boards and they are also enjoyed over a wide area of the private sector.

Only the other day, I was looking at an extract from a survey carried out by the National Association of Pension Funds in 1979 which inquired into occupational pension schemes. From that report, one concludes that IRM No. 12 schemes now cover 48 per cent. of companies and institutions in the private sector. That is the extent of the IRM No. 12 schemes which have an accrual rate of 10 years. Yet here we are arguing about fortieths as opposed to sixtieths for parliamentarians. It makes one wonder why the Government and the Leader of the House are so insistent about opposing the reasonable amendment that I have tabled.

There is an even more fascinating situation with regard to the Ministry of Defence and serving senior officers of the three Services. There is a rule in the Services that a senior officer will not be promoted within two years of retirement. But on inquiring of the Department there had been any exceptions to that rule I was informed that in the recent past there have been 20 exceptions. I am not the type of person who would impute any ulterior motive to that situation. However, it is a fact of life that if one is promoted within 18 months of one's retirement as a serving officer, in the process one enhances one's pension entitlement. That is taking place in the Services.

Compared with other Parliaments, we are at the bottom of the heap in terms of pension provision. I was impressed with the thoughtfulness of my hon. Friend the Member for Ince (Mr. McGuire) in providing me with details of the contributory pension scheme from Members of the Dublin Parliament. As I have suggested, we are at the bottom of the heap. We are certainly not quite as generously provided for as Members of the Dublin Parliament. Their pension entitlement is on the basis of fortieths.

My right hon. Friend the Member for Wythenshawe instanced the situation in relation to a Member of the European Parliament. I am conscious that he was quoting from an article in The Times of 8 December last year. The distinguished political editor of The Times commented on the situation which he had identified with regard to the pension provisions in the European Parliament. He quoted one Herr Albert Piirsten, a West German Member of the European Parliament in the Christian Democrat group, who died and left a wiow and a son young enough to be dependent on him. Mr. Wood reports: Widow and son qualified for pensions under a generalised position taken by the Parliament managerial bureau in April. The particular details of the pensions have now been settled. Widow and son will receive a joint pension of about £1,000 a month. That should be compared with the situation relating to two former Cabinet Ministers in this Parliament. One had served 28 years and the other 22 years. The widow of one is receiving a pension of £3,000 a year, and the widow of the other something less than £3,000 a year. Their position should be compared with the widow of Herr Piirsten, who served as a Member of the European Parliament for one year. It is not on to continue arguing about sixtieths as opposed to fortieths.

I was impressed when in December last year I read an article by a distinguished journalist, Roger Carroll who is money editor of The Sun. He served in the Parliamentary Press Gallery. Under the heading: We must get out of this awful pensions mess"— the article itself deals with the problem of indexing of civil service pensions—he lists those who get what in terms of pensions. It is illuminating to discover where he places Members of Parliament in his list. We finish between a Civil Service principal with 40 years' service and a sergeant in the Army with 37 years' service.

That just about sums up the argument for fortieths. Conservative Members will ask how we can fund this improvement. What about restrospection? That is an important question. Rarely has any improved pension provision been introduced in this House which dealt with the subject retrospectively. The question of restrospection is to some extent a false lead. However, there is a major question of funding.

I remind the Leader of the House and the House itself that I am not seeking to improve pensions merely for Members of Parliament. I am more concerned with their families and dependants—those in our occupational life whom we invariably tend to put last.

8.8 pm

Mr. Edward du Cann (Taunton)

If I may be permitted a personal observation, the feature of the speech of the right hon. Member for Manchester, Openshaw (Mr. Morris) that pleased the House most was the practical indication, in his response to an intervention, that the spirit of brotherly comradeship still lives in the Labour Party. Long may it do so. It was genuine and pleasing, and I hope that it is an example that will spread.

At different times both the right hon. Gentleman and my right hon. Friend laid stress on the fact that undoubtedly the decisions that we make for ourselves are carefully monitored by the public. There is no reason for regret in that. It is perfectly true that whatever we decide for ourselves, be it about remuneration or pensions, it is certain that it will be misrepresented and gossiped about, and that we shall be teased about whatever we do.

That, however, is no reason now, or at any other time, or in any other circumstances, to be afraid of doing what we know to be right. It is plain that consistently, over many years, the House and successive Administrations have shirked doing what is right. My right hon. Friend was correct when he said that this was not a convenient moment to be doing certain things. It never is. In any case, the middle of a parliamentary Session is not the most convenient time to legislate. That brings me to the point upon which I want to lay most emphasis.

It is sad that when advice has been given by Government or Opposition Back Benchers to their leaders it has been so consistently ignored in the past. That is the reason why we have had difficulty and embarrassment. We have nobody but ourselves to blame for that. I hope with all my heart that my right hon. Friend is as wise as he is sensitive on these matters. I hope that he will do his utmost to ensure that while he holds the fine position of the leadership of the House we shall not be so embarrassed again. There is no need for it.

We are dealing with two specific matters in this little group of motions. The first two relate to the proposal that the pension should be linked to the salary of £ 13,150 rather than £13,750. I regret very much that the Government are apparently unwilling to accept the larger figure. It has been said already that we are in a unique profession. The Liberal Whip quoted the example of the judges. The right hon. Member for Openshaw said that the repercussions arising from choosing the higher figure have been exaggerated. In addition to these points, it seems appropriate to emphasise that there is a good precedent for this. If it was right to attach the pension to a higher figure—the figure recommended by Boyle—in an earlier circumstance, there can be no argument against doing it now.

The motion on Members' pensions refers to the accrual rate. I am sorry that the Government are not willing to agree to fortieths. The House has voted for that. If the House passes a motion it should be accepted by the Government with a good grace. One of the reasons for the trouble, difficulty and embarrassment that we always have is that successive Governments agonise over these matters. They pore over them and judge them, and then reintroduce them in an amended form. Why are Governments never willing to accept what the House, in its collective wisdom, decides to do?

My right hon. Friend cogently advanced the arguments why he thought that the suggestion of fortieths was wrong. He suggested an alternative. The House should be grateful to him for that alternative, because it will undoubtedly bring substantial benefits to those who want to avail themselves of it. I still think, however, that it would have been right to accept what the House judged to be correct.

My hon. Friend the Member for Croydon, North-West (Mr. Taylor) talked about index-linking, which is so much a part of these matters. I so often agree with him and I respect his integrity of judgment and his practical experience. However, I venture to disagree with some of his remarks. I believe that the advice that I attempted to give to the House about the need to encourage transferability in pensions in general, and particularly in the private sector, is correct. I would not withdraw a word of that. It is right that the House should do all that it can to encourage transferability—movement between jobs, and so on. We ought to have done that years ago.

I hope that the Committee that is sitting at the moment will produce recommendations that will enable the House to make progress. It is reasonable that a man should be able to transfer his pension rights into the House's scheme, if he comes into the House. There can be no argument about that. I guess that my hon. Friend believes that, by and large, there are too many people in the public service in index-linked schemes, including Members of Parliament. That is probably too big a financial burden for the country to bear now. I totally agree with that.

I strongly repudiate the arguments of the Scott committee. My right hon. Friend said that he hoped that we would have an opportunity to debate them before long. However, that is not an argument for suggesting that in general it is wrong to encourage the transferability of pensions. It is right that the House should give an example. I am glad that we have passed this provision by such a substantial majority.

Secondly, I turn to salaries.

Mr. Bruce-Gardyne

I was also involved in the motion to which my right hon. Friend referred. I suggest to him that the point at issue was not the transferability of pensions, about which I follow his point, but the provision that we are being invited to approve tonight, whereby we could move our pension entitlement from the private sector, un-indexed, to our indexed pension arrangements. I suggest that that is related to our considerations on the Scott report.

Mr. du Cann

There is merit in what my hon. Friend says. 1 agree with that. However, I think that the two matters are separate. New entrants to the House who have given up careers outside ought to be entitled, if they wish, to move their pensions to the House of Commons scheme. No one can deny the good sense and justice of that. If, after that, my hon. Friend wants to say that Members of Parliament should not have an index-linked scheme, that is a separate matter. I do not say that I disagree with him. I would not disagree if he said that the very long list of professions and occupations, additional to the 700,000 people in the Civil Service to which the hon. Member for Nottingham, West (Mr. English) referred, who are on index-linked pensions, are too numerous for the general body of taxpayers to bear. We shall debate that on another occasion. However, there is no reason why we should not allow transferability for new entrants to the House into the current scheme. Let us amend it later, if that is proper.

Mr. Hooley

The hon. Member for Knutsford (Mr. Bruce-Gardyne) is wrong. It depends on the calculation of the transfer. If the calculation of the transfer allows for indexation, it is fair. That point was made by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham).

Mr. du Cann

Once we start examining individual cases we shall be here for a long time. As a rule, it is better to stick to principles.

I now turn to the question of salaries. I do not wish to talk about the quantum of salaries; I wish to comment on the point raised in the motion. I support the idea of the Select Committee. What my right hon. Friend said about considering these matters in each Parliament rather than in a fixed number of years was wise, as are so many of his utterances.

If the House decides to establish the Select Committee its report will be merely a general guide on comparability; it will not be mandatory. However, I see no harm in endeavouring to establish a yardstick by which we might judge our own circumstances—a tool, so to speak, to help us in the work. I cannot think why that should be objected to in general. There is not a close analogy, if there is any analogy at all, with Clegg. I repeat that what we are suggesting is not mandatory.

The right hon. Member for Openshaw rightly made the point that the circumstances of Members of this Parliament do not always compare with those of Members of other Parliaments. We cannot compare Parliaments exactly. However, I should like quickly to draw two matters to the attention of the House. First, a little while ago The House Magazine listed the circumstances of Members of Parliaments in a number of countries. The House will be familiar with the position in the United States, for example, so I shall not quote it. I merely say that looking at Europe I find that we are substantially underpaid in comparison with Belgium, the Federal Republic of Germany, and France, and we are paid less than Italy, Luxembourg and the Netherlands. I could go on.

Someone has to say, and say clearly—perhaps it is easier for me to say it, because I am able to earn a living outside the House and do not depend upon a parliamentary salary; I have no axe to grind—that it is essential to see that Members of Parliament generally have the right pay and conditions to do their job. It is a great honour to be a Member of the House. To be in this place is one of the sweetest and happiest things in the world. However, there is no reason why the public should expect those who accept responsibility, take seniority and carry some burden—not always too effectively—to penalise their families or themselves if they choose a career in the public service. All right—we choose to do so, but democracy imposes responsibilities not only upon those who are its most obvious handmaidens in Parliament but upon the general body of the electorate to provide the democratic apparatus with the style and the scope to enable it to carry out its normal responsibilities. We fail the idea of democracy if we have poorly paid parliamentarians. I am in no doubt about that.

Secondly, if the House would be good enough at some time to refresh its memory by looking at an answer given in the House on 7 August 1980 it would find that the remuneration that Members of Parliament have received over the past 16 or so years was very much greater, proportionately, than the remuneration that we receive now. Conditions here have improved greatly in recent years, largely because of the pressure of Back Benchers in the Chamber and of the two main parliamentary parties. That is good and appropriate. However, in real terms of money earned we are still earning less than we did some years ago.

That fact lends added point to the intervention of my hon. Friend the Member for Buckingham (Mr. Benyon). He pointed out that we must create a situation in which at the beginning of every Parliament we get the matter right for the remainder of the Parliament. That is enormously important, and I make no apology for reiterating the point to the Leader of the House with as much emphasis as I can command.

8.24 pm

Mr. Frank Hooley (Sheffield, Heeley)

I wish to concentrate on the motions numbered 5 and 6. First, I make a general observation that arises from the intervention of my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). The document circulated last October from the then Chancellor of the Duchy of Lancaster's office was appallingly dishonest. Every time that it was convenient to the argument a comparison was made with civil servants or with other bodies. However, when it was not convenient, it was said that Members of Parliament were not comparable with outside groups. Paragraph 9 states: There is no outside group whose work is remotely comparable to that of MPs so private sector comparators seem out of the question. I find such dishonesty distasteful.

The work and career of a Member of Parliament is peculiar and must be examined on that basis. We cannot claim to go beyond the rules laid down by the Inland Revenue with regard to pensions and ask for grandiose scales of remuneration, such as those in Europe, which are disgraceful. However, when considering pension and remuneration arrangements, we must accept that the job of being a Member of Parliament is peculiar in career structure and the nature of the work.

I do not believe that the Select Committee is a bad idea, although the independent review body could have done the job equally well had it been so instructed. Had the House given Lord Boyle and his colleagues instructions to sort out the linkage principle, they would have been capable of doing so. The advantage would have been that the recommendation would have come to the House from an independent body rather than from a group of our own colleagues. Nevertheless, the Select Committee could produce useful recommendations.

It is odd that the Select Committee's terms of reference are so narrowly drawn. Why is only one form of linkage spelt out in the motion—the designated group of outside occupations or the basket? One can think of many possible linkages—to the salaries of High Court judges, the Chief Commissioner of Police or consultant surgeons in the National Health Service. More importantly, the linkage could be with an independent index.

Again, several kinds of index could be devised. One could have some kind of index related to the RPI or to average industrial earnings. A number of indices could be taken and then multiplied or divided by a certain factor to produce whatever linkage the House thought appropriate. Why has the Leader of the House ruled out from the terms of reference of the Select Committee these other types of linkage that the Select Committee could properly explore? The motion includes the words by reference to increases in the remuneration of a designated group of outside occupations". That is one possibility. I do not see why the Select Committee should be precluded, from the word go, from looking at other possibilities that may turn out not to be practical or useful but should, nevertheless, be explored. The Select Committee could come back to the House to report that some proposals were possible and others were not. I cannot see why the terms of reference are so narrowly drawn. It might have been useful to charge the Select Committee with the task of examining the complicated issue of pensions, although that may put too heavy a load on its deliberations.

I believe that the Leader of the House referred to the composition of the Select Committee in his opening speech. I do not recall his exact words. I wish, however, to make three points. First, it should include hon. Members who were elected for the first time in 1979—our newest colleagues. I am sure that they would have a useful contribution to make. Secondly, it should include one or possibly two hon. Members who, at some occasion in their parliamentary career, have lost their seats. This creates personal, financial and other problems. It might be useful if the direct experience of such hon. Members were reflected in the Committee. Thirdly, it should include one or two hon. Members who have young, dependent families. They could bring into the deliberations some subjective considerations that might not occur to other hon. Members who like myself, are grandfathers.

I hope that the Leader of the House, in making up this Committee, will pay careful attention to its composition, and to the range of experience, age, and so on. I hope that we shall not get only high-powered Privy Councillors and long-serving hon. Members, although I am not saying that they should be ruled out.

I wish to discuss the motion numbered 6 on pensions and the amendment that I, together with my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris), propose. The amendment reiterates the position already taken by the House. As the right hon. Member for Taunton (Mr. du Cann) pointed out, the amendment, in a sense, is a misnomer. The Leader of the House's resolution is, in effect, an amendment. The right hon. Gentleman seeks to change or amend a decision taken formally by the House in recent times—about six months ago, I think. It is, therefore, in a sense, an anomaly to call the amendment an amendment. It is the Leader of the House who is trying to change things.

In support of this proposition, I wish to refer briefly to my own circumstances as a Member of the House, not because I regard them as representing a hard case or as being specially unlucky. On the contrary, I believe that, in many respects, I have been very lucky. I think, however, that my circumstances highlight the peculiar difficulties of calculating and working out a sensible pension arrangement for a Member of Parliament. I quote my circumstances because I do not know the personal circumstances of other hon. Members. They highlight points that need to be highlighted.

I entered the House at the age of 42, which is starting a career at rather a late stage. The Leader of the House mentioned that many hon. Members come into the House in their thirties or forties. I suspect that those in their forties are more characteristic than those on their thirties. I discovered immediately that my university pension arrangements—I was a university administrator before coming here—were not transferable. I received certain advice about continuing to pay the premium. In my financial circumstances, that was totally impractical. Consequently, there was no transfer at all in my case at that time in 1966.

Given the biblical survival rate of three score years and ten, I suppose that, on entering the House I might have looked, to 28 years' parliamentary service, with a bit of luck. However, the political climate changed in 1970 and I was out. The first tranche of my reckonable service was four and a quarter years. Then came 1974. The political climate changed a little again. What also changed, so far as I was concerned, was the highly capricious and arbitrary action of the boundary commission, which provided me with a somewhat better bet in terms of constituency chances. I came back in 1974. I have been here since then. In 1974 there was an important difference, because I found that as I had been in local Government service between 1970 and 1974 I could convert that superannuation arrangement into reckonable service for my parliamentary salary. As a result, I was somewhat better off than I was when I first became a Member of Parliament.

The capricious and arbitrary actions of the boundary commission will probably terminate my parliamentary career in 1983. On any ordinary calculation, and allowing for political trends, I shall be out on my ear in 1983 at the age of 60. I think that I shall have done 17 years' pensionable service. However, as I shall be only 601 shall not be able to get a pension. I cannot draw any parliamentary pension until I am 65. Therefore, my career is not remotely comparable with that of any civil servant. The vast majority of those civil servants who do a reasonable day's work can expect to have 30 or 40 years' reckonable service towards their pensions. In the document to which I have referred the average reckonable service for a Member of Parliament is 17 to 20 years. In my case, the lower figure will probably apply. I am not complaining. I chose to leave a perfectly safe job and to take up this career. I was extremely lucky to be able to do so.

The hazards of politics and of boundaries, and so on, are beyond my control. I have no control over the boundary commission, but it can put me and other hon. Members out of a job at any stage in life. It can totally disrupt any calculation of our pension requirements. The one-fortieth idea is intended as a remedy to some of the problems that arise from such situations. It may not be the best remedy. However, six months ago the House decided that it was, and the Leader of the House—for reasons that are not very convincing—is now trying to reverse that decision.

As the right hon. Member for Taunton pointed out, the problem is mainly one of transferability. We must take a harder look at this problem. Probably one-half or one-third of hon. Members come to the House with pension rights accrued from elsewhere. Provided that they can maintain or transfer them, one-sixtieth or one-fortieth might be enough. However, as I found to my cost in 1966, not all arrangements are transferable. In addition, many hon. Members—indeed, more are likely to come from the Opposition Benches than from the Conservative Benches—come from occupations that do not offer pension schemes. Alternatively, they may have very tiny accruable pension rights. Under the one-sixtieth arrangements they find themselves in difficulty.

We are discussing an expression of opinion and, not a provision that requires the Queen's recommendation. I suggest that the opinion that the House expressed last year was right. The attempt to amend it is not sound. I hope that hon. Members will confirm the standing opinion of the House. If the provision is accepted in principle, some group—either within the House or outside—will have to sit down and work out how we can find a sensible and fair pension arrangement. The arrangement should not be extravagant or grossly out of line with the arrangements that are made for our fellow citizens. However, it should take account of the unique and peculiar nature of a political career in the House.

8.40 pm

Mr. Paul Dean (Somerset, North)

I rise to oppose the amendment moved by the right hon. Member for Manchester, Openshaw (Mr. Morris).I agree with some of the arguments that he advanced, but this is the worst possible time for us, as serving Members of the House, to contemplate at public expense the improvement of our pension rights. It is the worst possible time, because in a Bill coming before the House next week we shall be asking national insurance pensioners to make sacrifices in the present economic circumstances.

Mr. D. N. Campbell-Savours (Workington) rose—

Mr Dean

I shall not give way. We have heard about the controversy which surrounds index-linkng, and we must remember that our pension scheme is index-linked. Over and above the national insurance pension, which is price-protected, we have three nations. First, there is the public service pensioner, who is absolutely guaranteed index-linking, with no ceiling or limit of any kind. Secondly, there are those in occupational pensions who may have some increase, usually on an ad hoc basis, but rarely enough to meet the full increase in prices. Thirdly, there are those who have no occupational pension scheme at all, or the self-employed, all of whom are on their own.

I hope that as a result of our discussions about index linking it will be possible to deal with some of the criticisms by having a ceiling or a cut-off point for the increases in public service pensions. I hope that compromise will be possible while maintaining the principles and the obligations which the State undertook in earlier years towards public service pensioners. But while the controversy continues, it would be an extremely bad moment for us to vote ourselves, at public expense, further improvements in our pension rights.

The third reason why it is the wrong moment relates to the question of pay. Many people in the private sector are accepting modest increases in pay, and in some cases no increases at all, in order to preserve their jobs. In many cases that has an implication for their pensions. Equally, sacrifices are being asked for in the public sector. Here, too, there is an implication for pensions. So whether one talks of national insurance pensioners, public service pensioners and index linking or the present pay position, it seems to me wholly wrong to pick this moment to make improvements in our pension arrangements.

Sir Ronald Bell

I intervene only to say that I think that we should pick this moment. We have passed motions of this kind over and over again, and this moment is merely the moment when the Government are trying to reverse something that we did long ago.

Mr. Dean

I understand what my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell) is saying. We have been here before, as he says. He and I have taken part in many debates in this connection. None the less, there are strong arguments against the amendments in the present conditions.

Against that background, I have a few brief comments to make on the motions before us, first on those in relation to pensionable salaries. It is a bad practice to have pension rights based on notional pay rather than actual pay. I welcome the fact that we are now getting away from that practice, having had our pension rates based on notional pay for some time. It is surely correct—and here I agree with my hon. Friend the Member for Taunton (Mr. du Cann)—to get the pay right first. The pension will follow from that. But to have an artificial device is surely inappropriate for us, and setting a bad example to others. For that reason, I shall support my right hon. Friend the Leader of the House if there are votes on the motions in relation to pensionable salaries.

The same general arguments that I advanced at the beginning of my speech apply to the motion in relation to Members' pensions. But I have a good deal of sympathy with the point that was made by my right hon. Friend the Member for Taunton, when he reminded us of the expression of view that was given in the House, and also with the right hon. Member for Manchester, Openshaw (Mr. Morris), who elaborated his reasons for preferring one-fortieth.

Pension schemes should try, as far as possible, to gear themselves to the likely length of service of those concerned. There are many examples. The judges scheme has been mentioned. There are examples in the private sector where it is possible, within the Inland Revenue rules, for pension schemes to mature over a comparatively short period in order to meet the circumstances of individuals or small groups of people. Considering sixtieths in that regard and comparing that basis with the average length of service of 20 years, there are strong arguments for improving on the present basis of sixtieths.

The argument has been advanced from several parts of the House that not everybody who comes into the House comes in with pension rights which can be transferred into the parliamentary scheme. The hon. Member for Sheffield, Heeley (Mr. Hooley) mentioned his own case, and one can think of other examples. There is the example of the self-employed, who have been working outside and ploughing their resources back into their businesses. They simply have not had the resources in many cases to start building up pension rights, therefore there is nothing that they can transfer into the pension scheme.

There are also the Members who are older than some of their colleagues when they come into the House. The development of pension schemes is a comparatively modern phenomenon. There are many older colleagues in this House who probably spent half their working lives without any opportunity to build up pensions rights. There are, therefore, many individual cases in which one can argue strongly that fortieths would be more appropriate than sixtieths.

But I come back to my original question. Is it right at the present moment that it should be done at the taxpayers' expense. It seems to me that the answer to that question should be "No". That is why I welcome the compromise that my right hon. Friend the Leader of the House is proposing in the motion relating to Members' pensions, under which it will be possible for additional reckonable service to be built up by lump sum or by fixed instalments payable as a deduction from salary. That will be at the Member's own expense, so that at any rate for the time being it is a reasonable compromise, and I hope that the House will be able to accept it.

The motion in relation to Members' salaries raises different issues and I have rather mixed feelings on it. I very much welcome the idea of having a look at our pay—and, indeed, at our pensions—at the early stages in each Parliament. That is a desirable development. I am not clear what a Select Committee can do which a revised Boyle could not do equally well or better. There is something to be said on occasions for the devil that one knows. I am inclined to think in this case that although Boyle has often been disregarded in this House nonetheless it is a system with which we are fairly familiar.

The main reason why I have mixed feelings about Motion No. 5 is the reference to increases in the remuneration of a designated group of outside occupations. What group? How does one define the group? One of the reasons why pay research is in abeyance is that a large number of people, particularly technical people in the Civil Service, expressed a good deal of dissatisfaction about the way it was working in practice. I would be very reluctant to see all the disadvantages and all the arguments that have gathered round pay research in recent years being translated to the pay of Members of the House. There are other arguments too which I will not elaborate because they are familiar to the House.

I dispute the suggestion of the right hon. Member for Openshaw that by this device we should take our pay out of politics. It is probably more likely that we should bring our pay into politics in a most undesirable way. For example, if a comparison is made with some grade in the Civil Service and if the Government of the day happened to be having an argument with the Civil Service as to its level of pay, would there not be a risk that we would be dragged into that political argument? We should be in deep political water as a result. I fear that this is the risk we would run were we to go for some form of comparability.

I shall certainly support my right hon. Friend on the motions with regard to pensions, but I have very grave doubts about motions on Members' salaries with regard to the proposal for a Select Committee.

8.53 pm

Mr. John Parker (Dagenham)

I should like to speak partly as Father of the House and partly as chairman of the Pensions Trust of the House. It is 46 years since I came to the House and for none of that period have Members of Parliament been well paid. I started in 1935 with a salary of £400. In 1937 it went up to £600, thanks very largely to the action taken by Mr. Attlee, who was then the Leader of the Opposition, in collecting a number of budgets of Members and presenting a very good case to Mr. Baldwin, the then Prime Minister, as a result of which Mr. Baldwin agreed to provide £600 a year and to provide a salary as well for the Leader of the Opposition. Right the way through salaries have remained low.

I should like to make the point that the length of service of Members always remained low, too. Before the war the average length of service of a Member was 15 years. Today it is 16 years. I do not think that it is likely to grow. As a number of Members have already said, it is a hazardous occupation. I have been fortunate—I will not say more than that—in my career in the House, although the first time I stood for Parliament I was defeated by a majority of 20,000.

I stress that it is a hazardous occupation. It cannot compare with the Civil Service, with judges, or with any other occupation. As other Members have pointed out, it is a unique job in itself and it should be remunerated and rewarded as a special job and an important job in the community.

As chairman of the Pensions Trust, I see no reason why increased pensions should be a charge on public funds. There are large sums of money in the pensions fund—£20 million at least—and I am certain that, apart from the fund being able to make a contribution towards increased pensions, Members would be prepared themselves to make an extra contribution. The Pensions Committee could be asked to make recommendations on the amount of money available from the fund and what it is thought that Members might be prepared to pay in extra contributions.

I quite agree with those who have said that the present is not the right time, given the economic climate, to ask for an extra charge on public funds if this can be done without a charge on public funds or with only a small charge on public funds.

In saying that the Pensions Trust should be asked to consider what Members might be prepared to contribute I am speaking for myself. The trust has not considered detailed proposals to put to the Government, but it has considered the whole question of pensions, what size they should be and what can be done about them. The trust has made no recommendations on this point, although it made recommendations which the Leader of the House adopted in the earlier Bill.

The Pensions Trust is a reputable body, whose members have a great deal of experience. Regular expert advice is given to it from outside as to investments. I ask the Government to take seriously the suggestion that the pension scheme might be funded partly by contributions from the pensions fund and partly by extra contributions from Members.

8.58 pm

Sir Brandon Rhys Williams (Kensington)

I am glad of the opportunity to contribute to the debate on the motion relating to Members' salaries, which raises the question of indexation, and on the motion relating to Members' pensions, which deals with the rate of build-up of entitlement.

Although in these debates we are dealing only with the conditions of Members of the House of Commons, we are touching on issues of wide public interest. What we decide is appropriate for ourselves the general public may well conclude is appropriate for them as well.

On the subject of the motion relating to Members' salaries we are in danger of falling into extremely sloppy thinking on both sides of the House about the concept of indexation. The proposals that we have already dealt with this evening for indexation of pensions of those who have left the service of the House seem to be somewhat out of accord with what is proposed by the Government in the motion. The cost of living is the index which is applied for people who have finished their service, but what seems to be suggested for those who are still at work, but who might be entitled to uprating from time to time, is that the reference point should be a designated group of outside occupations. The fact that this anomaly appears in the recommendations that the Government are making in the course of a single evening shows that we need to give much more thought to the question of indexation.

I entirely share the misgivings of hon. Members who do not like indexation to the cost of living index. There are many reasons for that. The cost of living index is an extremely blunt and inaccurate instrument. It is difficult to say, for instance, that the cost of living of a single person will vary in the same way as will the cost of living of a family with three or four children. Pensioners have different needs from people at the start of a career. It is difficult to say with certainty that in calculating the cost of living index we are doing justice to all concerned.

My particular reason for rejecting the cost of living index as the basis of indexation for pensions is that it hitches us to a balloon which is out of the control of the Government and the taxpayer. The cost of living index might rise considerably as a result of a further increase in the world price of oil or sugar or some other household necessity. It is not fair to designate particular minority groups which are to be totally protected from changes against which the rest of the population cannot protect themselves. If we are to look for an index we should look for one that really relates to the progress of the entire economy and the population as a whole.

It is important to consider the purpose of indexation. Some of my hon. Friends are disposed to attack it altogether; but it is not right to abandon indexation if that has the effect of exposing certain minority groups to a reduction in their standards of living through decisions by the majority about the way in which our currency is allowed to depreciate. The object of indexation is to protect minority groups which might be left behind in the general inflation of the currency.

It is shocking and repugnant that we should even contemplate exposing pensioners to a decline in their standards of living which is not suffered by the rest of the population because they are able to defend themselves by claiming higher wages or by some other means. When people are at the end of their careers they are still entitled to be treated as members of our society. It is a sign of our deterioration as a society and the decline in our moral commitment to minority groups if we contemplate exposing them to a fall in their standard of living because of the way in which we happen to run our economy, our tax system or our wage negotiations.

A society which is not prepared to look after its widows, children or pensioners is reverting to cannibalism. We must resist the temptation to think that it is good for the taxpayer to place a ceiling on our commitment to our pensioners. Our pensioners have brought us to where we are. We must take them with us wherever we go. If our economy is going downhill it is fair that pensioners should also accept a reduction in their standards. However, if the economy as a whole is booming the pensioners should share in that prosperity. We must take them with us in our ups and downs. That is why I do not like the adoption of the cost of living index.

The Scott report is an admirable document. It grasps a number of nettles which have to be grasped. I hope that we shall be able to examine the whole basis of indexation, public sector pensions, uprating of social security benefit, and so on in our consideration of the report.

I accept the idea of a Select Committee and I think it would be right to have reviews by an independent body once during the first Session of each Parliament. However, I do not like the idea of looking for a designated group of outside occupations. I share the view of hon. Members that the work of a Member of Parliament is not like anything else. I suggest that we should relate the uprating of Members' salaries to the progress of the earned income of the whole population, bearing in mind that hon. Members are drawn from all strata in society. They are not drawn only from the professional classes or the working classes. The earned income of the total population is the appropriate index to use while hon. Members are at work and when they are in retirement.

I turn to the question of the value of an indexed pension. It should cost much more. The private sector schemes are not able to offer indexation for various reasons. That does not mean that an indexed pension is a priceless asset. However, it is of considerable value. People who already have the good fortune to be disignated in the class of service which ranks for an indexed pension should be making much larger contributions while they are at work.

I do not know whether it is possible to find an exact figure for the extra contributions that they should be making. However, I believe that it would be proper for the Government to apply across the entire public service a surcharge of 10 per cent, on earned income for those who qualify for an indexed pension. That 10 per cent, would still represent good value.

The reason for the bitterness that has grown up between those who are in private sector schemes and those who benefit from public service schemes is that the standard of living in retirement of those who are able to depend on indexation is streaking ahead of those who depend on private sector schemes. Those who are in public service schemes appear not to have paid during their working lives for the benefit that they subsequently derive in retirement.

Mr. George Cunningham (Islington South and Finsbury)

Surely the hon. Gentleman will accept that the recent report provided no foundation for the view that those who benefit from index-linked pensions are underpaying for them to the tune of 10 per cent, of their earnings.

Sir Brandon Rhys Williams

It is exceedingly difficult to arrive at a figure that is fair. Actuaries who take different views of the future rate of inflation and the rate of return on the type of assets in which private occupational schemes are able to invest will be able to argue indefinately. There is a political judgment to be made. An indexed pension is worth substantially more than what others are able to get through membership of private schemes.

I shall vote against any proposal that comes before the House for de-indexation of public sector schemes, although I think that the type of index that we use deserves much more study. To qualify for an indexed pension, people should be making a contribution that is seen to be balancing the additional commitment that taxpayers are making in giving indexation as a bonus.

I have spoken to a number of people about this issue and it is my guess that a 10 per cent, additional contribution would be accepted as fair when set against not only the depreciation of the pound but the way in which all paper currencies are collapsing in value throughout the world since the breakdown of the Smithsonian settlement. We are going through a time of transition between the end of the gold standard and the arrival of some other standard of permanent value, a store of value and a measure of value for our connections with each other and for international trade. While we are groping for that new point of reference, we have to have some method of protecting our minority groups against inflation. However, those minority groups must pay while they are able to do so to qualify for the benefit.

I have a great deal of sympathy with those who have suggested tht we should have accruals of one-fortieths but I am one of those who voted against the proposition when the House considered the matter priviously. It is the general rule for approval of private pension schemes that they should not give benfits to those in retirement of more than two-thirds of their final salary. I do not know whether that is a wise rule, but it has been of such general application for so long that if we voted ourselves a pension scheme based on fortieths we would be giving ourselves the opportunity to earn pensions that would be better than any private occupational scheme or public sector scheme could give.

I realise that not many Members would be able to qualify for 40 years of service. However, it seems to me that we would be running into danger. We would have to overcome that danger by introducing further special provisions if we voted for fortieths. One could, of course, apply a ceiling.

Sir Ronald Bell

That is done already on the present basis by providing that after a certain number of contributions there should be no addition to the pension. That is already in the Act.

Sir Brandon Rhys Williams

I think that my hon. and learned Friend will recognise that to introduce a ceiling means that some Members will be working under different pay and conditions from others, although their contributions and work in the House might well be exactly the same. There is something wrong with a system if, when it is applied, it is necessary to recognise that it contains anomalies that must be rectified by frustrating the very principle that has been applied. It would be better to make the other choice, which the Government appear to have done by making it easier to bring in added years. One cannot do both.

It would be improper to accept the recommendations of the right hon. Member for Manchester, Openshaw (Mr. Morris) and the hon. Member for Sheffield, Heeley (Mr. Hooley) that we should adopt fortieths, and simultaneously allow an hon. Member to buy added years and to buy back service. If we did that, we could find ourselves in a position in which hon. Members could acquire sensational increases in their incomes after leaving the House.

Mr. Alfred Morris

The hon. Member for Kensington (Sir B. Rhys Williams) is respected for his knowledge not only of our arrangements but of those of the European Assembly. He spoke about anomalies. How can he possibly defend the decision to give a pension of £12,000 a year to the widow and child of a Member of the European Assembly who had died after one year's service?

Sir Brandon Rhys Williams

I accept the example that the right hon. Member for Manchester, Wythenshawe (Mr. Morris) has given. I hope that the House will not think that I am being priggish, but although I have the honour to be a Member of the European Parliament I have never delved into the conditions of pensions. I do not know what they are. I have the feeling that they are exceptionally generous, but I do not think that a recommendation that we should look to the European Parliament as an example would be acceptable in Britain. Perhaps it would be better if we did; but I do not believe that the public would support us if we tried to look in that direction at the present time.

I do not want to criticise the hon. Members who have recommended fortieths. I know that that principle is widely adopted in outside schemes. In a matter where a difficult choice has to be made the Government have made the right choice to allow Members to bring their entitlements from other schemes and to buy added years. I realise that some Members will come to the House in middle life with little in the way of pension entitlement, especially if they have previously been self-employed. But since the Acts passed in the early 1970s the number of such people is diminishing year by year. Soon the majority of Members elected even in their late forties or fifties will be assured of a sizeable accrual of pension rights before they become Members. It is right that a Member should be able to use that previous build-up of entitlement to consolidate his pension rights in the House of Commons scheme, rather than to enter into an accelerated pension system which might have anomalous results between one Member and another.

However, one thing worries me. The Government are recommending that the new option should be of limited duration. Will my right hon. Friend explain how he intends that that provision should be applied? Does he mean that for each Member there should be an opportunity, after he is first elected—which may last for one month, six months or a year—to declare the option of bringing in added years? Or is it intended that this new option of limited duration should be for the existing House, which might last for six months or a year, while those of us now sitting make up our minds on a once-for-all and final basis whether to use the added years option? I recognise that it is intended to be helpful to offer Members the alternative of paying fixed—instalment deductions from salary over five years. But as five years is longer than the life of most Parliaments, there is an element of risk whether Members can complete their payments.

There could be extremely tangled provisions where a Member has fallen down on payments and also forfeited parts of his earlier entitlements, and has not completed the acquistion of his new pension scheme.

I echo the remarks of my right hon. Friend the Member for Taunton (Mr. du Cann) about the pay and conditions of service for Members. It is true that on the Continent representatives of the people are valued more highly than they are here. It is notable that in countries which have relatively lately won through to democracy the representatives of the people tend to be valued more highly than they are in Britain where familiarity perhaps has bred contempt.

It is a proud thing to be a representative of a constituency in Britain. I do not think that the mass of the population wish to be vindictive towards Members of Parliament because of what one might call the Anglo-Saxon nervous breakdown. We are worried about ourselves as a nation, about our constitution, about the performance of Parliament, and about many other aspects of our public life. We do not make it any better if, as Members of Parliament, we adopt an attitude of self-disrespect or lack of self-confidence, and join in a general sense of condemnation of British public life. We should have the robust confidence to pay hon. Members what is appropriate to someone representing a British constituency. We must not devalue ourselves.

9.16 pm

Mr. Michael English (Nottingham, West)

There has been a measure; of hypocrisy in this debate. From earlier speeches, one would never have dreamt that it was a Cabinet of which the present Prime Minister was a Member and the present Leader of the House the Chief Whip which introduced inflation-proofed pensions in their present form to the Civil Service. I do not blame them for that, but there appears to be a tiny measure of hypocrisy in the arguments tonight.

The only thing that causes inflation-proofed pensions to be envied by those who do not have them is inflation. If there were no inflation the argument about inflation-proofed pensions would be futile and a waste of time. The present Home Secretary chaired the Committee of the House which introduced index-linking for the entire public income of one of the estates of Parliament. There are three estates—this House, another place and Her Majesty the Queen, whose public income is now linked to the price index. That illustrates the fact that such linkage causes little public concern. It is usually mentioned annually that the Royal income has been increased by 17 per cent., or whatever may be the current rate of inflation. It is mentioned, and then everyone forgets it, because everyone in the country knows that his own expenditure has increased by that amount. He knows that, on average, his income has also increased by something of that order.

The right hon. Member for Taunton (Mr. du Cann) pointed out that Members of Parliament are the only people whose incomes during the past 10 to 15 years have fallen in real terms. That is where the comparisons of the Leader of the House become, to say the least, stretched. I am quite prepared to accept his comparisons with the Civil Service, if the Civil Service had been prepared to accept a reduction in its real income during the past 15 years. I do not think that it should, but if comparisons are to be made they must be made fairly. As has been pointed out in the debate, the present position is unfair because Members' salaries—never mind their pensions—have fallen in real terms, while almost no one else's salary has fallen in real terms. Some have increased as much as inflation and some have increased considerably more than that. I do not know of any other group of people within Britain whose salaries have fallen in real terms. That is the point at issue.

This Government, and earlier Governments of both parties, have deliberately reduced the pay in real terms not only of ordinary Members of Parliament but of Ministers. It has been a deliberate act. I do not object if the Prime Minister values herself as worth 10 per cent, of the income of the chief executive of the Playboy Club—which is the approximate difference between their salaries. But she should not value the office of the Prime Minister so low. If she wishes, she is entitled to take no money at all. There have been Cabinet Ministers of both parties who have not taken any money as a salary. But she is not entitled to say that the office of Prime Minister is worth 10 per cent, of that of the chief executive of a gambling club.

That kind of judgment is one of the causes of the trouble in this country. I do not apply that principle merely to Ministers. It is ridiculous that the permanent secretary at the Department of the Environment should be paid hardly more than the chief executive of a county council, but that is the case. He is supposedly more or less in charge of the chief executives of all the county councils in the United Kingdom—not in the sense that he is their immediate superior but in the sense that the Department of the Environment has a colossal influence over all local government, yet he is paid hardly any more—and so on throughout the Civil Service. To try to balance out this low level of pay by a pensions system different from that of the majority of people in the country is a further anomaly which should be cured. But both should be cured at the same time.

The Scott report came to a conclusion similar to that of the Committee that I chaired in the last Parliament as to the real solution to the problem of inflation-proofed pensions or index-linked pensions. There are two solutions. One is to get rid of inflation. But so long as we have inflation, the other solution is perfectly simple. Everybody should have an index-linked pension. Indeed, everybody has an inflation-proofed pension in the form of the State pension.

The right hon. Gentleman makes a colossal error if he thinks that everybody in this country has an occupational pension apart from their State pension. [Interruption.] Perhaps the right hon. Gentleman can persuade his PPS to let him listen. If he believes that everybody in this country has a pension in addition to the State pension he shows how out of touch he and his colleagues are. He mentioned that everybody coming to this place has rights of transferability. That is totally untrue. It is also totally untrue to say that everybody coming to this place even had a pension right before, as my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris) pointed out. Roughly one-third of the working population of this country—some 7 million people—are in inflation-proofed pension schemes, roughly one-third of the population are in non-inflation-proofed pension schemes, and roughly one-third of the working population of this country are not in occupational pension schemes at all. The proportion in the latter category is declining, and has declined steadily throughout this century. It may be a little less than one-third now. Nevertheless, millions of people who work in this country are not entitled to an occupational pension. Another large sector is so entitled, but the pension is not inflation-proofed.

The third sector, which is basically the public sector, is entitled to an inflation-proofed pension scheme. Within that sector of 7 million people there is every conceivable type of scheme. One thing that was recommended by the former Expenditure Committee was that the Government should sit down and think out a set of coherent principles for public sector pensions. There is every conceivable sort of inflation-proofed pension. There are schemes in which people make no contribution at all. The Civil Service scheme is basically one of those. To be fair, I think that there is a small contribution of about 1 ½ per cent, in respect of widows' pensions or something of that nature, but with regard to the employees' own pensions it is a non-contributory scheme. There are contributory schemes. There are schemes which are funded and schemes which are not. There is even a peculiar breed of animal described as notionally funded which is not really funded.

If people contribute their working life to this country, whether they work for the State or not, if we think that they are entitled to a pension, they should have a pension. If a person works for the State as a policeman, in the Army, as a civil servant, as a teacher or a local Government official all of whose pension schemes are different—he should be entitled to his pension. But I should very much like to know why we make the assumption that all of those pension schemes should be different. Members of Parliament are only one category. It is ridiculous for the right hon. Gentleman to make a comparison with just one small sector, which comprises 10 per cent, of the public service. The definition of a civil servant is very obscure and very limited. Governments and civil servants have defined it in that way. There are only about 700,000 of them—roughly 10 per cent, of the people who work for the State in the public sector. That is because we do not define the public sector in the way that the French do. In France, a teacher in a local authority is a fonctionnaire—a civil servant, in our terms. The French make the assumption that everyone who works for the State is entitled to similar conditions. We do not. We have this extraordinary hotchpotch. The first thing that we ought to do—I accept that we should not just do it for ourselves as Members of Parliament—is to sort out this pension mess for the whole country, and for the public sector at the very least.

No one wants to tackle this because it means that some people would gain in respect of pensions for their widows but not of their own, others would lose, and so on. However, sooner or later it will have to be done with the fairness and equity with which it ought to be done. We muddle along because no one is prepared to consider it.

The right hon. Gentleman today is taking away £10 a year. Frankly, I doubt whether that will make or break the taxpayer or any possible recipient. It is a tiny, piffling little change. Instead of making tiny, piffling changes of that character not only in our scheme but in all the other schemes—because changes are being made practically every day in one scheme or another—we should settle down and decide what the country is capable of bearing. In one sense it is an economic matter. We should decide what the country is capable of bearing in terms of the amount that we are prepared to pay our old, retired people for the service which they have given to the country in earlier years. In the end, that will have to be borne aby people in productive employment. We should settle down and work out what, pro rata to what people had earned during their working life, everyone should get. That should be protected from the ravages of inflation, if there is inflation, and it should be done for everybody.

As the Scott report points out, instead of people getting a two-thirds pension non-inflation proofed, they would probably end up with something like a 50 per cent, pension which was inflation-proofed but which was given to everyone. Instead of this extraordinary hotchpotch of schemes covering 7 million people—some of them funded, some of them unfunded, some of them contributing, some of them not contributing—we would have a proper system under which everyone, including Members of Parliament, was dealt with equally.

I turn to the issue of salaries. I am certain that the hon. Member for Kensington (Sir B. Rhys Williams) was right when he said that if we are to link the salaries of Members of Parliament to anything it ought to be the earnings of the population as a whole. We are not here just as representatives of civil servants. I do not think that we should be linked to civil servants. We are here as representatives of the whole country, and I believe what he suggested would be appropriate and accepted.

If we determined an appropriate level of salary for Members of Parliament which was generally acceptable in the country as a whole, which was not thought by most people to be either too high or too low, and if we said "That is it, we shall link it to the average earnings of the community", I believe that that would be accepted. In those circumstances, if we had a bad year when average earnings did not go up to any extent, the salaries of Members of Parliament would not go up either. If there was a good year with boom conditions, as we have had at times in the past, salaries would go up. I suggest that that is an appropriate linkage if we are to have a linkage at all.

Motion No., 5 dealing with Member's salaries, talks about the appointment of a Select Committee and refers to a designated group of outside occupations". I hope that it will be possible to designate everybody in gainful employment as the group. I do not think that that is an inappropriate way of tackling this matter.

When we say "Members' salaries" I hope that we shall also deal with the salaries of those in ministerial office. As I said earlier, there is no reason why a Minister, if he happens to be a rich man, has to take a salary from the taxpayer. However, the office should have a salary attached to it.

I have never been able to understand why Members of the House who become Ministers should lose their salary as a Member of the House of Commons. The one thing they do not do is stop being a Member of the House of Commons; but they do stop receiving an income from an outside occupation.

It would be simple to get the Inland Revenue to calculate how much, on average, hon. Members lose. The Inland Revenue is bound by law not to reveal the income of any individual, but commonly, for all sorts of purposes, it produces collective statistics. It would be possible to run the great computer in such a way as to show what one may lose by becoming a Minister by the average of his colleagues' outside earnings. It would be a fair basis of payment on top of an ordinary House of Commons salary. Therefore, I hope that the Select Committee will realise that "Members" include Ministers and that the terms of reference are adequate for it to consider that problem as well.

I must declare an interest in the following matter. Having spent a number of years in the House as a bachelor, I married and I now have two tiny children. It is a point that not all hon. Members are so aged and decrepit that their children have grown up. We are not all grandfathers who represent the country in the House of Commons.

We have discussed the result of our peculiar pension accrual rate at great length. Hardly anyone, with the exception of my hon. Friend the Member for Dagenham (Mr. Parker) who is Father of the House, is likely to sit for 40 years in the House in the way that a civil servant can sit for 40 years at a Civil Service desk. In that respect, we are much more akin to judges. I do not wish to stress that comparison too much. Judges can reach their top pension, which is only half pay—not two-thirds—after 15 years. That is slightly less than the average time that hon. Members are in the House.

Therefore, in that respect, hon. Members need a scheme that is not compared to that of the Civil Service. I do not wish to compare the pay of hon. Members to that in the Civil Service. I do not think that Civil Service trade unions wish hon. Members' pay to be compared to theirs. I know that the right hon. Gentleman had a brief which had been given to him, his predecessor, and his predecessor in another Administration, but it is ludicrous that he should suggest that there is an obvious comparison between Members of Parliament and civil servants. If Civil Service trade unions tell him that there is such a comparison, I hope that he will point out to them that in order to make the comparison exact, they would have to resign from the Civil Service after 15 or 16 years. That is nonsense. That becomes nonsense and not just for the individual.

If any one of us who happens to be married dies tomorrow, his wife will get a pension. That pension will be calculated as half what the hon. Member would have received. His children may receive a pension of a quarter of what the hon. Member would have received if he had lived to the age of 65. Notionally he would age to 65 the day he died but the years of service which he had actually spent in the House would be considered. The average Member spends about 15 or 16 years in the House. In other words, he has about a quarter of the possible sixtieths. Therefore as a pensioner. He has a right to about a quarter of his salary. If he dies, his wife is entitled to one-eighth, which is slightly less than £1,650 per annum. If he has a child—up to two, as there is a limit on the number—the child would be entitled to a pension of about £821 per annum. My figures are not exact, but they are approximately correct.

Do we think that that scheme compares in any reasonable way with the sort of provisions in other pension schemes for widows and orphaned children?

We must always remember those who are not in occupational pension schemes. We should deal with that matter, as the Committee that I chaired formally recommended. However, we should deal with the matter not only on behalf of the country but on behalf of ourselves. While we have the incredible hotchpotch of pension schemes we should recognise that even if we do not wish to do anything for ourselves—and many hon. Members justifiably and understandably do not want to do anything for themselves—we might at least make provision for those of our colleagues who leave widows and orphans behind. If we wish to be mean to ourselves that is one thing; to be mean to our colleagues' spouses and children is quite another.

9.35 pm

Sir Ronald Bell (Beaconsfield)

I agree largely with what was said by my right hon. Friend the Member for Taunton (Mr. du Cann). It is regrettable that the matter comes up over and over again.

It is not right to say that it is an unfortunate moment for the matter to be considered. The Government are ignoring the motions that have been passed and are bringing these matters up again and again until, I suppose, the time arrives when there is no longer a majority for them present in the Chamber. That is how we came to be lumbered with the present unwieldly Hansard. The House rejected it twice. The Government ignored this and kept bringing it up again and again, until the motion was eventually passed. Having been passed, it was implemented.

It is a long time since the House passed the first motion for the linkage of hon. Members' pay. It was to the pay of an under-secretary in the Civil Service. The matter has always been ignored. It is now suggested that we should appoint a Select Committee to discuss it. The proposal appears to be that in the first Session of each Parliament there should be consideration of the general level and that the indexation should concern only the bringing up to date of the figure in the succeeding years of that Parliament.

When the House repeatedly passed the motions on indexation it was with the overriding intention that the disagreeable matter of hon. Members' pay should be taken out of annual debate once and for all.

Mr. du Cann

Yes, it was.

Sir Ronald Bell

It was accepted throughout the House that we were choosing between two alternatives that were not entirely agreeable, but we thought that the lesser evil was to take the matter out of regular debate and to settle for a considerable period the level at which our remuneration would be fixed. We should then be able to forget about it and not have the constant nagging of these debates, which is not only unsatisfactory but distasteful.

That purpose will not be achieved by the motion. It will remain in this form, as far as I can see, every year. Even when the Select Committee reports it will be in the form of a recommendation. It will have to be put before the House each Session, with the Government's amendment or recommendation that it be accepted or not accepted, or accepted with alterations. Once again, every year we shall have the same sort of recrimination and even, at times, acrimony. I see no purpose in that exercise. If we are to have an annual debate, let us forget about the linkage and the Select Committee and deal with it on its merits.

The best course is to have a linkage. There are objections. We have rehearsed them over and over again. It is not an ideal course of action. I say only that it is better than the other. We should adopt it. I am sorry that this ambivalent motion is put before the House.

I turn now to the question of notional salary. I do not like notional salaries for pension purposes. We got into them through modifying the Boyle recommendations some time ago. One felt that it was the right thing to do. There were hon. Members who would be retiring. It was hard on them that they should retire with a pension considerably diminished by the sense that prevailed in the House that we should exert severe economy upon ourselves, which we might change later. However, they would not be here to benefit by the later change.

As for the enlarged comparison that my right hon. Friend the Leader of the House was making, I think that he was proceeding on the wrong basis. What we are discussing is not comparable with what has happened in the Civil Service, whose increase in pay in the last Boyle recommendations was shaded down at the same time as our increase was shaded down.

We were concerned then not with an increase but with the consequences of the previous shading down, which meant that instead of the £12,000 figure being made effective at once, which I think Boyle recommended, it was said that it would take effect in three stages. At the same time, we were told that although it would be diminished or staged, in that sense, there would not be the further loss that arose as a result of the inflation that took place during those three years. When the last recommendation came up, the undertaking was that we would not have the super-added loss of inflation affecting the already ordered deferment that was diminished. That is why there is a total distinction between the Civil Service and ourselves. I do not think that my right hon. Friend need be persuaded by the analogy that he made.

That is all about virtually nothing. It apparently amounts to about £10 a year. I do not think that we should spend much time on the matter. Equally, if the House votes for it, I do not think that my right hon. Friend need worry about precedents in the Civil Service.

I wish to turn to a matter of more importance concerning the fortieths. We have been through all this at least twice before. I believe that forty-fifths would be the right solution, giving a period of 30 years. I am not, however, worried whether it is fortieths or forty-fifths. I think fortieths would produce a period of about 28 years.

I think that all hon. Members are agreed that if the existing system of sixtieths is regarded in isolation, giving a period of 40 years, it is nonsense. Even the hon. Member for Dagenham (Mr. Parker), the Father of the House, would not qualify for a full pension for another nine years. Viewed in isolation, apart from the question of credits coming from outside and bearing in mind that the average age for entry is 36 or 37, and that if he were in for 40 years an hon. Member would, on average, lose at least 10 years in absences from the House, it can be seen that he would qualify for a full pension at the age of about 86 or 87. The cost to the fund of a full pension starting at 86 or 87 is very small. I am not surprised that the hon. Member for Dagenham told us that there was an enormous sum in the pension fund. I think he said that the amount was £22 million.

Mr. Parker

£20 million.

Sir Ronald Bell

The hon. Gentleman says £20 million. I am not surprised. So long as we keep a 40-year rule I think that we will shortly be able to pay off the national debt accumulated in the pension fund. It is not what one would call a generous provision for hon. Members. It may be said that that is so but that there is a provision for bringing in pensions to which entitlement has already been created.

I refer to transferability. As has been pointed out, that applies only to a proportion of hon. Members. I should have been much more interested in this argument if my right hon. Friend the Leader of the House had given us figures. Of course, I should not have expected names. As the Fees Office knows, so my right hon. Friend must know the proportion of hon. Members who have transferable pensions that have been brought into account, and their average value. It would be interesting to know that.

Given the present age distribution of hon. Members, I strongly suspect that the number with significant transferable pensions is negligible. Of course, the position will change during the next 20 years. However, after hon. Members have been eliminated on the grounds of age, unsuitable occupation, previous self-employment, and so on, the number must be negligible. I declare an interest. Like my right hon. Friend the Member for Taunton I am in the happy position of being able to earn a living outside the House. I am not as dependent on the provisions of the House as are some. However, that is not the point. Many hon. Members will find that on retirement their parliamentary pensions will be their only source of income. Let us be clear about that.

For the next 20 years at least, the transferability argument will be a minor one. I do not know what the compromise brought forward by my right hon. Friend consists of. I should have been much interested if he had told me. It is all very well to say that the details will be published when they have been drawn up, but it means buying a pig in a poke. Will the proposal apply to all hon. Members or only to new hon. Members? If it applies to all hon. Members for how long will it do so? Does it apply only to hon. Members below a certain age? We do not know the answers.

Why should we be so worried about duplication? For example, on a 30-year basis there will be duplication only in the case of those hon. Members who remain in the House for more than 30 years. They might receive more than a two-thirds pension. However, there will not be many such hon. Members. Is that such a terrible evil? Under the existing scheme there is a cut-off date for those fortunate enough to have 40 attributable years. I understand that after 45 years' service that does not count, and that one can receive a three-quarters pension but no more. If there is an anomaly, it is not a new anomaly. I do not see why those hon. Members who remain in the House for as long as the Father of the House should not end up with more than a two-thirds pension. That does not strike me as an argument against this proposal.

A memorandum from the former Leader of the House was distributed among hon. Members. I have read it carefully, but I was not impressed by its argumentation. The document listed several systems, but dismissed them all. We are told that no one is comparable to a Member of Parliament. However, no sooner has that been said than the Leader of the House argues that civil servants are comparable, and that we cannot have anything that they have not got. When it is proposed to link—as the resolution did link—Members of Parliament with under-secretaries, it is said that that is wrong because there is no comparison between civil servants and Members of Parliament. We cannot win.

I turn to the provisions for judges. The Bill that we have recently seen is a consolidation measure. It is not based on fortieths. I know that there is a reference to fortieths in it, but that is in respect of particular years. Indeed, I think that it refers to a 15-year period.

The fact is that for the senior and middle judiciary the period is 15 years for half-pension. That means that thirtieths operate. In my opinion, that is right. It is based upon the average age of appointment and I expect that it takes into account the fact that most of those who are appointed judges have been in self-employment and will not have any transferable pensions. What opportunity they have of receiving a private pension is a matter of speculation.

Although the average period of service for hon. Members is 16 years, compared with 15 for judges, I do not suggest that we should operate on thirtieths, but I think that the argument for fortieths is difficult to refute. I therefore hope that the House will reaffirm its insistence of fortieths when the time comes to vote.

If my right hon. Friend the Leader of the House subsequently brings forward a scheme to plug all the holes that have been mentioned in this debate I am sure that the House will be willing to rescind that resolution, but I believe that we should reaffirm our decision now. It should be implemented unless the Government can produce a proposal to cover all hon. Members and not merely the minority who have attracted most attention.

There is no amendment dealing with linkage; there is only the motion. Frankly, I hardly know what to do about it. It is a fairly useless, almost embarrassing, suggestion. If it is defeated, or if it is passed, we are no nearer a solution to the problem on which we have spent so many hours over the years. We are in a most unfortunate situation. I realise that I and my right hon. and hon. Friends and others are partly to blame, because no amendment was tabled in time. Therefore, it is our own fault, It hardly matters which way hon. Members vote on the motion dealing with Members' salaries, because it is such nonsense. But when it comes to fortieths, I hope that the House will reaffirm its view.

9.53 pm

Mr. Michael McGuire (Ince)

I am delighted to follow the hon. and learned Member for Beaconsfield (Sir R. Bell). He should not reprimand himself about the failure to table an amendment on the subject of linkage because, as he rightly said at the beginning of his speech, the exercise in which the Leader of the House is indulging is intended to overturn the express will of the House on a free vote. I hope that that will be maintained tonight. I imagine that the Leader of the House will then decide, having had three or four bites at the cherry and the House having expressed its view, that we must abide by it on the matters of linkage and fortieths.

We had comprehensive answers to the motions in relation to Members' pensionable salaries from my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris). He reminded us of the explicit terms in which the Prime Minister wrote in that regard. She is not the first Prime Minister to find a convenient refuge in the state of the economy at a particular time, especially when the reports are presented.

I shall say no more on the subject, except to point out that we do get ourselves into a tremendous frazzle on the subject of Members' salaries. In fact, we are paying for our own lack of courage as Members of Parliament. We probably deserve to be punished—at least those who dodge the issue.

In 1911, Members of Parliament received their first payment as Members. I am not familiar with the arguments that were advanced at that time. I imagine that they were similar to some of the arguments that we have heard tonight from some hon. Members. Then in 1937 Members of Parliament had their first increase. In 1950, there was another increase. Between 1950 and 1957, when the next increase came, an attendance allowance was paid. I believe that that was scrapped.

Then in 1964 there was the Lawrence report. It had been agreed that everybody would abide by it. Apart from the time when the right hon. Member for Sidcup (Mr. Heath) was Prime Minister, when a report was presented, that was the first occasion on which a report was implemented. But we have to remember that on each occasion the report was implemented only for Back Benchers. So again the issue was fudged, and some reason was found for not wholly accepting the recommendations.

In December 1970, one of our late lamented Members, Lord Pannell—Charlie Pannell in this House, known unofficially as the "shop steward"—together with a present Member of the other place, Lord Houghton—then Mr. Douglas Houghton, the Member for Sowerby—sought by a Private Member's Bill to regulate the position and to take it out of the hands of Members of Parliament. But the then Leader of the House—the present Home Secretary—persuaded them to withdraw it, on the ground that the Government would set up a body which would do what they wanted. Subsequently the Boyle Commission was set up. It is interesting to recall the cri de coeur of Boyle: "If you want us to report as an independent outside body on what we think should be the terms and conditions of Members, please abide by it. Do not fudge it, because there is no point in our spending many hours in deliberating and in research if at the end the issue is to be dodged because of some political convenience or because there is some political mileage to be obtained from doing so."

The members said "If you are going to dodge the issue, please do not set us up and do not entrust us with this charge."

They were quite right. In other words, we are paying now for our own lack of courage at that time.

The Leader of the House, when he was speaking to the combined motions, said that what we do here is monitored outside, and that the public notice what we are doing. I shall tell the right hon. Gentleman why I think that the public do not notice it. During all the time in which I have been in this House and there has been fudging on the question of Members' salaries, and delay for one reason or another, nobody has come to me and said "Michael, you are doing a wonderful job and I admire your sacrifices and those of your colleagues." Incidentally, I have never once had the question raised by a member of the public when we have had an increase in salary.

The problem is that if we delay giving ourselves an increase for one reason or another, the eventual catching-up exercise will involve a large lump of money which, in percentage terms, will perhaps be higher than the going rate that the Government of the day—Labour or Conservative—are trying to impose. If that happens, it will seem that Members of Parliament are giving themselves special treatment. Everybody will forget the amount of money that Members of Parliament have forgone for political reasons.

I suggest to the Leader of the House that the public do not take any notice, but that if they did they would say "If you chaps want to give yourselves the proper terms and conditions of pay for the job that you do, that is entirely a matter for you." Those Conservative Members who disagree will be able to make their contributions later. I maintain that the public do not take any notice, but if they did the message would be "You are masters of your own destiny. If you cannot fight for yourselves, you will fight for nobody else."

I believe that my experience in this respect is the same as that of every hon. Member. Nobody has ever congratulated me on forgoing a rise in salary, neither have I been condemned by anybody for receiving a rise.

I turn to the crux of the matter, which is contained in the motions on salaries and pensions. The motion on salaries will once again be an exercise in fudging the issue. The right hon. Gentleman was quite right to remind us that no Government will hand over to a body of this House or to an outside body the absolute right to say "You have to implement what we do." Again, there will be that fudging of the issue. So what we are doing is going back on the old treadmill. If the Government want the expression of opinion of the House it has been given—

It being Ten o'clock, the debate stood adjourned.

Ordered,

That, at this day's sitting, the Motions relating to Members' Pensionable Salary (Expression of Opinion), to Members' Pensionable Salary, to Members' Salaries and to Members' Pensions may be proceeded with, though opposed, until any hour.—[Mr. Brooke.]

Question again proposed.

Mr. McGuire

If they want the free expression of opinion of the House, it has been given on two occasions. Although Boyle was not in favour of the linkage—and it went into the arguments as to why it was not in favour—it said that if it was the express will of the House it was giving an indication of how that should be done. I would much rather accept that. The more we fudge it, the more difficulties we are going to get into. We should grasp the nettle and get the linkage arranged.

Every hon. Member knows the grade which was suggested. I think it was the hon. and learned Member for Beaconsfield who asked when the proposal was made. I hazard a guess that it was 1973, when we were in power. As a result of a Back-Bench rebellion or revolt on both sides of the House we managed to get that freely expressed opinion of the House that we should be linked to a certain grade in the Civil Service. Had that been carried into effect, it is interesting to note that our salary now would be £5,000 or £6,000 higher than it is.

I want now to come to the major issue of Members' pensions. Earlier when my right hon. Friend the Member for Openshaw was replying he mentioned certain countries and said that I had been kind enough to give him some detail about the poorest member of the Community of Ten, the Republic of Ireland. It may be the second poorest member now that Greece is in the European Community.

Members of Parliament in the Republic of Ireland are subject to parliamentary pressures. Like us, they have to stand at elections which take place, as in our country, at a date determined by the Prime Minister choosing the most suitable wind. So they are not immune. They are not elected for life. They have to stand and justify their actions, though the method of election is different, being by proportional representation.

What is done in the Republic of Ireland? They have a very sensible system. Not since 1973 have they had a debate on salaries. They set up a review body identified with a national wages agreement. Hon. Members may be interested to know that the salary of a Back Bench Member of the Dail will go up on 25 February to nearly £13,000; there is a period when it may be prayed against in a negative form but the effective date is 25 February.

This will be the second increase in a year. They had an increase in June 1980. The salary that will be paid to them in February, backdated to take account of the last two recommended increases, is the result of a review body, an analogue being taken and transposed for a Member of Parliament. They have an agreement on both sides of the House; there is a commitment from the Government and the Opposition that nobody will exploit it for political mileage purposes and it goes through comfortably.

The question of pensions for Members of Parliament in the Republic of Ireland was also settled a long time ago. They have a pension scheme based on fortieths. The average scheme outside is based on eightieths so the people of the Republic have recognised that there are special conditions related to Members of Parliament. I want to refer to those that affect me because one's personal experience, as was said by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), is relevant.

I came into the House at the age of 38½. As a miners' Member I was below the average age. The average age of Members who come from the pits, whether as a branch secretary as I was, or straight from the coal face, as some of my colleagues did, is over 40.

Arrangements were made to enable Members to buy added years. The lump sum provisions were beyond me. Twelve months ago I would have needed about £18,000 and I did not have that kind of money. It became possible to buy added years by paying a monthly contribution in addition to the ordinary pension contribution.

Because we have dodged the issue of giving Members a proper salary, we have an agreement whereby we receive a notional salary for pension purposes. The National Coal Board pension came in only in 1952. I contributed to the scheme right from the start. I became a local union official in 1957, and my pension was frozen at about l0p a year. I was to get it when I was 65. So I had no pension at all and I wanted to buy added years. Here I echo the tributes that have been paid to the staff in the Fees Office who have been helpful, sympathetic and understanding. My tribute is as sincere as the other tributes that have been paid. They have helped me enormously.

The Leader of the House may be interested in this because he mentioned a new arrangement for buying extra years. The calculation for me was based on the actual salary. The increase has been deferred against the wishes of Boyle. It was paid in one half and two quarters, the last quarter being paid this year. Instead of my calculation being based on £13,150, which is the notional figure, it was based on £9,450 when I first applied. Because of the method of calculation and the Inland Revenue limits I could buy only three years and 328 days. Had the calculation been based on the notional salary, I would have been entitled to another year. I have, therefore, been deprived of a year because of this barmy system of a real salary and a notional salary for pension purposes.

I ask the Leader of the House to look into this. The argument that by buying added years a Member can reach what would be achieved by a scheme based on fortieths does not apply in my case and in the case of many other Members.

I hope hon. Members will take their courage in their hands. I know those who are on the payroll have to earn their keep, but a scheme based on fortieths for Members of Parliament is not out of line. Under the present arrangements, even with my added years, I shall not be entitled to a pension worth half my pay until I am nearly 70. People outside the House would not agree to arrangements of such a nature, bearing in mind the age at which most Members enter the House. The system is not worthy of a democratic country such as ours.

I ask the right hon. Gentleman to have regard to the will of the House which has been expressed on two previous occasions on the question of linkage and salaries.

In July the House expressed itself forcibly on the fortieths scheme. The Leader of the House referred to the document circulated in October. It was really a Civil Service brief. Every possible argument in favour of us being tied to the Civil Service was used. When it was unfavourable to us, but when it was favourable to argue the other way that argument was dismissed. It was a "Heads we win, tails you lose" proposition.

I do not believe that the public will be outraged if British Members of Parliament are equal only to the second poorest country in the EEC—the Republic of Ireland. We are still way behind most of the other Western European countries in terms of pension arrangements. We should have tackled the problem a long time ago.

Most hon. Members will remember the chap that I succeeded, Mr. Tom Brown. He was a miner and a miners' agent. He came to the House when he was 57. We used to exchange the usual small talk and talk shop. I used to visit him after I became the Member for Ince. One day he became angry and bitter. He said that because there was no pension as of right in his time he had to submit to a means test. It was generously conducted compared with the vigilance of the DHSS which pursues people it believes to be receiving money under false pretences. He told me that he had been in the House for 22 years and that the maximum that he could claim was a very small amount. He felt that he deserved better. The public would agree with him.

We have fudged the issue for too long. I do not think that we are being over-generous. I am certain that the public will not think that we are being over-generous. I urge hon. Members to follow the example of the right hon. Member for Taunton (Mr. du Cann), to whom we owe a great debt. He said that it was easier for him, with his outside income and interests, to make the speech that he made than it would be for me. The obvious inference is that I am feathering my own nest and trying to confer on myself considerable benefits which are not applicable to others.

The arrangement for judges is sensible. I do not want that arrangement. They have special needs. A man becomes a judge when he has shown his mettle and a degree of maturity. Inevitably he will be a minimum of 50 years of age when he becomes a judge. To give him a pension of half pay at 65 is not unreasonable. To give Members of Parliament a reasonable pension of half pay after 20 years is also not unreasonable.

We would not be out of step with any other Western democracy. In most cases we would still be far behind. We would just about have parity with the Republic of Ireland. I hope that Conservative Members will defy the Government, because the Government are defying the expressed will of the House. I hope that they will follow what was done in July and earlier and vote for the amendment moved by my right hon. Friend the Member for Openshaw.

10.15 pm

Mr. John Bruce-Gardyne (Knutsford)

I have news for the hon. Member for Ince (Mr. McGuire). I do not know about the Opposition Whip, but we have a free vote on this issue.

Mr. McGuire

We do, too.

Mr. Bruce-Gardyne

Then there is no problem. I do not understand the argument about defying the will of the House. If the House votes in favour of the amendment in the name of the right hon. Member for Manchester, Openshaw (Mr. Morris), that is the end of the matter. The House will vote in that way and the Government will accept the decision. I shall be only too delighted to support my right hon. Friend in resisting the amendment.

My hon. Friend the Member for Kensington (Sir B. Rhys Williams) made the case most effectively when speaking against fortieths in the fortieths versus sixtieths argument. I was swayed by the arguments advanced by my right hon. Friend the Leader of the House in introducing the debate. I believe that the opinion previously expressed by the House was mistaken and I shall support my right hon. Friend in resisting the amendment to the motion relating to pensions.

I find the motion numbered 4 profoundly unsatisfactory. For several years, for reasons which we all understand, we have had our pensions related to a notional salary which we did not have the nerve to pay ourselves. I am delighted that we are moving back into line. It seems that we are making honest men and women of ourselves. I shall be delighted to support my right hon. Friend in resisting the proposition of the right hon. Member for Openshaw.

I shall devote the bulk of my remarks to the motion relating to salaries. Persuasive and eloquent as my right hon. Friend always is, I am bound to confess that on this issue he left me utterly unconvinced, as did my right hon. Friend the Member for Taunton (Mr. du Cann), whose arguments I listened to with great care. I listened attentively to my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell), with whom I frequently find myself in considerable agreement, not least when he seems to be in a minority. I found myself in disagreement with both my right hon. Friends and with my hon. and learned Friend.

Like my right hon. Friend the Member for Taunton, I have the opportunity to earn a substantial part of my income outside the House. I agree with my right hon. Friend that it is essential that we ensure that Members are paid to do their job. I agree with him entirely. The question is how we arrive at that solution. It is here that we have been and are in considerable danger of doing ourselves a mischief. My hon. and learned Friend complained that the motion relating to salaries does not advance us anywhere because there is no obligaton on the Government to accept the conclusions of the independent body which it was suggested the Select Committee might devise. That is true. I believe that we are chasing a chimera. There is no way in which the House can divorce itself from the responsibility of deciding about what it pays itself. It is an illusion for us to imagine otherwise. We have to take those decisions and always will have to.

However, buried—no, not buried, but exposed in the terms of the motion relating to salaries I find a proposition which is wholly unacceptable. It is said that we should set up a Select Committee to give further consideration to the desirability and possible method of conducting reviews of Members' salaries by an independent body once during the first Session of each Parliament and of adjusting such salaries during the periods between such reviews by reference to increases in the remuneration of a designated group of outside occupations. That was described as a basket of analogues. It was the right hon. Gentleman's brother, the right hon. Member for Manchester, Wythenshawe (Mr. Morris) who used that phrase. I do not think that is quite right. I should describe it as a bandwagon of analogues. We are seeking something to climb aboard.

Sir Ronald Bell

Does my hon. Friend not think it might be a bandalogue?

Mr. Bruce-Gardyne

My hon. and learned Friend is trying to confuse the passage of my thought. I shall not pursue him down that line. I do not believe that we in this House—I am appalled that we should imagine that we could—should establish a Select Committee to investigate the possibility of finding comparisons for ourselves, while, at the same time, we have, rightly, sent the good Professor Clegg back to confuse the minds of his students at Warwick university. We have suspended—I wish I could say we had abolished—the Civil Service Pay Research Unit.

My right hon. Friend the Member for Taunton said that these are not analogous, because the conclusions of such a comparability study would not be mandatory. I think that that was the phrase he used. If they are not mandatory, what the hell is the point of the whole suggestion? I thought that the whole idea was to get the study out of the body of the House and away from the embarrassment of discussing it. If the comparisons and conclusions are not to be mandatory we will throw the matter back into the House, as I believe we should.

Sir Ronald Bell

In every Session.

Mr. Bruce-Gardyne

As my hon. and learned Friend says, in every Session. If we institute a system of comparability, we shall be treating the public with contempt. We are saying that we should impose one law for the Civil Service, one law for wide areas of the public sector and another law for ourselves. I do not believe that that is defensible for a moment. Alternatively, my right hon. Friend says that it is not mandatory. In that case, what the hell are we doing because the argument will come straight back to the Floor of the House once a year?

In short, either this proposition in the motion relating to salaries is utterly meaningless and purposeless, as my hon. and learned Friend the Member for Beaconsfield suggested—in which case we should throw it out on those grounds—or we are indeed seeking to organise for ourselves a binding system of comparability which we have, rightly, thrown out for many of those for whose employment we are directly or indirectly responsible. I suggest that that is utterly indefensible.

Mr. Michael McGuire

I am trying to follow the hon. Gentleman's argument. Would he ever give Members of Parliament an increase in their pay? If so, how would he set about doing it?

Mr. Bruce-Gardyne

Yes, I would give Members of Parliament an increase. I should set about it in the way that we have always set about it. We would vote for it. There is no escaping our responsibility to determine and vote for the salaries that we pay ourselves. It is no good our imagining that we can do that. For several years in successive debates we have tried to devise some wonderful scheme that will exonerate us from all responsibility. It is my case that there is no way that that can be done.

The Government want to establish an independent body. For God's sake, we have an independent body—the Boyle commission. As I reminded my right hon. Friend the Leader of the House when he spoke at the begining of the debate, year after year we told Lord Boyle that we did not like his sums and that we were devising different sums. That was quite right, because I do not accept that Lord Boyle or anyone other than this House should decide what we should be paid. Successive Governments have been right to take a view on these matters, and to amend the conclusions put before us by review bodies. That being so, what on earth is the point of the motion? For my part, I find it wholly unacceptable. It is either meaningless or hypocritical to those for whose employment the House is responsible. The example that we give is irresponsible to others. I am bound to vote against it in the Lobby tonight.

10.27 pm

Mr. Nick Budgen (Wolverhampton, South-West)

I shall be brief. I shall not attempt to detain the House through argument, but simply wish to make a few short assertions which relate entirely to the motion relating to salaries.

I agree with my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell) that to send such a difficult decision to a Select Committee is a fudge. I am neither so priggish, nor so young, as to be opposed to all fudges. But I suggest that this fudge—though no doubt it will be widely recommended as something that can be easily forgotten—is dangerous for the Government to recommend to its payroll vote, and to invite the Leader of the House to usher in with such sympathy.

By sending the matter to a Select Comittee in such an efficient and sympathetic way, the Government are giving the impression, first, that they are in favour of linkage and, secondly, that they still adhere to the idea of comparability. I agree with my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) that linkage is complete nonsense. It is an insult to all Members of the House. I suppose that we are entitled to insult ourselves. If we wish to say that our unique occupation is comparable with some amalgam of activities within the public sector, I suppose that we can insult ourselves in that way.

I disagree with my hon. and learned Friend the Member for Beaconsfield that it is possible to push Members' pay away from the vulgar gaze of the public, quietly collect our salary cheques, and hope that no one ever inquires about what we receive. At the same time, he and I and others will have a splendid time making offensive noises about, for instance, the pay of Members of the European Parliament. We would not expect for a monent that anyone would be so offensive as to apply the same system to ourselves.

Sir Ronald Bell

My hon. Friend will appreciate that it is only in the interests of the brevity of the proceedings that I do not denounce them now.

Mr. Budgen

I appreciate that it is only because of my hon. and learned Friend's consideration for the House that he does not do so now.

On comparability, I agree passionately with my hon. Friend the Member for Knutsford. This was one of the first big mistakes that the present Administration got themselves hooked on. [HON. MEMBERS: "Why only the first?"] I hope that it will be a long Administration. Like all Administrations, it will therefore make a number of substantial mistakes. The first great mistake was in relation to the Clegg commission. It was most unfortunate that just before the last general election we said that we would honour the various claims that were then being considered by Clegg. We have had extreme difficulty in getting off the hook. We are now disengaging with difficulty, but we are not yet entirely disengaged. As I understand it, all that we have said is that the pay comparability exercise will be held in abeyance for one year. I believe that far more than that is required. We need a successful frontal attack upon the whole concept of comparability.

It is scarcely consistent with that philosophy to say that the principle of comparability should be extended to the pay of Members of Parliament. It is therefore not easy to understand how the Leader of the House, admittedly in his ambivalent role of Leader of the House and also as a Minister in the Government, can sympathetically recommend this particuler fudge to the House.

I therefore hope that all those who are free to vote in this way will support those of us who wish to oppose the motion relating to salaries.

Finally, there is also a provision for adjustments within reviews. It is a form of indexation. The Tory Party has flirted with indexation in its time. I believe that after 10 March our previous flirtation with what I call—it is quite a mouthful—the Rooker-Wise-Lawson amendment will be something that we shall come to regret and to find very embarrassing.

I hope that we shall not go along with the motion relating to salaries, because it is a small extension of that rather unwise philosophy.

10.33 pm

Mr. Pym

I think that after just over four hours in discussion of these motions the House will now wish to reach a conclusion. Having heard all the speeches that have been made throughout the debate, one is very conscious of what a difficult matter this is. I think that it is particularly difficult in this round, in view of the history of the matter.

I was interested in what my hon. and learned Friend the Member for Beaconsfield (Sir R. Bell) said about comparisons with the Civil Service. I had much sympathy with what he said, because he will remember, as I do, that only a few years ago linkage with the assistant secretary grade of the Civil Service was the fashionable view in the House. He did not support it, and neither did I. But since then things have changed.

My right hon. Friend the Member for Taunton (Mr. du Cann) said that Back Benchers' advice had not been properly taken and that successive Governments had not done their full duty by the House. I have some sympathy with that view. I should like to say, however, that I tried to frame these motions in the light of earlier debates and in the light of my predecessor's consultations.

I do not think that the House would expect or wish me to answer all the points that have been raised. I should mention in particular, however, the advice that we received from the hon. Member for Dagenham (Mr. Parker), who spoke from his long experience of what I believe is about two and a half times the average length of service. He took us back to the times before the war, and reminded us that salaries in the House have always been low.

My right hon. Friend the Member for Taunton also referred, quite rightly, to the fact that we receive less by way of salary and remuneration than members of almost any other Parliament in the democratic world.

The Father of the House said that it was not possible to compare the job of a Member of Parliament with any other job. I have a great deal of sympathy with that. The right hon. Member for Manchester, Openshaw (Mr. Morris) mentioned the risks attached to the office of a Member of Parliament.

The Father of the House also mentioned specific ideas, one in relation to the pension fund. The costs that were put before hon. Members in my predecessor's paper have taken the fund's assets fully into account. However, I shall certainly consider that suggestion and all the other suggestions put forward, including those from hon. Members whom I regard as experts. My hon. Friend the Member for Kensington (Sir B. Rhys Williams) made a thoughtful contribution on indexation. My hon. Friend the Member for Somerset, North (Mr. Dean) has expertise here. It would be unfair not to include in the hierarchy of experts the hon. Member for Nottingham, West (Mr. English). I shall consider all the points made and, where appropriate, write to hon. Members with the answers.

The motion dealing with the Select Committee received the most attention. It had a mixed reception. It had a number of passionate critics and a greater number of less passionate supporters. The fundamental point is to what extent linkage helps us. The right hon. Member for Openshaw said that it was hoped that the arrangement would keep the issue out of the public eye.

Mr. Charles R. Morris

Out of political controversy; not out of the public eye.

Mr. Pym

I thought that I wrote down "public eye", but "political controversy" will do.

My hon. and learned Friend the Member for Beaconsfield took the same view, but my hon. Friend the Member for Somerset, North was of the opinion that linkage would bring the pay of Members of Parliament further into politics.

My hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) said that whatever happened this House could not escape responsibility for the level of hon. Members' remuneration. It so happens that that is my personal view. Whatever steps we take, at the end of the day we cannot escape that. However, we may be proved wrong if we proceed with the motion, which my hon. Friend will oppose.

Several other points were raised. The hon. Member for Sheffield, Heeley (Mr. Hooley) asked why the Select Committee was so narrowly restricted. The answer, basically, lies in the discussions that my predecessor had with many hon. Members. It was felt that this was the best direction in which to go. I take the hon. Gentleman's point about the composition of the Committee. It needs to be widely spread.

There was discussion about the fortieths. A number of hon. Members felt that the motion voted on last summer should have been accepted and that that should have been the end of it. However, there were many consequences flowing from it, which the Government believed it right to put before hon. Members, and that was in part the origin of the paper that was circulated. The motion on hon. Members' pensions seeks to overthrow the decision that the House voted on last summer, but it nevertheless takes into account the points made and proposes an alternative method for meeting the need that was felt on both sides of the House. In that sense, it is a genuine attempt to be as sympathetic as possible to the views expressed in the House.

I hope that we can now come to a conclusion. I repeat that in the Government's view the right level for pensionable salary is £13,150. A number of hon. Members have spoken against the idea of a notional pensionable salary. The Government support that view.

I think it is the general wish that we should set up the Select Committee and take the issue from there. On the matter of hon. Members' pensions, I hope that after the arguments that I have put the House will feel that whereas this does not fulfil what they voted for in the summer it is, by another route, a means of achieving the same objective. What is more, it is one that is more individually designed to the differing needs of hon. Members and their circumstances.

On that basis, I hope that we can now come to a conclusion. I hope that the House will decide to support the Government in the Lobby, but, of course, whatever is decided is decided.

Amendment proposed, leave out £13,150', and insert '£13,750'.— [Mr. Charles R. Morris.]

Question put, That the Amendment be made:—

The House divided: Ayes 44, Noes 121.

Division No. 78]	[10.41 pm
AYES
Beith, A. J.	Dubs, Alfred
Bell, Sir Ronald	du Cann, Rt Hon Edward
Best, Keith	Fisher, Sir Nigel
Bottomley, Peter(W'wichW)	Gardner, Edward (S Fylde)
Campbell-Savours, Dale	Garrett, W. E. (Wallsend)
Cohen, Stanley	Hamilton, W. W. (C'tral Fife)
Crowther, J. S.	Harrison, Rt Hon Walter
Cryer, Bob	Haynes, Frank
Cunningham, G, (Islington S)	Hooley, Frank
Dalyell, Tam	Kilfedder, James A.
Lamond, James	Ross, Stephen (Isle of Wight)
Leadbitter, Ted	Shersby, Michael
Leighton, Ronald	Soley, Clive
McDonald, DrOonagh	Spriggs, Leslie
McGuire, Michael(Ince)	Squire, Robin
McKay, Allen (Penistone)	Tinn, James
McWilliam, John	Wells, Bowen
Morgan, Geraint	Wheeler, John
Morris, Rt Hon A. (W'shawe)	Whitlock, William
Morris, Rt Hon C. (O'shaw)	Winterton, Nicholas
Ogden, Eric
Palmer, Arthur	Tellers for the Ayes:
Parker, John	Mrs. Gwyneth Dunwoody and
Pendry, Tom	Mr. Michael English
NOES
Aitken, Jonathan	Gummer, JohnSelwyn
Alton, David	Haselhurst, Alan
Arnold, Tom	Havers, Rt Hon Sir Michael
Atkins, Rt Hon H.(S'thorne)	Hayhoe, Barney
Atkinson, David(B'm'th,E)	Henderson, Barry
Baker, Kenneth(St.M'bone)	Heseltine, Rt Hon Michael
Beaumont-Dark, Anthony	Hooson, Tom
Benyon, Thomas(A'don)	Howe, Rt Hon Sir Geoffrey
Berry, Hon Anthony	Howell, Rt Hon D. (G'ldf'd)
Biffen, Rt Hon John	Hunt, David (Wirral)
Blaker, Peter	Jopling, Rt Hon Michael
Boyson, Dr Rhodes	Joseph, Rt Hon Sir Keith
Brittan, Leon	Lamont, Norman
Brooke, Hon Peter	Lawrence, Ivan
Bruce-Gardyne, John	Lawson, Rt Hon Nigel
Bryan, Sir Paul	LeMarchant, Spencer
Buchanan-Smith, Alick	Lester jim (Beeston)
Budgen, Nick	Luce, Richard
Carlisle, Kenneth (Lincoln)	Lyell, Nicholas
Carlisle, Rt Hon M. (R'c'n)	Macfarlane, Neil
Chalker, Mrs. Lynda	MacGregor, John
Channon, Rt. Hon. Paul	McNair-Wilson, M.(N'bury)
Clarke, Kenneth (Rushcliffe)	Major, John
Dean, Paul (North Somerset)	Marshall Michael(Arundel)
Douglas-Hamilton, LordJ.	Mather, Carol
Edwards, Rt Hon N. (P'broke)	Mayhew, Patrick
Emery, Peter	Mellor, David
Fairgrieve, Russell	Miller, Hal(B'grove)
Finsberg, Geoffrey	Mitchell, David (Basingstoke)
Fletcher-Cooke, Sir Charles	Moate, Roger
Forman, Nigel	Monro, Hector
Fowler, Rt Hon Norman	Moore, John
Garel-Jones, Tristan	Morris, M. (N'hamptonS)
Goodlad, Alastair	Morrison, Hon P. (Chester)
Gow, Ian	Nelson, Anthony
Grist, Ian	Neubert, Michael

Newton, Tony	Spicer, Michael (SWorcs)
Nott, Rt Hon John	Stanbrook, lvor
Oppenheim, Rt Hon Mrs S.	Stanley, John
Page, Rt Hon Sir G. (Crosby)	Steel, Rt Hon David
Patten, Christopher(Bath)	Stewart, Ian (Hitchin)
Patten, John(Oxford)	Stradling Thomas, J.
Penhaligon, David	Tebbit, Norman
Percival, Sir Ian	Temple-Morris, Peter
Pym, Rt Hon Francis	Thatcher, Rt Hon Mrs M.
Raison, Timothy	Thompson, Donald
Rathbone, Tim	Thorne, Neil (llford South)
Rees, Peter (Dover and Deal)	Townend,John(Bridlington)
Renton, Tim	Townsend, Cyril D,(B'heath)
Rhodes James, Robert	Vaughan, Dr Gerard
Rhys Williams, Sir Brandon	Viggers, Peter
Ridley, Hon Nicholas	Waddington, David
Rifkind, Malcolm	Wakeham, John
Roberts, M. (Cardiff NW)	Waller, Gary
Roberts, Wyn (Conway)	Warren, Kenneth
Rossi, Hugh	Wiggin, Jerry
Sainsbury, HonTimothy	Young, Sir George(Acton)
Shaw, Giles (Pudsey)	Younger, Rt Hon George
Shaw, Michael (Scarborough)
Silvester, Fred	Tellers for the Noes:
Sims, Roger	Mr. John Cope and
Speed, Keith	Mr. Robert Boscawen.
Speller, Tony

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That, in the opinion of this House, the ordinary salary of every Member in respect of service on and after 13 June 1980 should be regarded for pension purposes as being at the rate of £13,150.