HC Deb 31 January 1991 vol 184 cc1207-15 10.11 pm
The Lord President of the Council and Leader of the House of Commons (Mr. John MacGregor)

I beg to move, That this House endorses the proposals for improvements in Members' Pensions and Scheme Benefits to be contained in regulations under the Parliamentary and other Pensions Act 1987. Earlier today we had the Second Reading of the Ministerial and other Pensions and Salaries Bill. That dealt largely with the pensions, salaries and allowances of Ministers and office-holders. We now turn to the parliamentary pension scheme itself. There has inevitably been some overlap between the two in that several of the issues legitimately for this debate have already been raised in the previous one. The right hon. Member for Salford, East (Mr. Orme) quite understandably covered the most important ones because they are of greatest interest to Opposition Members. I make no complaint about that. I understand fully why he did it and I was almost tempted to do it myself. I hope that it will save time now, because it means that I can be brief.

Until the Parliamentary and Other Pensions Act 1987 was enacted, the scheme was contained in statute. But that Act gave us the power to make changes by regulation. It is a requirement of the Act that I should consult the trustees on any proposed changes to the scheme, and my predecessor and I have been in close touch with them on the regulations before the House.

I should like now to pay a proper tribute—I had to move very fast at the end of the earlier debate, so was unable to do so—to the trustees and to their chairman, the right hon. Member for Manchester, Wythenshawe (Mr. Morris), for the sterling work which they put in on behalf of us all as Members of the House. I also join in the tribute to those in the Fees Office whom the right hon. Gentleman listed for what they do for us on pensions. I also thank the Treasury officials—I know that the Fees Office staff greatly value their assistance. I am pleased to be able to say that the regulations have been accepted by the trustees.

To move from statute to secondary legislation as a means of making changes to the parliamentary pension scheme means that the House may only reject or accept the relevant regulations. Because, however, of the need to be sure that the House has the opportunity to comment on any amendments, the Paymaster General, in May 1987, gave an undertaking that the regulations would be set before the House in draft so that hon. Members might make their views known and have them taken into account. That is the purpose of the motion. The regulations themselves are subject to the negative resolution procedure.

The regulations make certain improvements in Members' early retirment arrangements and some changes in relation to Members of the European Parliament. They provide that Members who have accrued the maximum pension will cease to make contributions. They double the death in service gratuity in a way that will cover all those Members who, sadly, have died during this Parliament. They increase widows' and widowers' pensions from half rate to five eighths and they empower the trustees of the parliamentary contributory pension fund to appoint an agent to acquire and dispose of the assets of the fund on their behalf. I doubt whether the House would want me to cover them all in detail, but I should be happy to cover points at the end of the debate.

As the right hon. Member for Salford, East said, the proposals on widows' pensions, death in service benefits and the problem of excess contributions are all common to many other schemes. They are fair and modest and are to be welcomed generally. Others are technical and come into the category of what I might describe as tidying up.

I would, however, like to make two general points. First, the main benefits operate from 6 April 1988. That I believe is right. It means that they start broadly from the point at which the TSRB recommended them, and the Government accepted the recommendation. It would not have been fair in any way to disadvantage the widows of colleagues who, sadly, are no longer with us because of delays for other reasons in implementing the decision.

Secondly, I want it to be clear, as my hon. Friend the Member for Horsham (Sir P. Hordern) pointed out in the earlier debate, that the benefits are being funded from within the scheme itself. As he said, they effectively come from the last actuarial surplus. The reason for stopping at a five eighths widows' pension is that that, together with the other improvements, exhausted the surplus. Hon. Members will want to be aware that if and when the surplus is exhausted—I say if and when—contributions would have to rise to pay for those benefits.

Mr. Ray Powell (Ogmore)

In the earlier debate we talked about surpluses and the Treasury's contribution. I understand that if we had a surplus the Treasury's contribution would be less. Therefore, would the surpluses have been available if the Treasury had made a proper contribution and not the 4.5 per cent. that it contributes now?

Mr. MacGregor

The system was operated according to the present rules. However, as a result of discussions, there was some contribution to benefits as well as the change that was made to the Treasury contribution. The hon. Gentleman will know from our earlier debate that we are now proposing to take that issue to the TSRB. We explored that in some detail.

Judging from the representations that I have received and the comments earlier this evening of my predecessor, my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), to whom I listened carefully, the main point of contention left relates to former MEPs. Let me be clear what the issue is about. The background is that we have two pretty well identical pension schemes for MPs and MEPs. We are proposing to allow years as an MEP to count as service in the House for the purpose of the early retirement scheme in future and vice versa. What we agree to do here we will also implement for the MEP scheme. In other words, the symmetry will be maintained.

The only question is whether the years of service in the other Parliament should be those after the point at which the regulations are approved, or whether all years of service in either place should be included when an MEP comes here or an MP goes to the European Parliament.

That is a narrow issue, peculiar and particular to the parliamentary pension schemes. It is important to stress that. It is not an issue which ranges more widely to other pension schemes or arrangements. The point is also a fine one and arguments can be advanced on either side. The cost will have to be met from the fund and it must be very small.

I do not want to go into all the details this evening if I can avoid doing so. I hope that it is sufficient for me to say that, on balance, I am prepared to look sympathetically at the representations that I have received and my objective will be to accommodate them.

Finally, I should say something about the costs of these measures. The additional cost of all these changes to the total standard contribution is about 2.25 per cent. The total standard contribution, on current estimates, would need to rise, were it not for the surplus, to 22.25 per cent. As I made clear in my speech earlier this evening, one disadvantage of the approach to funding the scheme which the trustees have said they favour is that Members' contributions could fluctuate—perhaps wildly—and if the total contribution were to increase to pay for extra benefits, that cost would automatically be split, pro rata, between right hon. and hon. Members and the Exchequer. We do not need to take decisions on that now. We shall, of course, have an opportunity to take stock of the position after the next Government Actuary's department report is published and when the TSRB has reported. I intend then to hold a debate, which will allow the House to express its views on both reports.

As I said earlier, we need now to get the new arrangements into operation so that the benefits can be paid. Once the House has expressed its opinion on these regulations, I intend to lay them formally and they will come into force 21 days later. I commend the motion to the House.

10.22 pm
Mr. Ray Powell (Ogmore)

I do not want to delay the House unduly. However, there are a few points that need to be mentioned. I refer, in particular, to the basis on which our pensions are calculated. Some years ago, it was recommended that our salaries should be based on a certain civil service spine. Then the TSRB suggested that we should receive 85 per cent. of the salaries on that spine. In other words, we were to get 15 per cent. less than we expected. In addition, we had to make a pension contribution of 9 per cent., whereas civil servants, including some Treasury officials who were pressing for the system that was to be applied to us, and whose salary scale was close to ours, had a non-contributory pension scheme. We were told that it was a question of what part of the spine the civil servants were on.

We are losing out on two counts. First, whereas civil servants have a non-contributory pension scheme, we have to pay 9 per cent. Our salaries would be higher were it not for the fact that those of civil servants are not reduced by way of pension contributions. Secondly, we receive only 85 per cent. of the civil servants' rate. It is time that these issues were examined in great depth and detail, and a look should be taken at recommendations that have been made in the past. I recommend that we should be put on the scale of first secretary or secretary.

For the first time ever, the Government are providing for ministerial redundancy pay. Indeed, Ministers and others will receive two pensions. In this context, let us consider the obvious inequities of the resettlement grant for Members of Parliament generally. Surely common justice demands that those inequities be removed before redundancy pay for Ministers is introduced. Why should it be so simple to introduce legislation to benefit yourself, Mr. Speaker, the Prime Minister, Ministers and others? Why should that group have pensions paid immediately, whereas ordinary Members of Parliament must wait for recommendations to go to the TSRB?

Mr. MacGregor

The Bill is based on the TSRB's recommendations of two years ago—but I am proposing, on resettlement grounds, that the TSRB should reconsider that aspect.

Mr. Powell

I thought that I had emphasised that it would be a simple matter for you to institute. It seems to me rather selfish that you—

Mr. Speaker


Mr. Powell

I mentioned you, Mr. Speaker, because you would be covered by the provisions of the Bill. Therefore, it seems selfish to introduce that benefit for Ministers and others, whereas the rest of us will have to wait.

I accept the point made about the TSRB, but I remain sceptical because we are all under the impression that we would be on a spine with the civil servants, but then we learned from the TSRB report that the proportion of salary allowed was 85 per cent. and not 100 per cent.

I acknowledge the right hon. Gentleman's earlier remarks, but the 9 per cent. that we pay into the scheme and the Treasury's miserly 4.4 per cent. should be re-examined, so that the Treasury's contribution is at least compatible to that which would be made by a private business outside the House.

10.25 pm
Mr. Peter Fry (Wellingborough)

I want to avoid covering old ground and delaying the House unduly, but I feel strongly not only at a personal level but on behalf of many Members of Parliament, past and present. The House should record its gratitude for the work done by the Committee chaired by the right hon. Member for Manchester, Wythenshawe (Mr. Morris) and its thanks for the clarity of the proposals from my right hon. Friend the Leader of the House in trying to achieve progress. This issue is one that tends to be long neglected, but the only people who suffer are Members of Parliament, when they retire.

The hon. Member for Ogmore (Mr. Powell) clearly spelt out the reasons for the mess in which we find ourselves. He knows full well that it was a late-night deal, cobbled together because the House would not accept the recommendations on right hon. and hon. Members' pay —and it has created a number of complications.

It is relevant to make comparisons with schemes available to others. There can hardly be a scheme anywhere else in the country in which the employer's contribution is half that made by the employee, which places us in a special category. Either we can trust the contributions made by the Treasury and right hon. arid hon. Members, or we must look for improvements to the existing scheme.

Some might ask why the scheme should be improved, because Members of Parliament are, in comparison with many others, reasonably well paid. Despite the improvements made in recent years, many right hon. and hon. Members may be surprised to learn how small a percentage of their final pay they will receive as a pension when they retire. If I am fortunate to be re-elected and to reach my 65th birthday, I will have been a Member of Parliament for 26 years. One might imagine that length of service would entitle one to a full pension, but even after buying the extra number of pension scheme years that I am allowed, my pension will reach only 52 per cent. of my final pay.

Why are Members of Parliament different from people in other occupations? I shall try to give the Leader of the House a strong reason.

Earlier this evening I was talking to a colleague, who pointed out that when he came to the House he was earning twice the salary of a Member of Parliament. He had reached that moment in life when he was starting to earn a good salary and to progress, but he voluntarily gave it up to accept what was effectively half pay. Some people would say that that was his choice. But, just as in the age of noblesse oblige, I believe that an employer should be judged in the way that he treats his servants. Therefore, the Government should be judged on how it pays those who give public service. If we give excellent public service pensions to the civil service, on a non-contributory basis, surely we deserve some consideration when we contribute 9 per cent. of our pay.

A large number of hon. Members have given many years service, and have deliberately given up the opportunity to earn a lot more money. That peculiarity should be recognised. Although it has been said that we should not make comparisons with other Parliaments in other parts of the world, many of them recognise that relationship, and have a much shorter qualifying period before a Member of Parliament can obtain a full pension. I hope that that will be considered.

Although I welcome the increase in the widow's pension, I cannot for the life of me understand why we have not gone for the full two thirds widow's pension. That is allowed under the present tax regulations and is accepted in every modern pension scheme, but we deliberately pitch the widow's pension a bit below that level. It is not us who will suffer, but our widows—those wives who have to put up with a Member of Parliament as a husband and suffer all the privations and problems that wives often do. If there is any area where we should do the maximum that we can, then it is in helping the widows of former hon. Members. When this issue is next considered, I hope that that figure will be upped to the full two thirds.

Finally, like the hon. Member for Ogmore, I must refer to the question of resettlement grant. I understand that the normal retirement age is 65, and one's 65th birthday is a watershed. However, virtually everyone else in the country has some degree of choice about when they retire. This Parliament may be atypical, but when a Parliament runs on for longer than expected a number of hon. Members will lose the resettlement grant, whereas they would have received it if the election took place this summer or autumn, for example. This is not a very supportable case and the amendment, tabled and signed by more than 300 hon. Members, which would allow Members to take the grant, as long as they retired at the election after their 65th birthday, is acceptable.

Before I sit down, I should like to ask the Leader of the House a few questions about the resettlement grant. Under the present scheme, what would happen if an hon. Member realised that the general election would be after his 65th birthday, and he applied for the Chiltern Hundreds on the day before his 65th birthday? First, what would happen if he did that voluntarily? Secondly, what would happen if he had a medical certificate which said that he should not continue as a Member of Parliament? We all know that a number of hon. Members are looking forward to the day when they can retire, but they stay so that there will not be a by-election. Ideally, in their own interests, some of those hon. Members should go a little earlier. If we are not going to get outselves into a terrible muddle over this, we must have a clear sign that the settlement grant will be paid on a fair basis—at the nearest date to an hon. Member's 65th birthday, whether it is just before or just after.

I am grateful for the improvements that have been made to the scheme, but they have taken a long time to come. However, in all honesty, I am not completely satisfied, and I think that many hon. Members appreciate that much more needs to be done if we are to give hon. Members and their dependants the pension scheme perhaps not just that we deserve, but the one that we pay for.

10.34 pm
Ms. Joyce Quin (Gateshead, East)

I had hoped to speak earlier, but let me now put on record my strong support for what was said by my right hon. Friends the Members for Salford, East (Mr. Orme) and for Manchester, Wythenshawe (Mr. Morris). I especially welcomed their concern for widows and widowers, and for Members who, having served in the House for several years, might receive little in the way of entitlement. I also agreed with what was said by hon. Members on both sides of the House about the imbalance between Treasury contributions and ours.

For the first time, I have an interest to declare. As a former MEP, I am obviously concerned about the eight years in which I served in the European Parliament. I thank the Leader of the House for his opening comments, and I am glad that he is going to examine what we consider to be an anomaly in the treatment of Members of Parliament and MEPs.

The schemes were originally designed to be identical, and many of us supported that strongly: we wanted salaries and pensions to be the same in both Parliaments. We argued against a "Euro-salary", believing that, because Members belonged to their own countries, they should be governed by national conditions in those countries. It was a matter of regret to us when the early retirement provisions departed from that principle, and a matter of satisfaction when a change was proposed—although those of us who had already served in the European Parliament were left in a rather peculiar position. It would certainly be difficult for us to accept being relegated to an even smaller group of people disadvantaged by the timing of the measures if we were joined in future by former MEPs who were able to benefit.

I thank the Leader of the House for his willingness to reconsider the matter. It is a small problem that can easily be cleared up, but it is very important to those of us who are in that small category.

10.36 pm
Mr. David Harris (St. Ives)

Let me associate myself with everything said by the hon. Member for Gateshead, East (Ms. Quin), both about the wider issue and about a position that affects no more than a dozen or so hon. Members who have served in the European Parliament.

It is always invidious to make special pleas on behalf of oneself, but I honestly do not think that we are asking for a concession. We merely feel that we should be treated in exactly the same way as other hon. Members who have been members of the pension fund throughout. It should be remembered that, as Prime Minister, Lord Callaghan was instrumental in determining that MEPs should be paid precisely the same salary, and have precisely the same pension terms, as Members of Parliament. I would not have it otherwise; I think that his decision was entirely correct. The early retirement provision contains a curious anomaly. We merely want to ensure that we are treated in the spirit of Lord Callaghan's proposal—made, I believe, at a summit meeting many years ago.

I, too, thank my right hon. Friend the Leader of the House for the way in which he has approached the matter. I also thank my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) for his generous remarks. Lest there be a scintilla of doubt, let me make it clear—as the Parliamentary Private Secretary to whom he referred—that what he said came as a complete, albeit pleasant, surprise to me, and that I did not put him up to it!

I again thank my right hon. Friend the Leader of the House, on behalf of a very small group of hon. Members who simply ask to be treated in the same way as every other Member of Parliament.

10.39 pm
Mr. Alfred Morris (Manchester, Wythenshawe)

The House will be grateful to the Leader of the House for his succinct remarks in opening the debate.

I set out in some detail the views of the managing trustees in our earlier debate on Second Reading. There are some questions that remain unanswered and I know that the right hon. Gentleman will respond to them by correspondence as soon as he can. All I would emphasise again now is that the trustees most strongly pressed for a two thirds widow's pension and that we shall continue to argue for that further change in the scheme.

The improvements for which the regulations provide are, of course, mainly in keeping with what my fellow trustees and I have long advocated. We must now hope that the Top Salaries Review Body will be as intelligently responsive as the Leader of the House to the further improvements we have been seeking.

10.40 pm
Mr. Peter Bottomley (Eltham)

I have to declare two interests that relate to different points. First, we should not regard the Chancellor of the Exchequer or the Government as representing the taxpayers' interests and the rest of us as representing our own, or those of our potential widows or widowers. All of us are the taxpayers' representatives. I should prefer the trustees and the board to hear at least one person say that the 9 per cent. contribution is fair and reasonable, so long as the benefits for pensioners continue to improve, whenever that is thought sensible. I should much prefer to see a larger-than-usual deduction from my salary so that the accrual of pension entitlement reflects the genuine conditions that affect most people when they enter Parliament.

It is possible to become a Member of Parliament before one reaches the age of 30 and for some Members to serve until they are 65 and to get close to the maximum entitlement, but that does not apply to most hon. Members. I should prefer an increase in the pension entitlement to be made available before 65. Anyone who has served as a Member of Parliament for 20 years or so and who chooses to go should be able to do so on full pension.

The regulations make a great deal of sense. I hope that Members of Parliament will continue to ensure that those hon. Members who are not as well off as others manage to make reasonable provision for their widows and children. What has happened during the past year, with younger Members of Parliament dying, provides us with a reminder that there is much private misery. However much the Members' fund may be able to help some, it is far better that there should be entitlements—which are some of the best in the country—so that people do not suffer unnecessarily if death overtakes an hon. Member at an early age.

10.42 pm
Mr. MacGregor

I can respond briefly to the debate. As the hon. Member for Ogmore (Mr. Powell) knows, salary questions are not a matter for this debate. He referred to pensions and benefits. The question of the balance of contributions is, as he knows, going to the Top Salaries Review Body, as is the resettlement grant.

I agree with my hon. Friend the Member for Wellingborough (Mr. Fry) that we do not have particularly generous arrangements for ourselves, but we must be careful when voting about our own terms and conditions—hence the importance of ensuring that issues are referred to the TSRB for its recommendations. It is the TSRB recommendations which we have debated, both earlier today and now.

My hon. Friend referred to the resettlement grant. One peculiarity of service in this place is that we cannot choose when we shall retire. That is usually decided at a general election. If he was here this afternoon, he will know that I made that point.

My hon. Friend said that he hoped that we could move swiftly to a two thirds widow's pension. He asked why it was five eighths. I said in my opening remarks that that was agreed with the trustees because it brought us to the limits of the actuarial surplus that was then being discussed.

I am afraid that I have to disappoint my hon. Friend about one point relating to the resettlement grant. Under the present arrangements, or those suggested in early-day motion 299, that would not be available for those who seek the Chiltern Hundreds. So those of my hon. Friends or anyone else who might be tempted to exercise leverage by applying for the Chiltern Hundreds to secure a resettlement grant would not succeed in getting the arrangements changed because it does not apply in those circumstances.

The right hon. Member for Manchester, Wythenshawe (Mr. Morris) raised one or two points in the earlier debate. I am sure that he will forgive me and understand why I did not comment on them in the swift reply that I had to give to the debate. From memory, the one point that he wanted me to address was whether the House would be able to debate anything that came from the TSRB whether or not the Government came forward with regulations. I am sure that that can be dealt with through the usual channels if and when it arises, but at this stage it is a hypothetical question.

I hope that the right hon. Member for Wythenshawe and the House will agree that the fact that I have moved fast in putting the Ministerial and other Pensions and Salaries Bill to the House, implementing the earlier TSRB recommendations, and in putting as a matter of urgency to the TSRB the two points on which the House has today expressed particular concern, will show that I want to advance and settle the issues. One way of helping in that is to approve the motion now.

Question put and agreed to.

Resolved, That this House endorses the proposals for improvements in Members' Pensions and Scheme Benefits to be contained in regulations under the Parliamentary and other Pensions Act 1987.