Parliamentary Pensions

HC Deb 17 July 1995 vol 263 cc1412-26 9.42 pm

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton)

I beg to move, That this House endorses the proposals for changes in Members' pension scheme benefits to increase the death in service gratuity to three times the Member's annual salary, to allow Members to nominate individuals, institutions and trusts to receive the death in service gratuity and, when the Pensions Bill is enacted and relevant Regulations under it made, to establish a formal dispute resolution procedure as recommended in the SSRB Report on the Parliamentary Pensions Scheme laid on Thursday 30th March (Cm 2830).

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

I should like to inform the House that I have selected the amendment in the name of Mr. Alfred Morris.

Mr. Newton

Along with all right hon. and hon. Members, I plainly have an interest to declare in the subject that we are debating.

The motion follows the publication on 30 March of the Government Actuary's latest report on the parliamentary contributory pension fund and the Senior Salaries Review Body report on its review of the parliamentary pension scheme, and the Government's response to that. The Government recommended acceptance of all but one of the SSRB's four recommendations, and I shall deal with the three that I have recommended and the one that I have not.

I should like briefly to remind the House of the background to the debate, and to do that I shall make two points. First, in 1991, the SSRB recommended that it should review the pension scheme regularly at the time of the Government Actuary's triennial valuation of the fund. This has been the first review under those arrangements, and on behalf of the House I should like to thank the members of the SSRB—particularly those who were on the special sub-committee that was set up to deal with the review—for their work.

Secondly, I should like to deal briefly with the procedure for changing the scheme. Changes to the pension scheme regulations are made under the negative resolution procedure in accordance with the Parliamentary and Other Pensions Act 1987. It has, however, always been the case that the House is first given an opportunity to discuss proposals for changing the scheme before the regulations are laid; that is the purpose of the debate tonight.

I should add that, under the 1987 Act, I have a duty to consult the trustees about the regulations. I have, of course, done so and I take this opportunity to thank the trustees and their chairman, the right hon. Member for Manchester, Wythenshawe (Mr. Morris), on behalf of both current and former Members of Parliament and their dependants, for their valuable work, which I know is much appreciated. I have also consulted the chairman of the parliamentary Labour party and the chairman of the 1922 Committee.

With those brief introductory comments, I come to the SSRB's recommendations and our proposals. Three of the recommendations present little or no difficulty. Two are, in effect, procedural. The first is that the scheme should allow Members to nominate more than one individual, as well as institutions and trusts, to receive the death-in-service gratuity. That seems sensible, and we can readily accept it. It will provide Members with the proper scope to make nominations as they see fit. I need only add a few words about its potential effect on future nominations.

The way in which the current rule operates has the effect that the nomination is ignored if it is made in favour of a person who has been the husband or wife, but who, at the time of death, is no longer so. The gratuity is then paid to the personal representatives. The intention is to treat multiple nominations in the same way. If more than one individual is named and one of the nominees has to be disregarded, the proportion of the gratuity that would have been paid to that person will pass to the personal representative. Nothing in the proposed regulations disturbs the current position, which allows Members to change their nomination at any time.

The second of the procedural recommendations is that a formal dispute resolution procedure should be established for the scheme. Again, that is entirely sensible and acceptable. The only reason why I have not already produced a draft regulation in this respect is that—I think I can say that the trustees agree—it seems sensible to wait until we have the detailed provisions which will follow the present Pensions Bill so that we can be sure that the procedures that we put in place for our scheme are consistent with the rules for schemes generally. I will, of course, consult the trustees about the terms of any such regulation before it is laid, including on the question of to whom appeals should go at the third stage. I do not envisage a further debate as long as the trustees are content with the final proposals.

The third of the SSRB's proposals that I can recommend is concerned with the benefits of the scheme. The recommendation is to improve the death-in-service gratuity from two to three times annual salary. That change is fair and it can be justified given the particular circumstances of Members even though this aspect of the scheme now compares favourably with other public service schemes. I propose to bring that recommendation into effect from 1 April 1995.

The fourth proposal is clearly the most contentious, and is the subject of the amendment in the name of the right hon. Member for Wythenshawe and a number of others. The proposal is that the rate of accrual for Members' pensions, which is currently 60ths in respect of all service before 20 July 1983 and 50ths for all service thereafter, should, in respect of those of us who are still Members of Parliament, be retrospectively improved to 50ths for the years before 1983. The Government do not feel able to recommend this proposal to the House for a number of reasons, which I shall set out in a moment.

Before doing so, I should briefly make clear precisely who is and who is not affected by the proposal, as one or two comments that have been made to me in the Corridors suggest that there may have been some misunderstanding. As I have said, the proposal concerns only periods of service before 20 July 1983. It follows that no one first elected in 1987 or 1992, or at a by-election in those 12 years, is affected in any way at all. The number in the unaffected category is 362—more than half the House. Those elected in 1983 are affected only to a very small extent: the improved accrual rate would apply only to a short period of service between June and July. The number in that category is 104.

Thus, the total number of Members who are either unaffected, or affected to a degree that might be described as de minimis, is 466. The remainder would have an improvement in their pension rights, the size of which would depend on the extent of their service before 1983.

Mr. David Harris (St. Ives)

Will my right hon. Friend give way?

Mr. Newton

May I first finish this point, because it concerns me? Having already declared a general interest, I should make it clear that the number of those whose pension would be improved beyond a de minimis amount includes me, as I was first elected in February 1974. In view of the arguments that I am about to adduce, I suppose that that could be described as a perverse interest.

Mr. Harris

I declare an interest in this matter. Would my right hon. Friend care to inform the House what would be the position of those hon. Members who were elected to the European Parliament in 1979 but entered this House in 1983? Would they be affected by the provisions?

Mr. Newton

Yes, I think that they would because the same pension scheme applies to Members of the European Parliament as well.

Sir Peter Fry (Wellingborough)

May I declare my interest, in that I was here before 1983? I am fascinated as to why my right hon. Friend suggests that our widows should be helped—so they will benefit after we are dead through the death-in-service payment—but apparently resists any attempt to help us while we are still alive.

Mr. Newton

My hon. Friend puts his point in a characteristically good-natured way. I am afraid that the rather more solemn answer is that the proposed improvement in the form of the death-in-service gratuity is, in effect, from a current date and therefore has no retrospective element, whereas the proposal to improve the accrual rate for years in service now more than 10 years ago is an entirely retrospective proposal. That raises additional arguments, to which I shall come shortly.

Sir Andrew Bowden (Brighton, Kemptown)

I declare an interest, in that I was elected to this House in 1970. I hope that, by emphasising to the House how many Members are not affected, my right hon. Friend is not using that as an argument to persuade hon. Members to vote against the amendment. That would be wrong, because only those affected should be allowed to vote.

Mr. Newton

My hon. Friend, too, puts his point in a characteristically good-natured way. I set out the facts and figures in the way that I did, not as an argument against the amendment but simply because it had become apparent, talking to a number of our more recently elected colleagues in the Corridors in the past week or so, that some of them were harbouring hopes that would be disappointed in respect of what they might get out of this debate. I meant no more than that.

In picking up what my hon. Friend the Member for Wellingborough (Sir P. Fry) said a few moments ago, I should first remind the House that this is not a new argument but one that took place some four years ago when the former Top Salaries Review Body—the forerunner of the current Senior Salaries Review Body—made a similar recommendation and when the House accepted the Government's view that it should be rejected.

In setting out the issue which the House as a whole must face and address as a matter of public policy, I can do no better than quote what my predecessor, my right hon. Friend the Member for Norfolk, South (Mr. MacGregor), said in the debate almost exactly four years ago on 18 July 1991: the TSRB did not point to other schemes, public or private, which have adopted that approach on accrual. If we adopted that retrospective change—which is what it would be—we should be under strong pressure to make similar changes to other public service schemes and the repercussions could be very expensive. I do not believe that it is possible to justify going back almost two full Parliaments"— it would now be nearer three— to undo a decision made eight years ago, and never questioned in the interim. Moreover, it is a particularly unnecessary change as provision already exists for Members to purchase added years at the improved rate of accrual. Those who have chosen not to upgrade their pension have obviously felt that they had good reason for not doing so. Of course, many of our colleagues did upgrade their pensions. I believe that the choice should continue to be left to the individual Member."—[Official Report, 18 July 1991; Vol. 195, c. 615.] Those arguments weigh substantially and are compelling today, as they were then.

Mr. John Garrett (Norwich, South)

They may be arguments, but they are all flimsy arguments. How many public service schemes changed from 50ths to 60ths at that time? When that speech was given, the Treasury contributed 4.5 per cent. and we contributed 9 per cent. to the fund. Surely, the point is that this is not a generous scheme by any manner of means compared with civil service and public service schemes because of, for example, the severance arrangements.

Mr. Newton

The hon. Gentleman has skated away from the point that was a significant ingredient in what my right hon. Friend said four years ago and in what was said in the House only a fortnight ago in discussions on possible improvements to the armed forces pension scheme in respect of pre-1973 cases. After that debate, the House voted against a retrospective change, which might be said to be comparable in some respects, by 199 votes to 41, I think it was, with the official Opposition Front-Bench team advising hon. Members not to vote for the amendment. That needs to be borne in mind. The key point is whether the scheme is retrospective, not whether there should be the improvements in the scheme that I am proposing now in respect of the death-in-service benefit. The issue is whether those changes should be made retrospectively.

Dame Elaine Kellett-Bowman (Lancaster)

Is my right hon. Friend more or less saying to those of us who did make up our contributions to change them from 60ths to 50ths, that that was money down the drain?

Mr. Newton

I shall come to that point. Clearly, whatever else, that would not be acceptable to anyone.

As I have already said, especially in the light of the recent debates that the House has had on other matters, in the Government's view the arguments that my right hon. Friend the Member for Norfolk, South put forward in 1991 are no less compelling now than they were when the House accepted them. In one respect, they are even more compelling as, at that time, there was a surplus of £7 million in the fund, to which the Top Salaries Review Body referred in making its proposals, and which might at least have made it possible to make such a change without having to raise contributions to pay for it. That is not the position now, however. As a result of the numerous other improvements made in 1991, little more than £1 million remains as a surplus in the fund, and once the death-in-service proposal, which is part of my proposals, has been put into place, the surplus will be no more than £300,000.

Unless Members' contributions are to be raised so that all Members have their take-home pay reduced to improve the pensions of less than a third, there would have to be an increase in the Exchequer contribution—that is to say, from the taxpayer—to fund the improvement. It is estimated that accepting the accruals proposal as it stands would mean an increase in capital terms of £2.3 million or, looking at it in another way, of about £480,000 each year until the year 2000.

Sir Terence Higgins (Worthing)

Is it not the case that the present state of the fund reflects the fact that, on previous occasions, the Treasury has taken every possible opportunity to reduce its contribution? On the comparison with the civil service scheme, will my right hon. Friend tell us whether that is a contributory scheme?

Mr. Newton

My right hon. Friend, with his long experience, knows as well as anyone in the House that the civil service scheme is not a contributory scheme. The argument is always, as he well knows, that that fact is taken into account in determining the salaries, but there is no getting away from the fact—nor do I seek to disguise it—that this is a contributory scheme and that the civil service scheme is not. Alongside this important general argument stand a number of practical considerations, which perhaps help to show why retrospective changes of the kind proposed are such a dubious course. I shall mention two in particular, one of which will bring me to the thought raised by my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman).

Mr. John Butterfill (Bournemouth, West)

When my right hon. Friend talks about the comparison between the civil service scheme and the scheme for Members, can he advise the House whether, when the House voted to link its pay with that of an appropriate grade of civil servant, it voted to do so in terms of both the salary and the pension contribution, or were they entirely separate?

Mr. Newton

I do not think it was I who introduced any comparison of that kind, but my right hon. Friend the Member for Worthing (Sir T. Higgins). Leaving that aside, my understanding, and the reality, is that the House has voted on the linkage between the pay of Members of Parliament and pay at a particular level in the civil service, taking account of all the factors involved. As I have said, there is no mystery about the fact that the basis of—

It being Ten o'clock, consideration of the motion stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 61 (Committal of Bills),

That, at this day's sitting, the Lords Amendments to the Licensing (Sunday Hours) Bill, to the Child Support Bill and to the Criminal Appeal Bill may be proceeded with, though opposed, until any hour, and the Motion in the name of Mr. Tony Newton relating to Parliamentary Pensions may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later.—[Mr. Knapman.]

Question agreed to.

Question again proposed.

Mr. Newton

There is no mystery about the fact that the pension arrangements in the civil service are on a different basis from those for Members of Parliament.

I hope that the House will realise that certain practical difficulties need to be addressed. First, as I have already indicated by quoting from the previous debate, since 1983 Members have had the right, and I judge from what she said that my hon. Friend the Member for Lancaster has probably used it, to purchase added years of service. If they did so during the first two years after 1983, they were able to do so at a discounted rate. Many did so. Those who did not, of whom I am one, will obviously benefit from the proposal in the amendment, but the question then arises—exactly the question raised by my hon. Friend the Member for Lancaster—of how in fairness to treat those who did purchase added years.

One possibility, presumably, would be to refund what those Members paid in respect of what would now be provided by the Exchequer. The other, which is what the SSRB report and the amendment of the right hon. Member for Wythenshawe appear to envisage, is that they should be treated as having their years of service augmented so that they continue to benefit from the extra that they have chosen to pay, as well as the extra that the amendment would provide. However, that would produce the situation in which some Members would have an entitlement exceeding the maximum allowed by Inland Revenue rules. So once again, we would have to face—[HON. MEMBERS: "How many Members?"] It is important that the House should understand those complications. We would have to face the issue of refunds, whether interest should be paid, and if so, at what rate and so on. There could be yet further complications arising from the interaction between the basic scheme—

Mr. Garrett

Will the right hon. Gentleman give way?

Mr. Newton

Yes, of course I will give way. I have shown that I am willing to give way, but I should like to complete a sentence before I do so. Still further complications could arise from the interaction between the basic scheme and the scheme for additional voluntary contributions introduced last year.

Mr. Garrett

Is it not the case that to exceed the Inland Revenue threshold, a Member of Parliament would have had to have spent 40 years here? Therefore, the number affected is few. The right hon. Gentleman continually refers to those hundreds of Members of Parliament who will not benefit from such a proposed scheme, but they will not benefit because they are on 50ths already.

Mr. Newton

That latter point has been acknowledged in everything that I have said. They will not benefit because the improvement in 1983 meant that, since 1983, all of us, whether new Members or old, have been accruing at a rate of 50ths. That does not get away from the argument that I have been putting to the House about whether it is right to backdate that accrual before 1983. In the first part of the hon. Gentleman's intervention, he, in effect, confirmed what I said. In some cases, that possible tangle would arise. I do not say that it is insuperable, but it is one of the things that the House must register.

Sir Peter Tapsell (East Lindsey)

I do not think that that is a serious point. As it happens, I am advised by the Fees Office that I qualified for the maximum two-thirds pension some time ago, but I have elected to go on contributing to the pension fund of Members of Parliament. I am told that I could go on until I am entitled to a 75 per cent. or 80 per cent. pension if my electors go on re-electing me. I am assured that there is no problem about that, so why not just enhance the thing?

Mr. Newton

I have said that, in my view at least, there could be a problem of, as it were, running into the ceiling. I know that a number of Members have said, "Well, that could be dealt with in one way or another." Indeed, I am not saying that those problems are insuperable, but they are a factor of which the House should be aware.

The second, and in my view much more serious practical problem, is the inequity which would arise between Members and ex-Members in respect of service in the House in the same period. As I have said, the SSRB's proposal and the amendment of the right hon. Member for Wythenshawe relate only to those of us who are still Members of the House. In other words, a pension in respect of—to take my own case, 1974 to 1983—would be increased for someone like myself who happens to be still here, but unaltered for those who were here in precisely the same years and who happen to have left for whatever reason in the intervening period. I frankly think that it would be very hard indeed to defend that as being in any way fair.

The complexities of seeking to include ex-Members, let alone their survivors or legatees, are all too obvious and they may well prove insuperable. Moreover, the costs would certainly be significantly greater. On a rough estimate, against the £2.3 million in capital terms for the right hon. Gentleman's amendment to which I have referred, we would be talking about something like an extra £7 million, which the taxpayer would have to find. I said earlier that I believe the arguments against the amendment to be compelling. I hope that I have shown why I hold that view and I hope that the House will reject the amendment and agree on my motion as proposed.

10.5 pm

Mr. Alfred Morris (Manchester, Wythenshawe)

I beg to move amendment (a), in line 4, after 'gratuity', insert 'to apply the existing accrual rate of fiftieths to all service for currently sitting Members in respect of their future pension entitlement, with appropriate augmentation for those who have been making up the shortfall voluntarily'. The amendment stands in my name, as chairman of the managing trustees of the parliamentary contributory pension fund, and those of all my fellow trustees. It was trailed by early-day motion 1223, which has 354 signatories and the support of many other right hon. and hon. Members who, as office holders of one kind or another, are unable to sign early-day motions. It reflects deep and growing concern in all parts of the House about an official attitude to the pension fund that is seen not only as unjust, but as damaging now to the whole basis on which changes to the pension fund are processed by the Senior Salaries Review Body. More and more hon. Members are questioning the point of having an independent review body whose major recommendations in two successive reports in the space of four years can be set aside, as will have happened in this case if the managing trustees' amendment is not approved tonight.

In 1991, in Cmnd 1576, the review body first recommended an accrual rate of 50ths in the following terms: We recommend that the existing accrual rate of fiftieths should be applied to all service for currently sitting MPs in respect of their future pension entitlement, with appropriate augmentation for those who have been making up the shortfall voluntarily. That recommendation was anything but extreme. In fact the House had resolved 11 years earlier in July 1980 that the accrual rate should be one 40th of final salary for each year of service. Nevertheless, the review body's 1991 recommendation was not accepted by the Government and, when it was again asked to report on the fund in the current parliamentary Session, its report—Cmnd 2330—reaffirmed the 1991 recommendation in virtually identical terms.

But it was made clear immediately that the Government would again resist the recommendation. One reason given was that a part of the total cost—now reduced to £2.3 million from £3 million in 1991—would fall on the Exchequer. As the Leader of the House knows, that was not well received by hon. Members who recall what happened to the fund in 1983. I hasten to add that the right hon. Gentleman was in no way personally involved in the decision then, in effect, to raid the pension fund to offset part of the cost of an award from the review body on parliamentary pay by gratuitously increasing the Member's contribution to the fund to a wholly unnecessary 9 per cent. of salary. There was no talk then of the consequential effects of that huge increase on others in the public service. It would have been too ridiculous for words; and indeed, as we have heard tonight, the civil service has a non-contributory pension scheme while judges, I believe, have an accrual rate of 15ths.

The decision to impose a contribution of 9 per cent. on Members of Parliament—of which some have claimed authorship for Edward du Cann—was totally unrelated to the financial needs of the pension fund at the time, but of direct and substantial benefit to the Exchequer. It was a clear case of manipulating a pension fund at the Member's expense, a technique later refined and perfected by others and which is now being legislated against.

That is but one reason why it is not for Ministers to complain ever again of members of the fund unfairly benefiting at the expense of the Exchequer. As I have shown in previous debates on the fund, the Exchequer contribution was seriously and most unfairly out of line with what the Member had to pay over an extended period after 1983. Again, the Exchequer was for many years the main beneficiary of the managing trustees' investment policy. For far too long we were, in fact, victims of our own success in that the more that policy succeeded, the more disproportionately it helped the Exchequer.

The trustees' latest proposals to the review body were not confined to the accrual rate. We sought a range of improvements to benefit past and present Members alike and their dependants. The trustees are not alone in believing that more could and should be done to help retired Members, to assist the widows of our former colleagues and to improve the fund's provision for early retirement. Among our other proposals to the SSRB, the trustees also asked for an improvement in the death-in-service benefit.

Mr. Tony Marlow (Northampton, North)

My right hon. Friend the Leader of the House made a good point from the Front Bench. How can we justify retrospection for our pension scheme and not justify it for the armed services pension schemes?

Mr. Morris

There are many of us who feel that retrospection is well merited in that scheme as well, but I have a particular responsibility, as chairman of the managing trustees of the parliamentary contributory pension fund, to do my best in that capacity, which is what I am seeking to do in this debate.

As the Leader of the House has explained, the review body concluded that only four changes should be made to the fund, of which the Government, as they oppose the now reaffirmed recommendation on the accrual rate, accept only three. Of those, the improvement to the death-in-service benefit is, of course, welcomed by the trustees and we are glad that it is to be given retrospective effect, which means that the widow of our late and much-missed colleague Geoffrey Dickens will not lose from the lapse of several months since the review body reported in March. The trustees also welcome the other two recommendations, but these are matters of procedure and not benefit improvements.

As the law stands, only when proposals for change to the fund are recommended by the review body can this House amend the provisions of the fund. We cannot do so on our own initiative. Essentially our role is thus to propose and it is for the review body to dispose. It is for that reason that I must emphasise again that it is the independent review body's judgment, twice stated, first in 1991 and again in 1995, that improvement in the accrual rate is, and has been for four years now, a priority for change.

As soon as I knew of the Government's intention to oppose the change, and for the avoidance of any doubt, I inquired whether the review body might be prepared, in the event that its principal recommendation was again rejected, to substitute for an improved accrual rate some other change, or changes of equal value from the range of improvements sought by the trustees—a better deal, for example, for widows and/or for retired members of the fund—but the answer was that what is on offer is what is in the review body's report and nothing else. So anyone who thinks that to reject the recommendation on the accrual rate might help others must understand that that is not the case.

Mr. Tom Cox (Tooting)

My right hon. Friend is no doubt aware that I am one of the trustees of the parliamentary Labour party benevolent fund. All hon. Members can recall many colleagues from various political parties who left this place in very poor circumstances and who have never received a proper pension. The same is true of the wives of colleagues who have passed on. We might not be able to do anything for them, but my right hon. Friend is seeking in his amendment to ensure that ex-Members of Parliament and the wives of those colleagues who may pass on will begin to receive a reasonable pension to support them in their old age. Sadly, many former colleagues and their wives do not receive such a pension at present.

Mr. Morris

I am grateful to my hon. Friend. I very much admire his work and that of his colleagues in the parliamentary Labour party's benevolent fund, just as I hold in very high regard those in the 1922 Committee who perform similar work for their former colleagues who now live in circumstances of hardship.

There is one other matter on which I must briefly report to the House. The trustees have an important role in considering changes to the fund's provisions and we have taken legal advice in relation to our duties and responsibilities. The advice is unequivocally clear. It is that it is proper for the trustees, in considering what is best for Members, to regard recommendations of the review body as a proper guide for their decisions. We are advised also that it is not proper for the trustees to have regard to the fact that the Government's policy is not to implement particular recommendations of the review body. The advice proceeds: The Trustees would accordingly be right to use what Parliamentary means they have to cause amending regulations to be made by the Leader of the House to implement the Review Body's recommendation in question". We are further enjoined—on the basis of expert, impartial and independent advice—to accept that: The Review Body bases its recommendations on what is good current practice in pension schemes and what, in particular, would be fair to Members (of any class under consideration), balancing the burden of contributions against the benefit of higher pensions". Interestingly as well, our advice states: It is the Leader of the House, and not a person as Minister of the Crown, who makes the amending regulations. Hence is preserved, in law and principle, the independence of these crucial decisions from Government policy, as distinct from the collective view of the House".

Mr. David Shaw (Dover)

I was hoping that the right hon. Gentleman might explain at some point why the trustees are not recommending an accrual rate that is more akin to the average service of a Member of Parliament. My predecessor served the House and the Government loyally for 17 years, and I understand that that is much closer to the average service of most Members of Parliament—although there are different views. Why do we still have an accrual rate of 50ths and 60ths, when the average length of service of a Member of Parliament is much less?

Mr. Morris

There are a great many points that I could make in my speech, but it must be limited out of consideration for hon. Members on both sides of the House who want a decision on the amendment as quickly as possible tonight. As the hon. Member implies, the longevity of Members of Parliament is not great. On average, they serve something like 13 years and three months. I cannot recall the precise figure, but it is of that order. As I have said, judges base their pensions on an accrual rate of 15ths. Of course, no hon. Member is likely to serve 60 years here, and it is a virtual certainty that very few—perhaps not even the right hon. Member for Old Bexley and Sidcup (Sir E. Heath)—will achieve 50 years. That is why Members on both sides of the House say that we should have been asking the SSRB for 40ths and not 50ths. Yet even the figure of 40ths is unrealistic and if one looks at what other legislatures do across the world, one finds that we are anything but profligate in this Parliament when it comes to the protecting of Members' interests.

What I have quoted from legal advice received by the trustees ought not to be unimportant to the outcome of the debate. I trust that that outcome will be the approval of the amendment and a consequential change to the draft amending regulations. In commending the amendment to the House, I want especially, and very warmly, to thank the right hon. Member for Horsham (Sir P. Hordern) and the hon. Member for Dorset, West (Sir J. Spicer), together with my hon. Friends the Members for Jarrow (Mr. Dixon) and for Ogmore (Mr. Powell) for their constant and extremely valuable help in promoting a long-overdue change to the fund. The House as a whole is much in their debt.

10.21 pm

Mrs. Ann Taylor (Dewsbury)

I wish to speak briefly, because most hon. Members will probably have made up their minds on the issue. Like all colleagues, I must declare an interest. Many of the recommendations that are being discussed this evening apply to all of us, but the amendment applies in particular to those hon. Members who were here prior to the changes in 1983.

I want to say a few words in support of the amendment tabled by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) on behalf of the trustees, and it is important to emphasise the all-party nature of the amendment and the support for it within the House. The issue before us this evening has been outlined extremely clearly, but it is important to emphasise that the key point of the debate is that it is not just hon. Members who are concerned about parliamentary pensions and the 50ths and 60ths issue before 1983. The real strength of my right hon. Friend's argument is the case that has been put and the recommendations made by the Senior Salaries Review Body, which has recommended changes that are the subject of my right hon. Friend's amendment.

Mr. Marlow

What reason did the SSRB give for recommending the change?

Mrs. Taylor

If the hon. Gentleman cares to read the report, he will see that it is clear. I want to take the hon. Gentleman and other hon. Members back one stage. In 1991, the SSRB report first recommended this particular upgrading. It did so—this may answer the specific question asked by the hon. Gentleman—on the basis that such an upgrading would be fair to those who had contributed to the surplus that was then in the pension fund. That is a very important principle, and the hon. Gentleman should bear it in mind. The recommendations were not acted on in 1991. Had they been acted on, the degree of retrospection of which the Leader of the House complains would not have been as significant as it is. The retrospective element is so significant only because the 1991 recommendations were turned down on the advice of the then Leader of the House and the Government.

Mr. Butterfill

On the question of the surplus, is not it true to say that the latest revaluation produced a surplus which enabled the Government to reduce the standard contribution from 17.5 per cent. to 6.8 per cent?

Mrs. Taylor

The hon. Gentleman is quite right. Had that Exchequer windfall—if we can call it that—not occurred, there would have been a very significant surplus in the pension fund. That is what the Senior Salaries Review Body was referring to when it made its initial recommendation. It is a very strong point in favour of the amendment tabled by my right hon. Friend the Member for Wythenshawe. It is also probably one of the reasons why the SSRB returned to the issue this year and why we are debating this recommendation now. Indeed, the amendment covers the precise wording used by the SSRB in its report, and it is one of the reasons why I recommend it to the House.

Pension matters are incredibly complex. The Leader of the House gave us some figures to show how many people would not benefit from the proposed change. It is true that there are many anomalies in many pension schemes, including our own. Indeed,, when I talked today to the Fees Office about the changes in contribution rates over the years, it became clear just how complex an issue it is.

The point that we should emphasise and which underlines our support for the amendment is that although hon. Members are in the unfortunate position of having to vote on such issues, we are not in a position to make the basic recommendations. Those recommendations come from the SSRB—we have not dreamt them up, nor have my right hon. Friend and his fellow trustees. The pension fund trustees suggested the amendment following the detailed recommendations from experts on the independent review body.

Mr. Ray Powell (Ogmore)

Before my hon. Friend concludes, I hope that for the benefit of those outside who might be listening she will emphasise the fact that all 651 Members of Parliament contribute 9 per cent. of their salary. In addition, most people in the civil service pay for a non-contributory pension scheme.

Mrs. Taylor

My hon. Friend is right to say that we have at times contributed 9 per cent. of our salary. The comparisons that have been made with other schemes are difficult because different people have contributed on a different basis, and the benefits that we obtain in other ways are different from those in other spheres of employment.

Mr. Newton

I do not intervene in an aggressive spirit but, in view of the exchange that has just taken place, I want to make it clear that our contribution was 9 per cent. but was reduced to 6 per cent. following the 1991 recommendations. At present, the Members' contribution is 6 per cent.

Mrs. Taylor

If the Leader of the House checks the report of the proceedings tomorrow, he will find that I said that at times we had contributed 9 per cent. I remind him of the remarks made by his hon. Friend the Member for Bournemouth, West (Mr. Butterfill), who pointed out that the Exchequer contribution had been significantly reduced. That is the basic reason why the surplus in the pension fund has been reduced so considerably over the years.

We could raise many issues related to this topic. The hon. Member for Dover (Mr. Shaw) talked about reducing the contributions to 40ths. I am sure that other hon. Members—perhaps many Conservative Members—would like at some time to raise the issue of severance pay and severance arrangements, which are very far from generous for Members of Parliament although they are generous in other areas. However, we cannot stray on to those issues this evening.

Our basic case is that the independent review body has clearly recommended that change twice. It has thought it right to return to that issue in 1995, in spite of the 1991 decision.

Sir Gerard Vaughan (Reading, East)

The hon. Lady rightly drew attention to the fact that the SSRB has twice considered that and reached that conclusion. The legal advice that we have been given as trustees—and I wish to pay tribute to the right hon. Member for Manchester, Wythenshawe (Mr. Morris) as chairman of the trustees—is that we would be failing in our duty if we did not bring that matter before the House now, and we are unanimous, as trustees, that the House should consider that and, I hope, vote for the amendment.

Mrs. Taylor

I am happy to agree with the hon. Gentleman. That is why I am happy to accept all the recommendations of the SSRB, including the recommendation that is the subject of the amendment moved by my right hon. Friend the Member for Wythenshawe.

On behalf of many hon. Members, I congratulate my right hon. Friend and the trustees on the work that they have done. I thank them for giving us the opportunity to vote for the amendment this evening, and I commend it to the House.

Madam Deputy Speaker (Dame Janet Fookes)

Before any debate continues, may I point out that there is an inaccuracy in the tabling of the amendment? It should read "Line 4" rather than "Line 2". I think the sense is clear, but I say that for the sake of accuracy.

Mr. Alfred Morris

Madam Deputy Speaker, I did preface my speech by reading the amendment and emphasising that it was the amendment at line 4. Thank you very much.

Madam Deputy Speaker

Right.

Amendment agreed to.

Mr. Newton

On a point of order, Madam Deputy Speaker. In the light of the decision that has just been made, I shall certainly not seek a Division against the motion as amended. Obviously, under those circumstances, it would not be appropriate to proceed with laying the draft regulations, which were drawn up on the basis of what I had proposed to the House. Obviously, there are some complications that need to be tackled, as I sought to make clear in my speech, and the appropriate course now is for me to undertake further consideration and consultation and return to the trustees and the House as soon as possible.

Main Question, as amended, agreed to.

Resolved, That this House endorses the proposals for changes in Members' pension scheme benefits to increase the death in service gratuity to three times the Member's annual salary, to allow Members to nominate individuals, institutions and trusts to receive the death in service gratuity, to apply the existing accrual rate of fiftieths to all service for currently sitting Members in respect of their future pension entitlement, with appropriate augmentation for those who have been making up the shortfall voluntarily, and, when the Pensions Bill is enacted and relevant Regulations under it made, to establish a formal dispute resolution procedure as recommended in the SSRB Report on the Parliamentary Pensions Scheme laid on Thursday 30th March (Cm 2830).

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1. COMMITTEE OF PRIVILEGES 31 words
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2. BUSINESS OF THE HOUSE 154 words
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3. MEMBERS' INTERESTS 58 words