HL Deb 09 March 1949 vol 161 cc256-75

4.33 p.m.

LORD MIDDLETON rose to draw attention to a letter (A.G. 13119/48/ Funds) from the Controller of Pension Funds to ex-Indian Army officers, regarding proposed reduction in the scale of pensions; and to move for Papers. The noble Lord said: My Lords, in view of the deep anxiety which exists in regard to the imminent reduction of these pensions, I feel that there is no need for me to make any apology for introducing this matter into your Lordships' House. The words of the Motion may be a little misleading, and I would like to make it clear that the pensions involved are not those of former officers of the Indian Army but the pensions of those who may, after this month, become widows or orphans of such officers. The number of potential widows is 1,641, and there may be more if any of the 265 unmarried officers who are subscribers to the pension fund should commit matrimony. There are, so far, 1,225 children concerned. The lowest pension at present given to the widow of an officer of the Indian Army is £54 a year. That will be reduced very shortly to £50 a year and, in due course, to £44 a year. The highest rate of pension at present given is £220 a year, which will now be reduced to £212, and in due course may be reduced to £188 a year. There are three intermediary classes whose pensions will be reduced proportionately, and also the small pensions for children.

Before I go into more details, I think it would serve a useful purpose if I were to say something about the history of the pension fund involved, so that there may be a clear picture before your Lordships of the circumstances that have arisen and are plaguing so many. The Honourable East India Company established a widows and orphans pension fund, which was indeed very necessary owing to the heavy officer casualties in war and the high mortality rates in peace time. When the John Company faded out, so did the pension fund, except for existing pensioners, and between 1861 and 1873 the plight of widows and orphans of those who had become King's officers was deplorable. Until quite modern times it was the exception for any officers of the British Army to be without private means, but it was probably far more rare for any officers of the Indian Army to have any private means. So the widows of Indian Army officers were much worse off than the widows of officers of the British Service. What happened was that when an officer fell by the way, his brothers in arms sent the hat round and raised a subscription to enable the widow and children to return to England. When she reached home, she applied for a pension under Royal Warrant. If she failed, she was penniless; if she succeeded she was a little better than penniless. I would remind your Lordships, in passing, that these Royal Warrant pensions have never been a right, but only a privilege.

In 1873, the Indian Military Service Family Pension Fund was started. It was financed solely by compulsory contributions from officers of the Indian Army, who paid so much a month according to rank. There were what we would call to-day "special contributions" on marriage, or when infants reported their arrival. That fund was used by the Government of India for financing various projects—for instance, the Kidderpore Docks on the Hooghly—and even to finance Frontier campaigns. The Government of India credited the fund with a rate of interest equal to current rates of interest on long-term Indian sterling securities. That pension fund was never popular, not because of what it did, or did not do, for widows and orphans, but by reason of the way in which it was administered. I think we all had a grievance because we felt that a fund which was built up solely from our pockets ought to be treated as a trust fund, and that we should be represented on a board of trustees. Moreover, it was believed that if the fund had been invested in trustee securities in India, it would have received a higher rate of interest than was in fact accorded to it by the Government of India. I have done my best to investigate the latter claim, but I am bound to admit that the weight of evidence is against it.

As the result of representations made, I think, by Colonel Yate, in another place, a Committee was set up in 1909 to investigate the fund. After a five-year period of gestation the Committee gave birth to a most pernicious little mouse—I will endeavour to explain in what way it was pernicious. A line was drawn on the last day of 1914, and after that date no new entrants were allowed into the fund. A new fund was created with a new name, and all officers appointed to the Indian Army on and after January 1, 1915, paid into it. Because of the absence of any new entrants into the old fund, the interest-earning capital became restricted, and the fund reclined on its death bed; it became a dying fund. On the other hand, the new fund flourished, and so far those who contributed to it have had no warning of any reduction in pensions.

Your Lordships will understand that very heavy officer casualties in the First World War made heavy inroads on the old pension fund. After eleven years of haggling between the Government of this country and the Government of India as to whether a grant should be made to stabilise the fund, the Government of India—true to form—flatly declined to do anything about it. The Government of this country made a substantial grant which saved the situation. It is true to say that the high rates of interest prevailing during the Armistice years considerably benefited the fund, and the scale of pensions was raised.

I pass now to the year 1937. Coming events were now casting their shadows before them; 75 per cent. of contributors to the fund opted to have the fund transferred to England to be handled by trustees—or, rather, by commissioners. So 75 per cent. of the fund was transferred, and that is the fund that is in trouble to-day. Twenty-five per cent. of the fund is still in India. While the minds of those concerned with the fund in India are still undisturbed, those who are interested in the transferred fund have had the grim warning of a reduction of pensions, in two stages, to the extent of 20 per cent. to those who will become beneficiaries after this month.

The first reason given for the proposed reductions is the difficulty in securing in the future a yield of more than 3 per cent. on invested funds. That, of course, is due to the cheap money policy of the present Government. The second reason given is the fact that there is no new money to invest, because the fund is a dying one. That is due to the fact that the fund was cut off at the end of 1914, and no new entrants have come into the fund. A third reason is the increased vitality of wives and widows. Perhaps the noble Viscount the Leader of the House would claim some credit for that satisfactory state of things, being a doctor and a former Minister of Health. But however satisfactory that phenomenon may be, it is a little embarrassing to the prospects of those who will become widows and orphans.

That all these are excellent reasons, I do not deny. But, speaking quite humbly, after twenty years of experience of insurance—twelve years as Chairman of an insurance company, many years' experience of a trustee company and sixteen years' service with an investment trust company, which is flourishing—I venture to suggest that the following observations and considerations which have reached me deserve the serious consideration of the noble Viscount. I should like to ask why a period of nine years elapsed between the valuations of this fund—that is, from 1937 to 1946. All insurance companies have quinquennial valuations, and a close watch is kept on the position the whole time. Again, why was the increased vitality of widows and wives not noticed sooner? Insurance companies have known this for years, and have adjusted matters accordingly. Thirdly, why is it that when the valuation was made in 1946, contributors were not invited to send their observations until December, 1948—a time lag of two years and nine months? Insurance companies make quick decisions and inform those concerned within two months.

I should like to ask whether the Commissioners have ever considered annuities for the group of older pensioners. I think that will be interesting to know. It might bring great benefit to the fund. I would mention that it has been possible, with complete safety, to effect exchanges out of British Government stocks into Railway stocks, and then out of Transport stocks thus acquired into Electricity Supply stocks, and then out of Electricity stocks into Gas stocks. These transfers, made within the last two years, have improved the rate of interest from 3 to over 5 per cent., and there has been a capital appreciation. I would venture to ask whether any such action has been taken in respect of this fund, which stands at over £4,500,000.

By the great courtesy of the Controller of Pension Funds, which I would like to acknowledge, I have seen the investment list. It is the usual rather dismal list of orthodox trustee securities. On the early maturing of a considerable number of Corporation loans it will be even more dismal, because it will be difficult, if not impossible, to reinvest at more than 3 per cent. The conversion of securities on nationalisation has also had a shrivelling effect which has damaged the fund. The Commissioners have received permission to purchase ground rents, but so far they have not been able to obtain any. They have also been permitted to deal in mortgages. As one who deals in the mortgage business in every week of my life, I was rather surprised to see that two mortgages amounting to £133,000 have been negotiated to bring in only 3¾ per cent. I do not think I have ever seen mortgages of that nature at less than 4 per cent. I wonder very much why the Commissioners have been so extremely generous with the contributors' money.

I now turn for a moment to the circular letter of the Controller of Pension Funds. I say at once that I fully appreciate the difficulty of composing a letter so that everything involved can be readily grasped by those who are unfamiliar with actuarial figures and the niceties of investment. I mean no disrespect to the Controller when I say that his letter has caused considerable confusion, and there are a good many interpretations of it. After a good deal of experience, I suggest that the investment of trust funds is a highly specialised business. It needs constant attention, and I do not know whether that has been given in this fund. I await the reply of the noble Viscount opposite.

Whatever his reply may be, however, I feel strongly that the time given for contributors to make their observations has been insufficient. There is no date to this letter, but I understand that it reached contributors some time in December, and possibly was a nasty little Christmas present for some of them. A considerable number of contributors live in Australia, New Zealand, Canada, Kenya, and the Rhodesias. I wonder whether their letters were sent by air mail. In any case I think there has been very little time for contributors to grasp the full import of that letter, and to take expert advice upon it, and I think they ought to have more time. Before any irrevocable decision is made, I beg the Government to set up an independent Committee of experts in insurance and trustee investment to investigate the handling of both funds since 1937 and to advise on the methods for the future. It is conceivable that the advice of such a Committee would be that no reduction of pensions is necessary. If a Committee should find that these reductions are caused by the Commissioners' handling of the fund with lack of foresight and incapacity, thus rendering the fund anaemic, I think the Gov ernment should seriously consider doing something about making up the deficit, which amounts to no more than £345,000.

In conclusion, I would draw the attention of the noble Viscount, Lord Addison, to the speech made in another place on July 10, 1947, by the Prime Minister, when he gave an assurance about pensions. We know that space available in the Press for reports of proceedings in Parliament is exiguous, and it may well be that there has been an impression that the Prime Minister's assurance covered these family pensions. I hope the noble Viscount will make a statement that will remove any misunderstanding. I beg to move for Papers.

4.48 p.m.

EARL WAVELL

My Lords, I do not propose to follow the noble Lord who moved this Motion in his remarks on the financial side, about which, as he says, there may be some argument, but I propose to say a few words on the human side, about which I am certain there can be no argument at all. I remember many years ago that the two very charming daughters of a lady of my acquaintance received an invitation to visit India in the cold weather. Before they left, their mother gave them a most solemn warning against British officers of the Indian cavalry. She said they were "dangerously attractive, especially in uniform." Those were, the days when the Indian cavalry still wore dashing and picturesque uniform. She added: "You may ride with them, you may dance with them, you may even flirt with them; but if you value your future comfort do not marry them. They have no money and the climate is ruinous to the complexion." It is perhaps needless to say that after their mother's warning both girls came home engaged to officers of the Indian cavalry, whom they subsequently married. I do not suppose either ever had any cause to regret their decision, but they certainly learned something of the hazards and hardships of life for a British lady in India. Many of your Lordships know what those hardships are, but I do not think they are generally appreciated in the country at large. Some of your Lordships may have real the book about the life of Honoria Lawrence, wife of the great Sir Henry Lawrence, which tells a most vivid story of what British women went through in India less than a hundred years ago. It is a tale which would seem almost incredible to us to-day. Those were Victorian women, whom we have always considered as delicate and timid compared with our modern girls. They went through those experiences with a courage and toughness which does them the greatest credit.

The noble Lord who moved this Motion has a very extensive family connection with India. I cannot claim such an extensive connection, but my grandfather served "John Company" more than forty years ago, until ill-health, brought on by the climate, compelled him to come home. One of his sons, my uncle, in a long and honourable career in the Indian Army, lost his two children in infancy from the diseases of India. Conditions in India are different now, but they are still hard and there are still the hazards of the climate. There is still separation of families in the hot weather, when either the wife and husband have to separate, or they have to separate from their children, who may also have to go home for a long period of education.

It must be remembered that the wives of Indian Army officers seldom live in big cities like Calcutta, Bombay, Delhi and other such pleasant places which are visited by tourists in the cold weather, but in small out-of-the-way stations where there are few amenities, much discomfort and considerable danger from the climate. It required a good deal of courage and self-sacrifice to marry into the Indian Army, but there have always been brave women who have done it, and without them the officers of the Indian Army could not have carried on their work. There may be others in your Lordships' House who have had more experience and are better qualified to speak of the Indian Army and its officers, but there is certainly no one with a greater admiration for the Indian Army than myself, or who is more conscious of what it has done for India and for our Empire.

I need not relate to your Lordships all the campaigns that have been fought by that magnificent Army in the defence of the peace of India and our interests in the East. I would, however, like to remind you that without the help of the Indian Army we could not have secured and maintained our position in the Middle East in the two World Wars. Your Lordships realise that the Middle East, with its great reserves of oil, is one of the key points of strategy to-day. In the First World War the Indian Army took from our shoulders the whole weight of Germany's allies, those stout fighters, the Turks. They secured Iraq, and established our influence there; and they played a great part in Allenby's final victories. It is not their fault that our fruits of that great victory in Palestine have turned out to be Dead Sea fruit. We should also always remember that in the Autumn of 1914 and the Spring of 1915 a corps from India filled an absolutely vital gap in the line and defended the freedom of this island and of Europe at a time of deadly peril. I know that without the Indian Army in the last war we certainly could not have maintained ourselves in Egypt, or gained our victories over the Italians in Cyrenaica and East Africa.

The noble Lord who moved this Motion has asked that something should be done for the dependants of the officers who fashioned that magnificent instrument of war. Those officers as a body were the absolute pick of the Army. When I was a cadet at Sandhurst, nearly fifty years ago, the cadets who wanted to go into the India Army had to pass out in the first dozen or twenty places out of some hundreds. I believe that the men whom those officers trained and led will remember them, and that tales of them will be told with admiration in the Indian villages, and handed down from father to son, perhaps, longer than any other memories of the British in India. Surely, we ought to show our gratitude to those men for what they have done. And how can we better show our gratitude than by looking after their dependants, the wives that comforted them and the children they bore? I sincerely trust His Majesty's Government will recognise that, in addition to the cogent financial argument put forward by the noble Lord, we have here a debt of honour to be paid.

4.59 p.m.

LORD CALVERLEY

My Lords, I would like to support my noble friend Lord Middleton in his plea for a reconsideration of this problem. I cannot speak from any personal knowledge of India, but I counted it a great privilege when, as a member of another place, I was permitted to visit Sandhurst and to see the training of young officers who wanted to volunteer for the Indian Army. My knowledge was increased—if your Lordships will permit a personal note—when during the war my son served in India for four years. I then gained a greater knowledge of what was transpiring in that great continent. I remember the pride I felt when my son wrote to me to say that the then Viceroy—the last speaker, the noble and gallant Earl, Lord Wavell—had given him a job to do—an unorthodox job for an officer—that of getting food in order to feed the starving Indians in Bengal. That is by the way. My point is that, from the time of the India Company, there has been a tradition built up in India upon the foundation of British officers and, in many cases, of the faithful spouses who served them. They could not have done their duty if it had not been for those women.

I am making a plea to His Majesty's Government to reconsider their attitude with regard to the regulation which has been issued and which involves a rather mean reduction in an already rather small pension. It is not through any fault of these 1,641 women and 1,224 children that that small pension is being reduced, and ways and means should be found in order that this debt—I call it a debt of honour—should be observed by this nation of ours.

Sometimes I feel a little proud when somebody talks about "the word of an Englishman." Then, as a provincial who has never been very much out of this country, I reflect that it is not my word about which I should be proud but the word of the officers and men who have served us abroad over the generations, particularly in India. They acted, in a way, as ambassadors. They served in such a way that, owing to their behaviour in building up that great tradition, the phrase was coined. I have met some of these serving officers, and their men, Moslems, Sikhs, and various other religions, are all united in a unity of purpose because they are being led by British officers. My purpose this afternoon is to support the plea made by my noble friend Lord Middleton with all the strength of which I am capable. I say with emphasis that this is a debt of honour; it is a moral obligation, and I am asking that there shall be no reduction in the pension until there has been an adequate inquiry. I suggest that there should be a sort of moratorium, a standstill agreement, in order that these women and their children shall not suffer; that there shall be no decrease in the pension because the rates of interest have decreased in the City of London or elsewhere, but that His Majesty's Government shall, as an act of grace, behave graciously to these people. I hope my noble friend the Leader of the House, when he comes to reply, will tell us that until there has been further inquiry into this problem the pensions of these widows and their dependants shall not be decreased by one penny piece.

5.5 p.m.

THE EARL OF SCARBROUGH

My Lords, in just a few words I would like to support my noble friend Lord Middleton, the mover of this Motion. It appears that this matter of pensions for families of officers of the Indian Army has a complicated background, and that it has now come to the front in a circular which is also of a rather complicated nature. Nevertheless, this is surely clear: that at a date which I believe is the end of this month, those who will become new beneficiaries of this fund will suffer reductions in their pensions. It may be argued that no reductions are being made in payments to the beneficiaries who are at present drawing pensions, and that all that is being done is to give notice that future beneficiaries, after a certain date, will suffer this reduction because the fund has run into difficulties.

I do not understand the difference between someone who becomes a widow or an orphan of an Indian Army officer at the end of this month, and those who entered those categories before. So far as service is concerned—which is the reason why these pensions are given—the service is the same, and there seems in justice to be no reason why the future beneficiaries should suffer in this way. One understands, of course, that the reason why the suggestion has been made is that the fund has run into difficulties, but it is worth dwelling for a moment on the difficulties into which the fund has run and the reasons for them.

First of all, there were the heavy casualties in the First World War, which my noble friend has mentioned. There is also the fact that for same time there have been no new entrants to keep the fund going, and there is furthermore, of course, the difficulty of finding an adequate yield from trustee securities. To that, my noble friend who moved this Motion added one more reason: that, with all those things so apparent, little appears to have been done by the trustees to make provision for those difficulties. My noble friend is saying that there should be an inquiry into the manner in which this fund has been conducted, and if it is found that not sufficient attention has been given to the rather peculiar difficulties which have confronted this fund for some time, then the Government have a debt of honour to these people and should give some assistance so that these reductions need not be made.

There is only one other thing I wish to say. This problem is just one of the small legacies from British rule in India. Noble Lords on all sides of the House hope and believe that when it comes to the winding up of all the various results of British rule in India, generosity will be shown, and that at least the utmost fairness will be dealt to those who have served this country and India throughout their lives, and particularly to the widows and orphans of men who were in no way responsible for the change which has been made. This difficulty is just one of the small legacies, and I do hope that the Government will be generous in overcoming it.

5.10 p.m.

VISCOUNT BRIDGEMAN

My Lords, there has been in this debate so far a great weight of opinion to support the noble Lord, Lord Middleton, who moved this Motion. It has come from all quarters, and from such authorities as the noble Earl, Lord Wavell, and the noble Earl, Lord Scarbrough, both of whom are fully entitled to speak on matters of this sort; and it would not be right, I think if no expression of opinion came from this Bench. The object, I take it, of my noble friend's Motion is to see what can be done to alleviate the inevitable distress of some of these pensioners, for if they have no private means—as we must assume—a state of affairs will arise whereby they are expected to exist for the remainder of their lives on a pension which may be as little as £50 a year. Therefore, the first question we have to consider, leaving aside these letters, for the time being, is this: Is it proper and just, indeed is it possible, that a pension of that size is sufficient to support these people or, in fact, anybody?

That is the question to which we must apply our minds, in these days when we are concerning ourselves, so rightly, with the social services of this country. Now that these people are in this country, we must deal with this matter not against an Indian background but against a background of what is right and proper, judged by the standards of the social services which His Majesty's Government and all Parties have thought fit to provide for people in this country. That, I think, is the proper way in which we should look at the matter, and, if I may say so, it is the only way that will produce the results we desire.

The problem has to be looked at from two angles—the financial and the human. I agree with every single word that has been said on this subject from the human angle. From the financial angle there is a certain amount still to be said. It is really a rather shabby story that is set out in this letter. It is shabby, I think, because there is no doubt, even in the minds of those who are comparatively ill-versed in investment problems, that this fund has not been well handled; it is shabby because it is one of the examples of the conversion of public utility stocks in this country having taken place at such a low rate of interest as to hit, and hit very badly, the widow and orphan. It is also shabby from the point of view of paragraph 6 of the letter from the Controller of the Pension Fund in the Commonwealth Relations Office. In that paragraph, he says: Meanwhile there is no alternative to the adjustment of the deficit by reduction of the pensions.… "Meanwhile there is no alternative." That, my Lords, is begging the question with a vengeance! An alternative must be provided. The noble Lord, Lord Middleton suggested one: Government aid to provide a level of subsistence which has been thought right for other people.

Here we come on to difficult ground, because it is not for members of your Lordships' House to go into details about how the money should be provided. That is a matter for another place, and I will therefore leave the question there for the moment. I will content myself with saying that I very much hope that this matter will not be left as the Commonwealth Relations Office have left it. Folded hands and fatalism, sitting down and letting the widows and orphans get on as best they can at £50 a year, is not the best method of dealing with this matter. Whether there is an official inquiry or not does not matter, I think; the money is lost now. Let us go back to the object of this debate and appeal to His Majesty's Government to go into the matter again, and to ask themselves whether they wish to be parties to a state of affairs in which people who deserve well of their country are expected to exist on pensions of such a size.

5.16 p.m.

VISCOUNT ADDISON

My Lords, I have spent a considerable time, as your Lordships would expect, in investigating this matter, and I will do my best to give your Lordships a correct account of the case. I may say we all wish to join in the tributes which the noble Earl, Lord Wavell, and others have paid to what our fellow countrymen and fellow countrywomen have done and endured in India, and to the record which they have established for more than one hundred years; but if, without being thought light, I may pass that over, I would say that it has nothing whatever to do with the Motion before the House.

It would perhaps be an advantage if I were to state what the position is, because I am afraid that some of the remarks which have been made bear no relation whatever to the position. It arises from a fund that was established in 1872 by contributions by British officers in the Indian Army for their wives and children in case these ever become their widows and orphans. This fund was a "compulsory voluntary" one, so to speak: the contributors agreed to deductions being made from their pay; and these were consolidated into a fund which was to be administered for the benefit of the widows and orphans thereafter. This went on until 1914. In that year, for technical reasons, the fund was placed on a separate basis. It did not, as one noble Lord suggested, have the result of damaging the existing fund in the least degree; it was entirely separate. Therefore, this discussion relates to the beneficiaries under the fund established in 1872, which, so far as entrants into the fund were concerned, came to an end in 1914. There were no entrants into the fund after that date, and therefore the discussion relates to the widows and orphans of those who contributed to the fund up to that time.

I have heard various suggestions made about the administration of the fund, and I confess that I am rather shocked at one or two of them, especially that coming from the noble Lord who moved the Motion. I do not profess to be a financial expert (if I had been I should probably have been much better off) but I have been rather impressed by the skill displayed in the type of investment made for the fund. As an instance, perhaps I may repeat what the noble Lord mentioned—namely, that the funds were invested mainly in Indian securities; and in the last war, as we well remember, gilt-edged securities were really gilt-edged.

LORD MIDDLETON

They were never invested until 1937; the Government of India used that money for their own purposes.

VISCOUNT ADDISON

I have a list of the investments. The money seems to have been used in Government stocks which paid 4½ per cent. and 5 per cent. What the money was used for is not the point. It was invested in funds and securities of the Government of India which yielded 4½ per cent., 5 per cent. and, in one case, 5½ per cent. So they yielded very good dividends. In the first administration of the fund it was anticipated in 1914 or thereabouts that the pensions would be of a certain figure. On the revaluation of the fund after the war of 1914–18 the pensions paid were 50 per cent. more than the original estimate. I think that that is a fairly good tribute to the administration of the fund.

We now come to the suggestion made by the noble Lord who moved this Motion, a suggestion which I confess rather shocked me. He suggested what the Commissioners ought to have done with this fund. In fact, they have so invested that they are getting between 3½ per cent. and 3¾ per cent:. on the whole fund—which I should have said is pretty good these days. What he suggested was that they should have sold some Government securities one day, invested them in Transport stocks the next, sold out, and then again invested in Electricity stocks, and, after that, in something else. If that is the noble Lord's idea of the way in which this great public trust ought to be administered, it is not mine. As I have said, I think the fund has been administered with great frugality and with infinite care.

Now, two things have taken place since the fund was separated off in 1914. Remember, this is not a Government fund at all; it never has been a Government fund. It is a fund raised and contributed to by the subscriptions of the officers of the Indian Army for this purpose and kept in a separate trust account altogether. Two things have happened, and it is these, mainly, that have led to the present situation. The noble Lord said that it was the Government's cheap money policy which had been to a great extent responsible for the fact that the incomes from the fund had diminished. As a matter of fact, I can tell your Lordships the actual figures. The amount invested in securities affected in any way whatever by the nationalisation policy of the Government, is considerably less than one-tenth. As the noble Lord anticipated, the real thing which has led to the present position is that people are living longer. When the actuaries came to revise the payments, they found that, owing to the increased length of life of the widows and orphans, they would have to spread the payments out a little more thinly.

I can tell your Lordships that, as regards the figures which have been supplied to me of the demands on the fund, the Government actuary estimated that, so far as the deterioration—that is to say, the inability to continue paying the higher pensions—is concerned, more than five-sixths of it is due to the fact that people are living longer. It is the increased expectation of life which necessitates the calls upon the fund being dealt with in that way. The reduction in the rate of interest owing to the cheap money policy of the Government has been more than offset by various miscellaneous profits which the fund has made on its investments.

What is the fact? The fact is that the present difficult position of the fund is no fault of the present Government. This fund has nothing whatever to do with the present Government or Government funds; it is a separate fund altogether; it is not a State fund at all. On valua tion, it appears that owing to the increased expectation of life of the beneficiaries, coupled to some small extent, it is true, with the smaller rate of interest obtainable, the fund will not be able to pay as high a pension to future beneficiaries as it has been doing to the present ones. That is the fact. That is the actuary's finding. But note this, my Lords: it does not affect the pension paid to any present pensioners. Their pension will remain at the level at which it is now. The obligation to pay that pension will be honoured; it will not be reduced. However, it is suggested that owing to the increased expectation of life, the ability of the capital fund to provide pensions is thereby pro tanto reduced, and it is necessary to reduce the pensions by 10 per cent. That is the point before the House. That is the only point before the House, and I have explained to your Lordships the reason that has brought it about.

I may add that the statement of the Prime Minister in another place had nothing whatever to do with this fund at all. It was related to the agreement which we have made with the Government of India with regard to the sterling balances, and it was a pledge that we should honour to the full our promises to those entitled to pensions under the scheme between the two Governments. But it had nothing whatever to do with this at all. This is a separate fund, separately constituted and separately administered since 1872. The only reasons why the actuary advises that there must be a reduction in the rate of pension to-day are those that I have explained. I may tell your Lordships that when the reduction has been made, the benefit rate will still be 25 per cent. more than was anticipated when the scheme was started in 1914. I will, of course, look with great care into all the questions which have been raised by noble Lords. I would only make it quite clear that the administration of this fund over all these years has not been the business of the Government; it is not the responsibility of this Government, except to see that it is well done.

Before I sit down, I should like to ask this question of the noble Lord. Now that this private fund is not able to meet the calls upon it to the same extent as hitherto, does he want the taxpayer to make up the difference? I would remind the noble Lord that, when the fund paid 50 per cent. more, there was no suggestion of refunding to the taxpayer. He cannot have it one way, and not the other. As a matter of fact, that is a thoroughly bad principle. This is a private well-administered fund and the facts of the case are those that I have stated to the House. I do not think that the Commissioners have anything whatever for which they need apologise.

LORD MIDDLETON

My Lords, I am sure that those noble Lords who kindly supported my Motion will feel as much disappointment as I do at the reply given by the noble Viscount. Perhaps I speak very indistinctly, but the noble Viscount has not answered most of my questions. He has attributed to me remarks that I never made, and I feel a little troubled. The noble Viscount says that no harm was done to the fund when it was closed in 1914, in spite of the fact that after that there were no new entrants into the fund and no new capital received to bear interest and swell the fund.

VISCOUNT ADDISON

Because a new fund was established at the request of the beneficiaries.

LORD MIDDLETON

That fund was kept entirely separate. It is separate today, and has nothing to do with it. I do not think that those concerned were ever invited to give their opinions about starting a new fund. I have no authority for thinking that they were, and I wonder where the noble Viscount gets that information from. The noble Viscount says I criticised the former system, where the money was used by the Indian Government. I merely stated it as a fact and pointed out that it was a grievance. I sent a note of that, and other notes, to the noble Viscount some days ago, so that he might know the answers to the questions I was going to ask. There are a number of other questions he never answered. Why was there a period of nine years between valuation?

VISCOUNT ADDISON

Because there happened to be six and a half years of war.

LORD MIDDLETON

There were six and a half years of war for the insurance companies, but they had their valuations quinquennially. Anyway, when it had been held, did two years and nine months elapse before the contributors were told anything about it? This seems to be a most unbusinesslike concern. The noble Viscount contradicts the reason that the Controller gives in the letter for the necessity for lowering the pension. The noble Viscount contradicts it completely. That is the trouble with this letter: it is written in such a way that it is difficult to know what many things really mean. What has happened? The contributors have been invited to give their observations by February 28, and "D Day" for the reduction is April 1. Many of the contributors are scattered over the Dominions. What is happening now? What is the Controller doing now? I suppose he is collating all the answers and will circulate another letter so that they may make further contributions, and then it will be too late.

VISCOUNT ADDISON

May I interrupt the noble Lord? I will certainly represent that case to the Commissioners, to see about the consideration of those letters. I am sorry I omitted that. I will certainly do that.

LORD MIDDLETON

I am grateful to the noble Viscount. There is one more point. The noble Viscount has said that the pensions were raised at a certain period to 25 per cent. or more above what was stipulated. What he is saying in fact is, "Dear Mary, your grandmother had so much pension, your aunt had so much more; and now you are going to get about the same as your grandmother—much less than your aunt." Is that any comfort whatever? The noble Viscount seems to have forgotten that the fund was started in 1872 or 1873, that the whole of the Rules and Orders were amended in 1937, and that we are dealing with the figures which were tabulated in the amended Rules and Orders of 1937—nothing whatever to do with 1872. They are not related.

My Lords, I feel very dissatisfied with the answer; I think it is a most pitiless one. Unless this matter is dealt with more satisfactorily, a great many people will suffer. Why should there be any resistance to an inquiry? I am afraid that that resistance will mean that many people will think there is something to conceal; I am perfectly certain they will feel it. Why should there not be an in quiry? After the answers that the noble Viscount has given, I am not at all satisfied now that this fund has been managed properly. I do not know who are the gentlemen who control it. One, I believe, is the Public Trustee.

VISCOUNT ADDISON

That is right.

LORD MIDDLETON

How much time has he to spend on this fund? I should think he is a very busy man—and this fund requires a great deal of attention. My Lords, I will not say more. I ask leave to withdraw the Motion, but I reserve my right to raise the question again later on.

Motion for Papers, by leave, withdrawn.

House adjourned dining pleasure.

House resumed.