§ 2.48 p.m.
§ Order of the Day for the Second Reading read.
§ LORD MANCROFT
My Lords, I should be cruelly deceiving your Lordships' House if I tried to pretend that the details of this Bill, for which I have the honour to ask for a Second Reading this afternoon, are anything except extremely complex and abysmally dull. The main purpose of the Bill is, I think, a good one, and the main principle of the Bill fairly easy to understand. The main purpose of the Bill is to provide improved benefits, the most important being widows' pensions, without additional burden on superannuation funds or on the rates, and without any increase in the rates of contributions. What the Bill really does is to redistribute the benefits. The improvements have, of course, to be paid for out of the superannuation funds, and most of the money will come from making the annual pension rather smaller. At the same time, incentives are being given to encourage folk to stay longer at work, which means that they will not draw pensions until a later age; and, therefore, the funds will save by not having to pay out pensions for those extra working years. That also helps to pay for the improvements.
Local government superannuation in this country has grown up gradually and comparatively recently. The foundation of the present system was laid in 1922 by the Local Government and Other Officers Superannuation Act of that year—a private Member's measure for which the late Sir Herbert Nield was responsible—which could be adopted by Resolution of a local authority, whose officers thus became entitled to superannuation as a right. This led naturally to a big growth of superannuation schemes, but they were still far from being universal. Up to 1939 every whole-time permanent officer in local government service received the benefits of superannuation as a result of the passing of the Local Government Superannuation Act, 1937, and the corresponding Scottish Act. These Acts crowned the efforts spread over thirty years of the National Association of Local Government officers which is now known formally as the National and Local Government Officers' Association, and more informally by its 940 nickname of "N.A.L.G.O.", to secure satisfactory superannuation arrangements for local government employees.
In this Bill we are taking another big step forward to improve the conditions of this great body of men and women, much of whose work is known to those many members of your Lordships' House who have personal experience of local government, a body of men and women whose quiet work touches upon almost every aspect of our daily lives and who deserve well of the country for the importance of their services. Fourteen years have passed since the Acts of 1937 became law, and of course nothing could be done to improve them during the war. After the war N.A.L.G.O. raised the question of further improvements with the associations of local authorities. Your Lordships will probably know what those associations are. There are four main bodies: the County Councils Association, the Association of Municipal Corporations, which in the course of the last few years has had the benefit of having the noble Lord, Lord Burden, and myself as office holders, the Urban District Councils Association and the Rural District Councils Association. These bodies cover all the local authorities in the country. There are similar associations in Scotland. In addition there are the London County Council and the Metropolitan Boroughs Standing Joint Committee who, because of their size and importance, were included in the discussions.
When the two sides had agreed on the main outline of the legislation required, a Working Party was set up, composed of members of the local authorities' associations and bodies to which I have referred, and officers of the Ministry of Housing and Local Government, one of whom acted as Chairman. A corresponding Working Party was set up in Scotland. As a result, the proposals which form the basis of this measure have been agreed upon. In only one matter—and I shall say more about this later—did the Government take the initiative, and that is in the provision of incentives for the older worker to continue in service. Here I gratefully acknowledge the co-operation received from the associations and from N.A.L.G.O. The measure of agreement throughout has been very wide, though, naturally enough, the local authority associations have not felt able to accept all the suggestions of the associations 941 representing the employees. New points have continually cropped up, most of them of a comparatively minor character, to meet categories of people who would otherwise be left out, or service which would not be counted, contrary to the spirit behind this Bill. Both sides are now anxious that it should become law at the earliest possible time, and I am sure we may leave it to them to work the Bill when it becomes law in that same spirit, and with due regard to national as well as sectional interests.
Perhaps the most striking difference between this Bill and the Acts of 1937 is that the provisions setting out the details of the benefits are to be taken out of the Acts and will be promulgated in regulations to be approved by both Houses by way of Affirmative Resolution. This change follows what is now the normal procedure when voluminous and extremely complicated matters—and it is astonishing how complicated local government superannuation is—have to be dealt with. There is, moreover, a great advantage in doing this where there is so much detail and a progressive development of outlook, as with a matter like superannuation. Once details are all set down in an Act they can be altered only in an amending Act, but if they are brought into force by way of regulations it is a comparatively simple process to make amending regulations. Of course, in practice, as has always been the case, all those interested will be consulted first.
Your Lordships will be aware that some local authorities have their own Acts for superannuation of their employees. When the 1937 Act was passed, such authorities were required to modify their local schemes to fit in with the new Statute. The same will be necessary now, if all employees are to benefit from the improvements made possible by this Bill, and if the free interchange of employment between authorities and the general high level of local administration throughout the country are to be maintained. We have been trying to persuade these authorities of the advantages of giving up their local Acts and of adopting the new provisions in their entirety. I am glad that some of them are ready to do so, and I hope that in due course others will follow suit. 942 It would be ungracious if I did not pay tribute to those local Act authorities who have gone ahead of the existing law in the 1937 Acts and those who since 1948 have adopted provisions corresponding to the National Health Service superannuation scheme. It is the best practice here which the Bill seeks to make general. How far the existing law has lagged behind can best be illustrated by setting forth some of the changes which the Bill proposes to make.
Under the two Acts of 1937, when an employee retires he may, if he is in good health, allocate part of his pension to provide a pension for his widow. He is unable to do this if he is not in good health and in that event, or if he dies before retirement, his widow cannot get a pension from the superannuation fund in any circumstances. Under this Bill it is proposed to empower Ministers to make much wider provision for widows. The benefits envisaged are as follows: the employee will get a smaller benefit on retirement, but his widow will secure a pension in the event of his death while still at work at any time after he has qualified for a pension—that is, after ten years service; she will, of course, also get a pension if her husband dies after he has retired on pension. The amount of her pension will depend on that which her husband is receiving or had earned—it is intended to make it one-third. That is not all. An employee who ceases work through incapacity resulting from injury sustained in the actual discharge of his duty will now be able to get an injury allowance, and when he dies his widow will receive a pension. Where, however, the employee meets his death from injury in the discharge of his duty there is the alternative of a lump sum instead of a pension if the local authority think that will be best in the circumstances. These provisions for widows are the most important of the new legislation.
Since the passage of the 1937 legislation, which provides for all retirement benefits being given as pensions only, it has become generally agreed that it is advantageous to the retiring employee to be able to receive his benefit partly as a pension and partly as a lump sum. This would be very helpful, for example, if he wanted to buy a house. Accordingly the Bill provides that in future the retiring employee may receive his benefit in this 943 form. Bachelors and married men will receive the same rate of pension—though the actual amount will be smaller than at present, because it will be calculated on eightieths, instead of on sixtieths—buta married man will get a smaller lump sum as the price of providing a pension for his widow.
This illustrates a most important characteristic of the Bill, to which I referred at the beginning. It would obviously not have been difficult to provide increased benefits by increasing the contributions to be made by employers and employees, but, understandably, neither side was willing to make increased contributions; and the whole of the provisions of the Bill have therefore been designed, to use a technical phrase, to be actuarially equivalent to those in the 1937 Acts—that is to say, taken all round, the whole amount spent on benefits after the passage of the Bill should not be greater than the amount spent for a comparable number of employees of similar types under the two Acts of 1937. This is a most important feature, since many alternative schemes that might on the surface appear more attractive have the disadvantage that in one way or another they would increase the burden on the superannuation funds.
With negligible exceptions, none of the benefits of the two Acts of 1937 is available until the completion of ten years' service, though in the event of service terminating earlier the employee is generally entitled to a return of his contributions. It is proposed to provide by the regulations two short-service benefits available where more than five but less than ten years' service has been completed. In the event of retirement from ill-health in this period, the employee will be given a title to a single payment of a year's pay. In the event of his death within the same period, his legal personal representative will be given a similar title. At this stage I ought to mention that, in accordance with the usual practice, existing employees will be given an option of keeping their present superannuation rates or of going into the new arrangements under the Bill. The benefit of the option will be extended retrospectively to employees who have retired after September 30, 1950, or to the 944 employee's widow, if the pensioner has died after that date.
Section 7 of the Act of 1937 provides for compulsory retirement at the age of 65—that age has not been altered—but it also allows for further employment year by year without limit, though this extended service does not count for benefit. The section is, accordingly, not the bar to the employment of the elderly that might appear from its opening words, as your Lordships will appreciate from the fact that some 12,000 people above the age of 65 are still working for local authorities in England and Wales. Nevertheless, since no employee may earn additional pension after the age of 65 or after the completion of 40 years' service, whichever comes first, it does, to some extent, discourage elderly employees from remaining at work. Your Lordships will remember that it was in this matter, and this alone, that the Government stepped in, because of the importance they attach to extending the working life of the average man and woman. Under the Bill, an employee will be able to earn pension for 45 years or up to the age of 70, whichever period is completed first. This should afford a valuable incentive to the employee without making the employing authority unwilling to keep him on. It is important that the incentive offered to the employee should not be such as to make the employing authorities feel that, from their point of view, the continued employment of these elderly people is expensive in relation to the service they give. At present, as I have said, an employee can earmark part of his pension only when he retires, and only to provide a pension for his widow. He may, however, want to give his widow something more than she would get from a widow's pension, or to make provision for some other dependent. Under the Bill he will now be able to do this, and, moreover, without the necessity of retiring, provided, of course, that he is qualified for pension. This is another improvement which I hope will encourage an employee to remain longer at work.
Apart from these major points, the Bill provides also for various minor improvements, with which I do not wish to weary your Lordships. Any complex legislation, such as the Acts of 1937, inevitably shows minor defects in operation, or shows up cases of hardship or seeming injustice. 945 Accordingly, the opportunity is being taken in this Bill to correct a number of these, though none of them is really significant, save to a comparatively small group of persons immediately concerned, to whom of course they are highly significant. They have been agreed to by the associations I have just mentioned, and I will not take up your Lordships' time in dealing with that. There is one point that I should perhaps mention, because it is rather different in kind—that is, an amendment which will limit the provision for forfeiture of superannuation rights if an employee commits an offence or misbehaves. It limits forfeiture to cases where the offence or misbehaviour is related to the performance of the employee's duties, and it gives local authorities some discretion in connection with the imposition of the penalty. This, I think, mitigates what has been felt to be a somewhat harsh and undiscriminating provision.
I have already mentioned that some local authorities have their own Acts dealing with superannuation of their staff. There are several provisions in the Bill to meet different circumstances, but again I need not weary your Lordships by going into details. The principle is the same, to ensure that these local Act schemes come reasonably into line with the new arrangements, if they have not done so already, in those cases where the local authority prefer to retain their special position. The Bill gives the Minister power, should this be needed, to require a local authority to come into line. There are, in fact, twenty-two councils in England and Wales and two in Scotland that have complete Acts governing superannuation; thirteen more who have modified the 1937 Acts by substituting improved benefits akin to the National Health Service Scheme, and an unknown number who, usually in the body of more general legislation, have made particular provisions affecting the superannuation of their employees. The complexity of this Bill lies in the many details to meet the many different circumstances that arise, and to which this House will no doubt wish to give a more full consideration on Committee stage. But the principles behind it are few and simple, and I can recommend it with confidence to your Lordships as being in all essential respects an agreed measure, 946 a desirable measure and a desired measure, one to which I can confidently ask your Lordships to give a Second Reading this afternoon.
§ Moved, That the Bill be now read 2a.—(Lord Mancroft.)
§ 3.7 p.m.
§ LORD SILKIN
My Lords, we on this side of the House do not wish for a moment to disturb the harmony of the proceedings which have led up to the introduction of this Bill in another place. I understand that discussions have been going on for a great many years, and we are very glad that they have come to a culmination. This Bill will have achieved a remarkable thing if it can, as the noble Lord said, provide improved superannuation for local government employees without extra cost either to the employee or to the employing authority. I have read through the Bill. Like the noble Lord, I do not regard myself as in any way an authority on local government superannuation, but it seemed to me that a number of the clauses, if they mean anything at all, must result in increased cost, either to the superannuation fund or to the local authority. However, that will possibly come out in another stage of the proceedings. I do not wish to say anything about the details of this Bill. My noble friend Lord Burden, who is an authority on this subject, has something to say, and we shall listen to him with great interest. But I should like to draw the attention of the House to the increasing complexity of this matter from the point of view of the person who does try to understand what he is doing.
The noble Lord has referred to the considerable number of local authorities (I think he went up to something like fifty) who have their own Acts of Parliament dealing with superannuation, and an unknown number of others who have these powers wrapped up in other legislation. In addition, there are, as noble Lords will see from the last page of this Bill, I think, twenty-three Acts of Parliament dealing with superannuation and, I imagine, a considerable number of regulations. Now we have this additional Bill which will, I am sure, pass before very long, and under which further regulations are to be made. Indeed, I was interested to hear the noble Lord 947 make a virtue of the fact that these provisions will not form part of the Bill but will come in regulations to be made under this Bill. That is somewhat of a change of tone, compared with some of the speeches which we used to hear in the past about "putting things in the Bill" as against making them the subject of regulations. I was glad to hear a complete justification of the procedure which, in the past, we on this side have felt it necessary to adopt in these measures. The point remains, however, that there will be a large number of separate Acts of Parliament, all dealing with the subject of local government superannuation in one form or another, and a large number of regulations.
As I have said, it will be increasingly difficult for anyone who is interested in this matter to find his way about all these Acts of Parliament. I would respectfully suggest to the noble and learned Lord who sits on the Woolsack that probably the time has arrived when this subject might receive an examination from his Department, with a view to seeing whether the whole thing cannot be simplified, or at any rate consolidated, so that if we want to know what is the law on the subject we shall not have to wander through a large number of Acts of Parliament and regulations in order to do so. I realise that it is not going to be an easy task, but I am sure that the noble and learned Lord is quite capable of dealing with it, and it will be a great boon to many people, including local government officers themselves, if it is made easier for them to ascertain what their rights are.
With those few observations I want to give a general welcome to this Bill. It will, of course, be examined in this House, as it has been carefully examined in another place, but I feel bound to say that in another place the matter was dealt with so reasonably on both sides that a good many of the points that it might have been necessary to raise have been dealt with. As a result, I imagine that it will not be necessary to trouble your Lordships with many details during the later stages of the Bill.
§ 3.12 p.m.
§ LORD BURDEN
My Lords, may I thank the noble Lord, Lord Mancroft, for his clear, concise and courteous 948 explanation on this Bill. It is, I venture to think, a non-Party Bill and should not give rise to any Party controversy. However, not in any way as a matter of reproach, I should like to mention that proposals to amend the 1937 Act were discussed informally by the National and Local Government Officers Association with officials of the Ministry as long ago as 1946. There were many difficulties to be overcome and I am very happy that the Ministry of Housing and Local Government convened a Conference in October, 1951, at which, as was mentioned by the noble Lord, a Working Party was set up to examine concrete proposals in detail. I venture to think that this Bill is a very satisfactory result of the labours of that Working Party. I should like to express my thanks to the representatives of the associations of local authorities for the broad-minded and sympathetic way in which they have examined and agreed with many of the proposals submitted to them, and particularly I should like to say how indebted we are to the Minister of Housing and Local Government and his officers for the help given in putting these proposals into legislative shape and form.
Broadly, the Bill brings the superannuation arrangements for local government officers into line with those now obtaining in the Civil Service and the health services, and for the staffs employed by the electricity and gas boards. At the same time, as Lord Mancroft said, the opportunity has been taken to effect some minor adjustments in the superannuation provision for the staff of local authorities, and I think I am correct in saying that all the proposals in the Bill have been approved by the associations representing the employing local authorities. I think it is only fair to mention that the proposals as framed are not intended to place any further charge on local authorities—I think the word "appreciable" is used somewhere or other.
My Lords, the first Act dealing with superannuation for those employed by local authorities was the result of desperate action on the part of N.A.L.G.O., and it was a Private Member's Bill introduced in another place. The Act was permissive in character—in other words, superannuation provision was not made compulsory. To improve my education 949 I have recently read the report of the debate on this Bill—and incidentally it was very good reading. If your Lordships will allow me, I should like to quote one or two sentences from it. These are the words:It is the case, unfortunately, that the preserve of local government officers is no longer inviolate. There is a hungry wolf, with a heavy paw, in the shape of the business man, who is continually prospecting among local government officers to see if he cannot find some whom he can attract to his own service, thinking their abilities are being wasted in their present occupation. It is a fact that a good number of men have been attracted from public service into commercial life by the prospect of substantially increased remuneration.These are the words I would particularly call attention to:Happily, money is not everything to a great many people, and many who enter the public service cannot be induced to leave it by the most tempting offers, because they are proud of their work, they love it, and they would not exchange it for anything else, especially for work of a character which is unfamiliar to them. But it is necessary to make these officers as comfortable as possible, and to give them every inducement to stay.I am not sure whether your Lordships will be surprised or otherwise when I mention that those were the words of Mr. Neville Chamberlain, who later became Prime Minister of this country.
As the noble Lord, Lord Mancroft, said, a number of local authorities adopted the provisions of the 1922 Act, but the position was far from satisfactory, as the Royal Commission on Local Government, which reported in 1929, said, in these words:We are of opinion…that the local government service would benefit if the facilities for interchangeability were enlarged. This, however, depends upon the more general adoption of a uniform scheme of superannuation.The Hadow Committee was even more emphatic, because in paragraph 115 of its Report it stated:It has to be recognised that the absence of a superannuation scheme in some areas is an obstacle to the free movement of officers between authorities.…Compulsory superannuation for officers was recommended by the Departmental Committee on the Superannuation of Local Government Officers (1928). In our view this is essential to the welfare of the service and we hope that the Committee's recommendations will be carried out at the earliest possible opportunity.That was in 1934. The officers had to wait until 1937 for an Act which made superannuation provision compulsory. In 950 this Bill, as the noble Lord has said, further steps are proposed to bring the existing provisions up to the level that I have already mentioned—those in the Civil Service and public bodies. For my part, and echoing the words of my noble friend Lord Silkin, I think I can say on behalf of my colleagues that we welcome this proposal and will do whatever is possible to help in the passing of the Bill.
There are, however, one or two points I propose to raise on the Committee stage of the Bill. Some of them have already been mentioned by the noble Lord, Lord Mancroft. I can assure him that what I have to say will be said in no unfriendly spirit, but simply in ail endeavour to illustrate some of the points which have, so to speak, been left in the air without adequate explanation in the other place. I feel sure that the noble Lord, Lord Mancroft, will understand that I do not in any way expect a reply this afternoon. The first point is the clarification of the superannuation rights of the staff of a clerk of the peace, where that office is separated from that of clerk of the county council. The second point is the forfeiture of the right, in certain circumstances, to a refund of superannuation contributions. The third point is the loss of certain superannuation rights on interchange. The fourth point is the bringing into line with the provisions of this Bill of the superannuation arrangements in local Acts. May I conclude by again assuring the noble Lord in charge of this Bill of my desire—and I believe the desire of my colleagues—to be helpful and co-operative, and again express to him (and I hope he will convey it to the Minister) my appreciation and thanks, on behalf of the local government service, for the improvements and adjustments which are contained in this Bill.
§ 3.22 p.m.
§ LORD MANCROFT
My Lords, I am grateful to the two noble Lords opposite for the extremely friendly and courteous way in which they have received this Bill. The four detailed points of which the noble Lord, Lord Burden, has just given me notice will, of course, be looked into carefully, and I will try, at the Committee stage, to clear up any doubts which may still be in the noble Lord's mind. The point regarding complexity which was raised by the noble Lord, Lord Silkin, 951 meets, I am sure, with the greatest possible sympathy from noble Lords on this side of the House, particularly from one who has been trying for the last fortnight to understand some of the niceties of local government superannuation. There are those who read detective stories, and there are those who indulge in mental exercise with the aid of crossword puzzles. I believe there are even civil servants who actually read local government superannuation Acts in order to keep their mental equipment up to date. The complexities to which the noble Lord refers have been in existence for a long time. The noble Lord asked me about consolidation. I will consult the noble and learned Lord who sits on the Woolsack and the Minister, but from what I can remember of the results of inquiries which I have made in the past on this subject, if consolidation is possible it will be a Herculean task, and it will take a long, long time.
The only other point on which the noble Lord questioned me was the matter of extra cost. I believe that, reading one or two clauses of the Bill by themselves, it does look as if it would inevitably involve further cost. I understand from mathematical experts, however, that actuarially this is not so. While it is not possible to work out exactly what the change will cost, I am advised that it is unlikely that it will be any appreciable sum at all. With those few words, and once again thanking noble Lords for their helpful reception of the Bill and their expressions of good will, I would express the hope that by the time the Bill becomes an Act we shall have succeeded in making it even better than it now is.
§ On Question, Bill read 2a; and committed to a Committee of the Whole House.