HL Deb 17 June 1953 vol 182 cc1035-54

3.4 p.m.

LORD SCHUSTER rose to ask Her Majesty's Government whether they can now make any further statement on the subject of the pensions of retired officers in the three Services; and to move for Papers. The noble Lord said: My Lords, I trust that your Lordships will not regard the intrusion of a civilian into this discussion as a kind of gate crashing. I admit that it requires some courage on my part, when so many noble and gallant Admirals, Field-Marshals and Marshals of the Royal Air Force have in the past argued it, that I should on this occasion take up the cudgels. But it was thought by those who asked me to speak this afternoon that there would be some advantage if, for once, someone who had no direct interest in the assessment of Service pensions, that is to say, some civilian, should speak, and thereby show first, as a civilian may feel and may desire to do, his gratitude to those who, in peril and in hardship, have been our sure shield during so many years. Secondly, it was thought that one who has served the Crown otherwise than in arms for so long should show that he is as jealous as any serving officer can be for the maintenance of public faith by whatever Government may be in power.

To start with, I have a great embarrassment to meet. The noble and gallant Earl who is, I suppose, to reply is a gallant Field-Marshal who occupies the post of Minister of Defence. Therefore, not only should I have an impossible task if I were to try to persuade your Lordships that he could possibly say anything that was not entirely agreeable to your Lordships, but I have a personal obligation to express regarding the respect in which I hold him. He once did me a great favour—I suppose that he himself has forgotten it—and I subsequently had the privilege of serving as a humble camp follower under his command. Lord Napier, when dedicating the History of the Peninsular War to the Duke of Wellington, said that he did so because serving under his command he had come to understand why the Tenth Legion were attached to Caesar. Perhaps I may be allowed to say that, having served, very humbly, under the noble and gallant Earl, I can fully appreciate how it was that everyone, civilian and soldier, male and female, officer and other rank, came to feel for him not only respect and regard but also, if I may say so, affection. Therefore, if I, in the course of my remarks, use harsh expressions or hard words, I hope they will not be taken as in any way reflecting upon the noble and gallant Earl.

The subject on which I am speaking is capable of being made extremely complicated. I have here a great sheaf of documents, with elaborate statements and warrants of all kinds, which have been put out by the Service Departments from time to time for dealing with this matter. If I were to deal with my case properly I should read them all. The result of my doing that would, I think, be this. Those who know anything about the matter would only hear again what they already know perfectly well, whilst no one else would ever be able to follow the arguments. So I prefer to put my case as simply as I possibly can. At the close of the First Great War, when the cost of living had risen considerably, all the Service Departments put forward to officers serving under them, in respect both of their pay and pension and their widows' pensions, statements to the effect that those payments should be henceforth married (if I may use the expression) to the cost of living. As the cost of living rose, so the payments would follow within limits of, I—think the noble and gallant Earl will correct me if I am wrong—20 per cent. It was originally planned that a revision was to be made every five years, but at a later date that five years was changed to three. No one makes any complaint of that.

At a still later date, the cost of living having gone up and gone down, the position was, as it is said, stabilised. Now "stabilised" is a very beautiful word. It really meant that the promise made at the end of the war was completely disregarded, and that the pay and pensions, and widows' pensions, were fixed—which is a shorter word than stabilised, but has much the same meaning—at 9½ per cent. below that which many people thought they were entitled to receive. It will be understood that in the meanwhile, on the faith of the promise given, a good many officers had retired from the Services, supposing themselves to be entitled to an income which varied as the cost of living rose and fell. As we know now—and I do not make any complaint that it should not have been anticipated—the cost of living has risen very considerably ever since and the plight of these men and their widows can well be imagined.

That is a very simple story. I could elaborate it at great length but I am not going to do so. What is more germane to the present discussion is the answers which the Government have made when asked why they do not keep their promise. Two answers are given. The first is that they cannot afford it, and the second is that the promise did not mean what it said. I should like to deal with each of those answers separately. First, as to expense. When one of the deputations which came, I think, to the Treasury on this matter was arguing, a voice from the official Benches said, "Where is the money coming from?" That was a very pertinent and relevant observation, and if it had been asked before the promise was made it would have been very potent. But if I sit down to a bridge table and rise some hours afterwards, having lost every rubber—as I usually do—I do not then begin to say, "Oh, I thought we were playing for penny points, and I am going to pay out at that rate." If it has been agreed to pay at the rate of 2s. 6d. a point, I do my best to find the money to pay, and try to look pleasant. We have every sympathy with economy. When we were young we were all taught—and I wish all Governments had observed it—that we ought to be just before we are generous. But I think we might also believe and hold as a maxim that we should be punctual to all our obligations before we try to be economical. This is a very simple question to deal with, and one on which anyone can make up his mind at once. Have we come to a position in which Her Majesty's Government cannot afford to pay that which, on my hypothesis, they promised to pay, and on the strength of which promise people have altered their position?

The second answer is much more complicated and difficult to deal with: I find it difficult to deal with because I cannot understand it. It is said in defence of this performance that the promise did not mean what it said, and there is a great deal of talk about legal language. Legal language is language which expresses as concisely and as clearly as possible the thought which it endeavours to convey in the way in which it is best understood by the person who receives it. It is quite useless now, when the promise was thought to be one thing by those who made it and those who received it, for the Government to say, as the previous Government also said, that it meant something quite different. If I could persuade your Lordships that when the promise was made the Board of Treasury laid a trap for those to whom it was made, and that the Board of Admiralty, the Army Council and the Air Council all concurred in laying that trap, I should take a very serious view—as I am sure would your Lordships. We should be very ashamed of ourselves. But I do not make any such suggestion. I have not the faintest doubt that when the promise was made it was intended to be kept in the very simple terms in which it was made. The cost of living and pay and pensions have been going up and down within the limits I have expressed, and nobody has talked any nonsense about "mays" and "shalls" and "wills." It was not to be construed as a conveyance, or in any sense except in that sense in which those who made it intended it and those who received it understood it.

The matter does not rest there. In our history there has always been a time when, the peril having passed, those who served are neglected. We all know the old lines which came into existence when an illustrious Admiral, the ancestor of a distinguished Member of this House, swooped on the French on the West Coast of France and removed for the time being the peril of invasion: Till Hawke did bang Monseer Complang We'd lots of beef and beer. Now Complang's beat, we've nought to eat, 'Cos you have nought to fear. I thought those days had passed. Certainly the attempt after the 1918 war to apply the cost of living to these payments gave some indication that this was so; but apparently not.

See what happened next. Since these gentlemen retired from the service of His Late Majesty, those who have joined the Navy, the Army and the Air Force have been put on the same terms as the promise which has been broken. I have never understood a great many of the parables in the New Testament, and none puzzles me more than that of the workers in the vineyard. I have great sympathy with those who, after bearing the heat and burden of the day, found that the people who came in at six o'clock were to receive the same wages. What would they have said if at the end of the day the people who came in late were to receive a considerable amount in addition to what they were to receive themselves? I do not want to introduce what people call "sob-stuff" in this discussion, but we have not only an obligation of honour to fulfil but an obligation of gratitude. I think we should all desire to retain the Government's and the country's reputation for good faith and public honour. I think I have said enough to show that in this case we are in grave danger of outraging those principles.

I have nothing more to say. I have put the matter before your Lordships in the simplest way I can, and I think that I have disposed of these two excuses, so far as they can be disposed of. If we cannot afford to pay, I suppose there is no national bankruptcy court to which we can go; but I see no particular reason why these gentlemen and widows should be singled out for this treatment. If we can pay, then we ought to pay. As for the so-called legal objection, it is one which as a young man I should not have cared to raise in the most obscure county court or police court; and if I had done so I should have expected to have been swept out and silenced. I will leave the case at that. I apologise to the noble and gallant Earl because I have put him to this trouble. I am afraid of how far he will demolish me and how far I shall be punished for introducing, as a civilian, a military matter which does not really concern him.

3.16 p.m.

LORD JEFFREYS

My Lords, I rise to support my noble friend Lord Schuster in his Motion to-day. My noble friend has adduced reasons why in any statement that may be made—and I have no doubt a statement will be made by my noble and gallant friend the Minister of Defence—it is essential that substantial improvements in the rate of these pensions should now be announced. We have waited too long for an announcement of that kind to be made. We are much indebted to my noble friend Lord Schuster for once more bringing this matter before the House and for bringing it forward as a civilian, as he said himself, who is in no sense personally interested, but who does believe in the cause of justice and fair dealing for old servants of the Crown.

As this debate is on pensions and retired pay generally, I must declare an interest, as I am in receipt of retired pay; but I am not affected by the codes of 1919 and earlier or by the stabilisation of 1935 with which the bulk of my noble friend's speech has been concerned and with which, with your Lordships' permission. I intend to deal today. Some months ago, on February 16, a strong and authoritative letter appeared in The Times. It was signed by the three noble Lords who were Chiefs of Staff of the three Services in the late war. Towards the end of the letter are the following words, which I will read: We … welcome the assurance by the Minister of Defence that the case put … in the House of Lords last month will be most earnestly considered, and we would ask that as a matter of immediate justice, at least the retired pay of those officers who are still on pre-1945 rates may now be brought up to the 1945 rate. Nothing of the kind has in fact been done. There is great disappointment at the failure to make any provision in the Budget to meet the long-standing grievance—and it is a grievance—of those officers who retired under the code of 1919, in spite of the fact that the Secretary of State for War in his Memorandum on the Army Estimates recorded that there is a shortage of Regular officers in the Army, and I believe I am right in saying that in the other two Services neither the quantity nor the quality of the intake is at present satisfactory.

Let there be no mistake: the shortage of officers is in no small measure due to the dissatisfaction of retired officers at their unjust treatment in this matter of their retired pay. Their advice to the younger generation is only too apt to be: "Take warning from the way your elders have been treated, and do not render yourselves liable to similar treatment." When, on January 20 of this year, I brought a Motion on this subject before your Lordships' House, the Motion was supported by every speaker, from whatever side of the House he spoke. Only my noble and gallant friend the Minister of Defence, speaking, of course, to the Treasury brief—and, if I may say so, not speaking very convincedly or, in my submission, very convincingly—had to pour cold water on the Motion; though he said that the case would continue to be earnestly considered by Her Majesty's Government. He added these words: The whole question of retired officers' pay and pensions will be kept constantly under review and examination and, if and when it becomes possible to assist them financially, they may rest assured that they will not be forgotten. I drew some encouragement from that statement. But, in fact, nothing has been done, though I am perfectly certain that my noble and gallant friend meant exactly what he said.

The fact is that the enemy of the retired officer is the Treasury. There is, of course, no representative of the Treasury in your Lordships' House; but even in another place it is almost always a representative of a Service Department who is put up to present the Treasury case when the subject of pensions or anything in the nature of pensions is being considered. No one expects generosity from the Treasury; it is not the business of the Treasury to be generous. But justice and fair dealing are expected from the Treasury, and in this instance they have been neither fair nor just. Their methods, in fact, seem to be a cross between those of the miser, who is unwilling to spend a farthing on anything, however necessary, and who always pleads extreme poverty, and those of the sharp financier, who will seize any pretext for withholding what he should rightly pay to his creditors, while taking every care to extract every penny that is due to himself. In this instance, I submit that the Treasury have no case whatever.

May I again briefly refer to the code of 1919? This laid down new rates of retired pay. Those rates were to be subject to revision, not exceeding 20 per cent., according as the cost of living rose or fell. In the first place, that reconsideration had to be after five years, and subsequently every three years. In 1931 there was a further Warrant which made the revision due every six months. From 1922 to 1933 the cost of living fell steadily, and as it fell the rates of retired pay fell with it, until in 1933 the rates were 11 per cent. below the basic rates of 1919. In 1934 there was a slight rise in the cost of living, and a corresponding rise in retired pay from 11 per cent. below the 1919 rates to 10 per cent. below those rates. Then in 1935 the Treasury decided that retired pay should be stabilised at 9½ per cent. below the basic rates of 1919—there was no question of any rise in the cost of living—and to this day those rates are 9½ per cent. below the rates of 1919. I wonder if there is any other class of annuitant, pensioner or worker whose rates of pay are below those of 1919. notwithstanding the tremendous fall in the value of money and the tremendous advance in the cost of living.

My noble and gallant friend the Minister of Defence said on June 20: This decision I have always understood was welcomed by the officers affected"— that is, the decision to stabilise pay. That is the Treasury claim, but it is certainly not a correct one. My noble and gallant friend was, I know, serving in India in 1935, and so was I. I well remember the indignation of my retired officer friends whom I met on my return at this arbitrary reduction in their rates of retired pay. Welcomed it? They never welcomed it at all, sick of variations as I think I have said they were. They were sick of variations downwards, but not sick of variations at all. They hoped that there would be the upward movement that had been promised. They were disgusted when their pay was stabilised at 9½ per cent. below the basic rates of 1919. There has been talk of all State servants being treated equally, and a hint that a rise in officers' retired pay would mean rises in civil servants' pensions. I am in favour of justice for all State servants, and I do not wish to enter into any invidious comparisons. But it should not be forgotten that officers do not, even in peace time, serve under settled conditions as do civil servants at home; that they are liable to recall to service in war, and that this liability to further service is a distinct handicap to a retired officer's earning capacity. His retired pay is, in fact, in part, a retaining fee.

I would again plead for consideration for the pre-1914 retired officers. These have had no undertaking given to them, such as was given to those who retired under the terms of the 1919 Warrant and subsequently. But they are old men, and their small pensions which were fixed in days when a pound was worth a pound are, owing to the fall in the value of money, worth very little now. As an act of grace and of justice, I hope that they may be considered and that their pensions may be increased. I am talking about the small number of officers who retired before the First World War on very small pensions. I hope that they may be considered. I do not claim for one moment that they have a right, or that they have had any promise made to them, as have their successors who retired after 1919. But they are a small body and a diminishing body, and any increase given to them would be an increase that would diminish year by year, because they are old men now. I trust that they may be treated with reasonable consideration and fairness. Finally, I would again submit that the Royal Warrant and corresponding instruments of 1919, as confirmed and amended by those of 1931, do, in fact, constitute an undertaking and promise to those officers who retired under their terms, and the full implementation of those retired pay codes would not only vindicate the good faith of the Treasury and the Government—and that good faith has been quite considerably placed in doubt—but be an act of bare justice to the retired officers affected. We have never been told the actual sum involved, but £2 million has been mentioned—perhaps it might be a good deal less. Surely, when national expenditure is in the neighbourhood of £6,000 million, £2 million could be afforded to do justice to and keep faith with a number of old officers who have served their country faithfully in peace and in war.

3.30 p.m.

LORD BALFOUR OF INCHRYE

My Lords, once more I should like to support the plea which is made for these retired officers. I do not think there is any need for me to try to reargue the case. We had a full debate, going into all the intricacies, on January 20, and to-day my noble friend Lord Schuster, to whom I am sure we are all indebted for bringing forward this subject, has disposed briefly but effectively of many of the arguments put forward by Her Majesty's Government to resist this claim. If expressions of sympathy and expressions of good will and good wishes governed the actions of the Government, something would have been done already, because we have had very sincere expressions of sympathy and understanding and admissions of hardship. But, unfortunately, that is not the case. For within the Treasury the Chancellor lives alongside those Treasury twins, Repercussion and Precedent. Those are ever ready at his elbow whenever a voice is heard raising a suggestion for some particular settlement of a problem such as this.

I agree with the noble Lord, Lord Jeffreys, that it is not the Minister of Defence whom we have to tackle on this subject, but the Chancellor of the Exchequer and the Treasury. I can well imagine the scene in the Treasury room when the noble and gallant Earl the Minister of Defence goes to see the Chancellor of the Exchequer. The Chancellor comes in smiling, as he always does, full of good will, well diluted with frozen austerity, and says, "Well, I am very sorry, but I cannot do anything, because of precedent and because of repercussion in so many directions." I suppose he would have to say, too, "I admit that at the Treasury we have accepted wage increases for workers. We have had to help civil servants. We have tried to do something for judges in retirement, and for judges in actual work. We can manage to afford to pay, in the Central Office of Information, for information on present happenings in the world. However, we cannot afford to pay for these services of the past. It is true that the Treasury can find money for a new Embassy here and there, and they can even make some provision for that memorial to the past, the Albert Hall. But, unfortunately, they cannot make any provision for the services of the past of these retired officers."

I suppose the Chancellor would say to the Minister of Defence, "It is an unpleasant task that I am asking you to perform. I have seen the War Office, I have seen the Air Ministry and I have seen the Admiralty, and they all press me strongly to make some concession. But, unfortunately, I cannot do it, and you, the Minister of Defence, have got to carry the torch." And then the Chancellor, I suppose, would say, "My officials have made the position easier for you; here is a bundle of papers which will help you when you come to deploy your case in the House of Lords." The Chancellor then hands the Minister of Defence the Treasury brief. The noble Lord, Lord Schuster, broke into verse at one moment in his speech, and I am reminded of Mr. Hilaire Belloc's Little Lord Lundy. The Chancellor could finish his interview by handing over this brief and saying, "Here is the brief— 'The type is set, The brief prepared, Objections met, Departments squared.' Now go to it, Minister of Defence, and do your best."

That is the sort of interview that might take place in the Treasury. But it would be a shame that this Government's fine record in many directions, to which we, the Back Bench supporters, are proud to pay tribute and give all the support we can, should be blemished by this refusal to remedy this injustice to old servants of the State who, as the noble Lord, Lord Jeffreys said, have given the best of their lives to the service of the country. I do not believe in any precedent or any repercussions in this case. I believe that a concession on the part of Her Majesty's Government would raise no such great objections in other quarters. I believe that it would gain the support of those who, perhaps the Government think, might come forward with parallel claims. I believe that such a concession would clear away a longstanding grievance which I hope we may hear is to be tackled by Her Majesty's Government now, at this eleventh hour. If it is not, then I say to the noble Earl that there are many in this House arid in another place who feel very deeply and who will come back and back again until something has been done.

3.37 p.m.

LORD HAILEY

My Lords, I hope you will pardon me if I repeat here an assurance which I ventured to give on behalf of all past and present civil servants of the Crown in the debate on January 20 last—the assurance that they feel deeply the failure of the Government to implement their undertaking to consider with sympathy the readjustment of the injury done to the men of the Fighting Services by the arrangements of 1919 and 1931. Personally, in the course of a some- what long official career I do not think I can remember any case in which the Government could so clearly be accused of lack of faith as in this case. It has a debt of honour to the officers who were affected by the arrangements of 1919 and 1931 which even now I hope it will discharge.

But may I, with no intention whatsoever of detracting from the force of the arguments used by the noble Lord, Lord Schuster, go somewhat further, and point out that the whole of the question of pensions is one which should be considered together, and that you cannot discuss the general question of military or Service pensions apart from that of civil pensions? To begin with, the fundamental reason why we ask for the readjustment of the pensions of retired officers is the same—namely, the fall in the value of money and the rise in the cost of living. Equally, I think that the disinclination of the Government to yield to that claim is also fundamentally the same, for again and again it has used the argument that the pensionary arrangement is a contractual arrangement between the Crown and its officers and that the officers must abide by the contract just as the Crown does.

Well, my Lords, it is because the cases are so similar in this respect that some of us have ventured to ask that the whole case of pensions, military and civil, may be examined by some special body, in the nature of an inter-Departmental Committee or a Royal Commission. We made this request not only in your Lordships' House but in the Press, and I am venturing to repeat it now. The advantages to my mind would be obvious. In the first place, the public would be placed in possession of the facts beyond question of argument. It would be able to see the fallacy, if I may so express it, of the argument drawn from contract, because it would be possible to quote very many instances in which the readjustment of pensions has not been made subject to the argument drawn from contract. The latest case, of course, is, that of the pensions that have been raid as the result of the Chorley Report which took full effect in 1952.

But I think, above all, that the Commission or Committee might be able to set before the public the evidence of the extent to which the Government is falling behind the example which has been set by some of the great commercial, industrial and banking institutions in this country in the matter of the treatment of their retired servants—treatment which, I may note, has been extended by those institutions to all ranks of their retired employees, and not merely to those on the lower scales of pay. Although the Committee would not, perhaps, be able to quote the whole of the evidence which my friends are now ready to place before it, because many of these institutions will ask that their names should not be published, it would nevertheless be possible to quote a substantial mass of evidence showing how far more fair and just these institutions have been than has the Government. I cannot help feeling that the Committee would draw this conclusion, namely—that if the State desires to obtain recruits for its services, whether they are civil or whether they are military services, with the same traditions, the same standard of conduct, and the same qualifications as it has obtained in the past, then it must show itself as considerate to its employees as those who will compete with them for recruits from the same sources. Unless it does that, it will undoubtedly have to recruit from sources that do not have the same standards, the same qualifications or the same traditions as before.

In conclusion, may I say this: though we are all proud of the political institutions of this country, I would ask you to reflect how far our appreciation of these institutions is really based upon our knowledge of the behaviour and the qualifications of our public servants; and if there is to be any falling off in the standard of recruitment, then it will be a great national loss.

3.43 p.m.

EARL ALEXANDER OF TUNIS

My Lords, I think we can all welcome the debate we have had this afternoon on this problem of the retired officers' pensions. We are most grateful to the noble Lord, Lord Schuster, for having brought this matter before your Lordships' House. I much appreciate the way in which this problem has been tackled this afternoon, but I would ask your Lordships not to try to relieve me of any responsibility in this matter and shift it all on to the Treasury. I belong to a team. It is a team decision that I will give you this afternoon: I play for my team.

Your Lordships will appreciate that in the field of pensions this is only one aspect of a much larger problem which affects a great number of pensioners and which also may involve a very large sum of money. Another point which we cannot just brush aside is the likelihood of repercussions, as has been suggested by some noble Lords. The Government must take into account the likely repercussions which will raise their heads if relief is given in one part of the pattern. Therefore, in considering the matter, I honestly think it is impossible to try to take one section of pensioners in isolation. We have heard what the noble Lord, Lord Hailey, has said about the Civil Service. We are this afternoon discussing pensions for retired officers, but, you see, it immediately has a repercussion because the question of the Civil Service is bound to arise

To make the situation clear, let me broadly summarise the main claims which have been advanced in this House and elsewhere in relation to officers. First of all, there are the old retired officers who retired on the 1919 pay codes and whose pensions were reduced to 9½ per cent. below the 1919 rates. Secondly, there is the question whether all officers who retired before September 1, 1950, should or should not have their pensions brought up to the same level as those who retired after that date. As regards the first group, your Lordships are aware that there are between 300 and 400 old officers who are still receiving only the stabilised 1919 rates.

LORD SCHUSTER

The 1919 rates?

EARL ALEXANDER OF TUNIS

The 1919 rates which were stabilised in 1935.

LORD SCHUSTER

Surely, less the 9½ per cent.?

EARL ALEXANDER OF TUNIS

Less the 9½per cent., yes. The exact numbers of these officers are as follows: 173 in the Royal Navy, 178 in the Army and 8 in the Royal Air Force, which makes a total of 359. In addition, there are some 5,000 or 6,000 officers pensioned originally on the 1919 rates who have had the 1935 cut partially restored in varying degrees, either through re-assessment of pension for war service in the Second World War or by increases under various pension increase schemes, of which there was one in 1944, another in 1947 and a later one in 1952. The cost of the restoration of the 9½per cent. cut to all these officers including the 359 is a very small sum—I admit that; it would come to only £210,000 a year and, of course, sum would diminish as the years went by.

Your Lordships will, I hope, forgive me if I weary you with a little back history of this matter, because I think we need to get this matter straight. After the end of the First World War, revised rates of retired pay were fixed in 1919. As has already been said, 20 per cent. was considered as due to the then increased cost of living and could be varied by periodical revision, either upwards or downwards as the case might be. Owing to the fall in the cost of living, adjustments, which were nearly always downwards, were accordingly made in retired pay, until in 1935 it was decided to stabilise the rates at 9½per cent. below the 1919 code. The decision to stabilise was made in 1932, following a strong recommendation from the Tomlin Commission, which said in 1931 that Civil Service emoluments should be stabilised. This recommendation was accepted by the Government of the day and subsequently applied to Civil Service pay and pensions. It was also applied to officers' pensions in 1935. At the time—and it is quite true I myself was out in India, but this is what I am informed, and I take it that it is correct—pressure from pensioners, both Service and civilian, was for a stabilisation of this kind. As has already been quoted, I have always understood that this arrangement met the wishes of those officers concerned, and indeed was welcomed by them. But I am open to correction, and I withdraw that statement if it is not the case.

To be quite fair, I think the arrangement was not an ungenerous one. Just consider: in 1935 the 9½per cent. stabilisation corresponded to a cost of living of 55 per cent. above the 1914 cost of living index; but, in fact, the cost of living index in 1935 was only 43 per cent. above that for 1914. So that at the time the settlement was made it was quite favourable to those concerned, I am also informed that if the final stabilisation had been related to the cost of living at the time it would not have been a 9½ per cent. cut but it ought to have been a cut of between 10 and 11 per cent. So that what happened was, in effect, that these officers received a bonus which was not overtaken until the cost of living started to rise in 1939, four years later. It is only fair to say that no one in 1935 could possibly have foreseen what was going to happen in regard to the cost of living a few years later. From 1939 onwards, of course, the Service pensioner found himself in the same difficulties over the rapid rise in living costs as did all other pensioners—not only all State pensioners, but, indeed, all those living on fixed incomes. A number of those who retired between the wars, however, came back to active service with the Forces during the war years, and they have benefited by various changes and improvements in pensions schemes, some of which I have already mentioned. I think I might enlarge upon that—

LORD JEFFREYS

If I may interrupt my noble and gallant friend, surely it is the fact that the increases which were given in the case of those who were recalled for further war service were increases for further service; they had nothing whatever to do with the stabilisation or reduction of pensions in the past.

EARL ALEXANDER OF TUNIS

No; but are not all pensions given in respect of services rendered?

LORD JEFFREYS

It was for extra services rendered.

EARL ALEXANDER OF TUNIS

Why not? You may retire at a certain pension and if you come back and render more service to your country you get more.

LORD SCHUSTER

I wish I did.

LORD JEFFREYS

I would entirely agree with my noble arid gallant friend with regard to that. But is it not equally a fact that you ought not to get less for your past service?

EARL ALEXANDER OF TUNIS

Well, the pension was not reduced; it just remained as it was.

LORD SCHUSTER

But it had been reduced.

EARL ALEXANDER OF TUNIS

Only because it was reduced to correspond to the cost of living at that time. As I have tried to point out, when it was stabilised it was in favour of the officers concerned. May I now say something about the operation of the 1944 and 1947 increase schemes? Both schemes were on a hardship basis. I could give your Lordships some examples of what the increases were, but I will not weary you with them. As you would expect, they varied according to rank and, to a certain extent, to length of service. But as regards the hardship cases, the increases were subject to certain conditions of old age and total income.

I should very much like to be able to tell your Lordships, as I am sure the House would appreciate, in all seriousness, that the Government had decided to make good to these officers the so-called 9½ per cent. cut. The sum involved is, as I have said, a very small one by itself, but there are other factors which must be considered and which are involved in this question. To begin with, to restore the cut would have the effect of improving the position only of pensioners on the higher rates of pension, and I must point out that this is contrary to the Government policy that in our present economic situation any money available for increased pensions should be confined to alleviating hardship.

Now may I say a few words about the second of the two main aspects of this officers' pensions problem—that is, the claim that all officers who retired before the present pensions code came into operation on September 1, 1950, should be given the benefit of that code. When considering this matter I think it only right that we should appreciate what is involved. To begin with, to raise the pensions of all officers who retired before September 1, 1950, to the present level would cost the Exchequer over £2 million in the first year—a not inconsiderable sum and I must warn you that it would not end there, because we must take into account other relevant factors as well as the inevitable financial repercussions which would arise and which I have already touched on. For example, it would be idle to think that a large-scale improvement of this kind in officers' pensions could be made without involving a similar review of the pensions of other ranks. And it must be borne in mind that any increases as suggested would most certainly have repercussions on civil servants' pensions and on a variety of awards, such as National Insurance benefits, compensation for industrial injuries, war pensions and so on. I think it only right to point out the difficulties with which we are faced because we must take these things into consideration in tackling these big problems.

But, apart from these considerations of principle, the consequences of abandoning the established rule against retrospection, which is very easy to laugh at but which may not be so easy to laugh off, would be very serious and might lead us anywhere. I think that at this time we must, in all honesty, ask ourselves whether we should be able to afford very large increases in pensions all round—this at a time when the Government are doing their best to try and reduce Government expenditure. As I have already said, the cost of raising the retired pay of all officers who left the Services before September 1, 1950, to the rates now operative would be over £2 million. But, as I have already pointed out, this sum is insignificant compared to the cost which might be involved by opening the gates to everyone.

It seems to me only wise to point out, in the interests of the Services themselves, that if every improvement in current pensions had to be applied retrospectively, the cost involved would almost certainly inhibit such improvements or at least badly delay their introduction. I trust that your Lordships will not think that I am being obstructive and trying to put obstacles in the way of bettering the lot of my old Service comrades, because I would remind your Lordships that a tremendous number of these old retired officers are fellows who served with me; they are personal friends of mine. Far from that being the case, I want to see them get a fair deal. But it is my duty as a responsible Minister to point out some of the difficulties with which we are faced. And really they are quite formidable, as I have tried to indicate. After all, it is not so very long since the matter was debated in your Lordships' House, and a great deal has been happening since then. I repeat that this is a problem to which the Government have given, and are giving, the most anxious consideration. They cannot but be moved by great sympathy with the claims of numbers of retired officers who have given long and valuable service to their country. On the other hand, the primary task of the Government is to restore the economic health of this country, and, in pursuing this main object, they have to resist many claims to extra expenditure which are both well-founded and desirable in themselves. However, I can assure your Lordships that we shall do our best to find a fair solution to the case of these retired officers, for whom your Lordships have so rightly shown such great interest and such concern.

4.2 p.m.

LORD SCHUSTER

My Lords, I now realise that I ought, when I began my first observations, to have declared my own interest. I am myself a Civil Service pensioner, but it never crossed my mind for a single second that payment of the full pensions promised to officers of the Armed Services and their widows might possibly result in my obtaining any benefit. As your Lordships know, we put our case on two perfectly simple grounds. I tried, so far as I could, to leave out detail and to state those two grounds clearly, but I cannot have stated them sufficiently clearly. First I said—and I have not heard the statement contradicted—that in 1919 a promise was made, that on subsequent dates the promise was confirmed, and that now the promise has been broken. What has been said does not seem to me to answer that. No one has ever answered what I said on that matter, or tried to do so.

In industry and commerce where people are employed, whether on wages or on salary, there is something which is known as the "rate for the job." We know that it is difficult both for industry and commerce to fix the "rate for the job," but employers have assistance in doing that which is not open to Her Majesty's Government—nor ought it to be. There are vigilant trade unions to look after the interests of those employed. The employers have their own balance sheets to look to. They have the knowledge of what other firms in like circumstances are paying. None of these things are available to Her Majesty's Government as criteria. But they have this: they have the rate which they themselves fixed. In this case, they have fixed a rate which is greater in respect of new entrants than of those who have borne the burden and the heat of the day. To that I have heard no answer, either here today or on any other occasion. But your Lordships have been very patient with me, interfering in a matter which does not concern me—I hope I may say that, in spite of any possible effect on my pension, about which I spoke lightly just now. I will not go on making observations. I leave the matter in your Lordships' hands. I do not propose to divide the House, for I do not wish to strain the tender conscience of anyone who might feel that his obligation to the Government must hold him on this occasion to desert his convictions. So I close by thanking your Lordships, and asking leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.