HL Deb 26 April 1956 vol 196 cc1280-90

3.47 p.m.

Debate on Second Reading resumed.

LORD GREENHILL

My Lords, I agree with all that my noble friend, Lord Silkin, has said on this Superannuation Bill and if I do not pursue the references to the salaries at present being paid to teachers it is because I feel that the question of their adequacy or otherwise is a matter quite apart and distinct from the question of superannuation. It is better to keep the two questions quite separate so that we can apply ourselves to the question of salaries when the time comes, and deal to-day with what is contained in this Bill. To me, the significance of this Bill lies not in the fact that it purports to deal with what is called "an actuarial deficiency", but rather in the fact that it has given rise to a spontaneous outburst of feeling on the part of the whole of the teaching profession and has driven this responsible and well-informed body of citizens to say and do things which I feel in normal circumstances they would have preferred not to say or do. It seems significant, also, as my noble friend has indicated, that this is the second time that a Bill of this kind has been submitted; and although there have been made in the present Bill what the noble Earl has called "improvements" and what I prefer to call "adjustments", those by no means cover the whole of the grievances felt by the teaching profession.

Nor is it without significance that not very long ago the provision of monies for further education was being attacked. The outburst then was so great that not only did the then Minister of Education feel it necessary to resign but Her Majesty's Government felt it necessary to set up a Committee to inquire into the whole of the facts concerning further education. The question, therefore, arises: why are teachers singled out for this irritating attention? Why is it that in these days, when the supply of teachers is admittedly so chronically short, when industry is crying out for more highly educated young men and women and when it is generally recognised that the teachers have such an important part to play, the Government are adopting this attitude towards them?

The noble Earl, understandably, said that while he had heard of such things as actuarial deficiencies he had never been able to understand exactly what the term meant. I think the probability is that we are all in a similar position. My own feeling about it is that, in cases such as this, an actuarial deficiency amounts to nothing more than the falsification of a prophecy which certain actuaries made; and the method by which they are attempting to remedy that false prophecy is not to drop the prophecy but to try to twist the facts in order to suit the prophecy which they made some time ago. I will go further and say that my feeling is that this so-called deficiency is not a deficiency at all: it is a phantom entity, the outcome of the difference between certain receipts and certain payments. Whatever results from that is called a deficiency. If we went on paying, in times of deficiency, pensions that we had undertaken to pay, no one would be any the worse for it. But we pretend that here is an account which is what is nowadays called "in the red" and which must somehow be brought into balance. That seems to me to be a very unnecessary kind of calculation and quite unreal in relation to present-day conditions. When I try to think of an explanation why there should be this persistence with this phantom item, I can only assume that it is a continuation of a private enterprise concept in a public enterprise situation.

I wonder whether I can explain what that means by an example, because it seems to me that this is how it works In the year 1938 or 1939, a man I know decided that he would retire from business. He calculated that if he sold his rather flourishing but small business he would he able, with the proceeds, to buy himself an annuity of an amount sufficient to keep himself and his wife in modest comfort for the rest of their days. And in fact he did that. For a year or two things seemed to work according to plan. But to-day that man is in the humiliating position of having to depend on friends to assist him to live. Similar cases must be known to your Lordships. But what is the significance of that case? We should all agree that the man was honest in paying a premium adequate for him in return for a certain annual payment. The insurance company, we may say, was in a sense equally honest in that it has fulfilled its part of the bargain by paying the particular figure it undertook to pay year by year. But, in fact, the man is going short, and it would almost appear as though he, having paid good 1938 or 1939 pounds, is being repaid with a kind of clipped coinage in 1955 or 1956 pounds. The effect is that though the paper bargain is being kept and the man is being paid the sums contracted for, in actual fact he is now suffering a standard of living that he never thought he would have to suffer. And yet he has carried out his part of the bargain. The same sort of thing appears to me to apply to this case.

There are numbers of different kinds of superannuation schemes. As noble Lords will know, a Working Party drew up the details of a number of schemes now in operation, running through the Civil Service as a whole, the nationalised services, the local authorities and the like; and while the headings are similar in each case—"Contributions", "Money Benefit" "Methods of Finance" and so on—there are considerable variations in the derails. In the case of the Civil Service, as many of your Lordships know, there are no contributions by the employees. There is no fund, or, shall we say, there is no funded account. Any so-called actuarial deficiency is made up by the State. In other cases there are funded accounts, but there, where there is a deficiency, the employer, whether it be a local authority, the Scottish National Health Service or some other such organisation, makes up the deficiency. Why should we insist on treating this particular superannuation fund as though it were a permanent fund, as though sums were definitely fixed for all time, when this very day in your Lordships' House we are to deal later with a Bill which is called, I think, a Pensions (Increase) Bill—a method by which on six previous occasions we have had to alter what presumably were actuarially arrived at figures which have turned out to be false in course of time? I repeat that we are to-day to consider the seventh Bill dealing with increased pensions, though those pensions were the outcome of actuarial calculations made in the past.

I would therefore suggest that if the Government did the right thing they would take back this Bill, bring in a third one, ignore this business of actuarial deficiencies, and adopt what I think is the modern method of regarding remuneration of an employee. They would say that every worker is entitled not only to be paid for the work he does but also, after his years of work are over, to a pension for the rest of his life. And they would simplify the calculations by assuming that he would receive so much during his working life, but that there could be variation of the figure during his pensioned life. They would say to him: "If you want further benefits in the way of widow's pension, dependants' pensions and so forth, we can arrive at some kind of calculation whereby perhaps sums over and above what you receive as a right can be arranged for." In that way, I think we could simplify this matter and do more than anything else to restore that social prestige which I very much fear the Government is doing a good deal to destroy in the case of these valuable servants of ours.

3.59 p.m.

VISCOUNT HAILSHAM

My Lords, I venture to intervene in this debate to say only a very few words. I listened with both attention and respect to the two speeches which have been made from the other side of the House, but it occurred to me that both the noble Lords were in some danger of confusing two rather separate issues, and none more so than the noble Lord who has just resumed his seat in the last remarks he made. I think we should all recognise that deep feeling has been aroused among teachers in the last two years, most of which has centred round this Bill. But, as I think the noble Lord, Lord Silkin, has conceded, that relates not so much to the question of the additional 1 per cent. payable as a contribution to the pension as to the feeling which they have that they are generally underpaid and under-respected in the community. That general feeling is one with which I must confess a very real sympathy. I do not believe, as apparently the noble Lord allowed himself to say in his last sentence, that any respect or prestige in which the teaching profession is held in this country will he affected one way or another by the additional 1 per cent. I cannot believe that a matter of that kind can be dealt with on so small a scale or can be affected by such a trifling matter.

The noble Lord is certainly preaching to the converted so far as I am concerned when he claims that the prestige of the teaching profession ought to be respected and that it has probably not been sufficiently respected in this country in the past. Happily, that suggestion is outside the range of Party politics. I know that there is the Burnham Committee and that from time to time there is legislation, and I hope that that matter will be taken care of in the proper way by the proper authorities at the proper time. I was glad when my right honourable friend the Minister announced in another place that these provisions would not take effect until after the next review. I should conceive that it was a matter which the Burnham Committee would be very much entitled to take into account in the review which they will then make.

I have accepted that, and accepted that the prestige of the teaching profession ought to be maintained, that one standard of its maintenance ought to be its remuneration, and that the teachers, like a great many other professions, have suffered relatively a great deal more than some other occupations in the community. I recognise that statistically the case of the teachers is undeniably a strong one. I know that my own profession is not generally supposed to be underpaid, though in fact most of us are. I can speak from my own knowledge that the remuneration in my profession has not increased at all since before the war. We are relatively much worse off in relation to other occupations. Therefore I speak with sympathy of the teachers' claims. But I question the wisdom of tying these perfectly legitimate complaints by teachers, and by some other professions, to bitter attacks on an attempt to make a pensions fund actuarially sound.

It may very well be, as the noble Lord suggested, that an actuarially sound pensions fund is a financial or economic chimera. These are abstruse matters upon which I would speak very much subject to correction, because I am well aware of the pitfalls which beset noble Lords and Members of another place who speak on economic matters without knowing them clearly. It may very well be that many occupations, notably the Civil Service, are better remunerated by a noncontributory scheme. If that were so and such a change were to be effected, it would inevitably be the case that a noncontributory pension, being purely a form of deferred salary, would be taken into account in every review and no doubt the total remuneration would be scaled down by the Burnham Committee in proportion. I do not think that that is a question we ought to go into to-day. I have not heard from the other side of the House any suggestion that that step ought to be taken or whether it would be particularly attractive to the teachers. The step which has been taken is that a scheme, which has been contributory, in principle at any rate, since 1922, and on a permanent basis since 1925, is now being put on an actuarially sound basis. I cannot see that there is anything wrong with that in principle, especially as the additional payment of 1 per cent. is based on a salary which is under review before the 1 per cent. comes into effect.

Two of the noble Lords who have spoken have put forward an argument on the basis of breach of faith. That is something we hear from time to time in this House in relation to a number of matters, and I confess that whenever that cry is raised I feel a twinge of conscience about whatever it is that is proposed to be done. We hear it on a number of occasions and I think it is worth while reflecting a little on the nature of what is said on those occasions. I know that my noble and gallant friend behind me, Lord Jeffreys, has a particular horse which he rides with great eloquence and, so far as I am concerned, with great persuasive- ness, which is based on the construction of ministerial pledges given some time ago. On foreign affairs we find the bitterest antagonism aroused over the construction of pledges given in the 'twenties to different groups of people in the Middle East.

My abiding conclusion is that, although Ministers have every right to bind their successors, and while their successors ought to respect the pledges which Ministers give, there comes a time when a pledge ceases to be easily intelligible, and different people form, quite legitimately, different views about what it means. Then the time has come for Parliament to lay down a new policy. I cannot get out of that. It may be a hard doctrine, but I have been a Member of one House and another for more than half my adult life, and the conclusion I have formed about ministerial pledges is that the time has come for Parliament to step in and make up their minds what to do, in the light of the pledge and h the light of the present circumstances. Otherwise, Parliament will find itself saddled with innumerable pledges on which divergent interpretations are inevitably given which hamper and restrict the progress of policy.

It is now suggested that the teachers' pensions should remain contributory and that the actual deficiency, which I understand amounts to no less than £300 million, should be written off. I think the House will agree that that is the only possible thing to do with it, and that an actuarially sound contributory scheme should be instituted that will involve the additional 1 per cent. I did not follow the argument of the noble Lord, Lord Silkin—and again I speak with great diffidence on the matter—when he suggested that the mere chance that the increased contribution bore the mathematical proportion of 6 per cent. (or 12 per cent., if we take both contributions), to the teacher's salary meant that the fur d could not be overdrawn if for some external reason the teachers' salaries increased. I should have thought that the contrary was the case. I understand that the pension is payable on the basis of the salary earned by teachers during their last years. It must follow, therefore, that if, as the result of a review, their salaries are increased, the pension fund would tend to run more heavily into debt until the increased contribution which would follow the increase of salary came to mathematical equality with the increased pension calculated on the basis of the last year's salary immediately after the increase has been given. That may be a mathematical fallacy, but I should think it would be the case.

I cannot help feeling that this Bill has aroused a great deal too much bitterness and antagonism. I cannot speak of its very complicated past. I feel myself that there must be fairly solid reasons for making the scheme contributory, like so many other schemes, both in the public and the private service, all over the country, If it is to be made contributory, I feel certain that a contributory scheme must be actuarially sound. I have heard no demands that the contributions should be abolished, with the inevitable result on the salary. Therefore I come to the conclusion that the Bill is a good one, notwithstanding the antagonism it has aroused. I should like to think that, when the increased contributions come into effect and when the review has taken place, for quite different reasons than can be expressed properly in a debate on this Bill, the teachers will find that their salaries will rise; that the prestige with which they are held in the community will be restored—if, indeed, it has in any way been impaired; that they can cherish the feeling that they are playing the useful part which we all know they play, and that that usefulness will be universally recognised.

4.12 p.m.

LORD HADEN-GUEST

My Lords, the noble Viscount who has just spoken with such significance, as he always does, has, I think, left out one thing, and that is the feeling of the teachers themselves that they are not having a square deal. I do not think he laid any emphasis on that, but that is really the fact. While my own profession is that of a doctor, I have a particular interest in the teaching profession, because I was for many years one of the inspectors of schools for the London County Council, when the Inspectorate of Schools was set up, and I got to know teachers well. I know a great many of them personally, and I have lived a large part of my life in their company inspecting children. Therefore, I do know their point of view.

People who go in for teaching do not do so in order to make a large amount of money. They are often no better at accounts than doctors are—I do not know about lawyers, but I should think that sometimes they also are not too good at accounts. What I am getting at is that teaching is a profession which has a very high standard of devotion to its duty and its ideas. As I say, with few exceptions, people do not go in for teaching with the idea of making a large amount of money, but because of their devotion to teaching and their love for children. I do not think the details that have been so largely discussed this afternoon, the amount they pay in and the amount in the account, is the thing which concerns them. If they could get an assurance from this House—and I hope the noble Earl, Lord Home, when he replies, will be able to give it—that the Government mean to do the best they can for teachers, so as to put them in a reasonable condition in their declining years, I am sure it would give great satisfaction. To my mind, it is intolerable that people who have devoted their lives to one of the most important functions in the community, the teaching of children, should in their later years, owing to a change in economic circumstances which nobody could predict and which is affecting every country in the world, be faced with the likelihood of being reduced to a condition of real and serious physical poverty. In my view, that is the thing that we must get into our minds. There must be some definite movement on the part of the Government to show the teachers that they do not intend to leave them in that condition, but will do their best to bring pensions up to a higher level, so that the teachers, in their old age, can live in reasonable comfort.

4.15 p.m.

THE EARL OF HOME

My Lords, we have had an interesting debate. All the speakers from the opposite side of the House have really based their objections as my noble friend Lord Hailsham said, not so much on the additional 1 per cent. which the teachers are being asked to contribute as on the fact that there has been, as the noble Lord, Lord Silkin, said, an outburst of feeling from usually very reasonable people; that the teachers feel that there has been a breach of faith, and, as the noble Lord, Lord Haden-Guest, has said, that they have not had a fair deal. That charge hinges, I think, largely on the Act of 1925 and what was said in that year. I do not wish, any more than the noble Lord, Lord Silkin, does, to go in detail back to that Act. All I would say is that since I have come new into this field of education (it is not a field in which I have been active before) I have done my best to study the Act of 1925, and I cannot find in that Act anything which implies that the Treasury should bear all the cast of any increased pensions that might lead to this actuarial deficit.

On what Lord Eustace Percy said in 1925 there are differing opinions. The noble Lord, Lord Silkin, has truly said that Lord Eustace Percy himself has said that all he meant was that contributions would not be increased so long as the accounts showed a balance, which, had the scheme been funded, would have been sufficient to meet its future liabilities. The noble Lord, Lord Silkin, said that he did not think that anything I could say would remove from the teachers the impression that they had not had a square deal. I doubt whether anything I can say will remove that feeling. However, what I can say is that if the Government felt that there was a breach of faith involved in this, naturally we should not have made, ourselves responsible for this Bill. I think on each side of the House we realise that we take a different view as to that, and we are willing to leave it there. We have tried to find a fair solution between the three parties; that is to say, the State, the local authority, who is the employer, and the employee.

The noble Lord, Lord Greenhill, did not like the Bill; he felt that it should be withdrawn, and that a non-contributory scheme, should be substituted for the present scheme. And the noble Lord, Lord Silkin, said that there was a long and discreditable history to the Bill. When I. went back only to 1948 I thought I was being kind to the Opposition, because during this long discreditable history there have been, after all, one or two periods of Labour Government. No doubt the noble Lord, Lord Silkin, was making the same sort of impassioned speeches as he made to-day, and no doubt the noble Lord, Lard Greenhill, was advocating a non-contributory scheme; but neither of them seems to have made much impression on his fellows. To ask for a non-contributory scheme would be to ask for the rejection of this Bill and its withdrawal, and the noble Lord will not expect me to go into any detail on that.

I am glad that the noble Lord, Lord Silkin, used this opportunity as a peg on which to hang his Views on salaries and remuneration for teachers. I believe that the more the country understands the present financial plight of those people who are skilled, the better. Teachers, as my noble friend Lord Hailsham said, are absolutely worse off in some cases than they were before the war, and certainly relatively worse off. The noble Lord, Lord Greenhill, concluded that they were not receiving the value that they expected when they entered into the contributory scheme. Nor is any of us, unfortunately, in this time of inflation I think the answer to that must be the general measures that we hope to take to increase productivity in this country, and the general financial measures which we hope will be successful in stemming inflation. I hope that your Lordships will now give this Bill a Second Reading. It may not be perfect, but it is some effort to help the teachers; and so long as there is to be a contributory scheme, then I think there is an obligation on the Government to make it actuarially solvent.

On Question, Bill read 2a, and committed to a Committee of the Whole House.