§ 4.32 p.m.
§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(The Earl of Home.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [LORD TERRINGTON in the Chair]
§ Clause 1:
§ Writing-off of accrued deficiency of contributions
§ (3) For the purpose of calculating the amount to be added as aforesaid, regard shall be had to any future increase in the scales of remuneration of teachers for which provision is made by any order in force under section eighty-nine of the Education Act, 1944, on the thirty-first day of March, nineteen hundred and fifty-six, or which has been approved by the Minister before that date in accordance with regulations made under section one hundred of that Act, but subject as aforesaid the scales of remuneration shall be taken to be those in force on that date.
§ LORD BURDEN moved to omit subsection (3). The noble Lord said: Subsection (3) of Clause 1 was inserted in the Bill at a late stage when the Bill was under consideration in another place. There have been negotiations between the Government and the local authority associations, but t should like to make it clear that this particular subsection and its implications were not discussed, and that the local authority associations are gravely concerned at the heavy financial charge which, after the next quinquennial valuation, due, I believe, in 1961, is bound to fall on them as a result of this subsection.
§ Your Lordships will be aware that actuaries, when making calculations in respect of superannuation funds, always take into account the relevant factors, including known salary increases or increases likely to take place. Your Lordships will be aware, also, that in the normal course of events the next revision of teachers' salaries would have taken place some time next year, to come into operation after April, 1957. But such was the storm aroused by the proposals of the Government with regard to superannuation (and I do not intend to open 1006 the controversy again now)that this review was expedited, and as the result of the recommendations made an estimated £30 million a year will be added to the cost of teachers' salaries. This comes into operation next October. Similarly, the increase in superannuation contributions has been postponed until next October.
§ The 5 per cent. contributions, both from the local authority and the teachers, resulted in a heavy actuarial deficiency, although frankly, without going too far into it, my own view is that it is merely a bookkeeping transaction and not an actual loss in money. But with the 6 per cent. contributions of both sides it is estimated that on the actuarial valuation the deficiency will be between £60 million and £80 million; and this subsection places that actuarial deficiency on the shoulders of local authorities, subject, of course, to grant in the normal way. To make quite sure of this transfer of responsibility the Minister altered the rules, so to speak, under which actuaries normally work in assessing the actuarial deficiency of the superannuation account—it is a misnomer to refer to it as a "superannuation fund". The local authorities, and, in particular, the Association of Municipal Corporations, have protested strongly to the Ministry on this matter, but so far, without result. They feel that they have not been treated quite fairly by the Ministry in this matter, due to the creation by the Minister of a situation in which they will have a heavy actuarial deficit to meet as the result of this subsection.
§ That is the case that I would respectfully submit to your Lordships, and even at this late date I would urge the importance of securing the maximum of good will on all sides to ensure smooth working and the sincere co-operation of all concerned. If one of the parties—and not an unimportant one—feels a sense of injustice, that is the wrong spirit in which to launch a new proposal of this kind. Therefore I would plead for a meeting and discussion between the Minister and the local authority associations between now and the Report stage in a final effort to see whether some satisfactory agreement can be arrived at between them. I beg to move.
Page 2, line 13, leave out subsection (3).—(Lord Burden.)
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (THE EARL OF HOME)
The noble Lord has moved his Amendment in a moderate spirit. Clause 1, as he knows, requires the actuary to calculate the deficiency on the Teachers' Superannuation Account as at March 31, 1956. I was not in the negotiations, but, as I understand it, it was part of the understanding between the local authorities and the Government on which the financial provisions of the Bill were framed that they should be based on current salary scales. I think so far we are in agreement. On that basis, my right honourable friend the Minister of Education agreed, with the Treasury's consent, that the taxpayer should carry the deficit, estimated for England, Wales and Scotland at £338 million. At that time, it was not known, as I understand it, that the Burnham Committee were likely to meet and recommend a rise in the teachers' salaries which would almost coincide with the date of the Bill. In fact, the increase comes into operation in October, 1956. A date had to be fixed, and if there was to be any finality in the thing at all it had to be accepted and stuck to. So the date March 31, 1956, was fixed.
The noble Lord, Lord Burden, has suggested, not exactly that there has been a breach of faith, but that there has been some misunderstanding and that it is a pity to start off a new arrangement on this basis. My right honourable friend the Minister would not accept that. He feels that he has gone into this matter carefully and has come to an arrangement which is fair. I am afraid we shall have to disagree on this point. I hope the noble Lord will not press his Amendment. It was only on the Paper yesterday, and I have not had much time to look at the other implications of it. But as I have been reading it on the Bench, it would seem to me that the actuaries who would, in the ordinary course of events, take into account instalments of extra pay due to the bringing up of women teachers to equal pay, would not be able to do so if this subsection were dropped; and that is a result which the noble Lord would not wish. I am afraid I cannot meet him on his main case. I am sorry, but I am afraid we must agree to differ on that point.
§ LORD BURDEN
While I did not expect that at this stage the noble Earl in charge of the Bill could agree to the case which I have submitted, I do urge that on this specific point the local authority associations, who, after all, are concerned in the working of this Bill, were not consulted; and even to put it at its lowest there has been a misunderstanding. The noble Earl has not answered the point which I made, that to ensure that the Minister transferred this contingent liability to the local authorities, this subsection was inserted in another place late in the day, which is a clear indication that the Minister or the Department knew that the actuaries, in working out the deficit on, if I may so call it, the old superannuation account would, by the "rules of the game," so to speak, have to take into account known increases. That is the reason why I put this Amendment down, and I regret to say the noble Earl has not responded—I will not say to the olive branch but, shall I say, to a way of trying to appease feelings in this matter. I would urge him to think again on this point before this Amendment is negatived.
THE EARL OF HOME
I am sorry that I did not answer the question as to whether the Minister might meet the local authorities. I did not think that that was for me to say. The local authorities are, of course, in touch with the Minister of Education, and have no doubt made their request to him. It must be for my right honourable friend to decide whether he wants to take this matter any further. I know that he feels he has had full consultations.
§ On Question, Amendment negatived.
§ Clause 1 agreed to.
§ Clauses 2 to 5 agreed to.
§ Clause 6 [Extension of service to age of 70]:
§ 4.45 p.m.
LORD BURDEN moved to add to the clause:
(5) Notwithstanding anything contained in the previous provisions of this section, when a teacher attains the age of sixty-five years he shall cease to hold his employment:
Provided that the employer may, with his consent, extend his service for one year, or any less period, and so from time to time as the employer deems expedient.
The noble Lord said: I beg to move the Amendment standing in my name on the
Marshalled List, and in doing so may I say that, while the Amendment expresses the views of the Association of Municipal Corporations, I am speaking on my own behalf and accepting responsibility, and in no way committing anybody else on this side of the House.
§ As your Lordships will see, Clause 6 raises the maximum age of pensionable service from sixty-five to seventy, contributions ceasing to be payable in respect of a teacher who has completed forty-five years of service which are reckonable for pension. The purpose of the Amendment is to place teachers in the same position as other local government employees reaching the age of sixty-five. Under the Local Government Superannuation Act, 1937, when a contributory employee reaches the age of sixty-five he automatically ceases to hold his employment, though it may be extended, with his consent, from year to year. Until 1945, although under quite different statutory provisions and administrative arrangements, the position of teachers was, broadly speaking, equivalent to that of employees to whom the Local Government Superannuation Act applies. Under paragraph 3 of Schedule 11 to the Primary and Secondary School (Grant Regulations), 1945, it was provided that a teacher shall not he employed after he reaches the age of sixty-five years unless such employment is approved by the Minister; and approval will be given only for a limited time and in cases where there are special circumstances. This meant that the local authority desiring to retain a teacher's service had to put up his name for the approval of the Minister.
§ On October l7, 1949, however, Administrative Memorandum 339 was issued which referred to the paragraph I have quoted, and stated that, in consultation with the education sub-committee of the Local Government Manpower Committee, the Minister had decided to dispense with the requirement that he should give his approval, provided that the employing authority were satisfied that the retention of a teacher beyond the age of sixty-five was in the interests of the children and that no suitable replacement was available. When the 1945 Regulations were replaced, the change in procedure initiated by Administrative Memorandum No. 339 was taken a stage further. Not only was the Minister's approval of the retention of the teacher beyond the age of sixty-five dispensed 1010 with, but reference to normal retirement at this age was omitted altogether, and the local education authority no longer have occasion to consider whether they wish to retain the teacher, unless there is some specific provision in his service agreement.
§ Service agreements entered into between local education authorities and teachers do not necessarily contain any reference to a retiring age, and many authorities will no doubt have relied on the provisions of the 1945 Regulations and the law as it stood before that date. It may therefore he assumed that there are many teachers in employment who, if this Bill becomes law in its present form, will continue in service until the age of seventy (because this is to become, instead of sixty-five, the maximum pensionable age), unless their contract of service is terminated by notice from the employers. Here I come to what I regard as the most serious consideration in regard to this Amendment. The employing authority would then have to go through the distasteful task of positively establishing inefficiency at a personal hearing, if the teacher asked for it. It is true that the Bill does not interfere in any way with the contractual relationship between an authority and any particular teacher; nor does it confer on a teacher an automatic right to continue in service. But in practice, the difficulty to which I have referred still arises—that is, of having to interview a teacher, with all the unpleasantness and so on which might, and no doubt would, arise in such circumstances. It seems to me that there is no reason why teachers should not be in the same position as other local government employees. I beg to move.
Page 6, line 26, at end insert the said subsection.—(Lord Burden.)
§ 4.53 p.m.
§ LORD SILKIN
May I say one word on this matter? I was glad that my noble friend made it clear that on this Amendment he was speaking for himself, because he is certainly not speaking for me or for a number of my noble friends. I am utterly opposed to this Amendment. It is invidious and has nothing to do with the Bill itself. I listened in vain for one single educational reason why this provision should go into the Bill. The only reason that my noble friend gave was purely a financial reason, that the local 1011 authorities might in some way be penalised by having on their staff men who were not paying a contribution to superannuation.
§ LORD BURDEN
Oh, no. Although my noble friend is opposed to this Amendment, he cannot "get away with" that. The Amendment was moved in the interests of the children. The point that was made was that, under the clause as it stands, an inefficient, incompetent teacher, suffering from senile decay almost, can continue from the age of sixty-five to the age of seventy. I ask my noble friend whether that is the type of person he wants in our primary schools.
§ LORD SILKIN
I was not trying to "get away with" anything. I was merely expressing my view about this Amendment. I am glad that my noble friend has realised that there should be an educational basis for it. He never made that case in moving the Amendment. It is quite inappropriate to deal with retiring age in a Superannuation Bill. It would be a great pity to lay down in a Bill a statutory retiring age. There is a great shortage of teachers, and we may be glad to have teachers remaining on, and knowing that they can remain on, so long as they are in good health, beyond the age of sixty-five. But if it is applied to teachers I do not see why it should not be applied to legislators, in which case neither the noble Lord who moved the Amendment nor I would be in a position to legislate except by permission of our employers. I think we ought to leave this matter quite flexible, and certainly we should not put a provision into a Bill. No doubt there were good reasons why the matter was taken out of the Regulations—I do not know whether the noble Earl can tell us. Probably it was because it seemed that it would be wiser not to fix absolutely a retiring age for teachers so long as there was this shortage.
Of course, there is the general question: in a period of over-full employment, do we really want to have compulsory retirement at the age of sixty-five? Whereas, a generation or two ago, people were quite senile at the age of sixty-five or seventy, to-day, they are living longer and are fit to a much greater age. We 1012 know from experience in this House that men are fully capable of discharging valuable duties at an age well beyond seventy. It would be a great mistake to legislate at this stage and say that sixty-five should be the compulsory retiring age.
THE EARL OF HOME
May I intervene? As has already been said, Clause 6 makes it possible for a teacher to continue in service up to the age of seventy. It is the Government's feeling—and I think it is a general and growing feeling—that, provided persons are fit at that age, they should not be discouraged from carrying on their work if they so desire. I think the noble Lord, Lord Burden, moved his Amendment largely in the interests of the children. We need not worry a great deal that there would be a great number of teachers, unfit to teach, who would cling on to their jobs. Under the Bill as it is, the local authority can get rid of the teacher, and the teacher need not stay on if he does not want to. We think that the machinery under the Bill is flexible and sensible and that, on the whole, the machinery proposed by the noble Lord would be more rigid and less acceptable to the teachers, as it certainly is to the Government. I am afraid that I cannot accept this Amendment but I hope I shall find the two noble Lords together on the next one.
§ LORD BURDEN
After this friendly exchange of opinion, let me say that no one has suggested—certainly I did not, either in my Amendment or in my speech—that people should be compulsorily retired at the age of sixty-five. That is furthest from my thoughts. But I have been concerned, and am still concerned, that it may be not the man whose biological age is forty while his other age is sixty-five who will want to go, but the crawling, creeping, senile-decayed man suffering from an ossified brain or rheumatoid arthritis who will crawl to school. The poor children will suffer unless the local education authority take the matter in hand. It may be a head teacher, and who is going to report a head of that kind? He will not report himself, so the education in our schools will suffer. I want to avoid the indignity of a person who is senile being, in effect, dismissed for incompetence after reaching sixty-five. However, if my noble friend, 1013 with his vast experience of the L.C.C. Education Committee, wishes to see a number of people over sixty-five crawling wearily to L.C.C. schools, I have nothing further to say with regard to the point, and I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 6 agreed to.
§ Clause 7 agreed to.
§ Clause 8:
§ Provision for widows', widowers', children's and dependants' pensions
§ (3) For the purpose of supporting the benefits payable by virtue of rules under this section, the rules shall provide for contributions to be made by or in respect of the teachers to whom they apply of such amounts as appear to the Minister to be sufficient for that purpose, such contributions to be satisfied, as the case may be,—
- (a) by means of the reduction, by such amount as may be specified in or determined under the rules, of any additional allowances payable to such teachers under section three of the principal Act after the date specified in the rules, or the refund of such proportion as may be so specified or determined of any additional allowances paid under the said section three to such teachers before that date; or
- (b) by means of the reduction, by such amount as may be so specified or determined, of any sums payable after that date in respect of such teachers by way of death gratuities under section five or return al contributions under section twelve of that Act.
§ 5.1 p.m.
THE EARL OF HOME
Before the noble Lord, Lord Silkin, rises, I wonder whether it would be convenient—I am entirely in the hands of the noble Lord—to take the next Amendment and the Amendment to Clause 34 together and to have a discussion on them now, because they really raise the same matter—namely, the rules concerning widows' pensions and whether the lump sum should be used or whether a contribution should be made out of the pension.
§ LORD SILKIN had given notice of his intention to move to leave out subsection (3). The noble Lord said: So far as I am concerned I certainly agree, because I want to say frankly that I regard the discussion we are going to have, and my Amendment in particular, as a means of raising this subject generally. I think this matter has gone 1014 much too far at this stage to alter the basis of the scheme for widows and orphans, and at best all I can hope, and do hope, is to extract from the noble Earl a willing assurance that this subject will be reconsidered in the near future, because teachers attach a great deal of importance to the question of provision for their widows and orphans.
§ I think I can reduce this rather complicated subject to some kind of simplicity. In his Second Reading speech, the noble Earl referred to certain benefits which were being conferred upon teachers as a result of this Bill, and the provisions of Clause 8, which I think were introduced at a somewhat late stage in the Bill—they were not there originally—were instanced as one case of teachers benefiting. Clause 8 provides that teachers shall be able, if they so desire, by sacrificing a portion of the lump sum to which they become entitled on retirement, to make provision for their widows and orphans. The provision is based on a purely actuarial scale, and all that they will be doing—I do not think the noble Earl will pretend that it is more than this—is to use their own money or a portion of their own money to which they become entitled, for the benefit of their widows and orphans. There is no contribution, either from the local authority or from the Exchequer.
§ That seems to the teachers, and to us on this side, a rather harsh provision, particularly when it is compared with the treatment given to others in a similar position. In a good many cases the teachers make a contribution towards this provision for their widows and orphans and the local authority make a similar contribution. In some cases they pay an additional 1¼ per cent.; and I think that in the present case a contribution of 1¼ per cent, coupled with a similar contribution from the local authority, to which, of course, the Exchequer would be making its share, would meet the requirements. As the clause stands the whole of the provision has to be made by the teacher himself. He is not asked to make any annual contribution, nor is the local authority, but he suffers a big reduction in the amount of his lump sum.
§ Teachers' remuneration is not very great, even with the additional amounts they are getting as the result of the last Burnham award. The lump sum is not 1015 very great, and to sacrifice two-thirds of it means that in practice the amount that the teacher will get is not of great value to him. In most cases when people retire, they look forward perhaps to buying a small house in the country, away from their work; they do not want to continue to live in the vicinity of their old employment, and they want, if they are wise, to get into an entirely new field of activity. This lump sum was designed as a help towards enabling a teacher to start a fresh life. If, however, he has to devote a large proportion of that lump sum to making this necessary provision—and, of course, it is right that he should make provision if he can—then this particular advantage of the lump sum disappears altogether.
§ I do not think I need stress this case very hard, because, having read the discussion in another place, I believe the Minister is in favour of doing something—at any rate, he expressed his sympathy with the case, although he felt himself unable to do anything, as he said, "at the present time". He stated what the difficulties were. I hope I am not doing him an injustice when I say that the real difficulty was the fact that the local authorities were not prepared to face up to making a contribution, both because of the cost in itself and even more so because they feared that if they did this for teachers they would have to do it for some other employees.
§ As to the cost itself, I do not think I want to say very much. It is not a heavy expenditure, especially when coupled with the contribution from the Exchequer. It is a simple act of justice, and I think they ought to be prepared to face it. But I recognise that the fact that this basis of superannuation is not applicable to other local government servants could be regarded as a formidable argument, especially if it were feared that if this were done for the teachers local authorities would have to do it for all their other officers. My own view is that there is no earthly reason why it should follow that what they have agreed with the other officers would have to be disturbed, merely as a result of improving the position of the teachers.
§ After all, at the present moment the position of the two bodies of employees is different. The other local government 1016 employees already have the benefit of some provision as regards widows and orphans and the teachers have not, and the local authorities have not felt at all inhibited in making this arrangement for the other local government officers without making it for the teachers—in other words, they have themselves treated the two categories of employees in a different manner up to now, and that difference still remains. I can therefore see no logical reason why, if they improve the position of the teacher to-day, they should all of a sudden come to the conclusion that they have to treat their other employees in exactly the same way. There are compensations and other factors in the conditions of service of each of the different types of employee which might render one type of superannuation suitable in one case and a different type in another. Therefore, if it is desired to do this, I do not feel that the fear of the repercussions (which, if justified, might be a formidable argument) need deter them at all. I have already dealt with the actual cost and I want only to add that what the teachers are asking for is by no means extraordinary or exceptional. It is the same treatment as the whole of the Civil Service is getting. It is the same kind of treatment as is given to employees of the Gas Council and the area gas boards, and the British Electricity Authority and their area boards. One can find, too, a number of other bodies where superannuation rights would be comparable with what the teachers are asking.
§ I am sure the noble Earl will not say that my Amendment as drawn will not achieve the purpose I have in mind. I believe that what it would do—and this is the best I can say for the way in which it is drawn—is to remove the basis of superannuation which is at present intended; and perhaps if the noble Earl accepted my Amendment he could, at a later stage, substitute in its place what I really intended. But I have to be realistic about this matter. There has been a good deal of discussion and I cannot pretend, even in my most optimistic moments, that it is at all probable that Her Majesty's Government will at this moment introduce for widows and orphans the type of superannuation that the teachers have in mind; nor have they themselves that optimism. I hope however that it may be possible for the noble 1017 Earl to give them some encouragement, some hope that in the near future this question will be reconsidered when we are away from the atmosphere of this Bill, and that the teachers will be able to look forward to this particular improvement in their conditions of service. I beg to move.
Page 8, line 25, leave out subsection (3).—(Lord Silkin.)
§ LORD GREENHILL
I do not know that I have much to add to what my noble friend Lord Silkin has said, but it seems that the Amendment to Clause 34 which we have down is largely covered by what he has said. This matter is causing teachers in Scotland a good deal of concern and giving rise to a good deal of feeling. My information is that paragraph 3B of that clause contains no extra benefit for the teacher. It rests on a distribution of benefits to which he is already entitled. It is his own money that is being dealt with, and particular opposition may be expected to the provision which means surrender of part of the lump sum, to which my noble friend referred. A teacher qualified for pension when he retires at the age of sixty or over receives his pension and a lump sum. That lump sum is often anticipated for expenditure when he retires, and teachers do not like to feel that there is to be any interference with this lump sum, which is really their own. As the paragraph stands, the sacrifice of a very considerable part of that lump sum appears to be contemplated.
The truth appears to be that the provisions of paragraph 3B are far too rigid. If the consultations which are envisaged are to have any prospect of success, this provision must he far more flexible, to provide elbow room for those who may take part in them. I hope that Her Majesty's Government will look again at paragraph 3B of Clause 34 to see whether there is not some alternative method of financing the scheme, and particularly some way of conserving the lump sum or interfering with it as little as possible. The scheme is not what the teachers want, but even within those limits it ought to be possible to amend it to give more scope to those who may have to consider it. In these circumstances I should like to associate myself, in regard to Clause 34, 1018 with what my noble friend has said in regard to Clause 8.
§ 5.16 p.m.
THE EARL OF HOME
I am grateful to the noble Lord, Lard Silkin, for the thoughtful way in which he has moved this Amendment, because I think we are all concerned with this problem of teachers' widows, and we all hope that in the future we shall be able to do something more effective than we are now able to do. The noble Lord said that on Second Reading debate I claimed that there were certain advantages in this Bill as compared with the present situation. As I understand it, the only way in which teachers can provide for their widow or dependants at present is that a teacher who retires can allocate part of his pension to help to pay for his widow's benefit; or, if a teacher dies in service, his gratuity goes no his estate, and there might be something left over for his widow. But that is not always so. Under this Bill, using the device of a contribution from the lump sum, the teacher can obtain a pension for his widow or dependant whether he dies in service or not. I believe that is an advantage. The actuarial calculation works out that the widow will get something like one-third of the amount which the teacher would have drawn in pension had he lived. I believe that is an advantage, although it is perfectly true that the teacher is using his own money for the purpose.
Perhaps this is a convenient moment at which to mention the point raised by the noble Lord, Lord Greenhill, in which I believe the Scottish teachers are particularly interested. They have asked on a previous occasion that there should be an option: that teachers should have the option either to use part of the lump sum or to surrender part of the pension. I know the special value which Scottish teachers, in particular, attach to this lump sum. It is useful for buying a house and many other purposes—indeed, all Scotsmen attach considerable importance to lump sums when they can get their hands on them. But my right honourable friend the Minister did look again at this request after it had been made by the Scottish teachers, because he had a good deal of sympathy with them. The reasons why it was found impossible to introduce it were twofold. First, the Minister thought it would too greatly complicate the 1019 administration. Secondly, of course, this could not operate if the teacher were to die in service, because there would be no pension to surrender. It was therefore with much regret that he felt he could not meet this request; and he still feels so.
The noble Lord, Lord Silkin, looks forward, as the teachers do, to the time when the widows of teachers can be provided with pensions on a contributory scheme from the employer and the Exchequer, with the teacher contributing some percentage. The Minister of Education, too, has openly expressed his hope that the time will come when such a scheme can be introduced. The reason that it is not introduced in this Bill is that it does not seem to be practical politics. Local authorities, as the noble Lord has indicated, are firmly opposed at the present time to contributing towards a widows' scheme, and they agreed to the Local Government Superannuation Act only on the understanding that widows' benefit would not involve them in extra cost. I must not, however, in fairness, put all this on to the local authorities. The Government themselves, at the present time, are not prepared to put on to the shoulders of the taxpayer the extra cost which would be involved.
Perhaps I may give an indication of the cost involved. If this scheme were confined to teachers only, and did not relate to other local government employees, the cost in respect of past services would be £14 million, and in respect of future services £1 million annually. If it were not confined to teachers but were spread, as local authorities fear, to other local government and National Health Service employees, it would add another £40 million for past services and another £2½ million a year for future services. That would be a very formidable cost at this time. I will, of course, bring to the notice of my right honourable friend the speech of the noble Lord, Lord Silkin, who speaks with many years' experience of local government service, and with great knowledge. The noble Lord himself thinks it might be practicable to separate the teachers' scheme from the other local authorities' schemes. No doubt my right honourable friend will give full weight to such an authoritative estimate of the position. I 1020 am afraid that I cannot go any further now—indeed, I do not think the noble Lord would expect it. I do not know what the future will hold. If we are successful in raising the national income in the next few years many things not now within our reach will come within it, and I very much hope that some such scheme as this will be one of those things. All I can do now is to bring the speeches of noble Lords to the notice of my right honourable friend and assure them that I know he is in favour of a scheme of this kind when the financial situation allows.
§ LORD GREENHILL
The only thing I should like to add is this. It should be noted that the authorities in a city like Glasgow and, I understand, other education authorities in Scotland, are willing to consider favourably any increase in the financial burden there may be if a contributory system of widows' pensions is introduced. As the noble Earl probably knows, a figure of what might be involved in the way of annual contribution has been mentioned. I think I am right in saying that the Under-Secretary of State for Scottish Affairs has indicated that he is prepared to consider to-morrow (as he put it) a scheme of this kind. I do not know what the answer of the noble Earl would be in this case.
§ LORD SILKIN
I only hope that Scotland will find it possible to do it first and set a good example to England. It now remains for me just to thank the noble Earl for his reply and to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 8 agreed to.
§ Clauses 9 to 28 agreed to.
§ Clause 29 [Contributions towards benefits under Teachers Superannuaton Scheme]:
§ 5.25 p.m.
§ LORD GREENHILL moved in subsection (1) (a) to leave out "six" and insert "five" [per cent.] The noble Lord said: The noble Earl has perhaps not allowed it to escape his notice that Clause 2 in this Bill, which, in unambiguous language, is described as dealing with "Increase of contributions "and Clause 29, the clause with which I am now dealing and which, having regard, presumably, to the susceptibilities of the Scots, is described in more circumlocutory 1021 language as "Contributions towards benefits under Teachers Superannuation Scheme", really have as their aim the same thing, and that is to increase the contribution by 1 per cent. in the case of the employer and l per cent, in the case of the employee, the teacher. My Amendment is designed to alter the word "six" to "five". The noble Earl is well aware of the arguments which have been put forward in another place and by the teachers' organisation to the general public as to the real effect of this increase in contributions. It is, they say, simply another means of reducing the income of the teacher, and that, taken into account with any so-called increases in salaries which have since been granted, amounting, say to 7 per cent., it is really another way of saying: "We will give you 7 per cent. and take away 1 per cent. by way of increased contributions". That kind of treatment of this superannuation contribution has given rise to a good deal of discontent.
§ I have a personal attitude towards this question. Sometimes I think that perhaps I become a little too impatient about the whole underlying idea, for it seems to me that the whole basis of actuarial calculation as a means of arriving at an adequate pension for those whom we agree ought to have a pension is inexact, is irritating, and, as I see it. is irrelevant also. One has only to recall past experience in regard to so-called actuarial calculations. If the noble Earl will look at page 70 of the Education in Scotland Report, 1955, he will see there that on March 31, 1955, the annual value of the increases in pensions in force amounted to £282,631. What does that mean? It means that these actuaries, having carefully calculated all the variables they could possibly include before arriving at their figures, found, after a time, that their calculations were wrong. And instead of condemning the actuaries for their wrong sums we have had to pass Pensions Increase Acts in order to correct their bad calculations.
§ If your Lordships will look at page 71 of that Report, you will see that it says that if one assumes a rate of interest of 3½ per cent. on the monies, it would amount to 11 per cent., and to 11 per cent. on a 3 per cent. per annum basis. They are, so to speak, cutting the difference and making it 12 per cent. I do not know what other views may be about these so- 1022 called actuarial calculations, but it seems to me that, as I said in the course of the Second Reading debate, their whole underlying assumption rests on a basis which is well known to insurance companies but which, in fact, is not applicable to salaries of those engaged in public service. And the reason for that is that the actuary's job is to ensure that any figures he arrives at and any kind of arrangements he makes with the annuitant is one which will leave the insurance company a certain margin of profit after the particular transaction is carried out.
It may interest noble Lords to know that as recently as Tuesday of this week there appeared in the Glasgow Herald (I thought with commendable enterprise) a two-page account of the centenary celebrations of the Scottish Faculty of Actuaries, in which appeared a number of articles written by actuaries. In one article there is a reference in brackets to the Teachers (Superannuation) Bill. This is what it says:
A pension fund may be apparently prosperous, and growing and nevertheless he too small to provide for the benefits it will be expected to pay out in ten, twenty or thirty years' time; it was this paradox which underlay much of the misunderstanding during the recent dispute over the proposal to increase teachers' superannuation contributions.
I have already shown that these calculations, which apparently are able to forecast the position in ten, twenty or forty years' time, have been proved to be wrong. These are prognostications which cannot possibly have any kind of exactitude about them. They are at best intelligent guesses.
The writer of this article, presumably an actuary, is quite frank about the position, because he "kicks off" his article by saying:
Life assurance is a tusiness—a commercial proposition—but it is a business which can he successful and useful only so long as its financial transactions are based on a science; actuaries are the scientists of the life assurance industry, …
In other words, if regarded as a business proposition, the actuary is of value to the insurance company because by his calculations he ensures that after the transaction is completed there is a profit for the insurance company—a very proper proposition from the point of view of the insurance company. But when, as to-day, we are living in times in which the official
rate for money is neither an indication of the value of money nor a determination of the value of money, in which fluctuations in value are so very great, I think it is absurd to assume that we can possibly arrive at figures which have any validity at all.
§ Therefore, as is already the case in the Civil Service, it should not be a question of trying to base anything on an actuarial calculation, which in practice we know does not turn out to be right, but of regarding it as an undertaking by the State or the local authority that when a man has done his life's work he is entitled to a pension which will ensure for him a certain standard of living commensurate with the work he has done and the condition in which he then lives—a very simple and understandable basis on which to work. My objection to this clause is not solely because of its financial aspect but also because of its social implications. With the unfortunately widespread parental indifference, teachers in a very real sense stand in loco parentis to the children at school, and they shoulder the responsibility of attending to the educational, physical, moral and social well-being of the children. In view of this, it is a duty upon the State to see that there are none of those irritants and frustrations which appear to have arisen fairly frequently, if I may say so, in the relationship between the Minister of Education and the teaching profession, and which are not necessary.
§ I do not pretend that if we divided on this Amendment we should have any chance of getting our own way, and it would be unreasonable for me to ask the Minister to accept this Amendment of ours to-day; but I ask the noble Earl seriously to ask the Minister to take this to avisandum, as we say in Scotland, and between now and Report stage to see whether he cannot do something, even at this late hour, about this extra percentage contribution, in order to restore those good relations which ought to exist between the teaching profession and the Minister and which unfortunately one has to admit at the moment do not exist. I beg to move.
Page 20, line 4, leave out ("six") and insert ("five").—(Lord Greenhill.)
§ LORD MATHERS
I want to support my noble friend, Lord Greenhill, in what I consider to be the excellent case he has made for this Amendment. He has said that it is not our intention to divide the Committee—not that we should not have done so if we had thought that we could win, but I know that the forces arrayed against us would be too strong to enable us to do this successfully. All that the Amendment asks is that the word "six" be altered to "five"—that is the percentage of teachers' income that is to be devoted to the provision of the superannuation which is the subject of this Bill. Earlier in the Session, when we dealt with the Education (Scotland) Bill, I ventured to say bluntly that the position that had been created in the recruitment of teachers to the profession in Scotland was a deplorable one. I made it clear that in setting up a superannuation scheme, from the start of employment a figure should be laid down of the amount that would be expected from the teacher to enable an adequate superannuation allowance to be paid when the time for retirement came. I claimed that the percentage contribution by employees should stand and any change that was necessary in order to make the superannuation allowance meet any changes occurring since the time when it had been determined should be met by the employing authority. I had in mind railway superannuation schemes that have been based on that principle.
My noble friend Lord Greenhill has made reference to the actuarial basis on which these schemes are made. We do not find them too reliable. It seems to me wrong that when schemes are set up laying down conditions of employment, including contributions to a superannuation scheme, alterations should be made, making it difficult in a profession like the teaching profession to get the teachers to come along and fill the ranks that are so depleted at the present time. It is no wonder that there is a lack of applicants to enter the teaching profession, when the treatment in other professions of a similar type of person is so much better. The question of this addition to the deduction from the salary was mooted long before any suggestion was made that there would be some addition to the salary. That increase of 1025 salary has come about to a certain extent, but not even now to a satisfactory extent.
The way in which matters relating to teachers have been handled—I would say the maladroit way in these matters have been dealt with during recent months—has alienated the whole profession. If this Amendment could be given effect to there would be a possibility of restoring the good will that is desired, as has been mentioned by my noble friend Lord Greenhill; the position could be rectified and we could get on a decent basis with the teachers. I earnestly appeal to the Minister to endeavour to see what can be done along this line, in order to wipe out the bad feeling that has been created. It is a feeling that should never have been allowed to grow up, and one that can be debited to fie Government. I hesitate to think that Scottish Ministers would be in favour of the treatment that has been meted out, but naturally they have to fall in line with what is done by the predominant partner in these arrangements. I have no great pleasure in dealing with the matter at all., but I have pleasure in backing the claims made by my noble friend Lord Greenhill.
§ 5.43 p.m.
THE EARL OF HOME
The noble Lord, Lord Greenhill, started by inviting me to say, with him, what I thought of mathematicians, economists and the like; and he described their activities as inexact, irritating and irrelevant. I have been saying that to my bank manager about my overdraft for years. I could do better talking about mathematicians even than the noble Lord! But to reduce the contribution of the teachers from 6 per cent. to 5 per cent. would not alter the nature of this Bill or the superannuation scheme. I think the noble Lord, Lord Greenhill, was really making a tentative plea that, with people like teachers, in a national service, it would really be better to have a non-contributory scheme. That was probably what the noble Lord was seeking to establish; and, of course, there is a great deal to be said for that. However, what I am asked to do by this Amendment is to reduce the percentage from 6 per cent. to 5 per cent. in respect of the teacher's contribution.
Her Majesty's Government were faced with a difficult situation here. As the noble Lord knows, the actuarial deficit 1026 was calculated at £338 million, and the future situation was indicated by the Actuary. The Government had to achieve as fair a balance as they could between three people: the employers, using the ratepayers' money; the taxpayer; and the teacher, the contributor. As a result of a package deal (if I may use rather loosely a somewhat horrible modern expression) the taxpaper accepted the obligation to pay off the past deficit; the ratepayer accepted the obligation to pay any future deficit that might arise; and it was thought reasonable that the teacher should pay an extra percentage, and that his contribution should he raised from 5 per cent. to 6 per cent.
It was thought then by the Government that we had as fair and reasonable a balance as we could achieve. The Actuary calculated that 11⅓ per cent. would be necessary, but in that calculation he did not take into account either increasing age or increases in wages in the future. So the difference between 11⅓ per cent., as calculated by the Actuary, and 12 per cent.—that is 6 per cent. plus 6 per cent.—as adopted by the Government, was prudently to make allowance for these two factors. As we think, the important thing is for the account, fund or whatever one calls it, to be in a position to meet the calls that will be made upon it in the future.
Although I know that the noble Lord is not satisfied, and bat there is discontent about this matter, I would ask him to believe that we have tried to do the best we can to achieve a fair balance between the parties concerned. Whether in the future a non-contributory scheme may come, covering teachers, for instance, I should not like to say, although powerful arguments can be put forward in support of it. But given the present situation and the actuarial calculation of deficit with which we were faced, we believe that we have come to the best: solution.
§ LORD BURDEN
I should like to say a few words arising out of that reply. I would call to the mind of the noble Earl that the teachers had a non-contributory scheme or a non-contributory superannuation from 1918, and it was as a result of the infamous Geddes Committee Report that they were called upon first, in 1922, to make a temporary (as it was then said) contribution of 5 per 1027 cent. That contribution was made permanent by the Act of 1925. I am intrigued by this figure of £300 million-odd that is bandied about, and I should like an answer on this point. Is it intended that the Treasury shall pay over that vast sum into the superannuation account—are they going to make themselves responsible, in some way or other, from the interest? Or are they going to make a calculation in relation to the number of people who retire? There is a good deal of mystery about this matter, and it is because the figure of £300 million-odd is so freely referred to that I should like some further elucidation on the point. As has been said, this, in effect, was a scheme in which the State guaranteed the benefits—as my noble friend Lord Mathers said, a scheme which we used to know in the railway service as a guaranteed fund. In those circumstances, I think it is merely playing with words to talk about an actuarial deficiency of over £300 million.
§ LORD SILKIN
I am glad to find myself in agreement with my noble friend Lord Burden, but I should like to carry this question of the deficit a little further. The noble Earl talks as if this were an actual ascertained deficit which will have to be met by Her Majesty's Government if it is not met by anybody else. But is that really the case? Putting it at its highest, accepting that the actuarial basis is sound and is an actual forecast of what is going to happen, what does it mean? As I understand it, it means that for the next thirty years or so there will be payments into a fund made by the teachers; there will be payments out of the fund in respect of superannuation, and that probably during the whole of this thirty years the payments into the fund will exceed the payments out. But the actuaries have calculated that round about the thirty-first year (I am not sure about the exact number of years) the balance will change: the payments out will begin to exceed the payments in, and in due course this deficiency will amount to some £300 million.
I do not wish to make an attack upon a perfectly reputable body of professional men. They are scientific workers, highly skilled and qualified, and make their calculations in a perfectly proper way. But they have, in the nature of things, to 1028 work on assumptions. Quite often these assumptions are not based upon what eventually turns out to be the fact. Their assumptions are based on all kinds of human activities and human probabilities. Just as, in the past, these assumptions have been falsified, so it is quite probable that their assumptions will be falsified again. They may be falsified in either way. I admit that in the result the deficiency may be higher than they say; but, on the other hand, it may be less.
Our complaint is that, on the assumption that this is an exact figure and a correct figure, the teachers are asked for an immediate increased contribution—at a time when, it is said, with the higher cost of living, everyone else is in difficulties, particularly, the professional people with fixed incomes. It is this most difficult moment that is chosen to tell the teachers that this deficiency, which will, at the best, make itself felt in some thirty years' time, has to be met. That is the quarrel that the teachers have, and we have, with this increased contribution. As my noble friend Lord Greenhill has said, at this late stage in the Bill I do not think we can expect that an Amendment of this kind will be accepted, but I felt it right that we should state our case, even at this late hour. Our view is that the increase is not justified, and certainly not at the present time.
THE EARL OF HOME
The noble Lord is perfectly right to maintain his case to the end. He and the noble Lord, Lord Burden, have asked me some questions about this actuarial deficit, as calculated at March 31, 1956. He asks: is this sum of £338 million real? Well, it is sufficiently real for the Treasury to have agreed to credit the superannuation account with a sum representing 3½ per cent. on the £338 million. There must be some reality, or the Treasury would never have agreed to do that. I will look into it further.
§ LORD SILKIN
That sounds very impressive, but what does it mean? Is the Treasury putting its hand into its pocket and writing out a cheque for £3½ million every year? It is a paper calculation and it is just a facade.
§ LORD GREENHILL
In view of the hope that I think I detected, that some time or other we shall do things in a rational way, instead of in this mysterious way, I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 29 agreed to.
§ Clauses 30 to 32 agreed to.
§ Clause 33 [Amendment of Part I of the Third Schedule to the Act of 1946]:
§ 5.56 p.m.
§ LORD GREENHILL moved in the proposed new sub-paragraph (11), in the proviso, to leave out all words from "or was engaged" down to and including "objector." The noble Lord said: There is a point in this clause to which I think attention should be drawn. Sub-paragraph (11) enables a teacher who enters the service after gaining experience likely to be of value to him as a teacher to have the period of the experience recorded for superannuation purposes by fulfilling certain conditions. This is apart from the limitation of five years referred to in the sub-paragraph, which is in line with the Scottish salary regulations. These regulations provide that the period during which the teacher, after having reached the age of twenty-one, was gaining experience which, in the opinion of the Secretary of State, is or is likely to be of value to him as a teacher, may be taken into account for his service on the incremental salary scale. The periods during which the teacher was undergoing whole-time education, or whole-time training for the teaching, profession, or apprenticeship to a profession or trade, cannot be taken into account. The proviso to the new sub-paragraph (11) proposes that these periods shall not be taken into account for superannuation purposes either. And that at least is consistent.
§ But along with these periods the proviso includes periods of National Service. A teacher may not have his period of National Service recorded for superannuation purposes and the question is, why not? It should be noted that periods of National Service are to be taken as periods of service for incremental placing within the terms of the Scottish salary recommendations. Yet this proviso imposes an absolute bar on 1030 the recognition for superannuation purposes of the National Service of the teacher who does his service before he is actually employed as a teacher. Even if a man is prepared to pay the whole contribution; even if his National Service includes service of a direct educational nature as, for example, service in the Education Corps, he still cannot have this period of service recorded for superannuation purposes. Why has National Service been singled out for this treatment? As I have said, the salary regulations take quite a different attitude to National Service.
§ The result of this proposal will be that men who have undertaken National Service will be at a considerable disadvantage compared with women, so far as service recorded for superannuation purposes is concerned. Moreover, this discrimination will give rise to anomalies in the future. If National Service is discontinued, then teachers who have done their National Service will be penalised compared with those who will not be required to do it. Perhaps the Government will look at this proviso again and put men who have done National Service in the same position as those covered by the first part of sub-paragraph (11). I do not think I need elaborate the matter further. It is now getting late, and perhaps the noble Earl will give this point his sympathetic consideration. I beg to move.
Page 29, line 9, leave out from ("trade") to ("shall") in line 14.—(Lord Greenhill.)
THE EARL OF HOME
Any rules that apply must apply to all professions or to none. The noble Lord is asking us to make a certain exception here in the case of teachers. If National Service interrupts a career, then the period can be counted, of course, in any such scheme as this; but when National Service is done before a man begins his career, then it cannot be counted in any profession. I do not think we can make an exception in the case of teachers. I was looking back at the old debates on this subject and I saw what Mr. Glenvil Hall said about it in the last Parliament, in 1948. He said that he did not think it would be possible to make an exception for teachers in this case. He pointed out in some detail that many civil servants do not start their 1031 careers until the ages of twenty-two, twenty-three or twenty-four, and cannot have their National Service counted. The difficulty here is the exception. We must stand on the rule for all professions.
§ Amendment, by leave, withdrawn.
§ Clause 33 agreed to.
§ Clauses 34 to 41 agreed to.
§ First Schedule [Confirmation and coming into operation of orders of local authorites under section eleven]:
THE EARL OF HOME
This is really a technical, almost a drafting, Amendment, but I think that for the future I must put on record what it is about. The Pensions Increase Act which was passed this Session authorised a 10 per cent. increase in the pensions paid to various classes of public service pensioners, including teachers. Under this Bill, teachers will be able to choose, when they retire, to surrender their right to a lump sum and get instead a larger pension. This Amendment is designed to secure that the 10 per cent. increase due to certain teachers under the Pensions Increase Act is calculated on their real pension only and not on the larger pension which they may acquire from choosing to give up their lump sum. I hope your Lordships understand that as clearly as I do. I beg to move.
Page 34, line 55, at end insert—
|("The Pensions (Increase) Act, 1956.|
|Section eleven …||In the definition of 'basic rate', the reference to the annual rate of the pension shall be construed as referring to so much only of the pension as would have been payable apart from the election.")—(The Earl of Home.)|
§ On Question, Amendment agreed to.
§ First Schedule, as amended, agreed to.
§ Remaining Schedule agreed to.
§ House resumed.