§ Order of the Day for the Second Reading read.
§ 3.10 p.m.
§ THE MINISTER WITHOUT PORT-FOLIO (THE EARL OF DUNDEE)
My Lords, I beg to move that this Bill be now read a second time. The Bill provides for certain increases in the retirement pensions of those public servants whose pensions are paid from the United Kingdom funds and who are over the age of 60 or who have retired under the age of 60 owing to ill-health. The principal classes of public servants concerned are local government employees, National Health Service employees, Government civil servants and some other categories which your Lordships will find in the Schedule, such as the police and firemen. Armed Forces pensioners are not included in the Bill because they will receive parallel benefits under the Prerogative Instruments, which will differ very little, of course, from the increases provided for Civil 640 Service pensioners in this Bill. The number of people who will probably be affected will be about 110,000 Armed Forces pensioners, about 140,000 civil servants, roughly 100,000 teachers, and 100,000 local government employees, making a total of rather more than 450,000 altogether.
There have been a number of Bills, all of them what might be called ad hoc measures, making special increases in pensions since 1920: there was one in 1924, one in 1944, one in 1947, another in 1952 and the last one in 1956. None of these measures has ever recognised the principle that pensions ought to be based on any cost of living index, and no Government have ever recognised any obligation, either of right or of equity, to increase pensions in accordance with the cost of living. There is only one occasion—I think in 1919—on which an attempt was made to link Armed Forces pensions with the cost of living, but that had to be abandoned in 1935 or thereabouts, because it did not work satisfactorily. At that particular time I think its effect was that the pensions had to be adjusted the wrong way, which caused just as much discontent as the cost of living going the wrong way. The Government do not recognise, and have never recognised, any principle of this kind in relation to Civil Service pensions.
There is an opinion which some people hold that it might be a good thing if we did have a pension scheme linked with the cost of living, and it is perfectly proper that that should be debated. But I do not think we are likely to get very far by discussing it in relation to this Bill, because it is quite foreign to the principles on which either this Bill or any of the previous ad hoc measures to which I have referred have been based What various Governments have tried to do in these Bills is to make purely ex gratia provisions, prompted by the unfortunate fact that we have had from time to time a good deal of inflation, and that certain former employees of the Government whose pensions are fixed in terms of money have thereby suffered hardship. Therefore Parliament has agreed to certain ex gratia measures to alleviate that hardship. But Parliament has never agreed to any proposition that there is any kind of moral or equitable obligation to take any action of this kind; it is entirely a matter of grace.
641 This Bill differs from the previous ad hoc measures in only two respects. One is that it removes the ceiling of £100 which was still left by the 1956 Act. That Act abolished the means test for those additional pensions, but it left the ceiling that is now removed. The other difference, which is not a difference in principle but perhaps a considerable one in practice, is that in this Bill the increases are based, not on the original basic pension as in previous Acts of this kind, but on the existing pension—that is, the previous original pension plus subsequent increases The amount of hardship likely to be suffered by fixed pensioners is, of course, greater the earlier the date at which they retired. Therefore, the graded increases of pensions provided for under this Bill rise as the date of origin of the pension which" is to be increased goes further back. For pensions granted after April 1, 1957, there is no increase because the rise in the cost of living since then has not been sufficient to justify any special addition on that ground. For those whose pension began between March, 1956, and April, 1957, the increase will be 2 per cent.; between March, 1955, and April, 1956, 4 per cent.; between March, 1954, and April, 1955, 6 per cent.; between March, 1953, and April, 1954, 8 per cent; between March, 1952, and April 1953, 10 per cent., and for those whose pensions began not later than April 1, 1952, the increase will be 12 per cent.
In the discussions on this Bill in another place I do not think there were any positive criticisms about what the Bill contained; criticisms were confined to what it did not contain. I have already pointed out that no Government have ever admitted any obligation to relate pensions to the cost of living and that we cannot therefore accept the proposal for what is called parity—that is to say, that pensioners should all have their retirement pensions brought up to what they would have been if they had retired now instead of having retired at whatever date it may have been. Another criticism, naturally, has been that people under the age of 60 who have not retired owing to ill-health do not receive any increase in their pension. It is only if they are over 60, or if they have retired owing to ill-health do not receive any they get the increase. That again is based 642 on the principle that we have got to try, or want to try, to relieve hardship where it presses most.
Of course, we all know that there are individual cases of people who are under 60 but who, although they are in good health, find it practically impossible to get employment because the work from which they have been compulsorily retired at an early age is of such a kind that they are not easily adaptable to any other kind of employment; and these cases are undoubtedly hard ones. But as a general rule we take 60 as the most normal age at which retirement under these pension schemes could begin. It is easier, in general, for people under 60 than for people over 60 to obtain employment, and it has not been felt that it would be right to ask the taxpayer to extend these purely ex gratia additions to persons who are still of working age, still under 60, because the additions would have to be paid for, of course, by the taxpayers who are equally affected by changes in the cost of living.
§ LORD PETHICK-LAWRENCE
My Lords, I am not clear what the noble Earl is really trying to explain to us. Is he referring to people who were in the Civil Service, or whatever it may be, and have already come out, or is he dealing with people who are in the Civil Service and will draw the pension in a few years' time? To which of those two categories is he referring?
§ THE EARL OF DUNDEE
The people who are in now and will draw the pension in a few years' time will not be affected by this Bill at all. This is an increase only for persons whose pension has begun earlier than April, 1957. The peak figure of 12 per cent. is not reached until you get back to the people whose pensions began before April, 1952. But some of those, of course, are still under 60 and therefore will not receive the increase until they reach the age of 60. I wished to put before your Lordships all the considerations which have affected the debates in another place. One of them has been the negative criticism that this provision ought to have been extended to persons below 60 even though they are in good health.
§ THE EARL OF DUNDEE
That is what I said, people who are retired and who are under 60. They could, of course, have retired for some unavoidable reason not due to ill health.
§ THE EARL OF DUNDEE
No. They get their Civil Service pension. But what I have been trying to explain is that the 12 per cent. increase does not apply to people under 60 unless they have retired on grounds of ill-health.
§ LORD CROOK
Even if they have retired on grounds of ill-health surely it does not apply if they are in employment?
§ THE EARL OF DUNDEE
Yes. If they get their occupational pension at the age of 55, it does not mean they cannot get the occupational pension if they get some other kind of work.
§ LORD CROOK
But surely one of the things inherent in this Bill is that if a man retires on the grounds of ill-health and gets the pension, and in due course secures full-time employment, he will not get the increase until he reaches 60?
§ THE EARL OF DUNDEE
Of course he will. He gets it if he is over 60, or if he is under 60 and has retired owing to ill-health.
§ LORD CROOK
The noble Earl still has not got my point. It is not that the man will get it if he is under 60 and has retired on grounds of ill-health. He will not get it if he retired before 60 on ill-health grounds and is still not at the moment away from work but is in other employment. He does not get the increase notwithstanding that he is 59 and has retired on grounds of ill-health.
§ LORD LATHAM
The words in the Explanatory Memorandum are not that he has retired on ill-health grounds but only that he is in bad health. He may not have retired on the grounds of ill-health but he may have bad health subsequently[...].
§ THE EARL OF DUNDEE
The operative part of the Bill is on page 2, Clause 1, subsection (2):A pension payable…shall not be increased…unless the pensioner—
- (a) has attained the age of 60 years; or
- (b) has retired on account of physical or mental infirmity from the office or employment in respect of which, or on retirement from which, the pension is payable"
§ LORD CROOK
I do not want to embarrass the noble Earl, but this affects what I am going to say myself. Surely all this is related to subsection (6) of Clause 1. If it really means what I think it does, a man who has got his pension on grounds of ill-health, having retired from the Service, will not get this increase, according to subsection (6), if he is capable of being engaged in any full-time regular employment now.
§ THE EARL OF DUNDEE
I think it would be better if the noble Lord makes the point in his speech and I will deal with it in reply. I am not sure that I have apprehended the case he is trying to put, but he will no doubt put it later.
Although these increases apply only to those who have been in Government employment and whose pensions are paid from the United Kingdom or local authority funds, it is, of course, possible that other pensioners whose pensions are paid from the funds of Colonial Governments may receive a parallel increase if the Colonial Government so decides; but the responsibility is with the Colonial Government. What the Colonial Office here does when an increase of pensions of this kind is given to British ex-civil servants is to send a circular to the Colonial Governments pointing out what we are doing and implying that they might perhaps like to do the same. There are some Colonies whose scales of pensions are better than our own; some are the same, and some worse. But whether any Colony or Dominion or member of the Commonwealth should decide to make a parallel increase is the responsibility of that Government.
645 The cost of the increases provided for in this Bill will be about £8½ million, of which rather more than £6 million will come from the Exchequer and £2½ million from the local authorities. In addition, the Armed Forces pension increases under the Royal Warrant will cost a further £2¼ million. The factors which have always governed the decision of Parliament and of successive Governments in making these ex gratia increases in order to deal with hardship arising from inflation have always been mixed ones. They have to balance one thing against another. First there is the desire of the Government to alleviate hardship among its former employees. Next there is the duty of the Government to the taxpayer. We must remember that there are many taxpayers who are suffering great hardship on account of inflation and whose circumstances might often be considerably worse in that respect than those of the pensioners.
Thirdly, every Government has always to consider the effect of increased Government expenditure on our national economy, particularly in relation to the price level. At the beginning of this year, as your Lordships know, we were advised by our economic advisers that during 1959 we might expect a gradual strengthening of the national economy, but it was not expected that the improvement would be enough to justify this additional Government expenditure during the course of the year; and it was not until just before the Budget that it was realised that the estimates upon which we were proceeding had been too cautious, and that the improvement in the national economy was, in fact, proceeding faster than had been anticipated. Although it is always agreeable to find that things are better than expected, it has this disadvantage, that you may have to alter your arrangements without a great deal of preparation. In this case, there was no time for the local authorities, who are considerably affected by this Bill, to be consulted before the Budget. But my right honourable friend the Financial Secretary met them as soon as possible afterwards, on April 14, and I should like to repeat the expressions of gratitude which have already been made in another place by my right honourable friend to the local authorities for the way in which they have cooperated at such short notice with the 646 Government in making the arrangements from their side for carrying out the intentions of this Bill.
My Lords, the Bill has not met with any opposition in another place, As I have mentioned, the only criticisms have been concerned with what it does not contain, rather than with what it does contain, and I hope that your Lordships will now give it a Second Reading. I beg to move.
§ Moved, That the Bill be now read 2a.—(The Earl of Dundee.)
§ 3.32 p.m.
§ LORD PETHICK-LAWRENCE
My Lords, the main purpose of this Bill, as of previous Bills along the same lines that have been carried through both Houses of Parliament and received the Royal Assent during the last decade, and earlier, is to deal with the results of inflation. At the present time, we in this country, as in most other countries, live on a monetary economy; and where we are dealing with contracts that run over a considerable number of years, as they do in the case of a civil servant who makes a contract with the Government when he enters employment, retires forty or fifty years later and gets a pension based on the conditions which prevailed when he entered the employment, we are thrown into complete and total confusion by inflation. The people whom we are considering at the present time, and with whom this Bill essentially deals, are the people who have suffered as the result of inflation.
I think I am right in saying that these people have a double grievance. The first is the one to which I have referred. The other is that what was considered a reasonable standard of life for them and their social and economic equals fifty or sixty years ago, is at the present time regarded as grinding poverty. What I gather from this Bill is that while it attempts to meet the first and the major evil, that of inflation, it does not, and is not intended to, do anything with regard to the second. Whether that be right or wrong, I do not know; but certainly that is not the purpose of the Bill.
Now I come to the Bill itself. To a large extent of course, it is not a Party matter at all. During the last fourteen or fifteen years—in fact, further back 647 even than that—we have had this enormous inflation whatever Government has been in power. We had inflation under the Coalition Government; we had inflation under the Labour Government, and we have had inflation under the various Conservative Governments that have followed. It is equally true of all Parties and of the Coalition. The result is that unless these unfortunate people are to be left absolutely to fight an impossible battle against the odds that have been created by inflation, any Government with any heart at all must try to do something for them. The noble Earl correctly said that the State, in its hard-hearted form, has neither a legal nor even a moral obligation to do something for these people. That may be true. But I think that any Government of flesh and blood must feel a moral obligation towards these people who have served the State or the local authority to the best of their ability, and who, owing to some effect of inflation over which they have had no control at all, find themselves in this deplorable position.
Having said that, I have, in effect, subscribed to the principle underlining this Bill. I think that noble Lords on this side of the House will take the same view as I do; that the principle governing this Bill is a sound one, and that we should certainly offer no opposition to it in all its stages. Nevertheless, there arise a number of minor points which no doubt some of my noble friends behind me will illustrate, and which require bringing to light. I do not suppose that these increases will satisfy a large number of these people, partly because, as I have said, they are concerned not merely with inflation but with the other change in the position and ideas of the standard of life between to-day and twenty or thirty years ago. They will no doubt feel that, because they undertook this long contract with the Government, they are singled out by fate, if you like, for a particularly unfortunate lot. However, as I have said, there is no major issue involved. There may be minor issues which no doubt some of my noble friends will raise, but these figures, for what they are worth, are an alleviation of a lot of these people. As the noble Earl has said, however, while it is easy to be generous with other people's money the Government cannot 648 go beyond a certain point with regard to the taxpayer. Whether this Bill will last for all time or whether, as in the case of another Bill which the noble Earl was dealing with from that Box a little while ago, this is only a step and will have to be covered by further steps in the future, I do not know. But so far as it goes, in its very limited objective, and particularly with the exclusion of any ceiling, we give it our support.
There are two questions that I should particularly like to ask. The first is, since the Bill has no ceiling, how far does it go? Does it go right up to people at the top of the Civil Service who have incomes of £2,000 or £3,000 a year? As it has no ceiling in the sense that the earlier Bill had, is there any limit beyond which these increases do not take place? The second question I should like to ask (though it may not be possible for the Government to give me an answer) is, can the Government tell us whether there are any persons—and if so, can they give us some rough idea of the number—who have been in public employ, either by the Government or by local authorities, to whom this Bill applies who are at the present time in receipt of National Assistance? I think it would be useful to know the answer to that question, because, in the setting of that fact, we shall get a clearer idea of what help is really being offered to the people who are dealt with here. Having said that, I think there is nothing further I need add at this moment with regard to this matter.
§ 3.40 p.m.
§ LORD MILVERTON
My Lords, in rising to make a few comments on this Bill I should like to say at once that I am one of those people who entirely approve of its principles, and I have no criticism to make of what is in the Bill. I have, however, a certain number of criticisms to make about what is not in the Bill. I am indebted to the noble Earl who introduced the Second Reading for his frank and—if he will pardon me for saying so—unashamed confession that the forgotten man and the forgotten woman, otherwise the members of the Colonial Civil Service, are abandoned to their fate. I think those are not too strong words. We all know that Colonial Governments are responsible for the payment of these pensions, that there is now a no-man's-land of colonial territories 649 which have become independent, and that requests made to the Colonial Office meet with that kind of response: that it is the responsibility of the Colonial Government concerned.
There are two Secretaries of State whose honour is involved in this matter. There is also the Department of Commonwealth Relations, and their reply would be that they have no authority in the matter. Technically, that is quite true, as we all know; but it should be remembered that these men and women were appointed by the Secretary of State and worked under him in their earlier years. They were moved all over the world at his behest, and it is purely a matter of their luck, or ill-luck, whether they happen finally to finish in, and have their pension paid largely by, a Colony which is able to pay it, and to pay these parallel increases, or whether they end up in one which either cannot or will not do so. One has to consider the political circumstances which arise to-day in which certain Colonial Governments have a prejudice against these payments to expatriates and are not prepared to grant any increases which may involve them in all kinds of local difficulties with their own staff. But surely it is a point of honour with the British Government to do something rather more than merely to adopt this kind of tepid indifference of attitude.
I know that, when this Bill goes through, the Colonial Office, as the noble Earl has said, will inform Colonial Governments (and the Commonwealth Relations Office will do the same to territories which have become free) that these increases have been made here; and perhaps they will express a hope that those Governments will be able to make parallel increases. But that kind of tepid goodwill is surely not enough. I want to be fair about it. I realise the difficulties that would arise if Her Majesty's Government were to say that where these Governments will not pay the parallel increases Her Majesty's Government will undertake to do so: because, of course, in that event no Colonial. Government in future would dream of giving the increases.
When this matter was raised in another place the Financial Secretary to the 650 Treasury said [OFFICIAL REPORT, Commons, Vol. 606 (No. 116), col. 130]:Most overseas Governments are at least as generous as Her Majesty's Government in this matter.That is not correct. The actual figures are these. There are, roughly speaking, 42 of these overseas Governments concerned in this matter, and in regard to pension increase schemes, 21 out of the 42 are far less generous over the arrangements than the United Kingdom is. Five Governments out of the 42 have adopted the United Kingdom standard; and 16 have given terms which are rather more generous than those prevailing in this country. But when this Bill has gone through, unless parallel action is taken, the majority of colonial civil pensioners will he considerably worse off than United Kingdom pensioners.
I would suggest that it is, not enough for this Government to tell these men and women who have served us well in the past and helped to build up the Commonwealth that their pension is no longer any concern of this Government. Looking back on my own recollections in many of the bigger Colonies, I recall, that in Malaya, for instance, we Colonial servants had our own widows' and orphans' pension fund. The Government took it over compulsorily, and with the liabilities they absorbed the funds. Now it is no longer the Government in Whitehall that is concerned, but the Government in those territories. Surely, in those circumstances, there is a moral obligation of a very strong kind to see that the widows and orphans do not suffer owing to that transfer of authority. I appreciate that this Bill is perhaps not the right place for such provisions, but I feel that when discussing the Bill one is entitled at least to draw attention to these matters. I know that in another place the representatives of Her Majesty's Government said that this matter would be constantly under review. But that is very poor consolation to the widow and the orphan, or to the ordinary pensioned civil servant, because he, with his Government experience, knows what a phrase like that really means in practice.
Apart from that, there is one other point which I raised a year or two ago in this House on the last of the matters mentioned in the Schedule to this Bill 651 the Governors Pensions Act, 1957. I do not want to raise all the questions which were raised at the time over that Act, except to say that, in my humble view (and here I have to declare an interest, because I was personally interested in the matter), to take the Governors' pensions and entirely alter the method of computing them, giving all kinds of rights and privileges which had not been given before, and then, for some inscrutable reason, to ante-date the arrangements and give them retrospective effect to 1955, and to exclude from all benefits under the Act the 30 governors who were left, who had retired before that time, is a disgrace.
To their honour, be it said, the protest in another place came from the Front Bench of the Opposition. A former Labour Secretary of State asked why Her Majesty's Government had excluded these men, who presumably had served their country well. I do not wish to raise questions about the amount of the pension and so forth, but I do wish again to raise the point that never until 1957 in this country has Her Majesty's Government or the Government of this country recognised that a Governor has a wife. If, for instance, I had died within a week of my retirement my wife would have got precisely nothing after my eighteen years' service as a Governor. I suggest that this is a matter of principle. It is a public disgrace. To my own personal knowledge there have been, over the past few years, wives of Governors who have lived in considerable penury and distress because they were entitled to no pension at all. I know that this is not generally known, but it is a thing which ought to have received attention, and no attention has been paid to it.
I know that the usual reply is that the ordinary Colonial Governor has, before he became a Governor, had service in one or other of the Colonies and has subscribed through the contributory schemes to a widows' and orphans' pension fund, and he has been allowed to go on subscribing during his period as a Governor. That subscription lasts over thirty-odd years and the maximum pension which his wife could get under that would be between £400 and £500 a year, less tax. That, I suggest, my Lords, 652 in modern conditions is a very inadequate amount; and it has nothing whatever to do with the Government in this country, because payment of those widows' and orphans' pensions is one of the things that the noble Earl disowned any responsibility for, because it is the responsibility of some Colonial territory. And so the Government of this country escape paying anything to the widows of people who have borne those responsibilities.
May I say, in conclusion, that I think nobody will deny that the wife of any Governor has rendered a great public service, and no successful Governor could possibly succeed without owing 50 per cent. of his success to his wife, who has contributed to the service of this country as much as he has. I suggest that when these questions of pension arose it would have been easy to include something in the Bill for the widows and orphans, yet nothing has been done about it. I support the Bill entirely, but I thought that this was the proper time to draw attention to some of the things which have been left out.
§ 3.53 p.m.
§ LORD CROOK
My Lords, I seem to have lived a life almost permanently with Pensions (Increase) Acts coming into operation or Pensions (Increase) Bills about to be the subject of campaigns. I am made almost to feel very old to-day when I recall that I was in the 1920 agitation as a young trade union official of 19; and for local government and Civil Service officers I took part in campaigns to secure Pensions (Increase) Bills in 1920, 1924, 1944, 1947, 1952, 1954, and 1956. I assure your Lordships that I do not recall those facts merely to recount my life story, but because of their relevance to some of the observations which, for a few minutes, I seek to offer to your Lordships in respect of this Bill.
I want to start, at any rate, by saying how much I welcome the Bill, and I am sure it is welcomed by all those who will benefit from it. For over eighteen months representatives of the Civil Service and local government officers have been pressing Her Majesty's Government to produce a fresh measure to remedy the disabilities of the 1956 Act. That Act did not apply to those retiring after March, 1954, which meant that 653 some of those who retired after that date have in fact borne the full effect of the rise in the cost of living of approximately 20 per cent. What is more, before the 1956 Act Pensions (Increase) Acts have contained, as the noble Earl, Lord Dundee, said, both means tests and "ceiling" provisions. The 1956 Act removed the means test but retained the "ceiling", and as a result some ex-civil servants to this day are bearing an uncompensated increase in the cost of living which amounts in the extreme case to as much as 66 per cent.
Having welcomed the Bill, may I offer a few criticisms relating to improvements that some of us would like to see in the measure, if we could secure them before the Royal Assent? First, I join with those in another place who regarded the amounts as inadequate, although approving of the new system which the Government have put into this, the best of eight measures which have come in front of Parliament in the course of nearly forty years. The postman who retired in 1939 with a pension of £91 per annum is now getting £162, and under this Bill, if passed, he will get £182. If he had been in post as at to-day and was retired to-day he would get £235. A clerical officer who at the beginning of the war in 1939 retired with a pension of £175, now as a result of the 1956 Act is getting £271, and under this Bill he will get £303. If retired to-day he would get £316. He has, in fact, one of the nearest approximations to parity I have so far seen under the terms of the Bill. But that is not bringing pensions up to a level which provides that the pensioners can buy what they expected to buy when they retired from the service.
I would remind your Lordships that they had a right to expect certain conditions when they retired. They were taken into a service where they were told that their pay was fixed lower than it otherwise would have been because the Treasury would in due course provide an adequate pension for them, the cost of which, it was stated again and again in arbitration tribunal cases, was to the State approximately 12½ per cent. of the value of their remuneration. I know that there are many arguments which can be advanced against parity, but there are many arguments which can be advanced for it. I would remind your 654 Lordships that we had the most astonishing support for parity during the 1956 debates, when no less a newspaper than The Times, in an editorial—I ask your Lordships to note, The Times; not any other paper—said:Pensions should be kept in line with those payable to currently retiring servants of comparable status.I could never have hoped to put it in such good language to make a case to your Lordships this afternoon.
If we look at the senior grades, which the Treasury has had such difficulty in recruiting that it has had to raise the general standard considerably to get from universities the recruits that it wants, we see how bad the system proposed by the Government in this Bill really is. A principal who retired in 1939 with a pension of £550 per annum is, under the 1956 Act, getting £694: and under this Bill, if passed, he will get £774. The principal recently recruited who retires in the next couple of years, having received for the three-years' averaging period under the Superannuation Act the present remuneration given to a principal, will retire on a pension of no less than £1,025. In fact, this Bill in general gives only about half compensation for what these pensioners have suffered. If the pound is taken as being worth 20s. at the end of 1951 (the operative date in respect of the calculations under the 1956 Act), its value at January of this year was 15s. 2d., a decrease of 4s. 10d. or very nearly 25 per cent., as against the 12 per cent. which is the maximum anybody can get under the present Bill.
I am bound to confess that I am not sure what we in this House can do about this matter, because, as I understand it, the question of a Money Resolution in another place is obviously involved, and that has already been passed in limited terms, but I wonder whether we could not, in the course of later stages of discussion on this Bill, deal with the point of retrospection, which was raised in another place and in respect of which the Government has, so far, been adamant. The decision in principle to take action to produce this Bill was announced in April, and it is in respect of April, instead of August 1, that I suggest that retrospection of payment could be made. The dates of April 1 each year are the effective dates in the 655 Schedule in respect of the amounts of increases, and appear in both the Explanatory Memorandum and in the main clause of the Bill.
I know that in another place it was argued that retrospection in these matters was quite impossible. My Lords, it is not true that it is impossible. Royal Assent to the 1944 Act was given in this House on May 24, 1944, and the operative date for the payments was December 31, 1943. In 1947, Royal Assent was given on February 18 of that year, again with an effective date of December 31, 1946. In respect of the last Act, as many of your Lordships will remember, in 1956 Royal Assent was given well into May, with an effective date of April 1. I do not want to keep your Lordships unduly on a point like this, but I do want the noble Earl responsible for the Bill on behalf of the Government to know that those are the lines along which some of us are thinking, and might well be the lines of Amendments sought to be moved at the Committee stage.
But I would say that my main point involves no payment by the Government at all. My third and last point is that in respect to which I referred to my association with the past seven Acts in less than forty years. I did so deliberately, to lead to what I am now going to say. Parliament throughout this period of nearly forty years has completely failed to settle as a principle the method of dealing with the pensions of public servants. If pay increases are settled by negotiation, or if there are arbitration awards by the Civil Service Arbitration Tribunal which involve many millions of pounds of expenditure, the Treasury and the Government accept them as an automatic thing which they take in their stride. But in order to get any expenditure at all in respect of pensions, we run into not only separate Bills but the spirit of pressure groups, which I think is thoroughly bad, on the part of the organisations of civil servants, local government officers, and the like. Before we have a Bill like this coming to Parliament, there is each time a long, intensive period of lobbying and pressure, particularly in another place. Large quantities of letters and pamphlets are distributed, public meetings are held, and Members of Parliament are lobbied in the House 656 by constituents in order that they may secure from the Government a benefit under a Pensions Increase Bill.
When the Bill ultimately is produced, it appears as if it is something which pressure has extracted from an unwilling Government, whereas I say quite candidly to the noble Earl that that is not really the position. The truth is that successive Governments have in due course always given practical evidence of their interest in this subject, but they have never let it be known that this was something which was going to be done at a given time. They have always taken the kind of line that the noble Earl quite candidly said just now that the Government took on this occasion. Pressure groups have been busy; constituents have been lobbying, as I know; and, suddenly, as the noble Earl tells us, in April the Government, finding they had over-budgeted and had a bit of money they could use, took such urgent action to get on with the Pensions (Increase) Bill that the noble Earl has had to repeat here this afternoon the apology the Government had already given to the local authorities: that they had been unable to consult them because they had finally acted so fast.
If these pensioners, and the people who are about to be pensioned, are left all the time with a lack of knowledge as to whether the Government will in two, three, or four years' time think about reviewing the position, there will be these pressure groups all the time; because we must accept that an Act cannot increase pensions recently awarded, so there must be some "cutoff" date. In this Bill, for instance, no increases are to be given to pensioners who retired after March 31, 1957, because the rise in the cost of living from April, 1957, until now has not been sufficient to justify it. But the civil servant who retired on that date in 1957 had his pension based on his average salary over the three previous years—that is, his salary calculation, on which his pension was based, goes back as far as April 1, 1954. So he has not been fully compensated for increases in the cost of living even up to the date of his retirement.
For instance, a man earning £500 a year on April 1, 1954, would have had from the Treasury by April 1, 1957, two economic or cost of living increases, which 657 would have meant that by then he was getting £550 a year. But when he came to apply to that the percentage on which he would get a pension, it was applied not to £550 but to £530. So that, as a pensioner, he starts already behindhand; and then he finds that the next Bill leaves him out for a couple of years. As a result, a situation exists, even to-day, where there are a large number of pensioners, unaffected either by previous Acts or by this Bill, who are already falling behind in the race with the cost of living. In the case I have quoted, the man who retired as at April 1, 1957, is drawing a pension 6 per cent. higher than his 1954 salary would have warranted, whereas the cost of living has in fact in that time risen by 20 per cent. So we start off with a hard-core of pensioners who are critical, and every day, as hundreds more go on to the pensions lists, this critical gang of people grows, building itself into a pressure group—and when this Bill receives the Royal Assent these many pensioners will not see any prospect of a further review for perhaps another four years.
One of the major factors in this continuing pressure has been the feeling that once an Act has been passed no hope can be seen of any further consideration until this three or four year period has gone by. In the case of the present Bill, for instance, the man who retired on April 1, 1957, at the age of 65 has had no benefit up till now, gets none even under this Bill when it becomes an Act, and can hardly he expected to sit down and wait for something to turn up when he is 71 years of age, if he is lucky enough to live to that age. I think, therefore, that the Government ought to face the fact that in these modern days, when the Government themselves are indulging in every possible form of good relationships in industrial relations and when they are encouraging other people to do the same, they should make some firm statement on this matter.
If necessary, I should be prepared to put down an Amendment on the lines of the Amendment which was put down on the Report stage in another place and which provides for the appointment of a small committee of experts who will examine and report to the Government at the end of every two years. I say I should, if necessary, be prepared to do so; and I use those words quite deliberately, 658 because I am not particularly enamoured with that idea at all. I would far rather that the Government took themselves away from using merely these general phrases about "keeping things constantly under review" and said what would be accepted by everybody inside these organised groups and inside the trade unions that are made up by Civil Service and local government membership. A statement should be made, upon which they can rely, that for a period of two years the Government will do nothing, but at the end of the two years the Government will undertake to review the situation in the light of the circumstances then existing.
I throw that out to the noble Earl, not in the belief that he can hurriedly rise today and give some answer willy-nilly, but as an idea for examination, so that some statement may be made perhaps on Third Reading or when this Bill comes to pass, as pass I hope it will at the earliest possible date. Because nothing I have said, in what I hope has been an attempt at some constructive criticism, stops me from expressing to the Government my great appreciation for this Bill and for the fact that not only have they found legislative time to bring it in at this time and will try to get it through before your Lordships' House rises at the end of this month, but because it is the best of the eight Bills, the first one that, by trying the escalator principle, deals with the question the right way round.
§ LORD MOYNE
My Lords, I should like, in two sentences, to say how gratified I am to see that the Government have not forgotten to 'include in this measure their pensioners of the former Royal Irish Constabulary. Those of them who live in Southern Ireland do not enjoy many of the advantages which our richer country is able to afford, and their need is by so much the greater. I am glad to see that their pensions have not been forgotten in this Bill.
§ 4.12 p.m.
§ LORD CHORLEY
My Lords, I should like to add a word to what has been said about this Bill by my noble friend Lord Crook, and to underwrite to some extent the very valid criticism made by the noble Lord, Lord Milverton. The situation which he describes to your 659 Lordships' House is in some ways disgraceful. It seems to me that, as a matter of honour, the Government should underwrite the obligation to see that those who go out to work in our colonial dependencies are properly looked after in their old age, and particularly that their widows are properly looked after.
But this is a wide subject: it is really wider than the terms of the Bill before us this afternoon. I come across it a great deal in connection with those who work in our universities, now some 12,000 of the elite of the community, who are continually faced by exactly this sort of problem. They receive their superannuation from grants voted by Parliament. Undoubtedly there is nothing that has pressed more hardly upon the older university teachers during the period since the end of the war than this constant threat of being left in penury, or semi-penury, and having their widows deprived of all real position in society. This situation is reflecting itself in the way I was glad to hear my noble friend emphasise—on recruitment. We have heard how difficult recruitment is becoming in the Civil Service. Recruiting is becoming difficult in the universities, too, and largely for this reason; at any rate, this is certainly an important factor in the situation.
At the present time in industry there are generous pension schemes. I imagine that every noble Lord knows that; and it must also be known to your Lordships that during the past few years several distinguished civil servants have left their Departments in order to take posts in industry or commerce. More than one of them have told me that the reason for this is that pension arrangements are so much better. The State really cannot afford to lose its servants in this way. The State cannot afford not to attract the ablest young men from the universities both into the Civil Service and into the university teaching profession. Therefore, it is essential that this matter should be nut on to a proper footing and that the kind of situation, in which the noble Earl, in moving the Second Reading this afternoon, seemed to glory, should be brought to an end. I am very glad indeed that my noble friend Lord Crook emphasised this very point.
660 In the university world, we have now succeeded in getting quite reasonable machinery for dealing with salary increases in the situation of inflation which has prevailed over recent years, but when we suggest to the University Grants Committee that the same sort of arrangement should be made in respect of superannuation, we are met with a blank wall. That is much the same position as the Government have taken up in regard lo the pensions of civil servants and other people who come within this Bill. Surely it is reasonable at the present time that superannuation and pensions should be dealt with in the same sort of way and that effective machinery should be involved.
I do not know whether the suggestion in the Amendment which was put down in another place is the right one. Possibly sufficient consideration has not been given to it. But I should have thought that any reasonable person would have agreed that the position, which my noble friend has so graphically described, of Members of another place and of your Lordships' House being circularised by all sorts of organisations, like the Association of Senior Civil Servants, who wish to see that justice is done to the people who have given their lives in the service of the State is a disgraceful one, and that this sort of thing should not have to happen.
It is good that there is this Bill before your Lordships' House this afternoon, but is it not open to the reflection that this is General Election year and that this sort of criticism, which ought not to be available, is bound to be made until proper machinery for handling this position is established? I hope that my noble friend will put down some sort of Amendment in order to give your Lordships a better opportunity of threshing out the arrangements which are required for curing what is undoubtedly a sore in the body politic at the present time.
§ 4.17 p.m.
§ LORD SILKIN
My Lords, I rise first of all to reiterate my agreement with the most impressive statement made by my noble friend Lord Crook. He is perfectly right. Although we get these Pensions (Increase) Bills periodically, they always come as a result of pressure and not as a result of a recognition that it is timely to 661 review the position of pensions. I know that the noble Earl has told us that the Government do not accept the principle that they have to make good to the pensioner the increase in the cost of living or fall in the value of money. But they have, in fact, recognised it eight times. And there comes a time when they must cease to say that they do not recognise the principle and yet go on doing this.
By now, no Government can afford to say that they do not propose to take any notice of the increase in the cost of living, or the fall in the value of money, and to tell the pensioners, "You have made your bargain and you have to accept it." Of course, Governments periodically have to look at the position. It is unfortunate that they should do it only when they have a little bit of money to spare, or when there is an Election pending, or when the pressure on them is so great that they can no longer resist it. I fully associate myself with what my noble friend has said. There ought to be some legal machinery for looking at this position periodically to see whether it is timely to review the position of existing pensions.
I should like to ask the noble Earl, having—if you like, without prejudice; and I suppose that is what the noble Earl would really say—accepted the position that we have to make good the increase in the cost of living, why do we not really do it? Why do we hold back and go half-way or two-thirds of the way? Why do we not go the whole way and do the thing properly? In the long run it would not cost us very much more, because each time we make an increase we have to take into account the backlog of the previous occasion. It would be so much more satisfactory if, once and for all, we recognised the principle that when we grant a pension it is granted on the basis of the cost of living—that is to say, if the cost of living goes up then the pension goes up correspondingly—and that there is a periodic review so as to ensure that the matter is properly looked at.
The noble Earl may say: "What happens when the cost of living comes down?" I am not authorised to speak for anybody, but it would be quite appropriate at the review, if the cost of living came down, to bring down the cost of the pension, if the understanding is that it is designed to give people a 662 definite standard of living. I hope that the noble Earl will make these representations to those for whom he is speaking in the Government, and perhaps at a later stage of the Bill we might have a clear account both as to whether it is possible to have a regular review and as to the principle upon which the actual amounts are settled.
There is one other point I should like to raise, and I imagine that it is one for the noble and learned Viscount the Lord Chancellor. I see that all kinds of people are referred to in the Schedule, but there is no reference to High Court Judges, Judges of the Court of Appeal and others of high judicial office, although magistrates and county court judges are dealt with. I should like to ask the noble and learned Viscount whether he can say if this is intentional and if it is intended to deal with them in some other way. If so, could a statement be made as to how it is intended to deal with them? Is it going to be on something like the same basis as this Bill, or in another way? Having said that, we welcome the Bill, as we welcomed every one of the eight previous measures; but we do hope that in future it will not be done in this casual manner and that we can have a regular review of these pensions from time to time.
§ 4.23 p.m.
§ THE LORD CHANCELLOR (VISCOUNT KILMUIR)
My Lords, with your Lordships' permission I should like to intervene for a moment to deal with the last point raised by the noble Lord, Lord Silkin. The increases recently sanctioned in the salaries of members of the lower Judiciary in England and Wales, Scotland and Northern Ireland, have resulted in the amount of their maximum pension entitlement being automatically increased to a point where they approximate to, and in a few cases exceed, the pensions of the higher Judiciary mentioned by the noble Lord. The Government have been giving careful consideration to the situation which has arisen, and have decided that the pension entitlement of members of the higher Judiciary in England and Wales, Scotland and Northern Ireland should be revised. Proposals to this end will be put before Parliament in a subsequent Session. It is the intention to propose at the same time that some increase be 663 made to the pensions of those members of the higher Judiciary who have already retired. As your Lordships are aware, there has been no increase in the pensions of the higher Judiciary of England for some 134 years.
§ LORD SILKIN
Is the noble and learned Viscount in a position to go a little further and say the amount of the increases?
§ THE LORD CHANCELLOR
At the moment the form of the legislation is being considered, and I should be grateful if the noble Lord would leave it for some time. As soon as it is possible, I will acquaint him with what is in our minds.
§ 4.25 p.m.
§ THE EARL OF DUNDEE
My Lords, I had hoped that the noble Lord, Lord Crook, might perhaps clarify the question about persons who had retired under the age of 60 which he asked previously, because I should not like any of your Lordships to be in any doubt upon the point, and I was not sure that I apprehended what his difficulty was.
§ LORD CROOK
I thought the noble Earl would prefer me to leave it until later. However, I will develop it if he wants me to.
§ THE EARL OF DUNDEE
What I said in reply to the noble Lord is, I think, correct. If the pensioner retired on grounds of ill-health, he will get the increase even if he is under 60. That is clear. If he retired on any other ground, and is still under 60, and then falls ill so that he cannot work, then he gets the increase. That, I think, is also quite clear. The noble Lord also referred to the situation which would arise if the pensioner got other employment. I do not think that makes any difference at all. This is a pension which is not subject to any kind of test in regard to other employment.
§ LORD CROOK
May I help the noble Earl by saying that why I did not speak was that I thought it would be a good thing on the Committee stage to put down an Amendment to Clause 1 (6) to test the point, and that I would not bother with it to-day
§ THE EARL OF DUNDEE
Clause 1 (6) says:For the purposes of this section, a pensioner shall be deemed to be disabled by physical or mental infirmity if he is permanently incapacitated by such infirmity from engaging in any regular full-time employmentThat is simply a definition.
§ THE EARL OF DUNDEE
It does not affect the principle, which is that he gets the pension if he is disabled. I cannot see any ground for difficulty, but if there is any further misunderstanding I shall be glad to look into it.
The noble Lord, Lord Crook, made, I think, a very good and moderate defence of the principle of parity and also of the case for retrospection. As he said, he does not expect me to agree with him on either of these points. I quite understand the case for parity. The case against it, of course, is that if a pensioner's pension is fixed on the amount of his earnings at the time when he retires, and as a result of inflation his pension falls in purchasing power, you have got to remember that a great many other people besides Government pensioners also suffer very much in this way from inflation; and I do not think there is any moral principle which requires that special action should be taken to correct the effects that arise from changes in the cost of living in respect of some particular class of person.
§ LORD CROOK
May I say to the noble Earl that I fully agree with him? I did not expect anything special; I was thinking merely in terms of the magnificent speech which the Prime Minister made to a conference at Brighton where he associated both pensioners and those of the rentier classes.
§ THE EARL OF DUNDEE
The increases which have been given over the last twenty years at various times the noble Lord was inclined to attribute to the results of pressure. I have no doubt that there is pressure of various kinds from bodies representing all classes of pensioners, but I doubt whether it is really the case that these ex gratia increases in the pensions of ex-Government servants have been wholly or mainly due to pressure. There would not have been any case for them at all had it not been that inflation took place at certain times. 665 Naturally, when inflation occurs the Government, although they do not admit any equitable responsibility in the matter, want to consider whether they can do anything to ease the hardship which has resulted from inflation upon their former servants.
The noble Lord, Lord Silkin, who followed up the point, said that we had recognised the principle eight times, that we ought to compensate them for the consequences of inflation. But that is precisely what we have not done on these eight occasions. The whole point of what we have done is that, without recognising any responsibility, we have given what would have been a very inadequate increase if the responsibility had been recognised. It is precisely because the amount has not been commensurate with the rise in the cost of living that it is possible to make these criticisms on the principle that parity ought to be accepted. We have not accepted the position on these eight occasions that we ought to compensate the pensioner in full for a rise in the cost of living.
As for the arguments in favour of having a permanent Committee to review these things, I know, of course, that there is a case for that, too. I think perhaps the noble Lord, Lord Silkin, indicated one of the arguments against it when he mentioned that if the cost of living went down, the pension might have to be reduced. That was precisely what happened in the only class of pensions which we did at one time try to relate to the cost of living—the Armed Services pensions; and the results were so unsatisfactory that the idea had to be abandoned.
I should like to remind your Lordships that on every occasion when an increase of pensions of this kind has been made the Government spokesman has usually said that he hopes this is the last time it will be necessary to do anything, because he hopes that from this time forward there will not be any more inflation. Of course, if there is no more inflation there will not be any case for increasing pensions, and there will be no ground for any of the pressure to which the noble Lord referred. I am not going to be brash enough to repeat that, but I should like to remind your Lordships that for the last fifteen months prices have been stable for the first time since the war, and there are indications that we may 666 be able to hold that position; and that if, in future, pensions were to be regulated in accordance with the cost of living, it is not entirely impossible that the change might be in a downward rather than an upward direction.
I am grateful to the noble Lord, Lord Milverton, for the support which he expressed for the Bill, which I think was not affected by the various criticisms which he made about the Government's attitude towards the position of ex-Colonial servants. He questioned the statement of the Financial Secretary in another place, who said that most overseas countries had scales of pensions which were as generous as ours. I have tried to check it again and there appears to be a conflict of information. According to the information which the Government have, the majority of these overseas territories are either as good as or better than ours, although, of course, there are some which are not. My right honourable friend the Financial Secretary referring in another place to the position of widows' and orphans' pensions—which are in some cases more unfavourable—said [OFFICIAL REPORT, Commons, Vol. 606, No. 116, col. 130]:The Government have that question very much in mind, but it is not appropriately dealt with in a Bill which deals only with increases in pensions paid by Her Majesty's Government, I can assure honourable Members that the Government have and will keep this matter under review.I hope I got Lord Milverton's point correctly about the Governors' pensions. The position is that the basis of Governors' pensions was changed in 1956 and improvements were made for all such pensions that began after August 31, 1955. Under this Bill increases will be paid on the Governors' pensions and, of course, they will be larger for those pensions which began before August 31, 1955, under the old arrangements, than for those to which the new arrangements apply.
With regard to widows' pensions the Bill, of course, increases any existing widows' pensions. Obviously, it cannot increase pensions which do not exist, but I will draw the attention of the Colonial Secretary to the view that there should be a system of widows' pensions for Colonial Governors which was argued by the noble 667 Lord. I am sure that everything he has said will be given due weight by the Government.
The noble Lord, Lord Pethick-Lawrence, asked me two questions one of which I can answer and the other I cannot. His question about the number of ex-Government employees receiving National Assistance was asked in another place. The reply was that the information was not available. I have made inquiries, and I find that it is still not available. It has not so far been found possible to extricate the figures from those which the National Assistance Board have, but I will certainly ask again and see whether it would be possible to do this without undue trouble and expense to the officials of the Board. To the noble Lord's other question, whether the increase in pensions goes right up to the top and includes the highest pensions of the highest grade of civil servants, the answer here is, Yes, it does. There is no ceiling at all. I conclude by saying that all your Lordships have said will be considered, and by thanking your Lordships for the unanimous support which you have been good enough to give to the Bill.
§ LORD LATHAM
My Lords, before the Motion is put may I ask one question? The noble Earl referred to the local authorities, and paid a tribute to them for their helpful assistance, late though the proposals were. Can he say whether the general block grant to the local authorities—who will, of course, have extra expenditure cast upon them in respect of increased pensions for their pensionable retired servants—will be increased to take account of that extra expenditure?
§ THE EARL OF DUNDEE
My Lords, I do not think I ought to answer that question without notice, because I might not give the right answer. I should have thought the answer would be, Yes, but I would ask the noble Lord if he would be good enough to let me write to him.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.