PENSIONS (INCREASE) BILL

HL Deb 27 November 1962 vol 244 cc1150-201

Order of the Day for the Second Reading read.

5.5 p.m.

THE MINISTER OF STATE FOR FOREIGN AFFAIRS (THE EARL OF DUNDEE)

My Lords, the application of any Bill dealing with pensions and superannuation must always be intricate and there are a great many complexities both in the clauses of and in the Schedules to this Bill; but I think that the purpose of the Bill and its effects are simple. As I know several of your Lord ships wish to comment on it and take part in the discussions, I do not think I need take very long in explaining it to your Lordships. There are three main proposals. First, the general scheme of per centage increases on a sliding scale according to the date on which the basic pension began, Which is described in Clause 1. Next, the special supplementation for persons over 70, which is described in Clause 2. Finally, the enabling powers to enable supplementary sums to be paid to recipients of pensions which are legally payable by ex-Colonial Governments—Governments of countries which used to be our colonies, that is to say—to officers who have served in those countries under British Colonial administration and whose pensions are now below the United Kingdom level, so that we shall now be able to put an, end to this disparity.

The first two of these three proposals are of general application to all the main classes of pensions for civil public service. They will benefit those who have retired from the Civil Service, the National Health Service, the teaching service, the local government service, the police, the fire service and various smaller categories; and every class of pensioner who benefited under previous Pensions Increase Acts is eligible to benefit under this Bill. One or two small categories have been added: for instance, certain former Judges who in 1959 were dealt with under the Judicial Pensions Act, and not the Pensions Increase Act, of that year. Since many of these pensioners who were affected by this Bill are the responsibility of local government, and since the augmentation of their pensions is a charge on the ratepayers (tampered, of course, by the effect it will have on the Annual Review), the Associations representing local government bodies were consulted about these two proposals and they are generally acceptable to them. Altogether 500,000 pensioners—not including, of course, Service pensioners who do not come under the Bill—are within the scope of this Bill and will benefit by it. Many of these, of course, have dependants. So that your Lordships are dealing with a Bill which affects probably between 750,000 and a million people either directly or indirectly.

The scheme of per centage increases set out in Clause 1 of the Bill provides for an increase of 12 per cent. for those whose pensions began before April, 1956, 10 per cent. before 1957, 8 per cent. before 1958, 6 per cent. before 1959, 4 per cent. before 1960, and so on down to 2 per cent. after that date. That increase is calculated not only on the basic pension, but on the pension now in payment which includes earlier increases under previous Pensions Increase Acts, of which there have been five since the beginning of the war—in 1944, 1947, 1952, 1956 and 1959—this being the sixth one now, in 1962. The largest increase, of 12 per cent. for those whose pensions began before 1956, is slightly more than the rise in the cost of living since that date.

The next proposal in Clause 2 for the supplementary payments to those over 70, proposes a flat rate of £20 for those who retired before 1956 or their widows. For those of your Lordships who would like the calculation in weekly rather than yearly amounts, that comes to about 7s. 6d. a week. That is a general flat rate increase, and it concentrates relief at the point where it is most badly needed now—on the small pensions which do not benefit so much from the per centage increase as the larger ones do. If we take the main scheme under Clause 1 and the supplementary scheme together, the pensioner whose pension began before 1956, or a widow Whose husband was retired before that date, will receive increases which amount in the case of the smaller pensions to a pretty substantial per centage of the original pension. For example, for the widow with a present pension of £130 a year the increase is 27 per cent.; for the widow on a higher pension of £210 the increase would be 21 per cent.; for a retired clerical officer with a pension of £250 the increase would be 20 per cent.; for a teacher on £500 a year it would come to 16 per cent.

As your Lordships know, I have mentioned already that this Bill does not apply to Service pensioners, but it is the invariable practice to regulate increases in Service pensions by Prerogative Instruments in accordance with what is done for civilian pensioners, as will be done under this Bill. Accordingly, these Service pensioners or their widows will receive increases calculated in exactly the same way, except that I think there is a slightly different method of grading the over-70 pension to make it fit in with the intervals at which the actual Service pensions have begun. But it is substantially the same as the increases in this Bill, and the increases will be calculated from the same operative date. The total number of people who will benefit by this change for Service pensioners will be a little more than 112,000, and 40,000 of them will benefit by Clause 2 as well as by Clause 1. Although it is perhaps doubtful how far it is in order to go into Service questions on this civilian Bill, I shall be glad to hear anything that your Lordships have to say about the effect of what we are doing now upon Service pensions.

LORD SHEPHERD

My Lords, could I ask the noble Earl a question? I did in a previous debate raise the question of the death of Squadron Leader Stott in the tragic accident of two weeks ago, and also of his wife. I did ask the Minister whether he could tell the House what provision would be made for the two children who are left. Perhaps the Minister when he replies could tell us what is the present rate, and what would be the new rate to cover these two children or other children in similar circumstances.

THE EARL OF DUNDEE

My Lords, if the noble Lord desires it, I will certainly try to get what information I can by the end of the debate. I would have thought that, if he put the question down a fort-night ago, he would surely by now have received either an oral or a written reply. Anyhow, I have not heard of it at all, but I will do my best to see what information can be obtained before the end of our discussion.

The third proposal, which is a new principle in our pensions legislation, is to provide for the topping-up of pensions of former members of the Colonial Service, the Overseas Civil Service and the Sudan Civil Service—mainly officers who were recruited from the United Kingdom—and their widows and dependants. The Bill also covers certain widows of officers of the former Indian Services, who have not hitherto been eligible for pensions increases. Your Lordships will find the provisions in regard to that at the beginning of Clause 4, and in Part I and Part II of the Fourth Schedule. Members of the Colonial and Sudan Services were not, technically speaking, employed by the British Government; they were employed by the Government of the particular teritory in which they served. It was that Government, the Colonial Government, which was responsible for the payment of their salaries, allowances and pensions. Since independence their pensions have been payable by the Government of the country in which they formerly served, and British Governments of all Parties since the war have done their best to persuade these new independent Governments to grant any increases in pensions which have been made by the United Kingdom Government here. Naturally, the United Kingdom Governments have been anxious not to admit any responsibility for doing so themselves, because that would plainly have encouraged the foreign Governments or Commonwealth Governments to evade what we regarded as their responsibility. So we always brought our Pensions Increase Acts to their notice; and some of them, those who are now independent, have made generous increases in pensions; others of course have not.

In a number of territories the pensions increase drawn by these officers or by their widows and dependants, is very substantially less than that which would be drawn by a United Kingdom public servant. As your Lordships know, the Government have decided that we must now think primarily of the condition of the pensioners themselves, as it has been affected by such inflation as we have suffered in our own country; and that we cannot indefinitely go on relying on the assumption or hoping that the Governments who are paying the pensions will in all cases increase them comparably with ours. Therefore, the Government have decided that it is right to make provision in this Bill, under which the pensions of these overseas service pensioners should be brought up to the same total that they would have reached if the United Kingdom Pensions (Increase) Acts, and the other provisions of this Bill, applied to them.

I would just repeat again that some of the Governments of these former Colonies have been generous in making pension increases, and therefore in some cases the effect of this Bill on the recipients will be very small. In other cases, those who are dependent on countries who have not increased their pensions comparably with ours, it will be substantial. For example, the widow of a former Gold Coast officer who retired in 1945 and died in 1950, and who is at present in receipt of a pension of £350, which would include a £65 pension increase, will now receive a supplement of £151 a year. To give one more example, an officer who retired from Malaya seventeen years ago, in 1945, on a pension of £500 a year, will have received up till now an extra £154 by way of increase. Under this Bill, bringing it up to our level, he will benefit to the extent of a further £144.

The cost of this Bill to the Exchequer will be about double the cost of any previous Pensions (Increase) Bill. The direct cost of this Bill will be £17¾ million, and the cost of the pensions increase for Regular pensioners from Her Majesty's Forces, which will follow rather as a corollary to this Bill, will be £4½ million. Of the total amount of £22,100,000, just over £17 million will fall on the taxpayer, which includes the cost of the Service pensions which will be prescribed by the Prerogative Instruments, and £5 million upon the ratepayer.

The costs of the separate clauses of the Bill will be, just to analyse them briefly: under Clause 1—that is, the general increase, including the Service increases which will follow under the Prerogative Instruments—£14¾ million; the supplementary payments to those over 70, £6½ million; and under Clause 3 and Clause 4 it will be £840,000 and £570,000 respectively. All these figures relate to cost in the first full year of payment.

Any Bill of this kind, dealing with this kind of subject, however good or however inadequate it may be, must probably give rise to some feelings that it has not done enough. I should like to make only one principle clear—and it is one which I think any Government must adhere to. It is that when a contract is made to pay an annual pension to any person, that contract must legally and morally be held to be final, and the Government or the private employer who pays the pension is not under any obligation to increase it. If, later on, wages rise and pensions rise with them—that is, apart of course from any question of changes in the value of money; if real wages rise and real pensions rise—there is no justification for restrospectively increasing the pensions of those who retired when the wages and salaries were on a lower level. That would be equivalent to a retrospective increase in wages and salaries.

The reason why we have had to make so many changes in an upward direction of old pensions in the last fifteen or sixteen years has been, of course, because of the effects of inflation. That is a terribly complicated subject, and I will certainly not try to branch off into any discussion upon the subject of inflation in a debate of this kind. But inflation is a thing which affects the whole country, not only pensioners—and, indeed, not only those in receipt of fixed income. There are many people who suffer by it in all sorts of ways, and all of them pay taxes. The Government themselves have no money except what they derive from taxing the people of the country; and it, is not fair that people who do not receive pensions but who do suffer from inflation should have to pay more taxes in order to make up the whole loss in real purchasing power that has been suffered by the erosion of the real value of pensions. We cannot agree, nor do I think we ought ever to admit, that there is any obligation on any Government to maintain a regular increase of pensions in order to keep pace with any increase in the cost of living which may occur. But, my Lords, a good employer will usually try to supplement pensions which he is paying to his workpeople who have suffered through a fall in the value of money. The Government ought to recognise, and do recognise, that they should do what they can in that way.

Of course, there are some employers who themselves have been so badly hit by inflation that they cannot pay any pensions at all, and if inflation were to go to the length that it has gone in some countries, such as the German inflation after the First War, then it would be impossible to do anything. But the Government recognise that they ought to try to do what is reasonable and fair as between pensioners and taxpayers in making up to them part, at least, of what they have lost by the erosion of their pensions due to a fall in the value of money; and when you do that I think you are not acting on any legal or statutory obligation; you axe trying to relieve hardship, and you want to make it fairly uniform. On the other hand, I think it is right that you should give the greatest weight to where you think the greatest need is likely to be felt, and you can do that only on certain broad principles; you cannot have a separate examination in each case. We have tried, in one respect, to do that by the introduction of these new payments over the age of 70, because we feel that increasing age is likely, as a general rule, to bring increased need.

Perhaps one of the greatest regrets which many of us may have about our Pensions (Increase) Bills is the rule that, even if people retire before 60, they have to wait until the age of 60 before they actually receive any of the increases which are provided by our legislation. That applies not only to some ex-Colonial servants but to the police and fire service—and, of course, to a great many of the Forces. I expect many of your Lordships—many of us all—have friends who have retired from the Forces with the rank of, perhaps, colonel of brigadier, captain or rear admiral, who are quite relatively young at the age of 50, or even less, who are in full vigour of mind and body and yet who find it extraordinarily difficult to get jobs, however willing them may be to accept one. But it is a reasonable presumption that they are more likely to be able to earn some income under 60 than over 60; and the Government feel that, in order to distribute the taxpayers' money in the best and most equitable way, it is better to give the weight of increase to those who are 60 or more, although we recognise that there may be people who have retired long before the age of 60 and that there is plenty of time between their retiring age and the age of 60 for a considerable amount of inflation to take place.

My Lords, I shall be glad to listen to any comments, not only on this but on any other matters which your Lord-ships wish to raise, and to represent to my right honourable friend what your Lordships may say. I would ask your Lordships to bear in mind not only that this Bill is, I think, twice as costly to the Exchequer as any previous Bill, but that it goes further than any previous Bill in relieving hardships; and I am sure that, subject no doubt to minor qualifications, it will meet with the approval of your Lordships. I beg to move.

Moved, That the Bill be now read 2^a—.(The Earl of Dundee.)

5.31 p.m.

LORD CROOK

I should like to thank the noble Earl for his explanation of the Bill to the House and say that, for my part, I welcome the Bill. I speak with a knowledge of the Civil Service and local government service, but I do not pretend to speak, as some noble Lords speak, with regard to the additional features in this Bill relating to the Colonial Service and the Armed Forces. I want to say straight away that this is the best Bill the Government has presented on the subject in the past 42 years. I do not propose to waste the time of the House by arguing afresh some of those things which have been said in another place. If I am going to repeat anything it will not be the arguments advanced in the other place during the past few weeks but rather the remarks I have made in this House far too often.

I was a young 19-year-old official in a local government trade union when I first took part in the agitation for the first Increase of Pensions Act in 1920. Again, I took part in the agitation in 1924—lobbying in the House, organising mass meetings and the like. There were more years of agitation inside the Civil Service trade union movement which finally resulted in a quite inadequate Bill brought in by the Government in 1944. I was sent to your Lordships' House in 1947, and since I have been in your Lordships' House I have taken part in debates in 1947, 1952, 1954, 1956 and 1959. This Bill, in fact, is the sixth Bill since the war came to an end, and I want to say something to your Lord ships about the general subject.

All these Bills followed agitation. Now, again, we have had violent agitation all over the country: there has been lobbying of Members of Parliament, the writing of letters to Members of this House; mass lobbying and the like. I ventured to say to your Lordships on the Bill we had before us on July 2, 1959, that Parliament, during the whole of the forty years it had then been looking at the subject of pensions increases, had never tried to settle on any plan or method of dealing with the subject. It had been satisfied to leave it to this principle of lobbying and pressure and finally of giving way. The truth is that each Bill left a number of people with no benefit at all. The day after the Bill receives the Royal Assent there will be added new pensioners who get a pension based only on years of established service. It is well to remind ourselves what the words "established service" mean. A man may have worked 35 years for the State but is allowed only to count 20 of them as established for pension purposes. Then he gets a pension based on the average pay of the last three years. This is a pretty small per centage of the pay he was drawing. In a very short period of time he finds living costs in the country mounting and his already meagre pension appears trivial. He joins the thousands of pensioners whose ranks are swelling daily who cannot make ends meet, and he becomes another member of the pressure group.

I want, at the risk of repetition, to remind your Lordships of what I think is very relevant here to-day: the observations I ventured to offer on an exactly similar clause on July 2, 1959. In the case of the present Bill, the man who re tired on April 1, 1957, at the age of 65 has had no benefit and now gets none, even under this Bill when it becomes enacted. He cannot be expected to sit down and wait for something to turn up at 71 years of age—if he is lucky enough to live to that age. The man of 71 to whom I referred will in fact become 71 early next year. From early next year—if we despatch this Bill as fast as many people hope—he will become entitled at last to some increase on the pension he was given in 1957.

I went on to say that the Government were taking every possible step to encourage good relations, or normal good industrial relations, inside their own service, the Civil Service. It seemed then, and seems now, a pity to dissipate the good will which the Government have built up in that connection by almost making it possible—I would go further and say almost making it absolutely necessary—that the servants of the State should take part in lobbying, agitation and pressure on Members of Parliament. Not only the pensioners actually drawing pensions are involved in this agitation; it concerns also those who are now in the service. They have every reason to fear the position they will come to in due time. I suggest that this is not good for the Public Service. It is completely and absolutely time-wasting for both Houses, and particularly for individual Members of the other place.

I cannot help feeling that continual legislation uses time which, in the light of all the difficulties we have had with Bills over the last year, is time that Parliament can ill spare. I suggested in 1959 that it was a pity the Government could not get away from using general phrases about "keeping those conditions under review", and the like, and could not say what would have been accepted then, and I am sure would be accepted now by those representing the servants of the State: that there should be some general review over a period of time; that they should know that something would be said by the Government and that something would be done at some given turnover period.

I suggested on that occasion two years. I want to repeat to-day something of that kind. Cannot we try to leave behind us the series of events in which I have taken part for forty years, many of which, I think, are undignified and unnecessary; and the more undignified and unnecessary in these days of what we are claiming here to be an excellent Parliamentary democracy? I think they are completely unnecessary because we pass a Bill and within a year of the Act getting Royal Assent, those who are left out are beginning to write letters. Within two years of the Act the numbers have swollen, the cost of living figures go up, wages rise again, pensions are left behind, the lobbying starts, and the agitation within the Civil Service and local government trade union movements gets going. Leaders of those unions, who have plenty of other things to do, find themselves forced, if they do not immediately take the lead themselves, to take part in campaigns of this kind. Then members of all Parties press the Government to get on and do something.

After enough pressure, the Government reluctantly promise that they will do something in due course. The pensioners wait, and hope. And perhaps six months after that, if they are lucky, the gracious Speech from the Throne will offer some glimmer of hope by some magic phrase referring to action to be taken in this connection. A Bill is hurriedly introduced. It is not made retrospective to the date when, after months of agitation, the Minister had finally agreed that there was a case for a Bill. Whatever is granted is granted from "the appointed day", which, as your Lordships will have seen if you have looked at Clause 10 (1), is: the earliest day after the passing of this Act which is the first day of a calendar month. So we get a hasty scramble. The Bill is put through its Second Reading and hastened off to Committee. Members of another place sit, as they did last week, into the small hours of the morning, because they have good will and want to hasten this Bill on to the Statute Book. It is rushed over here, and today we have the Second Reading. We must dispose of the Committee stage—always supposing that we do not become persuaded that we should not have one, which is what happened last time—Report stage, Third Reading and pass the Bill so that we can get it back in another place in order that finally, by December 20, we may have the Bill here again, so that according to the phrase which I have read from Clause 10 (1), it may produce the money on January 1.

How much better, my Lords, if we had regular reviews which enabled pensions to reflect the rising standard of living! How much better, if we did not have to debate another Bill after two and a half years, but provided for the making of statutory regulations, within limitations which Parliament had itself set down in an Act of Parliament! Are we completely incapable, in this Parliamentary system of ours, of doing in respect of our staff what we not only like but almost expect to be done nowadays in respect of industrial negotiations and relations in the great commercial and industrial undertakings? Why is it that we must always lag behind in respect of our own State servants? Why is it that we must lag behind every other country? I do not know, if the Government get their way and put us into the Common Market, whether we shall get any reflection of the better things on the other side of the Channel.

Your Lordships will have seen the publicity, or probably heard the comments in your Lordships' House about the visit of trade union leaders to Sweden. Whatever impressions they may have come away with, and whatever they may or may not think, the truth is that these successive wages and pensions agitations do not take place in Sweden as they do here. Since they pegged their wages and pensions to the cost of living index, civil servants' salaries are fixed annually by negotiation between the Minister of Civil Affairs and the trade unions of the civil servants, and these negotiations cover not only those serving at the time but also those who have been retired over the whole period before. The adjustment of pensions with due regard to changes in monetary values and to the general standard of living is con- sidered year by year in relation to all the changes in the scale of pay which may be adopted for serving officers.

This flows from a principle generally accepted in Sweden, which some of your Lordships may have seen explained and very well written about in a recent article in the Daily Telegraph, which pointed out that the principle which is applied in Sweden in respect of its public service is that the achievements of one generation are based on the efforts of earlier generations, and that consequently retired members of an earlier generation should enjoy the results of their own efforts, in the same way as their younger colleagues enjoy the fruits of their present achievements. It is not at all a bad kind of principle and philo sophy to have in a country, and I com mend it to the noble Earl, Lord Dundee, when he goes back to talk to his right honourable friends.

I urge, therefore, that the Government shall consider permanent arrangements for the years to come. The fact that I have devoted my remarks merely to this theme of trying to get a tenth Bill on top of the ninth, intending to set up a permanent scheme, must not be taken—and we know each other too well for the noble Earl to think that it should be taken from me—as meaning that I like all the details of the Bill. I do not. But I know that we have done very well in this Bill, compared with what we have done in the past. I know that it has been a very genuine attempt on the part of the Government, and my right honourable friends in another place have courageously said that this represents a much better approach than any that has been made in the past. This is a Bill that I want to see on the list for the Royal Assent before your Lordships' House goes away for the Christmas Recess. I therefore hope that we shall move on to the Committee stage, and that those who wish to move Amendments will be able to do so at the earliest possible date, so that we may have the opportunity of the Royal Assent by December 20.

I should like to add only one other comment before I sit down, and this on a personal note of apology to the noble Earl. None of us knew the day on which this Bill was to be set down for Second Reading and, like others, I had accepted a public engagement for this evening. Then, to make matters worse, we did not start until five o'clock, and we find ourselves with a list of eleven speakers on this Bill. It seems that I should have to miss my other engagement if I remained until the end of the debate, and since I have no use for people who get up and erupt, and then clear off, I am anxious to make this explanation for my exit before very long and to apologise to the noble Earl for the fact that I shall not be present to hear him when he winds up. Having said that, may I commend the Bill to the House and urge that it goes on its way to the Royal Assent?

5.49 p.m.

LORD REA

My Lords, I should like to start, if I may, by expressing my indebtedness to the noble Viscount who leads the official Opposition for his great courtesy in welcoming my suggestion that perhaps I might for once address your Lordships from this place. I take it that I am, in a sense, in enemy territory, but I hope not too hostile territory. Perhaps I should add that no political inference should be adduced from this—not even anticipation.

I should also like to thank the noble Earl, Lord Dundee, for the very clear way in which he has introduced and explained this Bill. He called it, I think, a short Bill, and I rather had the impression that he called it also a simple Bill—though I was going to say that it is not so simple. It is not free of complexities, in its various cross-references to other similar Bills, to various classes of persons, to residential qualifications, differing age groups, different sexes, children, and especially in its breakdown into per centages, on the one hand, and fiat rates, on the other, for people whose eligibility falls at different times into a confusing range of past, present and future schemes. But in spite of these difficulties, its aim is in general a simple one, and an aim which I think the whole House will endorse by giving the Bill a Second Reading, because it seeks to relieve hardship and poverty among those whose working days are over and who are morally and politically entitled to receive financial sustenance by way of pension or allowance during their declining years.

Nor is it really a new Bill, as we have heard: for this particular problem has been tackled in an unfortunately piecemeal way. No legislation has yet been brought in (as I think it ought to be, and as the noble Lord who has just sat down told us) to lay down some sort of sliding scale which would cope with the regularly increasing difficulty which can quite plainly be foreseen as the cost of living continues to rise. Nor, I gather, is any further review at present anticipated. As a result of this hand-to-mouth method of dealing with a very human problem, which I think should take a high priority in our forecasting and our future planning, we have had, as the noble Earl said, no fewer than seven Acts in the last eighteen years, all directed to the same end of bringing up to date a previous Act which had become obsolete, exactly as everybody knew it would become obsolete.

The hope was expressed in another place, during the Second Reading of the Bill there, that this 1962 Bill would be the last Bill of its sort ever to come before Parliament. I have no idea why the Government should adopt such a view, for it seems to me obvious that the pensions increases in the present Bill, which stop at the arbitrary dateline of 1961, will obviously have to be reviewed again, almost certainly upwards but possibly downwards, as conditions of purchasing power vary in the years ahead. That they will vary seems absolutely certain, whether we join the Common Market or not. I shall have something to say a little later about remedies for this very serious fault of the Bill, and I hope that in Committee your Lordships will find yourselves able to improve matters. But I will now, if I may, direct my observations to the Bill as it stands.

In the first place, I would express my pleasure, as the noble Lord behind me expressed his, at the Government's recognition of the urgency of the matter, as revealed in Clause 10 (1), the interpretation clause, where we are all, I am sure, glad to see that the appointed day from which increases and supplements are payable is likely to be January 1 next—that is, if the Bill goes through in its present form—or, I hope, not later than February 1, if improvements by way of Amendment are accepted here and subsequently in another place without too much delay.

But, having found this praiseworthy clause, I must confess that the rest of the Bill in nearly all its major points fills me with deep disappointment and surprise that the qualities of charity and mercy, responsibility and human obligation, on which the foundations of such a Bill must lie, are whittled down to expediency and economy and to giving and doing, not as little as possible, but I think less than is necessary. I feel sure that this would not be the wish of the vast majority of the kindly people of this country, who, incidentally, are now withdrawing their support from a Conservative Government who for the whole of their ten years in power have failed to do anything very striking in regard to the hardships of the aged poor and others whose pensions from the State are quite inadequate.

I consider this a niggardly Bill. It is a Bill which will achieve the minimum effect and for the minimum of time. It seems to me to be a product of the Treasury mind instead of the human heart. I have a great respect for the Treasury mind; but when one is dealing, as this Bill should be, with human compassion and moral obligation the Treasury should be employed in guidance rather than in production.

Clause 1 of the Bill, if I correctly understand subsections (2) and (3), seems to limit the benefit of increase, as the noble Earl explained, to those who are over 60 years of age. But I am not satisfied that this arbitrary age limit should be imposed. Do we not all know of people in their fifties, and sometimes even in their forties, who have completed good work and have become very properly eligible for a pension? If eligible for a pension, why not eligible for this very necessary increase in pension? Senility can be no criterion, for many people in their fifties are more handicapped physically or mentally, or more typical or representative of approaching death, than some in their sixties, and some even in their seventies. I concede, as the noble Earl said, that there are exceptions to the minimum age of 60 for those in really bad health, and for widows and women with dependent children; but it seems to me inequitable that those who are deemed to have earned and merited a pension should have imposed upon them a period of real privation until they reach their sixtieth year, particularly when, as in the Colonial Service, retirement is compulsory at 55 and when the Secretary of State, for perfectly good reasons, not necessarily of misbehaviour, can expedite that retirement to an even earlier age. I therefore urge that in the case of those who have legitimately and creditably earned a pension the harsh limitation of age should be abolished.

I now turn to the proposed scale of increases in Clause 1. The oldest pensioners, or, more correctly, those who have been longest on pension—not less than six or seven years, and presumably up to the oldest pensioner alive—receive the top increase of 12 per cent. but apparently with no regard to the size of the present pension. This increase in very many cases will surely be far less than adequate on a really small pension. We are not, I know, talking about Service matters to-day, but it is indicative that over 2,500 Service officers' widows are getting pensions of £127 2s. a year. The position seems to me ludicrous when the pensioner who retires after April, 1961, gets only 2 per cent. Surely this scale is inadequate, and I should have thought that it demanded revision already.

The Government have stated, and I think the Minister stated it here, that the cost of increases on the scale set out in the Bill will be approximately £17 million a year; but it was said in another place that if all pensions were increased at the top rate—that is, the 12 per cent. rate—the cost to the State would be £90 million a year. No responsible politician will regard a Budget item of £17 million as trivial and all will examine very carefully a major figure such as £90 million. But is it really quite fantastic? What are our criteria? I submit that most electors in this country would like to see a vast economy in other fields in order that we should in reality and in fact be able to allocate £90 million to alleviate some, but only some, of the hardships of our pensioners and aged poor. It is to me no matter of pride, as my noble friend Lord Ogmore indicated a few minutes ago, to have a £500 million useless British nuclear set-up—what I call "Operation Fig-leaf"—just as a matter of amourpropre, while those who have given good service to the State are in penury and misery. We are all said to be sharing in the Affluent State. But this is simply untrue, and I think this Bill proves it.

Turning now to Clause 2, which provides additional increases for those over 70 years of age, we find in subsection (f)¾ that an old man of 70 whose pension, which may be a very meagre one and did not start before April, 1960, is to be given a special gift of £4 a year. That comes, I believe, to about 2½d. a day and will not enable him even to buy an evening paper. That sort of generosity is to me humiliating, and to those of us who know of pensioners trying to live almost on the borderline of starvation, it is not worthy of this nation. The biggest gift of all in this procession of very old people is only Is. Id. a day. It has been said that to the man who fought at Mons, every winter gets a little longer and every fire in winter a little weaker.

How jubilant do we think a man will get if he has an extra 7s. 6d. a week? And how far will it go?

I should like to quote other instances of difficulty, but I am quite sure that your Lordships know very well many cases of real hardship. I would, if I might, quote one little story which was mentioned in another place, because I find it rather moving. As it does not represent a political opinion of anybody there, I hope I am not out of order. The letter was from a small pensioner who was receiving National Assistance in order to eke matters out. She wrote: Even with National Assistance, this is not living: it is just existing. I often have no food in the house for two days till the grant is due. I am often cold and hungry.

This person was given a Christmas present of £2, and wrote again a short letter: I was going to be alone and was expecting my usual menu. Everything then seemed changed. I ran to invite a friend who is 84 to spend Christmas with me. Never has a chicken been more feted, with vegetables, a sausage each and a little seasoning. A baby plum pudding and a cup of coffee. A lovely fire, for I had bought a bag of coal. The Queen could not have been happier.

That is what £2 can do to create real happiness in a small way. But what can 2½d, do?

My last reference to the Bill in detail is to Clause 3 (4), which I confess I find very difficult to understand. I should be most grateful to the noble Earl if he could clarify it a little. It would appear that a Whitehall pensioner, that is, a civil servant in Whitehall, can retire and live where he likes. But an overseas service pensioner who works under the Colonial Service, as I take it in reading the Bill, is disqualified from getting any benefit if he retires to that very area where he has served, irrespective of the fact that he may still be regarded as domiciled in the United Kingdom; that is to say, if a man has worked all his life in Kenya and earned a pension he is allowed to retire to Tanganyika or to stay in Great Britain but if he goes to Kenya, for which he may have conceived great affection, he is disqualified. I hope I am wrong, but perhaps the noble Earl can help me on that point.

Clause 6 (2), at first reading, would appear to absolve local authorities from any responsibility at which this Bill is particularly aimed. Apparently they need not give this increase if they do not feel like it. May I ask if the noble Earl could help also on this point?

So far my observations, I admit, have been critical of what I cannot help thinking of as a rather miserly and stingy Bill which gives no lasting satisfaction, because I do not think the Government have got down to fundamental facts and fundamental justice. The Minister in another place (Official Report, Commons, Vol. 666 (No. 9), col. 1315) talking in defence of the Bill—an interesting point of view—said: I equally take the view that it is wrong in principle to seek completely to insulate any section of society from changes in the value of money

I am not at all sure that I agree that it is always wrong. I think it may be right in special cases, and one of the most obvious special cases is the old and the poor whose pensions link in very little relationship to the current cost, not of luxury, but of actually keeping alive. Another defence of this parsimonious Bill is that the dream of pensioners is that they will obtain a pension equivalent to the pension awarded for a similar job to-day.

I agree that the State cannot afford this, but one can have very much sympathy for such a dream. What I think the State must afford is a minimum and humane standard of current living, not unrelated to the true value at the time of past rates of remuneration.

Therefore, I come finally and shortly to a few brief points about pensions and pensions increases, all of which, or some of which, I would dearly like to see, if possible, embodied in this Bill when it is amended, if it is to be amended, or, if not there, in some new, similar Bill. First, I should like to see all pensions linked with a cost of living index specially related to the needs of old people. By "specially related to the needs of old people" I mean with special attention to the cost of food, rent, fuel and clothing, leaving out things like motor scooters and perambulators, so that the pensions can be reviewed annually in the light of changes in that index. In view of the great anomalies which exist, I would call for the publication of a biennial review in order to achieve a greater equality of treatment between recent retirements and earlier retirements. There seems to me a great discrepancy there. Remembering that pensions and National Assistance are part of the welfare services to which those in need are entitled by right, I think the Government should encourage special Government schemes for rehousing and centres for old people designed to meet their particular needs, and they should recognise as a matter of urgency, as this Bill does not recognise, that the problems of the elderly are growing every year without any concerted action being taken to remedy the situation. My Lords, I hope your Lordships will improve this Bill. I support this Second Reading on the principle that one-sixteenth of a loaf is better than no bread.

6.6 p.m.

LORD TEYNHAM

My Lords, I almost entirely agree with all that has been said by the noble Lord, Lord Crook, but I cannot feel that I can go quite so far as the noble Lord who has just sat down. I think that lobbying and pressure on Ministers and Members of Parliament in order to increase pensions is a great mistake and unnecessary. Service pensions are of course governed by this Bill, although promulgated by Royal Warrant. I feel, therefore, that we must debate the principle of Service pensions to-day, which I now propose to do. As one who moved a Motion in your Lordships' House almost exactly a year ago calling attention to the inadequacy of retired pay and pensions of officers and other ranks, I, of course, welcome this Bill. I think it also meets a great number of the points which at that time were put forward from all sides of the House. On the other hand, there still remain some glaring anomalies, and I would say that it seems a pity that these matters have not been put right at comparatively little cost to the nation.

As I pointed out in November last year, the gravest case is the plight of officers' widows whose husbands died before November 4, 1958. This date line creates two classes of widows, the first class those whose husbands fought in one or perhaps both world wars, and the second class those whose husbands died after November 4, 1958. What does this Bill do for the first class of widows or as they are often called, "existing" widows? They will receive a rise of 12 per cent. plus £20 if they are over 70 years of age. But why not bring the level of pensions for existing widows up to the level of the 1960 code? I wonder if your Lordsihips realise that the sum involved is only about £350,000. Why create discontent and hardship for this petty sum? I would add that, of all the public service widows, they are still the only ones to suffer from a division between existing and future pensioners.

The effect of this Bill on officers is also very strange. I think it will be seen that officers who have retired longest on the 1919 and 1948 codes and who are of course the oldest pensioners and, I would say, perhaps the least able to help themselves, have been left a long way behind. They are worse off than the others because the maximum of 12 per cent. increase awarded to those retired 6½ years ago is the same for those old pen sioners who began 43 years ago under the 1919 code, and 17 years ago under the 1954 code. I maintain that this is a very inequitable position. I really cannot understand why Her Majesty's Government continue to cling to the principle of immutability of pensions in spite of the pressure and the arguments of the noble Earl who is in charge of the Bill, who I think in many ways was very persuasive. Why not have a biennial review of existing pensions, which I think was mentioned by the noble Lord, Lord Crook, so that the absurd difference under no fewer than seven codes can be done away with?

I maintain that justice will not be done until the pensions are such that no longer will the oldest receive the least and elderly widows be left in the worst position of all. I can see no excuse or reason for this position and these matters really must be put right before long. I commend this Bill to your Lordships so far as it goes, but why spoil the ship for a ha'p'orth of tar?

6.10 p.m.

LORD SALTOUN

My Lords, I feel that I owe your Lordships an apology for asking to speak so early in this debate, particularly before the noble Lord, Lord Hailey (whom I am glad to see back in his place), on this or any other subject on which he may wish to address your Lordships. The fact is that I have a very small point to put before the Government; and, like the noble Lord, Lord Crook, I had already made an engagement for later in the evening. The small point I wish to make is to ask about the position of Sarawak and North Borneo pensioners. I listened to what the noble Earl had to say; I understand that they are properly covered; but I did not hear him refer to the matter in his speech. If I am not here at the end to hear anything the noble Earl may have to say on this point, I hope that he will forgive me: I will, of course, read it in Hansard.

Paragraph 3 of Schedule 3, refers to pensions payable by Her Majesty's Government in the United Kingdom by virtue of the Instrument of Cession of Sarawak…or the North Borneo Transfer Agreement … So far as I can make out, the Instrument of Cession says that Her Majesty "accepts liability for the payment of any pension," et cetera. I take it that a Bill of this kind, when it becomes an Act, is construed as it would be in the Law Courts. It seems to me that we have to look at the meaning of these words, because it might be argued that Sarawak pensions were not payable by Her Majesty's Government while they continued to be paid by the Government of Sarawak, because Her Majesty's Government is in a position only of having guaranteed them. I think that needs clarification.

If possible, there should be inserted some such words as: a pension for which liability was accepted by the Crown by virtue of the Instrument of Cession and which is paid to pensioners resident in the United Kingdom. It would have to go further, I think, than the "United Kingdom". For in Clause 3 (4) (a) the Bill refers to pensions payable to a resident "in the United Kingdom". Do Her Majesty's Government mean to cut out residents in the Channel Islands or the Isle of Man? Ought it not to say the "British Isles"? If it were to be only the United Kingdom, I think that a great many people would be very disappointed. I believe that it ought to cover the British Isles, and therefore paragraph 3 of Schedule 3 ought to be altered to make it quite certain, because I know that a great deal of anxiety is felt by the Sarawak and North Borneo pensioners. I hope that I have not detained noble Lords too long, though long enough to make myself quite clear.

THE EARL OF DUNDEE

My Lords, before my noble friend sits down, and as he will be going away, perhaps noble Lords will allow me just to answer his particular question about Sarawak, as be gave me notice of this last week. It is the Government's intention to supple ment the pensions of civil servants who have worked in Sarawak. I understand my noble friend's point that there may be some verbal dubiety—though I doubt whether there is—but we shall get advice on it, and if there is any doubt we will introduce an Amendment to put it right at a later stage.

LORD SALTOUN

My Lords, I am very grateful to the noble Earl.

6.18 p.m.

THE EARL OF LISTOWEL

My Lords, may I start by thanking the noble Earl and the Government for including the Overseas Service officers and their dependants among those who will benefit from supplementary increases to bring their basic pensions up to the increase in the cost of living? I am all the more pleased because it is a great encouragement to Members of this House, and also, I think, to Members of another place, when a Government changes its mind as a result of what they say. It does not happen often, but when it does happen it makes us feel that what we say here, the work we do here, is worth while.

Having said that, I wish to address myself to one or two points arising ex-clusively from the provisions of this Bill which deal with Overseas Service pensioners and their dependante, and I would ask the noble: Earl, when he winds up this debate, to explain as fully as possible some of the obscurities and difficulties which have occurred to me in studying these matters. There are three particular mates to which I would refer.

The first is the residential qualification for retired Overseas Service officers and their dependants; and, of course, there is no such residential qualification in the case of the home civil servants. This residential qualification, which noble Lords will find in Clause 3, sub-section (4), operates in this way, so far as I can understand it; that if a man retires to England, having served in an African Colony, or if he retires to any other African Colony than the one in which he served, he will get the benefits of this Bill, the increase to which he is entitled under this Bill; but if, on the other hand, he retires to the Colony in which he has served he will not get it. That seems to me an extraordinary thing. It is discriminating against the local men who have spent all their lives in one Colony—perhaps in Jamaica or Trinidad; or possibly in Kenya—who have made their homes there and who have to move elsewhere if they are to get the addition to their pension. I could have understood it if the residential qualification had been that they could get the supplement only if they retired to the United Kingdom, because, clearly, this Bill is intended to help people to meet the increased cost of living in the United Kingdom. But that is not the residential qualification as set out in the Bill: they get the supplement to their pension if they retire anywhere other than to the Colony in which they served.

That is the first point about which I should like an explanation. It seems to me all the more anomalous because, as your Lordships will notice, under sub-section (4) b) of Clause 3 this does not apply to a man who goes back to the Colony in which he has served on contract with the Government. As any of your Lordships who has lived overseas knows, when a country becomes independent it does not want administrators to go back—they can be recruited locally. More often it wants engineers, doctors, and vets, to go back to serve under the new independent Government on a contractual basis. What is so puzzling is that if a man goes back as a vet., say, to Uganda where he has spent most of his service, he will qualify, but not if he has retired there having spent his time in the service of the Uganda Government when Uganda was a Colony.

The second point I am worried about is this. There seems to be a tendency in this Bill to assimilate the pensions provisions of the Oversea Service to those which govern the Home Service. I think this is wrong, because the conditions of employment of overseas officers have been entirely different from the conditions of employment of persons serving at home. I will give an example of what I mean. The overseas officer has to retire at the age of 55: that is obligatory; it is not optional. That, of course, does not apply to the home civil servant. Nevertheless, the overseas officer cannot qualify for this supplement to his pension until he reaches the age of 60. There are not many cases of men between 55 and 60, and it seems unfair that a man who has to retire, not because he chooses to but because the Government says he must, however fit and however well-quailified to carry on, should not be entitled to this supplement between the age of 55 and 60. That is the second point to which I would draw the noble Earl's attention.

The third point reliates to widows. This is again a difference between the Home Service and the Oversea Service. In the case of widows' pensions, overseas officers have contributed during their own lifetime, out of their salaries, to a pensions fund, so that the money that is paid by way of pension to these widows does not come out of public funds, as it does in the case of the widows of retired home civil servants. Therefore, there seems to be a case for not having an age qualification of this kind. Again there are very few cases. Of course, most of them are over the age of 40. Obviously, in the case of a woman looking after a family who cannot earn a living when she is under 40 the pension is very badly needed. Therefore I think there is a case for having no age qualification for widows' pension.

I should also like the noble Earl (he obviously cannot do it now, but perhaps he will before the Committee stage) to try to work out the number of people involved in these three cases and what the extra cost would be to the Treasury of doing what I suggest. My own feeling is that the number of cases would be fairly small and the cost fairly small—a fact which I think strengthens the case for altering the Bill in this way. I hope that the noble Earl will first of all clarify our minds on these points. But if he fails to give satisfaction, he will not be surprised if we put down Amendments at the Committee stage.

6.25 p.m.

LORD MILVERTON

My Lords, for many years now debates on this vexed subject have recurred with increasing vigour—in fact, I had almost said increasing venom. The climax came last summer when the Treasury principle about the immutability of pensions was denounced by speakers of all Parties with a unanimity which is phenomenal and extremely rare. I have always taken part in these debates over these years, and now I make my usual initial declaration of personal interest, being myself a Malayan pensioner, having spent 21 years in Malaya, and also being a British Government pensioner as I spent eighteen years as a Governor. My claim obviously is the old one about The toad beneath the harrow knows Exactly where each toothpoint goes. I would begin by warmly congratulating the Government upon their courage in facing the admittedly difficult problem of pensions whose value has been seriously eroded by the fall in the value of money. Perhaps I might, with respect, say in passing that I thought the noble Earl was enunciating an appalling fallacy when he said in the course of his opening speech that the Government could not take responsibility for a fall in the value of pensions arising from inflation. Surely the ultimate responsibility for inflation is the responsibility of Government. However, I do not propose to go into those deep waters, either.

Many thousands of men and women will obviously be very grateful for this Bill, and I say this now lest some of the critical remarks which I now propose to make should leave the false impression that my warm support for the Bill is rather tepid after all. The Bill certainly is a great advance towards justice, but its ramifications are so wide that I propose in the interest of brevity to leave its history to others—the fascinating story of the conversion of the Treasury, struck by the lightning of public disapproval, to acceptance of some responsibility for the adequacy of pensions in a world of inflation. I will confine myself to a section of beneficiaries: the overseas officers, their widows and orphans.

To turn to the Bill, Clause 1, it seems inequitable, as has been already said, that Colonial Service officers should have to wait until they are 60 before receiving any benefit under this Bill. These supplements are paid because of Her Majesty's Government's failure to persuade certain overseas Governments to pay increases in the past in line with previous United Kingdom Acts. As has been said by the noble Lord, Lord Rea, and others, the retiring age of colonial pensioners is normally 55, and in some cases even earlier, and their terms of service clearly laid down all this when they were appointed. The Secretary of State, furthermore, has the power to retire them at 45 or 50. These terms took into account the conditions in which many serve in tropical countries, and it appears to me inequitable to equate colonial pensioners in this connection with home service officers. It is significant, too, that Her Majesty's Government when dealing with Palestine pensioners accepted the principle of paying increases at the age of 55. The reference to that, if it is required, is the Colonial Office note OSA140/141/03 of August, 1959.

Furthermore, with reference to the Explanatory Memorandum and Clause 1, it appears to be the intention that widows do not receive any supplement until they are 40 unless they have dependants or are in bad health. The pensions payable to widows in the Colonial Service are paid from a notional fund to which the civil servant has contributed. If he remains in the service he has to contribute for about 33 years before he is free from the annual con tributions. He contributes compulsorily whether or not he is married, and there is no age provision in the regulations governing their award. In the case of Malaya I think one should remember that in my early days we had our own widows' and orphans' pension fund. That was taken over compulsorily by the Government, not because we wanted them to, but because the Government wished to do it. We asked what was going to be our safeguard. We had our own system worked out. We were informed that the safeguard was the honour of the British Government. That, I suggest, is what it remains. All of those contributions were paid into Government revenue and with that guarantee. It seems wrong to differentiate between widows solely on the ground of age, and in any case a pension payable to a Colonial Service widow ceases should she re-marry. So that there is every precaution that she should not benefit unduly by receiving a pension.

If I may interpose a personal referonce, the British Government seem to be particularly allergic to widows. For instance, during my eighteen years' service as a Governor, the British Government did not recognise, or did not until 1956—a somewhat late awakening—that a Governor was married and that he might die and leave a widow and orphans. They expected the Malayan Service to recognise this, but the British Government themselves did not. If the Governor died in those days, in so far as his service as a Governor was concerned—it might be, as in my case, eighteen years—his widow would get precisely nothing from the British Government. In 1956, when at long last the British Government woke to the fact that Governors might be married and might die leaving widows, in the legislation then introduced those who were already retired—the thirty-odd forgotten men—were expressly excluded from any benefits of that kind, and the only protest made in another place came from the Labour Benches of the Opposition, and was curtly brushed aside as an impossible thought. I hope I may be forgiven for mentioning this purely personal reference, but it shows the atmosphere from which we are now trying to emerge. I could multiply these instances, but at this hour I will not do so.

To pass to Clause 3, although in the Memorandum it is mentioned that this enables supplements to be paid to widows and dependants, one feels that this should be made clear beyond any argument in the Bill itself. It could, I suppose, be argued that subsection (2) (b) covers this; but specific mention of widows and orphans would set: any doubts at rest and I suggest that that ought to be done. It appears to be the intention of Clause 3 (4) that should a pensioner reside in the country from which his pension is paid, then he gets no assistance under this Bill. There are many colonial servants whose service, at the bidding of the Secretary of State, has been scattered over several Colonies, and his pension, when it comes to be calculated, is a composite thing based on the liabilities of those different countries in which he has served. But under this Bill any thought of any of those countries where he has served is excluded from his consideration as a possible place of residence, because if he does go and live in one of them, then he loses all benefits under this Bill which might attach to the pension which he earned in relation to those services.

It has already been mentioned by other speakers that an officer who served in Kenya and, perhaps induced by the blandishments of the British Government, had decided when he retired to settle there, loses his benefits under this Bill; but had he served in Tanganyika and then retired to Kenya, he receives the benefit. It seems to me that the thing makes no sense at all, especially as this is a topping-up operation to remedy deficiencies for which Her Majesty's Government were responsible. It seems inequitable that a man who served like this should be penalised. I have a number of instances here with which I will not bother the House but which in their way seem quite incredible.

If we take a pensioner who earned his pension in Nigeria in regard to eligibility under this Bill, if the pension is paid in the United Kingdom and he decides to reside in the United Kingdom the reply is, Yes, he is eligible; if he decides to reside in Nigeria, No; if he resides anywhere else in the world except Nigeria, Yes. If the pension is paid in Nigeria, and he resides in the United Kingdom, the reply as to eligibility is, Yes; if he decided to reside in Nigeria, the reply as to eligibility is, No; if he resides anywhere other than in the United Kingdom the reply is, No. If the pension is paid elsewhere than in the United Kingdom or Nigeria, for residents in the United Kingdom, the reply as to eligibility is, Yes; for residents in Nigeria, No; for residents elsewhere than in the United Kingdom or Nigeria, Yes. I think this position speaks for itself.

To pass on to Clause 10, I notice there is no provision in this Bill for backdating. It is a pity that the benefits under this Bill are not to be retrospective for those pensioners who have suffered for many years because certain ex-colonial territories have been unable to see their way to make any increases in the pensions of overseas officers.

I now want to pass for one moment to the question which was raised by the noble Lord, Lord Saltoun, about Sarawak and North Borneo pensioners. This is a matter into which I made considerable inquiries. The third Schedule, paragraph 3, reads: A pension payable by Her Majesty's Government in the United Kingdom by virtue of the Instrument of Cession of Sarawak dated 21st May 1946 or the North Borneo Transfer Agreement dated 26th June 1946". As Lord Saltoun pointed out, the Sarawak Cession was from His Highness Sir C. V. Brooke. G.C.M.G, Rajah of Sarawak to "His Majesty The King of Great Britain, Ireland and the British Dominions beyond the Seas, Emperor of India", and the British North Borneo Agreement is between "His Majesty's Secretary of State for the Colonies on behalf of His Majesty (hereinafter referred to as the Crown) and the British North Borneo Company". In neither case is there any reference to "Her Majesty's Government" or "His Majesty's Government in the United Kingdom". The inference seems to be that His Majesty contracts in his capacity of King of Sarawak and North Borneo respectively.

Sarawak pensions are not payable in the United Kingdom, but are paid out of the revenue of Sarawak under a Sarawak Ordinance Pensioners living in the United Kingdom may, if they wish, have their pensions paid locally or in the United Kingdom by the Crown Agents. In the latter case the Crown Agents act as agents of the Government of Sarawak. I will not bother your Lordships with the exact wording of these documents, but I do suggest that the words "His Majesty accepts liability for the payment…" are quite different from the words "payable by", and no mention is made of the United Kingdom either in the Instrument of Cession or in the Agreement with North Borneo.

I should like to emphasise the question of the noble Lord, Lord Saltoun, whether it can be argued that Sarawak and North Borneo pensions are payable by the respective Governments and not by "Her Majesty's Government in the United Kingdom", and that therefore they do not come within the scope of the Bill. Clearly, that is not the intention of the Government, but I suggest that if there is the slightest doubt about it, as there seems to me to be, it should be put right.

A further question arises under Clause 3, paragraph (4) of the Bill, which by sub-paragraph (a) provides that no supplement is to be paid where the pension is payable in any overseas territory in which any services giving rise to the pension were rendered, unless the pensioner is for the time being resident in the United Kingdom. As by paragraph 3 of the Third Schedule only pensions payable by Her Majesty's Government in the United Kingdom are included, it follows that Clause 3 (4) (a) does not apply. Clause 3 (4) (b) would apparently apply, as this provides that if the pension is not payable in such territory the supplement would not be paid if the pensioner were residing in that territory. I suggest that the drafting should leave no possible doubt as to the fact that the obvious intentions of Her Majesty's Government should be properly carried out.

In conclusion, my Lords, may I say that I recognise the complexity and difficulty of the problem which the Government have to face, the background of moral obligations to pensioners, and also proper consideration for the taxpayers. If I may say so, with due respect, I was tempted to agree with the noble Lord, Lord Rea, but I could not help feeling he took too liberal a view of what consideration might be due to any taxpayer, and perhaps was indifferent to the sum which might be involved.

My Lords, this method, as was expounded at some length in another place, is unsatisfactory and leaves a recurring problem palliated but not solved. We are the only colonial Power, incidentally, to inflict—or shall I say to leave—responsibility for expatriate pensions on countries emerging to independence. Sooner or later the British Government will surely find it necessary to do the same as Belgium, Holland and France have done. In the case of India an arrangement was made. Perhaps a pointer lies in the case of Somaliland, where the cost of pensions increase was deducted from the grant-in-aid. Most of the territories achieving independence require, desire, expect and get financial aid. Would it not be a good move, my Lords, to estimate the total involved by expatriate pension liabilities and take that over as a new form of grant-in-aid? The Chief Secretary to the Treasury and Paymaster General promised in another place to give earnest consideration to the task of evolving a better method than that embodied in this Bill. I hope that the noble Earl who is to reply will at least answer some of the questions I have asked. Meanwhile, I thank the Government on behalf of overseas pensioners for this measure, and support the Second Reading of the Bill.

6.47 p.m.

LORD HAILEY

My Lords, I must, like the noble Lord, Lord Milverton, avow my financial interest in the proposals of this Bill, for I have for 28 years received a pension in regard to my serv ice in India. Perhaps that will explain also why I take so much special interest in Bills for the increase of pensions, because the basic pension for Indian civil servants was laid down over 100 years ago. It stands at the same figure to-day. Therefore, the question of pension increases under the present system of legislation is of quite exceptional interest to us. That fact will also explain, perhaps, why in any remarks I may make to your Lordships' House I shall not refer to the aspects of the Bill which affect the 450,000 pensioners who have rendered service to the State in Great Britain or to local bodies; although I may sympathise, and do heartily sympathise, with some of the criticisms that have been made in another place, and again here today in your Lordships' House, of certain aspects of the present Bill which relate primarily to those 450,000 pensioners. My special interest is, of course, rather with the 9,000 pensioners (I think that is the number) who have rendered service in India and in some of the Colonies. I must, however, permit myself one general observation—perhaps two.

We in this country have now, as your Lordships have heard, passed eight Acts for the increase of pensions—six since the war; and the cumulative effect of these Acts, as has been pointed out in another place, and also in your Lordships' House by the noble Lord, Lord Milverton, is to destroy once and for all that old theory of the immutability of pensions. It is not a very good description, but it is easy to understand the meaning of the word. I have heard "the immutability of pensions" quoted in your Lordships' House as what used to be called by some German philosophers "a categorical imperative", or perhaps by other people as an accepted canon of finance, and a perfect answer to any suggestion that pensions should now be raised or receive a supplement owing to the injury suffered by pensioners as a result of the increased cost of living. There was no such canon of finance, and there was no real argument in favour of the immutability of pensions. But, as I have said, and I do not want to labour the point, that doctrine, for what it was worth—and it was worth very little—has now gone for good. It is quite certain, as one noble Lord has just said, that we shall see further Pensions (Increase) Acts similar to this. If the cost of living increases, we shall in time see many such Acts—a fact, of course, that will be of severe regret to many of us, because it will also mean a very great increase in the cost of living which has already involved some of us pensioners in such hardship. Still, the fact remains that the doctrine, or, perhaps, the theory, or excuse, of immutability has gone.

But my pleasure in having lived to join the nonagenarians of this House, and so being able to see the death knell of this doctrine, is rather clouded by the reflection that legislation of this type seems to follow no definite policy or principle. There is no better proof of that, I think, than the inclusion in the present Bill of the £20 bonus to those over 70 years of age. It was a kindly thought, but it has ail the aspects of being spatchcocked into the Bill; so much so, that this provision has to be followed immediately by one which restricts its scope to an extent that will absolve the Treasury of any charge of undue liberality.

I am not going to refer here to the several alternatives that have been put forward in another place for establishing a principle on which pension increases should be given. I would only refer to the fact that some of us have for many years been urging on the Government the necessity for appointing a Commission to review the whole question of Service pensions and lay down a principle on which increases should be given. I can only assume that that particular demand was criticised adversely by the Treasury, which I think must have a somewhat unhappy conscience in this matter, for fear of what the recommendations of such a Commission might involve. But pensioners, after all, represent a body of men and women who have in the past held many responsible posts, and I feel that, even though the result of a review by such a Commission might not meet all their aspirations, they would be content to know that the result reflected the considered views of an independent body, instead of being, as at present, dependent on the views, sympathetic or otherwise, of a section of the Treasury—or, obviously, due on occasion to an emergency following an electoral crisis. But as I have said, I shall say no more on these questions of general principle.

I will turn to what I describe as my special interest—namely, that of the state of the pensioners who have performed State service in India, or in some of our colonial possessions. They number, I think, some 9,000 in all. Speaking on behalf of some of my friends, particularly in India, I heartily welcome the inclusion in the Bill of the two funds referred to in the Schedule—the Widows' and Orphans' Funds—which originally were financed entirely by con tributions from members of the Services in India. I welcome that very heartily. I may have a remark to make regarding the possibility—it is by no means clear— that they also may come under the embargo of an age restriction.

There are two points, in particular, in which my friends are interested. The first is, one to which reference has been made by others of your Lordships—I mean, in particular, the noble Earl, Lord Listowel, and the noble Lord, Lord Milverton—namely, the restriction of the scope of the Bill to officers who have reached the age of 60. We ourselves, as members of the Indian Civil Service, have made frequent representations, both to Parliament and by deputations to Ministers, asking that this particular condition should be withdrawn in the case of Indian and overseas civilian pensioners. It is not only the fact to which the noble Lord, Lord Milverton, and the noble Earl, Lord Listowel, referred that the ordinary age for retirement in India and the Colonies has been 55, for it has been assumed there that, after ser vice up to that age in a tropical climate, the Government servant has reached the limit of his ability to discharge any great work or responsibility. The disparity between the conditions of the home, British pensioner and those of the Indian or colonial pensioner goes much further. We ourselves, of course, see no reason why the British pensioner should not find some alternative employment up to the age of 60, for 60 is the retiring age well recognised in Great Britain.

But, as I say, the disparity does, as a matter of fact, go much further. The British pensioner in this country retires at his own option, and is well aware of the conditions in which he can secure reemployment in the open market. All the Indian pensioners, and many of the colonial pensioners, on the other hand, have ended their careers owing to constitutional changes in which they themselves have had no part, and they have to face the question of re-employment up to the age of 60 in a market of which they know little and for which they are often ill-adapted by their previous experiences. We know, as the noble Lord, Lord Milverton, has said, that an exception has been made in favour of the pensioners from Palestine in this respect, though on grounds which I think few of us have been able to understand. I and my friends are not able to believe that the removal of this restriction in the case of Indian and overseas pensioners would afford a precedent that would enable the British Service pensioners to urge that similar measures should be taken for their benefit.

There is another difficulty felt by the Indian pensioners, in particular, though it affects only a restricted number of them. The problem arose in the course of drafting the India, Pakistan and Burma Act owing to the fact that there was a general agreement that it was unnecessary to extend the benefits of the Pensions (Increase) Act, 1955 (I think it was 1955), to the Asiatic members of the various Government services there. They were very numerous. I have here a note which will illustrate how numerous they were. In 1946, in the Indian Civil Service—in Pakistan and India, that is—there were, against 504 officers classed as Europeans, 623 classed as Asiatic; and in the senior posts of the Indian police service there were 215 officers classed as Asiatics, as against 329 Europeans. In other services, the proportion of Asiatic members was even greater; but it was not thought either policy, or perhaps even decent, to draft the necessary clause in terms of racial difference only. As a result, the drafting took the form of differential treatment on account of residence; that is to say, though Indian and Pakistan residents might have the benefit of the additional allowances in almost any country of the world, it was specifically provided that they should not have them if they were resident in India, Pakistan or Burma.

There is arising, therefore, a difficulty somewhat akin to that to which reference has been made to-day: the disabilities which the present proposals impose on residents of some of the Colonies. I admit that, as a matter of fact, the clause introduced in the India, Pakistan and Burma Act affects a very small number of British officers, and some of those we might very reasonably expect to change their residence from India or Pakistan if they found it to their advantage to do so. But there are cases in which, owing to severe physical disability or illness, it is not possible for such officers to change their residence.

At one time it seemed likely to us that some sort of exceptional arrangement could be made such as that which was included in the Bill giving powers to the Secretary for Technical Co-operation to meet exceptional cases, but I doubt whether, infact, that is possible. I am afraid that, if we have to contemplate removal of these two rather exceptional disabilities, legislation will be necessary, and I and my friends will be very unwilling indeed to contemplate any course that would defer the very laudable intention of the Government to bring the benefits of this Bill into force on January 1 next year. Presumably, therefore, we shall have to await some other and more favourable occasion if we are to succeed in getting these two difficulties removed. But I mention them now, and commend them to your Lordships' attention, in the hope that, when the occasion does arise, you will support us in getting rid of these difficulties in the existing form of legislation.

7.9 p.m.

LORD COLYTON

My Lords, I should first like to apologise to your Lordships for not being in my place during the earlier stages of this debate owing to an unavoidable engagement. I am sorry to say—and I apologise in advance—that it will also probably necessitate my leaving before my noble friend comes to reply. I should like to add a few words of welcome to this Bill, and to congratulate Her Majesty's Government on bringing it forward. As has been said already, it covers a very wide field, including public service pensioners in this country and pensioners of the Fighting Services.

I should like to confine my remarks to one aspect of it—namely, the innova tion which has been introduced by the extension of increased pensions to the so-called overseas officers: that is to say, former members of the Colonial and Overseas Civil Services, the Sudan Service and, of course, as the noble Lord, Lord Hailey said, to widows and orphans of pensioners of the Indian, Pakistan, and Burma Civil Service. We warmly welcome this change of heart on the part of the Treasury. It was due, I think it is fair to say, to the joint efforts of members of all Parties in both Houses, but certainly outstanding credit must be paid to the present Under-Secretary of State for Foreign Affairs, Mr. John Tilney, who, year in and year out, pursued this topic in another place in the face of discouraging replies from the Treasury Bench. Your Lordships will recall that we also had notable debates in this House on February 20 and June 6 of this year. On the second occasion I ventured to make a special plea for the former British officers of the Sudan Government who had hitherto been entirely ruled out of court on the grounds that they were not in the service of the Crown. I am glad indeed that they have now been included.

I understand that the Sudan pensioners are generally well satisfied with the proposals, though there are certain conditions and points of detail on which they would like to see some readjustment. However that may be, I should like on their behalf to offer their grateful thanks to the Government for this timely recognition. I should also like to pay a tribute—if I may properly do so—to Colonel Michael Hilary, Honorary Secretary of the Sudan Pensioners' Association, for the great assistance given to the Sudan pensioners and to myself in formulating their case. I should also like to congratulate the Government on the speed with which they have introduced this measure and are carrying it into effect. It will be a very welcome Christmas present to many people who have served the interests of Britain well and honourably for many years.

I have one further plea to make to the Government. There is still one notable omission, and I refer to the British members of the Egyptian Civil Service from the time of Lord Cromer down to the proclamation of the British Protectorate over Egypt in 1914 and the subsequent period of the Protectorate from December, 1914, to 1922. Egypt was in those days a British responsibility, and these men were serving Britain just as much as were their colleagues in the colonial territories and the Sudan. The numbers involved are comparatively small: 376 pensioners and 226 dependants. I understand that, despite the vast increase in the cost of living, these pensioners, if they have retired to this country, have received no increase in pension whatsoever since they left Egypt.

Your Lordships will recall that at the time of the Suez crisis the Egyptian Government temporarily discontinued these pensions. As Chairman of the Anglo-Egyptian Resettlement Board, I was authorised to repay these pensions from Treasury funds until such time as the Egyptian Government resumed payment. This, it seems to me, was clearly evidence of acceptance by Her Majesty's Government of a measure of responsibility towards these pensioners. Indeed, I understand that there are a few cases where the Egyptian Government have never resumed payment and Her Majesty's Government are still defraying the cost of these pensions. Having regard to the small number of pensioners involved—a number which, alas… through the passage of time, is rapidly declining—and to the services rendered by them, not merely to Egypt but to this country, I would strongly urge upon Her Majesty's Government that all former British pensioners of the Egyptian Civil Service should be included at the Committee stage as an additional category in Schedule 3 of this Bill. I warmly support this Bill and hope that it will be given a Second Reading.

7.15 p.m.

VISCOUNT BRIDGEMAN

My Lords, the last five speakers dealt with various aspects of Overseas Service pensions. I will not follow them but go back to the speech of my noble friend Lord Teynham, who is sorry he had to leave the Chamber, and say a few words about Service pensions. I am grateful indeed to my noble friend, Lord Dundee, for indicating that he was ready to listen to matters affecting Service pensions and I must declare an interest because I receive a pension under the 1919 code. Service pensions are not included in this Bill, but the Memorandum states, as it has stated on past occasions, that members of the Armed Forces will be granted similar increases to those provided for civilians in the Bill. That is to say, when this Bill becomes law, which I hope will be very soon, we shall get the Prerogative Instrument, the Royal Warrant, and I hope that Royal Warrant will be dated to the same day, at least, as the increases under this Bill. But of course we have no certainty yet as to what figures will be in the Royal Warrant, and this is a Money Bill, anyway, so it is rather difficult to go into details and I am not going to try.

I would rather say a word or two about the principles on which this Bill is framed, because -the main principle, that of immutability of pension, which so many noble Lords have spoken about to-night, bears with increasing severity as the age of retirement of certain groups in public service is younger, because that means there are more pensioners and pensioners' widows on pensions which were fixed a long time ago. With inflation going as it is—and the course of inflation is very well traced by the dates of the various Pensions (Increase) Bills in the Memorandum—a Bill of this sort has been needed every two years. It has sometimes come out every two years, and it ought to come out, as the noble Lord, Lord Crook, said, every two years regularly. The cases of Service pensioners and widows under the older codes show that they suffer much the greatest hardship of all, because there are more people still alive who were serving under those old codes.

Having said that, I must go on to say that within the formula, whatever its defects may be, the provisions made in this Bill are certainly generous. My right honourable friend the Chief Secretary to the Treasury, when he introduced this Bill in another place, said that between 1959 and 1962 there was a 9 per cent. increase, and the figures in this Bill give a 12 per cent. increase. As a soldier might say, he has aimed off 3 per cent. for movement, and has helped the pensioners in the endless race with inflation, which neither they nor anybody else will ever win. So far so good. But, my Lords, that, in its turn, is an argument for bringing in the next Bill (unfortunately there will have to be a next Bill) in time so that it becomes law before the margin of 3 per cent. provided by my right honourable friend is exhausted.

The supplement of £20 a year to the over-70's is, once again, good going, on the wrong formula. It indicates, I think, as clearly as anything could indicate, that the principle of immutability of pensions is a principle which, however sound in theory, can no longer be applied in practice. I shall come back to that in a moment, when I talk about officers' widows.

So I think that we have two major defects in the Bill as it stands, side by side with its good points. First of all, with the noble Lord, Lord Crook, I am sure that it is right in these days to have a review every two years, but I would not go so far as the noble Lord when he quoted the case of Sweden, where wages and pensions are tied to the cost of living. That was the practice in Australia some years ago, and if anything could have operated to produce more galloping inflation I should like to know what it was. The Government in Australia managed to alter its course only in the nick of time. So, although pensions must bear a relation to the cost of living, I think that it would be quite wrong if we tried to lay down a hard and fast formula that they should vary with the cost of living. That would be going too far.

Going back for a moment to what I think is the most outstanding case where justice is not likely to be done under the terms of this Bill—I say "not likely," because we have not had the Prerogative Instrument—I would draw your Lordships' attention to the case of officers' widows. If one asks the various ex-Service societies, part of whose job it is to look after the cases of these unfortunate people, they will all say that it is the cases of widows which require most attention. The reason for that is that, whereas most other pensions are large enough to do the job they are meant to do—that is to say, provide a living in their own right for those who have no other means of support—the widows' pensions do not do that and force certain classes of what are called "existing widows"—that is, pre-1958 widows—into National Assistance. I am not going to quote cases—in fact, I have not got them with me—but if my noble friend would like them, they would be very easy indeed to produce.

I put it to my noble friend that this is a state of affairs which ought not to be allowed to go on any longer, and if the principle has been breached to the extent it has, then Her Majesty's Treasury might just as well be hung for a sheep as for a lamp and deal properly with these widows. In the course of hits speech, my noble friend said that a contract must legally and morally be held to be final. Legally, yes, but morally is quite another matter, as I think has been brought out in this debate.

What is the position of officers' widows? These are not my own words. I am quoting them from literature provided by one of the ex-Service societies. In spite of these increases,— that is, the increases expected from this Bill— their pensions have been allowed to deteriorate so much in value that their reward for their husbands' long service to the Crown is to be classfied as paupers. It may be argued that to receive National Assistance is not to be classified as a pauper. I am simply telling your Lord ships the view held by people affected. There is still room to apply the code of the good employer and still room for those concerned in the Treasury to go to the library and see whether the volume of The Merchant of Venice is really missing. With those words, may I once again heartily commend the Bill for a Second Reading and beg my noble friend in front of me to take heed of what has been said from so many parts of the House on the points where this Bill does not really meet pensioners' requirements at the present time.

7.25 p.m.

LORD KILLEARN

My Lords, my sole justification for intervening in this debate is that for twelve years I was His Majesty's High Commissioner in Egypt and the Sudan, and this Bill mentions provision for Sudan pensioners. I would also declare an interest in a sense, in that I am a pensioner, like many other noble Lords. I should dearly like to take up the noble Earl's argument, in his introductory observations, about the im mutability of pensions, which I think is quite untenable and which, as my noble friend Lord Hailey behind me has shown, has been contradicted by six Acts already.

THE EARL OF DUNDEE

This Bill is one of them.

LORD KILLEARN

Surely it runs counter to the noble Earl's argument on the immutability of pensions. Here I can speak personally. When I joined the Foreign Office, a great many more years ago than I care to think of, I joined at the princely salary of £100 a year. I was offered that in anticipation of a pension on which I could live later on. If that was not legally tenable, surely, morally it was. However, that was not what I got up to speak about.

I should like to support as strongly as I can what the noble Lord, Lord Colyton, said, first, in warm welcome of the pro- vision for Sudan pensioners, and secondly, in support of his plea in favour of the addition of the British members of the Egyptian Civil Service during the years of the Protectorate and before. I think there is a very strong case for their inclusion. It is true that Egypt was not actually a British territory, but it was a British Protectorate for the main part of the time and we were responsible for its administration. Actually, as the noble Lord, Lord Colyton, said, this responsibility was to some extent admitted when, after the Suez incident, Lord Colyton himself and his Anglo-Egyptian Settlement Board were empowered to make payment of these Egyptian pensions, which they have continued to do. Surely that is an admission of some responsibility. I know that this is not in the Bill, but so far as I can influence Her Majesty's Government I would put in a strong plea in support of my noble friend in favour of the inclusion of this extra category of persons, the British expatriate civil servants.

7.30 p.m.

THE EARL OF ALBEMARLE

My Lords, as the debate as been very lengthy, I would say only a few words. I had it on my conscience to try to support the hopes of a section of, alas…, we must almost say, forgotten people, because their service took place so long ago. I wish to say, in supporting this praiseworthy effort of the Government—this Bill—that I feel proud and also relieved. One wonders under what Statute or financial provision it will be possible for the noble Earl, Lord Dundee, to bring in a new Schedule to the Bill; but with good will and his brains he will perhaps be able to resolve the difficulty.

The question is that our Consul-General, Lord Cromer, could not have carried out the wishes of English Governments without having to put a financial adviser into the Cabinet of the Khedive; and the agreement was that unless the Bill that came up before those Ministers was passed by Sir Auckland Colville it would not become law. Therefore, you cannot leave in the wilderness a group of men who have so upheld the wonderful managerial work that England did for the fellaheen in the way of water and education. They have somehow to be included.

I will say this, in conclusion, to the noble Earl, Lord Dundee. One must remember that the Treasury officials are supposed to be impersonal and to toe the line. But not so Ministers. Ministers are the representatives of the Sovereign, and part of the inherited prerogative of the Crown of England is that they should give clemency and generosity to those who deserve it. Therefore, I trust that the efforts of my noble friend Lord Dundee, when the Bill comes before us again, will somehow got over the difficulty.

7.31 p.m.

THE EARL OF LUCAN

My Lords, I will not make any attempt to wind up a debate that has ranged so widely as this one. First of all, I should like to apologise to the noble Earl, Lord Dundee, for not being here when he moved the Second Reading of this Bill, but I have heard all the rest of the debate. I speak, as so many other noble Lords have this afternoon, as one having an interest in this matter, in that I draw a pension which has benefited from the series of Pensions Increase Acts that have been passed recently. I would particularly associate myself entirely with what the noble Viscount, Lord Bridgeman, said about the Service pensions and as to the Overseas Service pensions and others that were mentioned. I agree with my noble friend Lord Listowel that there is in this Bill much to be commended, but there are also a few matters on which we may need to move Amendments on the Committee stage.

I would strongly support what was said on behalf of the pensioners of the Egyptian Government. With all these things I hope we may concern ourselves on the Committee stage. I think that the overall impression that any independent listener to the debate would receive is what I can only call the incorrigible meanness of British Governments over generations past in the treatment of their servants. There is a lot that could be said. One could trace the possible background causes—the classes from which Government servants were recruited, and so on. But setting all that aside, surely our Government to-day, more than at any previous time, ought to set the example of a good employer. A good employer consults with his employees and works with them by means of co-operation.

In these cases it seems to me that there cannot have been the consultation that is desirable between the Government and the various associations representing these former Government servants. I am told as a fact that the Working Party which the Government set up did not consult the Overseas Services Association in making their recommendations; and the same applies to the other associations of pensioners. Surely the Government should genuinely consult with them, and if they have to draw a line and make a decision that appears to involve hardship, they should be able to explain their reasons. That is what seems to be lacking in the Government's handling of all these pensions matters, and it is something to be regretted. However, we shall gladly give this Bill a Second Reading and only hope that we may make some small improvements in Committee.

7.37 p.m.

THE EARL OF DUNDEE

My Lords, I think the enormous number of questions which your Lordships have asked in the course of this interesting debate is probably nine or ten times the number of your Lorsdhips who have remained until the end of it. I have a feeling that if I were to attempt to reply to this immense number of questions I should not please the very meagre number of your Lordships who have been good enough to remain as an audience. I will try to reply briefly to a few of them.

One of the things that has rather surprised me is that several of your Lordships appear to think that I said that pensions ought to be immutable. If I thought that pensions ought to be immutable, I do not think I should be moving the Second Reading of a Bill which proposes the largest and most generous mutation in the scale of pensions that has ever been retrospectively made in this country. What I said, and what I think is true, is that we ought not to accept the principle that the Government are under any legal or moral obligation to improve upon a contract which has once been entered into. I think, however, it is right that we should try to improve on it in order to mitigate so far as we can the erosion which pensions have suffered by inflation. I would point out that if inflation goes too far—and it has happend in some countries—it will not be possible to pay any pensions at all. That has been one of the lamentable eftects of extreme inflation in a number of countries which we can all call to mind. What we can do is to try to exercise our judgment and to be fair to the economy of the country, the taxpayers and the pensioners. That, of course, is a difficult thing to do.

I am glad to record that all of your Lordships, with one exception, I think, prefaced your numerous criticisms of the Bill by expressing strong approval of it in general, and in most cases by praising it as being a generous measure. The exception was the noble Lord, Lord Rea. I could not help feeling that his transmigration to the Box opposite had perhaps slightly bewildered him and up set the usual moderation with which he speaks. When he attacked the Government for having been so mean towards old people all its life, I really could not help thinking that, when that is said about a Government which has more than doubled the old age pensions and which has raised their real purchasing power to a height which has previously never been attained, an intemperate attack of that kind must carry neither conviction nor, indeed, respect.

I would suggest to the noble Lord that he has not quite understood what is done by Clause 2 of the Bill. He kept on talking about the terrible meanness of giving somebody only 2½d. a day, which he virtuously worked out was the daily equivalent of £4 a year. But the whole point of these increases is that the £20, which is the largest amount, is given to those whose pensions began before April, 1956. The £4, about which the noble Lord was so scornful, is for those whose pensions began after April, 1960, and which are very nearly as much as the pensions which will begin in future and which, of course, are not affected by this Bill at all. If you were to give a £20 increase to all these pensioners, you would be giving far more to those whose pensions began last year and the year before and less to those whose pensions began before 1956, because the recent pensioners are getting bigger sums to begin with.

While I am on the subject of the noble Lord, Lord Rea—I will try to deal with these particular questions first, and then take the more general ones in a moment or two—he asked about Clause 6 (2) of the Bill which provides that: …a local authority shall not be required to increase any gratuity which that authority has power to increase by virtue of this section. That, I agree, is a little difficult to understand, because the reference is to a previous Act. What the subsection here does is to exempt from the mandatory provisions of Section 5 of the 1959 Act. which, governs increases under this Bill, gratuities paid by local authorities. The 1959 Act does not specifically deal with gratuities, but it does cover everything here. So we exempt the gratuities paid by local authorities, because these payments are discretionary, and it would not be right to compel local authorities to increase gratuity payments which they are not compelled to make in the first place. But they are empowered to increase these discretionary payments by Clause 6 of the Bill.

My noble friends Lord Colyton and Lord Killearn have both departed. They both asked a question about the Egyptian civil servants whose service came to an end forty years ago. I can tell noble Lords that their case is being examined urgently. It raises some difficult problems, which are not made any easier by the fact that the relevant events occurred 40 years ago or more, and I do not think I can anticipate the Government's decision. But if it is decided that this category of pensioners are in a sufficiently similar position to the other classes of overseas pensioners dealt with in this Bill, then there will be an opportunity to make an appropriate Amendment on the Committee stage.

A great many of your Lordships, as one would expect, have devoted careful attention to the position of various widows. My noble friends Lord Teynham and Lord Bridgeman have spoken of Service widows. The noble Earl, Lord Listowel, asked about the difference between Home Service widows' pensions and Oversea Civil Service widows' pensions. I do not think there really is such a clear-cut distinction as the noble Earl suggests, because both Home Service widows' pensions and Oversea Civil Service widows' pensions are paid for as to one half by a contribution from the officers. As for the Service widows' pensions, they are, of course, on a slightly different footing, because there is not any contribution. I have listened with great sympathy to what my noble friend Lord Bridgeman said. I cannot go beyond what was said by my noble friend Lord Carrington in the last full debate which my noble friend Lord Teynham raised on this subject.

Widows' pensions schemes generally, Whether in private or Government employment, are a fairly recent innovation. I think that ten years or so ago very few private firms would have included widows in their superannuation schemes. It is only in recent times that some of the better employers have begun to do so. I do not think it can be said that the Government have lagged behind in this development, and certainly not where Armed Forces widows are concerned, because they have had pensions for many years. But it was quite common before 1950 throughout this country for widows to have no pension to supplement the various State systems of insurance. For example, the Civil Service scheme was not introduced until 1949, and those for the National Health Service and in local government are even more recent. I am aware that the rates introduced for Service widows in 1952 were a smaller proportion of their husbands' pensions than those paid under the Civil Service scheme, although that is no longer true under the latest code. But there was that significant difference be tween the two schemes—that the Armed Forces scheme, alone, I think, among all the public service schemes, is non contributory. The Serviceman himself does not contribute towards it.

When the family pensions of the Armed Forces were improved in 1959, after the Grigg Report, the Government considered very carefully Whether these improvements could be extended to those who were already widows. I simply give your Lordships the reasons and conclusions, without wishing to comment upon them. They concluded that it was not possible to distinguish between these widows and any other category of existing pensioners, and that if they tried to reassess their pensions (except, of course, on the discriminatory basis of hardship which was another matter), that would not be justified unless all other public service pensions were to be reassessed as well. It was decided that the principle which applies to other public service pensioners should apply equally to widows.

One wider question, which many of your Lordships have asked, concerns not the domicile but the residence of the pensioners who are affected by this Bill. The noble Earl, Lord Listowel, particularly pressed this question of the pro vision in Clause 3 that when the pension is payable by the Government of any overseas territory in which the service that has given rise to the pension was rendered, if the pensioner is permanently resident in that territory no supplement shall be payable under the Bill. Many others of your Lordships have put the same point, and I would remind your Lordships that the pension is paid by the Government of the country in which he earned his pension. The example which my noble friend Lord Milverton gave of Nigeria is perhaps not the best one, because Nigeria has only very lately become independent, so there has not been much time for a gap to develop between pensions paid to begin with and those later on. But in a territory which has been independent for some time, which started off from the original rate of pension, there may have been increases here since then, and there may, therefore, be a wide discrepancy between what is now being paid by the Government of the territory and the amount which the pensioner would have been receiving if he had been a United Kingdom pensioner and which he will now receive under this Bill.

But the reason why he is not eligible to receive it if he is permanently resident in the foreign or Commonwealth country in which he earned his pension is because they have been paying all the time the same pensions to their own retired civil servants, whether they originally have come from the United Kingdom or whether they are natives of the country and have always lived there. If a United Kingdom official lives permanently in the country where he earned his pension, it is not so easily justifiable that the British Government should step in and give him a higher pension than all his colleagues who are natives of that country are receiving. He must, I think, be taken to have adapted himself to the conditions of the country in which he resides. The reason why (and this has been asked by other noble Lords too) under the following subsection he is not disqualified if he goes to the country for a period, on some contract of service, is that his status is then not that of a resident retired person. He is going there to do a job of work, and we do not want his pension to be reduced on that account. On the contrary, it is a very good thing to encourage him to go and give what service he can in the territory which he knows. Of course, if he is not doing a contract of service and is not eligible to receive the additional pension, he can, if he later decides not to reside any longer in the territory but to go and live in the United Kingdom, then become eligible for the increase.

LORD MILVERTON

My Lords, be fore the noble Earl passes on, may I ask whether if the pensioner moves next door, a few miles from Kenya, and lives in Tanganyika, he is paid the increase?

THE EARL OF DUNDEE

My Lords, then he is not being paid by the Government of Tanganyika. Supposing he lived in the Sudan, while he is there he is being paid by the Government of Sudan, and would not receive any supplement from this country. It is quite a different matter if he goes and lives in Tanganyika; he is not being paid by the Government of Tanganyika anyhow. If he wants to live in Tanganyika or anywhere else—and this also applies to the Channel Isles, about which another noble Lord asked—if he wants to live anywhere outside this country he can get the increased pension, but it must be paid through a British bank to make sure it is not simply a device used by a resident abroad to evade taxation.

The noble Lord, Lord Crook, was the first of your Lordships—and he was followed by many others—who advocated either an automatic review of pensions or linking them to the cost of living or biennial reconsideration or something of that kind. My noble friend Lord Bridge-man pointed out that according to his experience that may lead to galloping inflation. Of course, we can all see the advantages of avoiding uncertainty and also, as some of your Lordships have said, of making it unnecessary to have this continual debate and pressure about the subject. The noble Lord, Lord Crook, began by asking whether, if we went into the Common Market, we should change our pension arrangements in that direction; and he then proceeded to give an example of a country which is not in the Common Market and with which we already associate under E.F.T.A.: that is to say, Sweden. I do not want to go into the question of Sweden, which has already been dealt with by my noble friend, Lord Bridgeman, but it would present many difficulties to have any automatic or semi-automatic adjustment.

If we had a review at regular intervals it might well happen that your review would come at the end of a period when prices had not been rising and, therefore, there would be no justification for doing anything. Then there might be a sudden rise shortly after that and you would have to wait another two years before anything could be done to remedy it. Perhaps it is better that we have to review the subject as and when a rise in prices occurs. After all, if the main object of this is to do what we can to mitigate the results of inflation, there is already a biennial review of Service pensions, but that is not retrospective; that is for future pensions. Civil Service pensions are generally automatically related to salaries at whatever time the pensioner may have retired. The only purpose of having these periodical reviews, whether they are automatic or not, is to consider what should be done about inflation, and I think, although they would save a lot of trouble, it would be rather a confession of defeat. After all we are all trying to prevent inflation and whether we shall finally win or not no one can tell in a free country that depends on a great many other things besides the Government; it depends on the good sense of the public to a very large extent. We should, I think, be confessing that we did not expect inflation ever to stop and that its future progress must be regarded as certain, or at least very probable. But, my Lords, I am not going to tell your Lordships for that reason that I think our present system is necessarily the right one, or that we ought to close our minds against any endeavour to improve it. I would just conclude, not with my own words but by quoting what my right honourable friend the Chief Secretary said the other day in another place on this Bill and on this very point which so many of your Lordships have urged. What he said was that we all appreciate that the present method of dealing with the problem causes difficulties and embarrassment and perhaps a certain waste of time on problems of one sort and another. My right honourable friend admitted that and he went on to say [Official Report (Commons), Vol. 667, (No. 17), col. 1163]: …I can promise…the Committee that I have taken note of the clear views expressed during the Second Reading debate, and I will endeavour to find whether some improvement in our system is possible. He went on to warn the Committee in another place that it would be a very rash thing to promise that he would be able to produce a better solution, but he certainly has the will to do so; and I will endeavour to follow the same line of argument to the best of my ability in the future stages of this Bill.

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