§ 3.0 p.m.
§ Order of the Day for the Second Reading read.
§ LORD SORENSEN
My Lords, I trust that your Lordships will not mind for a moment a brief personal reflection. May I say that this is the first time I have had the responsibility of introducing a Bill, either in this House or in another place, save for one in 1930 which dealt with the conditions of errand boys—of which I was one at one time, and I am, I rather think, still sometimes one, on a much nobler plane to-day. Therefore it is with great interest and pleasure that I introduce this Bill, particularly as I am sure its main proposals will meet with the appreciation and acceptance of the whole House. It is certainly most encouraging in these days to realise that all Parties are anxious to implement a sense of responsibility for the elderly citizens of this country, and in particular for those who have been our public servants.
Before dealing with this Bill in detail, may I make a few other comments on its general context? It was, and is, the desire and intention of the Government comprehensively to review our social security system, including the future of National Insurance. That review, under the responsibility of the Chancellor of the Duchy of Lancaster, is now proceeding, but has not yet been completed. When the report is issued I feel sure noble Lords will examine it with much approval of the information and material it will make available to this House. Meanwhile it is necessary, if only as an interim measure, immediately to supplement the pensions of a large number of ex-public servants. As your Lordships will no doubt remember, these words occurred in the gracious Speech of Her Majesty:Other measures will increase the pensions of retired members of the public services and their dependants …".This Pensions (Increase) Bill which I am presenting to your Lordships is a fulfilment of that intimation, but I recall that before the gracious Speech of Her Majesty the Government initiated an increase in the standard rate of the single National Insurance, retirement pension by 12s. 6d. a week, the largest increase since 1946. This has some bearing on 491 the proposals in this particular Bill. Unhappily this could not be put into effect until last March, but since then it has greatly benefited elderly pensioners, including some 90 per cent. of public service pensioners entitled to National Insurance retirement pensions. Altogether this Bill affects 710,000 persons, including those who have been or are civil servants, local government officers, teachers, members of the police, fire and National Health services, overseas civil servants and others, including those who at one time were in the Indian, Burmese or Pakistan forces. It does not embrace employees in the nationalised industries which are empowered, as we know, to make their own arrangements, and do so. Of course I have not mentioned these various categories in order of importance; they all have rendered invaluable service to our nation. I must refer briefly to three relevant factors. One is the cost of living and inflation, for these, to a greater or less degree, have devalued the benefits of previous pensions increases. It must therefore be an obligation of this and every other Government to prevent or check inflation wherever possible. I am sure that noble Lords, irrespective of Party affiliation, appreciate the strenuous efforts of the First Secretary to the Treasury in his endeavour to secure implementation of the Government's Prices and Incomes Policy. This, together with progressively higher economic production, should in time achieve greater economic stability for the benefit of the community in general and pensioners in particular.
Secondly, although we are heartened by the increased and increasing strength of the pound, we are still restricted by the consequences of an inherited economic crisis from doing all we would wish to do to ease the burden on pensioners. Thirdly, while broadly speaking this holding Bill, as it may be called, is akin to preceding measures and to some extent follows the same lines, although incorporating certain improvements, it does not necessarily mean that the Government will not devise a better system for the adjustment of pensions. Thus I understand that in the current review consideration is being given to a suggestion for the automatic linking of pensions to an index, although so far as I know no 492 conclusions have been reached on this broad proposal.
Let me now turn to the Bill itself and comment on its clauses. In Clause 1 we have the main provision of the Bill, which is that all public service pensions shall be increased according to a percentage scale of 2 per cent. for pensions which began between April 2, 1963, and April 1, 1964, rising to 16 per cent. for pensions which began on or before April 1, 1957. These increases are to be applied in the case of older pensioners who have benefited under previous pensions increases. Unlike the 1962 Act, which provided an additional flat-rate increase for pensioners over 70 years of age, this Bill does not provide a maximum percentage. It provides for an increase of 12 per cent. and a flat rate of £20 and a higher maximum increase of 16 per cent. This will be of advantage to pensioners of long standing, including those who may have had to retire prematurely because of illness or injury.
Some examples appear in Clause 1. To a postman, for instance, who retired in 1953 after 14 years' service, on an average annual pension of £190, increased since then to £258, this Bill will grant a further increase of £41, making now a total of £299. The second instance is that of a teacher who retired in 1957 with a pension of £423 after 40 years' service, increased subsequently to £475. This Bill will increase it by £66 and thus make his pension £541. A third instance I will give is that of a local government officer who retired in 1960 after only 20 years' service with a pension of £192, increased subsequently to £200. This Bill will enable him to secure an increase that brings his total up to £216, an increase of £16. Some 584,000 pensioners are in the categories I have mentioned and they will receive various increases. Rather more than half will be Civil Service pensioners. Similar increases for pensioners of the Armed Forces, numbering about 125,000, will be granted by Royal Prerogative by Royal Warrant.
Clause 2 deals with the calculation of increases for public servants re-employed after retirement. They will now be entitled to an increased pension based on the date of initial retirement. Thus they will enjoy both the reassessment to take account of their additional years of retirement and the pension increase related to the increased cost of living.
493 Clause 3 benefits particularly those public servants who have been superannuated under the F.S.S.N.H.O.—that is, the Federated Superannuation Scheme for Nurses and Hospital Officers. Certain public servants were superannuated through the F.S.S.N.H.O., or through that less perplexing abbreviation, the F.S.S.U.; otherwise, the Federated Superannuation System for Universities. Since 1946 the Treasury have been empowered to grant increases to civil servants superannuated under the F.S.S.U., but not, for a reason which I confess I cannot fathom, to other ex-public servants, including those previously employed in the National Health Service and by local authorities who are superannuated under the F.S.S.N.H.O. This clause will now empower the Treasury to grant increases to those superannuated under both schemes, or, indeed, under other schemes of a similar nature which are run incidentally by insurance companies and the like to whom contributions have been made.
Clause 4 covers certain technical amendments to previous Acts, including one affecting overseas pensioner excluded from the 1962 Act increase. At present pensioners who live outside the United Kingdom and the territory from which their pension is derived, but who have their pension paid in that territory, are not eligible for pension increase unless they have pension paid in the United Kingdom. This situation is somewhat anomalous. Generally speaking, these pensioners are free to elect whether pensions shall be paid in the former territory or in London, but in some cases difficulties have arisen about the exercise of these options and pensioners have been unfairly penalised. Moreover, even in cases where an option is effectively open we have come to the conclusion that this somewhat technical and artificial restriction is unnecessary and can be dispensed with.
Secondly, the clause extends a concession made in the 1962 Act for pensioners who return to reside in the territory from which their pension is derived. In general, such pensioners are ineligible for supplement under the 1962 Act for reasons which were explained in the debates on that Act when it was before Parliament, but an exception was made for those who return on a contract of 494 service to work for the Government in question. It has now been found that this concession is too narrowly drawn. Officers sometimes return to work not for the Government but for statutory Corporations established under the law of the territory in question, for local government bodies or under the auspices of the United Nations technical assistance programme. This Bill provides that in those cases pensioners will remain eligible for the supplement under the 1962 Act and this Bill.
With confidence, I ask your Lordships to pass this Bill so that it can receive the Royal Assent before the Christmas Recess and thus become effective from January 1, 1966. The first payments will be made at various dates, according to the varying pension increases and arrangements, although all will take effect as from January 1. As I have said earlier, 90 per cent. of public service pensioners also receive National Insurance pensions. With these, the increased combined pension fully covers the increased cost of living. Moreover, those with small pensions who retired some time ago will find that the structure of this Bill and preceding Acts especially assists them. The cost-of-living increase from December, 1950, is 75 per cent. In many cases, civil servants who retired in that Year, after 40 years' service, will now draw pensions that have increased substantially more than the cost of living since 1950. Thus, for a married postman the increase is 124 per cent. for a married clerical officer, 120 per cent., and for a higher executive officer, 100 per cent.
If, however, we calculate from December, 1956, the Retail Prices Index shows an increase of 28 per cent. from that datum line, compared with which a postman's pension will now have increased by 65 per cent., that of a clerical officer by 59 per cent., of a higher executive officer by 49 per cent., and of an assistant secretary by 40 per cent. The available table indicates that the only cases where increased pensions will fall short of the increase in the cost of living are senior servants, from assistant secretaries upwards, who retired before 1952 and for some of various ranks above the clerical officer level who have retired since 1960. Those retired since 1960 received pensions much higher in real terms than pensioners who retired in the early 'fifties.
495 This Bill ensures for the vast majority of public service pensioners that their combined pensions have as much, or greater, real value as the pension they drew on retirement, or could anticipate on reaching National Insurance retirement age. While we wish that more could be done—that I am sure is the general wish of us all—our desire, unfortunately, is frustrated by the restrictions arising from the present economic stringency. This fact also prevents us from implementing plans for an income guarantee scheme for the benefit of all aged persons with incomes below a certain level. Because of this economic necessity, the Government have had to decide the limits of proposals in this Bill. These proposals, however, will cost about£18.2 million a year, of which £13 million will be borne by the Exchequer, plus approximately £1,400,000 for proposals in Clauses 2 to 5. The cost of increased pensions for Service pensioners to be granted by Royal Prerogative is about £5½million. The overall cost, therefore, will be about £25 million, of which just a little over £5,200,000 will be borne by local rates. Naturally, we earnestly hope that still more can and will be done in the future. I shall be glad to deal with any points noble Lords may raise in respect of this Bill. Meanwhile, I commend it to your sympathetic consideration. I beg to move.
§ Moved, That the Bill be now read 2.a. —(Lord Sorensen.)
§ 3.18 p.m.
§ THE EARL OF DUNDEE
My Lords, the noble Lord, Lord Sorensen, has informed us that this is the first time he has had to move a Bill in this House on behalf of the Government, and I would therefore congratulate him very warmly on the capacity with which he has done so; and also, if I may be allowed to add it, on the brevity with which he covered this very diffuse and complicated subject. As he said, all Parties here desire to do justice to public servants, and this is a Bill which we on this side of the House welcome. Although it is of such great importance to so many people it is a Bill which depends mainly on finance. In your Lordship's House we do not usually have a long Committee stage, with Amendments, on a Bill of this kind, and therefore I do not think I ought to take up very much time on the Second 496 Reading in going into the details, except to say that we welcome the Bill generally.
The noble Lord has pointed out that the reason for this Bill, as for all previous Bills on this subject, has been the rise in the cost of living. We introduced similar legislation in 1952, and subsequently nearly every two years—in 1954, 1956, 1959 and 1962. I am sorry to say that the rise in the cost of living in the last twelve months has been at a very much higher rate than it was at the time of any of these previous Acts upon which this Bill is based and which, indeed, it imitates. The noble Lord referred in his speech—it was the only moment when he digressed a little from the actual Bill —to the incomes policy of Mr. George Brown. Of course we all hope that some day this policy will begin to bite, but it has not done so yet. Within the last twelve months prices have been rising so fast that I am afraid that by the time this Bill receives the Royal Assent it will be at least partly out of date.
Already the increases in National Insurance pensions to which the noble Lord also referred, which came in last March, have been largely eroded by the decline in the value of money since then. Just to take one particular example, I think that this Bill was presented to Parliament in November. At that time the heavy and sudden rises in fares for public transport in England had not been expected, and we had no warning of them. I am afraid that large numbers of pensioners who receive increases under this Bill will find, by the time they get their pension, that since the introduction of the Bill, the benefit has been at least partly discounted by increases in their cost of living which they cannot avoid.
The noble Lord also told us that the Chancellor of the Duchy of Lancaster was conducting a comprehensive review into this and kindred subjects, and that we must await the result of that review before we can expect any beneficial reforms in the principles which govern these pensions increases. We all know that there are many reforms in them which we should all like to see properly related to other relevant factors in our national economic life. But I think there are one or two changes which could be, and ought to have been, made in this Bill without waiting for such a review.
497 In the last Pensions (Increase) Act, which we introduced in 1962, besides the percentage increase given to meet the increase in the rise in the cost of living, which at that time was 2 per cent., there was an additional flat-rate increase for pensioners who were over the age of 70. While, of course, that flat-rate increase which they got in 1962 qualifies for the 8 per cent. increase under this Bill, there is no further flat-rate increase. I am sorry that the precedent which we set in 1962 has not been followed, because, on the whole, the older pensioners, although they get the same percentage increases, are beginning on lower basic rates than the younger ones. This was, I think, a useful and welcome step towards the principle of parity which perhaps one would not expect to see proposed without review, but I think it is a pity that the example of the 1962 Bill has not been followed, in giving this flat-rate increase for the older pensioners, most of whom start from a lower basis.
The other point which I think could have been achieved without any comprehensive review, and which we had intended to bring about, would be to lower from 60 to 55 the age at which these pensions become obtainable. I think there is a clear case for doing that. I submit to your Lordships that it is particularly important for the Service pensioners, although they do not actually come under this Bill. As Lord Sorensen has told us, a Royal Warrant governs the rise in their pensions, and it is based on what is done in this Bill. The noble Lord gave an estimated cost of …5½ million for the increase of Service pensions, which is calculated on the assumption that they will receive precisely similar increases to those provided for in this Bill.
I think it is a particular hardship on Service pensioners that the age at which they benefit from the increases should be as high as 60 because there are so many of them nowadays—more than there used to be—who have to retire long before they are 60, long before they are 55, and quite often it is difficult for a Service pensioner who has to retire at the age of 50, or even 45, to get the kind of job that he feels he is capable of doing. The fact that we have full employment does not mean that people who retire 498 from the Armed Forces at that age always find it easy to get suitable work to-day.
Although, as I have said, we in this House do not usually have a Committee stage, with Amendments, on a Bill of this kind, I feel it right to express our regret, particularly from the point of view of Service pensioners, that in this Bill the age has not been lowered to 55. I do not think I need keep your Lordships any longer. As I have said, we accept this Bill, and welcome it, subject to the criticisms that I have made.
§ 3.26 p.m.
§ LORD MILVERTON
My Lords, in rising to make a few brief comments on this Bill, I must, of course, at once declare my personal interest, as I am myself a Government pensioner, both a Malayan pensioner and a British Government pensioner, having served for 21 years in the Far Eastern area and for a further 18 years in various parts of the Pacific and the West Indies and Africa. Like everyone else, I welcome this Bill and wish it a speedy passage.
My comments are largely confined to what is not in the Bill, and I would ask your Lordships' patience for a few moments while I mention what those points are. May I say that they were equally rejected by the previous Government. I can remember three years ago arguing some of these points and getting no satisfaction out of that Government; but I was hoping that the present Government would have been able to take a more lenient view. Let me, of course, hasten to add that none of these cases affect me personally; they concern certain groups of officers whose cases are really quite hard. I am well aware that these cases were raised and were cogently argued in another place, but the present Government, like the previous Conservative Government, declared itself unable to widen the scope of the Bill to include these cases.
The first case has just been mentioned by the noble Earl, Lord Dundee—the age limit. The age at which a pensioner can become eligible for a supplement is still fixed at 60. No account is taken of the harsh climate, or harsh climatic conditions under which the overwhelming majority of pensioners had to serve—conditions which in many cases led to the early death of quite a few of them.
499 The retiring age for a great majority of pensioners has been 55 years, and some have had to retire at an earlier age, but they all have to wait until they reach the age of 60 before they become eligible under this or the preceding Bill. It is exceedingly difficult for any pensioner who has reached the age of 55 to obtain any work in this country. The cost of living for him, as for everyone else, continues to increase, and yet he receives no consideration. It is felt that a special case can be made out for overseas pensioners to receive the supplement at the age at which it would normally be paid if the overseas Government had been paying it—namely, 55 years.
The second case which I wish to bring forward concerns pensioners who were recruited either through the Colonial Office or the Crown Agents for service overseas under Local Authorities, Statutory Authorities and so on. These pensioners received no benefit from the 1962 Act on the grounds that they were Local Government employees and the provisions of the 1962 Act were intended to include only those who had been certified by the Secretary for Technical Co-operation as beingan overseas officer in relation to any territory in or for which any services giving rise to the pension were rendered.The reference is Section 3(2)(a) of that Act. "Overseas pensions" were defined in Schedule 3 as being "service under the Government of an overseas territory". These people were selected and appointed at a time when the complete governance of these overseas territories was under the control of the Secretary of State for the Colonies. Their appointments and, to a great extent, their discipline rested with the Governor of the territory; their pensions were subject to the ordinary Pension Ordinances of the territory and approval by the Governor, and their leave entitlements and salaries were, in general, identical with those granted to the ordinary overseas officer. In fact, apart from the nominal master they served they were to all intents and purposes overseas officers and were freely transferable to and from Government service without loss of rights.
It is instructive in this connection to note the case of those officers who were appointed to the staff of Achimota Col- 500 lege in the Gold Coast prior to April 1, 1930. As a result of representations made by the Overseas Service Pensioners Association, it has recently been agreed by the Ministry of Overseas Development that they are eligible for the supplement. The wording of the letter received from the Ministry is as follows:I am writing to let you know that it has been decided as a special case that the pensions awarded in respect of service at Achimota College by staff originally appointed to the Colonial Service before April 1, 1930, will continue to attract pensions supplements under Section 3 of the Pensions (Increase) Act 1962. Pensions awarded to staff appointed to Achimota on or after April 1, 1930, will not attract supplements.Subsequently this was amplified by a further letter which reads as follows:As I said in my letter of November 4, it has been decided to admit this group of pensioners to eligibility since the Government is satisfied that their position is unique. Among other things they were formerly members of the Colonial Service; they were explicitly guaranteed continuity of existing rights; their pensions were awarded and paid by the Government; and they were transferred without option.While justice has belatedly been done to these few people, those who joined the Service and served side by side with them after April 1, 1930, are now debarred from receiving any supplement, as, of course, are all those expatriate officers who were appointed to the staffs of Local Authorities in West Africa and elsewhere in the then Colonial Empire, irrespective of whether they were engaged before or after April 1, 1930. I would add that in this respect Ghana is one of the worst offenders in the payment of pension supplements to all its pensioners, and these people have been living on the same pension possibly for the last ten or twelve years. They see fellow pensioners who performed identical work and, to all outward appearances, were on identical terms of service, now benefiting from the 1962 Pensions (Increase) Act and, of course, any subsequent Acts, whilst they are debarred from any participation.
In addition, the plight of their widows is, if anything, even worse, because they, too, are debarred from receiving any supplement to their inadequate pensions. Yet it must be remembered that widows' pensions are on an entirely different footing from an officer's pension because the officer who pays into the fund can never himself hope to benefit from it. He pays 501 in so that his widow may benefit and yet, in the narrow, restrictive interpretation, the widow is the person who is made to suffer because of the position or post which her husband held. I suggest that it is inequitable that any widow whose husband has paid into any Widows' and Orphans' Pensions Scheme should thereby be debarred from benefiting under the Pensions (Increase) Acts because of the nature of the post to which he had been sent.
It is pertinent to note that local government employees in the United Kingdom have been included in Pensions (Increase) Acts, and the cost of such inclusion is to be borne by the local authorities concerned. If Her Majesty's Government could be persuaded to accept liability for these people, the necessary amendment to the 1962 Act could easily be made.
The third group of cases I wish to mention falls into two sections. First of all, there is what is called the residential disqualification. I remember fighting this without success three years ago. Under Section 3 of the Pensions (Increase) Act 1962, the Secretary for Technical Co-operation (or his successor, the Minister for Overseas Development) has to certify a pensioner as being an overseas officer in relation to any territory in or for which any service giving rise to the pension were rendered. The main reason why overseas pensioners were included in the 1962 Act is because overseas territories have not, despite representations from the British Government, increased the pensions of their pensioners. The mere fact that some of these people decided to retire to the country in which their pension was earned should not. I submit, debar them from the benefits of this Act. Provided the post they were filling was one that would normally have been filled by the Secretary of State they should, surely, be equally eligible for a supplement and should not be denied it because they have retired to the country in which they served.
The next classification under this group is what are called locally born officers or locally recruited officers at the time of engagement. Section 3(2) of the Pensions (Increase) Act 1962 provides that in order to qualify for a supplement the pensioner must be certified by the Minis- 502 ter as having been an overseas officer in relation to a particular territory. In the exercise of his powers of certification under the Act, the Minister has received the general consent of the Treasury under Section 3(6) to certify, without individual reference to the Treasury, overseas officers who fall within certain definite categories. These categories bar, in some instances, persons normally resident locally or in "contiguous" territories at the time of their appointment to the service, despite the fact that they may eventually have served in posts which were normally filled by the Secretary of State on promotion and were members of the old unified Colonial Service or its successor, Her Majesty's Oversea Colonial Service. The arguments just adduced over the other case seem to me to be equally valid here, and it appears to me to be most ungenerous that these faithful servants of the Crown should be debarred from receiving the supplement on these grounds.
In conclusion, may I say that I have no intention of taking up the time of the House in moving the necessary simple Amendments to effect inclusion in this Bill of the groups I have mentioned. I realise that this is no Party matter. The previous Government rejected these claims just as the present Government have rejected them. But if the Government could be persuaded even now to reconsider their attitude, it would be a simple matter for them to propose such Amendments in the Committee stage. Vast sums of money in the shape of grants and loans have been made available at the time of independence, and subsequently, to member countries of the Commonwealth. In answer to a Question in this House some months ago, we were told that during that period grants had totalled £126,501,000 and loans £133,818,000, making a grand total during that brief period of £260,319,000. The groups whom I have mentioned were not eligible under the 1962 Act. They are relatively few in number and, after all, they are people who helped to build up the many organs of Government in the overseas territories. The passage of time merely accentuates their distress. I have repeated once more the appeal to Government which was recently made in another place, and I now say that I support the Second Reading of this Bill.