HL Deb 16 March 1965 vol 264 cc331-9

5.23 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Champion.)

House in Committee accordingly.

[The LORD MERTHYR in the Chair.]

Clauses 1 to 6 agreed to.

Clause 7:

Pensions of Members

(3) The annual amount of the pension payable under this section shall be a sum calculated by referece to the number of complete years of reckonable service of the Member in question, as follows:—

  1. (a) for each year up to fifteen, £60;
  2. (b) for each such year exceeding fifteen but not exceeding forty-five, £24.

(4) A pension under this section shall continue for the life of the person to whom it is payable but shall not be payable in respect of any period during which he is again a Member of the House of Commons or is a candidate for election thereto; and for the purposes of this subsection a person who ceases to be a Member in consequence of the dissolution of Parliament shall be treated as a candidate for election unless and until he gives notice in writing to the Trustees that he is not seeking re-election.

(5) In this Part of this Act the expression "reckonable service" means, subject to the provisions of sections 11 and 13 of this Act relating to the refund of contributions and the transfer of pension rights,—

  1. (a) service as a Member of the House of Commons after 16th October 1964, being service in respect of which contributions are paid under section 5 of this Act;
  2. (b) service as a Member of that House before that date by a person who is a Member of that House at any time after that date;
but if in any case the service described in paragraph (b) above exceeds ten years, the excess shall be disregarded.

On Question, Whether Clause 7 shall stand part of the Bill?

LORD INGLEWOOD

I gave the noble Lord, Lord Champion, notice that I wanted to seek some information about this clause, particularly subsection (5)(b). Here we are concerned with the credits in a pension scheme for past services, over and above the future service financed by Members' contributions. I am sure the noble Lord will agree that it is right that we in Parliament should take an interest in credits or bonuses financed from public funds. I hope I may be excused if I am thought to be over purist—perhaps it is because I served as Parliamentary Secretary to the Ministry of Pensions and National Insurance and, therefore, have been concerned with these things—but I say that with the start of any scheme of this kind it is proper and reasonable that there should be some credit for past service, otherwise it is difficult, in the slang, to get the scheme off the ground.

I may be mistaken, but I should think that Clause 7 is open to the criticism of being too lavish on two grounds. First, there is the cost to the taxpayer. The Lawrence Report, Paragraph 79, estimated that the present capital value of this subsection is £2½ million, which is a great deal of money when we consider that the number of persons concerned is not so very large. It is tempting to suggest that more of us might share in this, but I am not doing that at all—rather the reverse. I am rather suggesting that ten years' credit for past services is too much. The noble Lord will correct me, I know, if I am wrong, but I understand that it could even work in this way. A Member with substantial past service has to serve only a very few days in this present Parliament, pay £150, and thus, under the terms of the scheme, compelling the Exchequer to pay another £150, after which, if he is 65 and his wife is the same age, he will be entitled to a pension the capital value of which in the market, I am advised, is about £6,200—which is not a bad golden handshake at all. Even the Sweepstakes on Horseraces (Authorisation) Bill, which we have just been considering, could hardly offer better prizes.

I suggest that four years' allowance for past services is really more appropriate. At one time I was tempted to table an Amendment, but I feel it better that I should raise the point in discussion. That allowance, I think, would be more satisfactory all round, and not least to the taxpayer. It would not throw the scheme out of balance. It would provide that as from the beginning of the scheme a Member would have to serve in two Parliaments before he became entitled to a pension, and I do not think that is unreasonable. As I say, it would save the taxpayer a substantial sum.

I shall be interested to hear from the noble Lord the Government's reasoning behind this paragraph in the Bill. I hope he will not fall back on the answer that it is in the Lawrence Report and, therefore, has the character of Holy Writ—because I do not think we have any right to treat the Lawrence Report, no matter what respect we give to it, as Holy Writ. Secondly, I hope he will not say that it is hard to see where to draw the line in a matter like this (because we can all see that) and that in the end they seem to have chosen a line which is fair to everyone and have found the right balance, because that is a safe line of advice to Ministers frequently offered to them by their advisers. I do not think that is really sufficient in this instance. Therefore, as I have given the noble Lord a whole week's notice, I am looking forward to a full answer, because I do not want afterwards to consider putting down an Amendment at a later stage to give him another chance.

LORD CHAMPION

I am obliged to the noble Lord for the way in which he has posed his question, and for having advised me of the fact that he was going to ask it. I am not quite so happy about the way in which he has told me of his arguments and then dares me to use the argument that this is in the Lawrence Report. After all, when I embarked upon this subject I set out on a horse called Lawrence, and now in mid-stream the noble Lord shouts from the bank, "Change horses". I just cannot see a horse anywhere about that is half as good as Lawrence in this connection, because Lawrence, after all, was a Committee set up in order to consider the whole matter of Members' salaries and pensions and, of course, Ministerial salaries as well. So I think to a large extent I must stick to the horse that I happen to be on, namely, Lawrence. The Lawrence Committee recommended precisely the figure which is contained in the Bill so far as past service is concerned.

The Government have, of course, considered this matter. It is right that they should do so, and they have come to the point of view that in this matter Lawrence was intrinsically sound. Ten years' credit is just about the right figure for the purpose of getting this scheme off the ground. As the noble Lord will be aware from his past experience, it is the general practice of employers, both public and private, to allow a measure of back service credit when a scheme is established for the first time. This point was put, as I understand it, to the Government Actuary on occupational pension schemes, the report of which was published in 1958. That report said: Some degree of back service credit is granted in most pension schemes in public service or nationalised industries and for about one-half of the membership in private schemes. Where granted, a back service credit has been in respect of one-half of past service for most eligible members of insured schemes, but equal to the whole of past service for the great majority of eligible members of other schemes. An upper limit to the length of service allowed to count in full is fairly common, especially in the public service and nationalised industries. The question is, just how much.

To turn perhaps from generalities to particular cases, in 1947 and 1948 large parts of the subordinate Civil Service staff —that is, industrial grades, messengerial and similar grades—who had previously been unestablished and unpensionable on principle, were established and made pensionable. The effect of the Superannuation Act 1946. which had just then been passed, was to allow these people, as soon as they were established, to count their previous unpensionable service back to 1919 as to the one-half of its actual length, which, as the noble Lord can see, would in many cases be very much more than the ten years which has been accepted for this Bill. Thus in some cases up to fourteen reckonable years of back service credit were granted. Similar provisions, partly contributory, were made for certain categories of staff when the pension schemes of the national coal and gas undertakings were set up. Similarly in local government, certain non-contributory service was subsequently made reckonable at the sole expense of the employer when the groups of staff concerned became subject to the Local Government Superannuation Scheme for the first time.

We have adopted what seems to be a reasonable precedent that a good employer (although, of course, one is not an employer in quite the same sense here) has adopted in the past in this connection, and I think it is reasonable so to do, partly because it is based on Lawrence, partly because it is based on precedent. I rather think this is just about the right period of service, having regard to the type of scheme and the people for whom this pension is designed, and I rather hope that the noble Lord will feel that in my speech 1 have answered most of his points and that he will not feel it necessary at Report stage to put down an Amendment.

LORD INGLEWOOD

Before the noble Lord sits down, can he just refer to my calculations about achieving entitlement as a result of a few days' service?—because it is important.

LORD CHAMPION

Clearly the difficulty in all this is that when a date is set somebody who comes just on the right side of the date is going to get a tremendous advantage. Inevitably when a date, or, in some cases, a boundary line, is set. somebody is going to be just outside and somebody just inside. I remember that when I was chairman of an education committee, and there was a two-mile limit in respect of free travel for children to school, somebody on one side of the street could have free travel and somebody on the other side of the street could not.

As to the noble Lord's calculations, I must admit that I have not gone into the matter quite so deeply as all that, and therefore I am not in a position to reply on the actual sum. But it is a fact that some Members of the other place who remained in it for a very short time after the last Election would benefit under this Bill and would, of course, get benefits for which they have never in fact paid. But that is "in the nature of the beast."

LORD NEWTON

Would the noble Lord be good enough to clarify the exact meaning of subsection (4) of Clause 7? I informed him that I was going to ask him these questions. Subsection (4) of Clause 7 says: A pension under this section shall continue for the life of the person to whom it is payable but shall not be payable in respect of any period during which he is again a member of the House of Commons or is a candidate for election thereto; It would appear to me that, if this clause is to have any meaning, the words "in respect of any period" must mean "during any period". If that is so—anti one hesitates, as a layman, to make any observations on drafting—perhaps the noble Lord would consider that an Amendment ought to be made; because it seems to me that, as at present drafted, the clause may suggest that further service as a Member, with a gap in between, will not be reckonable for the purpose of pensions, I am quite sure that that is not the intention of the clause.

May I also ask the noble Lord whether the words "candidate for election thereto" do mean a candidate, and not a prospective candidate? What I am thinking of is this. Supposing that a Member of another place is defeated at a General Election, and immediately after is reaclopted as prospective candidate for his division, it would be bad luck if in the lifetime of this Parliament he would not be able to get his pension. Again, I am certain that is not the intention.

LORD CHAMPION

I am also grateful to the noble Lord for having given me notice of these questions. This is a very courteous House and I like it. Certainly it is helpful to be advised of the possibility of these points being raised. The noble Lord has put quite fairly a point which raises some doubt in his mind. As I understand it, Clause 7 refers to the payment of pension, and not to the reckonable service and so on. As I understand it, the words "in respect of" mean precisely what he thinks they mean; namely, "during". But whether "during" would be better than "in respect of" is something upon which I am not capable of pronouncing. However, I will put this point to the Parliamentary draftsman, and if he feels that the present wording is not perfectly clear I will, of course, produce an Amendment on Report. But the intention here is, I think, perfectly clear in this connection.

As to the period for which a person may be "a candidate for election thereto", the candidate for election, as I understand it, is not a prospective candidate in the words that we normally use up to nomination day. From that moment onwards, as I understand it, a person becomes, legally speaking, a candidate; and from that moment onwards no candidate would be able to receive a House of Commons pension. I think this is perfectly clear. Certainly this is the intention of the Bill as it stands, and I think that it fairly clearly says so.

In the case of the period during which Parliament is dissolved and awaiting the next Election, this period between Dissolution and nomination day, the person will be automatically entitled to his pension on Dissolution, provided that he is not going to stand again. If he is going to stand again he will not be so entitled to a pension. If he is not going to stand again, he will be expected to notify the trustees that he is not seeking re-election and therefore will qualify. Subject to the promise I have made to the noble Lord, to look at this matter again between now and Report stage, I hope that I have reasonably satisfied the points he put to me.

Clause 7 agreed to.

Clauses 8 to 12 agreed to.

Clause 13 [Transfer to and from other pension schemes]:

5.41 p.m.

LORD CHAMPION moved, in subsection (4), after "person" to insert: any service of his as a Member of the House of Commons before the date on which the payment is made shall cease to be reckon-able service and".

The noble Lord said: This Amendment and the other one run together. The need for the Amendments arises from an error in drafting. The purpose of the Amendment I am now moving is to ensure that when a Member leaves the Commons, and his pension rights are transferred to another scheme, not only his contributory service but also any service before October 16, 1964, ceases to be reckonable service for pension under the Members' scheme. I have a lot of technical explanation here that I could give in respect of this Amendment. but I think it would be better if I confined my remarks to the effect of the Amendments.

The effect of the clause as it now stands would be to allow a man with a maximum of ten years' back service who has left the House with a transfer value which fully represents the value of his accrued rights for those ten years to receive in addition the pension for those ten years when he reaches age 65. In effect, under the clause as it is now drafted he could receive double pension. This is plainly wrong. The Amendment therefore cuts out double entitlement by providing that, when a transfer value is paid, any service before the date on which the payment is made—that is, both contributory and non-contributory service—shall cease to be reckonable. The second part of the Amendment removes the earlier provision, which applied to contributory service only and now becomes needless. With that explanation, although this is slightly more than a drafting Amendment, I hope the Committee will be prepared to accept this Amendment. I beg to move.

Amendment moved— Page 11, line 2, after ("person") insert the said words.—(Lord Champion.)

LORD NEWTON

I should like to thank the noble Lord for his explanation.

LORD CHAMPION

I beg to move.

Amendment moved— Page 11, line 4, leave out from ("treated") to ("for") in line 5.—(Lord Champion.)

Clause 13, as amended, agreed to.

Remaining clauses and Schedules agreed to.

House resumed: Bill reported with Amendments.