HL Deb 01 February 1972 vol 327 cc690-700

3.40 p.m.


My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Earl Jellicoe.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clauses 1 to 20 agreed to.

Clause 21 [Employees of British Airways Board, British European Airways Corporation, British Overseas Airways Corporation, etc.]:


I apologise for taking up the time of your Lordships' House with these four Amendments which are on the Marshalled List in the Government's name. Three of them, I can assure your Lordships, are purely technical. Amendment No. 1 is one of them, and unless any of your Lordships wish me to give the technical explanation, I beg to move.

Amendment moved— Page 21, line 4, after ("was") insert ("or was treated for those purposes as being").—(Earl Jellicoe.)


If the Amendment is more than drafting and I am not clear whether it refers to the other Amendments—and if the explanation is reasonably succinct, in view of the time I think the noble Earl, with respect, might give a small explanation of it. It will have to go back to another place, and although he assures us that it is all all right, I think perhaps we could have just a brief explanation.


I will gladly respond to what the noble Lord has said. Subsection (6) of Section 56 of the Civil Aviation Act 1971, which is substituted by Clause 21, permits Board service to be treated for the purposes of the superannuation scheme as if it were employee service where the Board member was previously an employee. As drafted, this Bill unintentionally excludes the person who immediately before his appointment was not in the employment of a member or group but was on the Board of such member; for example, a member of one of the Air Corporations who becomes a member of the British Airways Board. This was not the intention under the original Section 56(1)(b) of the Civil Aviation Act 1971, and the Amendment which I am moving is designed simply and solely to restore the position as it obtained before and to correct an unintentional drafting error that crept in.


I am much obliged to the noble Earl. I think it was helpful to have that explanation.

On Question, Amendment agreed to.

Clause 21, as amended, agreed to.

Clauses 22 to 24 agreed to.

EARL JELLICOE moved Amendment No. 2: After Clause 24, insert the following new clause: —(1) For subsections (1) to (4) of section 2 of the Pensions (Increase) Act 1971 (which provides for the future review of official pensions and payment of increases) there shall be substituted the following subsections:— '(1) Subject to the provisions of this section, the Minister for the Civil Service, as soon as may be after 30th June in the year 1972, and every year thereafter, shall review the rates of official pensions against any rise there may have been in the cost of living during the review period that is to say—

  1. (a) the period of fifteen months ending with 30th June 1972 ("the first review period"); or
  2. (b) the period of twelve months ending with 30th June in the year 1973 and every year thereafter;
and if it is found that in the review period the cost of living has risen by two per cent. or more, then the Minister shall by order provide that the annual rate of an official pension may, if a qualifying condition is satisfied, be increased in accordance with the order in respect of any period beginning on or after 1st December next following the review period. (2) Subject to subsection (3) below, the increases to be provided for by an order under this section shall be as follows:—
  1. (a) for pensions beginning on or before the first day of the review period the increase shall be in the proportion (to the nearest one-tenth of one per cent.) in which the cost of living has risen during the review period; and
  2. (b) for pensions beginning—
    1. (i) in the half year following that day; or
    2. (ii) in the next succeeding half year ending, in the case of the first review period, with 1st April 1972 and, in the case of any other review period, with the day after the end of that period; or
    3. (iii) in the three months ending with 1st July 1972,
the increases shall be in the proportion (to the nearest one-tenth of one per cent.) in which the cost of living is found to have risen between the basis period for that half year or that period of three months, as the case may be, and the end of the review period, if the cost of living in the basis period is taken as the mean of the monthly figures.
(2A) For purposes of subsection (2)(b) above—
  1. (a) the basis period for any half year is the six months ending with the first month of the half year or, if the cost of living is lower in the half year than in those six months, is the half year itself;
  2. (b) the basis period for the period of three months specified in sub-paragraph (iii) is the period of three months ending with 1st February 1972 or, if the cost of living is lower in the period so specified, is that period.
(3) Where the rise referred to in subsection (2)(b) above is less for any half year than two per cent., there shall only be an increase for pensions beginning in that half year if there is one for pensions beginning in a later half year, and the increase (if there is one) shall be two per cent.; but where this subsection prevents there being an increase for pensions beginning in any half year, then the order made in respect of the next review period shall for those pensions authorise, instead of an increase calculated in accordance with subsection (2)(a) above, such increase as would result if that prevented by this subsection had been made and were followed by one calculated in accordance with subsection (2)(a) by reference to the rate as so increased. (4) Where on any review under this section it is not found that the cost of living has risen by two per cent. or more in the review period, the review in the next year shall be for the same review period extended by twelve months; and if it is found that the cost of living has risen by two per cent. or more in the (extended) review period, the provisions of this section shall apply subject to the modification that for subsection (2)(b)(ii) and (iii) there shall be substituted the following:— (ii) in any of the succeeding half years up to that ending with the day after the end of the review period (2) For subsection (3) of section 9 of the said Act of 1971 (which relates to gratuities and lump sums) there shall be substituted the following subsection:— '(3) In respect of any lump sum or instalment of a lump sum which becomes payable after the day following the last day of a review period but before 1st December next following the review period there may be paid by virtue of section 2 above the same increase as if it became payable on that date.' (3) After subsection (4) of the said section 9 there shall be inserted the following subsection:— '(4A) Subsection (4) above shall have effect in relation to the first review period as if the period of three months ending with 1st July 1972 were a half year ending with that date '.

The noble Earl said: This is the substantive Amendment to which I referred in my opening remarks. The new clause which I am hoping to move into this Bill was the one which I foreshadowed at Second Reading. It gives effect to the Government's decision, which was announced in your Lordships' House by my noble friend Lord Aberdare just before Christmas, to review public service pensions every year instead of every two years, as was provided for by the Pensions (Increase) Act of last year. Your Lordships will recall that when the Pensions (Increase) Bill was before the House last July a number of noble Lords suggested that we had perhaps been wrong in holding to a two year review cycle, which is what we were committed to in our Election Manifesto, and I believe the Party opposite were also pledged to that, and that an annual review period would be more appropriate.

The noble Lord, Lord Shackleton, as he has reminded me from time to time with perhaps his tongue somewhere in his cheek, and the noble Lords, Lord Henley, Lord Gridley and Lord Fraser of Lonsdale, were among those who pressed me at the time on this point. It was in fact a suggestion which had been strongly pressed during the Committee stage in another place. The Government did not simply brush it aside at the time; we gave very careful consideration to it, but we came to the conclusion, having regard to the very substantial improvements already provided in the Bill and to their not inconsiderable cost, that we could not at that time justify adding annual reviews to the package. But I did say last July that if need be we can come back to this matter at a later stage, and in the event we have been able to come back to it sooner than I had deemed possible at that time.

The decision to move to annual reviews of public service pensions was linked with the decision to uprate National Insurance benefits annually. Public service pensions are, of course, occupational pensions, and it does not necessarily or by any means follow that the arrangements the Government make in this Bill as an employer should exactly mirror those they make for the nation as a whole in the quite separate field of social security benefits. In this case, bearing in mind all that was said during the passage of the Pensions (Increase) Bill, it seemed to us only right to take the opportunity of bringing the reviews of public service pensions on to the annual basis.

There was a further and significant reform which we pledged ourselves to introduce during the lifetime of the present Parliament, but which again for reasons of priorities and cost we did not feel able to put into effect immediately the Pensions (Increase) Act became law. I refer to the reduction from 60 to 55 of the age at which public service pensioners normally qualify for increases under the Act. We think it would not be right to continue to defer this reform once we have moved to annual reviews, and accordingly an Order will in due course be made under the powers already contained in Section 3(8) of the Pensions (Increase) Act, reducing the qualifying age with effect from December 1, 1972, the date from which, under this new clause, the next increase is to be made payable under the Act. I am sure that both these changes I have briefly touched on will be good news to the public service and Armed Forces pensioners, on whose behalf the noble Lord, Lord Bourne, gave a very generous welcome to what we had in mind at the time of my noble friend's Statement last December.

I should now like, if I may, quickly to refer to the clause in a little more detail. On the face of it, I would freely grant that it looks formidably complex, but there are in effect only three main things and one subsidiary matter it sets out to do. The main things are, in the first place, to provide for a system of annual reviews instead of the biennial reviews at present laid down under Section 2 of the Pensions (Increase) Act; secondly, to provide for the transition from September 1 to December 1 as payment date, and the fact that the present review period will in consequence not consist of an exact number of half years; and, thirdly, to reduce from 4 per cent. to 2 per cent. the amount by which the cost of living must have risen during the relevant period for an increase to be payable.

The last point is the question of a trigger figure, as I mentioned briefly on Second Reading. The purpose of having a trigger of this sort—4 per cent. in the Bill unamended—is to ensure that if at some future date the cost of living becomes virtually stable, as I suppose at some future date it might just conceivably so do, the whole complicated process of adjusting nearly one million pensions is not put into motion unless it is going to produce a worthwhile and needed increase for the pensioners affected by it. It could well be argued that, given the major improvement of annual reviews—and I think noble Lords interested in this matter know how important this annual rhythm is, especially in a period of inflation —the figure could perhaps be left unaltered, on the grounds that it would remain what it was always intended to be; namely, a measure of the extent to which one could reasonably allow the value of a pension to be eroded before purchasing power is restored. On the other hand, there is a rough justice, a rough logic (and I must say that it was a logic which appealed to me), in the argument that a rate of inflation of 4 per cent. over two years is roughly equal to a rate of 2 per cent. a year, and that in the context of annual reviews the trigger ought to be readjusted to be no more than 2 per cent. This view was one which was in fact strongly pressed on us by the Public Services Pensioners' Council, and I am glad that we have been able to adopt their suggestion.

Apart from the three changes which I have mentioned we are not introducing any alteration in the drill for reviews under Section 2 of the Act, but we thought it would be right and convenient to reproduce in a new clause the first four subsections of Section 2 in their new form, rather than to have a whole and complicated string of separate Amendments. I think that, as a general principle, this is always better than tinkering all through a Bill. There is a subsidiary change that again I should be glad to explain if need be, but I hope that I have given a sufficient explanation to satisfy your Lordships that the new clause is going to be helpful to the pensioners rather than the reverse.

3.52 p.m.


The noble Earl has introduced a clause which I find very clear and precise. Although we shall want to study the noble Earl's words, because he gave some quite interesting expositions, I think it very unlikely that we shall want to do anything further on Report. Just to take a small point, I hope, and I think, complete clarity has been achieved with regard to the particular day of the particular period. This has caused trouble in some public service pension schemes in the past, and I have known cases where there has been misinterpretation, and I, as a Minister, took a different interpretation from one taken by a local officer. I was gratified in that case to find that I was right and he was wrong. However, this matter seems to be well taken care of.

I am a little sorry that the noble Earl —though perhaps it was modesty on his part—saw only the barest hope of inflation coming down to lower than this amount in the foreseeable future. The noble Earl talked about pledges from the Government. I will not remind him about all those embarrassing pledges, but I will remind him that although he said that this sort of thing was covered in his Party's Manifesto, the Conservative Party scheme for public service pensions was in fact a very different one, and a rather unsatisfactory one as compared to that put forward by the Labour Government. The noble Earl has had the wisdom and, if I may say so, the generosity, to acknowledge this, and the Government have accepted it. As for the reduction from a biennial review to a one-year review, again I quite acknowledge that the Government were right and the noble Earl was right not to accept the Amendment until this principle was applied to the general body of pensioners outside the Civil Service. It would be dangerous to go on giving benefits to the Civil Service—although all these are fully justified —if the public at large are not going to be as well served.

There is one group I should like to refer to, and that is those in the F.S.S.U. scheme. I mentioned this subject before. I hope that the universities and the University Grants Committee will recognise that academics are not, for the most part, anything like as well paid as senior civil servants. Did my noble friend at the back utter a noise? Perhaps not. I thought one of my academic friends was either agreeing or disagreeing. I repeat again, academics are not as well paid now as senior civil servants, or will not be so well paid in the future. It is important that the functioning of their pension system should be as nearly as possible up to the standard of the public service. With those remarks we certainly welcome this Amendment and encourage the Bill to move on.


May I, on a completely non-political basis, say how much I welcome this Amendment and the whole attitude which has been adopted to this superannuation problem? It was in 1925 that I became a leader of a Civil Service union for clericals and executives, and I have lived through very many fights to get much done that we completely failed to secure. I was grateful enough when the last Government managed to do what they did. I was happy about the establishment of the new Civil Service Department and the job of work it did, and I am grateful that the noble Earl who now leads the House as Lord Privy Seal and is in charge of the general work of the Civil Service Department has not only carried on the good work of my noble Leader but has seen to it that this kind of thing is brought to this House, properly and appropriately.


I very much appreciate what the two noble Lords have said. I must apologise if I showed undue and unnatural modesty about our expectations regarding the reduction in the rate of inflation. All I will say is that if we can reduce it in the range of 2 per cent. plus within the coming year I, for one, will be reasonably satisfied. I can assure the noble Lord the Leader of the Opposition that the F.S.S.U. scheme is, I understand, a matter which is under consideration at the present time. Could I, on one further point, just deal—and on the same completely non-partisan, non-political basis as the noble Lord, Lord Crook—with the old Party political point which the noble Lord the Leader of the Opposition trotted out in the course of his remarks. I would agree that we fought the last Election on a slightly different basis so far as public service pensions were concerned, but there was a great deal in common with our two platforms in this respect. On one particular point which the noble Lord had in mind, when we came into office we recognised that there were technical reasons, and very good technical reasons, why what, in our innocence, we had thought would be beneficial to the pensioners would not prove to be the case, and we not only adopted but also improved on what the noble Lord had in mind.


I am grateful to the noble Earl. Of course it is difficult when in Opposition. That is one of the problems. He later had the inestimable advantage of taking over my flock of civil servants. Let us acknowledge again that great credit is owed to them.

On Question, Amendment agreed to.

Clauses 25 to 29 agreed to.

Schedules 1 to 5 agreed to.

Schedule 6 [Consequential and Minor A mendments]:

3.58 p.m.

EARL JELLICOE moved Amendment No. 3: Page 45, line 16, leave out ("after '22(b)'insert' and (c)'") and insert ("for 'and 23' substitute to 23A '").

The noble Earl said: This, again, is a technical Amendment designed to correct an error in drafting—one of the few errors in drafting which those civil servants whom I inherited from the noble Lord the Leader of the Opposition did not spot at the time but which, with their eagle eyes (and I pay tribute to their eyesight as well as to their humanity), they have managed to catch at this stage. The Amendment concerns staff who were formerly employed as civil servants in war pensioner or special hospitals, and who opted to stay under the Superannuation Acts when those hospitals were transferred to the National Health Service. As the Bill is at present drafted, any such staff who later become redundant and who are re-employed in the Health Service will not enjoy the benefit of pension increase. The purpose of this Amendment is, quite simply, to rectify this position. I beg to move.

On Question, Amendment agreed to.

Schedule 6, as amended, agreed to.

Schedule 7 [Savings and transitional provisions]:

EARL JELLICOE moved Amendment No. 4: Page 50, line 39, leave out ("11(3),").

The noble Earl said: I can explain very briefly the purpose of this further Amendment, which again is of a rather technical character. The background is this. To be admitted to the local government superannuation scheme a person must be able to complete ten years of service before his compulsory retiring age. Section 11(3) of the Local Government Superannuation Act 1953 was a transitional provision, allowing persons who entered local government service from certain employments before the passing of that Act to count their previous service in such employments towards that qualifying period. The employments concerned were those with which interchange of superannuation rights were possible under rules made under Section 2 of the Superannuation (Miscellaneous Provisions) Act 1948.

Although this provision is basically exhausted, its terms have been subsequently applied by later interchange rules under Section 2 of the Act of 1948 to cover persons entering local government employ before the making of such new rules. Because these rules will still continue in force, and further rules or amendment rules may be necessary, the basic provision cannot be allowed to lapse. The provisions in each section of the table should be the same, so that Section 11(3) must be deleted from paragraph 6 of the Scottish section, since this section of the Local Government Superannuation Act 1953 will be needed in the transitional period. I have bothered your Lordships with the technical explanation because I was quite certain that, if I did not, the noble Lord, Lord Shackleton, would ask me to do so. I hope that the position is now crystal clear to your Lordships. I beg to move.


I think it is useful to have that explanation so that we can read it afterwards, and can then understand what the Government have done. Meanwhile, I only congratulate the noble Earl on his masterly handling of a complicated Committee stage.

On Question, Amendment agreed to.

Schedule 7, as amended, agreed to.

Remaining Schedule agreed to.

House resumed: Bill reported, with the Amendments.