HL Deb 09 March 1981 vol 418 cc14-8

3.22 p.m.

The Lord President of the Council (Lord Soames)

My Lords, I beg to move that this Bill be now read a second time. May I first draw your Lordships' attention to a small omission in the printed copies of the Bill before your Lordships. On page 2, line 41, the words the fact "should be inserted after the words "but for ". Therefore, in fact, it should read "but for the fact".

This Bill flows from the fact that in years gone by there was no pension scheme for service in another place. Perhaps the best contribution that f can make in introducing the Bill is to outline the main points by way of background. The first intention of the Bill is to implement the recommendation made by the Review Body on Top Salaries a year ago about pre-1965 Members of Parliament; that is, about Members of Parliament who left the House before 1965. These, indeed, are those in another place whose service ended, in effect, before the parliamentary pension scheme was brought into operation. Their position was eloquently described by many noble Lords in the Second Reading debate in 1978 on the Parliamentary Pensions Bill. We were reminded that many of them—and indeed in this particular respect I can say many of us—sat for many years in another place in the days before allowances for secretarial services, postage, telephones, travelling and so on had even been thought about, let alone introduced. There are several who still contrive to give distinguished service as Members of your Lordships' House, but because they had no opportunity to contribute to a pension scheme, for the good reason that there was none to contribute to, they were deprived of any pension.

This situation has been of concern ever since the introduction of the parliamentary pension scheme more than 15 years ago. In proposing a parliamentary pension scheme the Lawrence Committee explicitly considered whether the scheme could cover Members who had already left another place. They considered that it could not, and the same principle of "no retrospection" in pensions matters continues to affect many thousands of would-be pensioners in the public services and elsewhere. However, I am sure that your Lordships will be glad, as I am, that following an invitation in 1978 by the then Prime Minister to take a fresh look at this matter, the Top Salaries Review Body in its Thirteenth Report proposed a solution, and it is that solution which is at the heart of this Bill.

From its creation in 1939 all Members of Parliament have contributed to the House of Commons Members' Fund, which is an old fund. It is a benevolent fund providing discretionary grants but on a stringent means-test, which means that only a few pre-1965 Members have benefited from it. I think that the contribution was about £12 a year from its inception until about 1959, when it became £24 a year, which it still is. That is for a Members' fund specifically as a benevolent fund.

The Review Body proposed that new grants should be payable to pre-1965 Members through this Members' Fund, but as of right. This proposal is the main feature of the Bill, and I hope that it will be welcomed by your Lordships. That is the background to Clauses 1 to 3 of the Bill. I shall make only one or two comments on the detailed conditions as to eligibility in Clause 1. I would suggest that the conditions have largely been framed to avoid creating further anomalies. For example, those who retired between 1965 and 1972 needed 10 years' service to qualify for a pension, which was paid only from age 65. The Bill has been framed so as not to treat pre-1965 Members differently from that group. Clause 1(6) relaxes this provision slightly by allowing the trustees in special circumstances to pay grants in cases of less than 10 years' service, but only if they are advised by the Government Actuary that such additional commitments can be borne by the fund. The trustees particularly asked to be given this additional degree of flexibility, and the Government are pleased to be able to respond to their wishes.

The last point that I would make on Clause 1 is that it will be no mean task to seek out and alert potential recipients to the new grants. But I understand that the fund's trustees and administrators are scouring through Who's Who and have plans in hand to bring this to the attention of any of those who are entitled to it but who do not in fact apply.

Clause 2 concerns the amounts to be paid. Initially, these are to be £1,000 a year to former Members and £500 to widows or widowers. In order to build up the fund to meet these commitments, the Government will be providing the fund with the sum of £2 million over 10 years. At this point I should perhaps assure your Lordships that these costings allow the grants, and are calculated to allow the grants, to be increased regularly. I suspect that there will probably be an annual review of the grants.

Subsection (1) provides the mechanism for these regular increases, and a final point in Clause 2 is that any additional discretionary payments made by the trustees to ex-Members should take account of the sums being received by them as of right. Subsection (3) makes this clear. In other words, the old payments paid by the Members' Fund to Members up to now, when considering the income of Members to whom it pays them, should take into account what they will now be getting as of right after this Bill is enacted.

Clause 3 is entirely technical. Under Section 4(4) of the House of Commons Members' Fund Act 1948, up to 10 per cent. of the Exchequer contribution to the Members' Fund may be earmarked for the "alleviation of special hardship ". Clause 3 allows the Treasury by order to prevent this from happening to any part of the new £200,000 a year which the Exchequer is paying towards the new grants, for otherwise it could put out the actuarial calculations.

Clauses 4 and 5 deal with a separate recommendation made by the TSRB. It will primarily affect Members of another place. But it will also benefit noble Lords who participate in the pension scheme as Ministers or other office holders. At present it is only possible to transfer pension rights earned outside Parliament into the parliamentary scheme within 12 months of first joining the parliamentary scheme. This unfortunately takes no account of the interruptions inherent in a political life, with which so many of us are all too familiar.

The review body proposed an extension of the time limit to five years, but even this would not deal with the problem completely. It would not meet the needs of all Members and it would leave the Parliamentary Pension Fund uncomfortably exposed. We are therefore proposing an arrangement which will offer participants in the scheme greater flexibility while it continues to safeguard the position of the pension fund. Thus, Clause 4 will allow transfers to be requested within 12 months of a person becoming a Minister, or Member of Parliament, either for the first time or after a break. It also provides a new option for all existing members of the scheme. I would commend this proposal also to your Lordships.

It is my hope that the measures in this Bill will be considered, in spite of their modesty, to be both practical and helpful. It is a subject which I know has mattered to a comparatively small number of people, but those who have rendered great service to the nation in years gone by. This has been a subject of worry for some years and a feeling of inequity, which to the best of our ability we are now seeking to put right. It is, as I see it, an all-party matter. Indeed, it was the previous Government which referred this in 1978 to the Top Salaries Review Board, and it falls to this Government to put it into operation. Though modest, I hope it will be both practical and helpful and may give us yet further cause to be grateful to my noble friend Lord Boyle of Handsworth, whose work chairing the review body on top salaries has been so eminently distinguished as in so many other fields to which he has given his life and his attention. I beg to move.

Moved, That the Bill be now read 2a.—(Lord Soames.)

3.34 p.m.

Lord Peart

My Lords, this is a day when we can rejoice, even though some people may not accept all of what the noble Lord has said. I believe that the Government have done well on this. I, along with my noble friend Lady Llewelyn-Davies of Hastoe, participated in the work of the Boyle Committee. We gave evidence over a long period, and I am glad to think that a good response has been made. I should like to pay a tribute on behalf of all of us on this side to what the noble Lord, Lord Boyle, has done. Here we see the culmination of something we hoped would happen.

I know that there will be anomalies somewhere in some people's minds, but I believe that this is a first step in the best sense. I have carefully read this weekend all the speeches on the House of Commons Members' Fund and Parliamentary Pensions Bill. The Bill, as they say, has two main purposes. I think that the House will agree that the most important is to provide honourable Members who left the House before 16th October 1964 with grants from the Members' Fund. That was emphasised by the noble Lord. These former honourable Members had no opportunity to contribute to a pension scheme or to benefit from one. Many of them are getting on in years and some of them now find themselves in difficult circumstances.

This is a state of affairs which has been a source of anxiety on both sides of the House. Indeed, it was highlighted by the noble Lord's right honourable friend in another place, the Leader of the House of Commons, the Chancellor of the Duchy of Lancaster. There is all-party agreement on this. We have always felt a bit diffident when discussing matters which affect ourselves. I never thought of that, though, when I was Leader of the House in another place. I always believed that it was important that Members of Parliament should have adequate salaries and adequate pensions. I am glad that that issue now is such. Here we are really discussing the amounts. Although I think we should not spend too much time on this, the Government have indicated what it will cost. Clause 2 gives the annual payment under Clause 1, which will be £1,000 to a former Member, £500 to his widow or her widower. These amounts may be varied from time to time by resolution of the House.

I believe that there will be an increase in the maximum annual Exchequer contribution to the Members' Fund, which has been mentioned. In other words, here is something positive and something which is helpful. It may well be that some honourable Member may be able to criticise here and there. I personally welcome this Bill very much. I believe it will show again that we can gradually adapt our system to giving help to those who have given service in the parliamentary field over a long period of time. I wish the scheme well.

From carefully reading many of the speeches and the official reply in another place, I see that there is to be set up a special Select Committee to examine matters which arise from time to time. I do not know how this committee will act; whether it will also trespass a little on the Boyle Report, or the Boyle Committee. We shall watch carefully because this matter may go further to a discussion of linkage, et cetera, with pensions as things develop. However, on behalf of the Opposition I strongly welcome this Bill, and I hope it removes the grievances which have been there.