§ 3.3 p.m.
§ Viscount Whitelaw
My Lords, I beg to move that this Bill be now read a second time.
I should make clear at the outset that the Parliamentary Pensions etc. Bill is of very limited direct relevance to Members of this House. It is mainly concerned with the pension benefits and contributions from salary to be provided for Members of the House of Commons, and it has been drawn up to meet the needs of members of an elected chamber. The Bill does however also make changes to the supplementary pension scheme for Ministers and office-holders, and is therefore of importance to noble Lords who are Ministers—or hope to become Ministers—and who choose to join the scheme.
The proposed improvements to pension benefits derive from the Twentieth Report of the Top Salaries Review Body, published in May 1983. These recommendations were adopted by resolution of the House of Commons in July last year, with the exception that the rate of contributions to be paid by Members should be 9 per cent. of salary instead of 8 per cent., as the review body had recommended.
During the preparation of the Bill, the trustees of the Parliamentary Contributory Pension Fund, and other interested Members of the House of Commons, made a number of suggestions for modifications of the scheme to take account of the special character of a 1336 parliamentary career, many of which my right honourable friend the Lord Privy Seal has been able to include in the Bill. The Bill therefore represents the result of a long process of close consultation.
The parliamentary pension scheme is at present embodied in two principal Acts, the Parliamentary and Other Pensions Act 1972 and the Parliamentary Pensions Act 1978. These Acts have been amended on several occasions, and the present Bill consists largely of further amendments; hence its apparent complexity. I would be happy to make available the Notes on Clauses to any noble Lord who would like to have more detailed information.
I turn now to a brief description of the main provisions. The Bill proposes an increase in the contributions paid by Members of the House of Commons and Ministers and other office-holders from 6 per cent. and 5 per cent. of salary respectively to 9 per cent. A contribution of 9 per cent. is more than double the national average for pension schemes in the private sector, and is clearly in line with the policy—announced in the 1983 manifesto—that members of public sector pensions schemes should pay realistic contributions towards their index-linked benefits. The increase in contributions will be implemented in annual stages so that the full rate of 9 per cent. will come into force in January 1987, when the final increase in the pay of Members of the House of Commons, agreed last July, is implemented.
Secondly, the Bill aims to provide a rate of accrual which will yield benefits appropriate to the career of a Member of Parliament. The pension accrual rate is to be increased from one-sixtieth of annual salary per year of service to one-fiftieth.
The TSRB recommended that it would not be appropriate to apply the improved accrual rate retrospectively to past service. This is in accordance with the long-accepted principle that improvements in pension scheme benefits should apply only to the future service of current members of the scheme. In order to provide a degree of flexibility to Members of the House of Commons in planning their pension arrangements, however, a limited facility is being made available for current Members to convert their back service to the new accrual rate at 40 per cent. of the cost to the fund. This facility is not open to Ministers or office-holders in this House.
Another area which has given rise to concern is the arrangements for early retirement. As your Lordships will know, it is not always as easy to plan the date of one's retirement when one is a Member of Parliament or a Minister or office-holder, as it is in other employments.
§ Viscount Whitelaw
My Lords, the Bill therefore contains certain provisions intended to give flexibility for those who retire before the age of 65, whether by choice or of necessity. I can explain these provisions more fully if any noble Lord wishes.
1337 The other provisions of the Bill include the abolition of the qualifying period of service necessary to receive benefits; an increase to the maximum permitted by the Inland Revenue in the lump sum which may be obtained by commutation of part of a pension; the provision of pensions for the widowers of female Members or office-holders on the same basis as those for widows; and various other minor changes.
The Bill also contains provisions which are not directly connected with the parliamentary pension scheme. One of these gives United Kingdom representatives to the European Assembly severance grants on the same basis as those payable to Members of the House of Commons, on a scale set out on page 18 of the Bill.
Clause 13 is of especial interest to certain Members of this House. It provides for Ministers and other office-holders in this House to receive a payment of one-quarter of final salary on ceasing to hold office. This implements a 1983 recommendation of the Top Salaries Review Body. I indicated to the House on 25th July last year the Government's intention to bring forward legislation on this matter. As the TSRB recognised, loss of office can come suddenly to a Minister in either House. Unlike his counterpart in another place, a Minister in this House has no salary as a Member of the House to fall back on in such circumstances, and he may have difficulty in resuming a former career at short notice.
The TSRB recommended a payment equivalent to three months' salary in order to ease the process of adjustment to loss of the income that goes with office, and the Government have accepted that recommendation. As I indicated to noble Lords last July, for the Chairman and the Principal Deputy Chairman of Committees, the recommendation to make severance payments to Ministers and office-holders could have been implemented without legislation. Nevertheless, in order to avoid possible complications should questions arise at some future date over the aggregation of periods of office as Minister and Chairman or Principal Deputy Chairman of Committees, it is proposed to cover them all in the legislation.
It is inevitable that the arrangements Parliament makes for its own pay and conditions will attract a good deal of publicity, and perhaps it is almost equally inevitable that whatever is proposed will be criticised. There is however a legitimate and justifiable public concern that Parliament should be seen to be responsible and circumspect in proposing improvements in our own conditions. The Government believe that the present Bill acknowledges the unique character of a parliamentry career and at the same time reflects the cautious approach towards improvement which the public expects. I therefore commend it to your Lordships and ask the House to give it a Second Reading.
§ Moved, That the Bill be now read a second time—(Viscount Whitelaw.)
§ 3.11 p.m.
§ Lord Ponsonby of Shulbrede
My Lords, I thank the noble Viscount for so succinctly explaining the 1338 purposes of the Bill. As the noble Viscount said in his introductory remarks, the Bill as it stands is of little relevance to Members of this House, but there is a great deal of interest in the Bill by Members of this House, particularly by those Members who were formerly Members of another place. Indeed, one of the faults of the Bill will be seen by many to be that it does little, if anything, for those who are now in this House and who were previously Members of another place.
Let me say in opening that we give a general welcome to this Bill and to the improvements in the pension scheme proposed by the Bill. However, one regrets that the Bill does not go further. Part of this of course is accounted for by the fact that the full proposals of the Top Salaries Review Body were not implemented, with the effect that MPs' salaries are lower than proposed in the review body's report and that has the consequential effect that the proposed pension will be lower than envisaged in the report. The proposal to increase the amount of pension contributions over a period of years rather than bringing it in immediately, is inevitable in view of the decision which was taken in another place about the level of MPs' salaries, and it is obviously the only practicable solution to this particular problem. But of course it will result in a lower pension at the end of the day.
As I said, we generally welcome the proposals but of course anomalies will still exist, and as the noble Viscount has said there is a particular concern about the position of a Member who achieves the 20 years' service and retires before the age of 60, as opposed to the Member who achieves his service after the age of 60. All Members, as of right, should receive their pension at the age of 60 irrespective of whether they have achieved the 20-year qualifying period for the full pension to be paid immediately.
The noble Viscount rightly pointed out that Members of another place have difficulty in fixing their retirement date. This of course is a particular problem for those who find themselves compulsorily retired under the age of 60. A Member in his late fifties will find difficulty in finding an alternative job. The Bill provides for a Member who has retired forcibly at any age over the age of 50 to receive an actuarially reduced pension. But that actuarially reduced pension will be a very substantially reduced pension, and one raises the question of whether such a Member should be entitled, for example, after the age of 55, to receive a full pension, rather than an actuarially reduced one.
The rate of accrual for pensions at one-fiftieth instead of one-sixtieth per year of contribution is welcomed. But as the noble Viscount said in his opening remarks, this is not something which can be back-dated prior to the date of the last election. So for all former Members of Parliament with service before the last election the one-sixtieth principle will apply to their pension as opposed to the one-fiftieth provision. Again, this is something which is causing concern to Members of this House who draw pensions or who will have the right in future to draw pensions because of service in another place. Could we not look at whether there could be some element of retrospection with regard to the basis upon which the pension is calculated?
1339 There is also the problem of those Members of Parliament who retired before 1964 and before the introduction of these particular arrangements. I know that some special arrangements were made in the past for those who had given considerable service in years gone by to receive a pension, or perhaps I should say a nominal grant. That grant is now £1,000 a year which of course is subject to tax, which means that those former Members of Parliament with considerable service will be receiving something slightly over £10 per week as a pension. One would not have thought that that was a particularly generous payment to them. One would have thought that there was a case for being considerably more generous in this particular area.
I know that many noble Lords think that they are being treated or have been treated in a way that makes them feel that their successors in another place are being treated far more generously than they have been, and that there should be more recognition of the past service of MPs. Another factor of which the Bill, as drafted at present, does not take account is the situation with regard to Members of the European Parliament. As we now have two elected assemblies, it means that people can, and indeed do, follow parliamentary careers both in the United Kingdom Parliament and in Europe. As I understand it, it is the intention that the pension scheme for MEPs is to be brought into line with the pension scheme for MPs. It would seem right that the two should be linked together so that in each scheme membership of the appropriate assembly would count towards total service, and that the benefits of having achieved a full pension after a 20-year qualifying period could be obtained from service in both assemblies added together. Alternatively, perhaps this could be achieved if there were transferability of rights between the two schemes.
As the noble Viscount said in his closing remarks, inevitably what Parliament does with regard to pensions will achieve a good deal of publicity. But that is not to say that we should not do the right thing by those who have rendered service in Parliament, whether in this House or in the other House, and that is something of which the Government should take account. I look forward to an interesting Committee stage.
§ 3.1 p.m.
§ Lord Diamond
My Lords, as an ex-Member of the other place, and as one whose office and responsibilities were terminated sharply and involuntarily both as to membership of another place and as an office-holder, let me first of all declare that unhappily I have no interest whatever. I am grateful, as we all are, to the noble Viscount for having introduced this Bill and to the noble Lord, Lord Ponsonby, for having gone into it in a certain amount of detail.
However, I find it difficult to think of more than one point which is appropriate for Second Reading. We shall have a Committee stage and all the problems that arise will arise at that stage. On Second Reading one simply has to direct one's mind to the prime question of whether or not it is proper that the other place—because by and large this affects the other place 1340 —should have an increase in its level of pension entitlement.
Anyone who knows the problems of providing for increases in remuneration or in pension entitlement in another place will know that the barriers are so great and the problems of public opinion so appalling that it is quite impossible to enable Members to have adequate remuneration, adequate services or adequate pension rights. Therefore, in my view, none of your Lordships can have the slightest doubt but that these increases are well merited and still leave Members of another place well behind the kind of remuneration and pension rights that they would receive if they were applying their minds in commerce or professional activities.
Having said that, and looking forward to the details of the Committee stage, I repeat my thanks to the noble Viscount and conclude with the words that Mr. Gilbert might well have used:I see in this one for thou and one for thee, but never oh never a one for me".
§ 3.22 p.m.
§ Lord Bottomley
My Lords, I should like to ask the noble Viscount the Leader of the House a question. Quite rightly, much has been said about those in another place who, unlike many of us, have not benefited. A plea has been made on their behalf and I hope that something can be done for them. Under Clause 12 of this Bill, is it not possible for something to be done to assist them?
§ Lord Beswick
My Lords, I was asked whether I would intervene for just a few minutes because, as my noble friend Lord Ponsonby said, there are anomalies in this Bill, and it is obvious from the voices that were raised behind him, and indeed from the other side of the House, that there is considerable agreement for the criticism which he was implying. There are those (I think these are the people whom my noble friend Lord Bottomley has in mind) who served in the other place up to 1964, when the pension provisions were first instituted. I believe that it is worthwhile thinking again about the conditions under which some of them entered the House just after the war. It was not a motivation that was prompted by financial considerations. I believe that the salary was £600 and that it rose to £1,000 a year. There was no question of any pension at all.
However, we have gone beyond those days and we are now thinking in terms of pensions. This Bill is about improvements to the provisions that have already been made. I know that some provision has been made to the pre-1964 Members, and I support what my noble friend Lord Bottomley was saying. I wonder whether something more might be done for them. Of course, it is possible for them to appear before a body and to receive an allowance on the ground of hardship. Those people can plead their case. But the sort of people I have in mind and the sort of people who have spoken to me are not given to pleading, and I do not think that we should leave them in that position.
It is not my intention to go into the details as regards the sort of individuals I have in mind, but before the Committee stage perhaps the noble Viscount might give one or two of those concerned the opportunity to 1341 see him and discuss the matter with him. I am sure that he would view their case with some sympathy, and conceivably something might be done.
§ Lord Glenamara
My Lords, I do not wish to delay the Second Reading of this Bill. But as someone who served for 25 years in another place and for eight years as a senior Minister, and who was Leader of the House in the other place, I should like to support the point made by my noble friends Lord Beswick and Lord Ponsonby. Up and down the country I suppose that there are upwards of 200 ex-Members of Parliament, some of them in your Lordships' House, who are living in straitened circumstances, and increasingly so. It was difficult to accumulate any savings in those days, but such savings as they have, because of inflation, are worth almost nothing.
I think that it is an affront to such people that we should allow public servants to live in this way. I know that they can go and submit themselves to a means test before a committee and then may receive a small allowance. I do not think that that should be the case. The noble Viscount made the point about retrospection and I encountered the same point from the Civil Service Department when I was working on the same problem. However, the noble Viscount has already breached the retrospection principle in what he has said by allowing Members of Parliament to buy-in previous years' service.
I would make a plea to the noble Viscount (although I do not think it will be dealt with under this Bill) to look at the problem of Members of Parliament who retired before 1964 to see whether, as of right, something can be done to help them, because they should not be subjected to a means test. They are a diminishing number. They are all getting on in years, and many of them are very hard up.
§ Lord Dean of Beswick
My Lords, I rise very briefly to support the point that has just been made by my noble friend Lord Glenamara and by the two previous speakers. I think it should be made quite clear that not all the Members who retired before 1964 receive that sum of £1,000. Whether such a Member receives it depends on a strict means test and some receive nothing, which is the insulting part about it. In this day and age, if we cannot put that right, there is something entirely churlish about our society, and I hope that this issue will be looked at as a matter of urgency.
§ Lord Ross of Marnock
My Lords, there is just one other point which I would ask to be taken into consideration. I completely support what has been said on this side of the House about former fellow Members of the House of Commons who retire fairly early. The point I wish to raise is the point about the availability of pension at the age of 60. Would it not be advisable to leave some scope for a certain amount of flexibility?
A colleague of mine who came to Parliament in 1935 was compulsorily retired in 1970 after 35 years' service. His was not the best of constituencies because it was probably the furthest away from London and one of the most difficult constituencies in the country—namely, the Western Isles. He served for 35 years in the House of Commons, was compulsorily retired and at that time was not entitled to a single penny of pension. He had come to Parliament at the 1342 age of 21 or 22, but he was far away from pensionable age, so when he retired he was completely without resources. No one would argue that the salaries in 1935 were at all adequate, any more than they were in 1945. Could the noble Viscount look at this matter to see whether a little flexibility could be included in the Bill to cover what would inevitably be an exceptional case?
§ 3.29 p.m.
§ Viscount Whitelaw
My Lords, I am grateful to noble Lords who have spoken, and particularly to the noble Lord, Lord Ponsonby, for the detailed points that he made. I hope to write and answer many of the points that he made before the Committee stage so that we may see where we stand before we reach that stage. If I can help in that way, I shall certainly do so. Equally, I am grateful to the noble Lord, Lord Diamond, for the important points that he made.
The noble Lords, Lord Bottomley, Lord Beswick, Lord Glenamara, and Lord Dean of Beswick, raised the question of the pre-1964 Members of the House of Commons. The noble Lord, Lord Ross, raised a slightly different point. As one who was a Member of that House for nine years before 1964, who was Chief Whip of a party for six years and Leader of the House for another two, it would be absurd to pretend that I did not have a good deal of knowledge of many of the issues that the noble Lords have raised and of many of the individual problems that were put forward. I do not think that it would be right for me to take the time of this House in dealing in detail with some of those points, because obviously a limited number of us are present today who are particularly concerned with this.
§ Viscount Whitelaw
My Lords, I am about to try to help the noble Lord, if he will allow me. Perhaps he will not.
§ Lord Beswick
My Lords, I want to help the noble Viscount. He reminded us that at one time he was Leader of the House. I had the feeling that, had he not been transported to Ireland, the deputation that I was going to lead to him at that time might have been very favourably received.
§ Viscount Whitelaw
My Lords, it would be dangerous for me to say that it would have been any better received than it was by my successor. I have nearly always found that all my successors in the different offices I have had have done it better than I did, and probably he did to.
It is important to remember in these cases that, as there was no pension scheme before, none of these former Members in fact ever had the chance to contribute to a pension scheme. They have not been contributors, and that raises a particularly difficult problem so far as their position under a pension fund subsequently established is concerned. Of course I shall be prepared to discuss this with the noble Lords concerned, but up to now that has been the major problem.
I understand, on the question of hardship raised particularly by the noble Lord, Lord Glenamara, that the Bill provides for much greater discretion to the 1343 trustees of what used to be called—I think it still is—the Members' Fund to deal with such cases, as he and I would know, and there is much greater discretion now. But I have to accept that much greater discretion to deal with hardship raises the problem that the noble Lord, Lord Beswick, put forward, that many of the people concerned do not like having to plead cases of hardship. I think one must accept that.
I should be pleased to discuss this detailed point but I have to come back because I may not be able to succeed in helping as much as my own instincts would like me to do. As the pension fund schemes have come up subsequently, and as these people have not paid contributions, this raises some formidable problems of how to deal with them successfully. But I shall be very pleased to try to see whether I can help in any way.
§ On Question, Bill read a second time, and committed to a Committee of the Whole House.