HL Deb 26 February 1991 vol 526 cc867-76

3.25 p.m.

The Lord Privy Seal (Lord Waddington)

My Lords, I beg to move that the Bill be now read a second time.

In 1987 the Lord President invited the Top Salaries Review Body to undertake a review of the parliamentary pension scheme, the pensions of the Prime Minister, Speaker and Lord Chancellor and ministerial severance pay. When the TSRB reported in May 1988, we made clear that we accepted the recommendations. This Bill implements those TSRB recommendations and also provides for a new night subsistence allowance for Ministers in the Lords.

The House will know that statutory ex officio pensions are paid without any qualifying period to the Prime Minister, the Speaker and Lord Chancellor, the justification for these special arrangements being the high dignity of the three offices. At present under the Parliamentary and other Pensions Act 1972, the Prime Minister's pension is fixed at fifteen-fortieths of salary, the Speaker's at twenty-fortieths and the Lord Chancellor at seventeen-fortieths of salary. The TSRB in its 1988 report recommended that instead of these different pension ratios, current and future office holders should be entitled to pensions of one half of their final salary; and Clause 1 of the Bill has that effect.

I should draw the attention of the House to Clause 1(5). Currently there is a restriction on the pensions increase that may be paid to former office holders. The TSRB recommended that this should be lifted and we shall be laying regulations under the Pensions (Increase) Act 1971 to give effect to that recommendation.

We feel however, that, despite this uncapping, as the pensions ratio is changing so substantially, too large a gap will open up between the pension entitlement of the current Prime Minister and the pensions in payment to former Prime Ministers. We have therefore taken the opportunity afforded by this Bill to set the pension level of all former Prime Ministers at the same figure which the current Prime Minister will be entitled to after enactment; that is £25,362.

Clause 2 of the Bill amends the Parliamentary and other Pensions Act 1987 so that regulations may be made to permit the Prime Minister and Speaker to participate in the parliamentary contributory pension fund.

Clause 3 relates the salary of the Lord Chancellor to that of the Lord Chief Justice. Noble Lords may recall that the 1983 TSRB report recommended that the Lord Chancellor should receive a slight salary lead of £2,000 over the Lord Chief Justice in recognition of his role as head of the judiciary. Up to now each increase to the Lord Chancellor's salary in implementation of this proposal has required an order subject to affirmative resolution of both Houses. Now the salary lead is to be contained in legislation.

I turn to Clause 4 which deals with severance payments and, in line with the TSRB recommendation, extends the severance payment scheme currently available to Lords' Ministers to Ministers and paid office holders who are Members of the House of Commons or who are outside Parliament.

The TSRB recommended that on losing office for whatever reason Members of the Commons should receive a severance payment based on three months' net loss of income, and Members not in either House should receive three months' loss of ministerial salary. It also recommended that the two-year qualifying period for Lords' Ministers should be dropped; that the Prime Minister and Speaker should be excluded from those arrangements; and that the Lord Chancellor should cease to be eligible because of preferential pension arrangements.

The justification for this is well understood. Ministers are required to relinquish outside appointments when they are appointed. This can often mean a substantial loss of income as well as a far busier working schedule. On leaving office a Minister has to make a rapid adjustment to cope with the financial consequences. It often takes time to pick up the threads of a previous career or to establish a new one. We believe that modest severance payments are entirely reasonable to bridge the gap.

I now turn to Clause 5 which introduces a new allowance for Lords' Ministers and paid office holders in the Lords. On appointment a Minister or paid office holder in this House loses the overnight subsistence allowance which he or she could claim as a Back-Bencher. But certainly most Ministers find it necessary to set up a London base—if they do not already have one—in order to meet the heavy demands of their jobs, and it seems only right that they should have some help towards the cost of running a second home in London. This help will now be forthcoming as a result of the introduction of a night subsistence allowance based on the Back-Benchers' overnight allowance.

But Ministers do not work only when the House is sitting and we therefore propose that this new allowance should be paid not on the basis of the number of days the House sits but at a flat rate of 220 times the overnight allowance; 220 representing the number of working days in a year, though most Ministers in my experience work a good deal longer than that. The allowance will go up at the same time as, and in line with, the Back-Benchers' allowance. At present it would be £14,960; producing, after account has been taken of tax deductions and withdrawal of the London supplement, a net benefit of around £7,700.

Clause 6 will enable the Lord President to make regulations in the other place to fix the Exchequer contribution to the parliamentary contributory pension fund. I do not propose to say a great deal about this clause save that it contains a permissive power whose use will depend on the outcome of a TSRB review of the future financing of the parliamentary pension scheme.

Clause 7 makes some changes to the Members' fund, which is a statutory fund administered by trustees who are able to offer grants to former Members of the other place or their dependants who experience financial difficulties. The clause brings up to date the wording of the 1948 Act and gives the trustees a wider discretion. The financial implications of the Bill are small and are contained in the Explanatory and Financial Memorandum. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Waddington.)

3.32 p.m.

Lord Graham of Edmonton

My Lords, I begin, as others will, by declaring my interest. I will benefit from the provisions contained in the Bill. Unlike other occasions, when the speech of the introducer of a Bill is repeated almost word for word, I believe that the House is indebted to the noble Lord the Leader of the House for the care that he has taken not only in explaining the facts—that is to say, the words on the face of the Bill —but also their implications. We on this side of the House give the Bill a very warm and general welcome.

It is a Bill which has received all-party support in another place and I expect that it will enjoy the same fate in your Lordships' House. I took particular note of the fact that in another place the Leader of the House, Mr. John MacGregor, spent 49 minutes introducing the Bill; though he was interrupted 17 times. That means that not only were there many Members on both sides of the House with a deep interest in the matter but that the Leader of the House in another place was well prepared and concerned to ensure that the points raised were dealt with. I certainly appreciate very much not only the care that he has taken but the fact that a succession of Leaders of the House over many years have ensured that this legislation has been brought to a satisfactory conclusion.

I know that my colleagues in another place take a deep and continuing interest in the matter. They have expressed to me their satisfaction at the present position. What we are concerned with here today and what the Minister has spoken about, is a series of small matters in themselves but which together make up a significant difference in the pay, arrangements and conditions of a great many people. First, we are talking about an improved level of pensions for the Prime Minister, the noble and learned Lord the Lord Chancellor and the Speaker. The noble Lord the Leader of this House indicated that that was entirely fitting and proper to the dignity of the office holders. We say "Amen" to that.

The noble Lord also referred to the creation of severance payments to Ministers who cease to hold office, for whatever reason, before reaching the age of 65. I believe that in another place, and certainly in this House, we support the general premise on which this new arrangement has been made. The noble Lord the Leader of the House referred to a night allowance to noble Lords, Ministers and other office holders in this House. That is the area in which I declared my own direct interest. In particular, the noble Lord dwelt somewhat on the basis and ratio of contributions to the parliamentary contributory pension fund. When the noble Lord replies can he say something more about the reference to the Top Salaries Review Body? Has he any news to give this House of the current state of those references?

I am sure that the House is grateful for the easement and the operation of the House of Commons Members' fund. My honourable friend in the other place, Mr. Alf Morris, has toiled for many years on behalf of Members of the other place with trustees who represent all sides of the House. He has spent many hours in working out the best arrangements. I am sure that the noble Lord the Leader of the House and many others are aware of the painful circumstances in which the widows of many former colleagues have found themselves. It is eminently fitting that the current rules and regulations are being eased so that the trustees can be a little more generous.

In my view, all these matters are modest but entirely fitting and proper in 1990–91 to give to our parliamentarians a better deal than they have hitherto enjoyed. We on this side of the House are very grateful indeed, not only to the noble Lord the Leader of the House but to his colleagues in another place who have worked to ensure that these better arrangements are brought in.

3.36 p.m.

Lord Rochester

My Lords, I feel somewhat diffident about speaking on this Bill since much of it affects the interests of Members of another place. At least I have no interest to declare in the matter. Noble Lords like the noble Lords, Lord Graham of Edmonton and Lord Boyd-Carpenter, are able to speak with more authority than I in drawing on their experience on a number of matters with which the Bill deals. However, I have some industrial experience of the administration of pension schemes and pay determination. Therefore, I may be in a good position to bring dispassionate judgment to bear briefly on those points which featured most prominently in recent debates on the Bill in another place.

I warmly welcome the introduction under Clause 5 of the new allowance for Ministers in your Lordships' House. I believe that I speak for all my noble friends, particularly those of us who stay in London during the week, in saying that the proposal that Ministers here should in future be eligible for the same overnight subsistence allowance payable on the basis of 220 days is wholly justified.

It is no reflection on noble Lords who now serve us so conscientiously as Ministers to say that we would all benefit if the noble Lord the Leader of the House and the Chief Whip were able to draw on more of their supporters as potential recruits to the Government Front Bench. That applies whatever the political complexion of the Government.

One of the issues concerning this Bill that most troubled Members of another place was that of the relative contributions to the parliamentary contributory pension fund made by the Exchequer and Members of the fund. I was surprised to learn that at present, in contrast to the situation in so many pension schemes in the private sector, Members of the parliamentary fund contribute 9 per cent. of their salary and the Exchequer less than half that amount; namely, 4.4 per cent.

The trustees of the parliamentary fund consider that in future there should be a fixed relationship between the contributions from the Exchequer and of Members, with the Exchequer bearing the greater share. However, that would have the disadvantage that Members' contributions would fluctuate and would thus lose the stability and predictability that they now have. In those circumstances, I am sure that the Government are right to refer the matter to the Top Salaries Review Body, particularly since the people who fund the employers' contributions are the general body of taxpayers.

The purpose of Clause 6, as the Leader of the House has told us, is to avoid the need to introduce primary legislation to make any changes in the balance of contributions that may eventually be agreed. Hence the provision for these changes to be effected by regulations. It seems to me reasonable to ensure in this way that the changes operate without undue delay.

Another matter which has obviously caused Members of another place considerable anxiety, though it arises only indirectly from the Bill, is the position in relation to the resettlement grant payable to MPs under their early retirement scheme. There appear to be two causes of concern. First, people ceasing to be MPs after the age of 65 are at present ineligible to receive the grant. Secondly, years of service as a Member of the European Parliament do not count as qualifying service under the scheme. I am glad that at Third Reading of the Bill in another place the Leader of the House said that the Government now accept that service as an MEP should count for this purpose so that all former MEPs who are now Members of the House of Commons would benefit from that change. A majority of Members of another place, of all parties, have indicated, as signatories to an Early Day Motion, that the whole question of the resettlement grant needs to be re-examined, so I am glad that the TSRB is to be invited to look at it again. The essential point is that on both those matters Members of Parliament are themselves potential beneficiaries. They should be determined, therefore, by an independent arbiter in the shape of the TSRB.

Finally, I come to the first three clauses of the Bill. If I may respectfully say so, throughout the 35 years in which I have been a Member of your Lordships' House we have been exceedingly well served by the noble and learned Lords who sit on the Woolsack. Their office is an onerous one, extending far beyond their duties here, and it appears altogether appropriate that they should in future enjoy this salary lead over the Lord Chief Justice and the other benefits for which the Bill provides. I do not propose to comment on the remaining provisions of the Bill except to say that they are entirely acceptable to us on these Benches.

3.43 p.m.

Lord Boyd-Carpenter

My Lords, as the noble Lord said, I have been involved in the question of ministerial salaries for a considerable time, going back to 1963 when the late Earl of Stockton instructed me, as Chief Secretary to the Treasury, to go into the whole matter of ministerial salaries. Your Lordships may, after this lapse of time, be amused to hear that in 1963 the rate of salary for a full member of the Cabinet was £5,000 a year—a rate which had been originally fixed in the year of grace 1841. In 1841 £5,000 a year was a magnificent remuneration. In 1963—I can give evidence, if necessary—it was very far from magnificent, being subject fully to tax and to the rise in prices. I am therefore particularly interested to see that this Bill has now been brought forward.

The Leader of the House in another place, John MacGregor, said that the Government had shown no indecent haste in bringing it forward. Indeed, that is so, because the committee which made these recommendations reported in 1988. Therefore, far from any indecent haste there might have been what could be regarded as a certain measure of stately delay in bringing it forward. Having said that, I particularly welcome Clause 5. As noble Lords may know, some of us have been deeply concerned for a long time at the wholly inadequate remuneration, particularly of junior Ministers and Lords in Waiting in this House. Given the age at which they are normally recruited—when acceptance of office involves interrupting a professional or other career and when there are very likely to be children beginning education—a very severe financial sacrifice has been demanded of noble Lords who have accepted, in particular, junior office.

If I may be allowed to say so, the House has been particularly fortunate in the high calibre and devotion to duty of those noble Lords who have in these circumstances accepted office. But it simply could not go on like that. One cannot create a situation in which really severe difficulty and hardship is caused to people and expect them nonetheless to be recruited into the jobs where that hardship will be found. I hope and believe that the substantial improvement—I use the words deliberately—which is involved for noble Lords, particularly for noble Lords in junior positions in this House, brought about by Clause 5 will provide a very large measure of relief. I warmly congratulate the Government on having now decided to bring it forward. It will help them to resolve what has been in the circumstances, as my noble friend the Lord Privy Seal admitted, the difficult problem of recruiting for junior posts.

I have one question to ask my noble friend the Lord Privy Seal as to the detail. As I understand it, the allowance that will be paid will be the same rate of allowance as the night subsistence allowance payable to noble Lords but will be based on the assumption of 220 nights. I take it that, in order to earn this, there is no obligation on the Minister concerned to be 220 nights in London. In certain departments the Minister may be required to travel all over the world to carry out his public duties. It would be ridiculous if he should be mulcted in this way because of that.

I express a doubt as to whether, if this is to work properly, 220 nights is enough. It is certainly not my experience of ministerial office that a Minister in a department in London worked only 220 days a year. If that had been so I think there are many noble Lords in this House who would agree that life would have been considerably easier. I doubt, for example, whether either the noble Lord the Lord Privy Seal or my noble friend the Chief Whip would really be able to say that they had only worked 220 days in the year. Therefore, I wonder whether the figure of 220 might be looked at again. I am sure that it is intended as a calculation, excluding weekends—that is, 104 days out of 365—but that still leaves quite a margin of days which are not covered; and most Ministers in most governments work for a great deal longer than that. Therefore, while my enthusiasm for the proposal is not diminished in any way, I hope that the figure of 220 may be looked at with a view to increasing it.

Having said that, I am very glad indeed, as I believe all your Lordships are, that the Government have decided to move in this matter. Among other things, it will make for the more efficient operation of the House by removing what has been quite a difficulty in recruiting and remunerating those who play so essential a part in its proceedings. In this day and age junior Ministers almost always have to be junior in age, and that is just the period of life when one is most vulnerable to financial pressures. Therefore, I congratulate the Government on their courage in going forward. I hope, subject to the point about the 220 nights, that the Government will carry this through. I believe that it will do an enormous amount of good.

The Earl of Selkirk

My Lords, can my noble friend say whether the Bill deals with the situation of widows of senior Ministers?

Lord Mackie of Benshie

My Lords, perhaps when he replies the noble Lord can clarify a point which has always worried me. I understand that the Lord Chancellor receives an enormously greater salary than the Prime Minister. Can he say whether that is so because the Lord Chancellor is worth more, because he works harder or because lawyers in this country are grossly overpaid?

Lord Dean of Beswick

My Lords, I should stress that I am not speaking in any way in opposition to the Bill because I fully accept it. However, in introducing and outlining the Bill, the Minister talked about fair treatment for Ministers and former Ministers to ensure that they did not lose out in total. Do I take it, therefore, that the legislation in no way covers Members of that place who have never been Ministers but who have been assiduous Members of that place without the benefit of a ministerial salary and who, in some cases, worked just as hard as Ministers, some of whom are now quite incapacitated and no longer able to attend your Lordships' House? Were those people considered in any way? If they were not, does that not indicate once again the provision of rather preferential treatment for a certain group of people?

I recall that about two or three years ago when the noble Viscount, Lord Whitelaw, was Leader of the House our remuneration—if that is the correct term—was under review. We were given an almost copper bottom guarantee that something would be done of a sympathetic nature in respect of former Members. Evidence was called for and given in extenso. However, the character of your Lordships' House had changed quite considerably from that which existed when the original pattern was set and, unfortunately, nothing has been done in the matter. Therefore, while I fully agree with what is proposed, I think it is rather regrettable that the people about whom I am talking—that is, some former Members of another place—are now living on very small pensions. It should be borne in mind that the pensions fund is well in excess. I cannot understand why the situation of those people was not given some consideration. I am sure that such consideration would have been sympathetically received by everyone concerned.

Lord Cocks of Hartcliffe

My Lords, in answer to the question put by the noble Lord, Lord Mackie of Benshie, and speaking as a member of the panel of the Chairman of Committees and in the presence of the noble Lord, Lord Aberdare, I should point out that the Lord Chancellor receives an additional payment because he is well worth it.

I ask the noble Lord who introduced the Bill to confirm that adequate time will be given to discuss the Bill both in Committee and on Report. There are many important questions involved in the matter. When I was Chief Whip in another place I had to deal with Members of my party who had lost their parliamentary seats. To serve in Parliament for perhaps five, 10 or 15 years and then suddenly to be truncated is difficult. It was not an easy transition to go from overalls on a shop floor in a factory to being a Member of Parliament. I ask your Lordships to consider the fact that the transition from being a Member of Parliament to being nothing was even more difficult. Therefore, I had much difficulty in trying to resettle Members who had lost their seats.

I think that substantial time should be allowed to deal with this aspect of the matter both in Committee and on Report. The Bill must not be rushed through on the nod. The issues involved are extremely important to individuals. If we do not consider ourselves as individuals at this level of the legislative process, then there is not much hope for those people—who number perhaps millions—who are unemployed. Let us, therefore, be considerate in the matter. I merely ask the noble Lord to confirm in his reply that there will be adequate time for discussion during the later stages of the Bill's proceedings.

3.57 p.m.

Lord Waddington

My Lords, I know that noble Lords are anxious to hear the Statement. I shall not, therefore, detain the House for very long. I believe that some noble Lords may have been concerned because on the original Order Paper my name did not appear as being the mover of the Second Reading of the Bill. However, I believe that that was corrected on a later Order Paper.

In my opening speech I was guilty of making a serious omission in that I did not thank my noble friend Lord Belstead for all the work that he has carried out in the matter. Indeed, he worked extremely hard to obtain what he believed was justice for Ministers in this House. We are all most grateful to him for the efforts he made.

The noble Lord, Lord Graham of Edmonton, welcomed the Bill on behalf of the Opposition Benches. I can assure him about something which he already knows; namely, that the Bill followed very protracted discussions with honourable Members in another place and also with noble Lords. We ultimately achieved a solution which now rightly receives a good welcome from this Chamber.

I was asked about the position regarding the reference to the TSRB of matters concerning the parliamentary contributory pension fund. The reference was made last week and a reply is expected by May. The noble Lord, Lord Rochester, welcomed the new overnight allowance. It is obviously not right that anyone should be dissuaded from serving in this place as a Minister as a result of not being adequately compensated for the fact that he has to have a second home. It was, of course, right to refer the various matter; mentioned by the noble Lord regarding the parliamentary contributory pension fund to the TSRB. The latter will also be looking at the question of severance pay for Members in another place.

I am most grateful to my noble friend Lord Boyd-Carpenter for his remarks. I echo his comments on the remuneration of junior Ministers. There will be no obligation on a Minister to be actually resident in London for 220 nights. It was really a question of obtaining a formula which, on the one hand, was related to the allowance paid to Back-Benchers in this House and which, on the other hand, would yield a result not entirely dissimilar to the allowance which is granted to Back-Benchers and Ministers in another place— that is, the so-called "additional cost allowance" which is payable to Members in the other place.

My noble friend Lord Selkirk asked about the situation of widows of senior Ministers. That issue is not dealt with in the Bill. However, it has already been dealt with by way of reference to the TSRB. I do not know whether I should now embark upon a long explanation as to why the Lord Chancellor is paid more than the Prime Minister. I shall leave that issue for another day. Suffice it to say that I am sure that the noble Lord agrees with me that it was rather absurd for the Lord Chancellor to receive a pension computed on a different basis from the way in which the pension of the Prime Minister is computed, or indeed that of the Speaker.

The noble Lord, Lord Dean of Beswick, asked about the situation of those who have left another place, who have come here but who are not as yet eligible for their pension—

Lord Dean of Beswick

My Lords, I was not referring only to Members of this Chamber. There are some elderly former Members of another place who have not come here and who are in a situation of distress.

Lord Waddington

My Lords, the House heard what the noble Lord said. Obviously, we did not set out to deal with everything by way of this Bill. However, I shall certainly bear in mind the points he made and try to catch up with the history of the matter. Further, I can promise the noble Lord, Lord Cocks, that there will be ample time for discussion of the matters about which he is concerned. With those few words, I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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