Orders of the Day — Local Government and Other Officers' Superannuation Bill.

– in the House of Commons on 7th April 1922.

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Order for Second Heading read.

Photo of Sir Herbert Nield Sir Herbert Nield , Ealing

I beg to move, "That the Bill be now read a Second time."

I gladly appropriate the fortune which attended me in the Ballot in order to bring in this somewhat prosaic but at the same time useful Measure. The time has long passed since there ought to have been facilities at any rate for a universal acceptation of the principle of the superannuation of local government officers. The principles of superannuation generally have been recognised for a very long time, and, although it is argued, and I think with truth, that the original superannuation of the Civil Service was upon special lines and had reference to a system whereby the prospects of old age were taken into consideration in fixing the emoluments for their services, there was no other attempt for a long time to apply this very beneficent provision to other public servants. The, Civil Service got their superannuation originally in 1859. They contribute nothing, although, since their superannuation was, as I have just said, considered to be part of their present emolument, and in the nature of deferred pay, there is, indeed, a contribution, of indefinable amount, towards their pension. In 1896, there came the Poor Law officials, and they are on a contributory basis, paying variable rates of 2, 2½ and 3 per cent., the rest being paid by the Poor Law guardians. In 1890—six years before the Poor Law officers—the police were granted superannuation, on the basis of a contribution of 2½ per cent., with contributions from the employers varying with the grade of the pensioned servant. Then, in 1898, the teachers had their first scheme. Originally it was contributory, but in 1918 a non-contributory scheme was introduced by the Government. That is in force to-day, and, as we all know, the proposals which are being made to alter it to a 5 per cent, contributory basis are arousing very con- siderable hostility on the part of the teachers. That is no doubt a matter which will be debated at length when the proposed Bill is brought in. In 1909 the asylum officers obtained their superannuation on the same basis as the Poor Law officers, contributing 2, 2½ and 3 per cent, according to circumstances, the authority making up the difference.

If there be a stronger case for the necessity of this Bill than is shown by the numerous private Bills which are promoted from time to time, I fail to find it. The private Bill procedure of this House is very often brought into play at enormous expense—one cannot emphasise too much the expense attending the promotion of Parliamentary Bills—I will not say altogether for the purpose of producing superannuation schemes and getting them authorised by special legislation, but it is certainly the fact that it has very largely operated upon the minds of these men who, no doubt, are desirous of obtaining proper recognition by means of superannuation—I mean the officers of various corporations and public authorities who are not yet covered— and would assist very materially in getting other matters joined together in a General Powers Bill, the prime object of which would be superannuation. The present Bill would obviate all that expense—I will not say waste of money, because I belong to a calling that profits by it; I will not say more than that it would avoid unnecessary expense. That is illustrated by the way in which Metropolitan schemes have been produced by private Bill legislation and passed during the last twenty years.

I find that the number of schemes is very considerable. In 1893, Croydon led the way, and, as regards Metropolitan boroughs, Stepney, in 1905, obtained an Act which set up their scheme. In 1906, the Bethnal Green Borough Council obtained an Act of Parliament upon the same basis, namely, 2, 2½ and 3 per cent, of the salary and emoluments, an annual contribution of £100 being made by the employers. Later on, in 1907, the Kensington Borough Council, the Metropolitan Water Board and the London County Council all promoted schemes for the purposes of superannuation, and got their Acts through. In 1908, a joint Act was obtained by Camberwell, Deptford and Hackney in combination, and an Act was also obtained by Marylebone very much on the same basis as those to which I have already referred. I should say that the Metropolitan Water Board is somewhat of an exception, taking from the employés 4¾, 5⅛, 5⅝ and 6⅜ per cent. In 1909, the Westminster City Council obtained their Act, which was amended last year. Wandsworth also obtained an Act in that year, and in 1911, Acts were obtained by Paddington, Poplar and Chiswick, which last-named was part then of the district which I represented in the House. In 1912, the City Corporation obtained their Act; in 1913, South-gate; and in 1914, Chelsea. Then came the interval of the War. I should mention the Port of London Authority obtained their Act in 1908. Then came the War, and the only Metropolitan or extra-Metropolitan scheme which has been framed and pased since then is the one for my own County of Middlesex. That scheme, although certainly it has only had twelve months' working, is now acknowledged by the most eminent actuaries of the day to be the embodiment of a sound financial scheme. I mention that because this Bill is framed on the Middlesex Act to fit the circumstances of a general Bill. Its provisions are such as to justify all that has been said about that Act.

I want to convince the House that this widespread system, so far as it has been already introduced by the expensive method of special legislation, will justify the claim to pass this Measure. In 1893 Croydon got its Bill, in 1899 Bootle, in 1901 Wallasey, in 1903 Birmingham, in 1905 Newcastle, in 1906 Edinburgh, in 1908 the Clyde Navigation. Newcastle amended its scheme in 1911 and St. Helens acquired powers, Birmingham amended its scheme in 1912, Liverpool had its scheme authorised in 1913, in 1915 Manchester and Cardiff obtained their scheme, and in 1921 Rotherham. Rother-ham and Cardiff both impose a 5 per cent, contribution on the employés. That is the basis of the proposal which I now make. There are at present no fewer than 10 Metropolitan boroughs, some in combination and some alone, proposing Private Bill legislation this Session, and if this Bill could be passed sufficiently rapidly to come into operation at a reasonably early date, this Private Bill legislation will not be necessary. The Lambeth Bill proposes levies varying from 3¾ to 6 per cent, on employés up to 42 years old. Ramsgate Corporation propose a levy of 5 per cent., and Bolton Corporation 5 per cent. Then there is this combination of local authorities in Metropolitan areas, including Shoreditch, Ber-mondsey, Finsbury, Greenwich, South-wark and Stoke Newington, and it would be for this Bill at this moment to try to prevent this constant application for special legislation by general legislation. When I had the good fortune to obtain an opportunity for introducing this Bill it was suggested by some that the Bill might be on the lines of the recommendations of the Departmental Committee. One of these recommendations is that this Bill should be universal and compulsory. I differ entirely from that. Having regard to the financial position of the country, it is impossible to expect to get a Bill through at this moment which makes it compulsory on all local authorities to adopt a scheme, and this Bill is purely optional.

As to the numbers who are already under superannuation schemes, the figures which I give are only approximate, because it is impossible with absolute accuracy to ascertain numbers which fluctuate. I have before me figures which state that civil servants at present number 200,000. These are people who are secured and always have been secured since 1859. The Poor Law officers are a much more doubtful number. Approximately in January, 1921, they numbered 57,900. Some of these were under the Asylums Board. So a reasonable estimate would be 50,000 people who are insured by reason of the Act of 1896. For the police the estimate is that the number of police under superannuation at present is 59,856. To these must be added a number of prison officials under special schemes 2,140. Then there is superannuation for a number of the community who are secured pensioners. The teachers, it is estimated, number at present approximately 180,000 who will benefit under the Superannuation Act: Then there are asylums officers given separately, 24,000. So in connection with those general services there are 516,376 persons approximately who are benefitting already by general schemes not of application merely to a particular area, but which are general to the particular calling of the persons engaged. Coming to the system of local government, it is stated that there are at present no fewer than 60,000 officers, as well as 200,000 workmen employés of local government institutions who are already covered by their local schemes. There are also others covered by existing local Acts. Therefore the grand total of those classes whom I have enumerated amounts to upwards of 570,000.

The total number of public servants who will be eligible to come under this Bill is 38,500 officers and 167,000 working men, so that the figures of those left outside are altogether disproportionate to the figures of those who are covered, and it is anomalous that these men should remain without the option of getting, in their old age, the pension which is possessed by the overwhelming number of those who are engaged in similar occupations, it being merely a question of accident as to whether the body for which the person works brings in a Bill for the special purpose, and incurs great expenditure. So far as the proposal to give districts the option to adopt the scheme under this Bill is concerned, I do not think that it is unreasonable to give a chance of obtaining superannuation to any man in the service of a local authority who is getting into years when the period of superannuation, if it existed, would have arrived. Local authorities are always loth to act in a manner which might be regarded as harshly or unjustly towards their old servants by compelling them to retire, dismissing them, throwing them out into the world to face the difficulties of the situation, because many of us know of the inability, especially in times like the present or even without regard to the War, of a man occupying the average position of a Local Government Board officer to save any money out of his salary if he has to bring up a fairly numerous family. It is impossible. Therefore the most the man can do in those circumstances is to provide a reasonably comfortable home and to provide a suitable education for his children so that they may get a start in life.

Such a man cannot save for a rainy day a sum sufficient to give him the equivalent superannuation. It is true he may enter friendly societies or he may take out a policy on his life, but that will not provide for him. Such a policy is a burden if he is dismissed from his employment by reason of advancing years rather than inefficiency. Under these conditions, is it not a more wholesome policy and better for the public that he should be able to look forward to a competence in the nature of a superannuation allowance, and make way for some younger man at a reduced salary, because, presumably, the older man would have advanced along the line and would have got the maximum pay that the office was worth? The difference in the salaries would thus be saved by the local authority, and could be, set off against the five per cent, which the local authority would be called upon to contribute under this Bill. I am told that the anomalies are such that at present of two men working side by tide in the same office one may be secured superannuation and the other not. There is a further illustration. While every teacher is able to look forward to superannuation without contributions, the clerks of an education department, attendance officers and others engaged on the purely administrative staff of an education authority, have no superannuation. How can one justify that? It is utterly impossible.

Under this Bill it is possible for an authority to cover every conceivable public service. That would put an end to an anomaly which works very great hardships. Some authorities have superannuation and others have not. That means competition. It means that the authority which has not adopted a superannuation scheme is in risk of losing its officers, unless it puts up salaries to such a figure as will counterbalance the salary of a similar position in an adjoining council where there is a superannuation scheme. It is a painful thing, spoken of again and again in this House, that there is this competition when an officer has proved himself exceptionally able. Authorities are constantly advancing salaries when they issue public advertisements of a vacancy in order to attract such officers, and salaries are sometimes swollen beyond the point which a position demands. General superannuation will give authorities the opportunity of adopting the provisions of this Bill and will do away very largely with many anomalies. An authority may want an officer who is already serving another authority and has a number of years' service under a pension scheme. If that officer accepts the new position he must sacrifice his years of contribution under the old authority. Every facility ought to be given to a man to carry forward his past contributions. Then there is a suggestion for grouping areas, so that they may be able to maintain a financially sound scheme.

Commercial houses, banks, railways, insurance companies and large employers of every description have found it to their advantage to establish superannuation schemes among their own staffs. The whole tendency of modern times has been to encourage this system of making provision by superannuation for old age. The passing of this Bill would very materially help the public service. I have here a statement made by Mr. Duncan Fraser, the auditor of the City of Manchester, who was called in to deal with the cost of their superannuation scheme. It is a preliminary report and this is what he says: The cost of a Superannuation Scheme may appear to be heavy, but there are so many incidental advantages and savings that there is no doubt in my mind that the adoption of such a scheme is to the advantage of the Corporation, even from a pecuniary point of view. In this connection I quote the following expression of opinion, with which I fully agree, from an Actuary of great experience:—A fund, maintained in a sound financial condition, is, in my opinion, a blessing to both employer and employee.The employer has the pick of the clerical market for the salaries offered, for a man would sooner take service in a firm where a pension is guaranteed, and at a lower salary than where no pension is promised; he secures a continuity of service, for the employee will think twice before he leaves a service, where he has a number of years to his credit for pension, for a small additional income; and if he (the employer) makes a proper contribution to the Fund, in addition to guaranteeing a good rate of interest, he secures efficiency in the service by superannuating his servants with a reasonable pension when they are no longer useful. His salary list is a good 5 per cent.—I am inclined to think, in many cases, nearer 10 per cent.—less than it would be if there were no Fund, and I do not think, therefore, that he can reasonably object to subscribe 5 or 6 per cent, of salaries to the Fund.'In considering the cost, I would further draw attention again to the large number of persons in the service of the Corporation who are already 65 years of age or over. At 31st March, 1919, this number was 422, and their salaries, wages, and emoluments amounted to £47,490. There is no doubt that many of these men are practically superannuated, although they are nominally in receipt of salaries or wages, and if there were a regular superannuation fund the Corporation's contribution to such fund would take the place of the existing salaries and wages. Then, again, a portion of these men who are drawing maximum salaries would be replaced by juniors at the lowest end of the scale. It will be seen, therefore, that there are many set-offs to the cost as shown above, but from the nature of the case it is impossible to reduce them to precise calculation. That reminds me of a case in my own county not many years ago. An old and very valued servant had arrived at the time when he could no longer perform his duty efficiently. It was impossible to expect that he would go on, and yet he had been associated with the county, in its history as a local government entity, since 1889. He had done work the lull extent of which could not be over-estimated. The difficulty was to know what to do-with that man. You could not cut him off. Under the old scheme his income had been, as it were, "farmed"; he had assistants in the office, and he was receiving what I may call a "farmed" salary, which was hopelessly insufficient to make proper provision for superannuation. The time came when the county council had to face the difficulty of whether or not they were going to send this man adrift. The solution arrived at was that while the duties of his office should be performed by his successor, he should be continued in one of the three offices which he formerly held, and an adequate allowance made to him nominally by way of salary for discharging a duty, while that duty was actually performed by another, and this man very rarely, if ever, entered the Guildhall. By this device, and it was only a device, a reasonable income was allowed to him to live out his few remaining years in relative comfort. That will not be done by many authorities, and it is necessary to have a scheme such as this, which will put beyond question hardships in such cases.

Much more could be said upon the desirability of such a system. The subject has been dealt with by successive Presidents of the Local Government Board and by Ministers of Health. In 1914, two months before the War, the Right Hon. Herbert Samuel received a deputation from the National Association of Local Government Officers, and after reciting the way in which some classes of officers, by legislation, had obtained pensions, stated he was proposing to take steps to do the best he could to help some such scheme, some such general Measure as I am introducing this morning. He said: Therefore, I propose, as the outcome of this deputation, to draw up a statement of the present position in regard to the superannuation of local government officers to make mention of the various considerations to which I have drawn attention to-day, and to communicate with the great organisations that represents the local authorities, to communicate officially with the Municipal Corporations Association, the County Councils Association and the Urban and Rural District Councils Association, and to ask them whether they would approve an inquiry being held into the whole of this vast question—for it is a question of great importance involving immense sums of public money as well as private contributions from your officers and affecting tens of thousands of persons, and also having a great influence on the future of local government in this country. I am not sure that it is not of sufficient importance for inquiry by Royal Commission, but upon that I do not wish to prouounce. It may be some other form may be found preferable. I am glad you have drawn my attention to this matter. Your Association represents a great body of men who take a great interest in this matter, and you have brought to my attention to-day a topic which has for many years past exercised the minds of a great number of Local Government officers, and I hope the steps I am now proposing to take will meet with your concurrence and possibly that the outcome will be an advance towards its goal. The War came within two months of that, and it was not found possible to do anything. In February, 1918, the late Lord Downham, then President of the Local Government Board, received a deputation from the National Association, and I will quote from the answer which he gave:— You have no difficulty in proving your preamble to me. It has indeed been proved, long ago, that superannuation produces from the point of view of the employer— which is the public—as well as the employed the best service in the interest of the employer. If anything, matters which have occurred since the War have accentuated and strengthened the case for superannuation. I am never tired of expressing heartfelt gratitude to Local Government officers for the marvellous way in which they have responded to the different calls made upon them to put their local machinery at the service of the Government for the purpose of carrying out national objects to national interest. One cannot praise them too highly. When we consider the problems of reconstruction, we realise the difficulties which will arise from changes which may occasion the need for transfer of duties and of officials from one branch of administration to another. My friend Mr. Fisher at the Board of Education has already been confronted with that problem in thinking what Parliament will be able to do in the matter of teachers in secondary and technical schools. I shall communicate at once with the County Council Association, the Association of Municipal Corporations and the Urban District Councils Associations and inform them that I have in my mind the immediate—not future—setting up of a Committee, if I can get the services of suitable gentlemen qualified to make examination of this proposal. I should indicate not unwillingness but a willingness and desire to carry the question a stage further. A scheme of superannuation would undoubtedly be a great improvement to the public service which you so ably carry out. Communications were sent to these authorities, and the result was a Departmental Committee was set up and they reported in July, 1919, on the desirability of a scheme of superannuation. I shall not weary the House with long quotations from the Report, but I should like to read a paragraph from Section III of the Report, which was the unanimous part of the Report: We do not hesitate about the first part of our reference. It is undoubtedly desirable that superannuation should be introduced for persons employed by local authorities in England and Wales I do not understand why the Report does not include Scotland also— Not only public authorities … but many private undertakings have put into force schemes of superannuation, … In other ways an acceptable system of superannuation tends to safeguard efficiency; by this means persons employed are relieved of anxieties for their future when advancing years or failing health may deprive them of the power to work: the employer on the other hand secures a more contented staff unburdened by the presence of aged or infirm members retained out of compassion, who, although they can no longer discharge adequately the duties of their offices, remain, … Witnesses have cited to us numerous instances in which local authorities, out of regard for long and faithful service, have continued to employ persons who are unfit by reason of old age or infirmity to carry on their duties efficiently. Some continue to do their work, though not as it should be done, some virtually do no work at all, and others have been appointed to consultative posts at a reduced salary not always with advantage to the service. The right hon. Gentleman the Member for Shoreditch (Dr. Addison), when Minister of Health, also received a deputation of the same sort, and in his answer he said that a Bill was actually in the hands of the Government draftsman and would be put upon the stocks, but nothing has come of it. It may be that the Geddes Report is frightening the various Departments of the Government. Sufficient to say no such Bill has been introduced by the Government nor has any notice been given of any such Bill. I think I have reason to suggest that, unless this Bill is passed, it may be some considerable time before the local government officers will be able to accomplish this desirable reform. I have said that this Bill is founded on the Middlesex Act of last year. That Act, in addition to applying to the staff of the county council itself, contained a provision enabling the Act to be adopted by any of the Middlesex local authorities with a population of 50,000 or over. If that be so, and it is a strange thing that the Bill passed Committee in both Houses without any opposition, how unjust it is that local authorities in areas of 50,000 people and upwards in, say, Hertford, or Kent, or Surrey, should not have equal opportunities with those possessed, by accident, by the minor authorities of Middlesex. This Bill will cure that. I have already commented on the favour able criticism of the Middlesex scheme actuarily, and I need not say that every local authority which chooses to adopt this Bill will be in an equally good position.

I have done, for I hestitate to say anything further, or to give more statistics to the House. I understand there is minor opposition only. I am looking for the hon. Member who was to have moved the rejection of the Bill and I do not see him; it may be that task is now in the hands of others. I understood the rejection was to be moved by those who are interested in the urban districts and the small rural districts, and that the ground of their objection is that these authorities are too small to be able to establish a financially sound scheme. I cannot understand that reason at all. In Committee it would be perfectly competent for us, without interfering with the scope of the Bill, to move that there shall be groups of the smaller authorities in order to bring a scheme into operation and to ensure that it may be sound financially. If the Committee choose to insert a provision for grouping these bodies, it will not be difficult to carry it out. It is rather an unworthy object to try to wreck a Bill because there may be some authorities so small that they cannot support a scheme financially. Why should not the officers of their larger brother authorities have the benefits of such a scheme? Then I am told they would rather wait, and wait an indefinite time, to get a general and compulsory Bill. I do not think that is the opinion of the great body of local government officers, and as this Bill has been presented with the full concurrence of the national association, I would prefer to take this view rather than the view of the Urban District and Rural District Councils' Association. I cannot help thinking there is another reason, maybe a hidden one, why opposition is offered to this. Of course, it will do away with the necessity for promoting private Bill legislation. It will, no doubt, limit very largely opportunities for expenditure there, and that may not be viewed altogether with friendliness in certain quarters, but I sincerely hope that is not the real reason why this opposition is offered. Again, it is objected that the Bill does not include part-time officials. My answer to that is that I am perfectly willing, as introducer of the Bill, to extend it to part-time officials if the Committee upstairs agree. I sincerely hope it may be possible to send this Bill upstairs, in order that it may be investigated by the Committee. I ask the House, in fulfilment of the debt that the country owes to local government officers, who have hitherto not been able, by the misfortunes of their situation, to get the benefit of superannuation, to pass the Second Reading of the Bill, and send it upstairs for more minute investigation in order that the very substantial grievances of a very deserving class of public servants may be remedied.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Ladywood

I desire to second the Motion.

Looking at the general question of superannuation from the point of view of local government administration, I think it might be said that three advantages present themselves to one's mind. First of all, it enables a local government authority to attract to its service a better class of men than it could otherwise get. Secondly, it enables the authority to keep officials in its service for many years and enables it to remove an official who has ceased to be efficient through old age without doing him an injustice or running contrary to its own natural feelings. I have worked in close association with a large number of local government officers. They do not have a very easy time of it. They have to serve masters who are constantly changing and they have to combine a loyalty to these matters and their changing policies with what they believe to be the interests of the department they serve. Whenever there comes a crisis such as those of which we had many during the War, and at times of extensive trade disputes, it is always to the local government officers that we go to organise whatever arrangements may be necessary to deal with the crisis, and in the last few years there have been brilliant examples of public service by these officers. It may be asked, If we have been so singularly successful in the type of public servant we have succeeded in attracting to local government, what need is there to do anything further? It is true that under most of the larger local authorities superannuation schemes are already in existence. I would make two observations upon that. It is the case, unfortunately, that the preserve of local government officers is no longer inviolate. There is a hungry wolf, with a heavy paw, in the shape of the business man, who is continually prospecting among local government officers to see if he cannot find some whom he can attract to his own service, thinking their abilities are being Wasted in their present occupation.

It is a fact that a good number of men have been attracted from public service into commercial life by the prospect of substantially - increased remuneration. Happily, money is not everything to a great many people, and many who enter the public service cannot be induced to leave it by the most tempting offers, because they are pround of their work, they love it, and they would not exchange it for anything else, especially for work of a character which is unfamiliar to them. But it is necessary to make these officers as comfortable as possible, and to give them every inducement to stay—shoit of trying to compete for their services with business and commercial concerns, for that is utterly beyond the capacity of local councils. Short of that, everything should be done to encourage them to stay, and to give their abilities and experience to the public service. The great local authorities have to choose their officers from a field which embraces the smaller local authorities, and as a rule those who come to the big provincial towns are men who have begun public service under some quite small authority.

If these small local authorities cannot continue to attract a superior type of man, the big authorities, even those with superannuation schemes, are going to suffer, for they will not have the same field to draw upon. That seems to me a strong argument, from the point of view of the local authorities, in favour of a general superannuation scheme. My hon. Friend has described the general position with all its anomalies and all its unfairness and all its injustices, and he has shown that we have side by side officers doing similar work, one of whom may look forward to enjoying a superannuation allowance, while the other has no such privilege. That is not likely to lead to contentment and satisfaction in the service. The position, as he has pointed out, has been recognised by Minister after Minister. It is very seldom you find a private Member's Bill introduced into this House which has behind it such a history of official approval as the present Bill, and although the Minister of Health does not, I know, agree literally with everything that his predecessors have done or said, I venture to suggest that, in this respect, he will take the view expressed by the right hon. Gentleman the Member for Shoreditah (Dr. Addison) when he said that he did not wonder that after 35 years of talk, and nothing done, the local government officers felt they had a legitimate grievance.

My hon. Friend has not thought it necessary to go into any analysis of the Clauses of the Bill. Many of them are somewhat technical in their character and when he has not thought it necessary perhaps I need not step in where he has feared to tread. But I should like to make an allusion to one Clause, namely, Clause 2, which gives permission to local authorities to adopt the Measure. As the Bill stands at present, it applies to all officers and all workmen employed by local authorities. It is, I think, the fear that a measure applying to all workmen might involve considerable expenditure that has kept a great many local authorities, especially the smaller ones, from adopting a scheme of this kind. Experience shows, as a matter of fact, that workmen do not take advantage of schemes of this kind to anything like the same extent as officers. Take our own experience at Birmingham. The number of workmen in our scheme is only one-third of the number of officers, although the number of workmen employed is vastly in excess of the number of officers. Therefore I do not think that the fears of local authorities—if they have had such fears—are likely to be realised. It does seem to me that since this is a permanent scheme it might be a good thing to allow an authority to adopt the Measure in respect of its officers only, or its workmen only, because that might induce an authority to begin a scheme, let us say, in respect to its officers, which would never put a scheme into operation if it were obliged to include not only its officers but its workmen. I suggest to my hon. Friend that he should give favourable consideration to any Amendment upstairs which would have that effect. I would repeat only what my hon. Friend has said, that it would be inconsistent and illogical on the part of any authority who thought this Measure did not suit a particular need, to deprive other local authorities of its benefits if they thought it suited them. I hope the House will be unanimous in giving a Second Reading to the Bill and will devote to it very careful and sympathetic consideration upstairs.

12 N.

Photo of Mr George Roberts Mr George Roberts , Norwich

I would like to associate myself with the Second Beading of this Bill. On the general principle, I am desirous of seeing every employed person, whether employed by local authorities or by firms, possessing the security of superannuation throughout his working life. For the greater part of my life I have been associated with the trade union movement, and I have always urged that superannuation schemes should form part of the operations of that beneficent organisation, because I have experienced that when men can look forward to a particular time to enter into the enjoy- ment of superannuation benefit, their membership is more stable and they act much more responsibly than if they had nothing to risk. It can be supported by evidence, if necessary, that the best trade unions in the country are those which attach great importance to the benefits of superannuation and similar schemes, and if that could be generally adopted, much of the abuse complained of in these organisations would be eliminated, because of the fact that these benefits tend to create a much more intimate interest on the part of the member than if they were absent.

In respect of public services, I think this House has a special responsibility. So far development has been very casual and haphazard. My hon. and learned Friend the Member for Ealing (Sir H. Nield) was able to point out that numbers of public servants are already in the enjoyment of this benefit. It seems to me indefensible that there should be others equally worthy, rendering equally good service to the public, who are denied these benefits. I have no hesitation in saying I would have preferred a comprehensive and compulsory scheme. I feel that if the case be of the strength submitted here to-day, the mere doubt which will exist as to whether worthy persons can enjoy the benefit or not is not a desirable state to create. Nevertheless, we have to look at these matters from a practical point of view, and I am told that the representatives of these officers entitled to speak on their behalf are prepared to accept this Measure in the hope that it will develop into what they desire, embracing the whole of the public service in a scheme of this character.

There are many anomalies familiar to everybody. We know of cases such as this. A clerk to a borough in London is entitled to superannuation, whereas a town clerk of a borough, such as that I represent, is not so entitled. Again, a rate collector appointed by a board of guardians is entitled to superannuation, whereas one appointed by a district council is not so entitled. I think that we must aim at shaping a policy which will remove all these anomalies, and make the provision of superannuation one of the general principles of public service; and, of course, we ought to urge Government and public authorities to set an example to private firms in this matter. This movement has spread very rapidly amongst the best firms in the country, and many of them have now made provision on behalf of their employés for superannuation. In the general interest of the employed persons, it is all to the good, because, as my hon. and learned Friend has pointed out, the absence of such a provision very often blocks opportunities for promotion. Naturally a local authority, and very often firms themselves, having had excellent and efficient service on the part of somebody in their employ, are very reluctant to discharge him, even at an age when he can no longer render such efficient service, and, as has been pointed out, many devices are resorted to. I know friends of mine who have reached an age when they ought to be able to retire, but, because of the absence of any provision for superannuation, they are retained by their councils in a consultative capacity, whereas the work is being performed by other and younger men. This involves an additional expenditure to local authorities. It also has a tendency to block promotion, and, of course, to destroy the stimulus which is necessary to secure the best services from these younger men.

For all these considerations, I think it would be a very gracious thing for the House to accept the Second Reading of this Bill without opposition. Again, I think opposition will very largely be avoided because of the fact that the officers concerned have accepted the principle of contributing towards the scheme. For my own part, I always felt that with contribution on the part of those who are to receive benefits, it can never be alleged against them that they are in receipt of anything in the nature of charity, public or otherwise, and it does tend to induce a constant interest on the part of those who contribute to such schemes. I remember, when I used to sit with my hon. Friends on the other side, we engaged in a great controversy within our own party as to the advantage or otherwise of a contributory or non-contributory scheme of health, and subsequently unemployment, insurance. I stood then with those of my colleagues in favour of the contributory principle, and so it is I am glad to see that these officers concerned have accepted this principle, and are willing that it should be applied in this case. With reference to the Bill itself, I have found a perusal of it to be rather involved. I am certainly not in a position to-day to pass in review its several Clauses with any particular intelligent capacity, but undoubtedly it has been very carefully drafted, though I can conceive it will require very close consideration on the part of the Standing Committee, to which, I presume, it will be referred. Having regard to the very comprehensive statement of my hon. and learned Friend who introduced this Bill—and I congratulate him upon having made very good use of the opportunity he secured in the Ballot—I think it is unnecessary to weary the House at any great length, but I certainly trust the House will give this Bill a Second Reading.

Photo of Lieut-Colonel Arthur Buchanan Lieut-Colonel Arthur Buchanan , Coatbridge

Like my hon. Friend the Member for Ladywood (Mr. N. Chamberlain) I have had some experience of dealing and working with officers of local government bodies, and I would like to join with him in intense admiration of these officers, as also for the way they stick to their own business and will not leave for employment with private individuals. I have in my mind an official of a local authority in Scotland who not many years ago was offered a salary in London double what he is getting at the present moment, and with half the work, and yet his loyalty was such to his present employers, the county council, that he is still remaining where he is at half the salary he might have been getting. My hon. Friend also referred to the difficulties of these men's work. He said that the policy changed, and they had to keep pace with the change in policy of the 'members of their authority. Difficulties are also made for them from another fact. I think he will agree with me that there is a large number of members of every local authority who consider that the officials are made for their special convenience, and they bother them morning, noon and night. I think everyone in this House is in sympathy with these men, who work so hard, and if we can do anything by this Measure to put them on a more satisfactory footing, and give them something to which they can look forward in their old age, we ought to do so. This Measure does something else. It gives some small sum to widows. I think this Measure will also lead to a very great extent to a change from the practice of keeping officials when long past their work. I have in my own mind a dear old gentleman. It was really a mercy when he was taken aloft, because, in the kindness of our hearts, we were never able to get rid of him, and our work was never done.

There is one little point on which I should like to ask my hon. and learned Friend to enlighten me. Under Clause 16 it seems to me that the older members of staffs at the present moment who have not contributed may, by special resolution of a local authority, have an increase to their superannuation allowance. I should like to ask my hon. and learned Friend whether, under Clause 19, there is not a chance of the younger contributors who come on later having to increase their contributions to the superannuation fund. I suppose it is hardly likely, because there will be so few of these staffs who have attained the age of 55, but I think it is always the tendency of the local authority to take the word "may" to mean "shall," and to be too generous, and give the higher amount to people who are retiring. Is there any chance of this creating what I may call a slump in the funds?

Photo of Sir Herbert Nield Sir Herbert Nield , Ealing

The hon. and gallant Gentleman may rest content that that contingency has been fully dealt with by the framers of the original Act.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

The House will probably expect a few explanatory words from me on the Bill. The subject is a familiar one, and has been discussed for very many years, both in Parliament and outside. It was the intention of the Government at one time to introduce a compulsory Bill to cover the question of superannuation of officers of local authorities throughout the country, but it was felt in the present case of local finances that a compulsory scheme would entail a heavy burden, the imposition of which could hardly be faced at the present time. The hon. Gentleman who introduced this Bill, and those who are working with him, are proposing merely that this Bill should be of a permissive character, that it shall allow local authorities to proceed in so far as they think they possibly can. That, of course, throws a greater responsibility on the local people themselves. I have listened very carefully to the speeches of those who support these proposals, and I note that they confine themselves to the question of the principle that something more ought to be done as regards superannuation funds by local authorities. They did not, however, enter into the very difficult questions raised by this Bill, which has 30 Clauses, some of which raise very serious actuarial points, and technical and financial difficulties.

Such a Bill as this runs the risk of imposing upon the local authorities of this country the figure estimated at something like three or four millions a year. Hon. Gentlemen have not entered into the very difficult actuarial calculations of the additional burden to the rates that this Bill will or will not impose. The hon. Member for Ladywood (Mr. N. Chamberlain) pointed out that the employés, that is the workmen, of the local authorities would not avail themselves of this kind of scheme. Everything hinges upon that. The officers of local authorities are, of course, a very limited number, and the amount added to the rates by a scheme of this kind, if they only were dealt with by the Bill, although considerable, would not be overwhelming. It is only right that I should say I am not using this argument, of necessity, against the Bill, but hon. Members ought to have some conception of the possible consequences which this Bill may have, so that a survey of the whole circumstances may lead us to a definite conclusion on the matter.

This Bill is drafted so as to extend to local authorities as small as parish meetings and parish councils. Anyone with any experience of superannuation funds will know that local authorities with two or three or perhaps half a dozen officials cannot possibly bear a superannuation fund. A Departmental Committee examined this Subject, and confined superannuation schemes to local authorities with a population of over 50,000. The hon. and learned Member for Ealing (Sir H. Nield) himself realised the difficulty and proposed—though I am not for the moment prepared to say whether or not it is a good proposal—a grouping system. But apart from this, I question very much whether the matter would go forward. That matter will have to be very carefully looked into in the Committee stage, and we then would also have to consider the recommendations of the Departmental Committee. We have very little actuarial knowledge of the circumstances involved in this Bill. I am not sure, but I believe when the Middlesex County Council introduced the Bill on which this Bill is drafted, no actuarial calculations had been made, and only experience, of course, will show how far such a system proposed would or would not be sound.

It is proposed in Clause 19 that in the event of a surplus or deficiency being disclosed on an actuarial valuation such surplus or deficiency is to be credited or debited to the local authority. In the event of a deficiency the rate to be charged to future entrants may be increased to such an extent as will prevent a further deficit. But the Bill is silent as to how the local authority is to liquidate the accrued deficiency. If the Clause means that the amount of any deficiency is to fall upon the rates in a lump sum in the year in which it is disclosed, it is obvious that the proposal is impracticable. If the deficiency is merely intended to be a moral obligation on the authority it will grow at compound interest and eventually impose a crushing burden on a generation of ratepayers not responsible for its creation. Similarly, in case of surplus it would be unsound to divert a surplus, which might have arisen owing to fortuitous circumstances, in aid of the rates for any one year. Financial prudence obviously requires that a surplus should be carried forward until sufficient experience has been obtained of the working of an individual fund to indicate definitely that the contributions paid are in fact in excess of the requirements. Frequent variations of the scale of contributions should clearly be avoided. Examination reveals a good many serious differences and difficulties, and that is why I want the House to realise that, in dealing with a matter of such considerable importance, the matter should be given the most careful attention. There is a good deal to be said for that from the point of view of local administration. No one wishes to dispense with the services of old and faithful officers who for many years have served with great ability and devotion without giving them something. I am sure nobody has the heart to cut them off without any pension. On the other hand, it must be remembered that in many cases on retirement a number of years are added to their service. I think all these things should be borne in mind. I have to safeguard myself in these matters in view of the cost of the actual terms which are now proposed, which I think on close-examination will be found not altogether easy to carry out. There is a very important question arising in regard to the definition of salary. The Bill defines, salary as including: Any war bonus or part thereof which may be made a permanent addition to salary. This is one of those things that requires looking into very carefully. We know the kind of difficulties which have arisen by treating war bonus as part of the salary when it comes to pension rights. We know the difficulty that has arisen by war bonus given only on account of the high cost of living purely as a temporary measure when it comes to the question of the pension allowance, and therefore that part of the Bill will require very careful scrutiny. All these points have to be very carefully considered and safeguarded. I am inclined to think the most practical plan will be to include war bonus in salary for the purpose both of contributions and of benefits. Clause 2 empowers any authority to bring itself within the scheme by a resolution passed by the majority of the members of the local authority. I think it is essential that the members concerned should be made fully aware of the burden which would fall upon the rates.

Photo of Sir Herbert Nield Sir Herbert Nield , Ealing

The Act of last year, on which this Bill is framed, actually gave the inhabitants of Middlesex the right to adopt it, and Parliament finally accepted that provision.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

I do not remember that that question was actually before the House.

Photo of Sir Herbert Nield Sir Herbert Nield , Ealing

The Bill proposed to give that power to cases under 20,000, but the chairman of the Middlesex County Council conceded the point that 50,000 might be put in its place.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

I do not think in these matters we should be governed by the decisions of the Middlesex County Council.

Photo of Sir Herbert Nield Sir Herbert Nield , Ealing

You might do worse than that.

Photo of Sir Alfred Mond Sir Alfred Mond , Swansea West

At any rate, I think these other facts ought to be fully considered. I am afraid that the carrying out of some of these duties imposed upon the Minister of Health would make that Minister very unpopular. There are, of course, a considerable number of further points, with which I do not want to trouble the House at the present time, but which, if the Bill gets a Second Reading, we shall have an opportunity of discussing upstairs in Committee. I do not raise these points in any hostile spirit, but this is an important Measure, and no one in charge of my Department can disregard the question of the financial and actuarial stability of the scheme. When we get into Committee all these points will have to be considered, and I have no doubt that the promoters of the Bill will be ready to receive any reasonable suggestion.

Photo of Sir Thomas Bramsdon Sir Thomas Bramsdon , Portsmouth Central

I am sure that we are all grateful to the right hon. Gentleman for his criticism of this Bill. His criticism is not unfriendly, and it does raise some really important points, which we are very glad to have. May I say, as one of the promoters of the Bill, that I am sure that my hon. Friends associated with me will be only too glad to give every possible consideration to any reasonable suggestion made on these points in Committee. He starts, however, with the idea that there is a general census of opinion that this Bill is wanted both by corporations and officials, and that is a very healthy thing with which to start. We in this House are constantly devolving duties and powers upon the local authorities, and it is therefore desirable that those who have, by administration, to discharge the work which we devolve upon them should be deserving officers, efficient officers, and contented officers, and at the present time there is not that content which should exist. We shall, by passing this Bill, very much improve the general administration of the local authorities throughout the country. It will encourage efficiency, it will encourage thrift, and it will place the general regulations as to superannuation and pensions on an ideal and unified basis. It is rather anomalous that there should be so many systems in existence throughout the country, and I hope, if this Measure works with success, as I think it will, that we may have other institu- tions coming in to participate in this general scheme, and that it may even become universal throughout the country. I am cordially in favour of the Bill, and all I wish to do is to express my approval of it.

Photo of Mr Granville Wheler Mr Granville Wheler , Faversham

I have been asked to mention the views of the Rural District Councils Association. When all is said and done, the rural district councils at the present time are in a very difficult financial position, and they have asked me to say that, after consideration of this Bill, while they realise that it can be put into operation by the bigger bodies, they do not, owing to their difficulties, see very much likelihood of schemes being adopted by the rural district councils. I would not for one moment subscribe to the view that, because they cannot put it into operation, therefore other bodies must not be allowed to do so. That seems to me to be quite an unfair attitude to take up. The rural district councils, owing especially to agricultural depression, are to-day in a very difficult financial position. They find it very hard even to collect their rates. Therefore any further burdens which they may have to face is a very difficult proposition for them, and one which they have to consider. We fully realise that this Bill will require most careful consideration in Committee. The grouping system may be a way by which these bodies may be able to come into the scheme, always bearing in mind that it must be optional to the bodies which make up the group. Realising that that system of grouping of smaller bodies may be a means by which a superannuation scheme may be brought into force in the rural districts, I do not propose to say anything more, though I have ventured to put these views before the House, because a great deal has been said on behalf of the urban districts which are in a better financial state. The rural districts are in a very critical financial condition, and, however much they may desire to do for those who serve them, their financial condition may make it impossible to adopt the scheme.

Photo of Sir Alexander Sprot Sir Alexander Sprot , Fife Eastern

Speaking as a councillor for a Scottish county, I desire to add a few words in support of this Bill. The strong point in its favour is that it is a permissive Bill. A county council or other local authority will not be obliged to adopt it unless it feels that its financial position warrants it in so doing. If, after discussion, a local authority finds that it is desirable to adopt this Bill, then it will have machinery at its hand in order to provide superannuation for its officers, which I hold to be extremely desirable. I am well aware of incidents such as those mentioned by other hon. Members. We have had old servants who have got past their work, and the problem has been how to dispose of them without dismissing them and leaving them with nothing upon which to live. One method of dealing with the situation has been to appoint an assistant who draws a portion of the salary and to keep the old servant still nominally in his position. That is a sort of sham and camouflage which it is desirable should be done away with, and, if this Bill passes into law, then local authorities will have the opportunity of doing so. I welcome this Measure in the interests of a very valuable set of public servants whose duties have been enormously increased of late years by the new legislation which has been thrown upon them by this House. I congratulate the Mover of the Bill upon having obtained a place for it in the Ballot, and I am glad that the Minister of Health has received it in a friendly spirit. None of us are pledged to adopt the details of the Bill as it stands, which, no doubt, will be discussed in Committee, and I trust that the Bill will receive a Second Reading.

Photo of Sir Wilfred Sugden Sir Wilfred Sugden , Royton

I think we are all agreed that superannuation is necessary and proper for public servants, whether they be civil servants or servants of a county or municipality, and I welcome a scheme whereby these people may receive the support and protection for their old age which is vitally essential if we are to have their best services, whether county, municipal or national. Having carefully considered this Bill, I find there is a very great danger that not only rural councils, but urban district councils are going to be penalised to a very serious extent, and there is going to be tremendous difficulty in obtaining the best service for urban councils, by reason of their handicapped financial powers, as they will not be able to give such a superannuation scheme, either in bulk or separately, as is needed for the staffs of these authorities in competition with cities and towns. I desire, therefore, a definite promise from the hon. and learned Gentleman who has introduced this Bill that he will give such protection for the servants of these small urban district councils as is needed, and that, in consultation with the Treasury, there will be drawn up such a scheme as will make it possible for urban district councils to obtain equally efficient officers as the big cities and county authorities. If my right hon. Friend will study the position, he will find it almost impossible for many authorities to do this, and, while I support the Bill, I reserve to myself the right to move an Amendment to give certain opportunities to urban district councils to participate equally with such great cities and towns. Some of us who have had sympathetic knowledge of the superannuation schemes of education authorities realise how these schemes are weak and inefficient in so far as they affect the people who are to participate in the benefit. We shall want, therefore, to very carefully consider the scheme adumbrated in this Bill. I suggest that when the Bill goes to Committee, we should secure the very finest actuarial advice from insurance companies, which are powerful and expert in respect of this kind of information, and that we should call into consultation also the representatives of urban and rural district councils, to consider how a really equitable scheme may be obtained for all and, if necessary, to ensure that some of the financial burden upon the poorer urban and rural councils shall, be borne by the richer bodies.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

In view of the fact that the Government have agreed to allow this Bill to have a Second: Reading this afternoon, it is quite unnecessary to detain the House for more than a few minutes. Indeed, I should not have spoken at all but for the points of criticism which have been urged against those of us who are supporting this Measure to-day. My hon. Friend the Member for Royton (Mr. Sugden) has drawn attention to the position of very small local authorities in this country, and to the great difficulty which they must experience in setting up any superannuation scheme. I cannot for the moment recall the exact terms of the Report of the Departmental Committee, but I am perfectly sure that in it reference is made somewhere to the grouping of areas, and I have no hesitation in saying, on behalf of those who are promoting this Bill, that that is a proposal to which we shall give careful and sympathetic consideration in the Committee stage. We recognise that there must be a considerable number of contributors in order to get a thoroughly satisfactory superannuation scheme, and there need be no hesitation in the minds of hon. Members this afternoon in supporting the Bill on that ground.

The only other question to which I wish very briefly to refer was raised by the hon. and learned Member who introduced this Measure (Sir H. Nield) when he referred to the difficulty which many Members of this House will experience in supporting a Measure if the element of compulsion is introduced. My duty this afternoon is merely to make plain one or two simple points on that issue. There is no doubt that the overwhelming majority if not all the local government officials in this country would prefer a compulsory scheme. They feel very strongly that unless the scheme proceeds on those lines it can never be of a truly satisfactory character. In common with all others, however, they recognise the difficulties of local and national finance at the present time, and with very great generosity they are giving this Bill their very cordial support. What I want to emphasise, however, is this consideration, that we are making too much of the difficulty of the compulsory principle at the present time. If this present Measure were compulsory it would be applied only to the residue of the local government officers in Great Britain, not exceeding 38,500, who are not now covered by superannuation schemes. If it were applied to workmen then 167,000 men, spread over the whole country, would come within the scope of the Bill. Therefore quite clearly we are dealing with a very narrow and restricted problem in the aggregate personnel. On the question of workmen I am bound to say that personally I believe in a comprehensive scheme. There are districts in which comprehensive schemes have already been introduced with very great success, but in common fairness it must be admitted that in other districts workmen have definitely applied to be excluded. It will be important on the Committee stage of this Bill to analyse these questions and to try and arrive at some settlement of the problem whether the scheme should proceed on the basis of including officers and workmen, or whether an option in favour of officers only ought to be accorded to the local authorities, as the hon. and learned Promoter of the Bill has suggested. I mainly want to emphasise the very restricted character of the numbers involved. If we confine ourselves to officers, only 38,500 men would be brought in if this Bill were made compulsory, in addition to those already covered by superannuation schemes.

There are only, in conclusion, one or two other points which I think are worth mentioning to-day. Hon. Members might hesitate if the Bill were compulsory, because of the increased charge on the local rates, but it is only fair to point out that certain savings would accrue, and that, in fact, the charge would be not nearly so heavy as hon. Members imagine, if in some districts there was any additional charge at all. The first point is that the contribution would not fall wholly upon the local rates, because there are the burdens in superannuation which are so far carried by the trading schemes of these municipalities, and which would be carried by the trading schemes of the municipalities brought under this Bill. Then there are certain Government grants towards established services which also fall to be taken into account. In the next place, if the Bill were applied on compulsory lines, there would be a certain saving in national health and national insurance contributions, because there would then be that certainty of employment, that security against dismissal, except for misconduct or neglect, and those conditions which entitle workmen and others to be placed beyond the reach of the unemployment insurance scheme. I mention these points because so far they have not been raised in the Debate, but quite obviously they are important matters for the Committee stage.

Lastly, there is the fact that the existence of a superannuation scheme would mean, as other hon. Members have pointed out, that men who retired at the peak of their remuneration in the local service would not be continued on those wasteful lines which have been described this afternoon, but would be replaced by younger men at lower rates of salary, while the older servants would take their place on the superannuation scheme to which they and the local authorities had contributed during their time of service. For these reasons, I think we are able to make a very complete reply to the possible danger of the extra burden of a compulsory scheme. But I want to say that the local government officers of this country fully recognise the difficulty of adding anything to national or local burdens at this time, and they have expressed their willingness to consider these matters in the fairest possible way on the Committee stage, although they recognise that this Measure falls short of the definite recommendations of the Departmental Committee which was appointed to consider this problem. For these reasons, we on these benches very cordially support this Measure and we will do everything in our power to make it effective in the Committee discussion upstairs.

1.0 P.M.

Photo of Sir Alfred Law Sir Alfred Law , Rochdale

The supreme merit of this Bill is that it is not obligatory, but optional on all local authorities, and that is, to my mind, a reason for the support which I am glad to give to it to-day. If it were made obligatory on the local authorities, ratepayers would not have the opportunity, as they can have now, when the elections come round, to vote for or against those who adopt this scheme, and therefore I think it is wise that the Bill should be optional rather than compulsory. Having been approached by some of my constituents to support this Bill, I feel it my duty to give it my support on Second Reading. In the past, rural districts as well as urban districts have been at some disadvantage in this matter, and I see no reason why in the Committee upstairs they should not be brought under the Bill. The Measure, I think, should be extended not only to large municipalities, but in regard to rural districts it might well be considered whether it would not be advisable to bring them under the scheme. Anyhow, for the time being, I have great pleasure in supporting the Second Reading of the Bill.

Question, "That the Bill be now read a Second Time," put, and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee.