Orders of the Day — Superannuation Bill.

– in the House of Commons on 15th March 1935.

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Order for Second Reading read.

12.57 p.m.

Photo of Mr Duff Cooper Mr Duff Cooper , Westminster St George's

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

This Bill deals with the superannuation of the Civil Service. It is a rather complicated Bill to read, easy to understand but difficult to explain. I shall endeavour to explain it in a few words. It is the result of the report in 1931 of the Royal Commission on the Civil Service. A joint committee of the Civil Service Whitley Council considered the report and put forward certain recommendations, which were unanimously agreed to by both the official and staff sides. This Bill contains the outcome of the recommendations of that joint committee. It is, therefore, an entirely agreed measure, and we are very grateful to the staff side for the part they played on the joint committee of the Whitley Council and the assistance they gave.

There are one or two things the Royal Commission recommended which are not contained in the Bill, and which may be missed. The Royal Commission recommended that Civil Service pensions should be put on a contributory basis, but that recommendation, after it had been carefully looked into by both sides, found favour with neither. Therefore, it was dropped, and the basis of Civil Service pensions remains as before. Another small point not taken up is the suggestion that marriage gratuities should be put on a statutory basis. These gratuities have been in existence since 1894, and the staff side intimated that if it were proposed to make any change with regard to marriage gratuities they would insist on a larger sum of money in certain cases, and it would therefore follow that the Bill was no longer a non-contentious Measure. We therefore decided to leave marriage gratuities as they are at the present time, and as they have been for 40 years.

Clause 1 of the Bill, which is one of the most important, extends to women Civil servants, the provision of the arrangements which were applied to men by the Act of 1909; that is to say, women Civil servants will in future be able to receive a certain sum down either on leaving the Service or at death in return for a smaller pension. This was applied to men in 1909. It was not then applied to women, because it was not their wish, but they have since exercised their proverbial prerogative of changing their mind, and now they do desire that it shall apply. It will not apply, of course, to any existing member of the Service unless she desires it so to apply. The second clause is also an important one. It enables Civil servants, men or women, on retiring to accept a lower rate of pension in return for an agreement whereby a percentage of that pension, calculated on an actuarial basis, will be continued to the dependant, husband or wife, on the demise of the Civil servant. There are two alternative choices open to Civil servants, and it is generally agreed that it is a desirable clause. Clause 3 lays down a uniform rule in regard to future entrants as to the reckoning for pension of unestablished service followed immediately by estabished service. Hitherto there have been a great many varying rules which have applied to different people; in future non-established service will count exactly as to one-half for pension purposes if it be immediately followed by established service.

Clause 4 provides, also, a uniform rule for the basis on which pensions will be calculated. Hitherto it has varied. In some cases it has been the final salary that a Civil servant has been receiving on leaving the Service, and in some cases it has been calculated on an average of what he has been receiving in the last three years. In future the latter basis will be universal. Clause 5 deals with the power of the Treasury to grant pensions to Civil servants in excess of the normal scale for special meritorious service, or at a lower rate in the reverse case. The former of these powers has been in disuse for many years and the latter, while it is retained in certain very special cases, will very seldom be used. Clause 6 is merely a drafting amendment to the existing law. Clause 7 refers to members of the China Consular Service who are allowed to retire at 55 instead of 60 years. They have the right of retaining that privilege even if the China Consular Service is amalgamated with the ordinary Consular Service or any other Service. Clause 8 improves the pension benefits of Civil servants transferred to services outside the Civil Service approved by the Treasury. There are services of a public nature which in the interests of the State it is desirable that Civil servants should take up. This Clause ensures that they will not suffer.

Clause 9 deals with rules for civil servants transferred to local authority service or vice versa. In certain cases agreements will be made between the Government and local authorities that when Civil servants go over to them the local authorities will assure to them the same sort of pensionable rights as they would have enjoyed if they had remained in the Civil Service. The treatment will be reciprocal. It will be open to any local authority to make this agreement or not. They can either leave the situation as it exists or enter into a reciprocal agreement.

Clause 10 extends the special superannuation provisions which already apply to the staff of criminal lunatic asylums to the staffs of homes for mental defectives. Clause 11 makes more generous provision for compensation for civil servants in the case of injury or accidental death. Clause 12 is necessitated by the recent consolidation of Civil Service pay. It really affects those civil servants who retired between September, 1931, and July of last year, when the new consolidation pay came into force, and assures to them that they will not suffer from the fact that they retired during that period. They enjoy the same privileges as people retiring either before or after. Clause 13 is purely declaratory, making plain exactly what the policy of the Treasury is with regard to this matter. The Public Accounts Committee some time ago said that the law on the subject was ambiguous and unsatisfactory, and this Clause is introduced in order to make it plain and, I hope, satisfactory. The remaining Clauses of the Bill contain only minor consequential provisions. The House will see, therefore, that the Bill makes no sweeping alteration or particular change in the existing system, but does provide, at comparatively small costs to the Exchequer, for a great many practical improvements, which are desired by both sides, by the Government and by the employees of the Government. I therefore can say without fear of contradiction that it is an entirely uncontentious and agreed measure, and I have no hesitation in recommending it to the House.

1.8 p.m.

Photo of Mr Morgan Jones Mr Morgan Jones , Caerphilly

The hon. Gentleman said that this Bill is easier to understand than to explain. I hope he did not mean thereby that it is easy to understand, because I found it extremely difficult to master its details, but I agree with him that it is a Bill which, at this stage at least, ought not to be opposed. Indeed, I cannot visualise the likelihood of our opposing it in the final resort. Whatever its shortcomings may be, it does effect a substantial improvement in the superannuation conditions of the Civil Service, and we therefore welcome it, but I think I can show at a later stage that it is susceptible of improvement in several details and we shall desire to put forward points in Committee. May I make one or two points even now. I notice in several Clauses the phrase "the commencement of the Act ". That would seem to imply that the Bill is to come into operation at some date after it is passed, but I find no such provision in the Bill. When, therefore, is the Bill to come into operation? Clause 2 provides that a civil servant who retires otherwise than on the ground of ill-health not earlier than three months after the "commencement of the Act" may surrender a part of his superannuation in order to provide for his widow or dependants after his death. May I trouble the House with a letter upon this matter which I have recently received, which raises an issue to which I hope the hon. Gentleman will give consideration. It is from an ex-civil servant: For years civil servants have been hoping for some such alteration in the Pensions Acts and now the Government intend to put restrictions or limitations on the concession. The change is not to cost the State anything. I am 67, having retired at the age limit of 60. My wife is 67. You can see the vital problem before me of trying to provide for my wife in the manner proposed, but owing to a technicality in the formula the Treasury say, in so many words, we cannot help you.' If I had the money and submitted the proposition to an insurance company, or even to the Post Office Savings Bank, there would be no difficulty. On the other hand, I have my pension, and am willing that part should be surrendered in the words of Clause 2. There must be a number of retired civil servants who feel as I do about the matter. I think the hon. Gentleman will see clearly what is the difficulty of this man. He is an ex-civil servant who is anxious to be able to utilise a part of his pension to provide an annuity for his widow in the event of his, death. I wonder whether it is possible to extend this provision in Clause 2 to a civil servant who has already retired. As to Clause 3, which provides for one-half the period of any unestablished service being counted for superannuation purposes, here, again, the benefit is limited to persons whose unestablished service begins after the commencement of the Act. I hope that the hon. Gentleman will find it possible to remove that limitation. I would also urge that any person who serves a continuous period of 10 years in an unestablished capacity should become an established civil servant. That affects, of course, mainly industrial workers, and I believe I am right in saying that there is a lack of uniformity in the practice of the various Departments. In any case we think that continuous service for 10 years ought to entitle a man to the benefits of establishment. When we reach the Committee Stage I shall invite hon. Members to consider one or two Amendments, but for the present I venture to say, on behalf of my hon. Friends, that we regard this Bill as providing a substantial improvement in the superannuation conditios of the Civil Service and on that account we shall not oppose it.

1.13 p.m.

Photo of Sir Ian Fraser Sir Ian Fraser , St Pancras North

The passage of the Bill in its present form will, I venture to think, create certain anomalies, and therefore I wish to draw the attention of the Financial Secretary to one or two points. It will be within the recollection of the House that after the War the Civil Service found itself short of com- petent people to attend to the many difficult and complicated matters which then arose. A vast increase in Government work had to be undertaken, and there were not the people available and to be recruited immediately, and so the State decided to take into its service a considerable number of ex-service men. No doubt the State felt that these men had had experience, apart from their ordinary educational attainments before the War—administrative and other experience during their service—and would be useful to the State, and so they were recruited in a temporary capacity of course. None of them felt that he had any claim on the State for permanent employment. No doubt they understood clearly that they were asked to come temporarily to help, and they were given a job. When a man is out of a job he does not look ahead 10, 15 or 20 years and bargain with his prospective employer, he is glad to have the job.

From time to time Parliament has felt that it would be setting a good example to employers all over the land were it to treat these men with particular consideration, and at various times measures have been brought to this House to ameliorate their conditions of service. Parliament went so far as to set up a special class, the "P" class, embracing the greater number of these men, and gave them some assurance of permanent employment, though without pension. A little later, as their term of service became comparable with that of the permanent Civil Service, Parliament still felt that something required to be done for them, and in October, 1932, Parliament decided that they should be pensionable.

It became a question as to who among them should be pensioned, and the decision was come to that practically all should be pensioned who had done reasonable service. One of the long standing rules of the Civil Service is that a man must do at least 10 years in establishment in order to secure his pension; it is also a rule of the Service that normally you retire at 60. I am well aware of the exceptions, but they only go to prove the rule which is that, officially, retirement takes place at 60 years of age. Unless a man can be established by the age of 50 so that he may put in 10 years' service, he cannot in the normal course of things be established. That does rule out many thousands of men who join the Service at an age considerably older than the boys and girls who make up the bulk of the Service.

The Government said, "We must make a concession," and for some reason which has never been explained they chose the extraordinary period of two years and eight months. They said that those who had not exceeded the age of 50 at the beginning of 1930, two years and eight months before the concession was brought in, should be included, although they had not served the normal 10 years. That satisfied all those who were let in; about 8,000 men came into the category of those who receive pensions. I am glad that they did, but I confess I can see no reason why those 8,000 should have come in and 2,000 should have been left out. It is about those 2,000 that I wish to speak. Merely because on 1st January 1930, some 2,000 of the same men happened to be over 52 years and 8 months of age, they were left out of those provisions.

The ordinary business man, or the trustee of a corporation, when considering a pension scheme for his staff would probably say, "We want a pension for those of our staff who have done reasonable service, but we cannot pension those who have done negligible service. We are bound to draw some line between reasonable service and negligible service." The Government might say the same, and we are entitled to examine whether this is such a case. Could the Financial Secretary show that the service of these 2,000 was negligible, there would be a strong case for leaving them out. No one could plead that men with one year's, or five years' service should be pensioned, but, if the Financial Secretary will look into the matter, he will see that these 2,000 men have already served an average of 15 years. By the time they retire, which will be round about the age of 65—and here I reach the point upon which an hon. Member just now tried to guide me; it is the practice of the Service to retire most of them at 65 and some departments have even agreed with the staff side that they shall retire at 65; all departments have discretion to keep them on, and the general practice is to do so—they will have served between 15 and 25 years. The only fair way to decide whether you should or should not pension a servant, is to determine whether or not he has done reasonable service. On the figures, I cannot help thinking that all those men, or the overwhelming majority, will have done reasonable service for the State.

Notwithstanding what is in the Bill, I hope that the Financial Secretary will indicate that the Government will be willing to withdraw the Financial Resolution and to introduce another which will make possible an Amendment which I will put to him. I know how difficult it is to find time, but I can assure the Financial Secretary—althought I have had no conversations in the matter—that it is very unlikely that he would meet with opposition or find the matter contentious or controversial. He could introduce an amendment in Committee to rectify this error, which is an injustice to a small number of civil servants, and it would cost very little, although the question of cost should not perhaps be the primary consideration, if an injustice be proved.

There is another aspect of the matter. The Superannuation Act of 1887 gave power to the Treasury to count back service—temporary service—for pension purposes; I think the words were "provided there were special circumstances in the case." That power still remains, and it seems to me that it would not be going too far to suggest to the Treasury that if they cannot amend the Bill they might under their special powers remedy what I believe is a defect in the law, and what appears, so far as it has been put before me and my colleagues in the House, to be an injustice which the House and the country would wish to see remedied. I ask the Financial Secretary whether he can go into the matter again and see whether, without committing himself to it, he can introduce an amendment in Committee which will meet the case of these men.

1.23 p.m.

Photo of Sir Ernest Graham-Little Sir Ernest Graham-Little , London University

I speak on behalf of the Staff Associations principally, and as chairman of the recently formed committee on the Civil Service in this House. I want to make plain at once that the attitude of those for whom I speak is that the Bill embodies an agreed solution of certain matters which came before the Whitley Council. Those for whom I speak have no wish to offer opposition to the passage of the Bill or to move any Amendment; they take the Bill as it is put forward, and the provisions contained in the Bill have been fully accepted.

I wish on their behalf to make a protest as to certain omissions to which the Financial Secretary refers as having been subjects not agreed upon at those discussions. Although those discussions could not reach agreement, the matters upon which they did not reach agreement are regarded by the Service as highly important.

The object of my speaking is to draw attention to two omissions of the first importance. There are two questions which concern two different classes of servants, the lump sum service men, a much smaller body, some 2,000, and a much larger body of unestablished classes. In regard to those two classes, the Service are anxious to do what they can to remedy the omissions in the Bill. We do not propose to make any motion to that effect at this stage. The number concerned is very large. I am told that there are 130,000 permanent employés of the Government who are not pensionable, however long they may serve. Then there is another number of persons who in their earlier years were employed on State business but paid by others—high bailiffs of county courts and other classes of that kind. The staff associations put forward the point that, as these persons were paid, whether directly or indirectly, out of State funds, their services should be pensionable. I want again to emphasise the fact that this Bill is an agreed Bill, but we want to draw the attention of the House to certain omissions which affect large bodies in the Service, and who perhaps may receive consideration at a future stage.

1.26 p.m.

Photo of Mr Valentine McEntee Mr Valentine McEntee , Walthamstow West

I would like to emphasise what has been said by the hon. Gentleman who has just spoken and by the hon. and gallant Member for North St. Pancras (Sir I. Fraser). I accept the statement of the Financial Secretary that this is an agreed Bill, but it is only agreed as far as it goes, and it does not go quite far enough. I have had personal experience in the service of a public body, and was associated with men who were in very similar circumstances to those who are called unestablished civil servants. I remember perfectly well men who had served from 30 years to, in one case within my own personal knowledge, 43 years—a man who was described at that time as temporary. I, with half the service that he had, became pensionable, and he did not. We were doing at the time practically the same work, and I can quite understand his feeling with regard to the difference in treatment between him and myself.

In the Civil Service there are similar cases. There is a great number of men with whom I have been associated and whom I know very well, unestablished civil servants who have been in the Service for a great number of years, and I do not think it can be said on any basis that their treatment is fair in comparison with other civil servants who are doing almost the same work, and in some cases quite similar work, but who are getting entirely different and very much better treatment. I think the Treasury might take the point of view that it is time that this admitted evil was remedied. I say that because I still hope that, although no agreement has been reached up to now, the Government will consider the position of these unestablished civil servants with long periods of service, and will make some better provision for them than has been made hitherto.

The only other point that I want to make is rather a technical one, and I may be entirely wrong as regards my interpretation of it. Perhaps the Financial Secretary might at any rate note it. It concerns the method, laid down in Sub-section (2) of Clause 4, of computing the amount of pension to which a man or woman shall become entitled. It says that the pension shall be computed upon the average annual amount of the salary and emoluments of his office during the last three years of his service. Those words do not quite cover the point that I have in mind. A case arose recently in the municipality of which I am a member with regard to a man who had qualified for pension and was going out. When we came to compute his pension—the words were different from those in the Bill—we found that, according to the Act under which the pension was granted, it must be calculated on the amount of the salary received during the last five years; and, owing to the fact that the man had been ill for at least three years during his last five years of service, the amount of his salary was very considerably reduced. I do not know whether the words in this Bill would cover a case of that kind, or whether such a man may or will be treated in the way in which we were compelled to treat him, although the borough council were of opinion that that treatment was unfair and not the kind of treatment that they would desire to give him. Because, however, of the interpretation which we were bound to put on the Act, we were not allowed to grant him as large a pension as we should have desired. As I have said, the words of that Act are not the same as those of this Bill, but I would ask the Financial Secretary to give consideration to this point, so that, if such a case does arise, it will not be possible for the man to lose what otherwise he would be entitled to just because he happened to have a long illness during the period of three years on the basis of which his pension is calculated.

1.32 p.m.

Photo of Sir Annesley Somerville Sir Annesley Somerville , Windsor

May I add a word in support of what has been so fully urged by my hon and Gallant Friend the Member for North St. Pancras (Sir I. Fraser), and also by the hon Member who has just sat down? It concerns in particular two small classes of unestablished ex-service men, one numbering 100 and the other 1,900. I feel a particular interest in these men, as I was a member of the Southborough Committee, which reviewed the Report of the previous Lytton Committee. We found that there was a considerable amount of hardship among these unestablished civil servants, and, as a result their condition was to a certain extent improved. Further improvements have been made since that time, but there remains this margin, which, I would plead, ought to receive very sympathetic attention. I am told that -these men now have an average of from 14 to 15 years' service, and when they reach the age of 65, if they have not previously retired, they will have done on an average something like 24 or 25 years service. It may remove any objection that there may be on the part of the Treasury to remind the Treasury that the amount involved is not large, but I plead, not merely on that ground, but on the ground of justice. I think that these men, having been in the service of the State for so many years and having been doing the same work as the established civil servants, should now receive finally the right to pension, and I would commend that view with all the force that I can to the Financial Secretary.

1.34 p.m.

Lieut.-Colonel Sir ARNOLD WILSON:

I should like to take this opportunity of expressing regret that the Treasury has not taken advantage of these amendments of the law to introduce a consolidating Measure which would cover the whole gamut of the Superannuation Acts. They extend over more than 100 years. They number about a dozen separate Acts of Parliament, only one of which has been repealed, and there are something like a score of other Acts dealing with superannuation which may affect the lives of at least 1,000,000 to-day and another 500,000 in succeeding years. They are extremely difficult to understand. The Financial Secretary and other speakers have referred to the difficulty of understanding this Bill and I submit that it is scarcely fair to the House, and is certainly unfair to those persons who ought to benefit from the Bill and from the Superannuation Acts in general that they should not be able to buy for a few pence from the Stationery Office a concise statement of the law as it stands in regard to their financial privileges. There is a vast amount of dead wood in the Acts, and it is exceedingly difficult, even for anyone who is highly skilled in legislation, to know how these people stand as regards their rights. I will quote from the Act of 1834 a Section which has never been repealed: Provided always, and be it further enacted, That nothing in this Act contained shall extend. …to give any Person an absolute Right to Compensation … or to deprive the Commissioners of His Majesty's Treasury, and the Heads or Principal Officers of the respective Departments, of their Power and Authority to dismiss any Person. … without Compensation. That doubtless is a necessary provision, and I fancy that it has been pretty completely modified during the past 50 or 60 years by the practice of making provision for appeals and the like. It is, therefore, pertinent to say that in the last eight years Parliament has only passed in all 14 Consolidation Acts as compared with the 14 which were passed in the single year of 1925. We are getting very much behind in the way of consolidation, and I hope that this matter, which is an outstanding example, may be taken up at a very early date. It is not enough that we should treat the employés of the State justly. We ought to be able to assure them that they are being treated justly and that the law is clear and explicit. I gather from the text of the Bill that it will introduce fresh anomalies in regard to a good many classes of public servants who are not technically covered by this Bill but who are in municipal and other local employment and whose rights are covered by local and special Acts, which are neither repealed nor mentioned in this Bill.

1.37 p.m.

Photo of Mr William Thorne Mr William Thorne , West Ham Plaistow

The hon. and gallant Member for North St. Pancras (Sir I. Fraser) asked the Financial Secretary to the Treasury to look into the question relating to ex-service men and pointed out that there were 2,000 persons who, on account of certain anomalies, were not allowed to come under this Bill. I want to put in a very energetic plea for another section of men and women working under State control in connection with the public-houses at Carlisle, Gretna, and at some other place, the name of which fails my memory at the moment. There are between 300 and 400 men and women working in the State controlled refreshment departments, and at the brewery, and for the last two or three years I have been making a big effort on their behalf to try and get them brought within the four corners of the Superannuation Acts. I am hoping that the Financial Secretary may see his way to meet the situation during the Committee stage of this Bill, so that these men and women may be brought within the scope of the measure.

It is generally known that all Government employés, whether working at Woolwich Arsenal or the Dockyards or under any State department, have some kind of superannuation scheme applying to their particular section, and it is a great hardship to these individuals—I do not know whether you would call them Civil servants or not—who are doing useful work under Government control, that no provision is made for them. As hon. Members know, the refreshment houses at Carlisle and Gretna are doing useful work and are paying propositions; they are making a good profit. I believe that both the men and women concerned would be quite willing to sacrifice a small portion of their salaries or wages in order to be brought within the scope of the Superannuation Acts, so that when they reach the age of 60 they may be assured of some kind of superannuation pay to help them to live in decent comfort for the remainder of their lives.

1.40 p.m.

Photo of Mr Duff Cooper Mr Duff Cooper , Westminster St George's

I would say, in replying to the various points that have been raised, that the greater part of them refer, not to the people affected by the Bill, but to those not affected by it. The hon. Member for Caerphilly (Mr. M. Jones) was in some doubt as to the meaning of the phrase, "The commencement of the Act." The Act will not apply until it comes into force, and it will come into force as soon as it receives the Royal Assent. He also raised the point whether it could not be made retrospective so as to affect ex-civil servants as well as civil servants. I am afraid that there is very little hope of that being possible. It would cost a great deal of money to the State, and he must realise the technical difficulties which would arise in applying Clause 2 of the Bill, to which he referred, to people who have retired from the Service altogether. The actuarial value of the pensions they could arrange to settle upon their survivors would probably be so slight in this case, they themselves having received the full pension in the interval, that it would not be worth while.

I will look into the point raised by the hon. Member for West Walthamstow (Mr. McEntee). I think that the meaning of the Clause is perfectly plain. I appreciate the point he raises, and I should think that Civil Service salary means the salary that should be received quite apart from any deduction for illness. That is a legal point, and I will get advice upon it before the Committee stage. The hon. Member for Hitchin (Sir A. Wilson) made a suggestion that we should introduce a consolidating Measure. It is a very in- teresting suggestion and should have full consideration. He could hardly expect, as he seemed to suggest, that we should consolidate superannuation for all workers in all forms of service, not only-State service but local service also.

Photo of Lieut-Colonel Sir Arnold Wilson Lieut-Colonel Sir Arnold Wilson , Hitchin

I did not mean to stress that point.

Photo of Mr Duff Cooper Mr Duff Cooper , Westminster St George's

I think that my hon. and gallant Friend did make the suggestion. It has been suggested that certain provisions with regard to the position of unestablished Civil servants are not fair. The only answer to that is that there may be hard cases, but whoever enters the Civil Service without knowing what the conditions are? If a man agrees to undertake a certain position knowing what the prospects of pension are, it is not quite just to say that the Government have acted unfairly towards him, because he would never have undertaken the obligation unless he had been prepared to do so on the conditions which were then in operation.

The position of those Civil servants, especially the ex-service men, to whom my hon. and gallant Friend the Member for North St. Pancras (Sir I. Fraser) referred, is one with which I and the whole House sympathise very deeply. That position could not possibly be dealt with in this Bill, because it is concerned with superannuation only. The Bill has nothing to do with altering the status of unestablished Civil servants, and I do not think that it would have been possible to include a Clause in a Superannuation Bill to make unestablished civil servants established Civil servants. If it were possible, it would have to form the subject of an entirely different measure. I will bear in mind everything which my hon. and gallant Friend and other hon. Members of the House have said with regard to the position of Civil servants and others. There are always doors open through which negotiations can be undertaken in order to improve the position of Civil servants, whether established or unestablished. I am sure that the House will recognise and remember that an enormous number of unestablished Civil servants have since the War, especially the ex-service men, received benefits to which they were not actually entitled by the terms under which they entered the Service. There are others who are outside that category, and if it were limited, as hon. Members have suggested, to a certain number of ex-service men, they must realise that the extension of it to them would imply an extension to a great many other people, and the cost would be much more than has been represented. The hon. Member for North St. Paneras did not expect me to give him any undertaking. It would be impossible for me to do so or to hold out hope of a further extension to unestablished Civil servants, but the matter will continue to be considered. In any case, it will not affect this Superannuation Bill, which I am glad to think has the general approval of the House.