State and Local Government Pensioners (Cost of Living)

Emergency Powers (Defence) Act, 1939 – in the House of Commons on 15th October 1942.

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Motion made, and Question proposed, "That this House do now adjourn."—[Mr. A. Young.]

Photo of Mr William Brown Mr William Brown , Rugby

I wish to raise a matter, which I think ought to receive attention, in regard to the position of pensioners in the Civil Service, the local government service, the teaching profession, the police service and the prison service. AU these categories of people are covered by superannuation schemes. Some, as in the case of civil servants proper, are non-contributory schemes where the whole cost falls upon the State. Others, as in the case of the teaching profession, are contributory schemes, with part of the cost falling on the State, the other part being met by the contributions of the individual officers. Usually the pension is related to the length of service which the individual has put in, but under all the schemes there is a ceiling beyond which the pensioner cannot go. In the last war the same problem cropped up. There was a big increase in the cost of living. It was discovered that pensions which might have been all right in the circumstances of 1914, became hopelessly all wrong with the rising prices that took place in the last war, and the State did in fact take steps to adjust those pensions. A special Measure was passed through the House of Commons, which enabled an increase—I think the figure was up to 40 per cent.—to be made in the amount of these pensions.

In this war there has been a rise in the cost of living, the amount of which may be disputed. The Ministry of Labour index figure says that the cost of living has increased by somewhere about 27 per cent. In the actual experience of most of us that 27 per cent. would, I think, be regarded as much lower than the actual increase in the cost of living. I think, in the experience of most of us, the appropriate figure would probably be nearer 40 per cent. than the 27 per cent. of the Ministry of Labour index figure. In spite of that very substantial rise in the cost of living, no adjustment has been made in the pensions of any one of these various State services. That is remarkable, because in every other field of the population where we have dealt with people living on moneys from the State, we have in fact made substantial adjustments to the rates of pay or allowances. We have adjusted unemployment benefit, we have adjusted Assistance Board relief, we have adjusted the separation allowances of the Armed Forces. We have adjusted—very inadequately, it is true—widows' and old age pensions. [Interruption.] Not Army pensions? I take that point. It may be that the scope of my argument to-day should be wider than it is. If my hon. Friend proposes to raise the matter of Army pensions, he may count upon my enthusiastic support. To-day I am raising the subject in relation to the civil services of the State.

Not only have we adjusted all the allowances I have mentioned, but we have also adjusted the rates of pay of serving officers in each of the services to which I have referred. In the Civil Service a war bonus up to a maximum figure of 13s. 6d. has been granted. In the teaching profession there is a similar cost of living bonus. Local government authorities have adjusted the pay of their staffs. And the Prison Commissioners have adjusted the rates of pay of serving warders. I submit that the need of the pensioner" is not less than that of the serving civil servant; in fact, it is very much greater. The maximum pension he may draw is one-half of his retiring salary. To pass from the active list to the retired list inevitably involves a very heavy and sharp contraction of the officer's standard of life, and when the pension is eaten into by a very heavy increase in the cost of living, which I submit is probably of the order of 40 per cent., the consequential effect on the officer is very grave indeed.

Another point I wish to make is that in all the services I have mentioned, particularly in the case of the Civil Service, it is not the whole of the service which is pensionable. It is only that part of the Civil Service which is described as "established," and a man may put in anything up to 15 or 20 years before he is passed into the establishment, and becomes eligible for pension. When he retires it is only that part of service which is established which is taken into account for pension purposes. The result is that many of these pensions are pensions of very small amounts—5s. a week, 10s. a week, 15s. a week, £1 a week and so on, and the impact of an increase in the cost of living of 40 per cent. on those very low pensions has produced tragic results among those old servants of the State.

I want to urge on the Treasury—one can never expect the Treasury to be generous; I suppose it would be inconsistent with its function if it were—that here is a case which does call for sympathetic understanding and sympathetic treatment. The Civil Service and other unions have raised the matter with the Government, and have been given various reasons why nothing should be done. One reason advanced to me, in respect to the Civil Service, was that before adjustments in pensions could be made the Government needed to be satisfied that the rise in the cost of living was not a temporary flash in the pan, but would extend over a very long period. I think the House will agree that three years is not an inconsiderable period, and beyond that it is as certain as anything can be, for reasons I will give in a moment, that the rise in the cost of living will persist for many years after this war is over. There is one simple factor which makes that quite inevitable. The Chancellor of the Exchequer tells us from time to time that he wishes to avoid inflation. Of course, he does not wish to do anything, of the kind. As a matter of fact he needs inflation, and he will not be able to arrange his post-war Budgets without it. When he says he does not want inflation, he means that he does not want uncontrolled inflation, but wishes to keep it within certain limits.

When this war started we had a National Debt of about £8,000,000,000. By the time it ends it will probably be of the order of £20,000,000,000, and probably more. I submit it will be quite impossible to service that Debt with the pound at anything like its pre-war value, because it would absorb the whole of a Budget of ordinary pre-war dimensions. It is a condition of servicing the Debt that we inflate, and it is pretty common knowledge that the Government intend to allow inflation within certain defined areas. But these areas are so wide as automatically to ensure that for a decade, and probably two decades, after this war is over, the cost of living will be substantially higher than in pre-war days. It seems to me that the first criterion which the Government say they require to be satisfied before doing anything about pensions is abundantly satisfied over the last three years and is certain to be satisfied for as far ahead as any one of us can look. The average life of a pensioner from the Civil Service after he has retired is about 12 years. It may be taken as axiomatic that for the whole of the rest of the life of men and women now on pension, they will be confronted with a cost of living very much higher than that which existed before 1939.

Another reason sometimes given to us is that if the Government are to increase pensions when the cost of living rises, are we prepared to accept the proposition that pensions should be decreased when the cost of living goes down, because, it is said, if we are not prepared to do that, then we are in fact occupying an illogical and argumentatively indefensible position? My answer to that is that that problem also cropped up in the last war. Exactly the same argument might then have been used. That did not prevent our doing what economic circumstances made necessary. It ought not to prevent our doing so in this war. Day by day, I receive particulars of hardship among pensioners which make very bad reading indeed. It is a shame that men who have put in anything up to 40 years in the service of the State, and have gone on pension, which itself involves a large drop in the standard of life, are now subject to an inroad into the purchasing power of their pension because of this rise of 40 per cent. in the cost of living. It is intolerable that old servants of the State should have to resort to public assistance to eke out the inadequate pension which is given to them at the end of a lifetime of service. I ask the Financial Secretary not to stick to the narrow letter of the law, but to respond, in a human and understanding way, to this very serious grievance. As regards the numbers involved, the Financial Secretary will be better informed than I am, but the total number is probably about 100,000, of old people who have been given no relief whatever since the war started. I urge the Financial Secretary to make a statement which will bring some hope to these old servants of the State in the various services I have mentioned.

Photo of Mr Thomas Harvey Mr Thomas Harvey , Combined English Universities

I was not aware that this very important subject was to be raised at this hour. I am sure many other Members would have wished to be present. I do not want to add to the very earnest and able appeal made by the hon. Member for Rugby (Mr. W. Brown), except to say a word on behalf of superannuated teachers. Their claim is a very special one. They have, like the civil servants, given their lives in many cases to the service of their countrymen, and they are retired on exceedingly small pensions. Many of these pensions were just enough before the war to keep them not in any sort of affluence, but in respecability. In many cases they are no longer enough for even that minimum of decent life without the greatest hardship. I would like, on behalf of that most deserving class of our fellow-citizens, to put in my plea along with that which has been made on behalf of the civil servants, and I hope that it will receive the earnest attention of the Treasury.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

This Debate has come on sooner than anybody expected, and I am at some disadvantage in countering the figures which the hon. Member for Rugby (Mr. W. Brown) gave. I hope that if I do not specifically contradict every statement he made the House will not think I am accepting them, although, of course, I know that he made them in good faith. For example, several times in the course of his speech he expressed the opinion that the cost of living was up by 40 per cent. on the pre-war cost of living. Of course, that is not the official figure, and no amount of repetition of that figure will make it the official figure. I think the official figure is 29 per cent. I know that the whole basis on which the figure was calculated was in dispute for many years, and that just before the war there was some discussion about altering the factors which went into it; but that alteration was not, in fact, made. Therefore, I repudiate the 40 per cent. figure, although I understand the reasons which actuated the hon. Member in putting it forward.

The Financial Secretary is always, by stress of circumstances, the embodiment of the negative principle. It is my experience, having been in that office for a considerable time, that when there are concessions to be made, it is generally the Chancellor or the Prime Minister who makes them; but when it is a question of explaining exactly why something which many Members think most desirable cannot be done, the normal procedure is that I should try to give the reasons. We would all be at one, with the hon. Gentleman when he points out that there are many people, alas, in this country who are, through the circumstances of war, suffering hardship, sorrow, and disappointment, in one way or another. One man's house is blown up, another woman's husband is killed, another man's child loses its life through a bomb, and so on. It is the whole tragedy of war that we are up against. My hon. Friend lifts one small comer of the veil by calling attention to what he considers to be the special hardship of retired civil servants. The matter has been raised in the House on several occasions, and repeatedly my right hon. Friend or I have had to say that we have not found it possible to recommend an increase in the pension rates. It is true there has been no adjustment since the war started. The hon. Member says that this is different from what happened in the last war, but that is not so; there was no adjustment in the last war.

Photo of Mr William Brown Mr William Brown , Rugby

I did not say that the adjustment took place during the war. I said that, as a result of the rise in prices which was caused by the last war, we had to make an adjustment in pension rates. I am urging that the Government should make that alteration in this war, without waiting for the end of it.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I was not trying to make a debating point, but merely to clear up the question of whether there was an adjustment during the war. If the hon. Member did not say that there was, I beg his pardon. There was an adjustment after the war, when the cost-of-living figure had reached 255 per cent. of the 1914 level. That is a very different position from what we find ourselves in to-day. The hon. Member talked about an increase of 40 per cent., but I now have the correct figure, which is for September (all items) 129 per cent. of the 1939 level, that is, an increase of 29 per cent. That is very different from the 255 per cent. mentioned above. The contract which is made with the established civil servant with regard to his pension is that it is fixed with reference to conditions in force when he retires. That is well understood. There is no great evidence, I think, of stupendous hardship at present as a result of the rising cost of living. There are, no doubt, many difficult cases. On the other hand, one has to bear in mind that a great number of retired people in these days, owing to the shortage of man-power, find it possible to get one form or another of employment. It is not universally true that because a person is pensioned he is not in a position to get any increased emoluments of which we are speaking.

Photo of Mr Daniel Lipson Mr Daniel Lipson , Cheltenham

Has not a bonus been given to existing civil servants, teachers and many other classes of the population on the grounds that there has been an increase in the cost of living which is just the same for these pensioners? The argument has been valid for those who presumably are better oft, but it is not apparently valid for those who are living in reduced circumstances on retirement pensions.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I was not prepared to discuss the whole question of Civil Service pay. These are not matters that I, in my office, could enter into lightly and on the spur of the moment, but the fact is that not every civil servant has received an increase of pay because of the cost of living. If I had time, I could give the exact position where the level comes in, but what actually has happened is that there have been certain increases granted in the lower ranks not linked up with the cost of living index. I think the hon. Gentleman was in at the earlier discussions, at which I was also present. It was really at that time done with a view to seeing that the scale was kept somewhere in relation to the scale which was available for people in outside industry in corresponding classes. I think that is really what the position was.

Photo of Mr William Cove Mr William Cove , Aberavon

Is it not true to say, broadly speaking, that these increases in war bonus have been given because of abnormal conditions due to the war? These abnormal conditions are created by a number of different factors. There was an increase in wage rates and a corresponding relative decline in the value of goods and also an increase in the cost of living. It is true that the pension is given as a sort of contract at a time when a person will retire, but war conditions are entirely abnormal, and the right hon. and gallant Gentleman ought to meet that situation as far as civil servants and teachers are concerned.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

The hon. Gentleman is merely reiterating the plea. I was just trying to make the point—I was not discussing the whole question of Civil Service pay—that such rises that were made were not directly related to any particular rise in the cost-of-living figures.

Photo of Mr William Cove Mr William Cove , Aberavon

If there was no rise in the cost of living, there would be no increase.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

They were not related to that but to a variety of factors, and I think the hon. Gentleman accepts that. However, this is a side issue which we are not disposed to discuss to-day. I know that anything can be discussed on the Adjournment, but it is a little more easy for the Minister to reply if he knows what the subjects are going to be. The position is—we are all agreed in this—that there has been a rise in the cost of living and that in certain cases—I do not say universally, nor does the hon. Gentleman claim it—it must have brought hardship and difficulty to these pensioners. The question therefore arises whether this is the moment in which anything should be done to ease that position. I can give, if anyone wants them, the references to the series of questions at different times asked by various hon. Members as to whether the Government were prepared to introduce legislation which would be required to deal with this problem. The answer which has been given has been, "No, we are not prepared to introduce legislation at the present time on this subject." My right hon. Friend has based himself on the contention that the moment is certainly not opportune nor are the conditions such as to make it necessary. The increase in the cost of living which necessitated action of that kind not during but after the last war were very different from the position as it is to-day.

On the other side of the picture, one has to bear in mind that while clearly the Government have particular relations with those pensioned persons who used to be in their service, yet the Government as a whole have to take the widest view of these problems, and one has to bear in mind that the Civil Service pensioner is not the only pensioned person in this country. There are other people who through the cost of living and the decline in interest rates and so on find themselves no doubt also in a very difficult position. Imagine a couple of brothers who years ago decided to be clerks. One went into private employment and one into the service of the State. The man who has been retired perhaps even under a superannuation scheme of his firm has no prospect of getting his pension increased by anybody. For the man who has saved and put his money, say, into house property to use the income from that as his means of livelihood, and has his house destroyed by a bomb, there is nothing that can help him in his conditions of day-to-day existence. The Government have to have, I think the House should recognise, a pretty wide view of all these small interests, and our policy, which has been discussed before and no doubt will be discussed again, and to which sufficient attention is not always paid, of trying to cope with the problem of the rise in the cost of living and the hardships of those who are on low income standards, has been a general stabilisation policy with regard to food prices and the necessities of life, and the increased control which is being exercised both by rationing and by price control of the reduced quantity of goods in the market to-day.

I would commend to hon. Members on that point in case they do not think it is a very valid one—I hope they do—to look up some remarks made by the hon. Member for East Ham, South (Mr. Barnes) when we discussed agricultural and food policies on 28th July of this year, where he gave figures, which appear in the OFFICIAL REPORT, showing the amazing result of this policy of stabilisation of food prices during this year as compared with what happened when there was no such policy in 1918, and the absence of that policy in those days was one of the factors which caused the great increase in the cost of living which made it necessary, after the war, to look into and reopen the whole question of these pensions.

Photo of Mr Evelyn Walkden Mr Evelyn Walkden , Doncaster

Will the right hon. and gallant Gentleman also look at the same Debate and contrast other observations by hon. Members concerning essential commodities which were not controlled in relation to the Minister's own statement, that we should all sooner or later have to become vegetarians? Observations were made by certain hon. Members directed towards the prices of cabbages, beans and other essential commodities which are in daily use and not controlled at all, but which have to make up the family budget. Pensioners can hardly benefit by the explanation the right hon. and gallant Gentleman is giving when they have to pay such high prices for uncontrolled but essential commodities in daily need.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I daresay that all these factors should also be taken into account, and from what the hon. Gentleman says I suspect he meant, in asking me to look up the Debate, one of his own speeches.

Photo of Mr Evelyn Walkden Mr Evelyn Walkden , Doncaster

No, there are others.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

But for all that the general stabilisation policy of the Government has been of enormous assistance. That is agreed, and that is one of the new factors which must be borne in mind when comparing the difference in the conditions of people now with the conditions of corresponding people in 1917–18. I cannot be expected—nor would the hon. Gentleman expect me—to agree with what he said about inflation or its desirability or all the rest of it. It is not for me to lay down any proposition, but I dare say that if it was found that the cost of living had risen by 200, 300, 500 or even 1,000 per cent., a great many things which we are not doing to-day might have to be looked at. We might have to reconsider not only this problem but others. Although there are hardships in certain cases, my right hon. Friend the Chancellor has asked me to say that he does not see his way to recommend legislation for tackling the problem of pensions for civil servants. Such hardships as there are, grievous although they may be on individuals, are not of such a general character, nor has the cost of living risen to such a figure, as to make it necessary in his view, and in the view of the Government, to re-open this question at the present time.

Photo of Mr William Brown Mr William Brown , Rugby

I think we all agree that degrees of hardship vary enormously, but in the lower rates they are grave and acute. If the right hon. and gallant Gentleman cannot meet the whole case, cannot he draw a line, say, at £3 or £2 per week, and then give relief under that? If he cannot meet the whole case cannot he meet the worst aspect of it?

Photo of Mr William Cove Mr William Cove , Aberavon

The hon. Gentleman the Member for Rugby (Mr. W. Brown) has just raised a point which I intended to try and press upon the right hon. and gallant Gentleman, than whom no one is quicker at any moment to put up a good case for the Government.

Photo of Mr William Cove Mr William Cove , Aberavon

It is true that subsidies have been given, but they effect everybody, whatever the range of income may be. I want to put in a plea here for teachers who are on pensions. After all, when we debated the Teachers' Pension Bill in Committee it was then laid down that pensions were deferred pay, not something coming out of the sky and through the generosity of the Treasury, but something worked for and stored up. Former teachers have stored up this deferred pay, and now they find that owing to the abnormal circumstances of the war the money has greatly reduced value. There are in the teaching profession people with pensions as low as 25s. or 30s. a week. Many of these people have written to me to point out the difficulties which they are in to-day. I hope I am not a snob, but these people have had to carry into a pension period a standard of life, a respectability, that they had to maintain while they were having salaries, and their hardship is very severe.

I ask the right hon. and gallant Gentleman whether something can be done along the lines of the bonuses which have been granted on salaries. I understand that both in public employment and, in many cases, private employment, a salary ceiling has been fixed, sometimes at £450 a year or £500. Cannot the Government fix a ceiling? I do not know whether they are prepared to receive a deputation of Members who are keenly interested in this matter, because this question cannot be bargained and argued about in detail across the Floor of the House. I think it would be a good thing if some of us interested in the Civil Service, teachers and other organisations and associations could meet the right hon. and gallant Gentleman and put to him further details, so that we could enlist his sympathy, intelligence and ability. So, I ask whether there is any hope of a deputation being received.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

That sort of question does not require an answer from me. It is the right of any Member of Parliament at any time to approach Ministers. I do not have to give a promise that I shall or shall not see any hon. Member. All I have said is that it is the Government's decision that this is not the time to make any change or introduce any legislation on this subject.

Photo of Mr William Cove Mr William Cove , Aberavon

I know that Members have the privilege of being received, but I want to put it on a more official foundation and see whether we cannot change the mind of the Government. I know that the right hon. and gallant Gentleman has stated the mind of the Government up to now, but even this Government have changed their mind before, and I am quite sure will have to change their mind again. I hope that if formal representations come from a group of Members, we may have proper facilities for putting the whole case before the Government.

Question, "That this House do now adjourn," put, and agreed to.