There is a small printing error on page 8 of the Bill. In line 33, the word "that" should be "this". As this is a comparatively minor provision, I did not consider it necessary to have the Bill reprinted and I am making this statement instead.
I am grateful for the statement you have just made, Mr. Speaker. I, too, have investigated this matter. I understand that the Bill was in correct form as handed into the House and that the subsequent transposition of words was a printing error which occurred subsequently to the Department handing in the Bill.
I beg to move, That the Bill be now read a Second time.
As the House may remember, this Bill was foreshadowed in my statement on 17th July. It is the sixth Pensions (Increase) Measure which the House has considered since the war. One was in 1947 and the remaining four—in 1952, 1954, 1956 and 1959—were introduced under the present Government. If Parliament is willing to approve the Bill, it will make the biggest additional provision, in terms of money provided, of any of these Pensions (Increase) Acts.
The last two Measures, the Acts of 1956 and 1959, provided additional pensions of the order of £11 million in each case and in the earlier Measures the cost did not exceed £9 million, in all cases including in those figures the cost of the Royal Warrant improvements made separately in respect of Armed Forces pensions. Applying the same basis to the present Measure—'that is to say, adding to it the cost of the Royal Warrant changes which my right hon. Friends will be introducing in due course—'the total cost will be slightly in excess of £22 million. I mention this to show that, in scale of provision, this is substantially a bigger Measure, of the order of twice the size of that of any of its predecessors. I can at least, therefore, claim that the promise which I made in my statement at the Box that this Measure would be no less generous than its predecessors is fully redeemed.
I should like to begin with one or two quick reflections on what I may call the philosophy of Pensions (Increase) Measures. Although there are exceptions in this highly varied field, public service pensions are normally related to length of service and salary during the last years—generally the last three years—of service. From the point of view of strict entitlement those pensions, once awarded, are fixed, being fixed on that basis.
There is a point of view which I have heard expressed that the matter should rest there and that if for other reasons hardship results, that is a matter for which the former public servant should, like his fellow citizens, rely on the normal social services. The other, if I may say so, extreme view is that the retired public servant should not only be fully compensated for any changes which may take place in the cost of living, but should also share in any absolute gains which subsequent improvements confer on his successors.
My own view is that both those extremes are wrong. I take the view that the Government, as a good employer, should take account of the hardship of their former employees, particularly hardships which have arisen through no fault whatever of their own. I equally take the view that it is wrong in principle to seek completely to insulate any section of society from changes in the value of money, and perhaps still more wrong to do so when that compensation is effected not, as it were, by the employer's own money, but by money extracted from taxpayers, who may be, and often are, less well off than the persons to whom the pensions are paid, and who may equally have suffered erosion in the value, for example, of private savings for just the same reasons as have caused difficulty to the pensioners. Therefore, I do not think there is any mathematical formula for one extreme or the other. I think it is a matter of rather difficult judgment, accepting that one ought to make some improvement, as a good employer, but remembering at the same time that when that improvement is made it is at cost to the taxpayers, including poor taxpayers and to try to seek a figure and proposals which will satisfy the broad judgment of fair-minded people as being reasonable and right.
It is, indeed, interesting, if I may detain the House for a moment, to trace the development of this policy since the war. The earlier Measures, that of 1947, which hon. Gentlemen opposite introduced, and that of 1952, which, as Financial Secretary to the Treasury, I had the privilege of taking through this House, both proceeded on the basis that all that should be done was relief of absolute hardship. For that reason, therefore, the improvements were confined to the smallest pensions where, quite obviously, in absolute terms hardship was most acute. But thought on this matter has developed, and the concept not only of absolute but of relative hardship, of reduction of standards, which, though above those of many of their fellow citizens, are lower than the pensioners used to enjoy, itself gives rise to something that I would describe as relative hardship.
As a result, the Act of 1956 gave some improvement right up the scale of pension, though it deliberately limited the amount of increase so that people on the higher pensions did not get the same proportionate increase as those on the lower. That restriction went in the Act of 1959, where the proportionate increases were made the whole way up the scale.
In this Measure the same principle applies to the percentage increases. They are made from the bottom to the top of the scale and relate only to the date of retirement. But the Bill also introduces a provision for the older pensioner which is plainly, being on a flat rate basis, of greater proportionate value to a person on the lower rate of pension. That is in Clause 2, to which I will refer in some detail, if I may, later.
The Bill covers all pensioners covered by the previous Pensions (Increase) Measures with some additions. The most important addition in every respect is the provision contained in Clauses 3 and 4 in respect of what are colloquially known as overseas pensioners. I shall have a word or two to say about them in a moment. There are also some small additions, such as that in Clause 7, of a small number of former employees of the Raw Cotton Commission not dealt with in previous Measures.
The numbers of pensioners involved are pretty substantial. There will benefit under Clause 1 of the Bill, so far as we can calculate, some 502,500 public service pensioners of Whom rather more than half will also benefit under Clause 2. I am told by my right hon. Friends the Service Ministers that their Prerogative instruments, when introduced, will cover a further 112,500 pensioners of the Armed Forces. The overseas pensioners, to whom I referred a moment or two ago, and who, as the House will see, are dealt with under Clauses 3 and 4, number a little over 10,000.
The House may like a breakdown of the categories of pensioners covered by the Bill, at any rate the main categories: 187,000 civil servants; 84,800 teachers; 120,000 former local government employees; 50,600 police; 6,000 of the Fire Service; 34,600 of the Health Service; about 5,000 former Indian and Pakistan civil pensioners; and a miscellaneous collection of others of between 4,000 and 5,000.
The Bill has three main provisions, and I should like to concentrate what I have to say this morning upon them, leaving my hon. Friend the Financial Secretary, who, if he has the good fortune to catch your eye, Mr. Speaker, at the conclusion of the debate, will seek to reply to it, to deal with other details and reply to any points which other hon. Members, if they also have the good fortune to catch your eye, may raise.
Clause 1, as I have indicated, follows the lines of the previous Pensions (Increase) Measures, including that of 1959. by providing percentage additions to pensions, related to the date of retirement. Retirements before the beginning of April, 1956, will result in an increase of 12 per cent., and the percentage increases are graded downwards as retirements become more recent. That, as the House knows, is to take account of the fact that the tendency of salaries and, therefore, of pensions has been upwards. The second main provision is that of flat rate additions to pensions in respect of those pensioners and their widows at 70, and the third main provision is the one I touched on a moment ago and is for the pensioners of overseas Governments, of the Sudan Government, and certain dependants of Indian and Pakistani pen- sioners who were not covered, as the pensioners themselves were, by previous Measures.
Let me take these three in order. As I have pointed out, the percentage increase in respect of pre-lst April, 1956, retirement is 12 per cent. The last increase in these pensions was that effected by the Act of 1959. That took effect on 1st August, 1959. At that date the Retail Prices Index stood at 109.3; the latest figure is 119.3, precisely 10 points up, or a little over 9 per cent. The 12 per cent. increase in pensions not only covers this but provides some further margin.
The question has been raised as to whether there should not be further steps of graduation for dates of retirement earlier than April, 1956, but one has to take account, in constructing this Measure, of the effect of previous legislation of this kind. One finds that if one were to take this stepping or graduation further back one would produce in respect at any rate of substantial classes of pensioners a situation in which those who had retired longer, further back, would, with pensions increase, be drawing more than those who retired shortly before 1956. Therefore, to get a reasonably smooth and fair pattern the graduation has stopped at April, 1956.
Can my right hon. Friend tell the House what would be the cost of giving those to whom he is giving the 12 per cent.increase absolute parity with the awards of 1961?
The Financial Secretary will no doubt deal with that issue in general, but I can give my hon. Friend the figure for parity as a whole—that is, including not only the ones involved in his question, which form the greater part—the pre-1956 ones—but adopting the principle of parity, as it is called, which means giving to all public service pensioners the same pension that they would get if they retired from the same job today. That would be about £90 million a year.
I was dealing with the question of further steps, and, as I said, that does not produce a reasonably fair or even pattern. As to the lower percentages which are set out in the Bill, they broadly take account of the increases in salaries since then.
Clause 2 not only embodies a wholly new provision in pensions increase legislation, but also, I suggest, reflects modern developments in social thinking generally. It is a special addition at the flat rate of £20 a year for those who retired before April, 1956, regardless of salary, subject to the proviso in subsection (2) about which I will say a word in a moment. Being a flat rate provision, it is proportionately of very much more benefit to the man on the smaller pension than the man on the larger pension, and it is itself graded for more recent retirements for the reason I gave in connection with Clause 1.
I should say a word in justification of the broad concept. I take the view that at something like this age the difficulties of retired people become in many ways more acute. There are the physical difficulties of increasing age and also the material consequences of fairly long retirement. It is perhaps significant in respect of this choice of the age of 70 that some years ago the Phillips Committee expressed the view that it was at the age of 70 that in general the problems and difficulties of old age become acute. In any event, the pensioner of 70 has, in the nature of things, been longest retired and longest exposed to the effects of inflation and to practical difficulties such as possessions requiring renewal and so on, and in many cases, on medical grounds, there are greater needs, together with less capacity for the pensioner to help himself. Therefore, I hope that the House will feel that this is not only a human, humane and sensible provision but also in accordance with a great deal of modern thought in the broader concept, into which I must not be tempted even by the presence of the hon. Member for Sowerby (Mr. Houghton), of the social services generally.
The flat rate figure is related only to date of retirement, subject to the provision in subsection (2) that it must not amount to more than a quarter of the increased pension. That limitation is, I think, sensible. There are, as in particular the two hon. Members on the Opposition Front Bench, the hon. Member for Sowerby and the hon. Member for Walthamstow, West (Mr. Redhead) know very well, a number of people drawing small pensions in respect of very short public service—periods down to not much more than ten years. It would, I think, be getting the whole thing out of balance and be wrong to attach an increase which really was, under this old age provision, quite disproportionate to a small pension earned only by a relatively small proportion of a working life. If applied without limit, it could be quite disproportionate.
The combined effect on the older pensioners—I hope I made it clear to the House that they get also the percentage additions under Clause 1—
If my hon. and gallant Friend will allow me, I propose later in my speech to give certain figures about the cost and I would rather give them—I intend to give them—in the context of the other cost figures rather than interpose them in the argument here. I promise to do that. If I overlook it I am sure that I can rely upon my hon. and gallant Friend to remind me.
The combined effect in the case of some of the smaller pensions for the older pensioners is interesting. If one takes the case of a postman who retired early in 1956 with forty years service and is now over 70, his present pension of £4 5s. 9d. goes up by 17s. 10d. to £5 3s. 7d. Another example is that a policeman with the shorter period of service of thirty years that many have had, has a current pension of £7 4s. 3d. which will go up by £1 4s. 11d. to £8 9s. 2d. Taking another example which may seem to the hon. Member for Sowerby to be even more relevant, the pension of the widow of a senior executive officer who had forty years service, if she is over 70, goes up from £4 4s. 1d. to £5 1s. 11d.
I now come to the question of the overseas pensioners. Before I embark upon this difficult question, I should like to say how glad I am to see on the Government Front Bench my hon. Friend the Joint Under-Secretary of State for Commonwealth Relations, who played a leading part in pressing for steps of this kind before he joined the Government. [Interruption.] I heard an hon. Member say "Shut him up". That hon. Member clearly shows that he knows nothing whatever about my hon. Friend's pertinacity.
I say in fairness to my predecessors of both parties that I do not think it was unreasonable for a long time for another view to be taken of this matter. We are concerned here with pensions which are the obligation of and are paid by other Governments, and, with the best will in the world, it is obvious that if the Government of the United Kingdom take over responsibility for increases, it makes it at any rate less likely that some of those Governments will themselves make improvements. It has been felt, therefore, that where these pensions were the obligation of another Government the right course to take was to draw the attention of that other Government to what we were doing in respect of those pensioners who were our responsibility and many of those Governments, let me say in all fairness, have responded, and responded generously, though some have not.
I am not sure that it is the milk in the coconut, because the obligation to take over responsibility for these pensions from, as my hon. Friend rightly says, the British Government originally was assumed by the overseas Governments as part of general agreements which they willingly undertook and which were in many ways highly beneficial to them. The material factor which weighed with my predecessors of both parties was that the pensions were the obligation of overseas Governments and the choice was, in the first place, for them to make. My predecessors and I did, when the time came to propose increases at home, draw their attention to what was being done.
I thought I was being rather chivalrous, for I was de- fending not only my predecessors on this side of the House but was also, in what I must admit is a rather unaccustomed rôle, defending my predecessors among right hon. Members opposite. But if the hon. Gentleman feels my chivalry and gallantry to be misplaced, I shall, rather sadly, think that in this prosaic age, he is perhaps right.
We maintain that where, under agreements honourably entered into, pensions are the responsibility of another Government, that Government should, in the first place, do what they think right by way of improvements and increases. We must be fair about this. Many of these Governments have carried out this obligation, although the pensions have seemed rather high in comparison with the standard of living of their own people.
By this Clause, we say that, when one compares the position of the overseas pensioner and whatever addition has been made by the Government liable for his pension with the position of the United Kingdom pensioner and his benefit from successive Pensions (Increase) Acts, the right thing to do is to top up the overseas pension so as to bring it up to the same level as it would have reached had he been a United Kingdom pensioner and had he enjoyed not only the benefits of this Bill but also of previous Acts. That is what this Clause is designed to do.
That sounds relatively simple in theory, but it is hideously complex in practice. Some of them have had increases, which in some cases have been quite good. A vast amount of detailed work has to be done to comply with the principle by putting them, as from the operation of the provisions of this Bill, into the same position as they would be in if they had enjoyed not only this but previous pensions increase measures in this country.
That is why this Measure is produced in a form against which I have certain prejudices. Unlike other Measures, it gives enabling powers. My right hon. Friend the Secretary for Technical Cooperation, who appointed a working committee to look into this, has reported that this is an appallingly complicated matter and that the only way in which we can handle it in time to get ahead with this Bill is to ask for powers to enable him, with the approval of the Treasury, to make regulations. The purpose of these regulations is as I have stated, and they will be laid before Parliament and subject to negative procedure.
If we had had to wait to work out how to do this by legislation, the provisions certainly could not have been included now in the House's business for some months to come, and then I should have had to present the House with a Bill physically a great deal bulkier than the relatively slim Measure we now have before us.
This will apply, broadly speaking, to Colonial Service pensioners, to widows under the nine military and civil India and Pakistan Pensions Funds, and to Sudanese Government Pensioners. The reason that I restrict the Indian and Pakistan provisions to widows is that the pensioners themselves, under arrangements made some years ago between Her Majesty's Government and the Governments of India and Pakistan, have already been included in pensions increases, but the widows were dealt with under a rather complex network of funds and were not so taken over. Therefore, to include them is the only necessary step in respect of India and Pakistan.
I express my gratitude to ray right hon. Friend the Secretary for Technical Co-operation and his able officials on a very fine job of work in simplifying a matter which made me, when I first saw it, begin to lose heart that it might ever be possible of solution.
As I promised, I will give certain figures as to cost. Overall, the cost will be £22,100,000 in the first year and will tend to rise. Of this figure, £6,120,000 will fall in the first place on local authorities in respect of local authority pensions, but the cost to the local authorities will be partly offset because part at any rate of this expenditure is grant aided.
Provided that my right hon. Friends, when they lay the Warrant, follow the lines of this Bill—which is normal practice and is I believe their intention—the additional cost to the Armed Forces will be £4·4 million. The total cost, as far as we can calculate it at this stage, for overseas pensions will be £1·4 million. This reflects the fact that many of these pensioners have had increases from the employing Governments.
Taking the central and local government expenditure under the Bill—that is, excluding the overseas pensioners on the one hand and the Armed Forces, who are not under the Bill, on the other hand—about £5·25 million represents the cost of the special over-70 provisions, which is very nearly half the total for the ordinary percentage additions of just over £11 million.
Now I wish to say something about the timing which we should like to follow with the help of the House. I am very anxious to get this Bill through the House and another place and obtain the Royal Assent before Christmas. The Bill is expressed to come into operation at the beginning of the month following the Royal Assent, and, if it proves possible with the help of the House to keep to that timetable, I propose that it should come into operation on the 1st January. The actual receipt of the extra money by pensioners would then follow at rather varying intervals.
Now I metaphorically put on my hat as Paymaster-General and explain how my office propose to handle this. A number of pensions—those of teachers, for example—are paid monthly, and it is hoped, therefore, that the additional rate, with the higher entitlement running from 1st January, will be paid in some cases in January and the rest in February. A number of these pensions are on a quarterly basis, and when the pensioner gets the additional money will depend on when, in the cycle of payments by the Paymaster-General's office, his particular payment comes up. But we certainly hope that the overwhelming majority of them will have received their increases by the end of the financial year.
That excepts the overseas pensioners because, as the House will appreciate, following the Royal Assent it will be necessary to make regulations. They cannot be lawfully made before the Royal Assent. What is perhaps even more time-consuming is that it will be necessary to get information from a variety of foreign Governments. All Governments answer letters quickly but some answer them quicker than others.
This Measure means, of course, a substantial additional charge on the taxpayers and I do not conceal that from the House. But on the other hand, it will give, in one way or another, to those who have served this country and will do something to restore the position of those who have retired, and in particular those who have been retired for a considerable time. This must—and I do not wish to be dogmatic—represent an essay in judgment, and I hope that the House will feel that it represents a fair balance between the interests of these pensioners on the one hand and the interests of their fellow citizens and fellow taxpayers on the other. It offers the biggest additional cost, that is, the biggest additional pension provision, of any of these Measures, and by a very wide margin—it is almost double the previous highest. It has the widest scope of any of them and it gives—and this is the new feature, as I have stressed—special attention to the oldest pensioners.
I should apologise to the House, because, Mr. Speaker, I have said this so often that you might convict me of tedious repetition, but I believe that it is increasingly the case that social policy should concentrate at any rate in the broad general directions in which the money is most needed and the money can do most good. I think that the Bill, despite this heavy expenditure, measures up to that test and I commend it to the House.
I am sure that the House would wish me just for a moment to recall the part played in debates on previous Pensions (Increase) Bills by our late friend and colleague, the Right Hon. William Glenvil Hall. I know that when the announcement was made in July of a forthcoming Pensions (Increase) Bill he was looking forward very keenly to taking part in the debates upon it, and we all regret that that will not be so. It fell to him, when he was Financial Secretary to the Treasury in the Labour Government, to introduce the first postwar Pensions (Increase) Bill in 1947, and he joined in debates on this long string of Pensions (Increase) Bills since, and we all regret his passing.
I should like to congratulate the Chief Secretary on his lucid and patient explanation of the best Pensions (Increase) Bill so far, and also to congratulate him upon his remarkable run of good fortune. Last July, he was able to introduce Regulations increasing National Assistance scales to the cost of an additional £20 million. Only last Monday, he introduced Regulations to repay another £42 million of post-war credits, and today he has moved the Second Reading of a Pensions (Increase) Bill which, he tells us, will cost about £23 million. Let us contrast that with the bleak experience of his predecessor who went all through the pay pause, nurses' pay, university grants and other tempests. I am sure that we offer our felicitations to the Chief Secretary on having come in in calmer days. I shall make an appeal to the right hon. Gentleman's good fortune and reforming zeal in one or two respects as I go through my remarks.
As the Chief Secretary has said, this is the sixth Pensions (Increase) Measure since the war, and I can confidently say that it will not be the last. Unless some more satisfactory method is found of relieving hardship among public service pensioners, the Bill is bound to be followed by others. Let us mark that when dealing with this important Measure. There are some lessons to be learned from the fact that we have had this long string of Measures to increase public service pensions, and I shall return to them later.
First, I remind the House and the Chief Secretary that many public servants are drawing pensions lower than they should because of the denial in many cases of much of their service to reckon for superannuation. Many hon. and right hon. Members are familiar with the grievance of many public servants through not counting temporary or unestablished service for pensions. They therefore start in the pensions increase stakes with a lower pension than those who have had the benefit of counting all their service for pension. The House will remember that at different times in this Parliament more than 300 hon. Members have signed Private Member's Motions asking the Government to provide some remedy for this long-standing grievance.
It is a matter for strong criticism of the Administrations of the past that they have kept public servants in a so-called temporary position for 10, 15 and 30 years, none of their service, strictly speaking, reckoning for superannuation. Previous Superannuation Acts have conceded some part of that service to count for pension, but not one the whole of it, and it is important that we remember this in relation to the provisions of the Bill. I hope that even yet it will be possible for the Government to find some satisfactory and reasonable solution to that problem.
There is another set of people who are constantly representing their grievances to us and who are concerned with the Bill but who are not likely to benefit from it. Those are the re-employed pensioners, persons who have retired and who have then been brought back for a further period of service. Under Section 20 of the Superannuation Act, 1834, the re-employed pensioner is not allowed to draw in pension and pay together more than the pay he was getting at the time of retirement. When he comes back for a further period of service, his pension is abated by the amount of his pay, and the total of the two must not exceed his remuneration at the time he retired, possibly some years previously.
That means that during his period of re-employment he gets neither pensions increases nor pay increases. His total remuneration remains fixed at the level of the time of his retirement. Many representations have been made at different times that it is wrong to deprive re-employed pensioners of both pay increases and pension increases. They ought at least to have one or the other, for they otherwise have no redress for the rise in living costs during the period of their re-employment.
Hon. Members who may wish to study this matter will find it fully dealt with in the Report of the Royal Commission on the Civil Service, 1953–55, Cmd. 9613. I am bound to disclose to the House that the majority of the Royal Commission recommended no change, though five members of the Commission dissented from that point of view.
We welcome the Bill's proposals. We are bound to welcome such a significant improvement in the conditions of public service pensioners. At the same time, we are not being unduly critical when we say that this is yet another palliative Measure, another ad hoc step. There is no lasting solution in the Bill and its proposals will have to be revised by later legislation.
The right hon. Gentleman referred to what he described as the philosophy of pensions policy and referred to two extremes of view—one that no action should be taken to improve pensions once fixed, under the doctrine of immutability, and the other that pensions granted in the past should be adjusted from time to time to the level of pensions being currently awarded for comparable status and length of service.
We are aware of these two extremes, and, as the Chief Secretary said, this Bill steers a middle course which he believes should satisfy the reasonable judgment of those who have to decide these matters and of the taxpayers who have to foot the Bill. I say in passing that we always get the taxpayer brought in to proposals to increase pensions, but we do not hear quite so much about him when dealing with proposals to increase pay.
Of course the taxpayer is footing the Bill of all public expenditure, and of course many taxpayers are not as well off as considerable bodies of people who are in the employment of the State, or are in retirement and drawing pensions from the State, but the taxpayer has to look at what is a fair basis both for remuneration and the pensions of public employees, having in mind the desire to have adequate standards of recruitment, to have as far as possible an incorruptible Civil Service, to have one that is efficient, and to feel satisfied that conditions provided ensure a very high standard of devotion to duty in the public interest. This is the fundamental interest of the taxpayer, and he must be prepared to foot the bill.
I remember when I was in India several years ago discussing this very problem of public service pay and pensions with the Prime Minister of India, and Mr. Nehru said that by comparison with the lot of the general body of the Indian people no public servants in India have a grievance because they are all better off than most of the people, but that, he said, is not the test. The test is what is necessary, even in a poor country, to ensure a high standard of integrity, efficiency, and devotion to duty, and if the taxpayer is going to have too much regard to his own position in this matter he will pay heavily for it in the inefficiency and unsatisfactory nature of the public service. The taxpayer must look at this as objectively as he can, and of course not all taxpayers are poor. There are plenty of rich ones, and many of them are far better off than either serving or retired civil servants. There are no top-hat schemes in the Civil Service, but there are plenty outside, and we must bear these things in mind when trying to get the whole question into proper perspective.
The Chief Secretary referred to the rise in the retail price index since the last Bill came into operation in 1959. He appeared to be applying the cost of living as a test for the revision of the level of pensions, and he said that the retail price index had risen by 10 per cent. since the 1959 Act.
I beg the right hon. Gentleman's pardon. It has risen by 9 per cent. since the 1959 Act.
There is no uniformity in this matter in the test. When introducing the Pensions (Increase) Bill in 1959 the then Chancellor said:
The retail price index has risen 7 per cent since the last Pensions (Increase) Act took effect."—[OFFICIAL REPORT, 2nd June, 1959; Vol. 606, c. 35.]
That was the 1956 Act. On occasions before that, between the 1952 and 1956 Acts, the retail price index had risen by 11 per cent. Between the 1947 and 1952 Acts the retail price index had risen by 37 per cent.
Sometimes the retail price index has risen more than at other times when a Bill has been introduced. I think that the explanation of the introduction of the Bill in 1959, after a rise of only 7 per cent. in the retail price index, was largely because of the speech of the Prime Minister at about that time regarding pensioners' share in the general prosperity of the nation, and I remark as a fact that the Pensions (Increase) Bill was introduced probably to redeem that pledge, and to redeem it, incidentally, before the General Election in the autumn of 1959.
During the past ten years the retail price index has risen by 65 per cent. Pensions awarded in 1951 have been increased by the 1959 and earlier Acts by only 27 per cent. This Bill, for the under-70s, increases pensions by a further 25 per cent. That is a 25 per cent.increase on the original basic pension, so the total increase after this Bill becomes law, for pensioners under 70, for those who were pensioned in 1951, will be a 52 per cent. increase as compared with a 65 per cent. increase in the Retail Price Index.
I have heard some people suggest that a suitable test, though not necessarily an exclusive one, would be the movement of the Ministry of Labour's wages index. This has risen 45 per cent. in the last ten years, but wages and salaries in the public services were so much below the pay of people in comparable outside employment in the early part of the last decade that public service pay has risen faster than the Ministry of Labour's wages index over the same period.
The Priestley Commission of 1953–55 and other reviews of public service pay—police, teachers, local government, and so on—did much to enable public servants to recover lost ground in their position relative to those employed in comparable occupations outside, so that for this purpose it would not be satisfactory to take the wages index as the test of improvements in the level of public service pensions.
If we were to make a comparison between the rise in the cost of pensions in relation to the rise in earnings in the public service, I could give at least one figure, and that is, that the rise in the average cost of the Civil Service non-industrial staff has risen 130 per cent. since 1948 while pensions have not risen by anything like that figure. We must not, of course, overlook the age bonuses in Clause 2 of the Bill, a new feature welcome in some respects, but perhaps not wholly defensible from the point of view of principle.
This gives a flat rate addition to the pensions of those over 70, a maximum of £20 and a minimum of £4, according to the date of the beginning of the pension, and irrespective of the amount of the pension. This, as the Chief Secretary said, has the effect of adding a further percentage to pensions according to the year in which they began, the percentage being higher in the case of the smaller pensions. For the pre-1956 pensions, the age bonus of £20 is the equivalent of an extra 25 per cent. on pensions as low as £80, but only 2½per cent. on pensions as high as £800, so for a pension of £100 in 1951 there has been added already £36 by earlier Acts, £16 is added under Clause 1, for a person over 70 another £20 is added under Clause 2, making an addition of £70 increase altogether on the original pension of £100 before 1956.
That 72 per cent. increase compares with a 62 per cent. rise in the retail price index, a 45 per cent. rise in the wages index and a 75 per cent., or greater, rise in the National Insurance pension. Yet a pension of £100 ten years ago is only £172 today. Higher up the scale the percentage rise is less, because the age bonus is a flat rate. That means that in the case of the pension of £400 given in 1951 to an over-70 person—which has been increased by £105 so far—another £80 will be added under Clauses 1 and 2, making a total increase of 46 per cent., compared with the rise in the retail price index of 62 per cent., in the wages index of 46 per cent., and in the earnings of civil servants since 1948 of 130 per cent., over the same period.
There is another test. How do past pensions compare with those currently awarded for comparable status and service? Here I touch upon what the Chief Secretary regards as an extreme point of view, which, for brevity, can be described as the doctrine of parity, in contrast to the other extreme, the doctrine of immutability. The former doctrine lays it down that past pensions should keep abreast of currently awarded pensions, whereas the other provides that pensions once awarded need not be altered at all, and that people should make their own provision to deal with the hazards of inflation or the fall in the value of money.
The Chief Secretary says that between the two extremes there is a reasonable mean, and that the Bill fulfils it. But there are strong grounds for regarding some relationship between pensions and current pay as a more satisfactory basis for the adjustment of pensions than any of the other criteria which have been mentioned. As the right hon. Gentleman knows, it would take very much bigger increases than those provided in the Bill to bring past pensions up to the level of currently awarded pensions for comparable grades and length of service.
This is an important point. Have not the hon. Member's constituents written to him suggesting that some independent authority should examine these two problems and then bring the whole question of the pay award to this House, so that we should have to examine the pensions of these people?
I am grateful to the hon. Member for making that suggestion. I entirely support it. The truth is that no examination of the fundamentals of superannuation in the public service has been undertaken for many years—in fact, not since 1859. It is time that the whole question of the position of the pension in relation to the various other relevant factors in present conditions was reviewed. I was going to suggest that somebody of suitable standing should examine this matter. The last Royal Commission was not called upon to do so; that question was outside its terms of reference and it therefore did not examine the principles underlying our present superannuation arrangements.
Even after the Bill becomes law, and after the bonus for the over-70s is awarded, it will still be necessary to increase pensions by a further 15 per cent. to bring the pension of a clerical officer in the Civil Service, for instance, up to the level of the pension now being granted to a clerical officer retiring at the present time. In the case of an executive officer the increase will have to be 19 per cent. and in the case of an administrative principal 27 per cent.
I want to refer to the hon. Member's response to the interjection made by my hon. Friend the Member for The Wrekin (Mr. W. Yates). Is it really quite fair to say that there has been no review? Is not this what the Civil Service Pay Research Unit is
doing? I have here its terms of reference, one of which is:
The discovery of the pay and conditions of service attached to jobs regarded as comparable.
No, sir. The Civil Service Pay Research Unit does not deal with superannuation. It was set up after the Report of the Priestley Commission on Civil Service pay, and it deals solely with job comparisons for pay purposes. In reviewing Civil Service pay and comparing the levels of pay inside the Civil Service with rates of pay for comparable employment outside, it has to take into account the value of Civil Service superannuation, the differences in hours of work, if any, the differences in meal rates, if any, and the differences in holidays with pay, if any. Those are all relevant factors in weighing up strict comparability with outside employment, and the Research Unit is not allowed to deal with questions of superannuation.
Which of the tests that I have mention—retail price index, wages index, and the doctrine of parity—is being applied in the proposals in the Bill? The answer is none of them. This is a pragmatic approach, not related to any body of principle but resting upon the judgment of what is fair in all the circumstances.
Numerous quotations could be made from the 1954 White Paper, but I will not trouble the House with them. There are also the replies to Questions given by Ministers on the adoption of some stable and acceptable criterion for deciding this matter. All attempts to obtain this have been repulsed, because the Government still believe that the present method is the best. But I warn the House that we shall have to return to this problem after the lapse of a few years, and go through exactly the same process of relieving hardship—relative or absolute—among public service pensioners.
Some of the consequences of proceeding on this pragmatic basis are to be found in the difficulties which the Treasury itself has realised, regarding the effect of the Bill on past pensions in relation to more recent ones. I see from Table A, which accompanies the Press statement issued a few days ago, that a clerical officer in the Civil Service retired in 1947 on a pension of £215. The Bill will bring his pension up to £350, if he is over 70, as he almost invariably will be. But the clerical officer who retired last year receives a pension of over £400.
In fact, in respect of each year that we look back, the pensioner is comparatively worse off than the person of equivalent grade who retires subsequently. Is that a fair or rational basis. Should a man who retires in one year have a life pension lower than the man who retired the year after? This is what the existing system results in. The male certificated teacher in London who retired in 1947 will have his pension brought up to £437, but such a teacher retiring now will receive a pension of over £500.
I will not stop to argue the matter further, but I suggest that a very important question is contained in a Motion passed unanimously by this House on 25th May this year, calling upon the Government to declare anew the principles for fixing the level of pensions. That Motion related particularly to the pensions of former colonial civil servants, but the then Financial Secretary—now the Minister of Education—explained that the principle being dealt with would apply to all, and the Bill is probably largely the result of the exchanges which took place during the course of that debate.
I think that the House will expect me to sum up our point of view about the principles underlying the Bill. Much of the details of the Bill, including some of its important provisions, we may have an opportunity of dealing with in Committee.
May I here interpolate a word about the operative date? We could overcome any difficulty regarding the Committee stage of the Bill if the Government would insert a specific date for operation in the Bill, instead of leaving it as the first day of the calendar month after the Royal Assent. There is no sanctity about that formula. The Minister could put in the date 1st January, 1963, and then we would cease to fret about the speed of passage of the Bill through the House, but we can look at that when we come to it.
On the general issue we feel bound to say on this side of the House, and I am quite certain that it will be echoed on the other side of the House, first, that the present ad hoc method of dealing with this problem is not satisfactory, and that we ought to try to find something better which will give greater certainty to those concerned and which will relieve the House of the difficulty of having to deal with these complicated matters at relatively frequent intervals.
There is in our view a case in 1962 for the consideration of a progressive pension scheme in which a regular review of pensions will be undertaken by reference to some measurable, and relevant criterion. There is no suggestion of insulating the pensioner from the general economic conditions of the country. That is not the problem at all. The problem is how to keep the pensioner in line with rising levels of income and standards of living in the country. He falls behind. The pensioner, as I said in the debate on the Address in reply to the Queen's Speech a few days ago, has no employer to threaten, he has no arbitration tribunal to go to, he has no court of appeal. He can only ask Parliament to redress his grievances. Each time we go through the same dreary process of memorials, motions, letters and piteous pleas for the relief of hardship, and then pressure is exerted on the Government, who always says "No" to begin with—they said "No" only a few months ago—and then they say "Yes" and claim all the credit for having done it. Even when they gave way on pensions to former colonial civil servants they had to defend an attitude which they have now abandoned. There is nothing gracious about this and nothing satisfying to the pensioners concerned. I put forward the general proposition that consideration should be given to some system of relating movements of pay and adjustments of pensions whether on a broad occupational basis or within a narrower field of employment.
Finally, there is this very important, much wider, question of considering the place of those who have retired in the new approach to an incomes policy. Some place for the pensioner must be found, and there can be no rational and equitable incomes policy until all sections of the community have their reasonable position in it, taking neither too much nor receiving too little. That is what an incomes policy must mean. The pensioner is entitled to his share, and I hope that he will get it, because, in my judgment, retirement is an extension of one's service to the State—it is part of the whole contract. It is just as much a part of conditions of service as other provisions, such as sickness, breakdown, and other conditions of service.
I think that the view, if it is held in any quarter today—I scarcely think that it can be—that pensions once fixed should stay fixed rests on the doctrine that once an employee has retired, the employer has done with him and that once the pension has been fixed the contact is completed. After that, it is only if his conscience is stricken by the spectacle of hardship that he is called upon to do anything more. None of us accepts that doctrine today, and this Bill is proof of that.
The question is whether we go further and look at the reasonable anticipation of a public servant who is giving life service to the State. There is no doubt that public servants attach great importance to the conditions of retirement. It is one of the rewards of their service. They do not get the glittering prizes of industry, commerce and the professions. They are employed on modest levels of remuneration and their superannuation arrangements are part of that.
In those conditions, naturally, very much more importance is attached by the public servant to pension arrangements than in many cases outside. I say, further, that the hundreds of thousands of serving public servants have seen repeated long enough the problems of retirement. It is they, as well as the pensioner, who should give attention to a more satisfactory solution of this problem. It is their turn next. There ace many public servants in retirement today who in the past have been apathetic to the plight of the pensioner but who are now part of the army of pensioners who are looking for redress in this Bill and for something more satisfactory than this Bill provides.
I would, therefore, encourage both sides of the public service, the official and the staff sides, to give positive attention to the whole structure of superannuation schemes in the public service with a view to getting something more satisfactory as a built-in provision for the future of their pension rights.
I must make three brief references to other parts of the Bill, and I especially want to welcome Clause 3. I am glad that the Chief Secretary has acknowledged the important part played in this matter by the Under-Secretary of State for Commonwealth Relations. We must give credit where credit is due. In season and out of season, with all the rebuffs and discouragement, and with all the denials of any obligation on the part of Her Majesty's Government, he has won through, and I congratulate him on sitting on the Front Bench today to see the triumph of his efforts. He was supported by hon. and right hon. Members on this side of the House and on the other side of the House. Indeed, this is a joint effort and a triumph for the House of Commons—the Treasury can take no credit whatsoever for it.
This is really where the will of the House has prevailed, and if the Chief Secretary had acknowledged that, I would have thought better of him. To scramble through all the obsolete arguments of the past was not really worthy of him. I think that it is a great achievement and that the House can be well pleased with it, and especially with the inclusion of British pensioners of the Sudan Government who were denied even consideration in this context, "You have never been in the British Empire", it was said. "You were in the employment of a Government of a hybrid character which cannot be held to place any obligations on Her Majesty's Government." Yet here they are. I think that the transformation is so astonishing that one hopes that this new spirit in the Treasury will apply itself to other problems of comparable difficulty at the present time.
Yes, I am very conscious of the fact that railway superannuitants are not in the Bill. We should have been much happier had it been possible to include them, but the Government have a responsibility here which, I hope, they will discharge in the proper quarter.
As regards Forces' pensions, I want to suggest to the right hon. Gentleman that he should make representations to the Leader of the House to give us an opportunity of discussing what will be the contents of the Prerogative Instruments on a separate occasion. There are many questions affecting Forces' pensions which are distinct from the factors in the civilian pension. This was mentioned at Question Time yesterday on the business for next week. I hope it will be possible for us to have some separate time for the discussion of those pensions. We have not had the opportunity for a long time.
I hope, therefore that in welcoming the Bill the House will bear in mind some of the fundamental questions underlying it, which, I think, should not be lost sight of in looking at a Bill of this kind which is of comparatively narrow scope These issues are of profound importance and need, I think, continued discussion with a view to finding something more satisfactory. I am sure that the Chief Secretary will acquit me of any charge of being unduly critical or tiresome in what I have said.
I conclude by saying that we welcome the Bill and are happy to be present at its Second Reading.
There have been three Pensions (Increase) Bills of this character during the last six years, and I have had the honour on each of those occasions of making the first speech from the back benches. It is, I feel, a responsible task, because, as has just appeared from what the hon. Member for Sowerby (Mr. Houghton) has been saying and the agreement which it has had from both sides of the House, this is, after all, very much a matter in which all quarters of the House are concerned. It is not a party matter.
We as Members of Parliament have a special responsibility for looking after the conditions, and retirement conditions in particular, of those men and women who in most cases have given the whole of their working life to the public service in realms for which we are particularly responsible in connection with public expenditure. It is surely part of our duty to see that a proper proportion of that public expenditure is devoted to providing them with proper conditions.
After all, these public service pensioners do not have great industrial organisations to support them and to support their claims. Also, they are not the kind of people who like to engage in agitations, particularly against the Government who have employed them. Therefore, they are not in the same strong bargaining position as, for example, are the great industrial organisations. Nor does their case provide headlines for the Press or animated discussions on television, so they are apt to be at the back of the queue.
I think there are many hon. Members on both sides of the House who would agree, who feel and who have often said so in the past that public pensioners have, in some respects, had a rather poor deal. It is only in recent years, largely through the work of back benchers on both sides of the House, that the Government have come to take what I venture to describe as a more reasonable and more modern view of their responsibility towards their servants.
I am going, I hope briefly, to suggest to the House that there are good reasons for thinking that the present system which we have enshrined, if that is the right word, in public servants pensions Bills is not a satisfactory one and that we ought to give very careful consideration—the hon. Member for Sowerby has already adumbrated the line with which many of us agree—to the possibility of some more satisfactory arrangements. But before I come to any critical examination of the position, I wish to express a very genuine word of thanks to my right hon. Friend and his colleagues for what they have done in the Bill, because one cannot properly overlook the fact that this Bill, if Pensions (Increase) Bills are the way that we have to do it, cannot possibly be described as anything but a generous application of that method.
I feel that there are many pensioners who would wish that to be said. We all know, unfortunately, that when people are not able to get the full extent of their claims made there is a tendency to say. "This is no good at all." I do not think it is right to attribute that attitude to the public service pensioners, and I believe that many of us find that though they may be disappointed that they do not get more they recognise that a real effort has been made to help them.
Several points have already been mentioned, but I should not like it to be thought that we who for some years have been particularly interested in this subject do not very much appreciate what has been done. First of all, there is the special attention which is being paid to the older people. That, I think, is a very striking thing, and it is, of course, a departure from the lines of any previous Pensions (Increase) Bill.
Then, of course, there is the inclusion of the colonial and ex-colonial former public servants which will, I am sure, be welcomed not only by them but by all those who have sympathised with their position.
There is a third point, which is only a small one but which, I think, those concerned with negotiations and discussions in these matters would like mentioned. It is what is called the cut-off date, which in this case has been advanced. In previous Bills there was the unfortunate feature that the date on which the pension should be improved, that is to say, the standing date of the pension to which the improvement should be applied, was quite a long way back before the date of the Bill. That is being remedied in this case and we shall find at this time that anyone pensioned up to the end of 1961 will benefit to a considerable degree. I think that should be mentioned because it shows that the details of this matter have been carefully considered. I believe that is very important for what one might call the point of view of morale and a general feeling of fairness and justice. That is what I feel is one of the disadvantages of the present pensions increase system. What happens is that every time one of these Measures becomes law all those concerned starts preparing for the next one because they feel that if they do not start immediately nothing will ever happen. They do not know when the next Measure will come, and therefore we find that a great deal of the benefit is lost.
Many hon. Members receive letters from their constituents, almost immediately after the passing of such a Measure, asking what is to happen next I think, therefore, that it is desirable to appreciate that the present system, of itself, is causing unnecessary and, I believe, avoidable discontent among pensioners. The whole thing was summed up extremely well in an interesting article which appeared last week in the Economist in which it was stated that the present system has the effect of "keeping public pensioners panting desperately after the cost of living". We know from the speech today by my right hon. Friend that that is not the way in which he looks at the matter. The difficulty is that the impression created by the present system and its operation is different.
The history of the legislation has been mentioned, and I think it worth while to recall one or two features of that legislation which perhaps Show why it is that this feeding of discontent has grown up and is so strong today. The origin, in 1944, just before the end of the war, of this system was quite definitely hedged in with the so-called principle of immutability and special hardship, but no one has been able to point to the origin of the doctrine of immutability. I think it was something quite understandably created as a good argument, and no doubt it has stood up for years. In fact, it persisted through the legislation of 1947, 1952 and 1954, and it was, of course, manifested particularly by the means test and the maximum supplement. Those two things caused a great deal of heartburning.
I have been looking up the debates which took place over the years, and one finds that from the very beginning hon. Members from both sides of the House were protesting against the application of that outlook to public service pensions. The only advance made during those years was in the actual figures and the actual percentages applicable, which, as a result of reducing the application of the means test, was that the single person figure went up from £225 to £425 a year and the figure for married people from £300 to £550. Great efforts were made by hon. Members at that time to persuade the Government to depart from those so-called principles. In 1954 the Government, in the famous Cmd. Paper 9092, to which reference has been made by the hon. Member for Sowerby, attempted desperately to hold the position.
The White Paper stated that there was this principle of immutability and that the only justification for departing from it was "special hardship", that is to say, What is known in another field, and we have heard of it recently, special circumstances which apply to particular individuals rather than anything which applies to a class. In effect, the Govern- ment definitely refused to abandon that position.
Before the 1956 Act a number of hon. Members got together and then there came a real break-through—almost a "D-Day" break-through—because the means test was abolished. But at that time the "snake" was only "scotched", because those pundits interested in the matter managed to retain the maximum, and so the hardship criterion, it was alleged, was still maintained. At last, in 1959, it was killed. The maximum was abolished.
I remember very well, as I am sure will other hon. Members, the speech made on that occasion by our very good friend the late Will Glenvil Hall, who was very deeply concerned with this subject. He pointed out that the effect of the 1959 Measure was that the Government had abandoned this original principle and he said that the time had come for us to make an advance from the hand-to-mouth method and find some acceptable permanent way to deal with this question. I feel that those who recognise the contribution he made, not only in respect of this subject but of many others of interest to the whole House, would like a tribute to be paid to him for providing us with a text, as it were, for our approach to this matter today. Perhaps I may read what he said in 1959:
The need to match pensions with purchasing power has presented Parliament with a problem for some years. From 1944 onwards the list of Acts is quite long—1944, 1947, 1952, 1954 and 1956. All these Measures have failed to find any real solution to the problem which faces us in this matter of pensions for State servants. All of us would welcome a real attempt at a permanent solution by any Government, no matter of what party. I am sorry to say—I feel that the House and the Chancellor himself will agree—that we have not found such a solution in this Bill."—[OFFICIAL REPORT, 2nd June, 1959; Vol. 606, c. 47.]
Well, of course, we do not find it in the present Bill, and I venture to think that we never shall find it in this method of legislation. It is really impossible. One might describe it as a fire brigade method; an ad hoc method; a hit-and-miss method. Is it not time that we considered whether it is possible to devise some proper businesslike system which will provide for periodic reviews when necessary by some appropriate
machinery of a suitable character applying recognised criteria?
I venture to suggest also—perhaps it is a matter going beyond the subject of the present debate, although it certainly includes it—that it should be borne in mind that there is a particular reason why we should take a fresh look at this whole matter. After all, so far, we have always been concerned, even in the more enlightened and modern days of pensions increase Acts, with trying to enable the pensioners to catch up with the existing cost of living.
Recently, as both parties have agreed in policy statements from time to time, and as this House unanimously agreed in a Motion which was accepted by the Government, we decided that as a matter of principle pensioners ought to be entitled to expect to have a share in the improved standard of living that is developing, and which we hope will continue to develop. In the system of the Pensions (Increase) Acts, there is no room for consideration of that. We do not even catch up, as the Economist pointed out. The pensioners are "panting along" and trying to catch up, but if we are to consider the other aspects, some special machinery is required.
In the days of "Neddy" and "Nicky," I suggest that it is time indeed for those of us concerned with the interests of the public pensioners to stake out their claims, because otherwise they may get to the back of the queue again. They may go for a long time and then be told, "We are very sorry, but we have given out all there is to be given out, and we have forgotten about you." I hope they will not be forgotten.
I am sure that everyone will welcome this Bill, but I think that the House would like to have, so far as he can give it, from my right hon. Friend, who we know has this subject very near to his heart and also has great experience of it, at least some assurance that these aspects of the matter will be considered, so that we shall not have the position that, once this Bill has received the Royal Assent, the files are put away and someone will say, "That has finished with that for a year or two." It has not finished with it, and I think the House would wish to have some assurance of that kind from my right hon. Friend.
I have to declare an interest in this matter, and also to apologise to the House in that I did not discover that interest until it was brought to my attention by the Ministry of Education in January, 1961. Therefore, I have been present in the House when previous Bills have been discussed, and, although I never took any part in the discussions, I did not at that time disclose that interest. In view of the way in which the Civil Service is sometimes criticised for its attitude in these matters, I hope I shall be allowed to read to the House a letter which I received when staying in Devonshire during the Christmas Recess of 1960–61.
The letter is dated 9th January, 1961, which is type-written, but with a rubber stamp mark "10th January, 1961". It reads as follows:
My staff have been going through the files of certificated teachers whose only connection with teachers' superannuation was that, before 1919, they paid contributions towards a deferred annuity under the old Elementary School Teachers' (Superannuation) Acts, 1898 to 1912, and have found yours among them. In practically all of these cases, we have no knowledge of the teacher's whereabouts or whether he is alive or dead.
I am happy, therefore, in your case, to be in a position to let you know that you are entitled to a deferred annuity of £11 1s. 8d. payable from 11th September, 1947, and that since 1st April, 1956, this annuity has been increased under Pensions (Increase) Acts to about twice this amount. Instructions for payment have been issued to H.M. Paymaster-General, and application should be made to him on the enclosed form. You should also complete and forward to him the enclosed form Gen.266B, so that the exact amount of the increase payable under the Pensions (Increase) Acts can be calculated.
A copy of the 'Pensioner's Guide to the Pensions (Increase) Acts' is enclosed for your information.
A former private secretary of mine, when I was at the Ministry, adds his good wishes to me. I will not quote them, because in the light of modern events the punishments that might be inflicted on him and me do not bear thinking about.
I may say that the gentleman in question has a permanent grievance against the Department, because when he was made a private secretary he was held not to have a sufficient standing in the Civil Service hierarchy to warrant his being paid the usual allowance that is made to private secretaries. I ask the right hon. Gentleman just to examine what happened at that time, because it seems to me that if a man does the work he is entitled to the rate for the job, and even if he has not advanced sufficiently high in the scale of things within the Department he is all the more entitled to it when undertaking the difficult and delicate duties which Ministers know fall upon these gentlemen. I wish him the same kind of luck that he wished me in the letter which I have just quoted.
A few days later, I received a warrant for £202 from the Paymaster-General, which represented about fourteen years' accumulation of the pension at varying rates, which were all set out, with the proper amount of Income Tax correctly deducted. I now get £6 2s. 2d. every quarter, which is quite acceptable.
What oppressed me at the time and does now is that it is quite evident from the contents of that letter that there were a number of other people who had served in those far-off days when, before the days of the Burnham Committee, teachers' salaries were negotiated individually with separate authorities. I started in Surrey as a teacher on a scale of salary from £90 rising to £130 by £5 increases. I recollect that I determined that the first time that my cheque was more than £10 I would spend it all in one day to see what it really felt like to be wealthy.
There are some secrets that I would not share even with my right hon. Friend, but I managed to do it. Then, the next year the Surrey County Council reduced the' scale of salaries from £90—£130 by £5 increases to £90 —£125. I just mention that to show that some of these very old servants of public authorities, whether national or local, had to encounter difficulties with regard to their scale of living while they were still employed. I hope that if what I have said today does nothing else it may draw the attention of these people to the fact that there may also be a file relating to them in the Ministry of Education although no other evidence there exists of any service they have rendered.
I want to thank the Minister for the way the Bill has been introduced and to associate myself with everything that was said by my hon. Friend the Member for Sowerby (Mr. Houghton) and what has been said by the right hon. and learned Member for Chertsey (Sir L. Heald). My hon. Friend the Member for Southampton, Itchen (Dr. King) and I know from our personal experiences the way in which this subject of the hope of a small increase in the near future, no matter what has just happened, still keeps many of these people in a state of continual anxiety and hope, and more often anxiety than hope.
I hope that it may be possible to devise some scheme by which these past services can be recognised in the matter of superannuation in a way that does not involve virtually perpetual agitation, which after all has its unsettling effect on recruits to these various forms of public service who as they look forward can only see the same kind of thing operating many years from now when they will be more violently interested in superannuation problems than they are in the early years of their service. It was brought home to me that merely by achieving notoriety my file was recognised when people were going through it, when other people who had been continually serving long after I left the service were there with possible rights which had not been implemented and in the nature of things could not be implemented.
I hope that the attitude which has prevailed in speeches this morning will mark the future of this subject and that we may be able to arrive at some permanent way of handling the matter which will not involve this continual agitation and these successive Acts which, when they come, rarely do real justice to the claims that are being made.
I was not quite sure at one point in the reminiscences of the right hon. Member for South Shields (Mr. Ede) whether he was warning pensioners that, of course, if salaries go down, then, by parity of argument with the arguments put today, they must expect pensions to go down too; but I take it that that was not his intention.
I hope to be short and I fear to be ineffective. I wish to welcome the Bill and support it, and as far as that goes I am afraid that I cannot be effective, because so does everybody else and my remarks will make no difference. I differ from everybody else who has spoken in what I think is the next thing one ought to say. This Bill is designed, and I think it is the sixth or seventh in a dozen years—
It is designed to readjust the relation between superannuation payments and inflation, and though there has been some slight reference to inflation today no one on either side of the House has indicated that one way and possibly even the better way of adjusting the relation would be by stopping inflation.
It is not so easy, I know, but one of the reasons which it is not so easy is precisely the kind of amusement felt by my right hon. and learned Friend the Member for Chertsey (Sir L. Heald). We all of us, if we take our duties seriously, all on both sides of the House, on the other side rather less convincingly than on this perhaps, are committed to the proposition that inflation is public enemy No. 1 and is the worst of our economic ills. I understand that one-sixth of the voters of this country are affected by this and similar Measures. That may be wrong. I take it from a letter to the Daily Telegraph from—I cannot remember his first name [Interruption]—Sir Gerald Gibbs, who must be right because he was in my squadron in 1917. One-sixth of the voting power has, if not the whole of the risk of inflation affecting its pensions insured against, at any rate a very considerable amount of that risk insured against.
My right hon. and learned Friend must get that straight with the air vice marshal. Whatever the proportion, it is obviously quite enough to affect policy.
My welcome of the Bill is stronger for the overseas people than it is for anyone else, for the reason that they have no responsibility for inflation here whereas all the rest of us who take any part in politics, even if it is only voting or abstaining from voting, have some responsibility for inflation. The only reason I take the time of the House is that so far we have had no indication that everything we say about the Bill is, at least from the Government Front Bench, intended to be said with the implicit assurance that it is fully understood that much the best way of getting out of the difficulty of the relation between inflation and pensions is to have less inflation.
I quite agree with my right hon. and learned Friend the Member for Chertsey that we shall not abolish inflation tomorrow. If it is true that we shall never get inflation much down from what it has been during the last generation, it seems to me perfectly certain that the whole of our social arrangements will crash. It is equally certain that whatever the proportion of the population affected by Pensions (Increase) Acts, whether large or small, it is equally certain that that proportion must mean a particular, as well as the general, tendency to inflation. Everyone has said that once we pass this Bill we shall be agitating for another one; the other one will not be on the principle that salaries have gone down and pensions ought to be reduced or prices have gone down and therefore pensions ought to be reduced.
I think that all inflation is in essence dishonesty. It consists in running one's household by borrowing from the next-door neighbours with the firm intention of repaying them with something less valuable. That being so, it seems to me most important that we should never pass one of these Bills without making clear that in that sense and from that point of view we regard it as an evil necessity.
I shall not follow the hon. Member for Carlton (Sir K. Pickthorn) in a discussion of the very large topic he has raised, inflation, except to say that we are, obviously, on both sides of the House, aware that our greatest problem today is how to reconcile a full and expanding economy and full employment with the need to keep down inflation as much as possible. In this debate, we are concerned with people most of whom had nothing to do with the country during the recent years of inflation, the effects of which they now have to suffer.
I am delighted that the right hon. and learned Member for Chertsey (Sir L. Heald) is taking part in the debate. His work in this field has been outstanding. It is not too much to say that he was one of the chief architects of the last Pensions (Increase) Bill, and this new Bill is to a great extent built on the last. It is fitting also that the Bill should be introduced by the Chief Secretary to the Treasury who had such a distinguished record at the Ministry of Pensions and National Insurance. When the right hon. Gentleman went into the Ministry of Pensions, I was afraid lest, after his experience at the Treasury, he might destroy the great humane atmosphere at his new Ministry. But he has done more than that: he has carried out a wonderful series of humane measures at the Ministry of Pensions. I only hope that he will take some, of the humane spirit of that Ministry into the Treasury. This Bill suggests that he is doing it.
I want, first of all, to thank the Government on behalf of thousands of public service pensioners in this country. I have addressed many of them during the past year, particularly old colleagues of mine in the teaching profession. I find it difficult to convey to the House just how real was the happiness felt by these people when they heard the announcement last July that something would be done for them this autumn. They are now eargerly awaiting the benefits of the Bill. If they have one complaint, it is the fundamental one that the Bill was not introduced last July and is not already in operation. From our side of the House, we shall, of course, do nothing to delay its passage.
The Leader of the House and the Chief Secretary himself have almost said that we must rush the Committee stage so that the benefits of the Bill may be put into operation by 1st January. I wish that we could send the Bill upstairs for a short Committee stage and examine it a little more carefully. The dis- cussions we had upstairs on the last Bill were not unfruitful. Indeed, they were very useful. This Bill is not perfect. Anyone interested in the subject knows, as the Minister himself must know, that there are still many anomalies, which need to be examined and, if possible, corrected.
I hope that the Minister does not intend necessarily to tie the date for the coming into operation of the benefits of the Bill to the time of enactment. The increases are long overdue. There is no reason, except the financial one—there is certainly no constitutional reason—why we should not write into the Bill any appointed day we like other than the appointed day provided for in Clause 10. As things stand, it looks as though the appointed day will be 1st January, and the Minister has confirmed this. I urge him to push back that date some months. I say seriously that it is not unreasonable to ask that the appointed day should be made retrospective back to the summer, to the day when the Leader of the House announced that he accepted in principle the two Motions on the Order Paper, the one dealing with public service pensions and the one dealing with Service pensions.
I understand from my hon. Friend the Member for Sowerby (Mr. Houghton) that the cost of pushing back the Bill month by month would be about £2 million a month. I hope that the Minister who is to reply will tell us whether that figure is about right. If it is, I suggest that £2 million a month for moving the appointed day back to December, November, October or back to July would be money well spent.
The Bill follows in its main provisions the lines set out after careful inquiry by the 1922 group under the leadership of the right hon. and learned Gentleman the Member for Chertsey. I never forget what he did at that time, some years ago now. He widened the scope of Pensions (Increase) Bills to bring almost every conceivable category of public service pensioner within the net.
I am not, so to speak, an expert on this side of it, but I hope that the colonial provisions include some of the anomalous categories overseas embracing those who have been writing to us. I have in mind particularly those who have written from Kenya. I am glad that the Sudanese pensioners are included. The Minister has referred to a "miscellaneous" group, and I hope that we can bring within the scope of the Bill under that broad category the rather curious anomalies which up to the present have not benefitted by previous Acts. Perhaps we may consider that in Committee.
Even in the excellent formulae applied in the last Bill we found anomalies. I must confess, however, that, when we tried to make, as we thought, the increases fairer in their incidence, almost every attempt we advanced in Committee to reduce or remove one anomaly introduced some other anomaly. This may be true also of what I am about to suggest in regard to this Bill.
In Clause 2, we seek to give extra aid to aged pensioners, those over the age of 70. They will receive a lump sum of £20 a year if the pension began more than six years ago, that £20 being scaled down to £4 if they received their pension about one and a half years ago. Subsection (2), however, provides that
A pension shall not be increased under this section by an amount exceeding twenty-five per cent. of the adjusted rate of that pension.
This, the Minister admits, penalises the poorest pensioner, who will not receive his full £20 lump sum if £20 is more than 25 per cent. of the pension. The Minister defends this on the ground that the only people as poor as that in the scale will be short-service pensioners. I hope that he will examine the question carefully. I have a suspicion that, particularly among some of the Civil Service widows and police widows, there ore widows who will not receive the full benefit of the lump sum because of the 25 per cent. provision in subsection (2). I shall press the Minister in Committee to take it out.
How poor some of the poorest widows of old police pensioners can be one can judge from the fact that the National Association of Retired Police Officers is always trying to secure for them free medical aid because they are people just above the category to qualify for National Assistance free medical aid but so poor that paying for the prescription is a hardship.
I hope that the Minister will be prepared to reconsider the £20 maximum in the Clause. I like the Clause. I have not got any inhibitions about it as my hon. Friend the Member for Sowerby has. It is the oldest pensioners who are worse off, and I think that the whole set of figures in Clause 2 could easily be scaled up a little without costing the Government very much. This would help particularly those who went on pension before 1956, some of them long before 1956. I know that Clause 1 takes care also of the veteran pensioner by grading the pension increase according to the time for which the pension has been drawn, but in both Clause 2 and Clause 1 the categories begin at 1956. I believe that there ought to be special terms for those whose pension began in 1954, in 1952, or before then.
My right hon. Friend the Member for South Shields (Mr. Ede) is quite right. Some of the very old pensioners have fantastically small salaries which are well below the figures given for later years by interested bodies to hon. Members who have received literature on this matter in the last three or four months. I would want, if it were possible, to go back earlier than 1956. I distinguish between the inequitable position of the pensioner who has been drawing a pension since 1942 or 1946 and that of the pensioner who has been drawing a pension since 1956, just as the Bill recognises the injustice done to the pre-1956 pensioner compared with the post-1956 pensioner.
Some of these very old pensioners have the additional hardship of not even qualifying for National Insurance pensions. They are not entitled to full National Insurance pensions. Whatever public service pension they receive very often has to be supplemented by National Assistance. It is unfair then to group into one big bunch all the pre-1956 pensioners.
Let me illustrate that with one or two striking figures. A teacher who retired in 1939—and I know some of these grand old octogenarians—today receives, after taking into account all the increases, only 60 per cent. of the pension payable to teachers today. A Scottish octogenarian teacher who is in this category receives only 41 per cent. of the present-day pension. A policeman who retired before 1946, before the great reforms of my right hon. Friend the Member for South Shields as Home Secretary, receives a pension which is only 46 per cent. of that awarded for similar work today. A civil servant who retired as late as 1951 receives a pension which is only 70 per cent. of the present pension.
The Bill goes back to 1956, but it treats alike the police pensioner of 1946 and the police pensioner of 1956. The difference between them however is represented by the figure 47 per cent. for the 1946 pensioner and 67 per cent. for the 1956 pensioner. Yet both will receive the same percentage increase on very different pensions.
When it comes to Pensions (Increase) Bills, I think especially of old retired postmen and policemen, and teachers who retired on a meagre Burnham scale which obtained long before the increases which have taken place in the last few years. I think specially of the widows whose pensions for the deaths of their Civil Service husbands or late police husbands are a fraction of the male pension and often can be measured in shillings rather than pounds. The benefits which they will receive from the Bill will be small because the percentage increases are increases on tiny pensions. However, though they are small, they mean a lot to poor people. They mean a few extra comforts and in some cases even a few extra necessities.
But the issue in this Bill is not only one of hardship. Pensioners do not ask for charity. They protest against the principle and injustice which extends through the whole range of ex-public civil servants, the richer pensioners as well as the poorer ones. Hon. Members have received from the Association of Head Masters, a very eminent and unusual body to be writing to Members of Parliament almost for the first time in its existence, a communication pointing out the gross anomaly in the pension position of old retired headmasters.
I give the House the example not of some poor old policeman or some old retired teacher but that of what I might call the better-off civil servant, one of the many who have written to me during our long campaign this year. He retired in 1955. So far, previous Pensions (Increase) Bills have given him 10s. plus a week on his 1955 pension. But he points out that a man in his position, a senior executive officer, now retires on a pension £6 a week more than the other man's pension.
The dream of pensioners is that they will obtain a pension equivalent to the pension awarded for a similar job today. I think that their claim is morally justifiable, but it would be very difficult for the State to finance it completely. However, even if one does not agree that the claim is morally just, surely no one can justify such an egregious difference in pension for one job within seven years as shown in the figures which I have given—a 10s. increase for one man compared with a £6 increase for the other. It is right therefore that we should move to narrow the gap between different awards for the same work. There can be no dispute about this.
The pensioners make two other claims which I think no hon. Member can challenge. One is that the pension should be increased to offset the rise in the cost of living. As I have said, pensioners are not responsible for inflation. Indeed, I sometimes doubt whether we are. But the decline in the value of money has very often occurred since they retired. It cannot be attributed to their work or lack of work. Their pension should, as a bare minimum, be at least the same value as it was when it was awarded.
Pensioners, moreover, claim that they have a right to snare in Britain's increased affluence. It may be argued that they are not working now to increase the nation's prosperity, but the nation's present prosperity is based on the devoted labours of those who served Britain in the past and on whose work the present generation is building. All today's teachers were taught by veteran teachers. All today's civil servants were trained by veteran civil servants.
Each year, in the month of November, in a police parade in Southampton we honour the memory of policemen who died in the Southampton blitz. There still appear on that parade old ex-policemen, inadequately pensioned, who helped to save Southampton just as other police forces helped to save Britain in those critical years in every blitzed city, and, indeed, just as the old Service men saved Britain. Without the work of this past generation there would be no prosperity and indeed no Britain. They have a right to share in an increased affluence.
Another claim of pensioners which is widely, passionately and proudly made is that they should not have to go cap in hand to the Government or to Members of Parliament, or to form pressure groups in order to obtain adjustments of their pensions grudgingly granted when at last public opinion is strongly ranged on their side. That is what happened in this case. This Bill is the result of the constant pressure of back bench fighters like the hon. Lady the Member for Tyne-mouth (Dame Irene Ward), who year in and year out fights the battle of groups of people like this. It is due to the efforts of those who signed the two Motions on the Order Paper which in the end made the Government act.
I am glad that this debate is taking the turn which it is. I believe that for these people, and, indeed, for all those at the hardship end of the Welfare State, there is need for a systematic review of benefit. My old-age pensioner representatives from Southampton who attended the mass meeting at Westminster Central Hall came to see me this week. They should not need to agitate for a steady upgrading of benefits.
The various bodies representing public service pensioners—here I pay tribute to the Public Service Pensioners Council for moderate and able advocacy of its claims at all time—are now beginning to demand as of right a regular public review of pensions, say every two years, and the linking of pension increases with some "measurable relevant criteria", to quote a very happy phrase of my hon. Friend the Member for Sowerby.
I was glad to hear the devastating attack by an ex-Attorney-General on the sacred cow of the immutability of pensions. Apart from the wretched 10s. which we fixed in 1946 and still pay immutably to a group of widows, I doubt whether there is an immutable pension left in the whole system. Immutability is a dogma, a sort of myth zealously cherished by some of the hierarchy in the Treasury, who always remind me of David Copperfield, poor Mr. Dick and King Charles's Head which always kept coming in.
Immutability has gone. I urge the Government and all concerned in superannuation schemes to look at the grave and great issues raised by the simple fact that no superannuation scheme makes provision for the inevitable erosion of future pensions by inflation. I cannot see the possibility ever of the State itself, or by itself, underwriting all the losses in superannuation schemes due to inflation. I am glad that pressure is coming from both sides for a serious public inquiry into the whole of the superannuation structure.
Ever since I came to Parliament, I seem to have been engaged in a process of welcoming a Bill like the present one, complaining that its benefits were almost immediately outstripped by events and beginning to ask for another one. This has happened six times in my Parliamentary lifetime. Today's Bill tinkers with the problem. I admit that it is the best tinkering to date, just as its predecessor was immeasurably superior to any that went before it. It will do a lot of good to many people who not only need the money, but have been suffering under a sense of injustice.
However, there can easily be more inflation ahead. Historic decisions that we may make during the next twelve months may dramatically raise the cost of basic needs within the next two years. I hope that we do not have the long campaign which preceded the present Bill before again we come to the House to give a little social justice—justice, not charity—to those who served Britain well in their day and generation.
The matter does not, however, rest there. The Government should be a model employer. They give an example to other employers. I appeal through this House to other private emloyers to follow the example that the State is taking on today. In a similar debate some years ago, I mentioned an hon. Friend of mine on the other side of the House who does just this for his old employees and steps up their pension at great cost to himself, even though they have not paid in for the extra benefits. But not all employers do that.
I remember what it meant to my proud father in his old age when his firm increased his very small but, at the time he retired, sufficient pension, which had been eroded away by rising prices. He hated being dependent upon his son, although his son was proud to have the privilege of looking after him. I remember, however, his complete satisfaction and pride when an increase in the whittled-away pension restored to him for a time his complete independence, only to find it all happen again as the pension began once more to decline in value.
The Government themselves are indirectly one of those employers. I admit that the Ministry of Transport cannot shoulder the burden of treating the railway superannuitants as the Bill treats other public servants, but the Treasury could, in today's Bill, take this burden off the shoulders of the Ministry of Transport.
Order. I am sorry to interrupt the hon. Member, but he must not pursue the question of railway super-annuitants too far, because they are not public servants and they do not come within the scope of the Bill.
I realise that, Mr. Deputy-Speaker. I am making what might be described as a Parliamentary request to the Treasury to do what the Ministry of Transport cannot do and to bring those people within the scope of "public servants". I do not intend to pursue the matter in detail, but I make the plea, which some of us have made again and again, that we should accept that these people are public servants.
I never understood why the right hon. and learned Member for Chertsey, in casting the net wide, did not bring these people within the scope of a former Bill. I urge the Minister, even now, to add a Clause to the Bill. The stationmaster who stood at Waterloo in the midst of the fire blitz, or the man who drove the troop trains down to the coast before D-Day, is a public servant neither more nor less than anybody who will benefit by the provisions of the Bill.
Having said that, and in deference to what you have said, Mr. Deputy-Speaker, I conclude by saying that I welcome the Bill. I thank the Leader of the House for keeping his promises. I am glad that we shall also have the opportunity, which we have had in previous years, of discussing the Royal Warrant, under which we discuss the other great half of the promise. I beg the Minister to consider our plea for the railway superannuitants, and when we have done this job in the Bill I urge the Government to turn to the great mass of people who are even worse off than the people whom we are considering in today's Bill, and that is the great mass of retired pensioners.
I was a little surprised when the hon. Member for Southampton, Itchen (Dr. King) suggested towards the end of his speech that my right hon. Friend the Chief Secretary to the Treasury should add another Clause to the Bill, as the hon. Member had said earlier that he would do everything he could to help to get the Bill through as quickly as possible. Otherwise, I considered the hon. Member's speech first-class. I enjoyed every word of it and agreed with all of it, particularly the hon. Member's emphasis upon the older pensioner.
We have had some extremely interesting speeches, not least from my hon. Friend the Member for Carlton (Sir K. Pickthorn), who took a long time in informing the House that either one-sixth or one-sixtieth of the population were affected by the Bill and that if we wanted to know the correct figure, we must apply to an air marshal to whom he referred as "Gertie".
Every speaker without exception has referred to the need for a different system of pension increases. For this reason, the House of Commons is demanding a different method for the future. I hope that the result will be successful, as were the demands of the House of Commons led by my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), who now occupies a position on the Front Bench, on behalf of colonial pensioners.
It is always a pleasure for an Hon. Member to speak on a Pensions (Increase) Bill when he represents a constituency such as mine, which has an extremely large number of residents who have given many years, often their entire working life, to the service of the State. This latest Bill cannot claim, nor could any of its predecessors, to give full compensation for rises in the cost of living since pensions were fixed. It can, however, claim to give compensation for rises since the last Bill was introduced. It gives a measure of relief from hardship and it includes two benefits which have been absent from former Bills. It is on these three points—the two benefits and the relief from hardship—that I should like to say a few words this afternoon.
Concerning relief from hardship, one has only to live and have friends among pensioners who retired many years ago to translate the bald facts of pension rates to the real reduction in the living standards of the individual concerned. The Bill includes a 2 per cent. escalator provision, as did the 1959 Act. This escalator provision shows an awareness of the increased need of the older pensioner. I find it difficult, however, to understand why in both Measures the escalator provision has been limited to 12 per cent. as it is exactly those who retired before 1956 who need further increases. Indeed, a figure of 40 per cent. would be necessary to bring the oldest pensioners anything like in line with their colleagues who have retired since April, 1960.
It is true that this Bill provides a special flat rate bonus. This has been introduced for the first time for pensioners of 70 and over, and this principle is most certainly welcome, although one regrets the limitation here to the maximum of one-quarter of pension paid prior to the date of the Measure. This limitation, again, falls most heavily on those with the smallest pensions. The actual rates of this flat rate bonus are really far below what I feel we really owe to those older pensioners, even though I know that the cost is high. I think that my right hon. Friend the Minister said that the figure was £5½million, getting towards one-third of the total cost of the Bill.
The old argument of fixing pension to the cost of living has, of course, been considered very often, and it is indeed a most attractive idea, but if introduced it would create a precedent, by allowing one section of the community to contract out of any increase in the cost of living at the expense of the rest of the community, which includes many who have to rely on retirement incomes not subject to periodic increases. I realise that, but at the same time I would note that incomes from wages and salaries, and, indeed, from basic retirement pension, the so-called old-age pension—though that, I know, has nothing at all to do with the Bill—have all increased well above the increase in the cost of living.
This is a cause of real injustice to the older Crown pensioners, and, of course, we include those from the Armed Services, who are not provided for in the Bill but are dealt with under the Royal Warrant procedure. It is not funny to see—and I know of cases—elderly widows of generals who are in the position of having to apply for National Assistance. This is a case of injustice, when their incomes have fallen so far behind in real terms.
Again, I cannot agree entirely with the view that it is inevitable that the vast majority of benefits come only in increased wages and salaries which we give to those engaged in work at the present time. It would seem to me to be more equitable that the present wage and salary earners should be prepared to acknowledge that a proportion of the national prosperity should go to their own predecessors.
The other particular benefit in this Bill, again somewhat overdue, is the inclusion of benefit to certain pensioners of colonial and former colonial Governments, as laid down in the Third Schedule in the Bill. Although I say these increases are somewhat overdue, that is due, I do not doubt, to the attempt by the Government to persuade overseas Governments concerned to accept their proportion of responsibility. However, it is right that these pensioners should now be relieved of the very real hardship which has been theirs, although I realise that the Government have created difficulties for themselves with regard to the future acceptance by overseas countries of their responsibilities.
I welcome this Bill. I would merely say finally that I hope that the Government will give further consideration to the suggestion that in future an automatic review of Crown pensioners should be undertaken. I was going to suggest using the Ministry of Labour's wages index as a main guide, but the hon. Member for Sowerby (Mr. Houghton) rather shot that one down. However, as the hon. Member for Itchen and others have mentioned, there should be some other relevant criterion used. This would remove the need for continually bringing Bills before the House with all the intensive lobbying and campaigning to which those who have given long service to the State should not be committed. Let us press this Bill through and obtain the Royal Assent in time for the increases to become available on New Year's Day. By so doing we shall be giving the State pensioners at least a substantial measure of justice.
I am very pleased to welcome this Bill today and to welcome the increases for public service retirement pensioners who have felt the increasing inflation and the increasing cost of living in the past years. I welcome very much the Minister's assurance that this Bill should come into law as soon as possible. I hope very much that the object of doing so by 1st January or before that date can be carried out.
I rise mainly to raise two points which are not in the Bill, and I do so because of the letters I have received from a number of my constituents who are retired civil servants. My hon. Friend the Member for Sowerby (Mr. Houghton) raised one of these matters, which is a very real grievance, especially in the Civil Service, and that is that a number of retired civil servants today, while working in the Civil Service, spent a great deal of their working lives classified as temporary, which has meant that their temporary service does not count for pension. That is a real grievance. Some of these men have given 5, 10 or 15 years of temporary service. They were doing the same type of work and working the same hours as established personnel, and it seems to me that this Treasury arrangement—I do not know whether it is the officials of the Treasury or the Minister who is responsible—that men who are working in the Civil Service as temporary and then become permanent cannot have their temporary service counted for pension is a real grievance not only amongst some of my constituents but, I think, civil servants in the country as a whole.
I make an appeal to the Financial Secretary. I think that he is sympathetic, as is the Chief Secretary to the Treasury. Whether sympathy will help these people or not I am not sure, but I make an earnest appeal to the Financial Secretary to consult with his right hon. Friend to see whether, when we are in Committee on the Bill, they could get some Clause inserted in the Bill to cover this point. I earnestly appeal on behalf of the many public service retired pensioners that the hon. Gentleman will have another look into this question.
The other point I want to raise is one which has been touched on by my hon. Friend the Member for Sowerby, who is such an expert on these questions. I think that he and the Chief Secretary are the two experts in this House of Commons on questions of public service pensions, National Insurance benefits and National Assistance. The point was also raised by the right hon. and learned Gentleman the Member for Chertsey (Sir L. Heald). It is that when the Government feel we ought to increase these public service pensions a Bill is introduced, but the cost of living still goes up, and we have to look again in three or four years' time to see whether they should be increased. Perhaps there could be a biennial review, taking into account the cost of living and taking into account also—which is very important—the standards of living which people on wages and salaries in industry and commerce, and in the Civil Service itself, are enjoying, and see whether we can bring the retired section of the community as well into this general rise in living standards. I ask the Economic Secretary to look into the possibility of the insertion of a biennial review Clause in Committee so that pensions may be reviewed by the Government with these important points in mind.
Those are the two points that I rose to make. I welcome the Bill. Like my hon. Friend the Member for Southampton, Itchin (Dr. King), I wish it covered retired railway servants, who are also suffering from increasing inflation, and whose standards of living are affected. But on the whole it is a good Bill and I welcome it. It will help public service pensioners, and I hope we shall bring it into law as soon as possible.
The hon. Member for Feltham (Mr. Hunter) has made a plea for a permanent solution to this problem. The hon. Member for Sowerby (Mr. Houghton) referred to the Bill as giving no lasting solution. Practically every other hon. and right hon. Member who has spoken has referred to this. My right hon. and learned Friend the Member for Chertsey (Sir L. Heald) said that we shall never find a solution in this method of legislation. I would add that I believe that we shall never find a solution by any method of legislation.
In the course of my short speech I want to put forward what I think might be a solution. If I make some criticisms which may strike a slightly discordant note in these proceedings, I can only say that I do not want to do this and that they will not be directed at either side of the House.
Naturally, I welcome the Bill, not only for the assistance which it brings to retired public servants but also because it strikes another blow at the doctrine of immutability—and I am glad of that. I see the dangers to this country if a complete hedge against inflation is built, but if we are to maintain, as we do, that the elderly are to share in the increasing prosperity of the country, I cannot for the life of me see how we can support the doctrine of immutability. As we have heard, in practice it never has been applied. There has been a succession of pension increase Acts since the First World War with the object of protecting the older pensioners against the increasing cost of living.
Even so, there is today much dissatisfaction among these older pensioners simply because they have had no share, or very little, in the very considerable increases granted to public servants in recent years. Frankly, there seems very little justification in logic and equity for these great divergencies. Ideally, it can be argued that there should be a single code of pensions in force for all public servants retired at any given time. As we know, this is the case in certain countries. But I do not go as far as that. For one thing, it would be tremendously expensive and certainly could not be achieved quickly, There are other arguments against it—the natures of jobs change, the problems of recruitment also change, and so on. But we should work towards lessening the difference in pensions between those retiring today and those who retired in earlier years, and in this Bill I see the opportunity to make a start.
I particularly like the flat rate increase granted to those over the age of 70, although, of course, at the lower end it is a very small increase. We agree that the oldest are the worst sufferers from the erosion of pensions, and that is recognised in the Bill by the granting of this flat rate increase and by other provisions. But if we feel that these people have suffered an injustice—my hon. Friend the Member for Chichester (Mr. Loveys) touched on this—I believe it right that we should fasten the blame where it belongs—and that is not with the Government, not with any Government. It is with those who negotiate salaries on behalf of the staff side of all the various categories of public servants.
The people in these services who are working today owe much to successive Governments—acceptance of the principle of comparability in the Civil Service, and for the fighting services the acceptance of the Gregg Report for biennial reviews of Service pay. These have brought great financial benefits to all the people working in these services. Today they are well paid and retire on good pensions. But time and time again they have scraped the bottom of the Treasury barrel with their demands without a thought for the older retired people of their own profession. As the hon. Member for Sowerby said when speaking of pensions during the debate on the Address in reply to the Gracious Speech
How is a pensioner to be assured of his place in society if those who are nearer to the nation's wealth or have stronger arms are to scoop the pool?"—[OFFICIAL REPORT, 1st November 1962; Vol. 666. c. 443.]
Is it asking too much to suggest that these negotiators should have the charity to forgo a small fraction of the extra money made available to meet a wage claim so that a similar percentage increase can be given to their older retired members? The percentage would be very small. If we take the age of 70. as in the Bill, as a starting point, the number of retired people in any given profession compared with the number of serving members is small, and, in addition, the average pension is only about half the average salary. It would not, therefore, be much of a sacrifice to ask for.
It has been argued that those currently earning have a right to be better off in real terms as they are at any given moment producing the nation's wealth. I reject that. The average pensioner lives at the most twenty years to enjoy his pension. What happens to the nation in that period will have been decided for better or for worse quite as much by what was done before retirement as after.
Again, it will be argued that the negotiations are a matter of bargaining. That the staff negotiators pitch their demands higher in order to get what they regard as the right amount for their active members. But negotiators always do this; their demands are always too high. In due course, an offer will be accepted. The association or union concerned could then be told that if its members wished their retired members to share in the settlement, the accepted sum would have a small amount deducted. This would be said and done publicly, and if the representatives of the active members insisted on grabbing the lot, it would be an excellent thing to focus the attention and comments of the nation on this.
I hope I shall mot be out of order if in order to reinforce my argument I touch on the case of the Fighting Services. They are mentioned in the Bill. In dealing with the case of retired public pensioners, it is extremely difficult not to include the Fighting Services; but I will be very brief. Their case is different, of course. They have no union to put their case. On the other hand, the senior active officers have great influence in these matters. In the first place, the biennial reviews of Service pay accepted by the Government were primarily in the interests of recruiting, but, frankly, I do not think it is a serious reason today. Service pay and pensions are well above what is necessary to attract recruits.
In the case of the Fighting Services, the Government could say that the principle I advocate would in future be applied when Service pay adjustments were made, and that a very small percentage would be subtracted for the benefit of retired older members. The cost would be very small. The Services got £14 million this year and will get another £14 million next year. The cost of the flat rate increase in this Bill, covering all public service pensioners, is, we are told, £5·4 million. Thus, a very small sum would be needed for the Fighting Services.
As I said, the Government could say this, but I do not want them to say it. I want this to come from the Services themselves. It should be announced that it is being done at the request of the professional members of the governing boards of the Services, and if properly explained it would, I am sure, be accepted by the vast majority of the members of the Fighting Services.
Nor for a moment do I think that it would affect recruiting. In fact I hold the opinion that it would improve it. If there is any doubt that it would not be acceptable then a referendum should be held. This is an occasion when a referendum would be appropriate. There is a precedent. Before the marriage allowance was introduced into the Navy, a referendum was conducted as to the form it should take. I voted in it myself.
I find it difficult to believe that the senior officers of an older generation would have accepted all the advantages for themselves which have flowed from the Grigg Committee and not, at the same time, have considered the position of their older retired members and how they might also share in the biennial review. The Fighting Services should give a lead in this matter. They should give the moral leadership and show some charity and unselfishness.
If they did that, it would be reasonable to expect the Civil Service and other associations and unions to follow suit. If they did not follow suit, the nation would discount the crocodile tears so often wept for the pensioners by people who have scraped the barrel, aided by agitation and threats. No doubt it is too late to alter the intention of the Government to pay a flat rate increase this time, but I appeal to the various Services to consider what I have suggested, put into practice in future, and by doing so end this problem once and for all.
I congratulate the Minister on this Bill. It will be a great help to many people and the sooner it goes through the better.
Whatever else emerges from the discussions today, I hope that when the Government have studied the debate they realise that there is unanimity on both sides of the House that this Bill, much as we welcome it and much as we hope to push its progress through the House, should be the last Measure of this kind to be brought before us. I hope, in passing, that the Chief Secretary will take note of the observation by my hon. Friend the Member for Sowerby (Mr. Houghton) that if we have suggestions to improve it it will be possible to find debating time without hindering the implementation of the Bill.
There is a unanimous desire to find another way of dealing with this problem. I commend one thing in the Chief Secretary's speech. He made no reference to Clause 9. It is an interesting Clause, very quietly referred to in the Arrangement of Clauses as "Expenses"—a small matter one might think. Of course, there is the time-honoured phrase:
There shall be defrayed out of moneys provided by Parliament—".
This phrase occurs in all similar Bills but in this Bill, in which something called "contributions" is excluded from the public services concerned, there is another phrase which says:
There shall be paid into the Exchequer…".
These Clauses are never referred to by Treasury speakers, because they conceal a very interesting and important truth. Of course, they are put into italics because another place has not to pay any attention to them. A lot of people think in any case that if a thing is in italics one need not pay much attention to it.
Nevertheless, this is important because it enshrines the reiteration of the fact that, whatever one may call the agreement drawn up in relation to a certain pension, whether the pension is to be in addition to the salary that was paid or whether contributions are to be taken out, there is no such thing as a contributory pension. There is no such thing as a fund. There is no fund because when the pensions come to be paid they have to be paid out of money provided by Parliament, which means the commonsense fact that they have to be paid out of the national income of today.
If contributions are extracted from future pensioners, these are paid into the Exchequer. There is no direction from this House as to what should happen to them or any suggestion that they should be invested for the future. They are spent as part of the income of the year in which they are paid into the Treasury. If only the Treasury would, next time, accept that principle! I had hoped so much that it would accept it this time.
The Treasury does not go far back enough into history. It is a pity that these particular words in italics do not go to another place. This is of historical importance. There was a quarrel as to whether another place should be allowed to have any say in financial matters. If there really still exists a number of the old, caricature, backwoods landowning peers, and if one could bring them together and ask their views on a pension scheme and its principles, what would they say? I believe they would reply, "Give them a share of the crop." That would be the attitude of anyone concerned with agricultural production. But then agricultural production is the basis of the original national income.
Surely the time has come to accept that the pension is a right. It is a continuing share of the equity of the whole community. Had we accepted that by now, we should have avoided some of the unfortunate vocabulary which has crept into this discussion. I do not want to select phrases to make a controversial speech, but the right hon. Gentleman the Chief Secretary used the phrase that it was "no less generous". This is not generosity. This is plain, simple justice.
The hon. and gallant Member for Carshalton (Captain W. Elliot) spoke about pensioners owing much to successive Governments. It is the successive Governments who owe much to these pensioners. If someone claims that this is the biggest single increase, one can stand that phrase on its head and give the Government credit because this is a reflection of the biggest single decrease in the value of the old pension.
There is no credit in this, nor in the fact that the present value is higher than was paid for by the pensioners. There is nothing unfair in the notion that pensioners' incomes should be related to the present remuneration of their old jobs. No one would claim that the people who do the jobs today are vastly superior in ability to those who did it a generation ago. This is a comparison of life with life.
I accept that. I said earlier that I did not want to take individual words and turn what is a constructive discussion into some sort of controversy. We are basically agreed on this subject, and I think that the time has come for the Government to say that, although they have not introduced the principle this time, they are feeling their way towards its acceptance.
The Chief Secretary said that he would outline the philosophy of superannuation, but a philosophy cannot be based on what is a phraseological fiddle. There is no philosophy of retirement in this country. It has not been formulated yet. It has not been accepted that the problem of staged retirement is a problem which will face the whole community for the next ten years with the same intensity and importance that the problem of unemployment faced the younger generation in the 1930s. That is the problem we have to tackle, the problem of enabling people to change their employment if they wish towards the end of their lives and at the same time establish a right to a share of the equity.
My complaint is that little bits of the vocabulary creep in as though there were a contributory pension scheme into which people paid so much, so that there was a fund out of which they were entitled to get so much, just as though it was an endowment scheme or something of that sort. It is not.
The Chief Secretary talked about the advances we had made since the war. One might ask, "Which war?". Why do we assume that all the experience of the social services has been built up since the days of Lloyd George? There have been devices in society to provide social welfare schemes for a great deal longer than that. I could go back to the One Hundred Years' War. There was a long period in the Middle Ages when there was a good principle of devoting one-tenth of current income to social welfare and the upkeep of the Church. I will not develop the theme of how that came to be undone and changed.
It is no good talking as though there were no social services until the Liberal Government introduced the stamps. It is not true. There are many aspects of our social services of which it can be said, "We have been through this before". Sometimes we get excited when a lady member of the Civil Service is promoted to high administrative office, and we say that this is the first time a woman has been appointed to such high office. But it is not true, for there are plenty of occasions when ladies have taken an important part in developing the social services.
I could start with Lady Margaret, but I will move quickly through the centuries for about 300 years and come to another very influential lady who helped and advised the monarch in these things, Miss Gwynne, who was responsible for the establishment of the Royal Hospital and for giving a great deal of advice to the monarch in other respects. I am sure that she and the monarch took this problem very seriously after a frugal late-night supper, because the then monarch had had experience of living on a pension from another monarch in his days of unemployment and Miss Gwynne had had considerable business experience in the theatrical catering world.
They would have worked out a kind of scheme for retirement, and also a retirement Without an earnings rule, which is most important. I am sure that she must have said late one night, "Look, Charlie; we cannot have these bastards hanging around the Court doing nothing and eating us out of house and home; what do you suggest? You must give them either a title or a job."This is a fascinating historical development, particularly in view of recent discussions about jobs of this kind where there is a direct link with this particular system of patronage. But there was no exclusion from earning power. AH these things were based on a different kind of job, or a continuation of the share of the equity, and there was no suggestion of a contributory pension scheme, not even for the pensioners of the Royal Hospital.
There is a great deal more to be studied than merely the effect of these so-called contributory schemes and the stamp schemes which we are fond of believing we have made far better than anything which has been seen in the last generation or two. Welcome as these increases are, they do not make the incomes of these people anything like the proportion that they should.
The Chief Secretary used the word "absolute" and spoke about "absolute improvements "and about "a share of the absolute improvements". But I do not think that there has been any absolute improvement in the earnings of public servants. If one considers the public service as a whole and the salaries which used to be given to officers of the State of one kind or another, then people of my age-group went into the professions at a time when they could expect many times the salary of a worker in industry even though it would be regarded as a small initial salary in our profession.
We take pride in the National Insurance Scheme, but an unemployed man at present receives a smaller percentage of the average pay in industry when he is unemployed than he did in the worst days of the depression. We can kid ourselves into believing that we have a wonderful social insurance scheme and a wonderful system of superannuation which outshines anything thought of by our ancestors or by foreign countries, but it is simply not true. We shall be deceived by speeches about "absolute improvements" and "owing a lot to successive Governments" and "the generous attitude of the Bill" unless we seize this opportunity of saying that we have now learned enough to see that we do not have a philosophy of retirement or superannuation and that this is the moment to devise one and that we should accept the principle of a share of the equity and a share or proportion of the salary of the job at present being done.
Let us no longer pretend that there is an investment fund and no longer pretend that these benefits should be related to salary scales of years ago. I hope that those people who will be writing to us and who have been writing to us and who will be reading the reports of the debate will see that now that they have some leisure they have a job to do, not only for themselves, but for the country as a whole, because if we could get this thing right in the public service sector, we would be setting an example to industry outside and to everyone else concerned and it could be studied and implemented over a much wider range. I hope that in his reply to the debate the Financial Secretary will say that it was with regret that the Government decided to rush through the Bill on the old basis, once they had decided to do it, because they felt that next time there would be a different approach, a different system and something which would stand for generations.
The merit of the debate has been that everybody has agreed that, pleasant though many of the provisions of the Bill are, none of us is satisfied that the Treasury has got down to the fundamental facts or to fundamental justice. I hope that the Financial Secretary will be able to tell us unequivocally that what has been said will be embodied in a plan for the future before very long. I hope that he will not say that he will consider everything that has been said today, because if he does, that will prove to all of us who are interested in these matters that the Treasury has never got one jot beyond looking at a new Pensions (Increase) Bill on the basis of the old.
I hope that we shall get a specific assurance, and I suggest that in questions of this kind, which are not party political at all, but are really human problems, the Treasury would be well advised to enlist Members from both sides of the House to discuss what we have in mind. I am not prepared to agree to Treasury officials preparing schemes which finally find acceptance by the Chancellor of the Exchequer and are brought forward to this House.
I should also like to know specifically whether we are to have a debate on the Royal Warrant and Service pensions. I know that I cannot talk about them today, but I should like to be assured that we shall have a debate on them, and that we shall not just be presented with the Royal Warrant with no opportunity of discussing whatever provisions may be contained therein.
I thank my right hon. Friend and the Government very much for at last bringing forward this Bill. I listened with great interest to what was said by the hon. Member for Sowerby (Mr. Houghton). He seemed to indicate that the 1959 Pensions (Increase) Bill was introduced because of the Prime Minister's pledge. With respect to the hon. Gentleman, he has got it a little out of context. The Prime Minister's pledge about everyone sharing in the affluent society was made at the time of the last General Election. It was not made before the introduction of the 1959 Bill. It was made at the time of the General Election, and it makes me all the more annoyed that it has taken two years of badgering by both sides of the House before we could have the pleasure of debating this Bill introduced today.
The Prime Minister's pledge still stands, and, good though many of the provisions of the Bill are, I agree with all that has been said, that the oldest and most vulnerable people are not really going to derive all that much benefit from it. The Prime Minister's pledge still stands, and we shall therefore need something else if his pledge is to be put into operation. This is an important point to bear in mind.
I also listened with interest to what my right hon. Friend said about the responsibility of the taxpayer, and the money which we are proposing to spend by this Bill having to come out of the pockets of the taxpayers. I should like to point out that there is such a thing as indirect taxation, as well as direct taxation, and that all the people covered by the Bill have had to make their contributions by indirect taxation to the general financial obligations which Parliament places on the general taxpayers of the country.
It has been the proud boast of the Conservative Party, and rightly so, that we have taken a lot of people out of the range of direct taxation. Many of the people covered by this Bill have incomes so small that they will not have benefited by that change, but, through indirect taxation, they will have had to make their contribution to the tax reliefs which have been given to other people. Therefore, I do not think that the arguments used by my right hon. Friend when he introduced the Bill, I think to cover up some of the small issues of the financial provisions, were quite as efficacious as one might have hoped for from him, and I hope that when he reads his speech he will bear that in mind.
My next point is one which has not been touched on, and I should like an assurance about it because I like to have everything on paper. I like to have everything recorded in HANSARD. I should like an assurance that if some of the people who are to benefit by the bonus of £20 when they reach the age of 70 are on National Assistance, as I think many of them will be, although of course we have no figures to show the numbers involved, the bonus will not under any circumstances reduce the amount which they receive by way of National Assistance. Nobody has mentioned this point, and when discussing all the wider implications of the Bill it is very difficult to put forward cases of people who might be drawing National Assistance, but my hon. Friend the Member for Chichester (Mr. Loveys) referred to the fact that many widows of Service officers, and indeed of other ranks, are thrown back on National Assistance. It is very difficult to work out how much anybody drawing National Assistance and having a very small pension will benefit from the bonus, but in any case I do not think that it will be very much, and I want an assurance that whatever they draw by way of National Assistance will not be reduced.
I think that one of the main weaknesses of the Bill is the reference to 1956. My right hon. Friend gave some explanation about that, and said that if some pensions had been increased still further it would have ensured that some people had bigger pensions than others who came into a later category. I agree that this is all very complicated, but even though I am sometimes rather critical, I retain a confidence that the brains of the Treasury are such that they could have found a way out of the difficulty, and I am not satisfied with the argument put forward. In fact, I get tired of hearing that argument put forward because it all sounds uninitiated, and I sometimes think that the Treasury is a body of uninitiated people who do not know very much about how the lower level of society lives.
When the Treasury talk about 12 per cent. it sounds pretty good to the uninitiated in the country. I was trying to work out what this would amount to when my right hon. Friend, if I may so call him, the Member for South Shields (Mr. Ede) was talking about the amount to which he was entitled. I do not think that an extra 12 per cent. would give him very much. Twelve per cent. of a very small sum is very much less than 10 per cent. of a larger amount. I do not think that I am very good at figures or statistics. Mathematics have never really been my particular province, and I am always thankful that nobody has offered me a job at the Treasury, not that it was in the least likely, but I think that this factor has to be borne in mind, that with regard to improvements one cannot have more than one-quarter of what one's pension was.
I do not think that the date, 1956, is at all satisfactory, and I cannot see why we cannot devise a scheme whereby people who cannot take advantage, or have not been able to take advantage, of the National Insurance pensions should not have more than those who have been able to take advantage of them. I am only throwing out this suggestion, but I Chink that it would have been very much more acceptable to the very old and the very poor. I hope that the Chief Secretary will think about that.
I must not say much about the railway superannuitants, but I have noticed one thing in the Bill that has given me a sort of inspiration on this matter. Suddenly, out of the blue—I have never heard the question referred to in the House before, and I do not remember any concession ever having been made by the Treasury which has not been raised in the House—the people on the Raw Cotton Commission have been included in the Bill's provisions.
I am delighted. I am sure that the people on the Commission are entitled to be covered by the Bill. I have nothing to say against that. But if we can suddenly deal with the Raw Cotton Commission in that way I cannot understand why we cannot deal with British Railways in the same way. Once the Treasury has delivered itself into my hands to the extent of putting in some people who have not asked to be put in, I cannot see how it can refuse to include people whom everybody is asking to be put in. It is as simple as that. If the Treasury can find the money to pay the increased railway wages—as it will have to—is there any reason why it cannot find the money for the railway superannuitants? In saying this I am following up what has been so lucidly and effectively said by my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot).
I hope that we do not have to have the kind of wrangle that we had after the 1959 Bill. I have written a very powerful letter to Dr. Beeching—I had better call it "powerful"; I cannot call it polite—and I hope that that letter will find its way back to the Treasury, via the Minister of Transport. That is all I have to say, but I want to warn the Chief Secretary that if the railway superannuitants do not get a fair deal much will be said by hon. Members on both sides of the House.
Finally, I want to read a letter that I have received from a pensioner, because I am not sure that I have made my point about the eldest and the poorest in the land. It is a most extraordinary thing that the really old and fragile people, who have done a great deal for the country, will get the worst deal of all. I do not feel happy about this. The letter that I have received is a very nice one. It says:
Although I feel grateful that the Government is once more to introduce an increased pensions Bill for Service pensioners, I hear with some misgiving that once again it is to be a percentage increase. I have a disability pension"—
this is in education—
of £60 (the basic pension of £22)—so that 12½per cent. will give me an increase of either £5 or £2 according to the way the increase is given. Surely the chief needs of the elderly and infirm are food, warn clothing, heating (gas, electricity or coal) and in many cases rates upon our homes. These increase uniformly, and not according to one's means (certainly not percentage increases).
That is just the point. If the Chief Secretary has a quick brain he will be able to work out that 12½ per cent. of £60—from which unspecified deductions have to be taken—does not provide very much to the very oldest, and the great numbers of nurses, police widows, and all sorts of other people whom the House of Commons wants to help.
I do not understand why we cannot drive into the Treasury mind the fact that the whole House wants to help the poorest and the weakest in the land. It is most unfortunate that in these days, when Parliament should be built up, democracy seems to have less and less influence on the Executive. I do not want to hold the Bill up. I want to see it on the Statute Book at the earliest possible moment. But I want the assurance of the Chief Secretary that every-thing that hon. Members have said about establishing a proper, up-to-date system for meeting our obligations will be taken into account. These are our obligations. It is not the Treasury that has to do it; it is we, the people as a whole, who have to do it. I speak for my part of the world, and every other hon. Member speaks for his or hers, and if the country demands that something effective should be done for these really old and valuable people, we expect the Treasury to act.
I notice that whenever we have a new Bill of this kind the Minister tells us privately what will happen. But he has made up his mind, and he never discusses the question with us. Parliament should be built up into a body which can offer advice. I am all for offering advice. In those circumstances, I hope that the advice given by hon. Members on both sides of the House today will be heeded and—much more important—acted upon.
The hon. Lady the Member for Tyne-mouth (Dame Irene Ward) alleged that the Treasury Bench was uninitiated in the habits of ordinary people. The Treasury Bench is not uninitiated in the Parliamentary habits of the hon. Lady, and she, together with a number of other authoritative speakers from both sides of the House, has turned the debate from a discussion on the details of the Bill into an almost unanimous expression of opinion that this should be the last Bill of its kind that the House should have to consider, and that much better machinery should be set up for dealing with the position of public service pensioners. I hope that the Ministers who have listened to the debate will go away determined to see what they can do, inside and outside the Treasury, to carry out what is clearly the wish of hon. Members on both sides of the House.
Speaking as a newcomer to debates on pensions, the main point that struck me was the innovation in the Bill—the extension of its scope to the ex-colonial pensioners and the provision that they are to enjoy the increases under these Acts together with public service pensioners at home. This puts right a longstanding injustice and anomaly, which was causing unnecessary friction between this country and some of the new and emergent countries in the Commonwealth or on its fringes. I say "on its fringes" because one of the most glaring anomalies occurred in the case of the Sudan pensioners.
Until recently the Government took an extremely legalistic view, and said that they had no direct responsibility in the matter. These pensioners from the former Sudan service—especially those retiring before 1950—were justified in feeling badly let down. We have now had a most remarkable conversion on the part of the Government after digging their heels in on this matter for a long time. This is a very welcome conversion, although it has come somewhat belatedly.
It would be ungracious, especially for somebody like me, not to mention the work done on behalf of the Sudan pensioners, and, indeed, on behalf of all overseas service pensioners, by the present Under-Secretary of State for Commonwealth Relations. Today must be a moment for him to savour, as a new Minister. The usual experience of those who attack the Treasury from the back benches and are then promoted to the Front Bench is that they have to turn from attacking the Treasury to apologising for it. In this case, however, the hon. Member has found that no sooner has he joined the Government than they have been converted to the campaign that he has waged so assiduously over the years, with a good deal of support from hon. Members on both sides of the House.
Towards the end of his campaign the present Under-Secretary of State for Commonwealth Relations seemed almost to despair of converting the Treasury, and he finally put forward the proposition that the Government ought to tell the countries who were not playing their part in awarding pensions increases that they would suffer a reduction in aid from this country if they did not rise more generously to the occasion. Hon. Members on this side of the House felt that by far the better way to deal with the matter was for this country to accept responsibility for those who served the Crown in these overseas territories before they became independent. I am sure that the Under-Secretary will agree that the solution now put forward in the Bill is by far the better and wiser course, and is the right way to deal with the matter.
This country has a reasonably good record in giving economic aid to the newly developed countries of the Commonwealth. I would not, facing a Treasury Minister, admit that we are doing as much as we might, but our record by world standards is a reasonably good one, and for that reason I have always thought it was a pity to spoil it by the scandalous proposition that these poor emergent countries should be forced to subsidise the costs here of our unique combination of affluence and inflation.
In the main, these countries have a per capita income of about £20 a year, and I think it was foolish to go on chivvying and nagging them to try to make up the pensions of their ex-rulers who are now living in their own home country and facing economic problems which are the consequence of our governmental actions. Nor did that sort of policy, which I am glad has now been abandoned, help those new responsible leaders of the African countries, particularly those who are trying to establish a public service structure in those countries which is related to their own needs and economies, and not to the cost of employing expatriate officers.
I welcome the fact that this Bill makes the provision in relation to these overseas civil servants. I would emphasise the point made by my hon. Friend the Member for Southampton, Itchin (Dr. King) that in Committee we should look at how far the net has been cast. I hope that the Government will be as generous as possible when it comes to defining the kind of overseas pensioners who are entitled to help under the Bill. As the Minister said in his extremely lucid opening speech the actual numbers involved are fortunately very small because a number of overseas countries have acted very generously. Since the numbers are small, I think when one comes to marginal cases and it is a ques- tion of whom we designate as being entitled to these increases and who are outside their ambit that the interpretation should fall as generously as is possible.
I turn to another group of people who will welcome the provisions of the Bill very much, and that is the members of our teaching profession. I know that in Scotland there has beer the feeling as the years passed since 1959 that things were becoming increasingly difficult, especially for the older teachers—the teaching profession has a remarkable record for longevity. Today there are more than 2,000 women teachers in Scotland with a pension of less than £250 a year, and indeed 1,100 of them have pensions of less than £200 a year.
If we take the women non-graduate teachers, who retired in 1946 and who are now facing some of the problems of advancing age which the Minister described, then even if we include them in the new lump sum proposal which the Minister has put forward, which I think is a very good development, we still find that these ladies will receive a pension from the community which is only about half of the pension that is being received by the same kind of teachers now leaving the teaching service.
I have talked to the Retired Teachers' Association in Scotland about this. It puts forward a proposal, which the Minister mentioned, that the escalator principle should be extended to 20 per cent. which would mean that higher percentage increases of 14 per cent., 16 per cent. and so on would affect pensions dating back to 1952. The Minister said that the reason for rejecting this was that it would create mathematical complications and that there would be anomalies under which some of those benefiting from it would receive higher pensions than those in a later stage of the pensions arrangements. I rather share the view of the hon. Lady the Member for Tynemouth about this. Perhaps some of the retired mathematics teachers may understand all the complications of this—I confess that I do not—but I support her case that the right hon. Gentleman, who is such an expert on these matters could, with his usual ingenuity, find some way round this difficulty if he were really to set his mind to it.
I think that the retired teachers already face some particularly unfortunate anomalies, as mentioned by my hon. Friend the Member for Sowerby (Mr. Houghton), who opened the debate from this side. If they do what the community pleads with them to do, and continue teaching beyond the age of retirement, they find that they have to sacrifice their pension. They are not allowed to enjoy both pension and salary. But if they leave the public sector of education and go to private schools they can enjoy both pensions and salary. Not only do they find themselves handicapped in this way, but if they go on teaching for a number of years, as many of them fortunately do, and then retire, they find that during the period that they have gone on teaching they are not allowed under the rules of the superannuation scheme to go on contributing to the scheme and entitle themselves to the pension related to the point when they actually leave the teaching service. They find, when finally they leave, that they have to go back to a size of pension related to a number of years before. I hope that these anomalies can also be looked at.
I think that the most important thing that has emerged from the speeches in the debate is the universal agreement on both sides of the House that there ought to be some new method of tackling these problems. We should get away from the situation in which retired public servants have to use part of their well-earned retirement in lobbying and pursuing Governments and Members of Parliament when every few years we have a fresh pensions Bill put before us.
A good deal has been mentioned about the so-called principle of immutability. As my hon. Friend the Member for Sowerby said there is no documented record as to Where this principle was first enunciated. My hon. Friend, who is a great authority on this, was kind enough to point out 'to me that the original Treasury view, given as far back as 1859, by Sir Charles Trevelyan, to the Commission set up for the first comprehensive Civil Service Superannuation Act stated:
My opinion is that there is no distinction in principle between salary and pension; and as salaries are liable to be altered for the public good, so, in my opinion, are pensions liable to be altered.
I am not at all sure that we should not return to this principle of 1859. We have to try to take the general view that the adult life of a person in our community ought to be treated as a whole and that the point of retirement is merely that point where the proportion of leisure in his life is substantially increased. Therefore the rewards that he receives from the community should be treated on a continuous basis as part of the general sharing of the wealth of the community. This point was made very vividly by my hon. Friend the Member for Paddington, North (Mr. Parkin).
I fully take the point made by the Minister that we cannot in fact isolate public servants as a group in a matter like this and treat them in a manner distinct from the general community. I accept that. At the same time, I say that the Government, both as good employers and as the Government, have the duty to set an example in these matters. I would hope that as part of a generally changed attitude to all the manifold problems of superannuation the Government would seriously consider taking this question of public service pensions out of the legislative process altogether and establishing some independent machinery for dealing with it which would take decisions on the basis of what could be agreed as relevant criterion after a full and proper investigation of these matters.
I think that in many ways this is one of the great challenges of the affluent society into which we have moved, and I should think that the lesson which the Government have learned in this debate is that while everyone pays generous tribute to the present Bill, everyone on both sides of the House feels that it would be very unfortunate if we went on with this method of dealing with the matter. Before the next Pensions (Increase) Bill comes before us we should have a fresh lead from the Government concerning the methods of dealing with these problems.
I am very grateful to you, Mr. Speaker, for calling me, and I promise not to be long. I do not wish to delay the House, as I know that time is getting short and that other hon. Members wish to speak in this valuable debate.
I should like to endorse some of the suggestions made by hon. Members opposite, especially that put forward by the hon. Member for Southampton, Itchen (Dr. King) who suggested that the increases should be retrospective. It would be a very happy surprise for pensioners to hear that 'that was so and I hope that the Minister will very seriously consider this proposal.
May I say at once, as one who has many constituents wholly dependent upon pensions, that I warmly welcome the Bill, especially in respect of those pensioners who have so faithfully served the Crown overseas? With respect, may I say that it shows that Her Majesty's Government are really facing their responsibilities in this direction and rightly deserve to be congratulated for so doing? However, I feel that this is only a beginning with what ought to be done. These people have still to look to overseas Governments for their basic pensions, and, indeed, for such increases as have been granted to them. They may find themselves faced with fiscal measures which would either prevent them taking their pensions out of the country or with heavy taxation imposed on the pensions. Unfortunately, there is nothing they can do about it.
I am sure the House would agree that we have been exceedingly generous to all the newly independent countries of the Commonwealth. We have given them large grants and loans and other aids, yet in the public officers' agreements which were entered into with them Her Majesty's Government placed upon the shoulders of the newly independent countries the burden of the payment of pensions to these old servants of the Crown. Would it not be wiser, more statesmanlike and more equitable when giving these countries their independence, and when rightfully assisting them with grants and loans in order that they may become viable, that we should at the same time hand them a completely clean slate instead of attaching this liability, which, after all, is our liability? Surely, in common fairness and justice, ought we not to shoulder this responsibility ourselves and let the newly independent countries start off with no commitments stemming from the colonial period?
I believe that this Bill will do much to remove the discontent and the hardship which exists, but unless some undertaking is given to these pensioners on the point which I have raised they will continue to experience anxiety and have no real sense of security, something which is so important to them at their time of life. Will my right hon. Friend consider the matter in this light and give careful consideration to taking the fairest step of underwriting the basic pensions paid by overseas Governments or take over the entire responsibility of paying the pensions direct from the Treasury, so removing all anxiety?
I warmly welcome the Bill and trust that the Minister will give these points, which have been made so briefly, some consideration.
My only reason for entering this debate is because about a year ago when there was a debate on pensions—I believe it was on a Friday—I ventured to intervene, and ever since I have been the recipient of scores of letters from pensioners affected by low pensions appealing to me to use what influence I possess—not that I possess very much—to impress upon the Government the need for introducing legislation which would remove some of the anxieties, hardship and, indeed, privation which exist among these people.
I naturally welcome the Bill, as my hon. Friends on the Opposition Front Bench and around me have done, and as, indeed, have hon. Members opposite. But I have no illusions about the Bill being found to be completely satisfactory by those affected. I gather from the various pensioners' associations that they have discovered many anomalies in the Bill and have made some suggestions to the Government, and certainly to several hon. Members. I hope that in Committee some of these anomalies will be removed.
The hon. Member for Bournemouth, East and Christchurch (Mr. Cordle) believed that the contents of the Bill would mitigate the discontent that exists. I doubt that it will. I believe that many of the pensioners will be disappointed and disgruntled about its contents and about the meagre amount which they are likely to receive as a consequence of it.
I believe that the only useful people in the country, the only people who are dynamic, are the discontented ones, because, otherwise, we should not have had the Bill. Undoubtedly it was the discontent of hon. Members on both sides of the House, and that of the right hon. and learned Member for Chertsey (Sir L. Heald) in particular, which brought pressure to bear on the Government in the past and which has led to the introduction of the present Bill. It may well be that the Government would have delayed still longer had that discontent not been voiced.
I am the last to look a gift horse in the mouth, and if a few shillings a week or a month will bring some relief to people who are living on very meagre incomes and who, in some cases, are suffering dire privation and hardship, then I am delighted that that should be so. But I do not believe that the present Bill will be the last word. Far from it. Hon. Members on both sides of the House have suggested that we might some day witness the provision of a permanent scheme which would avoid this piecemeal legislation. As far as I know, no one in the course of the debate—I did not hear the whole of it but I heard much of it—has made any constructive suggestion concerning how this permanent provision will be provided. There are many difficulties. For example, are we to have some tribunal dealing with appeals for increased pensions on the basis of principles negotiated by the Government? I think that procedure would give rise to difficulty. There is the question of whether there should be flat rate increases or variations in the increases in pensions determined by the length of service and the conditions of the applicant and so on.
All these matters have to be considered and I doubt whether the Government would be in a position to introduce legislation of this kind before the next General Election. It may well be that a succeeding Government might also experience considerable difficulty. There is, therefore, all the more reason, if there are found to be anomalies in this legislation, if some amounts are regarded as meagre and insufficient to provide the measure of relief required, that during the Committee stage proceedings the Government should make some effort to meet the demands made upon them. Apart from that, I welcome the Bill and I hope that its provisions will bring some measure of relief to those concerned.
Like other hon. Members, I welcome this Bill so far as it goes. It is certainly better than no Bill. As was said by the hon. Member for Sowerby (Mr. Houghton), it is a triumph for the House of Commons to have obtained a little blood out of the stony-hearted Treasury and I hope that my right hon. Friend will be glad to hear that I shall take a very slightly less jaundiced view of his Department in future.
The debate today has naturally centred round Civil Service pensions. I hope that I shall manage to keep in order if I say a few words about Service pensions, which are a matter of particular interest to myself and to people in my constituency. I wish to ask one or two questions of fact, and I hope that my hon. Friend the Financial Secretary may be able to answer them in his reply, and I should like also to raise one or two questions of principle applicable to the Bill as a whole.
About five months ago, on 25th May, we had a very sharp debate on Service pensions which arose from a Motion moved by my right hon. Friend who is now the Minister without Portfolio. He was eloquently supported in a most moving way by my hon. Friend who is now the Under-Secretary of State for Commonwealth Relations. The debate was answered, with a Treasury brief Which was visibly discomforting to him, by my right hon. Friend the Minister of Education, who was at that time Financial Secretary to the Treasury. Since then, my right hon. Friend the Minister without Portfolio has become the Keeper of the Government's Image. His presence in the Chamber this afternoon for a short period indicated his continuing interest in this subject. Of course, my hon. Friend the Under-Secretary of State for Commonwealth Relations is still interested in this subject, although in his more elevated sphere.
I ask my hon. Friend the Financial Secretary to give the House an assurance that whatever instrument is created for Service pensions we shall have an opportunity later on to discuss Service pensions in more detail than would be in order this afternoon. If it is possible I should like my hon. Friend to give the House some information about the position of Service widows. I am sure that he will remember what was said by my right hon. Friend the Minister without Portfolio five months ago about the question of widows of Service officers. I do not wish to detain the House with quotations from that speech, but if my hon. Friend will read column 843 of the OFFICIAL REPORT for 25th May, he will see that my right hon. Friend used some quite strong language about the attitude of the Government towards these widows. I hope very much that when the question of Service pensions comes up for the necessary—I do not know whether to call it legislation—the remarks of my right hon. Friend will be kept very much in mind and that we shall have a satisfactory solution.
Order. I am sure that the hon. and gallant Gentleman is trying to keep in order. I think that a general comparison between Service pensions and civil pensions is permissible. But I do not think that matters of detail relating to Service pensions are in order.
I apologise, Mr. Speaker. I feared that I was likely to transgress.
May I continue on rather thin ice on another point? I hope that my hon. Friend will also give the House some information regarding the position of officers who have commuted their pensions. Their position is in no way indicated in the Bill. It is, of course, a matter of great interest to a number of people who will be affected by the new Service pension rates. There is a great deal of anxiety and uncertainty on the part of many persons who have commuted up to half of their pensions and who do not know whether the commuted half will benefit from any increase. That is an important point and the quicker it is cleared up the sooner the worries of many people will be relieved.
I have two questions of principle to raise, and again I hope, regarding the first one anyway, that I shall be in order.
There has been much reference to this doctrine, or whatever it may be, of immutability and I support what has been said about the importance of dealing with this difficult question by the introduction of some kind of yardstick or scale against which all pensions may be measured.
The Government, I think, take credit for the fact that there have been a number of pensions increase Measures introduced in the last ten years or so. I do not think this a matter for which they should take credit, quite the reverse. We all know the process which goes on in these cases. There is a meagre increase which perhaps satisfies people for a time and then there is a further degree of inflation, and hon. Members are bombarded with complaints. Hon. Members satisfy themselves from their own observations in their constituencies that the complaints are genuine, and that there is real hardship. They write to the Minister and receive the usual Ministerial reply. I agree with my right hon. Friend that the Government do reply promptly to correspondence. But unhappily the replies are not always satisfactory. Pressure is put on the Government and at last some move is made in the way which has been indicated this afternoon.
But that is not really a satisfactory solution. It will inevitably be repeated in another few years, and I simply cannot understand, knowing quite well the difficulties, why my right hon. Friend and his right hon. Friend expose themselves to all this trouble. It would be so very much easier if we could have some scale which everyone could understand and by which the pensions could be measured, so that everybody would know how they stood. Both hon. Members of this House and my right hon. Friend would be saved a great deal of difficulty and heart-searching.
I know the difficulties, but let me remind my right hon. Friend that the principle of immutability has long ago been abandoned, and does not and cannot exist when the highest ranks of the Armed Forces are excluded from it. Field marshals, admirals of the fleet and so on are never retired but remain on half-pay, and their half-pay or pensions rise with every increase of pay.
Finally, I should like, if I am in order, to refer to the question of the relation or the equating of Service pensioners with Civil Service pensioners. This point was discussed in the debate on 25th May, and I cannot expect that today my right hon. Friend will be able to say anything about it, but I feel that now that we are, in the words of my right hon. Friend, looking at the philosophy governing these pensions, this is one of the aspects that should be taken into account.
The pensioners in the Armed Forces cannot be fairly related to pensioners in the Civil Service, because, quite apart from the conditions of service and quite apart from, perhaps, the harder life which some of them have to live, there is the question of earlier retirement. Civil Servants, with whom we are particularly concerned this afternoon, or at least most of them, enjoy a career factor, taking them on to late middle age, or in some cases even to old age, whereas in the Services, and particularly the older Service pensioners, before the new and improved career factor came into force, were compulsorily retired at a comparatively early age. They had no such career factor, and a good many of them who might have been still serving were retired in their 40's, and have not benefited from the increases in pensions and gratuities which have been introduced later.
I hope my right hon. Friend will say a few words on some of the points I have mentioned. I am grateful to the Government for bringing in this Bill, which, however, I hope will be tidied up in Committee.
I hope that my hon. and gallant Friend the Member for Chelsea (Captain Litchfield) will forgive me if I do not try to follow him into the realm of Service pensions, in so far as it would be in order, in any case. I do not want to add my weight to the thin ice on which he was skating.
I should like to refer briefly to two matters and to take up a very interesting suggestion made by my hon. Friend the Member for Bournemouth, East and Christchurch (Mr. Cordle). Personally, I do not feel the difficulty which he does in leaving the greater part of the pensions paid by former Colonial Terri- tories as the responsibility of the new independent Governments, but perhaps we might not embark on a lengthy argument about that, in view of the hour.
I should like to know from my hon. Friend the Financial Secretary whether it is the Government's intention to take this power by regulation, which, I think, in general circumstances, the House does not much care for—this was echoed by the Chief Secretary—not only in respect of those Governments which are at the moment independent, but in respect of all Governments which are paying pensions of this character. If my hon. Friend is able to say "Yes"—it may be that this would be better dealt with at a later stage, and if he feels that way about it, we can accept it—then, it would go far to meet my hon. Friend's point.
Clearly, the Government would then be equipped with the necessary powers to act quickly in precisely the eventuality to which my hon. Friend drew attention. It is also fair, in reply to him, to recall that by double taxation agreements with countries of this kind, we ought to be able to deal with the sort of catastrophic intervention of taxation in the country of payment which he has in mind.
I therefore content myself by echoing the widely expressed satisfaction throughout the debate, on both sides of the House, that it has now been possible to pocket our pride—and I make no complaint if hon. Members say that it is our pride on this side of the House more than that of the Opposition—on all the arguments previously put forward and to bring an element of justice to those who have served this nation outstandingly in different parts of the world.
Secondly, I do not believe, with respect, that the House has sufficiently realised how important is the principle involved in the Bill, if we approve of it today, to add a subvention over the age of 70. Just as I want to say that with other hon. Members I trust that this is the last Pensions (Increase) Bill we shall see, so, personally, I hope that in other fields we have seen the last of a flat increase, as for instance in ordinary retirement pensions. I therefore welcome the innovation. I think it a most remarkable advance in Government thinking, for which the Chief Secretary is to be most warmly congratulated. I hope that we shall see this extended into other fields.
In my third and last point I would recall that in opening for the Opposition the hon. Member for Sowerby (Mr. Houghton), drawing on a lifetime of experience in the Civil Service, rightly laid stress on the element of integrity in our civil servants. That, of course, is not only a question either of their current pay or their pensions, and indeed the hon. Member was not arguing that it was. But I put it to the House that if we are to keep up with their high standard, which we regard as one of the great possessions of this country, we shall need to continue to recruit to the Civil Service men and women of the highest calibre. One, though by no means the only, field of recruitment is among the sons and daughters and grandsons and granddaughters of existing members of the Service.
We have a horrible lesson here before us. Service recruitment—and I know it intimately from the Army point of view—was very seriously prejudiced by the cheeseparing way in which the nation in the past treated its Service pensioners. There is no question about this. We have learned the lessons now, to no mean extent. There is the danger that if we do not treat with proper generosity and a proper sense of responsibility the serving members of the Civil Service a sense of resentment will transmit itself to a group of men and women who might well by themselves form a valuable source of recruitment, imbued as they are already by family background with the standard of integrity to which we attach so much importance.
The modern generation, be it right or wrong, attach for greater importance to this question of pension rights than ever their forebears did, or even their half-forebears. I cannot remember spending at school a sleepless night over my pension rights, but the plain fact is that young men and women who enter the professions today look from the beginning at the pension rights that the profession carries. This is of great importance to the young man or young woman. For these reasons I join with other hon.
Members on both sides of the House in leaving the Government Front Bench in no sort of doubt that there is a growing feeling, inside and outside the Civil Service or the public services themselves, that the present ad hoc step forward and another step forward after being pushed from behind, way of dealing with our pensions does not fit the present situation in the twentieth century.
To change it will cost more. We accept that. Although this has not yet been mentioned, it may well be that our obligations, should we enter the European Economic Community, will give us yet another inevitable push towards the new principle. This is not the time to develop that, but I suggest that there may well be far-reaching ramifications to our signature of the Treaty of Rome, should we sign it on proper terms.
I most earnestly suggest that, from our own national point of view, some more permanent and better scheme is required. It would be pleasant if there were plenty of time to develop the argument. However, as a result of today's constructive, good-natured and responsive debate, the Government can have been left in no sort of doubt that, if they seek to repeat what is—I grant this—the best topping-up process we have yet seen as a regular part of our national life, they will have missed the feeling and the impetus lying behind so much of what has been said today.
This has been a remarkable debate, the tenor of which has been one of almost general approval and support for the main purposes of the Bill, but with considerable, and almost universal, dissatisfaction at the limited extent to which it meets the needs of those concerned and its limited scope under the present system of dealing with this recurrent problem. It is significant—I hope that the significance will be borne in upon the Ministers concerned—that the dissatisfaction has been expressed almost universally from both sides of the House. I take encouragement from that fact, particularly as the Bill itself reflects the degree of responsiveness of the Government to a somewhat similar debate a few months ago when a similar condition of universal agreement on both sides of the House obtained.
The main purposes of the Bill are twofold. The first is to give a further measure of compensation to public service pensioners for the continuing erosion in the value of their pensions. Second, the feature which has been widely welcomed, there is belated rectification of a manifest injustice to certain overseas service pensioners hitherto denied the benefits of the United Kingdom Pensions (Increase) Acts because of what I can only describe as rather unseemly disputes between the overseas Governments concerned and Her Majesty's Government here and, with due respect to the essay in gallantry and chivalry of the Chief Secretary, what I still believe to have been the legalistic quibbles of the United Kingdom Government. I will not belabour that point now.
I welcome that the Government have at last been responsive to the pressure exerted from both sides of the House over a long period which culminated in the unopposed passage of the Private Member's Motion introduced by the right hon. Member for Ashford (Mr. Deedes), now the Minister without Portfolio, on 25th May last. Incidentally, his elevation and that of the hon. Gentleman who is now Under-Secretary of State for Commonwealth Relations, who also was identified with this proposal over a long time, seems to suggest that the subject constitutes a possible open gateway of admission to the Government. Hon. Members opposite might care to note that. Perhaps it has some significance in the tone of today's debate. But, be that as it may, I shall not be ungenerous in attributing motive.
I am glad that the Government have done what they have on a comprehensive basis, giving to these pensioners the full benefits of all the previous Acts, although, seemingly, only from a current date, leaving them to bear the measure of sacrifice which has been involved for them in the delays in remedying the injustice. There is no provision in the Bill for any measure of back-dating. I hope that even now the Government will be prepared to consider this aspect again, for, if this principle of topping up is regarded as the right principle for this category of pensioners, then surely it has been the right principle from the beginning, and those concerned should not now be called upon to suffer the loss that they have sustained by this persistent and, I think, unwarranted denial.
I accept that in the complex circumstances of these particular cases the method of enabling powers is the only practicable and expeditious way of giving effect to this decision, although in Committee we shall require clarification on other points—for example, the reasons for setting the minimum age limit of 60 when the normal age of retirement for colonial pensioners is 55, and, in the case of the Palestine pensioners, the increase has been conceded at that age.
I turn to the major aspect of the Bill, that of pension increases. The first point that I want to emphasise is that in the public services the expectation of a pension was and is an essential part of the conditions of service towards which pensioners during the years of their service contributed either by specific deductions from pay or, indirectly, as in the case of the Civil Service, by acceptance of scales of pay which were lower by reason of the pension expectation than they otherwise would have been. It cannot, therefore, be too clearly emphasised that these pensions are in the nature of a contractual right. They are not charitable gifts. They were intended and were expected to bear a definite relationship to the standard of living enjoyed by the pensioners during the working years of their service.
In these circumstances, I submit that public service pensioners are morally entitled to expect, as a minimum, that their pensions shall be maintained at a level of reasonable relationship to the value that they bore in terms of purchasing power when computed at the time of retirement. To the extent that the Bill is a step in that direction, although, as has been demonstrated, an inadequate step, it is welcome.
It would be wrong, indeed churlish, not to acknowledge that the Bill is, in certain respects, an improvement on its predecessors and on the sum total of its benefits is greater than that of any of its predecessors. But we have no right to be complacent on those grounds. It makes a further advance in the liberalisation of the principles of previous Pensions (Increase) Acts. As the Minister said, the earliest of these gave relief only for absolute hardship, measured by a means test and subject to income limits. These restrictions were later swept away, and the 1959 Act was the most progressive Measure to date, although it still did not give universal satisfaction.
Furthermore, in so far as the Bill is built on the pattern of the 1959 Act, one is confronted with the inevitable difficulty that one cannot tamper with the provisions of this Bill in an attempt to deal with the many anomalies which still exist without creating an entirely new set of anomalies. That is an important feature to remember in our examination of the Bill.
A welcome feature is the entirely new scheme whereby the older pensioners, those over 70 years of age, will receive, in addition to the standard increases, certain graduated supplements. This is welcome because it is the older pensioners, those who in general have been retired the longest, upon whom the burden of depreciation of money values falls heaviest and who, by reason of age, are less able to seek means of supplementation in other quarters.
But welcome as are the increases proposed and the measure of advance that the Bill represents in its general approach, it would be wrong to conclude that it fully satisfies the claims of equity or that it should be construed as the last word in legislation of its kind. Full compensation for the loss in real value of pensions is clearly not achieved even by the provisions of the Bill, however generous they may be claimed to be. The further back in time that payment of pension commenced, the larger is the gap of disparity. All this is demonstrated by examples that have already been quoted, and many more could be given, but I do not propose to weary the House with those examples, for it is officially admitted that the Bill, like its predecessors, is not designed to give full compensation for rises in the cost of living, but to give only a measure of relief from hardship.
Is there anything sacrosanct about this limited practice of the past? Does it become right and proper because it is dressed up as a philosophy or a doctrine? Does an injustice become acceptable or equitable merely because it has been perpetrated so long? I can only say that many of the pensioners who are the victims of this practice see it only as a practice which cheats them out of what they regard as their just dues and an incongruous and ungenerous attitude in What is described as an affluent society.
If, however, the Bill falls short, and is admitted to be deliberately designed to fall short, of full compensation for the depreciation in money values, it cannot possibly be said to fulfil the Government's pledge—
I shall go on at a later stage to argue that at least the pensioner is entitled to the measure of compensation which is enjoyed by the generality of the community.
The Bill falls short of full compensation and cannot possibly be said to fulfil the Government's pledge, given in the General Election of 1959 and, with all due respect to the hon. Lady the Member for Tynemouth (Dame Irene Ward), given by the Prime Minister before that General Election, and certainly repeated since, that pensioners should continue to share in the good things which a strong expanding economy would bring. Most of the pensioners known to me question the word "continue" in that pledge. If it means anything, it implies more than mere compensation for the rises in the cost of living.
How far the total effect of all pension increases to date, including those of the present Bill, fall short of the ostensible aim and purpose of the Government pledge may be gleaned by comparison of the level of pensions which will now be payable to various pensioners from different public services who have been retired some years with those currently payable to individuals retiring today from comparable positions.
A number of examples have already been given and many others could be quoted. I will add only two. They are the more compelling, to my mind, because they are actual cases known to me personally. The first is of a former assistant teacher who retired in 1936 with a pension of £204. Currently, as a result of earlier Pensions (Increase) Acts, he receives £360. By this Bill the figure will be uplifted to £423; but an assistant teacher retiring from a comparable post today, without any special allowances, would receive a pension in the neighbourhood of £615. The second case—and I have good reason to know this case—is of a former head teacher, who was in fact one of my schoolmasters, who retired in 1942 with a pension of £360, which is now £436, to be uplifted by this Bill to £508; but a head teacher retiring from a post comparable to that which that individual occupied would today receive a pension of the order of £1,000.
I know that these and similar examples have been extensively quoted in support of the argument of what is called "parity". I know that for various reasons, some of principle, some of difficulties of administration and comparability and of total cost, the claim for parity, in the precise sense in which it is sometimes put forward, has been repeatedly and forcefully rejected officially. But whatever the difficulties, whatever be the argument in regard to that particular advocacy, we say that surely pensioners are entitled to look to the community, which they served faithfully during their years of service, helping, let us remind ourselves, to lay the foundations of the higher living standards of today, to afford them some share in the benefits. As one such pensioner put it to me only recently in correspondence:
We pensioners are consumers, taxpayers and ratepayers, and, as such, have to bear our share of the cost of ensuring a rising prosperity for others which we are not permitted to share. That is clearly unjust.
I echo his views.
That brings me in conclusion to a reiteration of the plea which has been made, initially by my hon. Friend the Member for Sowerby (Mr. Houghton), but later echoed by practically every Member on either side of the House who has spoken in this debate, for an entirely new approach to the problems of such pensioners, a new look at the principles by which they are determined and the method by which they are reviewed. It has been pointed out that this Bill is the sixth Pensions (Increase) Bill of a whole series, the fifth or sixth since the war. Clearly it will not be the last, if we proceed on the present pattern of things, and it is significant that the House today has expressed its disquiet in such universal terms and impressed upon the Government that it is not content to keep going through this completely unsatisfactory method of dealing with what is not only the problem of pensions but is, I venture to suggest, a deep human problem for many of the people concerned, and one to which we in this House ought to be responsive.
I said in a previous debate that there was something repugnant in the spectacle of pensioners of any category having to come from time to time virtually cap in hand to plead for some measure of justice and relief, and devoid of any stronger means of pressing their claims, having to depend upon the degree of sympathy which they could enlist in this House to exert pressure upon the Government who eventually, reluctantly and inadequately responded with some small grain of comfort, the value of which began to erode from the very moment at which it was conceded.
I repeat that surely the time has come to put an end to this unsatisfactory ad hoc method, the results of which are dependent on a number of purely fortuitous factors, and to build into legislation an express provision whereby these pensions shall be reviewed at regular periodic intervals. A biennial review has been suggested and would seems to be an appropriate one. The kind of review on this ad hoc and unsatisfactory basis that we have had does not conform to any normal pattern. The intervals between the Acts have been three, four and five years and unrelated to anything other than the degree of pressure and the circumstances that have been impressed upon the Government of the day.
I suggest most earnestly for the Government's consideration that they should seek legislative authority whereby they shall have the power to adjust pensions by some such periodical review, not only by reference to the cost of living but by some agreed standard measurement to reflect the general level of wages and salaries of the working population, and in that way ensure for pensioners that they shall indeed have a share in the benefits of higher living standards.
With these reservations about what we feel to be the inadequacies and defects of the Bill, but mindful of the urgent needs of the pensioners for the benefits which it does provide, the Opposition will not resist the Second Reading, though in Committee we shall seek, without unnecessarily impeding its progress, to remedy these inadequacies to the extent that its limitations makes possible.
In conclusion, I express the earnest hope, echoing that which has been voiced by other hon. Members, that, having seen this Measure on the Statute Book, the Government will not then sit back feeling that they have disposed of the problem for the time being and that there is no occasion to do anything more until pressure builds up again, but will, in response to the clearly expressed views in the House today, take the initiative in seeking in consultation with the interests concerned a new, permanent and equitable basis for dealing with this problem in future.
Moreover, I hope that the Financial Secretary, in reply, will not merely take note of this view but will give a positive assurance that the Government will be as responsive in this instance as, happily, they were to the expressed will of the House when we last debated similar matters on 25th May.
As one would, I think, expect in connection with a topic of this kind, this has been a most excellent debate. Practically every speech made from either side of the House has been moderate and responsible, although I know full well that many people feel strongly about the issues involved.
There has, of course, been criticism to some extent that we have not gone quite far enough. I am sure the House will forgive me if I say that I anticipated that that point would be made during the debate. But it cannot seriously be denied that this is one of the most generous pension Measures of its kind.
Several points were raised, particularly by my hon. and gallant Friend the Member for Chelsea (Captain Litchfield), about Service pensions, but, Mr. Deputy-Speaker, you at least will understand the reasons why I cannot supply the answers on this occasion. However, I will ensure that my right hon. Friends who are responsible for these matters know what has been said and what has been asked by my hon. and gallant Friend. I should like in reply to deal with the basic question of the extent—
Of course, this really is not a matter for me but for my right hon. Friend the Leader of the House who, I am sure, will take note of what has been said.
It would be helpful if, in reply, I deal with the basic question of the extent of the increases proposed and then go on to deal with certain matters of principle raised by hon. Members. But first I want to say how grateful I am to my hon. Friend the Joint Under-Secretary of State for Commonwealth Relations who is to help us during the later stages of the Bill. As the hon. Member for Sowerby (Mr. Houghton) so generously said, it is very appropriate that my hon. Friend should be helping us on this occasion because he, more than anybody else on the back benches, has fought for a better deal for those pensioners who served overseas.
I cannot let the moment pass without also making reference to the late Glenvil Hall, who was a predecessor both of my right hon. Friend the Chief Secretary to the Treasury and of myself as Financial Secretary to the Treasury. This is the first time I have been intimately concerned with a Pensions (Increase) Bill but I had only begun to consider the complexities of this matter when I came upon the name of Mr. Glenvil Hall. Coming from the same part of the country, I knew him very well personally and I regret very much that he is no longer with us. He was as highly respected in the Come Valley as he was in this House.
When one is considering whether the increases proposed are adequate it is, of course, relevant to consider, as many hon. Members have, the change which has taken place in the cost of living. Indeed, the hon. Member for Sowerby referred to this aspect at some length. The increase in Clause 1 for those who retired on or before 1st April, 1956, is 12 per cent.
I do not know Whether it was deliberate, but my hon. Friend the Member for Tynemouth (Dame Irene Ward) seemed at one stage to be rather derisive about the percentage increase of 12 per cent. But as my right hon. Friend the Chief Secretary said, since the last Pensions (Increase) Act, in 1959, came into operation in August, 1959, the cost of living has risen not by 12 per cent. but by a little over 9 per cent.
I want to be perfectly fair about this because I realise that it may be said that that is not the right comparison because the 1959 Act had a cut-off date in 1957. Under it, no increases were given to those retiring after 1st April, 1957. But I ask hon. Members, in trying to judge whether or not these proposals are reasonable, to consider the position of a public service pensioner who retired early in 1956.
Since March, 1956, the cost of living has gone up by 17·8 per cent. Taking into account the increase under the 1959 Act and the increase under Clause 1 of this Bill, that pensioner will have had an increase of 16½ per cent. of the pension he started with in March, 1956. In other words, the increases which he will have received will total almost as much as the rise in the cost of living.
But, of course, that is not the whole of the story. The increases under Clause 1 must be considered together with the flat rate increases for those over 70 which are provided for in Clause 2. It is worth emphasising again the point, made by my right hon. Friend, that the cost of Clause 2 adds nearly 50 per cent. to the cost of Clause 1.
I do not say this in any spirit of personal criticism of my hon. Friend the Member for Tynemouth, but she generally speaks with some force, and she will not, I am sure, mind if I say that, in her speech—While I recognise the force of some of the things she said—she paid too little regard to the importance of Clause 2.
Many pensioners who retired before April, 1956, will be eligible for these flat increases which will have a considerable effect on the small pensions. Because the increase is a flat rate in- crease, it has a different proportionate effect on pensions at different levels. I hope that the House will bear with me for a few moments while I give one or two examples of the effect of the Bill on pensioners retiring before 1st April, 1956, and who are over 70.
My hon. Friend the Member for Tynemouth said that the oldest and the poorest would get the worst deal. She said that the oldest and most vulnerable would not get much out of the Bill. In view of what she said, I can say that I should be delighted to see her at any time if she would like to see me at the Treasury, or I can see her at the House of Commons, or anywhere she cares to choose.
The hon. Member for Sowerby specifically referred to somebody who was receiving one of the smallest pensions, £80 a year. Let us consider a pensioner over 70 who retired before 1st April, 1956. and receiving a pension of £80 a year or less. He will receive increases under the Bill of no less than 37 per cent., 12 per cent. under Clause 1 and 25 per cent. under Clause 2. If to that we add the increase which he received under the 1959 Act, he will have had a total increase of 41½per cent.
Pensioners with a pension of £200 a year will receive a total increase of 22 per cent., or 26½per cent. taking account of the effect of the 1959 Act. I remind the House that these are all pensioners retiring before 1st April, 1956, and over the age of 70. Pensioners with pensions of more than £250 a year, which, I am told, is an average figure for Civil Service pensioners, will receive a 20 per cent. increase under the Bill, or 24½per cent. taking account of the 1959 Act. A pensioner with a pension of £400 a year, another example to which the hon. Member for Sowerby specifically referred, will get an increase of 17 per cent. under the Bill, or 21½ per cent. including the 1959 increase. No fair-minded person could deny that those are all substantial increases and are certainly more than the rise in the cost of living since 1956.
Is it not rather unrealistic to compare these percentages with the increase in the cost of living since 1956, as there might be a further increase in the cost of living between now and the time when the Bill becomes effective, and after that date there will probably be at least another two years before there is another such Bill, during which time the rise in the cost of living will continue to erode these gains?
I hope that there will not be much increase in the cost of living between now and the time when the Bill becomes effective, and which, if all goes well, will be 1st January next year. There is bound to be some period between Pension (Increase) Acts, but the very fact that in the case of these older people we have made provisions for increases in pension which are greater than the rise in the cost of living goes to show that we have done our best to help those people on the older and smaller pension.
Of course I recognise, as anybody in the House does, that it would be very nice if we could go even further, and some hon. Members would like the Government to do just this. But we should not delude ourselves about the consequences. First, there is the question of cost, and I hope that it is not only those of us who sit in the Treasury who consider the question of cost.
Let us suppose that we were to raise the rates of increase in Clause 1, which is the basic Clause, from 12 per cent. to 20 per cent. for retirement up to 1st April, 1956, with proportionate tapering for those retiring later. The cost of Clause 1 would be increased by about £7½ million, that is to say, from just over £11 million to nearly £18½ million. This compares with the cost of £5¼ million which my right hon. Friend mentioned for the flat rate increase in Clause 2 for those over 70, but it is not only a matter of cost.
While Pensions (Increase) Measures have never been designed—there is nothing new about this—to give full compensation all round for rises in the cost of living, an increase of 20 per cent. in Clause 1 in lieu of the 12 per cent. which is there would be more than the rise in the cost of living since 1956, and I should have thought could hardly be justified for all public service pensioners. As I mentioned, the maximum increase of 12 per cent. which appears in Clause 1 compares with a rise in the cost of living of a little over 9 per cent.
since the 1959 Act came into operation in August of that year.
Compared with rises in the cost of living during the intervals between most of the existing Acts, that 9 per cent. is a low figure. Between October, 1952, when the 1952 Act took effect, and February, 1956, when the 1956 Act was presented, the retail price index rose by 11 per cent., and, unlike the present situation, was still rising rapidly. I make no party point about this but in fairness I should say—indeed, the hon. Member for Sowerby fairly mentioned it—that between December, 1946, when the 1947 Act took effect, and June, 1952, when the next Act, that of 1952, was presented, the cost of living rose by no less than 37 per cent. and the Government responsible for our affairs over the greater part of that period took no action. There may have been special reasons for this, but I am pointing out, because it is right to do so, that we are doing a considerable amount in this Bill.
In the time that remains to me I should like to face the criticisms of principle which have been made in the course of this very interesting debate. I do not want to shirk them. I shall have to take them pretty shortly, but I owe the House a reply. I think that three matters of principle have been raised.
First, there is this question whether or not there should be special arrangements for periodic reviews to be made at fixed and regular intervals to try to get away from the disadvantages of a system which involves representations being made on behalf of pensioners to my right hon. Friend, and so on. Secondly, there is the principle involved in the proposals for parity—I need not explain it in detail at the moment—and, thirdly reference was made in passing, and I can consider it only briefly because it is outside the Bill, to full reckoning.
The hon. Member for Walthamstow, West (Mr. Redhead) suggested, as I understood him, that there should be some automatic and regular review of pensions, and this point was made by my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) who, since long 'before I took this job, has had a great deal to do with the problems of pensioners over the last few years.
Indeed, I remember his coming to see the previous Chancellor of the Exchequer about this. The hon. Member for Feltham (Mr. Hunter) suggested that the period might be two years. He thought that there might be biennial reviews, and the hon. Member for Sowerby thought that there was something in this suggestion.
At first sight, coming somewhat new to this matter, I think that this idea has considerable attractions. On the other hand, I ask the House to consider the implications of doing something of this kind. My hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) referred to the recommendations of the Grigg Committee for an automatic biennial review of the pensions of the Armed Forces of the Crown, and, as the House knows, the Government accepted those recommendations.
But there is a very important distinction here. The Grigg recommendation was concerned solely with future awards of pension. It did not deal at all with the reviewing or increasing of existing pensions, which is what we are now concerned with. The need for the Grigg recommendation concerning Service pensions followed from its recommedation about pay, because in the Armed Forces—unlike the situation in the majority of the civil public services—there is no automatic link between pay and pensions. Service pensions are set out in pension codes, which, since the war, have run for a number of years and have then been revised in the light of changes in the cost of living and in Service pay since the previous code was introduced.
Civil public service pensions, on the other hand, do not need to be reviewed in this way, and are not so reviewed, because they have a fixed relation to the retiring salary of the pensioner, and new pensions increase automatically if salaries are increased. There is thus a very important difference of principle between the pay and pension systems of the civil public service pensioner and of the pensioner in the Armed Forces.
But even if there is no relevant precedent for a review of civil public service pensions after specified and fixed intervals, that does not conclude the matter. What really matters is the merits of the case. The main objection to such a review is that it would import a rigidity into the procedure which, at the end of the day, would not be in the interests of the pensioners themselves. I will explain why.
Under the existing procedure the Government keep the position of public service pensioners under review, and can intervene at any time with a measure of relief without having to wait for a fixed and specific date to arrive. If these matters were governed by a fixed timetable it might well happen that, at the time of one biennial review, the increase in the cost of living was too small to justify any action, but that within the next year or so there were developments which, added to the increase already existing at the time of the review, amounted to a level which might be considered to justify some Government action. Under the system of fixed reviews, action would have to wait for another year—or, alternatively, it would be necessary to have a special advancement of the next review.
My hon. Friend the Member for The Wrekin (Mr. W. Yates) suggested, in an intervention—and I think that the hon. Member for Sowerby agreed with him—that it would be a good idea to set up an independent body. This raises the whole principle behind public service pensions. Strictly speaking, the State, like any private employer, is under no obligation to make increases in the pension on which a member of its staff retires. Despite this, the Government, in common with other good employers, do not rest on this but, since the war, have regularly made increases in pensions in order to help their former servants, especially those who have been retired for a long time.
But the exact amount of such help raises very difficult problems. Nobody will deny that the Government have two duties in this field. First, they have the duty of a good employer to his old employees, and this includes trying to prevent hardship. But no Government can forget—despite what my hon. Friend the Member for Tynemouth said—that they also have a duty to the taxpayer, and that many taxpayers themselves are living on fairly modest incomes. It is necessary to keep a fair balance, because it is they who have to find the money required for additional public service pensions.
In the end, it is an issue of judgment how far a Government's concern for their former servants justifies them in using their power of taxation to compel everybody, including poor people, to pay towards the increase in public service pensions. Having said this, I agree with my hon. Friend the Member for Wokingham (Mr. van Straubenzee) that it would be quite wrong to take the view that no improvement in the system should be made at some future date.
No hon. Member, being realistic, would suggest that in this Bill we can alter the structure, but hon. Members on both sides of the House have put forward many constructive ideas and suggestions, and my words are not idle when I say that we shall bear in mind what has been said by all hon. Members. Time, unfortunately, is very short, and there is much more that I would wish to say.
Perhaps I should say, in passing, a brief word about the nationalised industries, because I was specifically asked about this by my hon. Friend the Member for Tynemouth and other hon. Members. The position is that unlike the State and local authorities, nationalised industries do not look to Pensions (Increase) Acts for their authority to pay increases to their pensioners. The industries already have the power to pay pensions under the various Statutes by which they were nationalised and, in some cases, under Regulations made under those Statutes. Similarly, because they have the power to pay basic pensions, they also (have the power to supplement those pensions.
The exercise of that power, as I think the House knows, is generally subject to the consent of the Minister who has a general responsibility for a particular industry, but, apart from this, the boards of nationalised industries are in much the same position as employers in private industry in deciding whether or not to increase pensions. Therefore, the answer to my hon. Friend the Member for Tynemouth about the Raw Cotton Commission is that there are no set powers in the case of that institution, because it is no longer in existence, although the pensioners are, so there was a reasonable need for taking some action there. In short, there is no need for pension increases in the nationalised industries to be dealt with in the Bill.
It might be helpful if I say that the nationalised industries are, of course, fully aware of the Government's proposals for this further measure of pensions increase, and they are now considering what action they think it proper to take. In some oases, I believe that the detailed proposals are already being framed and that, when they are worked out, they will have to be submitted to the Ministers responsible for the various industries, whose approval is required. If they are approved, it will be for the boards, who are responsible, to announce their decisions to those immediately concerned. As I have said, the various boards already have all the necessary legal powers to pay increases to their own pensioners.
I hoped that I might have had the opportunity of saying something at length on the question of parity and full reckoning, but I deliberately curtailed the time I was to allow myself to reply to the debate because I knew that there were many hon. Members who wished to speak, and I know that some who wished to speak have not been able to do so.
There are many other matters that I should like to have dealt with, but I cannot conclude without saying to the right hon. Member for South Shields (Mr. Ede) that I hope he will receive many further benefits under successive Pension (Increase) Acts.
Can my hon. Friend not say a word of encouragement for those numerous people of whom I am the only one here today, who think that the best way to help pensioners and all other poor men is to stop the rate of inflation?
I quite agree with my hon. Friend. Somewhere in my sheaf of notes I have the answer to the hon. Gentleman. It is this. Certainly no one who has known my right hon. Friend the Chancellor of the Exchequer or my right hon. Friend the Chief Secretary would doubt that one of the principal aims that they have in mind is to counter inflation, but when a period of inflation is behind us, I think that it is right that we should do something for our public service pensioners, as we are doing in this Bill. I quite agree with my hon. Friend that this in fact must be the basic objective of the Government, and the surest way of ensuring that we are able to counter inflation is to see—as has been said so many times, and is now, I think, accepted universally—that the rise in total incomes throughout the country does not exceed the rise in production.
I hope that, in the interests of the pensioners, we shall be able in Committee and on the remaining stages of the Bill to combine thoroughness with expedition and so get the Bill on the Statute Book before Christmas. I join with my right hon. Friend in commending the Bill to the House.