Ministers and Members (Remuneration)

– in the House of Commons at 12:00 am on 16 November 1964.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00, 16 November 1964

If it is not too far out of order, I should like, on behalf of the whole House, to express our deep concern about the illness which has overtaken Mr. Speaker and, on behalf of the whole House, to express our sincere wishes through you, Mr. Deputy-Speaker, for his speedy recovery.

Hon. Members:

Hear, hear.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

With permission, I should like to make a statement. The House will recall that on 19th December, 1963, my predecessor announced that a Committee would be set up under Sir Geoffrey Lawrence To review, and to recommend what changes are desirable in, the remuneration of Mr. Speaker, Ministers of the Crown and Members of the House of Commons and also the allowance for Members of the House of Lords, having regard to their responsibilities, to the place of Parliament in the national life and to the changes which have taken place since the existing emoluments were fixed, in general standards of remuneration, and to the increases in expenses borne by Members of both Houses in the discharge of their duties. and to report to the Government which would be formed after the General Election. It was understood between the parties that the Report would provide a basis for immediate action, as soon as the Government and Parliament had had time to study the recommendations.

As announced in the Gracious Speech, we have received the Report of the Committee. A copy has been sent to the right hon. Gentleman the Leader of the Opposition, and the text is being made available as a Command Paper today. I am sure that the whole House will join me in thanking Sir Geoffrey Lawrence and his colleagues for the thoroughness with which they have carried out their task.

The Government accept the recommendations of the Report as they affect the salaries and allowances of Members of both Houses, and will take appropriate steps to implement them. In outline these recommendations are: that the gross payments of members of this House should be increased to £3,250 a year, inclusive of what the Committee called the "exceptionally heavy expenses" which Members incur in the discharge of their duties and which the Committee put at £1,250 a year. The whole amount of course will be subject to tax, allowance only being made for proved parliamentary expenses.

We further accept the Committee's recommendation that the car allowance for members of both Houses should be 4½d. a mile; and that the allowance for members of the House of Lords should be 4½ guineas for each day's attendance. The Resolution of this House to give effect to increases in remuneration for Members and to provide for the increased attendance allowances for the other House will propose, as was envisaged last year, that they should be made retrospective to the first day of this Parliament.

The Government also accept that there should be a contributory pensions scheme for Members of this House, requiring an annual contribution by each Member assessed by the Committee at £150, and are studying the Report's detailed recommendations.

With regard to the salaries of Ministers and others, while the Government do not dissent from the Committee's approach to the problem of recognising suitably the responsibilities that fall on Ministers, many of whose salaries have remained unaltered since 1831, they do not consider that in present economic circumstances it would be appropriate for ministerial salaries to be raised to the level recommended by the Committee. They propose that the increases should be reduced to half the amount of the increases proposed by the Committee, and that the new salaries should not take effect until 1st April, 1965. The decision to take only half of the recommended increases would apply right through the range of Ministers, and would affect equally the right hon. Gentleman the Leader of the Opposition.

The Government further consider that with the extremely onerous duties falling in any modern Parliament on the Opposition Chief Whip, he, too, should receive a salary from public funds.

Legislation will be introduced in due course to deal with a pensions scheme for Members, revised Ministerial salaries, the payment to the Opposition Chief Whip and changes in the remuneration of Mr. Speaker.

Photo of Sir Alec Douglas-Home Sir Alec Douglas-Home , Kinross and West Perthshire

I should like to associate myself, and all hon. Members on this side of the House, with what the Prime Minister has said about Mr. Speaker and his illness. We very much hope that Mr. Speaker will be well again very soon.

I am very much obliged to the Prime Minister for allowing me to see a copy of the Report over the weekend. I echo what he said about the care and industry with which Sir Geoffrey Lawrence has compiled the Report and the full use that he made of the advisory panel of Members of both Houses of Parliament in making it.

This is a very difficult problem, as the House knows. It never seems to be the right time to tackle it; it never has been the right time and probably it never will be. All hon. and right hon. Members will want to study the Report. I would only say that we on this side of the House will study it with every sympathy and a desire to solve a problem which is very real, as I have always understood, while reserving my judgment on the more detailed proposals.

I take it that these proposals will be embodied in a Bill at some future time. I am particularly obliged to the right hon. Gentleman for the attention which he has paid to myself and to the Opposition Chief Whip. Incidentally, today is the birthday of my right hon. Friend the Opposition Chief Whip, so I think that it will be very welcome.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Joining with the right hon. Gentleman in his reference to the Opposition Chief Whip's birthday, I hope that it is clear from what I said that the timing of our proposal was not such as to affect the right hon. Gentleman in time for his birthday.

In reply to the question put by the Leader of the Opposition about timing and method, a Motion dealing with Members' salaries will, it is hoped, be introduced and debated before Christmas. At the same time, it is hoped that we shall have legislation dealing with changes in Ministerial salaries and the remuneration of Mr. Speaker, and, if the details can be settled in time, the pension scheme for Members.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

As this has always been treated as an all-party matter, may I ask the Prime Minister why we have not seen a copy of the Lawrence Report, as that makes it even more difficult to deal quickly with these proposals?

May I also ask three short questions of the right hon. Gentleman? Does the proposed gross payment in relation to the salaries of Members mean that the £3,250 is to be a straight salary payment and not, as at present, divided into two separate forms of payment? In connection with the pension, is there to be, as I take it there will be, an Exchequer contribution, and can the right hon. Gentleman give us any idea of what that will be?

Finally, may I ask to be associated with the regret which has been expressed at the illness of Mr. Speaker?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I agree with the right hon. Gentleman that this has always been regarded as an all-party question. If he feels concerned that we did not send him a copy of the Report, I can only express my regret. I will look into the precedents and see that they are followed as closely as possible in future.

On the question of the pension, the right hon. Gentleman will find that it is recommended in the Report that there should be a Treasury contribution. One of the big difficulties is the problem of past service and the capitalisation of a sufficient sum to cover pensions for Members who have served in the past, and whose qualifications arise from a period before the pension contributions come in, so there will be a capital sum from the Treasury to cover that. It is intended that there shall be an annual contribution by the Exchequer of about £95,000 against a similar total from hon. Members.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

Is the salary a gross payment?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

As I explained in my statement, it is a straight increase in that sense from £1,750 to £3,250, but in computing the amount it was right to recommend the Lawrence Committee considered that the £750 of Parliamentary expenses was far too small in the light of modern costs and that, therefore, a notional figure of £1,250 should be included. The whole amount is subject to tax in the ordinary way subject to deductions for proved Parliamentary expenses.

Photo of Mr Francis Bowles Mr Francis Bowles , Nuneaton

May I ask whether the pension scheme for Members will be free from the present means test?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

It is intended that the new scheme described in the Report shall be a pension scheme as of right.

Photo of Mr William Shepherd Mr William Shepherd , Cheadle

Can the Prime Minister give consideration to the question of limiting the amount of living expenses which a Member will now be able to claim, since it is conceivable that the richest may benefit most unless this is attended to? Secondly, will the right hon. Gentleman give consideration to devising some means whereby it would be no longer possible for Members, when they are adequately paid, to draw sums of money from outside organisations for representing the interests of those organisations in this House?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

The question of outside sums of money for Members who represent outside interests is, of course, a matter for the House. It does not arise in the context of the Lawrence Report.

The cost of living in London is a matter, so far as tax allowances are concerned. for the Board of Inland Revenue, and I do not think that it calls for any action on the part of the Government or of the House. I would, however, say that it is not widely realised than in past years very many hon. Members, who did not have any outside source of income of any kind, have lived in intolerable conditions during their stay in London during the week.

This is a point of which I think the Lawrence Committee takes full account. I would feel that most hon. Members would expect that there would be longer periods in which it would be necessary to be in London for an average week in this Parliament than in previous Parliaments.

Photo of Mr Jon Rankin Mr Jon Rankin , Glasgow Govan

May we take it that those who do not want this increase do not need to accept it? There is nothing compulsory about it?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Yes, Sir. There have always been cases where hon. Members have not taken the Parliamentary salary and this will continue to be the position.

Photo of Sir Kenneth Pickthorn Sir Kenneth Pickthorn , Carlton

Since there have been assumptions by right hon. Gentlemen that this is an all-party question, may we ask whether it is safe to assume that it is also an all-Members' question and will not be decided simply by a three-sided set of assumptions? In pursuance of that, could the procedure by which this is to be done and has been done in the past on this occasion be fully explained, as it never before has been, to the Members of the House?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

This is certainly an all-Members' question. It is a question for the whole House and will be under the control of the House when the Motion is put before the House. The reference to its being an all-party question, made by the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond), referred to the courtesies which are usually followed in giving advance information of something that takes a lot reading. It was not possible to give all Members an advance copy of the Report before the statement this afternoon.

We shall be following the procedure of previous occasions and if the hon. Gentleman feels that more explanations are needed, we will look certainly into that suggestion.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

Can my right hon. Friend say whether the Lawrence Committee made any recommendations whereby future consideration of this problem could be taken off the Floor of the House? Could my right hon. Friend also say whether the Government accept that part of the recommendations, if there were any?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

My hon. Friend will be aware that a number of hon. Members have always considered that this matter should be taken away from the procedure we followed in the past and that the Parliamentary salary should be assimilated to a particular rank in the Civil Service. This has been examined, but I think I am right in saying that the Lawrence Committee have not recommended on those lines. I think that there is reason to feel that on this occasion the procedure of the Lawrence Committee, which was proposed by the late Government, has worked pretty well.

We regard the settlement that comes out of it as being a final settlement as far as one can see ahead, but should there be a further occasion when there is a case for reviewing Members' and Ministers' salaries, we or our successors in a future House might well consider whether the Lawrence precedent is not a good one to follow.

Photo of Sir Frederick Burden Sir Frederick Burden , Gillingham

Does the right hon. Gentleman not agree that the Leader of the Liberal Party was apparently under a false asumption in believing that the present tax allowance, so-called, of £750 is not permitted unless proven to the tax authorities, and that both he and members of the general public are quite wrong in assuming that Members of Parliament receive a tax-free allowance without having to prove, to the satisfacation of the Income Tax authorities, that every penny is, in fact, a legitimate expense?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I did not understand the phrase of the right hon. Gentleman as implying that he did not understand this. I think that he did. But I agree with the hon. Gentleman—there is widespread misunderstanding in the public mind, and certainly in the Press about this—that the whole salary is subject to tax. There is no tax-free allowance, but there have to be proved expenses in respect of certain restricted and limited forms of parliamentary expenses —not all of them. I think that it is the experience of most hon. Members, particularly those who fill up their own returns without assistance, that the Inland Revenue has been very tough in interpreting the rules on this matter.

Photo of Mr Frank Taylor Mr Frank Taylor , Manchester Moss Side

From what the Prime Minister has said, may we take it that there will be an opportunity to debate the proposal to increase the remuneration of Members of Parliament?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Most certainly. No one has power to put this into force except on a Resolution of the House.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Can the Prime Minister say whether there is any precedent for the statement that the payment be made retrospective? Would he bear in mind that many people are worried about the long delay in the raising of the pension, which will not take place until the week beginning 29th March, 1965?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I think that all of us are very much concerned about this point. I am not sure about the precedents. I would like to look into that, but I think that there is a precedent for making this retrospective; 1945 certainly was a precedent and there may have been others.

In all the exchanges we had about this across the Floor of the House in December, 1963, I think that it was understood by all of us that the purpose of the operation was for the Committee to report to the incoming Government with a view to immediate action. These phrases were used. I think, therefore, that we must act on that basis.

As the right hon. Gentleman the Leader of the Opposition said, and I agree with him, there is never a right time for doing this. Because there never is, never was and never will be a right time, unless we seize a time, however unsuitable, what the Lawrence Committee recognised is a very unfair situation, and one which is derogatory to the work of Parliament, cannot be put right.

I regret as much as the right hon. Gentleman that the new pensions increase takes so long to put into operation. I have gone into this myself, in a great deal of detail, and I have made such helpful and ingenious suggestions as I could for speeding it up, but I now recognise that within the present system it cannot be done. We very much regret that it could not be done at the same time as this proposal to raise Member's salaries.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

May I ask two questions, both directed to the question of the increase of Ministers' salaries? The first is whether my right hon. Friend is aware that many of us who accept the principle which was accepted in all quarters, that it was better that salaries should be fixed not by Parliament but on the recommendation of an outside body, wonder whether it might not have been better to let that apply to the increase in Ministers' salaries as well as to the increase in Members' salaries.

My second question is this: I understand that under the old salary arrangements, of the £1,750 which was paid to Members, Ministers were allowed to draw, in addition to their Ministerial salaries, the sum of £750. Will this continue?

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

Yes, Sir. The ministerial salaries were subject to a review by the Lawrence Committee on exactly the same basis as were Members' salaries. The position has been examined with very great care indeed. As I have made clear, the proposals of the Lawrence Committee in respect of Ministers' salaries and those whose salaries are based on the ministerial scale are excessive, we feel, in present circumstances.

We have, therefore, recommended not only a delay in their payment, but also that only half the proposed increases should be the subject of legislation—and that will be final. There is no provision for taking the other half at a later date, although any future Government is free to make recommendations at any time.

My hon. Friend asked about Ministers and what has been up to now the £750 parliamentary allowance. It will be a fact that the proposed £1,250 allowance shall be available to Ministers, but that will be taxable and will be on exactly the same basis as for any Member of the House.