Reckonable Service

Parliamentary Pensions Bill – in the House of Commons at 12:00 am on 26th July 1978.

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Lords amendment: No. 7, in page 12, line 21, leave out from "1964" to end of line 24 and insert for the words 'ten years' there shall be substituted the words 'fifteen years'.

Photo of Mr John Smith Mr John Smith , Lanarkshire North

I beg to move, That this House doth disagree with the Lords in the said amendment.

I am sure the House will agree that the intention of noble Lords in another place in confirming the amendment was entirely understandable. Many of them have reason to feel strongly—indeed, to feel more strongly than Members of this House—that those who have ceased to be Members in recent years have suffered from the low pay and absence of pension arrangements that prevailed in this House for far too long. While many such Members now receive a pension in respect of their former service as M.P.s, it is in many cases based on considerably less than the full service they gave to the House.

But there are major difficulties about improving the lot of those who are no longer contributing to the basic scheme for Members. There is, first, the fact that to extend the extra five years of back service credit to former Members would be directly contrary to the recommendations of the Top Salaries Review Body. I put forward the view during Second Reading and in Committee—and I think it was generally, if reluctantly, accepted by hon. Members—that the present Bill represented a package and should be regarded as such.

One can add to a package, as we have done for widowers and children, if there is a strong case. But to go directly against a specific recommendation of the Review Body is, I think, a different matter and can only undermine the Review Body's status. I know from the Second Reading and Committee debates in this House that some hon. Members would have liked the Bill to go further in a number of respects, but they accepted that because the Bill was a package their particular wishes could not be satisfied.

There is also the problem of cost. Practically no change in the parliamentary scheme would give rise to large additional costs, because the scheme is a small one. But the cost of allowing up to five extra reckonable years to all who have retired since 1965—and this I understand, is the intention of the noble Lord who moved the amendment—would add £1 million to the £1¼ million capital cost of all the measures in the Bill and £86,000 per year to the present estimated annual cost of £120,000 per year. This is admittedly not a lot of money in the context of pubic expenditure as a whole, but an increase of over 70 per cent. is relatively large when one considers that it will make only one provision retrospective. There are other provisions, not least the improvements in assistance to widows, that hon. Members might, for similar compassionate reasons, also wish to see given retrospective effect.

This brings me to the main reason why the Government do not feel able, despite our sympathy for those affected, to support the amendment. It is, in short, because it is a breach of the no-retrospection principle, which, as I explained a number of times during earlier stages of the Bill, is quite central in public service pension arrangements. For many years, improvements in public service pension schemes have been restricted to contributing or future Members at the time the improvements are introduced. This is because to make improvements restrospective would greatly increase the cost of every measure. It would require higher contributions from existing Members or necessitate fewer improvements.

Once you begin to allow retrospection, it is almost impossible to decide where the line should be drawn. A measure of retrospection merely shifts the boundary between those who have and those who have not to a new point, and, since usually the new boundary cannot logically be defended, the result simply creates new and even more intense feelings of unfairness. The line has, of course, to be drawn somewhere, and the fairest point is undoubtedly the time when new or additional benefits are introduced and when higher contributions, if any, become payable. This has always been the rule.

There are many groups of former employees up and down the country—groups for which there will in many cases be a considerable measure of sympathy; the pre-1950 Service widows and local government industrial staff are two cases in point—who have not received benefits because this rule was applied in their pension schemes. If we agree to this amendment, we shall be conferring on our former Members improvements that are not allowed to others in the community. It might cause resentment to those who have less control over their own pension arrangements.

I do not like having to ask the House to oppose the amendment, because the sense of grievance that has given rise to it is very real and understandable. Nevertheless, I think that the need for equity in this important respect between former Members of this place and former employees in many other walks of life now demands that the improvements in the Bill should be introduced in a way consistent with improvements in occupational pension schemes elsewhere. I must therefore, with great regret, ask the House to oppose the amendment.

Photo of Mr Paul Dean Mr Paul Dean , Somerset North

I very much regret that the Minister is advising the House to disagree with the Lords in this amendment because it seems to me that what we are doing in the Bill is adding yet another anomaly to our parliamentary pension arrangements, whereas the amendment tries to avoid that new anomaly being added. The worst anomaly of all, in my view, is that there is no parliamentary pension at all for former Members of this House who retired before 1964, or, indeed, for their widows. There are at least 272 of these, and it seems to me that it is wholly wrong for this House to go on improving pensions for existing Members while leaving completely outside those who retired before 1964. I realise, Mr. Deputy Speaker, that you would not allow me to pursue that argument now.

12 midnight

The amendment at least tries to avoid another anomaly being introduced, because, under the Bill as it stands, without the amendment, existing Members will be able to count 15 years' service before 1964 for pension purposes but past Members will not be allowed to do that. We shall therefore have the situation that, for example, Members who retire in October of this year, if this Parliament ends then, will be able to count 15 years, whereas widows of Members who died earlier this year will be able to count only 10 years. I am making no party political point whatever, because all the hon. Members concerned sat on the Government side of the House. I submit to the House that it will be virtually impossible to persuade the widows of those Members that there is any equity in only 10 years for them whereas it is 15 years for those who retire a few months afterwards. I very much regret that the Government do not see their way to accepting the amendment.

One can argue that there should be no retrospection at all, but what we have done now is to create three classes of retrospection. I think that there is much to be said for a retrospective element, particularly when one takes into account not only that the pension scheme was not introduced until 1964 and that those who served in earlier years had no pensions but that many of the allowances that we now have were not available to them either. In my view, there is an argument for saying that there should be an element of retrospection. Furthermore, many private occupational pension schemes are now introducing an element of retrospection for those who have retired. Therefore, I do not think that, in arguing as I am, we are arguing special privileges for ourselves. All that we would be doing is following some of the best practice in private occupational pension schemes.

When the Minister argues that we should not introduce retrospection, I find his argument wholly unconvincing, because under the Bill we are creating three classes of parliamentary pensioners: first, those who retired before October 1964—no retrospection whatsoever, and no pension whatsoever; secondly, those who retired before this Bill, who are able to count 10 years before 1964 for pension purposes; and, thirdly, those who retire after the Bill, who are able to count 15 years before 1964 for pension purposes. There is no rhyme or reason whatsoever in this. If we are to have retrospection, as I believe we should, it should apply to all.

The other argument which the Minister used, which again I found wholly unconvincing, is that the Bill is carrying out the recommendations of the Boyle report and that it is a package. That argument, however, has been blown sky high. The Government have been highly selective in picking parts of Boyle, rejecting other parts of Boyle and adding some elements which were not in Boyle at all. Did Boyle recommend tht our pensions should be based on notional salary rather than actual salary? No. Boyle was highly critical of that. Did Boyle say that we should go on ignoring those who retired before 1964? No. Boyle specifically drew the attention of Parliament to this "no pension" point and invited Parliament to consider whether, for those former Members over the age of 80, there should be some special provision.

Did Boyle recommend the amendment that we have just accepted relating to widowers' pensions? The answer is "No". The Miniser is wholly unconvincing when he says that the Government are carrying out the Boyle package. The Government are carrying out those elements of Boyle which they wish to carry out. Others have been put on one side and further improvements have been added. The arguments that the Minister has put forward fail on all counts. We are now adding anomaly to anomaly, complexity to complexity.

There is one point on which I agree with the Minister. He made the point on Second Reading that it is wholly unsatisfactory to deal with such matters by main legislation. The sooner we move to a framework of general rules and have a body of trustees who can interpret the rules with discretion, the better. We have got into a wholly unsatisfactory position. I very much regret that the Minister has not seen fit to accept the powerful arguments that were put forward from both sides in the other place by noble lords with considerable experience in these matters. If this Lords amendment was accepted, we would be avoiding piling one more anomaly upon our pension arrangements.

12.7 a.m.

Photo of Mr Robert Mellish Mr Robert Mellish , Southwark Bermondsey

I begin by telling the Leader of the House that I believe that all those who are to benefit from the Bill, on both sides of the House, are deeply grateful to the Government for what they have done. I am a beneficiary of the main proposals. Having been here for 32 years, I shall have added to my years of service in this House, for pensionable purposes, not 10 but 15 years. From that point of view I am grateful. We have to put this into perspective. If this is not stated firmly and clearly, we are being mean and cheap. It was courageous and decent of my right hon. Friend the Leader of the House to do what he has done, because, as far as I am aware, Boyle did not recommend that either.

The story of salaries and pensions for hon. Members is well known by everyone. It is a sordid, sad story. I can turn the clock back. There are hon. Members on the Labour side—I will not name them—whose personal behaviour over this question of salaries and pensions has been disgraceful. The theme has been, to get cheap popularity, "Do nothing for Members of Parliament until something has been done for old-age pensioners." I do not know whether that could be called Left-wing or Right-wing. I know that I have always opposed that view.

Members of Parliament have been treated shamefully over the years. It was not until there was a new House and a new attitude that things changed. I pay tribute to the former Leader of the House, the right hon. Member for Penrith and The Border (Mr. Whitelaw). He showed more courage than most Labour Leaders of the House. He was the man who implemented Boyle. He has a lot of guts.

I say to my right hon. Friend the Leader of the House that, in view of the economic conditions which the country has faced over the past few years, it was inevitable that he did what he did. I support him and understand and respect his attitude.

There are a number of noble Lords who were comrades of ours until they were elevated. I am never sure, when someone goes to the Lords, whether it is promotion or whether it is simply a case of their going to the mortuary. I can understand their point of view. My heart simply asks "If we are doing something for ourselves, why cannot we do it for them?". That is my natural instinct, and I feel very sorry when I am told that I cannot do this.

The hon. Member for Somerset, North (Mr. Dean) does not convince me that whatever we do here might impress other people and other schemes. The hon. Member is an expert in the pension world. I am not. I am an amateur. But I cannot believe that, somehow, other pension schemes will say that the House of Commons has set a very bad example. Frankly, either there is justice in the case or is there is not. If there is justice in the case, surely it must be supported. It is as simple as that. It may be said that it will cost a great deal, but what is the cost as a proportion of the nation's expenditure, bearing in mind the billions of pounds of expenditure in which we are involved?

I am sick of the argument, and I have been for years, that we must never do anything decent or right for Members of the House of Commons because, somehow it may set the wrong precedent. That argument has been trundled out again and again. Members of Parliament are worthy of a decent salary and a decent pension. If they are not, they should not be here, or they should get nothing at all. There are some people who could come here and not take a salary. It would not matter to them. But the vast majority of Members who come here are honourable men and women who do a first-class job, and they should be paid properly for doing it. Some of us have been saying that for years. We have not had a lot of support.

Photo of Mr Gordon Bagier Mr Gordon Bagier , Sunderland South

Will my right hon. Friend agree, too, that those hon. Members who served for 15 years before 1964 were in themselves subsidising this House? They had a disgraceful salary, they had to pay for their own secretarial assistance, they had to pay their own postage and they had to pay their own costs of living in London. They could not possibly have provided for their own future.

Photo of Mr Robert Mellish Mr Robert Mellish , Southwark Bermondsey

That is right, and they were not given decent consideration because we were all terrified of certain sections of the press. Certain newspapers would have spread the story about Members of Parliament looking after themselves and taking the money away from old-age pensions. That is absolute rubbish. If Members of Parliament were paid nothing at all, old-age pensioners would not benefit by a penny. That has nothing to do with the argument.

But we suffered this for years. I was involved in the argument years ago. Some of those who talk loudly now about pensions and salaries were not here to support the argument and put down motions. I said on Second Reading and I say again that the greatest destructive influence that we ever had was when Sir Hartley Shawcross, as he was then, came into the House one night, dressed in all his finery, having been to an important dinner somewhere. He spoke about the hardships of Members of Parliament and just about destroyed our case. I remember that very well. If there was ever a time that we did not need a friend, that was it.

I put this to my right hon. Friend. I am not sure how much it would cost. But let us suppose that the amendment was written into the Bill. Would it be a disaster?

I have been making some inquiries, because I am a little bit concerned about the terms of the amendment. I am advised that those who were here prior to 1964 and up to 1972 would not benefit, even if the amendment were carried. It would apply only to those after 1972. Perhaps my right hon. Friend will say whether that is so. If it is, this is a crazy amendment and I do not know what we are all talking about. If, however, it is not the case and those who were here before 1964 would benefit, I say please let them have it. It would not cost the nation a fortune, and I assure my right hon. Friend that my constituents will not come to me next Friday complaining bitterly that something has been done for some very decent people.

Photo of Mr Francis Pym Mr Francis Pym , Cambridgeshire

The House is appreciative of what the Government have done in accepting the recommendations of the Top Salaries Review Body and in introducing the Bill. In deciding to take that action, I am sure that they were assisted by the right hon. Member for Anglesey (Mr. Hughes) and my right hon. Friend the Member for Taunton (Mr. du Cann), and, indeed, Back Benchers on both sides of the House. But in no way does that detract from the appreciation of the House for the introduction of the Bill. As the Minister of State said, the Government have actually gone further than their original undertaking in at least one important respect, and the House is grateful for that as well.

I turn to the amendment that we are discussing and the possibility of going yet further. My hon. Friend the Member for Somerset, North (Mr. Dean) deployed a strong case and indicated the anomalies that have been created by refusing to accept the amendment and the inequity of doing so. On the other hand, we must appreciate that we are in the process of moving from an age when there was no pension scheme not only in this House but elsewhere. I refer to the pre-1964 situation. In the 1940s and 1950s there were very few pension schemes as we now understand them. For the past 10 years or so the House, in common with outside organisations, both public and private, has been moving into a totally new area. We must recognise that in the transition it is inevitable that anomalies and inequities will arise.

12.15 a.m.

I am in sympathy with the amendment and the case that was made by my hon. Friend and the right hon. Member for Bermondsey (Mr. Mellish). On the other hand, we must recognise that there would be some strong restraints upon the Government in advising the House to accept the amendment.

In organising and arranging its own pensions, the House has a contribution to make in moving public opinion generally and in developing pension schemes generally. At the same time, we need to be careful not to put ourselves by our own vote in a position of actually being, and being seen to be, considerably ahead of pension schemes outside the House.

If I summarise the Minister of State correctly, he was saying that if we were to accept the amendment we would be going noticeably beyond what is today the current practice for those who retired some years ago. That is current practice in both the public and private sectors. It is for that reason that I would not feel able to support anyone in voting in favour of the amendment if anyone wanted to do so. We must get the balance right.

I feel that right hon. and hon. Members on the Front and Back Benches on both sides of the House are wanting to do their best to ensure that the House is not behind arrangements outside the House—that is a position that we enjoyed, if that is the right word, for a good many years—and that it uses its power and voice to move schemes generally rather than to put itself in an excessively favourable position.

For those reasons, I consider that it would be unwise for the House to go as far as the amendment proposes, although I am reluctant to say that I do not want to support the amendment. To those who have added to the view that we must ensure that those who retired a good many years ago should have the fairest and most generous deal possible, I and my right hon. and hon. Friends give our support and place ourselves in that lobby. We want to ensure that we do not exceed that responsibility.

I am grateful to the Government for what they have done. For our part, my right hon. and hon. Friends will ensure that the House does not lag behind in future.

Photo of Mr George Cunningham Mr George Cunningham , Islington South and Finsbury

I want to make three points. First, in case there should be any confusion in the public's mind, we should make absolutely clear that there is no Member of this House in the House at the present time, and no Member who can participate in the vote tonight, who has a personal interest in the outcome of the vote tonight. No Member who can vote tonight can have his pension increased whichever way the vote goes. Let the public and the press clearly understand that.

Second, it must be said that Members who had service in this House before 1964 were in the same position as we are in. They could vote the arrangements which dealt with their own salaries and their own pensions. If they did not do so, it was not because they were prevented from doing so or because a Government did not let them do so. They could have done so, and the question for us is, since they did not do so, whether we should do it for them retrospectively.

The third point is one made by the Minister when he said that if we were to adopt the amendment we would be going beyond what is common practice in most pension schemes outside. I agree with that, in spite of what has been said by the Opposition.

I shall give an illustration. In the last decade or so there has been a change in the arrangements that apply to former civil servants who become Member of this House or who take up other occupations. The change permits them to grant into a new pension scheme the equivalent contributions from their previous service as civil servants. That applies to any civil servant coming into the House at present. It does not apply to me as a former civil servant who quit the Civil Service before that change was made. It rightly does not apply to me.

I grieve for it and I feel the loss, but it rightly does not apply to me. It was an improvement made after I had left the service to which that improvement applies. That is the normal practice. It is a pity, but it happens in all pension schemes. It would be curious, to say the least, and rather undesirable if we were to breach that normal principle and introduce for past Members of this House the retrospective effect which is proposed in the Lords amendment. On that ground I shall oppose it.

Photo of Mr John Smith Mr John Smith , Lanarkshire North

The hon. Member for Somerset, North (Mr. Dean) was in plain disagreement with my arguments. I respect his view and I accept that his knowledge of private and public sectors is as great as mine. But comparisons can be made between our scheme and other public service schemes. My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) has reminded us that this rule has been applied in the past. I have mentioned the pre-1950 widows of other ranks personnel in the Armed Forces who from time to time still claim a case for retrospective pensions.

Local government and industrial staff representing 200,000 people had no pensions before 1972 and received no back service credit when they became covered by the local government scheme. The principle of retrospection upon which I rely is that one does not make changes in schemes generally which apply to people who are no longer contributing members of a scheme at the time it is made.

My right hon. Friend the Member for Bermondsey (Mr. Mellish) reminded us of the great sacrifice made by people who were Members of the House before 1964. He described the conditions which obtained then. I am sure everyone agrees that it was a disgraceful state of affairs. Gradually we are puting things right.

I cannot recommend the House to accept the amendment. I was asked about the technical meaning of the amendment. I am conscious that both in the Lords and the Commons much feeling has been expressed about the way in which former Members have been treated under our pension arrangements. This matter was referred to the Boyle Committee. It was considered, and it was recommended that we should not make changes and should not make payments to those who retired before the scheme was introduced.

Because of the sympathy in the House and because there has to be another reference to the Boyle Committee, I am prepared to submit this matter again to Boyle for further consideration. If the committee came to a different conclusion, we should have another opportunity to consider the matter. I sense that the House would agree to that. I undertake that we shall refer the matter to Boyle.

Photo of Mr Edward Du Cann Mr Edward Du Cann , Taunton

I am sure that that proposal will be widely accepted. We should express our gratitude to the Minister. This is a very good way of getting out of a difficulty. However, the Minister will remember that during the debates in the Lords and the general consideration which many of us have given to these matters we have recognised that this is not the only anomaly and difficulty.

Would the Minister broaden the assurance that he has just given to the House and be willing to say that an anomaly will be examined with a view not merely to streamlining the scheme but to taking a once-for-all survey to ensure that all the anomalies are removed?

Photo of Mr John Smith Mr John Smith , Lanarkshire North

While the right hon. Gentleman was making that interesting contribution to our debate, I had the opportunity of consulting my right hon. Friend the Leader of the House. I am authorised to say on his behalf and that of the Government that we would certainly be prepared to consult the right hon. Gentleman and others who have interested themselves in this and other matters. It is difficult to give a specific commitment now, but we shall certainly consult before the reference is made to see what we can do to accommodate the genuine concern that exists.

I have given a clear commitment, therefore, that the matter will be referred to the Boyle Committee the next time. Boyle must consider other matters, so that this is not an academic undertaking. In view of that commitment, and bearing in mind what my right hon. Friend the Member for Bermondsey (Mr. Mellish) said, I hope that the House will agree, with great reluctance and regret, not to accept the amendment.

Question put and agreed to.

Committee appointed to draw up a reason to be assigned to the Lords for disagreeing to one of their amendments to the Bill: Mr. Bates, Mr. Pym, Mr. Roderick, Mr. John Smith and Mr. Weatherill; Three to be the quorum.—[Mr. John Smith.]

To withdraw immediately.

Reason for disagreeing to one of the Lords amendments reported, and agreed to; to be communicated to the Lords.