Power to Provide for Pensions

Parliamentary and other Pensions Bill – in the House of Commons at 8:24 pm on 13th May 1987.

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Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central 8:24 pm, 13th May 1987

I understand that amendment No.1 is not to be moved. Therefore, we shall consider amendment No. 2, in page 2, line 21, at end insert— '(aa)may provide, in the case of a person who ceases to be a Member of the House of Commons in any year between the ages of 55 and 60, having completed 20 years' service, for the payment of an unabated pension to him from the age of 60.'. With this it will be convenient to discuss also the following amendments: No. 3 in page 2, line 21, at end insert— `(aa) may extend the entitlement to full and unabated pension to a person who, having reached the age of 60 and after completing 20 years of service as a Member of the House of Commons, has stood as a candidate and been defeated at a parliamentary election.'. No. 4, in page 2, line 21, at end insert— '(aa) may provide for the payment of a lump sum to a person on his ceasing to be a Member of the House of Commons at the age of 65 or over, calculated on the same basis as the resettlement grant payable to a Member who has left the service of the House before attaining pensionable age.'.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

I beg your pardon, Mr. Walker. I thought that amendment No. 9 was to be moved by the Government.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

No. That amendment now goes into what would be its proper place in the sequence of our proceedings. Therefore, it will come after Government amendments Nos. 5 and 6.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

I do not wish to detain the House for any longer than is necessary. It is not our intention to press amendment No. 2. However, we expect to hear from the Leader of the House something about the subject that we are discussing.

Photo of Mr John Biffen Mr John Biffen , North Shropshire

I am grateful for that great constitutional innovation. I am unable to comment on what I know would have been powerful speeches delivered on behalf of amendments Nos. 2, 3 and 4.

The merits of these amendments are almost self-evident. They would specify a change that could be made by regulations under the power in clause 2. That power is already wide enough to allow regulations dealing with each of the proposed changes to be made. Therefore, it is not necessary to specify, in this way, individual matters that regulations might cover. Indeed, I do not believe that it is desirable to do so. However, it is clear that the amendments are intended to create the presumption that the scheme will be changed in these ways.

The first amendment would allow regulations to be made to extend the facility for early retirement with a full pension paid at the age of 60 to all Members with 20 years' service, who retire after the age of 55. The intention of the present rule, which allows Members with long service to retire at a general election at the age of 60, or after, without abatement of their pension, is to allow them to retire at the general election before their 65th birthday, rather than waiting until the next election or causing a by-election.

Although I recognise that the rule can cause some hard cases, changing the scheme as envisaged in the amendment would create a whole new set of anomalies. Those who retire at 55 with 194½ years of service, for example, would complain that the new rules were unfair to them. Furthermore, that would exaggerate the distinction between two classes of Member, those who can take their pension at 60 and those who must wait until they are 65.

The second amendment is intended to extend eligibility for immediate payment of a full and unabated pension to a Member who is aged at least 60, with at least 20 years' service, who stands for re-election, but is defeated, at a general election. That point can be dealt with briefly, because the scheme was amended to allow that during the passage of the Parliamentary Pensions etc. Act 1984. However, the fact that confusion has arisen about that provision is a good example of why the Bill is needed. This part of the existing legislation is so complicated, after the series of amendments, that it is not surprising that hon. Members have found it difficult to follow.

The third amendment would allow regulations to be made to provide for payments from the pension fund to Members retiring at the age of 65 and over, which would be equivalent to the resettlement grant paid from the Consolidated Fund to younger Members on leaving the House. In considering this point, I am sure that the Committee will wish to take account of the fact that the scheme already provides for Members to receive by commutation of part of their pension the maximum tax-free lump sum permitted by the Inland Revenue rules in similar private sector schemes.

I recognise that that is not directly comparable with the resettlement grant, which is a straight payment from the Consolidated Fund and is a benefit over and above what is provided by the pension scheme. Nevertheless, the commutation arrangements have clear tax benefits and should not be discounted when considering the means available to Members to secure a lump sum on retirement.

8.30 pm

I remind the Committee that resettlement grants are intended to tide over Members who leave the House before normal retirement age and need to re-establish themselves in alternative employment. Paying resettlement grants to Members past normal retirement age would be a new departure and I am not convinced that it would be justified.

However, I acknowledge that there are anomalies in the area where eligibility for immediate pension and for resettlement grants overlaps. I recognise that the area dealt with in the first amendment is also one where anomalies arise. Taking into account this point and the others raised during the Second Reading debate, I now believe that we should refer the scheme as a whole to the Top Salaries Review Body for an early review. In particular, I envisage that the review body would be asked to consider the early retirement arrangements and the anomalies caused by the availability of both a resettlement grant and an immediate and full pension to those who retire between the ages of 60 and 65 with 20 years' service.

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

May I express the hope, which I trust the Leader of the House will endorse, that if the TSRB finds in favour of changing the existing arrangements, those of our colleagues over the age of 65 who are leaving the House now will not be excluded from benefit.

Photo of Mr John Biffen Mr John Biffen , North Shropshire

I am sure that that is a factor which the TSRB will almost certainly consider in its judgment of what adjustments might have to be made to our scheme. Certainly its attention will be drawn to the right hon. Gentleman's intervention when the terms of reference are resolved at the beginning of the next Parliament.

The precise terms of reference for the TSRB would be a matter for discussion through the usual channels. That, again, covers the right hon. Gentleman's point. It would be helpful to set that in hand at an early stage in the next Parliament so that the House and the Government may have an opportunity to consider the TSRB's comments and possible changes to the scheme sufficiently in advance of April 1988 for Members to make an informed choice about whether to opt out of the parliamentary pensions scheme, as they will then able to do.

I do not believe that it is sensible for us to consider piecemeal the anomalies thrown up by the present rules of the scheme in advance of the TSRB's review of the scheme as a whole. To do so would merely create further anomalies. Therefore, I hope that the hon. Gentleman will feel that that is a reasonable response to his formal moving of the amendment.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I had hoped that the minor changes which are embodied in the amendments and which would have a negligible impact on the finances of the parliamentary pension fund, which is in robust health, could be agreed and accepted by the Government.

The anomalies are clearly established. I had an exchange of letters with the Minister of State, Treasury, which entirely satisfied me that my anxiety on the second of the amendments was misplaced so I do not see why that should be pursued or referred to the TSRB. However, I am worried about the two remaining anomalies. The first concerns a person who ceases to be a Member of the House of Commons in any year between the ages of 55 and 60, having completed 20 years of service, and who will not receive an unabated pension at the age of 60. The second anomaly is that while all other hon. Members are entitled to severance pay or resettlement grant if they lose their seats at a general election, the only hon. Members who are not entitled to a lump sum are those who have reached or passed the normal age of retirement. Those anomalies are small, but they so disfigure the features of our parliamentary pension fund arrangements that they should be removed.

While I accept that major changes in the parliamentary pension scheme should await a further report by the TSRB, I am disappointed that the Government take the view that even those minor anomalies should first be considered by the review body. May I at least suggest to the Leader of the House that there should be a two-stage reference to the TSRB? The first stage, which we hope would lead to a swift, short report, would cover precisely the anomalies that have been identified. The second stage, which would deal with more fundamental features of the scheme, would be the subject of a more considered report.

I echo my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) when I say that it is my strong hope that any benefit flowing from the removal of anomalies in the present scheme will be made available to our colleagues in the present Session who will not be with us when the new Parliament assembles.

Photo of Mr Jack Dormand Mr Jack Dormand , Easington

I wish to add my disappointment to that of my right hon. Friends the Members for Manchester, Wythenshawe (Mr. Morris) and for Bethnal Green and Stepney (Mr. Shore) in relation to the resettlement grant. The reference of that and the other matters to the TSRB is a stalling exercise. I would have thought that the House could decide those matters. As has been said, the sum involved is negligible and, moreover, the fund is healthy.

It is generally recognised that the term "resettlement grant" is something of a misnomer. This has been taking place for many years in both the private and public sectors and is usually referred to as a lump sum on retirement. To designate it as a "resettlement grant" to help hon. Members to obtain alternative employment is a misuse of words. We are talking about hon. Members who have served many years, enduring the usual disadvantages of parliamentary life, such as long hours, and that should be recognised by what should be called a "lump sum", not a "resettlement grant". That is the basic difficulty facing the House.

We have had helpful private talks with the Leader of the House, who has a reputation for listening carefully. In view of what has been said by three hon. Members tonight, and as many right hon. and hon. Members have approached me as the chairman of the parliamentary Labour party, I hope that the Leader of the House will recognise that this is an annoying and frustrating position. I hope that he will take cognisance of what we have said and see whether we can proceed differently from the way in which he has proposed.

Photo of Mr John Biffen Mr John Biffen , North Shropshire

I shall respond briefly to the right hon. Member for Bethnal Green and Stepney (Mr. Shore) about the terms of reference that will govern the consideration of the TSRB early in the next Parliament. Naturally, they must be the subject of widespread consultation through the usual channels. He will appreciate that I cannot say now, indeed it would be a gross presumption to say now, what those terms of reference will be. Certainly they will not be concluded merely by whoever happens to be in Government arid holding the post of Leader of the House. They will be the subject of proper consultation, but the point that the right hon. Gentleman makes is a perfectly fair one, because there should be a two-stage consideration of these matters. I am sure that that will be borne in mind.

I say to the hon. Member for Easington (Mr. Dormand) that the term "resettlement grant" is not an invention of the Treasury Bench. It was suggested by the TSRB in its report, which sought to make clear the purpose of the grant — the payment to an hon. Member who had left the House but who had not reached the age of retirement. It was clearly intended not just to be a supplement to one's position on leaving the House. It was specifically meant for someone who left the House in anticipation of having reached full retirement age.

I have noted what the hon. Gentleman said and he knows perfectly well that what he says, although he will not be here to grace us in the next Parliament, will echo on to inspire those who have to consider the terms of reference for the TSRB, and I hope that he will be consoled by that thought.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Minister of State, Treasury (Mr. Peter Brooks):

I beg to move amendment No. 5, in page 3, line 8, after 'instrument', insert 'subject to annulment in pursuance of a resolution of either House of Parliament.'.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

With this it will be convenient to take amendment No. 6, in page 3, line 12, leave out from 'them' to end of line 14.

Photo of Mr Peter Brooke Mr Peter Brooke Minister of State (HM Treasury)

On Second Reading several hon. Members expressed concern that the change from primary to secondary legislation, which the Bill proposes, would mean that the House of Commons would have fewer opportunities to debate and amend the scheme.

I agreed to consider that point and I am happy to give an undertaking on behalf of the Government that time will be made available for a debate on an amendable motion before any regulations amending the scheme are made under clause 2. This would allow, for example, the sort of debate that we had in July 1983 on the recommendations of the TSRB which led to the changes to the scheme that were made in the 1984 Act. The arrangements will be similar to the procedure for determining hon. Members' pay and allowances.

In accordance with the procedure which I hope we will shortly enact, through amendment No. 9, the trustees' comments on the Government's proposals will be available to hon. Members for debate. The views of hon. Members expressed in the debate will be taken into account when the regulations are subsequently introduced. If such a debate is always to be held, it will usually be unnecessary to hold a debate on the regulations themselves. This amendment, therefore, substitutes the negative procedure for the affirmative procedure currently provided for in clause 2(7).

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

On Second Reading on 27 April I expressed my anxieties, which were widely shared, about the central purpose of the Bill, which is to enable further changes in the parliamentary pension scheme to be made not by amending legislation but by regulations issued by the Leader of the House. I think that the House took the point that if we were limited to debates on regulations we could not amend them, we could only vote them down, which is a considerable restriction on our normal freedom of debate and, furthermore, debates on regulations normally take one and a half hours. I thought that that was not a satisfactory way of proceeding and I suggested that changes should be introduced so that proposed changes could be put to the House in the form of an amendable motion.

That was where we left matters at the end of that debate and I was glad to receive a letter from the Leader of the House informing me: We intend to give an undertaking that there should be an opportunity for Members to make their views clear, in a debate on an Amendable motion, before regulations are finalised. That is the background to the Government amendments to clause 2 that are now before us. Having heard the Minister of State say quite categorically that the House will be able to debate an amendable motion before regulations are finalised, I consider that adequate assurances have been given and I am grateful to the right hon. Gentleman and the Minister of State. I agree that we no longer need the affirmative resolution procedure and that we can be content with the negative resolution procedure which is the subject of the amendments.

Photo of Mr Cranley Onslow Mr Cranley Onslow , Woking

I should like to add the thanks of Conservative Members for the way that my right hon. Friend the Leader of the House and my hon. Friend the Minister have responded to the sentiments that were expressed in our debate on Second Reading and in the subsequent discussions. It seems that it has been a very constructive process and that the Bill has been much improved as a result.

Amendment agreed to.

Amendment made: No. 6, in page 3, line 12, leave out from 'them' to end of line 14.

Photo of Mr Peter Brooke Mr Peter Brooke Minister of State (HM Treasury) 8:45 pm, 13th May 1987

I beg to move amendment No. 9, in page 3, line 14, at end insert— '(7A) Where the Leader of the House of Commons has made any proposals for the making of regulations under this section, a copy of any representations made to him by the trustees of the Fund about the proposals shall be laid before the House of Commons.'. Amendment No. 1, which the hon. Member for Blaydon (Mr. McWilliam) did not move, sought to give the trustees a more active role in the process of amending the scheme by regulations. We appreciate the knowledge and expertise of the trustees, which equip them for such a role. We are committed to allowing the House an opportunity to debate the proposals for amendments to the scheme, and it seems right that the trustees should advise the House at that stage, while leaving the final decision to the House. Amendment No. 9 would allow that by providing for the trustees' comments on proposals for amendments to the scheme to be laid before the House so that they can be available for debate. I described the arrangements for this debate when we debated amendments Nos. 5 and 6.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

I am grateful to the Government for their response. I think that I went over the top on Second Reading. I think that the Government have understood perfectly the point that I was making and it has been incorporated in their amendment.

Amendment agreed to.

Clause 2, as amended, ordered to stand part of the Bill.