House of Commons Hansard Debates for 31 Jan 1991

Sir Peter Hordern (Horsham) : Our contribution of 9 per cent. is the highest of any privately-funded pension scheme in the country and it should never have reached that position. When my right hon. Friend refers the matter to the TSRB, will he make it clear that it is not simply a matter of wanting to alter our contribution so that there can be flexible arrangements in the future, but that 9 per cent. is too high and should never have been the position ? That is what the TSRB should be investigating.

Mr. MacGregor : I suspect that I do not have the same detailed knowledge of pension schemes elsewhere as my hon. Friend the Member for Horsham (Sir P. Hordern). I am aware of his great knowledge of them. I cannot confirm precisely whether a 9 per cent. contribution is higher than that for any other scheme in the country. If I were to say so, and then discovered that that was not the case, no doubt people would write about it. However, I agree with my hon. Friend that in my knowledge it is a high contribution in comparison with other schemes.

Clearly, in referring this matter to the TSRB, it will be open to anyone, including the trustees, of which my hon. Friend the Member for Horsham is a distinguished member, to make representations about the balance of contributions, the system and the points made by my hon. Friend.

Mr. Orme : May I underline the point made by the hon. Member for Horsham (Sir P. Hordern)? We have looked into the 9 per cent. contribution and compared it with the private and public sector. It is almost impossible to find anything comparable with our scheme. It is completely wrong. Members feel that it is a gross injustice and I hope that when the Leader of the House refers the issue to the TSRB, as he has rightly said that he will, he recommends that it looks seriously at the matter.

Mr. MacGregor : I have already explained in a written answer the way in which we are proposing to refer this to the TSRB. The right hon. Member for Salford, East (Mr. Orme) knows that the terms of reference have already been agreed with the trustees. In fact, I made some changes to the terms of reference to incorporate recommendations of the trustees. I intend this to be a serious reference, as I do another matter that I shall come to. The TSRB will look

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at the views expressed in the debate and it will be open to the trustees and others to make their representations known.

Sir Norman Fowler (Sutton Coldfield) : In referring the matter to the TSRB, what view will the Government express? Will they be suggesting, as my right hon. Friend appeared to a moment ago, that this is a fair system? If they do that, I do not think that they will carry the House with them.

Mr. MacGregor : Since the Government have put this scheme before the House, clearly we shall make clear why we did so and why we believe that the current scheme has certain merits. By referring the matter, the TSRB will be able to make up its mind about whether it wants to propose any changes. I want to make it clear to my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) that I am doing so in order that the strong feelings in the House can be conveyed to the TSRB. I can go no further than that today.

Mr. Frank Haynes (Ashfield) : I have been listening carefully to what the Lord President has had to say. He mentioned that the Government were a little fearful of the amount of finance involved in the fund. Some such things have been said in the past and the right hon. Gentleman almost said it today. The Government are more or less deciding their contribution to the pension fund and they feel that it should be smaller than it is now. Hon. Members are correct in their belief that 9 per cent. is far too high. Incidentally, during the passage of the Employment Bill I can remember the ex-Secretary of State for Employment, the right hon. Member for Sutton Coldfield (Sir N. Fowler) who is sitting below the Gangway, talking about pension funds outside the House and what workers should be doing to get into such funds. They were much better than the House of Commons fund. I have not yet heard the Lord President refer to the people who have to carry out the job in the pensions office across the road after we have debated and decided on the regulations and so on. They do a first-class job in very difficult circumstances.

Mr. MacGregor : I agree with the hon. Gentleman's final point and I intended to mention that later. However, I am happy to do so now. I do not recall saying what the hon. Gentleman attributed to me at the beginning of his intervention about the finances of the fund. The TSRB recommended the current position. The Government accepted that and clearly believe that the scheme has been fair up to now. I am aware of the depth of feeling in the House because I have consulted widely before reaching this point and those feelings are clear from the reactions in the Chamber today. Therefore, I think that we are taking the right step by referring this to the TSRB so that it can be looked at again. It will enable all those who are putting points to me now to put the same points in detail to the TSRB.

Mr. Ray Powell : It has already been said that we did not have much of a hand in deciding that we would contribute 9 per cent. I have my salary slip, which all hon. Members will have received yesterday or today. My basic superannuation contribution is £217.28, and that is for my wife to know if no one else. With all due respect, during the

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five-week-per-month period I would be paying £43 or £44 a week and during the 10 four-week-per-month period I would be paying £52 a week. I have consulted organisations outside to see what benefits I would receive if I contributed to a private scheme. I was told that on all the benefits currently available to me as a Member of Parliament and those contained in the Bill I would receive nearly one quarter again. The TSRB should consider that anomaly. The contribution to the majority of occupational pension schemes is 4.4 per cent. by employees and 8.8 per cent. by employers.

Madam Deputy Speaker : Order. I understand the hon. Gentleman's deep concern, but this is an intervention, not a speech. Is the hon. Gentleman coming to his final point?

Mr. Powell : This is my final point. The Leader of the House mentioned 40 per cent. and 60 per cent., but he did not say who is paying 40 per cent. and who is paying 60 per cent. It is essential for us to know that.

Mr. MacGregor : In a debate such as this, the Leader of the House is in a slightly unusual position, because he is putting forward the position not only of the Government but of those who fund some part of our pension contributions--the taxpayer. We must have a mind to that and be fair about it.

Like the hon. Member for Ogmore (Mr. Powell), I received a pay slip yesterday. I, too, pay a Members' contribution of 9 per cent. I am aware of the points that the hon. Gentleman made, but we must be careful how we approach these matters, which is why it is right to ask the TSRB objectively to consider the argument that is being advanced and how outside schemes operate.

I mentioned ratios to make a distinction between the current system and one with fixed ratios, which is the preference of the trustees. Hon. Members can put their views to the TSRB, which will then make a decision.

Mr. John Garrett (Norwich, South) : The Minister has given an eccentric description of his job, which is why I suspect that he will not be a very good Leader of the House. His job is to represent Members of Parliament. It is the job of the Chancellor of the Exchequer to represent the taxpayer. In this instance, the right hon. Gentleman is not a member of the Executive but is representing the House.

Mr. MacGregor : That is what I am doing by putting this issue to the TSRB, with a recommendation and terms of reference that have been agreed with the trustees.

The Government will make clear what they see as some of the merits of the present system. It is perfectly clear that everyone will be entitled to put his own case. I know that the trustees will do so and hon. Members, too, will be free to put their views. It will then be for the TSRB to make recommendations. If it were to recommend a change in the present arrangements, it would then be for the Government to decide whether to put them before the House. If, for example, the TSRB were to recommend, and the Government were to accept, a change to a fixed relationship between the Exchequer and the Member's contribution, that would require the Leader of the House to fix the Exchequer as well as the Member's contribution. I do not have that power and it would require new primary legislation.

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I have recognised the force of the arguments--the trustrees will agree with me on this--that the parliamentary pension scheme would be unique in requiring primary legislation to make such a detailed change, and that pressures on the parliamentary timetable may delay such possibilities. Under clause 6, therefore, we shall amend the Parliamentary and other Pensions Act 1987 to enable us to make changes by regulation if we are persuaded that the system should change. The House will note that the clause is permissive, but I hope that it will agree that this will be a more satisfactory arrangement.

Sir Geoffrey Howe (Surrey, East) : May I congratulate my right hon. Friend on having achieved that clause, for which I know the trustrees were pressing? He has been able to take advantage of his more recent association with Treasury officials than mine to coerce a healthy conclusion from that redoubtable organisation. He has been assisted by the fact that hon. Members have been pressing their case on him, as they are pressing him in early-day motion 299 on resettlement allowance.

There is a group that is not well represented in the House--about whom I have felt an uneasy conscience since the time when I held my right hon. Friend's office--on behalf of whom my former Parliamentary Private Secretary intervened a moment ago : those who have combined service as Members of the European Parliament and Members of this House. Some have served here but are now serving in Europe, and vice versa. The salaries of MEPs were fixed precisely parallel to hon. Members' salaries to ensure parity. In one respect, that does not seem to apply--the benefit that they earn at the end of their service. I hope that my right hon. Friend will take that point seriously. I tried to take it seriously because I felt that it was being under-represented ; there are few such creatures sitting on the Benches in the House. Apart from that, I congratulate him on his success. One last heave in respect of those poor fledglings in Strasbourg would be most helpful.

Mr. MacGregor : I am most grateful to my right hon. and learned Friend. I hope that that shows that I take seriously my responsibilities as Leader of the House and have endeavoured to achieve the right solutions.

It would probably be best to discuss MEPs in the context of the regulations. It is rather a complex matter, as my right hon. and learned Friend will know, and I have been involved in tortuous examination of it in recent days. It might be best for me to listen to hon. Members and respond in detail later.

Mr. Allen McKay (Barnsley, West and Penistone) : Will the regulation be debatable?

Mr. MacGregor : I think that the hon. Gentleman means the regulation on MEPs. Today we will be debating the draft regulations. The Government will consider the points that are made and introduce regulations later.

The House should know that the GAD is working on the next valuation report, which is expected in the next couple of months. That will yield a new Exchequer contribution. Under the 1987 Act, any change in that contribution can come into effect only at the beginning of the financial year following publication. Thus, if the report were published in, say, late April, the new Exchequer contribution would not take effect until April 1992. My written answer suggested that the TSRB is being asked to

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report on this subject by this April. Following consultations on the practicalities of that with the chairman of the TSRB, I am persuaded that we shall have to give more time for the review to be undertaken properly. I propose that it should report as soon as possible--some time in May.

Hon. Members' reactions have shown that it will be necessary for the TSRB to consider much evidence and many representations, and no doubt it will wish to take oral evidence. Its chairman was probably right to say that it is better not to rush the reference and for it to consider all the evidence and to relax the timetable that I proposed in my written answer.

The important point for the House is that, even if the TSRB were to recommend change, and we accepted that, we would be in a position to take the necessary action well before April 1992. That is the important point. Any change to the Exchequer contribution in the forthcoming report of the GAD could therefore be included in any regulations made under clause 6. I hope that that reassures the House that there is now no question of a lack of power, nor any difficulty of timing.

I know that some hon. Members are keen that the TSRB should examine experience in other countries. As the House will have seen from my answer on 24 January, that is specifically mentioned in the letter that I shall send to the TSRB's chairman. It is only fair to warn the House, however, that because of the tight timescale I doubt that it will be possible for the TSRB to cover this aspect fully before May. That is one of the consequences that we must accept of trying to get the matter resolved as soon as possible.

Sir Peter Hordern : My right hon. Friend said that the Government Actuary would report in April and that he would report on the state of the fund as at April or May last year. He will report solely on the relative contributions between Members of Parliament and the Exchequer. What happens when the TSRB considers not only the balance of contributions, but improved benefits, with which the House is concerned, such as the suggestion for up to two thirds for widows ? What happens when the TSRB then considers those matters, and reports favourably and recommends that such improvements should be made? Will there be time for the Government Actuary to see what the improvements will cost so that, using the procedure under clause 6, the House may carry forward the recommendation that should be made by the TSRB on the improvements that may be suggested by the House?

Mr. MacGregor : This is a complex matter, so I shall try to go through it with some care. I am anxious that the House should know the position and I do not want to mislead it. The reference to the TSRB is fundamentally on the point about the balance of contributions and whether the system should change. If the TSRB makes such a recommendation and the House accepts it, that will be a big change in the system. As a result of the timing of the next GAD report, there should be no problem about making the change, if that is what is eventually decided, in good time for April 1992 so that the automaticity of anything that the GAD report might say normally under our present arrangements would not apply. In other words, if we do not make a change in the system, there is the automatic effect of the GAD report in April 1992 under our present arrangements. I am satisfied that if we

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want to make a change under these proposals --and with the suggested timing--to the TSRB, there will be time to take that into account and that automaticity, if that is how it worked out, would not follow. My hon. Friend the Member for Horsham knows well from his discussions, especially with my right hon. and learned Friend the Member for Surrey, East on the changes to these benefits and to the benefits that we shall discuss later, that discussions also took place between the Leader of the House and the trustees. The benefit changes were agreed, and we are now putting them to the House and seeking its agreement. That process could, no doubt, continue, but it would be concurrent with and not part of the change to the overall scheme.

I must warn, as I mentioned earlier, that every change in benefits that relates entirely to a surplus--if there is one--in the last valuation carries through. If there is a change in the valuation subsequently and the surplus disappears, those benefits will still be there, but will have to be paid for. That is where, in a fixed contribution scheme, the contributions might have to rise. I hope that I have given my hon. Friend the Member for Horsham a clear answer.

Perhaps it would be appropriate for me to say something now on the resettlement grant which is the subject of early-day motion 299. The House will be aware that this grant is paid directly from the House of Commons vote and has, therefore, nothing to do with the parliamentary pension fund nor, indeed, with the Bill. Hon. Members will also recall that the TSRB examined the question of the cut-off at age 65 in its last report, the recommendations of which we are now implementing, and that it recommended no changes in the resettlement grant. But the Government must obviously take very seriously an expression of such widespread concern from hon. Members of all parties. I can, therefore, tell the House that we agree that the TSRB should be invited to look again urgently at this matter.

I shall be drawing to the TSRB's attention the strength of feeling in the House that the arguments bear re-examination, especially in view of the unique circumstances which determine the precise timing of the end of a Parliament and therefore, for some hon. Members, the end of a parliamentary career. The trustees were anxious that the TSRB should consider the matter seriously, with an open mind and in a way that ensures that the arguments can be put before it clearly and to the satisfaction of all concerned. I give the House the clear assurance that I will put the request to the TSRB on that basis.

Mr. Joseph Ashton (Bassetlaw) : It is pretty obvious from the number of people here today who are aged well over 50 that they are concerned about the retirement age. Is not it a further disgraceful anomaly that an hon. Member aged 48 or 49 who has done 15 years' service in the House still gets only six months' severance pay when it is virtually impossible for him to go back to his job? This will not affect me or many of my colleagues, but it will affect Conservative Members, who could lose their seats even through a boundary change.

The Leader of the House proposes that Ministers should receive three months' redundancy pay after having had possibly only two years in a ministerial job. They will not be unemployed because they will go back to a

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Back-Bencher's salary. In the past, many hon. Members have done 15 years and have lost their seat at the age of 48 or 49, yet they have received only six months' redundancy pay. Surely severance pay should be tied to length of service and, of course, those who serve over the age of 65 must also be considered. Length of service should be tied to severance pay as well as there being a birthday cut-off at the age of 50.

Mr. MacGregor : There is a length of service tie-in. As the hon. Gentleman will know, it applies equally to hon. Members of all parties. I have been referring to early-day motion 299 about which the House is expressing concern. That is why I suggest that the right thing for the House to do is to refer the matter to the TSRB, expressing clearly the strength of concern and asking the TSRB to consider the matter again.

I also recognise that there is concern that the TSRB should report as quickly as possible so that appropriate action may be taken in a timely way. I have, therefore, agreed with the TSRB that I will ask it to report separately on the resettlement grant by the middle of April. I have every reason to believe and expect that the TSRB can meet that demanding time scale. I am sure that the whole House will wish to join me in expressing our thanks to the TSRB for its readiness to deal with these complex and important matters--and especially with early-day motion 299--so speedily.

Mr. Merlyn Rees (Morley and Leeds, South) : I declare an interest in that I should be affected by any change here and in that I am now over 70.

When the Leader of the House talks to the TSRB, will he point out that it is no use comparing this pension scheme with a normal one? I mentioned my age. Many of my friends have now been retired for five years. Whether they were in banking, in teaching or anywhere else, they retired at a set age. They realise that a number of hon. Members are over 65 and that it is a different scene.

Some of us may come here at a later age. Parliaments run over a four-year period. People outside sometimes get the wrong end of the stick and compare our jobs with jobs outside. That is why the magic figure of 65 has been used. Will the Leader of the House point out to the TSRB that it should look at the different nature of work here?

Mr. MacGregor : I am sure that the right hon. Gentleman's point will be raised by a number of those who make representations to the TSRB. My role as Leader of the House and on behalf of the Government is to say that we shall put these points to the TSRB, and ask it to look at them seriously and in the way that I described a few moments ago. However, my personal view--as I said a moment ago--is that we are in unique circumstances and have a unique job. I agree with the right hon. Member for Morley and Leeds, South (Mr. Rees) that our position is different.

When Members of Parliament enter a new Parliament, they take a decision for themselves, but they cannot be certain when their employment will terminate. The TSRB should be asked to consider that point, which I recognise.

I should like finally to turn to clause 7, which makes some changes to the Members' fund. This is a statutory fund, administered by trustees, which is able to offer grants to former Members of Parliament or their dependants who experience financial difficulties. It is usual to make changes to the fund from time to time.

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The House of Commons Members' Fund Act 1948 has in particular a hardship provision which permits the trustees,

"for the purpose of alleviating special hardship"

to make such

"payments as they think fit".

This section has not been reviewed for a long time and it seemed right to us and the trustees that we should bring the wording more up to date and, in doing so, cast the trustees' discretion more widely. Under the Bill there will now be no doubt about the trustees' discretion to act where,

"having regard to the circumstances of the persons to whom the payments are to be made",

they judge it right. The decisions on what payments to make and to whom will, of course, be for the trustees alone.

The financial implications of the Bill are small, and are contained in the explanatory and financial memorandum. I should also tell the House, however, that, under Statutory Instrument 1981/748, there is provision for the Treasury to pay to the separate Members' fund up to £215,000 per annum. Currently, £115,000 per annum is made available to that fund. It seemed right to us that, at a time when we were changing the trustees' discretion, we should make the extra £100,000 per annum available, and we propose to do so.

All these matters have been considered extensively by the TSRB, and by the Government in discussion with the trustees and others. The measures in the Bill and in the draft regulations which we shall be considering later today together form a package with which the trustees are content. In view of the lengthy consultations, and because the beneficiaries of these modest and overdue changes include the widows of a number of colleagues who are sadly no longer with us, I hope that the House will agree to support the Bill, and that we can thereafter make rapid progress with its remaining stages. I commend the Bill to the House.

6 pm

Mr. Stan Orme (Salford, East) : The Bill deals with ex-Ministers and office-holders and, to that extent, its provisions are limited. The proposals are modest, but hon. Members on both sides of the House will agree that it would have been wrong to proceed with the Bill without discussing other matters affecting Members of Parliament, and those matters should therefore be dealt with this evening. I hope to speak only once, and it may therefore be helpful for the Leader of the House to hear the Opposition's views on the regulations with which he will deal later this evening.

I thank the Leader of the House for the manner in which he has introduced the Bill, and I want to put on record the fact that there has been a great deal of consultation and discussion involving the trustees--not least my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), who has played a prominent part. I represented the parliamentary Labour party in those discussions, and I know that other hon. Members have represented their respective parties. We have been trying to resolve outstanding problems regarding hon. Members' contributions and benefits under the pension scheme.

The proposals are extremely modest--certainly when considered against the background of conditions in other

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Parliaments in Europe, the Commonwealth and the United States. It is worth putting it on record that the House of Commons turned its mind to proper provision for Members of Parliament and their dependants under a contributory scheme only in 1964. We have since had to build on that scheme. Improvements have been made, and further improvements are contained in the Bill and the regulations. Nevertheless, in certain areas, progress has been painful and slow--not least in respect of widows and dependants. The House has seen the tragic consequences of that in recent years.

We welcome the improvements that have been made--and certainly some of the improvements outlined in the regulations attached to the Bill. The fact that the Leader of the House has seen fit to introduce the regulations alongside the Bill shows that he recognises the importance that hon. Members attach to the proposals. Many hon. Members have already told the right hon. Gentleman that their concern is to see justice done. We want nothing other than justice. We want what we are entitled to ; we do not want anything more, and we certainly do not want anything less. That point must be made very clearly.

The Leader of the House has told us that clause 6 provides the power for the holder of his post to make regulations altering the amount of the Exchequer's contribution to the fund. It is extremely important that that provision should be included in the Bill because, if the Top Salaries Review Body makes proposals for changing the contribution ratio, the right hon. Gentleman must have the basis on which to make those changes. The right hon. Gentleman's anticipation of that eventuality is a mark of his good will towards the House. We must make it clear to the TSRB that it is totally unsatisfactory to have the Treasury contribution reduced to 4.4 per cent. while Members of Parliament are now to pay 9 per cent. I gave evidence to the body when it last discussed the matter and I made that case strongly.

At that time, of course, we did not realise that the Government Actuary would recommend 4.4 per cent. The Government Actuary has the power to re- examine the Treasury contribution. When he saw that the fund had reached a high level, he reduced that contribution to 4.4 per cent. The problem is that he has no power to examine hon. Member's contributions, and that is absolute nonsense. When I was Minister of State for Social Security, I examined pension funds and I know that the trustees of the pension fund of a large firm such as ICI would never have tolerated such a state of affairs.

I do not think that the Top Salaries Review Body fully understood the arguments that were put on the last occasion. The body takes evidence, and it is incumbent on hon. Members to stress the point raised by my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees)--that the employment of hon. Members is unique. I welcome the recommendations made by the Leader of the House, who has gone as far as he can in telling the TSRB to take a fresh look at the matter and come forward with proposals.

I welcome, too, the new proposals regarding an hon. Member who reaches maximum pension after 30 years' service and is still under the age of 65. At present, if he or she completes 30 years' service before the age of 55, he or she continues to pay full contributions between the ages of 55 and 65 and is, in effect, paying in for no gain. That is nonsense. The removal of that anomaly is welcome, and does no more than bring Members of Parliament into line

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with employees in the public and private sectors. We in this place do not take the lead in these matters ; indeed, in many respects, we are lagging far behind.

That matter is linked with the question of early retirement. At present, if hon. Members take early retirement, their pension is payable when they reach the age of 65 or when they have done 20 years' service. If the Member of Parliament is over the age of 60 at a general election, he or she can receive an immediate unabated pension. Under the proposed new arrangements, if an hon. Member retires before the age of 60, as long as the required number of years has been reached, he or she will be able to claim a pension without having to wait to attain the age of 65. That is another small, but important and long overdue, adjustment.

Turning to widows', widowers' and children's pensions, there has been a long and protracted argument over this issue, as the Leader of the House knows only too well. There is strong feeling that the pension rights of widows and widowers should be two thirds of the allowable pension instead of one half. There have been

instances--these have been put before the House on a number of occasions-- of hon. Members who have died on a small pension, because they have only been here for a limited time, when the widow and family have received a pittance and have had to rely on charitable contributions from one or other side of the House. That must be rectified.

Therefore, although the move to five eighths is a step in the right direction, I agree with the hon. Member for Horsham (Sir P. Hordern) that that should not be the final answer. We should aim to get the TSRB to agree at some future date that it should be two thirds of the allowable pension. That is a justifiable amount, and we should press for it very strongly indeed.

The increase in the death gratuity is overdue and very welcome. The increase is to two years of gross salary paid to the spouse of the deceased, the widow or the widower, and is back-dated to 1988. This is very welcome, but, again, it is only in line with standard practice.

There have been untimely deaths on both sides of the House. I do not need to stress to my right hon. and hon. Friends that we have had some very bitter blows in recent months and years. We have seen families riven by grief because of the untimely deaths of younger Members of the House.

Mr. Michael J. Martin : I think it is worth while putting it on the record that widows have to put up not only with their grief but also sometimes with the intrusion of the press and the rest of the media trying to find out who the successor to the seat will be. They often also have to see their late husband's photographs on television just when they are trying to get over a terrible grief.

Mr. Orme : That is one of the extra burdens that one has to bear if one is a Member of the House.

We very much welcome the fact that this recommendation is to be implemented.

I want to deal very briefly with the question of the regulations for future Members of the European Parliament, who will be able to transfer their pension rights from the European Parliament scheme to the House of Commons scheme, where they will be counted as added years. That is very much welcomed. However, those hon.

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Members who serve in the House and who have previously served in the European Parliament feel very aggrieved that the proposed new scheme does not apply to them. Will the Minister take a further look at this issue?

A similar situation should also appertain when an hon. Member becomes a Member of the European Parliament. It should be reciprocal. The MEPs are not asking for anything different. They pay to the pension scheme within the European Parliament, and they are on the same salary as we are. All they are asking is that, when they transfer that money, it should be counted as added years. This is a small but, I think, justifiable point.

Speeches tonight have shown how strongly we feel on the resettlement grant. Hon. Members feel that there is a great deal of injustice here. The resettlement grant is for Members who have left the House of Commons, to allow them to make modest adjustments in their home and living conditions. With a cut-off age of 65, it has become a lottery whether one's birthday falls just before a general election or just after it. There are a number of examples of hon. Members who have missed this by a very short period, even days, and also of hon. Members who have gained. As we have no fixed dates for general elections but are dependent on when the Government, irrespective of what party forms the Government, call an election, the unfairness is aggravated.

Sir Anthony Grant (Cambridgeshire, South-West) : I agree whole- heartedly with the right hon. Gentleman. On the question of hon. Members who gain, is he aware of the case of one of our colleagues, no longer in the House, who was consulted by Prime Ministers as to the date of an election? He was in a difficult position, because whatever advice he gave would benefit or disadvantage him. That shows the absurdity of the present system.

Mr. Orme : That is true, and the lottery must be removed. There is a justifiable case. As the House knows, and as the Leader of the House has acknowledged, 351 hon. Members have signed a motion to this effect. They feel extremely strongly about it. It is worth putting it on record that only a small number of hon. Members are involved, but the injustice is seen as great.

I therefore welcome the fact that the Leader of the House has referred this to the TSRB in as strong language as it is possible for him to use at this stage. I hope that he will impress on the TSRB the fact that hon. Members see this as a matter of natural justice and that it is important that we have a reply as soon as possible, so that any proposals can be implemented before the next general election.

I believe, therefore, that the proposals before us this evening--limited, modest, but important--are a step in the right direction. It is not the end of the problem ; we have not resolved all the outstanding issues ; but certainly we are making progress. I ask my right hon. and hon. Friends to support the Bill and the regulations this evening.

6.16 pm

Sir Norman Fowler (Sutton Coldfield) : Pensions are an acquired taste. I remember that when the state earnings-related pension scheme was introduced in 1975 there were only about a dozen hon. Members present in the House. I mention that to make two points. First, pensions policy generally has been a long-standing interest

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of mine--and it is not just my own pension that I am interested in. Secondly, I speak as one of a select band of ex- Thatcher-Cabinet Members who are not retiring at the next election.

A flicker of suspicion crosses my mind when a Government put on a Bill such as this late on a Thursday, with private business at 7 o'clock, and in the middle of a war. My fears are semi-allayed by what my right hon. Friend the Leader of the House has said. I support entirely what he says about settlement grants, but I am bound to say that I am less than overwhelmed by the arguments for severance payments for Ministers.

I suppose that publicly the most controversial part of this Bill is clause 1, which gives half-pay pensions to anyone who reaches, for however short a period, the position of Prime Minister, Speaker or Lord Chancellor. I would not oppose that. It follows precedent, as my right hon. Friend has said. These offices have been treated differently previously, and this proposal manages to rationalise the position. It is generous, but, as far as those offices are concerned, justifiable.

My concern is the contrast with the positions of other Ministers and the position of hon. Members generally. To take the Ministers first, the Lord Chancellor's is an important post but not, perhaps, the most dominating post in the Cabinet. Others have more influence : Chancellor of the Exchequer, Foreign Secretary, deputy Prime Minister, Home Secretary--posts of that kind. They are covered by the supplementary ministerial pensions scheme. Estimates are difficult, but it would take a Cabinet Minister of that kind, or indeed any other Cabinet Minister, about 20 years of service in the Cabinet to reach a half-pay pension. It is hardly necessary for me to say that not many hon. Members, in our experience, serve 20 years in the Cabinet.

What about a Member of Parliament? Under our provisions, it would take him 25 years to reach a half-pay pension, and that is on the new basis of accruals of one fiftieth rather than the old basis of one sixtieth. Of course, that came into being only in 1983. Most hon. Members will be covered by most of the one-sixtieth provision, and only partly covered by the one-eightieth provision.

Whatever else, I do not believe that Ministers and Members of Parliament generally can be attacked for having unbelievably generous pension arrangements, but what really sticks in the throat is the basis upon which those pensions are financed--the reason for clause 6. The Member scheme is a funded scheme. That means contributions from Members and from the Treasury. It used to be the case that the Treasury contributed 18 per cent. and Members contributed 9 per cent. However, over the past few years, like every other funded scheme in the country, there has been a good surplus. That has resulted in Members' contributions remaining at 9 per cent. but the Treasury's contribution going down from 18 per cent. to 4.4 per cent. I remember something about Government being a model employer. The Government have taken a pension holiday which is extremely difficult to justify. I do not believe that it can be justified, nor do I believe that that is the sort of thing that the Government should be about in terms of pensions policy. Their case is that the 4.4 per cent. is what the Government Actuary says is necessary to finance and fund the scheme. That may be true as an actuarial calculation, but it does not mean for one moment that we should believe that everything within the scheme now is desirable or cannot be improved. For example, the

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position of widows could be improved, to the benefit of everyone concerned. I hope that my right hon. Friend will take on board what I detect to be the feeling on that subject, particularly in respect of widows. Changes in the financing of the scheme are urgently required. The position until now has been rather shabby and not something in which the Government should be involved.

Obviously, I welcome clause 6. I would welcome it even more if my right hon. Friend would go a little further in what he sets out as the Government's policy and the evidence that he will give to the TSRB. I am delighted to know about his powers to do that, but I should be interested to know even more about the matter. However, clause 6 allows the Leader of the House, with the consent of the Treasury, to make provision for determining the Exchequer contribution. It calls for consultations with the trustees. Again, that is obviously an important thing to do. Also, it calls for consultations with persons appearing to the Leader of the House of Commons to represent persons likely to be affected by the regulations on which he has consulted, other than the trustees themselves. Again, that is an important point.

Not everyone will want to be in the House of Commons scheme. There are now new pension options. For example, there are personal pensions, which in many ways were designed for people who might change jobs. Someone who enters the House with a majority of 300--I do not care on what side of the House--is not necessarily going to look forward to 30 years' uninterrupted service on the Benches of the House of Commons. It is important that the position of personal pensions is understood.

What does a generous Exchequer do? Of course, it pays the national insurance contribution that is required by law, but, apart from that, as the employer it makes no extra contribution whatsoever. The Treasury's touching support for the Government's policy of extending choice in pensions is to do the absolute minimum that the law allows. In other words, it does absolutely nothing. The Treasury needs to be made aware of that point and to understand that the law has changed, even if some of the views upon it may not have done so.

The trustees are concerned first and foremost about the fund, and that is right. My right hon. Friend the Leader of the House must take into account other interests as well. He really must impress upon the Treasury and upon his colleagues the fact that there are now new options, that the law has changed, and that hon. Members may want to exercise those options, just as much as people outside would wish to do so.

The Bill is rather incomplete. It deals with some problems but ignores others. It should be recognised that Members of Parliament have a right to good and sensible pension arrangements made for them, and, above all, that we do not allow the Treasury to rule the scheme. That would be disastrous. A few years ago, I carried out a national review of pension arrangements. I hope that my right hon. Friend will conduct his own review of pensions for Ministers and Members of Parliament. There is a great deal left to improve in our system. 6.25 pm

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