asked the Minister for the Civil Service if he will consider introducing amending legislation to the Pensions (Increase) Act 1974 to allow special supplements on lump sums for those public servants who retired after December 1972.
No, Sir. The purpose of the 1974 Act was to ensure that those retiring after December 1972 on salaries affected by the 1972–73 counter-inflation measures did not, as a result of the Pensions (Increase) Act 1971 arrangements, receive for the rest of their lives pensions below those of colleagues with the same pattern of service who had retired immediately before the introduction of those measures. Lump sums were not affected in the same way. No one retiring in the period in question would have received a smaller lump sum than a predecessor with the same pattern of service.
Does the Minister agree that those living on fixed incomes and who retired during this period comprise one of the sections of society which are most vulnerable to the adverse effects of inflation? In this respect does he not agree that the Government have a responsibility to their former employees?
I do not disagree with the hon. Member about the difficulties facing those living on fixed incomes. However, conceding supplements on lump sums would involve accepting the principle of notional rates of pay, which is something that successive Governments and the Inland Revenue Department have been reluctant to do.
Many of my right hon. and hon. Friends would be outraged if the Government took the steps suggested by Conservative Members at a time when we are seeking to curb public expenditure. Is my hon. Friend aware that this suggestion comes very low in the order of priorities for public expenditure?
I shall bear that point in mind.
Will the Minister review the Pensions (Increase) Act 1971? Is he satisfied with the way it is working? Is he aware that it gives all former public servants inflation-proof pensions which no private pension scheme could possibly afford to give? Does he agree that the capital value of these pensions for some civil servants runs into six figures, which is far in excess of what was originally intended?
The hon. Member is suggesting that the inflation-proofing of Civil Service pensions was not intended. I can tell him only that the legislation was put on the statute book by the Conservatives. As for whether the Government are satisfied, we recognise that we have an obligation to retired civil servants in this regard.