My Lords, it is important that I declare two interests. First, I had the privilege of being the Member of Parliament for Northampton South for 23 and a half years and I am in receipt of a pension. Secondly, I am a trustee of the Parliamentary Contributory Pension Fund, known as the PCPF, and have been for some years.
It might help your Lordships’ House if I gave a bit of the background to the Bill. The House of Commons Members’ Fund was established in 1939 before there was a pension scheme, which was itself established in 1964. The whole idea of the fund was to help former Members and their dependants who faced financial difficulty. Its original purpose was to provide those former Members, their widows or widowers and orphan children with a discretionary grant in lieu of a pension. Subsequent amendments over time allowed grants to be made to alleviate hardship, gave trustees greater discretion and introduced an “as of right” payment for certain Members who left the House before the Parliamentary Contributory Pension Fund was established.
There have been two previous attempts to bring the fund up to date, made by my colleague, Peter Lilley MP, who is a trustee of the members’ fund, but those both failed. On 4 November last year, Sir Paul Beresford, to whom I pay tribute, presented under its previous title the Bill that is before us today. He explained that the Bill would empower trustees to cease requiring contributions from Members and to return surplus funds to the Treasury. It would extend the class of beneficiaries to assist all dependants of former Members who experienced severe hardship. It would also allow one of the trustees to be a former Member of Parliament.
It is not my intention to go through all the clauses of the Bill, but it is right just to specify the three categories of beneficiary that would arise from it. First, there are the “as of right” recipients. As I said, there were no pensions prior to the PCPF being set up in 1964. Thereafter, those who left the House from October 1964 onwards and had served 10 years or more were entitled to a pension for themselves or their widow or widower. The fund pays those who left the House earlier or without the necessary 10 years’ service and their widow or widower as an “as of right grant”. Currently, that is set at £6,132 per annum for ex-Members and approximately £3,835 for their widow or widower.
The second category is widows. Widows can receive top-up pensions. 1n 1991, the PCPF pension to the widow or widower was increased from one half of the Member’s pension to five-eighths, but it applied only to Members who had left after 1988. The trustees decided to make good the apparent oversight of widows or widowers of Members who had left before this date by making a discretionary payment from the fund to top up their PCPF pension already in payment from one-half to five-eighths of a Member’s pension.
The final category is hardship/discretionary grant recipients, who receive either a one-off or a periodic payment which is paid entirely at the discretion of the trustees where they consider that an individual satisfies the requirements of the legislation. The legislation allows the trustees to make periodic or other payments to the widows, widowers or orphaned children of former Members as those trustees think fit, having particular regard to the circumstances of the person to, or in respect of whom, the payments are made. Essentially, these payments are made on a financial hardship ground. Your Lordships’ House, particularly its former Members of Parliament, will understand that these demands, given the existence of the current pension fund, have reduced substantially. At this time, just under 50 people are in receipt of one or other of the three categories that I have mentioned.
I turn to some of the key points that arise from the Bill. Your Lordships’ House needs to be clear that this is not a government Bill, nor is it a government hand-out Bill; it is a House of Commons management Bill. The Bill is not new—as I have already said, two earlier attempts fell, principally for lack of time.
I imagine that your Lordships’ House will be interested in some of the figures. Payments in the last financial year came to around £137,000. Against that, the fund stands now at just over £7 million. At present, the fund is drawn from the compulsory contributions from Members, earnings from its investments and an annual contribution from the Treasury of £215,000, whereas the Members’ contributions amount to £15,000 per annum.
The Bill will remove the requirement under existing primary legislation for Members to make monthly contributions of £2. However, the Bill also enables the trustees to recommend resumption of contributions if they should ever be needed in the future, at no more than 0.2% of pay. The trustees also have the right, if they agree, to return any surplus funds to the Treasury, and I understand that they have requested this discretion.
The Bill will extend the class of beneficiaries to assist all dependants of former Members who experience severe hardship. It will also remove the requirement for trustees to be current MPs. I am sure that the House will agree that it seems sensible for the trustees to ask, for example, for the Association of Former Members of Parliament to nominate one trustee. In addition, that will enable the trustees to get over the problem that arises when, at a general election, a number of Members who are trustees lose their seats. The Bill will allow such former MPs to remain as trustees temporarily until they are formally replaced. Finally, in Clause 9, for efficiency reasons, the Bill will amalgamate various Acts.
I turn to the deduction from Members’ salaries, a point I suspect former Members always find interesting. If we go back in time to 1939—I doubt anyone here can remember that—the provision then was for a £12 per annum contribution. That was increased to £18 by a resolution of the House on 18 July 1957 and to £24 on 17 May 1961.
It is not for me to comment on that one, I think.
As I have said, any contribution cannot exceed 0.2% of annual salary. Clause 5 also empowers the trustees to vary the amount deducted from Members’ salaries by direction.
However, the news is really quite good in so far as it is proposed that the Government’s contribution from the Treasury should now be removed. It is limited to £215,000, as I said, but there is already £7 million in investments, which is more than enough to cover the current payment of the £137,000 that I talked about. It is therefore proposed that just over £1 million be repaid to Her Majesty’s Treasury.
It is also proposed that there be no contribution from Members. I should make it quite clear that there is a provision within the Bill that it can be reintroduced if trustees so recommend, at no more than 0.2% of salary. I hope that, with that explanation, my colleagues will be able to reflect on the importance of the Bill to all those who would be potential beneficiaries. I beg to move.
My Lords, I thank the noble Lord, Lord Naseby, for introducing this measure both succinctly and clearly, which helps the House. We are happy to support the Bill, and in doing so we pay tribute to those who had the foresight and solidarity to establish the fund initially back in 1939 when there was, sadly, the need for such provision. Happily, the pension provision for MPs is rather more generous today, so the demands on the fund are correspondingly fewer.
As foreseen by the noble Lord, Lord Forsyth, we cannot help but note that many trade unions started in a similar way—as an act of solidarity by a friendly society or trade union. Indeed, check-off started in exactly that way, which of course the Government are now seeking to stop in relation to trade unions if it is paid for out of public funds. We have heard that these contributions will probably no longer be demanded from MPs; but if they are, perhaps the Minister will confirm that their collection will be without cost to public funds.
I have only three questions on the Bill, which I think are probably more for the Minister than for the sponsor to answer. First, am I right in assuming that the appointment of trustees is effectively done through the usual channels? Secondly, what provision is there for reporting, not on individual cases of course, but on the sorts of things that the noble Lord, Lord Naseby, just spoke about, such as the numbers affected and the performance of the fund? What provision is there for the reporting of such things either to MPs collectively or via any committee thereof?
Thirdly, given that it is now good practice for virtually all charities, non-governmental organisations and indeed boards and committees for terms of office to be time limited, do such good practice guidelines apply to the appointment and terms of trustees of this fund? With those questions, although this is not an official government Bill, the official Opposition are happy to give it our best wishes.
My Lords, I thank my noble friend Lord Naseby for introducing the Second Reading of this Bill today. As noble Lords have heard, calls on the fund have diminished over the years since the introduction of the parliamentary pension scheme. There are, on average, 45 applications each year, and it is discretionary with the trustees whether they are successful. Each year some applications are rejected. Nevertheless, I am sure your Lordships will agree that this fund is an important resource for retired Members and their families should they find themselves in financial hardship.
As my noble friend Lord Naseby stated, the Bill will introduce the required adjustments to the fund’s former outdated legislation but allows trustees to continue to focus on serving the fund’s benevolent purpose. The changes being made are largely technical, aiming to simplify the fund and the associated administrative burden. This will make the fund easier to administer and allow the trustees to spend more time on the fund’s main objective, which is to assist former Members and their dependants in financial need, rather than be burdened by the peculiar legislative requirements, many of which are time consuming and costly, added to which the fund will be independent of Treasury support.
As my noble friend said, other benefits resulting from the legislation are: the cessation of Member contributions while there is a surplus; allowing the trustees to return surplus funds to the Treasury; an amalgamation of various Acts to create one set of governing regulations; the removal of the requirement for all of the trustees to be MPs; and widening the class of beneficiaries who can claim assistance.
The noble Baroness, Lady Hayter, made three points. I can confirm that appointments of trustees is done via the usual channels. Secondly, she said that it was important for people to be able to see where the money is spent. Audited accounts are publicly available annually. Her last point about trustees’ terms being time limited is important, particularly nowadays, and that will certainly be discussed as the Bill goes forward.
In summary, this is a vital step forward for the fund and its trustees. It is envisaged that the fund’s legislation will be fit for purpose for the foreseeable future, meet the modern-day demands of the fund and continue to assist those former Members and their families most in need.
My Lords, I thank Her Majesty’s Opposition for the support they have given the Bill. This is not particularly relevant to the Bill, but I reflect that, just over 50 years ago, I stood in a general election for Islington North—a seat well known to the Opposition—and now stand here with what I think is a very important Bill today.
For the record, I think the noble Baroness is correct that the trustees need to think about some form of report to both Houses. Certainly since I have been on the PCPF, we as pension fund trustees have gone a long way to try to communicate with all our pensioners past and present. I will look at that in conjunction with my noble friend on the Front Bench as we take the Bill forward.
My Lords, I am sorry to interrupt my noble friend. This is an important and necessary Bill. Is it not a bit late for it to go through this House? Does he anticipate that it will get on to the statute book, and what is the process between now and Prorogation?
My noble friend is right to say that it is late in the Session; nevertheless, I would not have taken up the Bill had I thought it was not going to be successful. We have had discussions across the channels in the usual way. My understanding is that if the House gives the Bill a Second Reading today, reasonable time must then be allowed for those who might wish to table amendments to it. However, I have had an assurance from the Government that the following stages can be taken quickly and not necessarily on a Friday. I will be looking to my noble friend on the Front Bench to ensure that that happens, which is worth putting on the record. Without further ado, I commend the Bill to the House.
Bill read a second time and committed to a Committee of the Whole House.