HC Deb 01 February 1972 vol 830 cc213-7
2. Mr. Jay

asked the Secretary of State for Social Services whether he will reconsider the rule by which a recipient of retirement pension or other national insurance benefit forfeits a portion of this benefit after a period in a National Health Service hospital.

Sir K. Joseph

No, Sir. Reductions of benefits after a beneficiary has been receiving free in-patient treatment in a hospital for some time have been a feature of the national insurance scheme since its inception and seem to me to be fully justified.

Mr. Jay

Although up to the present all Governments have maintained this rule, will the right hon. Gentleman seriously reconsider this matter because it is, after all, a contributory pension? Would not recipients of a private pension or a public service pension be indignant if their pension were cut because they were in hospital?

Sir K. Joseph

No, Sir, I cannot undertake to do that. It seems to have been generally accepted that public funds should not provide twice for the same contingency; and if a change were made it would, even though marginally, affect the level of contributions, which would have to be charged.

Mrs. Castle

But has not the situation changed radically since the principle was introduced and since it was last reviewed in 1960? Can it be said today that the level of national insurance benefits is so lavish that such deductions are justified? Will the right hon. Gentleman ask his advisory committee to have another look at this matter sympathetically, and will he convey to that committee the views of the House?

Sir K. Joseph

I am not sure the right hon. Lady is right, because I believe the National Insurance Advisory Committee has looked at this matter more recently than 1960. The fact remains that people are getting their keep while they are in-patients in hospital, and the adjustment is made sensitively in the light of their continuing commitments at home.

Sir B. Rhys Williams

When we speak of the contributory principle, is it not fair to bear in mind that a person who retires today will probably have paid for about a tenth of the benefits he receives from national insurance?

Sir K. Joseph

That is true, but the bulk of the cost of the retirement pention is borne by contributors, with a large contribution from the taxpayer. One generation subsidises another.

10. Mr. Dempsey

asked the Secretary of State for Social Services if he will give a precise date when he proposes to commence the review of the rates of retirement pensions; and if he will make a statement.

22. Mr. Ewing

asked the Secretary of State for Social Services when he proposes to begin the review of retirement pensions.

65. Mr. Edward Taylor

asked the Secretary of State for Social Services when he anticipates that the next review of retirement pensions will be started.

Sir K. Joseph

As I have already announced, the next uprating will be in October. The review will be timed accordingly and the details announced in due course.

Mr. Dempsey

But is the Secretary of State aware that recently I bought a pound of boiled gammon which cost 12 shillings, and that, coming to the slices, it worked out at nine old pence per slice? Would the Secretary of State agree that this, together with the soaring prices of other necessities, is beyond the purse of retirement pensioners at present? Would he agree that what is required is a substantial increase in retirement pensions now?

Sir K. Joseph

Despite the price mentioned by the hon. Gentleman, both the general price index and the pensioners' price index show that the pension increase given in September more than restored the purchasing power of the pensioner and added a marginal increase. Therefore the Government have brought great comfort to millions of pensioners in announcing—this was something that the previous Government were unable to do—that we are moving to annual upratings instead of biennial upratings.

Mr. Ewing

Would the Secretary of State accept that the announcement today that pensions are not to be reviewed until October this year will be received with great dismay by the people of this country? Will he ensure that when this review is undertaken, those pensioners who, as a result of the last review. finished up being worse off than they were before the review, will not be the victims of the same policy?

Sir K. Joseph

I rejoice to remind the House that now that we are moving to annual upratings for both retirement pensions and supplementary benefits, there will no longer be any cause for the misunderstandings that have accompanied the biennial review of one and the annual review of the other.

Mr. Ridsdale

I congratulate my right hon. Friend on taking probably one of the greatest steps taken by any pensions Minister in bringing forward an annual review, which has given great satisfaction to many pensioners. Under the annual review, will my right hon. Friend consider the question of concessionary fares for elderly people in rural areas? At present, concessionary fares are being given in urban areas, backed by wealthy councils, whereas in rural areas the local councils cannot afford to back them.

Sir K. Joseph

My hon. Friend is tireless in his advocacy of benefits for the elderly. Therefore, I take his kind tribute very warmly. I will discuss his suggestion with my right hon. Friend, but I do not consider that upratings and reviews are normally the occasion for such a policy declaration.

Mrs. Castle

Is it not a fact that the right hon. Gentleman and his Government would never have introduced the annual review had it not been for the exceptional situation of the grotesque increase in prices caused by the Government's policy? As a result of that inflationary pressure, has not the whole value of the last increase been whittled away, and does not that mean that any further increase in prices between now and October will result in a systematic and steady reduction in the value of pensions that are already inadequate? Will he not take exceptional measures to deal with this situation?

Sir K. Joseph

The value of pensions always erodes between upratings and did so even when the Labour Government were in office. In fact, the buying power of the pension now, four months after the last unrating, is greater than it was four months after the last Labour up-rating in 1969.

Secondly, the rate of inflation that we expect over the next year, roughly—no one can be absolutely sure—is of about the same order of magnitude as the Labour Government expected when they statutorily bound themselves to review pensions only every two years.