SOCIAL SECURITY BILL

HL Deb 22 May 1973 vol 342 cc1107-72

3.22 p.m.

THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE)

My Lords, I beg to move that this Bill be read a second time. On May 17 last year the noble Baroness, Lady Phillips, who I am delighted to see is speaking after me in this debate, initiated a debate on the White Paper, Strategy for Pensions, and in the course of that debate we had a great many authoritative speeches from all parts of the House, from your Lordships who are interested in this matter and particularly knowledgeable about it, and I look forward again to-day to hearing a very constructive debate on this Bill. We are likely to have an even more well-informed debate on this occasion, as the noble Lord, Lord Boyd-Carpenter, is to make his maiden speech, and I suppose his expert knowledge on this subject, as a former Minister of Pensions and National Insurance, is as great as that of all the rest of us wrapped up together. The proposals that we were then debating in the White Paper are now embodied in this Bill.

The Bill reforms the provisions we make for retirement by a system which reflects the needs of present-day society. The existing National Insurance scheme has served us well since its introduction in 1948. It has been constantly developed over the years and it now provides a comprehensive system of support for its contributors, but its structure is no longer suited to the new demands that we must make of it. We therefore propose that it should be reorganised to fit it to the important task of providing adequate pensions in the years ahead.

Attitudes to retirement and old age are changing, people's expectations are changing, and the number of pensioners has been steadily increasing. All this means that we must take a fresh look at the way in which the State provides financial support in retirement. The Bill introduces a simpler and clearer structure for the State scheme, to form the basis of a fairer system—a system which will more effectively ensure that everyone has a decent income in retirement. The underlying aim is to enable people to have two pensions: a standard pension from the State basic scheme and a second pension, related to earnings, from an occupational scheme. The functions of the basic scheme are different from those of occupational pension schemes, and by acknowledging these differences openly in the way that the Bill does we can construct a system which makes the best use of these separate and complementary functions.

The basic scheme is on a pay-as-you-go basis by which resources are transferred from the working population to those who are receiving benefit, and this is the foundation of retirement income. To this basic pension every employee will be able to add a second pension which will be related to his earnings while he is at work. Each person will provide this pension for himself, through his savings in a occupational scheme or in the reserve scheme and by putting aside part of his earnings in this way he will be contributing to a higher standard of living in retirement for himself and his family. We believe we have thus set the scene for a fruitful partnership between State and occupational schemes, in which each can work towards its own proper objectives. The Bill promotes a new and vital role for both types of scheme and provides the right structure for them to work in harmony. It also provides the necessary flexibility to enable improved provision, whether through the State basic scheme or outside that scheme, to be made in future as circumstances make this necessary or desirable.

I now come to the details of the Bill itself. Part I of the Bill deals with the basic scheme and Chapter I sets out the new arrangements for contributions. The contribution structure has been reorganised so as to provide a fairer and sounder means of financing the scheme. The in-came from to-day's contributions is needed to pay to-day's benefits. The largest claim on the resources which are made available by contributors is for retirement pensions; these, with the standard rate at £6.75 a week, now cost some £2,000 million a year. The numbers of pensioners are constantly increasing, and there are at present only about three times as many workers as pensioners. We have therefore to ensure that all contributors pay a fair and reasonable share of the cost of providing pensions and other benefits, and to do this we will end the flat-rate system in which the amount that can be raised by contributions is limited because of the burden which flat-rate contributions impose on the lower-paid worker.

The basic scheme will continue to be financed on a pay-as-you-go basis and there will be, as now, a Treasury supplement of 18 per cent. Contributions for employed earners will be wholly earnings-related and will be collected by the Inland Revenue with P.A.Y.E. This simpler system of earnings-related contributions for employers and employees will mean that most higher earners will pay more than at present and most lower earners less, and the contribution burden therefore will be more fairly distributed. As far as self-employed people are concerned, they will pay flat-rate contributions, and those self-employed who have higher incomes will in addition pay a new earnings-related contribution. This Class 4 contribution is being introduced solely to ensure that the self-employed make a fair contribution compared with other contributors. The range of earnings on which contributions are to be paid will be brought up to date in time for the start of the new arrangements and will be reviewed each year thereafter. As a result of these new contribution arrangements, the income of the basic scheme will rise automatically as earnings rise. The flexibility of the earnings-related structure will provide a firm and adequate financial basis for the scheme.

The benefits of the basic scheme are set out in Chapter II. The rates of benefit shown in the Bill are the rates which are now current, but they will of course be increased, before the new arrangements come into operation, under the normal annual reviews. The existing range of benefits is largely unaltered. The main changes in the structure of the basic scheme benefits are the modifications which have been made to adapt the contribution conditions to the new contribution structure. We have also made specific easements and simplifications in the contribution conditions for some benefits. As a result of these changes, the new contribution conditions will be easier to satisfy for most people. We intend to continue our policy of extending selective benefits to those groups who have a special claim on resources—as we are doing at present with the extension of attendance allowance—and we shall be able to do so more effectively now that the scheme's finances are on a sounder basis. Chapter II also incorporates our undertaking to review the main rates of benefits each year. Upratings will take place annually in November and will at least restore the real value of benefits. Pensioners now have, for the first time, a statutory guarantee that their benefits will regularly be increased at least in line with the increase in the cost of living.

Chapter III contains supplementary basic scheme provisions. Employed married women will be able to choose, as they do now, whether or not to contribute to the scheme; this choice will determine what benefits they are entitled to. If they choose not to contribute they will pay a small contribution to the costs of the industrial injuries scheme and the National Health Service. Self-employed married women will continue to be able to choose whether or not to pay flat-rate contributions, but they will be liable to pay Class 4 contributions in the same way as other self-employed people if their earnings are high enough.

Part II of the Bill contains the provisions necessary to establish a full partnership between the State and occupational pension schemes; to ensure the protection of pension rights for those who change their jobs or for other reasons leave their pension schemes; and to set up an Occupational Pensions Board with functions not only in connection with the system of recognition of pension schemes and preservation, but also of an advisory nature. The proposals are founded upon the firm belief that occupational pension arrangements represent the best means by which employees may earn earnings-related pensions and so ensure a decent standard of living in retirement.

There are two main reasons for this belief. First, the needs of individuals vary, and occupational pension schemes can be tailored to meet those needs to an extent which cannot be matched by across the board State provision. Secondly, ocupational pension provision has developed considerably over the past 20 years. Over 11 million employees are now members of schemes; total annual contributions are now well over £1,800 million, and the total value of pension scheme funds is probably of the order of £15,000 million. But while we acknowledge the achievements of the occupational pensions sector up to now, the conditions which must be fulfilled if an occupational pension scheme is to assume responsibility for the provision of the "second pension" —these are the recognition conditions—have not been structured on the basis that all desirable things have been achieved and that no room exists for improvement. The tests—and these are a number of alternatives designed to suit the structures of particular common types of scheme as well as a test of general application—will mould the development of schemes. The twin priorities, in the Government's view, have been the establishment of decent standards of personal pension provision and widowhood cover. These are the two main ingredients of the recognition tests. I would stress that the standards are minima, and the Government confidently expect that all those concerned with occupational pensions will respond to the challenge and will seize the opportunity to do better.

The proposals for a system of preservation of pensions, which are also contained in Part II of the Bill, represent a major step forward in employee protection through the medium of occupational pension schemes. In future, if an employee who has built up significant rights in his scheme leaves it, he will remain entitled to these rights at the time he reaches pension age. I should stress that the requirements established in this area by the Bill apply to all occupational schemes and not only to those satisfying the recognition conditions.

The Occupational Pensions Board will have an important role in relation to recognition and preservation. But in addition the Board will provide a body of experts, well placed to advise the Government upon future policy in the area of occupational pension provision. The establishment of this Board is a token not only of the Government's concern to have real expertise on hand to implement the proposals put forward in the Bill, but also of our intention that the development of pension provision should not stand still. As your Lordships may be aware, appointments have already been made to a "shadow" Board who are already at work on the tasks which will in due course confront the Board proper if the Bill reaches the Statute Book.

LORD DAVIES OF LEEK

My Lords, I hesitate to interrupt the noble Lord, but will the people who are considering the future be taking into account casual workers like construction workers, farm workers and others, with whom we have always had difficulty?

LORD ABERDARE

My Lords, in due course the Board will be available to help those with these kind of problems, but initially most of their effort is to go into the recognition schemes. This is a quite hefty task to face initially. Later on, no doubt a body of experts will be of great assistance in these difficult areas.

Part III of the Bill is concerned with the reserve pension scheme, which will be the means by which those employees not in recognised pensionable employment will be enabled to save towards an earnings-related second pension, and widowhood cover. It has thus the character of a fall-back scheme. But there is likely always to be a need for some facility of the kind: not all employers, particularly small employers or those with a rapid turnover of labour, can be expected to be able to run occupational schemes of their own; and even where an employer does have an occupational scheme there may be an introductory period before new employees are able to join. The number of employees who, together with their employers, may be expected to be contributing to the reserve pension scheme on the introduction of the new arrangements may be quite large, but as the occupational pension movement develops, as we are confident it will, the number contributing at any one time will correspondingly decline.

Because of the nature of the reserve pension scheme's membership, many of its contributors being little more than birds of passage, there will be no common bond between the various employers and employees who at one time or another will be contributing to it. This imposes the necessity for the scheme to be designed as a money-purchase scheme, with its pensions calculated to provide a fair return on the contributions paid. The scheme will be fully funded and, just as unfair advantage has been avoided by way of cross-subsidy within the scheme, so also there will be no Government subsidy to the scheme. Contributions will be earnings-related and set at 4 per cent. of the same range of earnings as basic scheme Class 1 contributions. Of the 4 per cent., the employee will pay 1½ per cent. and the employer 1½ per cent. In the case of the reserve scheme, there is no provision for married women or widows to opt out of payment of contributions, irrespective of any choice they may have made in the basic scheme.

The pensions will consist of two elements: there will be a guaranteed rate related to contributions paid—these scale rates are set out in the Bill—and a profit-sharing element which will take the form of bonus additions from the periodic distribution of surpluses. There will be no retirement condition or earnings rule—I am sure that will please a great many of your Lordships—and personal pensions will be paid at 65 for a man and 60 for a woman, unless the pensioner opts to defer taking the pension at that age in favour of having it paid later at an enhanced rate.

LORD SHEPHERD

My Lords, before the noble Lord moves away from that point, I wonder whether he would touch on a point which has been the cause of a good deal of concern? The Government have decided that those who, because of the circumstances of their employment, are required to enter the reserve scheme, should not have their contribution set against their income tax requirements, when in the case of the occupational scheme they can make it an allowance. I wonder whether the noble Lord would say something about that?

LORD ABERDARE

My Lords, I had intended to come to that point in winding up at the end. It is a rather large question, but the basic answer is that originally we had conceived all the contributions to the reserve scheme being made as to 50 per cent. by the employer and 50 per cent. by the employee. In order to compensate for the fact that the employee in the normal occupational scheme got tax relief on his contributions, we divided the 4 per cent. differently so that the employee pays only 1½ per cent. and the employer 2½ per cent. I am sure that the noble Lord and other noble Lords may well wish to turn to this point and, if I may, I will speak to it at the end.

The management of the scheme and the Fund will be in the hands of an independent Reserve Pension Board. The broad aim is that the Board should have the kind of freedom that those running an occupational scheme have for the investment of the Fund. They will be able to invest in equities and property as well as fixed interest securities. They will, however, be restricted in being required to keep their holding of voting shares in any quoted company to less than 10 per cent. of the company's unrestricted voting capital. This is an important restriction, which is coupled with a statutory requirement on the Board to conduct their investment and operate the scheme with the interests of scheme members as their prime concern.

Part IV of the Bill contains the provisions relating to administration, legal proceedings, and miscellaneous and general matters. These provisions differ little from the existing legislation but they have, of course, been modified to suit the new structure of the scheme. The present arrangements for adjudication which are contained in the National Insurance Act 1965 are preserved in the Bill.

The provisions of the Bill as a whole represent a major reconstruction of the present National Insurance scheme and the start of a balanced partnership between the basic scheme and occupational schemes. I am sure that in the course of our proceedings to-day we shall hear from critics of the Bill who will no doubt allege that it does not do all they would have wished. It is not difficult to suggest points for further advance—in the standards of occupational schemes, the range of benefits they provide, full transferability of pension rights, and so on. But we are not seeking in this Bill to set ultimate standards. The important thing is that we are establishing a sound and sensible structure. We all hope to see further progress—and the Government for their part intend to work towards further improvements in the scheme. The Bill faces the facts about the situation as it has developed and provides the framework for the developments which we all want to see in both State and occupational pensions. This Bill is essentially about the provision of better pensions—an issue which concerns us all. I believe that the proposals in the Bill are sound and I commend them to your Lordships. My Lords, I beg to move.

Moved, That the Bill be now read 2^a;. —(Lord Aberdare.)

3.47 p.m.

BARONESS PHILLIPS

My Lords, I should like to thank the noble Lord for introducing this Bill in his usual very charming fashion. I always feel very sad that I have to oppose him rather than agree with him when we are engaged in debate. I was very interested to hear him mention the "shadow" Board. I rather thought that we on this side of the House were the "shadows" and those of your Lordships who sit on the Front Bench over there represented the more solid figures in this matter.

This is indeed a major Bill, containing 98 clauses. I thought this morning as I travelled on the Underground and saw all the workers going to their various occupations: "This Bill affects all the citizens in the future—all the working population—and it is legislation actually for the 21st century." As the noble Lord has explained, the Bill really divides into three parts, the first part dealing with the State social benefits, the second part dealing with the second pension, and the third part dealing with the pension for those not covered by occupational schemes. In the other place the Minister described this Bill as being a landmark in the continuing development of social security, as in the same way was the 1948 Act when that was introduced. He went on to say that the Bill does not tinker with the original structure and is not an amending Bill, although it repeals nearly all the existing National Insurance legislation. The noble Lord has repeated that this afternoon. That being so I beg your Lordships to exercise your rights and privileges throughout the passage of the Bill so that some useful amendments may be made.

In a previous debate on the White Paper, to which the Minister has referred, I expressed the hope that some of the recommendations that were put forward at that time by knowledgeable people, those of your Lordships who are well experienced in this field, would be considered by Her Majesty's Government. So far as I can see this has not happened in any one particular, so the Minister must not be surprised if I mention again some of the points which I have introduced before. I believe at that time he accused me of taking advantage of the freedom of the Opposition Box in order to put forward various points which I had not put forward when in Government. Some of the points I present to Her Majesty's Government I equally argued with my own Minister when he was dealing with the Bill which finally died before the end of the last Government.

This is the season when the women's organisations deal with their resolutions; there is a constant spate of them. It is an extremely useful pointer to the kind of matters which concern various people. These resolutions do not usually deal with matters like South Africa, or even the European Economic Community—they certainly do not deal with questions like Watergate. But they talk about education, health and social benefits, like those we are discussing in the Bill before us to-day. I notice that the Minister in the other place referred simultaneously to 23 million earners at work and 11 million beneficiaries at any one time. He said it was the task of the social security system to enable the 23 million at work, in their capacity as earners and taxpayers, to provide support for the 11 million beneficiaries. Surely this is an over-simplification. The earners are often beneficiaries, and the beneficiaries may well be earners, at any rate in some measure.

In so far as this Bill provides an opportunity to make a thorough re-examination and a reorganisation of the country's national pensions structure, I give it a cautious welcome. I am glad, for instance, that social security benefits are to be subject to an annual review, and that they will maintain their value in line with the increase in the general level of prices and earnings, though I am not sure how this is to be done. I sought some information on this point from the Bill, and I noticed that the Minister again told us that this was going to happen, though we were not given an explanation of how it would happen.

I am glad that the present system of contribution cards will leave us. I hope that the preservation of benefits under the occupational scheme will provide a first step towards an ultimate aim of a complete transferability between all pension schemes. But, having said that, I am bound to say that I find the thinking behind the Bill completely old-fashioned and it does not seem to take any account of the social trends of the times. We are going to see the full implementation of the Equal Pay Act, we are going to see changes in family and property laws and particularly we see the work pattern of both men and women changing. For example, we are seeing the perpetuation of that strange rule that retirement age is based on sex—65 for men and 60 for women. It has been repeated again that women get less by way of pension because they are fortunate enough to live longer. It seems a curious way to reward them for their stamina. Surely a major change of this character must be used to introduce a flexible retiring age based on individual circumstances, particularly health and the work in which the individual is engaged. Together with this I would once again mention the earnings rule. I am delighted to see that the noble Lord, Lord Reigate, is to speak in the debate. To think that this old-fashioned idea is once again written into legislation! I know that I will be told that it costs money to abolish it, but I repeat that those pensioners who earn will pay tax on their earnings and that therefore this will act as a regulator. Merely to say that it costs money is not to take full account of the changing situation.

The Bill still refers to the contributor and his wife or his widow; not the spouse or the surviving spouse. Surely it is a very old-fashioned concept that the married women is the dependant of her husband rather than an adult citizen in her own right. That is exactly what we are moving towards; most women will now be able to work in a full-time post, if they wish to do so, outside their home for at least 25 years, assuming that the early age of marriage will continue with a smaller size of family. The basic idea that women are the dependants means that you will have other anomalies which we see carried over into the Bill. For instance, there is the provision for the widow's child allowance, but none for a widower. Those of us who ask for equality ask for just that. We do not want any special privileges but we want to be considered, particularly in the work situation, as citizens in our own right. On the other hand, the widow who relies entirely on her husband's pension will receive only half the State reserve pension after his death, and while the present system for married women to opt out of the State basic scheme will continue, she has no right to opt out of the State reserve scheme. Here again we have an immediate anomaly.

The basic contributions are to be the same for men and women; namely, they are to be earnings-related. Nobody will quarrel with that. There is the same minimum qualifying level below which contributions will no longer be paid. This means that the below-average earner will pay less and, as the above-average earner will pay more, most women at present tend to earn less than men and their average contribution will be lower and we shall get the old allegation that women are privileged. I ask that this Bill he considered in line with the implementation of the Equal Pay Act.

Let us leave for a moment the question of women and look at the general philosophy underlying the Bill and the effect it is going to have on the lives of those who will contribute and receive. It has been said truly that this piece of legislation offers nothing for the existing pensioner and very little for anyone over the age of 40. A man aged 43 earning £30 a week, assuming his earnings rise at 3 per cent. per annum until he reaches 65, will receive a State reserve pension of £4.20. I tremble to think what £4^a;.20 will be worth at the stage when he receives it. Those already receiving pension are dealt with by provisions which do little more than reflect the existing rules and procedures. Those 2 million pensioners who need supplementary benefit to maintain even a minimum standard of living will still have to continue to survive on this.

With our entry into Europe, it is a salutary thought to record that our pension scheme compares very unfavourably with the other European countries. This Bill should have afforded the opportunity to bring it up to standard. I find the whole Bill riddled with inequalities. For instance, why is the minimum age of entry into the State reserve scheme set at 21, while the basic scheme is set at the school-leaving age? Why is a married woman, who pays the full contribution to the State basic scheme to continue to receive a lower rate of unemployment and sickness benefit than a single woman? Why is tax relief available for private occupational pension schemes but not for the State scheme?

I am pleased that we are to have a maiden speech from a very distinguished ex-Minister and I believe that as a result of his scheme I am one of those who pay and will receive 2½p in addition to my pension when I retire-2½p per week. I wonder sometimes how I shall manage to spend it. I find it sad—and I say this advisedly—that the Government have not taken any heed at all of the constructive comments that were made in the last debate on this subject—they were offered in that spirit—and that is why we on this side of the House will try to put right some of the particular and the general points in the Bill which we find unacceptable. Every man or woman who makes a contribution to the community by his or her work has a right to live in dignity if unfortunate enough to be sick, elderly, handicapped, unemployed or left without the breadwinner, and it is our bounden duty to ensure that any legislation we pass makes this possible.

4.1 p.m.

BARONESS SEEAR

My Lords, the passage of a social security Bill is a matter of considerable social importance. A social security Act reflects the changing values and circumstances of the times and it is also a powerful instrument for the development of social policy and for the framing of the kind of society that we wish to see. With this in mind, I want to take three areas of changing social values and circumstance and to see to what extent the Bill that we have before us meets the requirements we see in those three areas. Over the past ten to fifteen years there can be little doubt that the community as a whole has become far more aware of the evil of poverty and far more determined to ensure that poverty is eradicated in our country. This perhaps is because the chance of doing so effectively is within our grasp in a way which was not the case in previous generations. For this reason there can be no doubt that it is the basic pension which is of prior importance.

We know—manifold studies have shown it and it is mere common sense—that the people in our society to-day who are in real poverty are those very large numbers of old-age pensioners who are entirely dependent on the State pension and for whom there is no supplementation from other pensions save through Supplementary Benefit payments. It is the gravest defect of this Bill that these people, who are the most serious victims of poverty in our country, will receive so little benefit. It is true of course that in the future the development of the occupational scheme plus the reserve scheme will mean that there will not be these large numbers of people totally dependent on the basic pension. But that is in the future and we here must be concerned with the present. So, as we see it from these Benches, it is the basic pension which must be given the highest priority and the raising of the basic pension that must come first above all other requirements.

The Government are of course committed—and we are glad to see this—to annual reviews and to adjustments in relation to increases in the cost of living. We feel that this is an all too unambitious approach to the adjustment of the basic pension. The pensioner, not in the 21st century but here and now, should be able to share in the growth rates which we know are coming into reality once again and the rising prosperity which the Government hope, and which we all hope, is coming to the country. This will be reflected in higher average earnings for those in work, and in our view the increase in the basic pension should be adjusted in relation to average earnings of male manual workers and not in relation, or not solely in relation, to increases in the cost of living. For it is this group of people who must surely be in the forefront of all consideration of reform of social security payments.

These are a large group. But when we are considering the problem of poverty, the central problem of social security, though by no means the only one, we must not only consider this main group but consider also small special groups of people, small in number but who suffer severely because of the particular circumstances to which they are subject. Here we should have liked to see some opportunity for introducing regular income for the permanently disabled. This surely is something which research again has shown is greatly needed. The numbers are not vast but the requirement for benefit, because of the need they suffer, in a country which is trying to outlaw poverty, surely must be a high priority.

May I also draw the attention of your Lordships' House to another group of people, a very small group—and I declare my interest because I am in fact closely associated with an association which exists in order to assist them—who could have been helped in this Bill and who have been omitted; that is, the group of women, frequently while at work very low-paid women, who because of domestic circumstances, because of the condition of their parents, or a parent, have to give up work altogether and live at home, abandoning all opportunity for accumulating pension. They suffer severely not only in their earnings but also, in many ways a more serious problem for them, in their prospect for pension when they themselves become old. We have urged, and we shall urge again in amendment to this Bill, that women in such circumstances should be able to have their pension contributions continued so that they are able to draw full benefit rights when they themselves reach retirement age. This also of course is a problem for women able to work only part time because of domestic duties and who will be earning below the level which enables them to benefit from the scheme as put before us. So much for the areas of acute poverty which it must be the first purpose of this Bill to eliminate.

The second major change in society to-day which should be reflected in the Bill, and which to some extent is but not in my view adequately, is the fact that the position at work and in the lives of individual people is changing with great speed. There is a real benefit in terms of economic growth from the rapidity of change, but the rapidity of change has a high price which is paid by people who for one reason or another are not able to keep pace with the changes that go on in the economy. So the need is for much greater flexibility in a number of ways than we have had in the past or than we find in this Bill. The Government have to some extent recognised the need for encouraging flexibility in the limited extent to which pension rights are maintained, and I believe from what the Minister has said that the Government would very much like to be able to give full transferability of pension rights. I would urge that this is of the very greatest importance for economic as well as for individual reasons. It is wholly desirable that people should feel free, should indeed be encouraged, to move from one firm to another, and from one occupation to another. We have suffered throughout the post-war years through a degree of stagnation, both in industry itself and in the careers of individual men and women; and failure to obtain full flexibility in pensions, full transferability of pensions, is a brake that we cannot afford and a brake which cramps the development of individual men and women capable of taking on far more demanding tasks but unwilling to do so because of loss of pension rights. The Bill goes some way, indeed an important way, to remedying this situation, but in our view it does not go far enough.

There is another area in which we should like to see a much higher degree of flexibility. This is flexibility in retirement age for both men and women, the opportunity—and it should be actuarially calculated according to age—to take pension very much earlier if it seems right for the individual person so to do. This would ease the problem of change inside industry and would get rid of the quite absurd distinction between men and women in regard to pension age. Why on earth women are entitled to retire five years earlier than men when, as is well known, my Lords, there are two of us to one of you when we reach the age of 80, I have never been able to understand. Surely this is a fantastically out-of-date regulation to insert. I am not, of course, suggesting that women should be required not to draw a pension until they are 65; but surely, as things stand at the present time, the sensible thing to do is to say that a smaller pension, actuarially calculated, can be drawn by any person, male or female, at an earlier age if he or she sees fit to do so or if, in the situation of their employment, he or she has precious little alternative but to do so.

The advantages of this proposal are very great indeed; not least there are advantages to the employer, but there are advantages also to the individual and to the economy. I am sure that what a great many people really want when approaching pension age is the opportunity to retire gradually. It is of course an opportunity—and I speak as one coming up to the pension age (that is, the curious female pension age)—to continue in part-time employment when full-time employment is no longer available. The opportunity to draw a smaller pension early in life gives men and women the chance to take on appropriate part-time employment which they may be able to continue for very many years. In doing this, they can make a substantial contribution to the economy, they can supplement their pensions and they can give themselves a very real interest and a continuing sense of being needed, which is what most people seek when they reach retiring age. But if in order to get full pension they have to go on until they are 65, then in many cases it is too late to seek the part-time employment which at an earlier age they would be able to obtain and keep for many years.

May I illustrate this point? A relation of mine, a chartered accountant, retired early on account of ill health. He obtained part-time employment as an adviser to a small company and has continued, very satisfactorily from his own and the company's point of view, to the age of nearly 70. This is the kind of arrangement which a great many people seek, but the opportunity for early retirement presents itself only when some financial security is guaranteed, and this the existence of a small pension makes possible. I am sure that the opportunity for part-time work, backed by some income, even at a lower level than the full pension, would make an enormous difference in the lives of most pensioners.

A graduate student of mine did an unpublished study (one of the saddest documents I have ever read) of the attitudes towards retirement of men and women in semi-skilled and unskilled jobs—jobs which had given little in the way of interest and little in the way of financial return. For such people at the age of 65 retirement was a blank. Had it been possible to go earlier and to get into some kind of part-time activity which at least would have given them scope for personal contacts and some scope for their activity, their future would have been a great deal brighter. Can we really not look again at the possibility of flexibility in retirement age?

In regard to the third area of change in society, I do not wish to bore your Lordships with the familiar subject which most of you will expect me to raise, but it surely stares from the pages of this Bill. The third area of change, which might not be happening as we go through this Bill, is the changed position of women in our society. It is still quite extraordinary, not only that there are these differences in retirement age, not only that women are still given the opportunity to opt out of paying social security contributions if they are married employees—a most extraordinary exemption—but also that women are still seen, in terms of social security, in their marital status rather than as persons. Many women still depend for their pensions on the contributions that their husbands have earned for them. Surely in 1973 this is totally outdated.

I know there are great difficulties and it is a radical change that I am urging, but is it not really possible now to find a way in which each individual person carries a social security right which she builds up in her own name and as an individual person, whether she is single, married, separated, divorced or widowed? If it were possible for a girl, from leaving school right up to the age at which she draws her pension, to be an insured person in her own right, irrespective of her status, then, if I may change a famous phrase, "at a single blow many of the social problems connected with a deserted wife, the single parent family, would be alleviated straight away, because she would be carrying a claim to benefit in her own name throughout her life. Of course I recognise that this is a very radical change; I recognise that there are many unanswered problems associated with it. The Danes have gone a long way in this direction, and what they can do we can do also. It seems to me to be the greatest pity, when we are bringing in a new Bill of this kind which I freely admit has many improvements in it, that we should baulk at this change in the approach to women for which society, as we see it today, is calling out.

4.18 p.m.

LORD BOYD-CARPENTER

My Lords, I rise this afternoon subject to serious handicaps. The first is that for the second time in 28 years I have to make a maiden speech which, although in a different House, curiously enough is in the same Chamber as the one in which I made my first. Secondly, I speak, as some of your Lordships will know, subject to the inhibition associated with the name of the late Viscount Addison. It was explained to me by a noble Lord, one of the Minister's colleagues, as inhibiting me from speaking on any subject of which I had any knowledge, but adding—by way, I believe, of consolation—that in my case that was not a very significant limitation.

But, my Lords, as the noble Lord, Lord Aberdare, mentioned in over-gracious terms, I have been associated with social security for a number of years. Indeed, I was the Minister responsible for the National Insurance Act of 1959 which, as your Lordships may remember, introduced on the modest scale referred to by the noble Baroness, Lady Phillips, the principle of wage-related contributions and benefits. This was the measure which the spokesman of the then Opposition in the other place strained the resources of a Wykehamist vocabulary to describe as "the Boyd-Carpenter swindle". I was happy to note that when that very distinguished right honourable gentleman and his colleagues became responsible for our affairs they fully maintained that measure in effect, and indeed greatly expanded its scope. It is still in force to-day and is assimilated in the measure now before your Lordships. I have a great admiration both for the Secretary of State whose work this is and for the measure before us. If it is not presumptuous to say so, I think that the present Secretary of State has the ideal qualities for a Social Services Minister: a cool and calculating mind coupled with a warm and generous heart. Sometimes, in some people, the thermostat works in the opposite direction. But this measure which represents his massive work is one of the major reforms in our social security system.

I regard it not of course as even attempting to deal with many of the vital social questions, particularly those to which the noble Baroness who spoke from the Liberal Benches referred. It performs the more mundane, but equally essential, task of laying the financial foundations on which alone an effective system of social security can be erected. As the noble Lord the Minister said, and it is essential to the concept of the Bill, it provides for the income of the Fund, the money available for benefits, to rise automatically as wages rise whether those wages rise as a reflection of rising prices or in anticipation of them. Thereby there is secured for the Fund an income adequate, so far as human provision can make it, to sustain the ever-rising costs of these benefits in an age in which some measure of inflation appears to be inevitable. That, it seems to me, is the essential part of this major measure.

I do not wish to waste your Lordships' time by saying much else in favour of the Bill because, after all, that is the Minister's business. I should like for a moment or two, on the contrary, having declared my general support for the measure, to enter one or two reservations and to make one criticism. My first reservation is this. I fully understand the immense administrative advantages of passing over wholly to wage-related contributions—the abolition of the stamp and the collection of these by the Inland Revenue. But the combination in ths2 basic scheme of wage-related contributions with flat rate benefits may do something to erode one of the basic concepts of National Insurance; that is, that it is contributory and that the right to benefit depends not on means or lack of them but on contributions. Under this Bill it will be perfectly possible for a man on high earnings who, because he has spent a number of years outside this country, has contributed only for a limited number of years (but a large sum in those years) to receive actually less in pension at the end of the day than the man on the lower income who has contributed throughout his life at a lower rate and who has therefore paid less into the fund. Socially I see the argument for this. It has great force. But if one is concerned, as I think many of us are in the long-term interest of our social security system, that the link between contribution and benefit should be maintained and that there should be no question of eroding the contributory principle, I think this change is one that merits a certain amount of consideration, perhaps even of anxiety.

I regret, too, that opportunity has not been taken to modernise the industrial injuries scheme. Contributions to the industrial injuries scheme are of course to be collected with the other social contributions under this Bill. It is a very open question to-day whether it is right to pay a higher benefit to a man who is injured at work than to a man who is injured on his way to work. Indeed, he gets a higher contribution if he gets the injury on his way to work in his employer's transport but not in his own transport. In 1973, this distinction is difficult to defend. It is equally difficult, now that contributions are wholly wage-related, to allow still, as the Industrial Injuries Scheme allows, for mainly flat-rate benefits regardless of the loss of earnings that the relevant injury has caused. I hope that the noble Lord the Minister may be able to tell us that his Department have found they have had enough to do with this Bill—which I can fully understand—but will proceed now to further review of the Industrial Injuries Scheme.

My third regret is that the Bill still continues the bad practice of making a contribution out of the contributions to the National Insurance Fund to the National Health Service. The Health Service is not an insurance benefit. It is one that is open to anybody who is sick, and to foreigners, and people who for one reason or another have not contributed. It is both illogical, and in principle unsound, that National Insurance contributors should contribute towards the expenses of the National Health Service. It is a curious financial arrangement that, on the one hand, the Exchequer puts into the National Insurance Fund annually under this Bill a sum of the order of £600 million, but at the same time there is a very large subvention from the Fund for the support of a totally different service, the National Health Service. That method of financing is difficult to defend in principle, and I am quite certain that it blurs the clarity of understanding that there ought to be of this scheme.

I come to my one substantial criticism, the one which was foreshadowed by the noble Lord, Lord Shepherd, and to which I understand the noble Lord the Minister will be good enough to reply at the end of the debate. It concerns the allowance for tax purposes of employees' contributions to the State Reserve Fund. May I preface my criticism by saying that over the whole scheme of occupational pensions it has always seemed to me that the Inland Revenue was the enemy of progress. The difficulty of getting revenue approval for a generous occupational scheme is proverbial. This opposition, this fear that someone may get too large a pension at the end of the day, seems to me nonsense both socially and economically. Economically, it seems nonsense because successive Chancellors of the Exchequer have declared again and again that savings, which are what pension contributions are, are as good as taxation for the purpose of the management of the economy. Socially, it is nonsense because in an age of inflation the major problem has been, and will continue to be, how to maintain the standard of life of the retired in relation to those who are at work. Now that the Government have come forward with proposals which rest for their success on the development of the occupational schemes, I hope that someone will take the Inland Revenue by the scruff of its neck—if it has one; I think it sometimes shows some neck—and secure that a more generous and more contemporary approach is made to the approval of schemes.

Now I come to the tax treatment of employee contributions to the Reserve Scheme. These contributions it seems to me are singled out for adverse discrimination. In the case of the occupational schemes in which I believe the majority of our fellow citizens will be involved, the employers' contribution will rank as an ordinary tax expense of his business, and the employees' contribution will be allowed, subject to revenue control, as a deduction for tax purposes. Similarly, the pension arrangements made under the 1956 Finance Act by the self-employed will be allowed for tax. In the State Reserve Scheme the employer's contribution will again be an expense of his business and so allowed for tax. Only the employee in the State Reserve Scheme will not have his contribution allowed for tax.

The Secretary of State in another place and the Minister to-day suggested that a defence for this could be found in the fact that under the Bill the employer, where his employees are in the State Reserve Scheme, contributes 2½ per cent. of wages against 1½ per cent. by the employee. But, my Lords, that kind of thing is common throughout the occupational pension system. Certainly, in one pension scheme with which I happen to be connected the contemplation is that the employer shall pay two units for the employee's one. There is nothing unusual about this. Indeed, some of these occupational schemes are noncontributory so far as the employee is concerned. It may be that this is an intended incentive to get as many people as possible into occupational schemes. But the incentive is being applied in the wrong place. The employee has no choice as to whether his employer initiates a scheme. Inevitably, the decision rests with the employer.

It seems to me to merit a good deal of explanation—more, frankly, than was given in the House of Commons—to justify saying that where someone, through no fault of his own but as a result of his employer's decision, finds himself in the State Reserve Scheme he pays tax on his contribution uniquely among contributors to pension schemes throughout this land. I do not seek to detain your Lordships by labouring this argument further, but it really does seem to me that this is a very curious anomaly. One suggestion—I think it was made by the Secretary of State in the House of Commons—was that it would cost £25 million to allow these contributions for tax purposes. As I understand it, the whole purpose of the Government, a purpose which I wholly share and support, is to see that the maximum number of people are in their employers' occupational schemes, and if they are the Government loses the revenue anyhow. It does not seem to me that that argument justifies penalising those, I believe no more than a minority, who remain in the State Reserve Scheme.

My Lords, having uttered those criticisms, may I say again that I have very great respect for this Bill. I believe it marks a great step forward. But I hope and believe that in view of its importance it will leave this House an even better Bill than when it came here. As the noble Baroness said from the Dispatch Box, this is a measure that affects every citizen of our country. It is the fact that major reforms of social security inevitably only come forward at fairly lengthy intervals. It really is of very great importance, therefore, that this Bill should be just as good as the ability of both Houses can make it. I hope the Bill will go forward. I hope it will go on to the Statute Book, improved perhaps as a result of your Lordships' attentions, and that it may therefore be the big contribution it is intended to be to the well being of our people, and that it may be able, in words which were used by the father of unemployment insurance. Winston Churchill: To bring the magic of averages to the service of the millions".

4.33 p.m.

LORD TAYLOR OF MANSFIELD

My Lords, it falls to my lot, and indeed it is a privilege, to congratulate the noble Lord, Lord Boyd-Carpenter, on his maiden speech in your Lordships' House. I heard his maiden speech in the other place, and I am privileged to hear this one to-day. I heartily congratulate him on the points that he has put forward so far as this Bill is concerned. He follows in a fairly long line of succession of ex-Ministers of National Insurance. If my memory serves me aright he was the sixth: there was Sir William Jowitt, Mr. Hore-Belisha, Mr. James Griffiths, the noble Baroness, Lady Summerskill, the late Lord Ingleby, and I believe the noble Lord succeeded Lord Ingleby. I had much to do with him in the other place on National Insurance questions, with particular reference to the industrial injuries set-up, pneumoconiosis and industrial disease. We did not always agree, but I always found him approachable and willing to listen, with a disposition, if possible, to do something for these victims of industrial disease and to prescribe further ones to be added to the list. He was always very willing to give thought and time and attention to these matters. I congratulate him on his maiden speech to-day which was forthright and semi-critical. It was an indication of the noble Lord's forthrightness and of his profound thinking and originality of ideas. I am sure that all your Lordships will be pleased to listen to the noble Lord on future occasions.

I am grateful to the noble Lord, Lord Aberdare, for the exposition he gave of what is not only a big Bill but is a complicated measure. It is not a Bill that is easy to unravel, as I found over the weekend. I did not have the Explanatory Memorandum with me. I was wading through a tangle of legal jargon and I really could not make up my mind what some of the points meant. I fell back on the advice that Sir Winston Churchill once gave to the House of Commons, that it would be a blessing and a great benefit if Parliamentary Bills could be written in basic English.

I should think that the preparation of this somewhat complicated measure took some months, and to be asked to assimilate all its provisions, all its details and its many complications in a few days is not an easy matter. But I found that with the noble Lord's explanation of Part I, and particularly Part II, and Part III in reference to the occupational and the reserve pension schemes, it became much clearer to me than it was a couple of days ago. I do not know whether the noble Lord, Lord Aberdare, realises that he should be a very proud man to-day, as a Welshman coming from the Principality. He is the third individual coming from the Principality in this last 65 years who has had the privilege and the opportunity of introducing a major insurance Bill. First, there was that great Welshman Lloyd George—and I will be pardoned for referring to him as Lloyd George; nobody ever refers to him as anything else. In 1908 Lloyd George introduced the first Act dealing with old age pensions. It was not as complicated as this Bill. The initial cost to the Exchequer—it was not on insurance lines at all—was £2 million. When I heard the noble Lord refer to the recent payment to pensioners of more than £2,000 million. I wondered what Lloyd George would have thought of that astronomical figure.

Although the initial cost to cover the old people who had reached the age of 70 in 1908, subject to a means test, was only £2 million, one noble Lord is on record as saying that it would bankrupt the nation, while another said that it would sap the moral fibre of the nation. That indicates how the nation's conscience in social matters has undergone a great change in the short period of 65 years. Mr. James Griffiths, another Welshman, was the Minister responsible for introducing the National Insurance Act 1946, and the noble Lord, Lord Aberdare, to-day has the privilege of being in the line of succession in presenting to your Lordships' House not a National Insurance Bill but the Social Security Bill of 1973. If I were in the noble Lord's place I should feel a very proud man indeed to be in that line of succession of Welshmen in this field of social service.

Twenty-seven years ago the first postwar National Insurance Bill was before Parliament and it became operative—I know that this is common knowledge, but it is sometimes as well to remind ourselves of our history—on July 5, 1948. The point that I wish to make in connection therewith is that, despite the measure of 1908 and the National Insurance Act 1911, that was the first attempt to deal in a comprehensive way—and the operative word is comprehensive "—with the problem of insecurity and with the subject of making provision for the time when earnings are interrupted through a variety of causes, such as sickness, unemployment, retirement, accident, widowhood and so on. Your Lordships will be well aware—some more aware than I am myself—that the legislation of that period, not only the National Insurance Act but that on other matters such as family allowances, the National Health Service Act, the National Insurance (Industrial Injuries) Act and the National Assistance Act, was all based on the Report of the late Lord Beveridge. I sometimes reread that Report, because it not only made a thorough investigation of our social and allied services but made recommendations which were implemented by the first postwar Government in 1945 to deal with the problems of poverty and insecurity.

The Bill before the House to-day, while proposing changes and additions, is in one respect identical to the National Insurance Act 1946, in that it retains the universality of the scheme. Whatever criticisms and suggestions there might be about some of the proposals in the Bill before us, I am very pleased—and, on reflection, I think that every one of your Lordships will also be pleased—that it retains the universality of the scheme. As did the Bill of 1946, this Bill divides the community into three main classes. I shall not go into them, because they were so understandably explained by the noble Lord, Lord Aberdare. Like the measure of 1946, this Bill is based on contributions giving entitlement to benefits. One does not have time to distinguish between the kind of benefits under the National Insurance Act; the National Health Service Act, whose benefits are in kind; and the National Assistance Act, whose benefits are also in kind in relation to Part III accommodation. But the National Insurance Act, like the Bill which is before us to-day, deals exclusively with cash benefits when earnings are interrupted or have ceased altogether in the case of retirement at 65 for men and 60 for women. On all the evidence that one can accumulate to-day, the age of retirement poses a problem and I do not think the time is too far distant when, of necessity, we shall have another Bill. Technological improvements will drive the nation to it and we shall need to have a much lower age of retirement than 65 for men and 60 for women: but that is a problem for the future.

Whatever our criticisms or suggestions might be in regard to some of the provisions in the Bill, I am sure that there is unanimity about what I shall say now. Prior to 1948 the position in this field was totally and absolutely unsatisfactory. Some sections of the population were covered, but some were not covered at all. I remember that when I myself came to the House of Commons in 1941, having contributed to the Lloyd George Health Insurance scheme from its inception in 1912, I was "out" because I was a non-manual worker with more than £250 a year. The only lifeline that I had for retaining the benefits which I expected, particularly on retirement, was by becoming a voluntary contributor. I mention that fact merely to indicate how unsatisfactory the position was. But after 1948 everybody—those under a contract of service, those self-employed and those unemployed—became participants in this universal scheme as contributors, and also as beneficiaries when necessary. So I welcome the continuation in this Bill of the universality of the scheme. To depart from it would not be welcomed by the nation. To return to the higgledy-piggledy, hotch-potch state of affairs that existed in this field prior to 1948 is unthinkable. It is my belief that no modern Government would dare to depart from a comprehensive, universal scheme of this kind, or oven dream of departing from it.

May I make one or two observations on the contribution side? Whether the scheme should involve a flat-rate contribution, as is the case now; or whether the contribution should be a percentage of earnings, as is proposed in the Bill; or whether, to go even further, there should be a social security tax with a larger contribution from the Exchequer, is a matter of opinion. It is a matter of argument: it is a matter that can be discussed. It may be that in the future we shall devise a simpler method of financing, administering and operating our social security schemes. Speaking at the moment for myself only, I should prefer a social security tax with a larger Exchequer contribution. One of the reasons—there are others—is that I think it would be more economical administratively. However, having said that, having put forward that personal opinion, I favour what is in the Bill—that is, a percentage of earnings—for this reason: that it gives greater consideration to the lower paid. The noble Lord, Lord Boyd-Carpenter, knows that on previous occasions in the other place we have always talked about the burden on the lower paid; the albatross of insurance contributions around the necks of the lower paid. What is proposed in the Bill, a percentage of earnings, is in my judgment better, because it will help those who are receiving less rather than those who are receiving more.

There are many other things that I should like to say but I do not want to trespass too much on your Lordships' time. However, I want to say one or two words in criticism of Clause 10(3) of the Bill—that is, the three waiting days. The words which are used in that subsection provide that, in the case of any period of interruption of employment, sickness benefit or unemployment benefit shall not be payable for the first three days of incapacity. This has been a very arguable point for many years. I remember, in the field of the old Workmen's Compensation Acts. that if a man had the misfortune to meet with an accident he had to be off a fortnight before he got any pay at all; and this three-day waiting business is, I think, a retrograde step. What happens, my Lords? Just this. Suppose a person is in the initial stages of a temporary illness—he has an attack of influenza, say, coming down to ordinary conditions in the home. He calls in the doctor, who gives him treatment and who gives him a certificate of incapacity. But on the second or third day the man feels he is improving, and he reasons on certain lines: "I will not send in my medical certificate; I will go back to work." But he finds at the end of the first or the second day that it has taken too much out of him, and he has to give up again. I am thinking now of the manual workers in our heavy industries. So he needs another medical certificate, and another three days before he becomes eligible for benefit. In the heavy manual industries this ineligibility for benefit is a hardship, and could be damaging to health by men returning to work too soon. "What about the fund?" some people will ask. "What about the administrative costs?" To put it in a Nottinghamshire way, I think that what we save on the swings by depriving a person of three days we lose on the roundabouts by there being eventually a longer period of benefit because the person has gone back to work too soon.

My Lords, I must make a reference—and it is in the form of a criticism—to the Exchequer contribution. At the inception of the scheme in 1948 the supplement by the Exchequer was in the neighbourhood of 25 per cent. plus an additional contribution of between £3 million and £4 million every month for the six years following March 31, 1949. In addition to this contribution, the Exchequer made a contribution of one-fifth of the total contributions to the Industrial Injuries Fund. At the moment—and it has been so now for a number of years, and it is proposed to continue it in the Bill—the Exchequer contribution is not 25 per cent. but 18 per cent. of the total contributions to the National Insurance Fund. From this it will be seen that the Exchequer contribution to the National Insurance Fund is less, in percentage terms, than it was in 1948.

We may be able to argue that point at later stages in the Bill, but may I, in conclusion, put a question to the Minister? I note from the Bill that the Industrial Injuries Fund is to be wound up, and its assets and liabilities transferred to the National Insurance Fund. I do not quarrel with that: it may be administratively more convenient. What I should like to know—and I cannot find it in the Bill or in the Explanatory Memorandum—is what is to happen to the Industrial Injuries Advisory Council. This Bill does not mean, I hope, its abolition. The only thing I can find in the Explanatory Memorandum is that the membership of the National Insurance Advisory Committee will be increased numerically. There is no reference to the Industrial Injuries Advisory Council. I hope it will not be wound up. My Lords, if one had the time one could go into the work which, over the last 26 or 27 years, this body has done, particularly in the field of industrial diseases.

4.59 p.m.

THE LORD BISHOP OF BRISTOL

My Lords, may I first join with those who would claim the pleasure of being in the House on the day when the noble Lord, Lord Boyd-Carpenter, made such a maiden speech as to illustrate the eloquence and the authority with which he contributed to a debate on this rather daunting and complex subject.

It is with some diffidence that I venture to intervene in a debate based on so complex a document as this. But I do so in order to plead the cause of one group of persons which, as I understand the Bill, is not adequately provided for. That is the disabled housewife. There are many categories of disablement and this is the one which I would specially seek to emphasise. In doing so, I ought, as they say, to declare an interest, even if it is a personal and in some sense a sentimental interest. Some 15 years ago, when I was the principal of a theological college, my personal secretary was a very able, and indeed brilliant, young woman who was the wife of a young retired naval officer. She was taking a part-time job partly to assist the financial budget and partly to deploy her gifts. A few years later when I was in Bristol and she in Surrey she wrote me to say that she was now known to be suffering from disseminated sclerosis. For five years after that, Megan Du Boisson, from her sick bed, fought to establish what is now widely known as the Disablement Income Group—"DIG" to its friends.

It is because I first caught a glimpse of the courage, and at times the near desperation, of those who are in that category, that I feel the opportunity presented by the undoubtedly epoch-making legislation before us for Second Reading ought to take further account of that field of need than appears yet to be the case. I shall leave it to my noble friend Lord Soper to deal with some other aspects of this kind of disablement, but the principal case that I think needs to be made is that the cash benefits for severe disablement should be extended to disabled housewives, who are not a large group. As I understand it, there are some 130,000 disabled women under 65, two-thirds of them married, who are unable to do the greater part of their household chores, and 25,000 with children under 12 who have difficulty in looking after their children because of their disabilities. It is clear that where a housewife has not herself been a contributor it is inevitable that if she incurs the kind of disablement which disseminated sclerosis, for example, brings with it there is hardship in family life, increased expenditure in the family budget. If she is not sufficiently disabled to qualify for the attendance allowance, there will nevertheless be an impairment of the husband's earning capacity or need for extra domestic help. Yet there is no provision for that kind of sufferer from disability. There are other categories, but this is one which is so small, so crucial and so poignant, that there seems no reason to exclude the sufferers on any grounds of economy.

It could be argued that there would be a saving in means-tested supplementary benefits; that there would be fewer disabled people being cared for in longterm institutions, and fewer of their children having to be cared for under local authorities, and that it would do something to increase the earning capacity of one who had to that extent been relieved from some anxiety and was able to use in a more creative way such facilities as were retained. The noble Lord who introduced this Second Reading held out the promise that there would be an expanding programme and that we may hope to see covered matters with which the Bill as drafted is not concerned. I plead that here is a category whom "now" is not too soon to include.

5.5 p.m.

LORD REIGATE

My Lords, I should like to add my congratulations to my noble friend Lord Boyd-Carpenter on his outstanding contribution to our debate to-day. I suppose that I am still allowed to call him "my noble friend", although he has temporarily removed to the Cross-Benches. He brought wit and wisdom to our debate, and surely he spoke with a length of experience that no one else in this House could ever exceed. I agreed with many of his criticisms; some of them I shall refer to and support later.

This is certainly a measure of immense complexity but I think it is fair to say that it is also consolidating and perhaps the most constructive piece of social legislation which either House has had to consider in this century. It is the first major overhaul after 27 years. I may say that I have been refreshing my memory—not so much my memory—and have been re-reading the debates of 1946 in which the noble Lord, Lord Taylor of Mansfield, who has just spoken, took such a significant part. That Bill, too, was described as consolidating and constructive. It was described as the culmination of half-a-century's development of our social services. This now brings it up to three-quarters of a century. When we look back, with all the wisdom of hindsight, some of its provisions seem a little quaint to-day. They took power in the Act then to vary contributions for the purpose of maintaining a stable level of employment. That power, in fact, was never used. I hope I am not guilty of being too partisan if I quote one sentence from the speech of the then Minister when he said that, "The House will be aware that the Chancellor of the Exchequer has expressed the Government's intention to hold the cost of living at about 31 per cent. over the September 1939, level." I have always found some charm in the precision of that "31 per cent."

The other thing which is very significant in the 1946 debates is that it was never contemplated that more than a cursory review should have to take place, say, every five years. I welcome more than anything else the fact that provision for an annual review, in quite new terms, is to be built into this Bill. There was in all those debates—though it is, I am glad to say, absent from our deliberations today—a feeling of finality that the Welfare State had been achieved and there was not very much more that needed to be done. We now know differently. We know that there is no finality in the social services; that needs change, means change and opportunities change. Also, I think we now realise that the nature and kind of poverty itself changes from time to time. However, if this Bill is not a final solution, it provides a framework which will, I believe, last for a very long time.

Surely the most significant change is the diminishing use of the words "national insurance" in this Bill. The Under-Secretary of State in another place referred to this fact when he said that we now have to recognise the fact that the basic scheme is no longer national insurance but in fact social security. Now we have not funded contributions to an insurance scheme as was hoped for in 1946 hut a pay-as-you-go scheme based on the generation in employment paying for the sick and elderly. The last true vestige of national insurance is in the use of the contribution as an entitlement to benefit. I would ask my noble friend to consider whether the now outmoded phrase "national insurance" could not be completely eliminated from the Bill. The National Insurance Fund has not, in any actuarial sense of the word, or indeed in any actual sense of the word, been an insurance fund for many years. Could it not, and should it not, now properly be called the Social Security Fund, so as to avoid confusion with the Reserve Pension Fund? I spoke in similar terms a year ago but, alas!, my suggestion fell on deaf ears.

I want, in particular, warmly to welcome the new Reserve Pension Scheme. I think it is highly desirable. It is very much needed and, together with the increased transferability of other pensions, occupational pensions, should make for flexibility of employment. It will help the worker to change his job, to better himself, or sometimes, unfortunately, not to better himself, but at any rate without jeopardising his own family security. There is one blessing in the Bill—I am not sure whether to call it a minor or a major blessing—the fact that the stamp is going. I have just learned from my noble friend, with some regret, that the stamp is being retained for the self-employed; but that is a small minority, and I think we should all be thankful to see the end of the stamp for the rest of the population. In the 1946 debate one of the speakers said—and I think it might be described as part of the mythology of the Left—that in 1911 there was a meeting in the Albert Hall when the body of the hall was filled with Duchesses and the upper tiers with housemaids and parlour-maids, saying that in no circumstances would they ever lick stamps for Mr. Lloyd-George. My Lords, time passes on; the housemaids and parlourmaids are no longer there; the stamp is going and, in a typically British way, only the Duchesses remain. But, all in all, my Lords, this is a very great Bill; particularly, I think, when—a point which has not yet been referred to—the new tax credit scheme comes in to supplement its proposals. I entirely agree with the noble Lord, Lord Boyd-Carpenter, that this is a measure with which my right honourable friend would be proud to have his name associated in the future. If I may have a final "dig", I think he would be prouder of it than he would of the National Health Service Reorganisation Bill; but that is another matter.

So much for the bouquet. If my noble friend will forgive me, now for a few brickbats. They are only detailed matters, but I draw attention to them now so that the Government may give them consideration before the Committee stage. I will start with the smallest point. I may have got it wrong, but I read with amazement in Clause 30(3), which refers to the death grant, that it will not be payable to those over pensionable age in 1948. That means men of 90 and women of 85. My Lords, need we be quite so mean in this year of grace, 1973? Are there so many nonagenarians that it would break the Exchequer if their funeral expenses were paid now? I realise that it is difficult to draw a line, but surely the Government, who believe in selectivity and who have done so much for the over 80's, could justify this minute extra expenditure. It is a small point, but it really did stick in my gullet when I read it.

My noble friend Lord Boyd-Carpenter raised one other point: this anomalous contribution from the National Insurance Fund to the National Health Service. I am sorry to say that, clearly, my noble friend had not read my own contribution to the debate on the White Paper last year, or he would have seen that I raised the same matter. The National Insurance Fund is financed 18 per cent. from the Exchequer, and the National Health Service Fund is almost wholly financed from the Exchequer. I suggested that we might eliminate this cross-payment and I shall now quote what my noble friend Lord Aberdare said to me in case he has not got the reference handy. He said that "he"—that is, I myself: asked me about the National Health Service contribution within the stamp. In the financial year ended March 31, 1970, which is the last year for which I have figures, the National Health contribution provided £152 million, which was 9¼ per cent. of the total cost of the Service in that year. So this is a very considerable sum to try to find from the Exchequer. The noble Lord related it to the amount paid by the Exchequer into the National Insurance Fund, which was an even larger figure of £353 million"—[OFFICIAL REPORT. 17/5/72; col. 1427.] My Lords, all I am asking is that a little work should be done and that my noble friend should subtract £152 million from £353 million and make the Exchequer contribution £201 million. Why do we have to rob Peter in order to pay Paul in order to pay Peter back again? That is clearly all it is. Although it may deprive some assistant principal in some obscure backwater in Whitehall of a job, I hope that this may be altered, because as it stands it is the biggest bit of nonsense enacted in a Bill before Parliament.

On another point, my Lords, I feel in duty bound to the noble Baroness, Lady Phillips, to mention the earnings rule. I am almost inclined to say that this is a "request number". Having bored your Lordships on the subject in the past, I will be fairly brief. I appreciate very much that there is slightly more flexibility now as regards the increases in increments for those staying on in employment. If those increments become adequate they diminish the effect of the earnings rule. Nevertheless, I regret its continuance and the fact that there are no signs of any constructive proposal for ending it. If I do not embark on the subject at any greater length, it is because I begin to realise that we can never ultimately eliminate the earnings rule unless we satisfy ourselves exactly what grounds we want to have for drawing a pension. The earnings rule arises out of the fact that we switched from old age to retirement as the basis for the pension. I think that the time may be coming when we shall have to link retirement with incapacity, partly through the occupational scheme and partly through the State scheme, so that, rather on the lines of what was said by the noble Baroness, Lady Seear, we can allow earlier retirement at possibly a lower standard of living for those not able to work as long as others. It is an enormous subject and it is not entirely covered in the Bill. I am not certain that we can find the right solution yet. We may criticise the content of the Bill, but I must say also that I am not certain that I have a constructive alternative to put forward. Therefore I shall rather briefly skate over the earnings rule.

Lastly, my Lords, I want to deal with a point which was raised by my noble friend Lord Boyd-Carpenter, the question of the tax exemption for contributions to the Reserve Pension Scheme. I think that I understand, and I sympathise with, the Government's dilemma. I think I sympathise perhaps rather more than did my noble friend Lord Boyd-Carpenter. He has a difficult problem, but the way he is proposing to solve it, by refusing tax exemption only to the beneficiaries of the Reserve Pension Scheme, surely is a fundamental breach of the basic principle of taxation; namely, similarity of treatment between one citizen and another where the conditions are comparable. The Bill seems to me to recognise that this is an inequity by increasing the employers' contribution in order to compensate; but, as my noble friend pointed out, the employers' contribution is allowable against tax. Therefore you get a double anomaly, an anomaly as between the two classes of beneficiary and an anomaly as between the employer and the employee.

As I said, I sympathise very strongly with my right honourable friend in his dilemma. He wishes to have private occupational schemes cover the widest possible area of employment. He is right, and I agree. It is because occupational schemes can be tailor-made to suit the needs of particular industries that I think it is far easier for them to provide a higher standard of living in retirement than any national scheme ever could. Therefore my right honourable friend seems to fee] that he must make the fall-back or reserve scheme comparatively unattractive or, shall I say, less eligible. I choose the phrase "less eligible" carefully, because I would remind my noble friend of a principle which was enshrined in the Poor Law Act of 1834, namely, that the condition of the person on relief ought to be less eligible than that of the person not on relief, and that theory of less which was impeccable in principle if it had been wisely and humanely applied, led to the dark events of the 19th century. You cannot justify the one scheme by penalising people on the other, and I hope that the Government will try to find some other way round what I honestly recognise is a great difficulty.

I would draw the attention of my noble friend—the Secretary of State has already heard this—to some very wise words of Sir Robin Turton in another place, suggesting that perhaps we ought to reverse the whole procedures and that contributions to pensions should not be tax-deductible but pensions should be tax-free. It is an idea which I must say had never occurred to me before and I am not prepared to argue in its favour or against it, but it could be an answer to some of the difficulties which we are now meeting. This issue is not really a pensions matter; it is a tax matter. I strongly approve my right honourable friend's aim, but I dislike his having in this case to achieve it by a fiscal "fiddle", and I frankly hope that this matter will have much further examination. All in all, with those criticisms, which are only minor criticisms, I feel that this is a great Bill and one which we can still improve during the Committee stage.

5.24 p.m.

BARONESS SUMMERSKILL

My Lords, I am only too happy to declare that I am of Beveridge vintage, and since those exciting days—and that is the right expression for the days when it was first decided to introduce a comprehensive insurance scheme into this country—I have followed the progress of every Bill of this nature which has been introduced; and, of course, when a Bill is being introduced an Opposition can criticise and can approve. Nevertheless there has always been progress. So far as this Bill is concerned, I agree with many of the things which the noble Lord. Lord Boyd-Carpenter, said—and I never said that to him in the other place—and may I congratulate him on his maiden speech and on the excellent analysis that he made of the Bill. I am sure he will be happy here, but at times the courtesy and kindness are almost unnerving, after being trained in another place.

So far as the actuarial aspect of this Bill is concerned there are certain very great improvements, but nevertheless I feel it is not in keeping with the times and in a few years' time this will be regarded as a very old-fashioned measure. No doubt the House will know the aspect of the Bill I am going to touch upon, a very important aspect: the treatment of over 50 per cent. of the adult population. Last week we were told that it was not intended to accept the Sex Discrimination Bill as amended by the Select Committee, and that in due course the Government will draft another Bill. Now the women in this country who read that statement—and it is remarkable how many of them read the Parliamentary Reports these days—must have assumed that the Government's Bill would be an improvement. I can only say to them that they can judge by the provisions of the Bill before this House to-day whether they can rely on the Government's promises to remove discrimination, because this Bill must be condemned on the ground that it does discriminate against women. My noble friend Lady Phillips has raised the point, other Members have raised it in their speeches and the noble Baroness from the Liberal Benches also stressed it. May I therefore remind the House, briefly, of what the position is to-day; and I hope, as there are many kind husbands and fathers in the House, that I may stimulate them to agitate on behalf of women, who have been discriminated against not only in other places but in this Bill.

My Lords, it was believed by many parents that if their daughter married then her security was ensured, provided she was a faithful wife. However one may regard this concept of woman's destiny, the fact is that it has been totally destroyed by the new Divorce Act, which enables the most loving wife and mother to be discarded in five years without her consent and in two years with her consent; and it seems clear that the women by-products of this heartless Divorce Act can take little comfort from this Bill. I notice that our disabled Members are not here, but I should like the disablement income group to note that this Bill has special relevance to disabled women. What means are available to a wife before separation, desertion or divorce to enable her to shield herself and her children—and I am particularly stressing the woman with children—against these disasters? She is completely dependent on her husband's good will. Whatever his income, with the connivance of the Inland Revenue Department he can keep the amount secret. If he has a rise in wages he is under no obligation either to reveal it or to give his wife some additional housekeeping money to meet rising costs; and the Ministers who tirelessly exhort the tired housewife to shop around never direct the husband to increase the housekeeping allowance.

When a marriage is dissolved the wife has no nest-egg, because she has no share during marriage, no right to a share, no legal right to a share—and that is the right that matters in some families—of the family income. The best I could do to help her was the Married Women's Property Act of 1964, which enables her to keep half the savings from the housekeeping allowance; and the reason why I could go no further than that was that this House has a great majority of men and the only unanimous recommendation of the Royal Commission on marriage and divorce was the one I embodied in the Bill. The woman married to a secretive and mean man has little chance of saving and the outlook for her on the break-up of marriage is a bleak one. Many noble Lords will remember when the late Lord Hudson stood up on the occasion of a debate on the Divorce Bill and said: "The woman who will receive money is the woman in the house on Friday night when the man receives his wages." The unfortunate first wife and her children drag out a miserable existence, depending on a maintenance allowance which may or may not be paid, or alternatively on supplementary benefit. If any noble Lord wants to see how this system operates, he should go to his local court and see these unfortunate women on Friday night hoping that the maintenance has been paid.

My Lords, the Bill that we have before us is called the Social Security Bill. Where is the security for the good mother who has served the community and the nation? These women are not only having babies to satisfy themselves; they know full well that once the child is 16 or 17 quite normally it looks outside the home. A mother has not a freehold of her child, but merely a leasehold. She is serving the nation by producing the workers of tile nation. But how is the nation caring for her? I would say that the most glaring omission from this Bill is the failure to give women insurance in their own right—to give security to that woman who has served her husband, the locality in which she lives and the nation.

I hope that no noble Lord will laugh at what I am about to say, because it is quite serious. Recently it was assessed that if a mother was paid at current rates for cooking, cleaning, sewing and nursing, she could claim £4,000 a year. That assessment can be verified; your Lordships have only to inquire the cost of the various services in your homes. Yet if a widow remarries she must forfeit her pension; and the work she has contributed over the years in the first home is totally disregarded. If she finds that she has made a mistake in her marriage, she must still forfeit her pension. When one considers this coolly and seriously, it is clear that this particular woman is discriminated against in the most serious fashion. Furthermore, as has already been said, the receipt of a pension compels the widow to limit her earnings. But the quintessence of cruelty must have been devised by an oriental mind in the Civil Service: for a widow is to be condemned to loneliness if she wishes to retain her pension, while a widower can have as many affairs of the heart as he pleases. This, I say, is the very essence of cruelty.

If the actuarial mind has failed to apply itself to the social considerations, at least it must have appreciated the inequity of settling the wages floor for women for payment of earnings-related contributions at one-quarter of average male earnings, and permitting married women paying full contributions to opt out of the State basic scheme. For years before this all of us who were concerned about these things knew that the only satisfactory insurance scheme would be one that was not based on a voluntary approach. It had to be compulsory, otherwise people would not make their contributions. But here again, the married women is not treated as fairly as everybody else. If she has a drinking and bullying husband; if she, like most women at home, feels that for the sake of the children she must have peace, and the man says, "Do not worry about making that contribution; just leave it", she will give way, and then she is not fully covered, as she should be. This is something which I agree in past schemes was absolutely wrong and against the interests of the married woman; but the Government have again allowed it.

Then, women will still receive less favourable terms than men from occupational schemes. The minimum age of entry to the State reserve scheme has been set at 21. The level of benefits is low, and yet a large number of women will be dependent upon the scheme. That is the position of the married woman.

When those responsible for these provisions come to consider the position of the single woman, I do not detect any softening of the heart. Indeed, from my observations, I believe that men consider that if a woman has not received a proposal of marriage she has failed in reaching the only important goal in the world: that of pleasing a man—and any man will suffice. I say that for this reason. I believe that the treatment of the single woman in the field of social security has always been punitive. It is subconscious, but there is no doubt about it. Even the actuarial mind fails to appreciate that the single woman who leaves work to care for an elderly relative is saving the State a very large sum of money over the years, money which otherwise would have to be spent on hospital or geriatric services. As a doctor, I was in a hospital yesterday asking about costs, and the costs of these services now are tremendous. The auxiliary workers who are being exploited in our hospitals and who recently threatened to strike, some actually striking, rightly deserve much greater pay. These single women leave a well-paid job; they stay in their homes without any entertainment, without any change from day to day; they look after an incontinent parent; care for her; give her comfort—and give him comfort; father and mother to her are just the same—and the State sits back, rubs its hands and says: "That is saving us a lot of money." And indeed it is.

My Lords, it is estimated that there are 300,000 single women who care for elderly dependents in the home, and many of them are obliged to give up their employment for varying periods because the aged cannot be left alone. For a time they will phone up the doctor and say, "The key is under the mat", and the doctor calls, lifts up the mat, finds the key and goes in. But the time comes when that it not enough, and these women leave their jobs and stay at home. It gave me great satisfaction some years ago to address the inaugural meeting of the National Council for the Single Woman and her Dependents, which I regarded as a long overdue pressure group. I recall that crowded meeting. Those women for the first time in their lives had found an organisation which would speak for them. As I say, a crowded meeting, of women with pale, care-lined faces—faces which rarely saw the sun because they had to stay in the home day and night. I recall particularly the shabbiness of the coats of those unselfish women, who for many years had been unable to afford new clothes for themselves. This Bill fails to recognise that these women have to give up outside employment for as long as 20 years, and consequently not only forgo their earnings, but jeopardise their own entitlement to any form of retirement pension or to other social insurance benefits.

So, my Lords, I wind up by saying that, from whatever angle this Bill is examined, one finds that it discriminates against women by failing to provide them with insurance in their own right which will effectively protect them during the most vulnerable periods in their lives.

5.40 p.m.

LORD MAYBRAY-KING

My Lords, as a life-long feminist, I am happy to follow the noble Baroness, Lady Summer-skill. Through the years we have fought many campaigns together towards the goal of equality for the sexes, and I hope the Government will take note of the criticisms she has made, from a woman's point of view, of the social security features in this Bill. I would echo the tribute that the noble Baroness paid to those hundreds of thousands of single women in. Britain who sacrifice careers—and very often almost everything—to look after aged parents.

For 15 years as a Back-Bencher in the other place it was my privilege to be associated with colleagues who were always pressing on successive Ministers—among them the noble Baroness, Lady Summerskill—the need to do more for the old, the disabled and the ex-Servicemen. I am one of those who believe that since the Second World War we have been very fortunate in the calibre and quality of Ministers of Pensions, Ministers of National Insurance and now Ministers of Social Security, from both Parties. I am delighted that one such former Minister is taking part in this debate: the noble Lord, Lord Boyd-Carpenter, who held this office, as he held so many others, with distinction and humanity. I should like to join other noble Lords in congratulating him and thanking him for his maiden speech—a speech full of the knowledge and experience gained in so many Ministries. It is a special pleasure for me to hear an old friend make his maiden speech in your Lordships' House. The pattern has not changed, my Lords. Here in this House we know well the able and kindly way in which the noble Lord, Lord Aberdare, addresses himself to his duties as Minister; and I am glad that the noble Lord, Lord Boyd-Carpenter, paid a well-deserved tribute to the present Secretary of State, Sir Keith Joseph.

I welcome this Bill, but would have wished it to go much further. Above all I welcome the writing into this Bill in Clause 38, of an annual review of pensions. The distressing pattern of the post-war years has gone. What used to happen was this: the old-age pensioners, the public service pensioners and the ex-Servicemen's associations would mount a campaign, which they ran for years. After some two or three years they would secure a pensions increase Bill—often late enough to find the new increases provided for partly eroded by rises in the cost of living. In these campaigns the bodies outside were backed by Party and non-Party groups in the House of Commons. I remember especially Sir Lionel Heald in the 1922 Committee, on the one hand (and how deeply at this moment we regret the passing of the former Chairman of that 1922 Committee, Sir Harry Legge-Bourke, who was one of the noblest Parliamentarians of my years!), and on the other side there was Mr. Douglas Houghton. I believe that he has devoted more study to the problems of social insurance than any other citizen in this country. He brought skill and thought to all the campaigns and was at work in the last Government, devising new conceptions of social security. Those campaigns went on year after year. They were tiring, and they were shameful from the point of view of the people who were waiting for the outcome of a long campaign. I remember the wonderful work of the Public Service Pensions Council, and I remember the great work done by Mr. John Jennings, M.P. and other Back-Benchers—year after year engaged in putting new Motions down on the Order Paper almost immediately after one Pensions Increase Bill had become law.

Behind all our thinking was the belief that the day would come when we should not have to mount such campaigns and the increases would be given automatically. Now, my Lords, the annual review for which we have asked for so many years becomes the law of the land and Clause 38 is wide enough to cover all social security benefits, including those provided for by the Industrial Injuries Act. It empowers the Minister, when making his annual review, to consider not only rising prices but also the general level of prices and earnings and—here I am quoting: … the national economic situation as a whole, the general level of the standard of living, and indeed any other factors which he deems worthy of consideration. This is a monumental remit to a Minister. It gives the Government power to bring about what many of us think the country must achieve: a regular improvement in the conditions of our older citizens and, I think, a radical improvement in the condition of some of them. The Bill itself provides the machine, but I do not think it goes far enough. In my lifetime the country has made dramatic alterations in its care of old people. When I was a young man one of my hobbies was to entertain the old folk in the Southampton workhouse. It is difficult to convey, but not difficult to remember, the conditions then obtaining for many folk who had become too old to work and who depended on the niggardly provisions of the Poor Law.

I am glad that the noble Lord, Lord Taylor of Mansfield, paid tribute to Lloyd-George. I know what his work meant in changing the lives of my grandparents and the people of their generation—the coming in of the first Old Age Pensions Act. I believe that the right honourable gentleman. Mr. James Griffiths, will always be remembered for improving on Beveridge—"the great Beveridge" to whom the noble Baroness so rightly referred—and starting what has since been steady progress towards the ultimate goal of security and dignity in old age by his great Act of 1946. Since then, each Government has made progress in this field—steady progress, but too slow.

I have the privilege of being associated with an organisation of voluntary workers called "Help the Aged". Last year it raised £1¾ million for old folk in Britain and other parts of the world, under its altruistic founder, Mr. Jackson Cole. The Association is delighted now to have as its President the noble and learned Lord, Lord Gardiner, who is to speak after me in this debate. Those who work in voluntary bodies such as the one to which I referred, like "Meals on Wheels" and the Friends of Hospitals, know just how true it is that the old people of Britain still are divided into "two nations"; on the one hand, those with pensions and other incomes in addition to their State pensions, and, on the other, those living on the State pension plus supplementary benefit. Indeed, it is the voluntary workers of England, in giving their gifts of money and of voluntary service, who are more aware of the poverty of the poor than almost anybody else. I am afraid that, in spite of all we have done, the gap is widening between the State pensioner—the one with only his or her State pension and supplementary benefit—and the rest of the community. Certainly the gap is widening between the pensioner and the earner.

I understand that the State Reserve Scheme which will provide a second pension for those not fortunate enough to work in a job carrying an occupational pension, will still leave those who benefit by it needing supplementary pensions until well into the next century. It will be nothing at all as good as the occupational pension schemes. Much more certain is the inadequacy of the provision made, even after this Bill becomes law, for existing old age pensioners.

I have praised in various debates in your Lordships' House the work of voluntary bodies in supplementing what the State does. Special housing for the elderly is provided by local authorities, and also by voluntary bodies. I can think of a friend of mine at Christchurch, Hampshire, who has himself built 500 purpose-built flats for old folk. I can think of the "Help the Aged" Housing Association which has already built a thousand old people's flats in what we call sheltered accommodation" under the care of a warden. Some weeks ago I had the pleasure of speaking with Mr. Paul Channon, the Minister, at a meeting of London Mayors across the way in the G.L.C. There both of us were appealling to the local authorities to do more to provide sheltered accommodation for old people, on the one hand, and, at the same time, to make land available for the voluntary societies so that they can carry on in their work of providing extra special accommodation for old people.

But whatever the voluntary bodies do—and what they do grows every year—those who give service in the voluntary field know that the basic responsibility lies on the State to provide an adequate basic income for those who, through no fault of their own, have not the good fortune to receive two pensions and who must depend on the State for almost everything. There are millions of pensioners today in that position.

At the same time, the State must surely tackle the racket in land prices which has inhibited local authorities and voluntary bodies from providing not only the kind of housing I am speaking about, but housing altogether. I realise the fantastic difficulties which face any Government on this question of the basic pension, especially when we remember that the man with two pensions benefits from every increase in the basic pension. On this complex issue we need more and more thinking of the best minds of all Parties. With respect to my noble friend, I do not think that the noble Lord, Lord Boyd-Carpenter, solved it; I do not think that Mr. Crossman solved it, although I would not use the words about either of them that Mr. Crossman used about the noble Lord. I do not think Sir Keith Joseph has solved it in this Bill. I am one of those who believe that, given the right lead, those who are working and earning will be willing to bear an extra burden of taxation to provide for every person in this country a decent standard of living, whether that decent standard of living is provided merely by a basic pension or by a basic pension plus a supplement. I believe that such a lead ought to be given by the Government. To me, Clause 38 of this Bill points the way, provides the instrument, by which we can advance more swiftly than we are doing at the moment. I realise how much Britain has achieved in social security in the Welfare State since the war. But I realise, too, how we lag behind some of our fellow nations in the European Community in our care for the old folk.

I hope that by the time the first annual review is made we shall have created such a climate of public opinion that it may be possible to raise dramatically the income of the pensioners with the lowest incomes, and to lift some millions of men and women who have served Britain in their working years from the undoubted hardships that they still endure because the misfortune of their occupation was that it carried no occupational pension. I understand that a recent piece of research by students of the London School of Economics, headed by Dr. David Piuchard, has found that 80 per cent. who work are willing to make further financial sacrifices provided they are certain that the money goes to old age pensioners. The great Trades Union Congress has expressed a similar view.

My Lords, Clause 38 points the way. I believe that Britain is ready for radical improvements in the treatment of the millions who now exist on State pensions only plus supplementary benefit. I hope that in the years ahead Clause 38 is going to be the answer.

5.56 p.m.

LORD GARDINER

My Lords, it is always a privilege to speak after the noble Lord, Lord Maybray-King, whose speeches I always so much admire, particularly in the field which he has made so much his own. I feel nervous in addressing your Lordships on the subject of pensions, because nobody is an expert in everything and it simply is not one of my subjects. I am particularly nervous when we have had so many speeches from those who are great experts in this field, no one more so than the noble Lord, Lord Boyd-Carpenter. I was extremely interested in everything he said. I, too, do not know why the State Reserve Scheme should be so discriminated against, and the point about taxation is a peculiar one.

I, too, have always been muddled about how far the stamp is connected with the National Health Service. My experience is that you can arouse a good argument at any time by asking: How is the National Health Service paid? Most people think that that is what the whole stamp is for. I also agree with the noble Lord—and I have never understood this point—in regard to the question, why a man who, through his own fault, falls off a ladder in a factory gets a special right to compensation but does not when he falls off a ladder at home. In addition, he has the right to sue his employer for damages if it is his employer's fault. I imagine that we cannot get far along that line until the Royal Commission on what is often called "no fault insurance" reports. We had a most interesting historic review from my noble friend Lord Taylor of Mansfield, and later from my noble friend Lady Summerskill.

The only reason why I am speaking is because while I know little of the techniques of the law on pensions, I know something of the conditions under which so many—I think too many—of our old-age pensioners have to live. Broadly speaking, not a bad test of the degree of civilisation and humanity of any society is how they treat their old people. The plain fact is that too many old people are living in conditions of which countries such as ours cannot feel proud. I agree with those who think that pensions should in the end be treated as deferred pay—it is part of what people have worked for all their lives—and that the object of the community should be to see that people can go on living as near as possible to the standard to which they have been accustomed.

At General Elections all political Parties always proclaim what they are going to do for the old-age pensioners. This has gone on for a considerable time, but we have not yet arrived at the position at which we ought to be. There are many virtues in this Bill. I agree with the noble Lord, Lord Maybray-King, that the annual review is a great thing to achieve; and the State Reserve Scheme, when fully in operation, will be good and I welcome it. But it does not come fully into operation until 2018. A man of 25 will not have reached the matured scheme; and I think I am right in saying a man of 43 getting £30 a week, and assuming, as the Government do, a 3 per cent. annual increase in earnings, will achieve a pension of £4.20. This really is not good enough, and something must be done to avoid what would otherwise be a 40 years' poverty gap.

Of course this costs money; we appreciate that. The money can only come either from the Treasury or from increased contributions, or from both. So far as the Treasury is concerned, of course "now" is never a good time to get more money. Some of us, I think, would be prepared, if it was really going to break through this position for the old-age pensioner, to give up a Channel tunnel, or perhaps even Maplin, and others to give up the continual increase in armaments. So far as contributions are concerned, I believe that statistics have shown, or tests may have shown, that about 85 per cent. of working men would be prepared for an increase in contributions—and I have no reason to think that employers would not also—if they were assured, if it could be guaranteed, that the Treasury would not use the money for any other purpose than to improve the position of old-age pensioners.

I feel I must say how much I agree with my noble friend Lady Summerskill, and indeed the noble Baroness, Lady Seear, in the whole approach of this Bill to women. It is all based on the supposition, not that they are people in their own right, workers in their own right, but that they are some man's appendage. We shall never get this straight until they are treated as people in their own right. As I understand it, if a husband and wife are both working and the man loses his job he receives unemployment pay; if the woman loses her job, she does not. I do not know, if that is right, how it can be defended; or how it is that if the woman dies first the husband retains the same pension for one as he had for two, while if the husband dies first the widow's is reduced by half. The only excuse I have heard is that women must always receive less pension than men because they live longer. This, it seems to me, cannot be right. It is not their fault they live longer. Does an old woman require less in the way of food, clothes and warmth than an old man? It is the fact—is it not?—that the non-manual worker lives longer than the manual worker; but I have never heard it suggested that the pensions of non-manual workers should be decreased so that they would have to go on living on a lower standard simply because they live longer.

There is one point on which I am not sure whether I understood the noble Baroness correctly. I thought she said that we could in effect safety leave this to the Government because they have promised legislation to reduce sex discrimination. If the noble Baroness said that, may I say that it is not right. I was re-reading only this afternoon exactly what the noble Viscount, Lord Colville of Culross, said when he intimated that we could forget about the Select Committee's Report on the Sex Discrimination Bill, and that the Government at some time would put forward legislative proposals, but these were to be confined to employment and training and there would be a look at education. This, I gathered, was because the Select Committee had so limited themselves. The reason for that was that it was a Private Member's Bill and they thought that if such a Bill was to tackle the whole question of sex discrimination in the fields of education, training and employment, it was as much as a Private Member could be expected to do. We considered pensions and the grave discriminations there; we considered banking, guarantees, mortgages and so forth, but we thought that for a Private Member to try to tackle all the disparities of pensions would be quite impossible and we were wise to limit it to these three subjects. But it is most disappointing to be told that, while the Government may at some time in this Parliament put forward legislation to stop sex discrimination in the fields of education, training and employment, they have no intention at any time of eliminating the absurd discriminations which exist in relation to women in the field of pensions.

I hope that the Government may consider this point. It was the great merit of the 1959 Bill, which completed its Committee stage but failed owing to the 1970 General Election, that it really did eliminate the discriminations in the field of pensions so far as women were concerned. I hope that the Government will give further consideration to this 40-year poverty gap and find out whether we cannot even now do something radically to improve, in the next forty years, the position of the old-age pensioner. It is my belief that the people of this country are perhaps exceptionally generous and humane and, if called on to increase contributions or even for further taxation, would gladly do so if it would relieve any old-age pensioner from living in the poverty which unfortunately so many of them do.

BARONESS SUMMERSKILL

My Lords, may I answer the noble and learned Lord because I should greatly dislike to be misinterpreted? What I said, or inferred, was that the degree of sex discrimination in the Bill before us to-day was so great that the women of the country, having realised this, should not place their hopes on having a sex discrimination Bill amended in their favour.

6.8 p.m.

LORD SOPER

My Lords, may I first add my congratulations and thanks to the noble Lord, Lord Boyd-Carpenter, on the occasion of his maiden speech. I had never heard him speak before—that is my loss, but it can now be remedied. I was much impressed, not least by the competence with which he dealt with this compendious and most difficult Bill. I have made some effort to read it but I should be less than candid if I pretended that I had read every page of it; and there is much of it which at the moment passes my comprehension.

That leads me to the very much stronger reason for endeavouring to see this Bill steadily and to see it whole, and to ask the very important question about what it intends to do. I take it that it is an expression of the Government's intention, so often stated, of making a kind of selective benefaction in which the universal offer of good things will be made available to those who need them. Indeed, if the Government are still looking for some text upon which to build this totally admirable intention, may I refer them to a Tory of the 18th century, the Reverend John Wesley, who was engaged upon various activities of social and indeed of eternal security, and endeavoured to obtain the services of a number of young men and offered them what were called "The Twelve Rules of a Helper"? One of those rules was: Go to those who need you, and especially to those who need you most. I believe that to be admirable as a proposition, and intend in what I have to say to try to judge this Bill in the light of it. Perhaps I ought to interpolate the comment that there were other pieces of advice which John Wesley gave to his helpers, one of which seemed in direct contradiction to the one I have quoted. It was: Talk sparingly with women, especially with young women. However, that has nothing to do with the matter in hand.

If it be true that this is a Bill intending to succour those people who are in need, there are certain observations about it which have already been adequately transacted and dealt with in your Lordships' House this afternoon, and I will do no more than refer briefly to two of them. I entirely agree with what has just been said by my noble and learned friend Lord Gardiner and what was so clearly said by my noble friend Lady Summerskill, and Lady Seear. But in fact within this Bill there is still involved a principle which is detestable; and though we in the Church have not entirely eradicated its evil consequences, as the noble Baroness pointed out the other day, this is a serious condemnation of an attitude of mind to women which I hope will, by the grace of God and by other means, soon be completely eradicated.

Secondly, I want to add my words of support to what the noble Lord, Lord Maybray-King, said about old age pensioners. It is a significant fact that, of the old age pensioners to-day who receive incapacity pensions and retirement pensions, 28 per cent. of them cannot live on the pension as it is now available to them and are committed to the supplementary benefits, which include a principle about which, as far as I can remember, no one to-day has said anything, yet I think it demands attention. As one involved practically in this field, I wonder how many people entitled to supplementary benefits, out of a fierce but rather splendid pride, in fact do not ask for them and do not get them. I have no wish to wring anybody's withers, but last winter I watched an old lady die of hypothermia. She was a very proud and fierce old lady, and she died because she was not prepared to do the sensible thing; which was, to apply, or to get somebody else to apply on her behalf, for the supplementary benefits which she desperately needed. Therefore how heartily I support what has already been said about the inadequacy of this Bill, in so far as it attempts to meet those who need, because many of them are still uncared for!

John Wesley said, "Go especially to those who need you most", and it is for that reason that I want to draw your Lordships' attention to one group which has had only casual, though very important, reference this afternoon from my noble friend of Bristol. I refer to the disabled group. The disabled group are in a peculiar sense of deprivation and need, not only psychologically but emotionally and in every other way, because of their condition, about which it is impossible for me to do more than sympathise from outside because I am not disabled. But they suffer loss of earnings and they suffer from the extra expense which is required to keep them in conditions of tolerable welfare. It is in this group that this Bill seems to me to be more sadly lacking in comprehension and a really significant approach than in almost any other matter, and in my submission this is a serious blot on its general competence and its general magnanimity.

DIG—the Disablement Income Group—insists, and I think quite rightly, that to discriminate between invalidity and widowhood and retirement is invidious and wrong, and it expresses itself in the kind of situation which I will briefly relate. Here is somebody who is disabled in an early stage of his career and has to give up work. For six months after the cessation of his working life he receives a kind of pension which is graded. From that point until he becomes of retirement age he receives nothing but the flat supplementary benefits. This I believe to be thoroughly unjust; and it could be, and ought to be, remedied.

There is another group, those who from early childhood—or indeed from birth—are told (and they soon come to realise) that they will be incapable of earning their living. They approach working age with the prospect of nothing better than supplementary benefits. I believe that such supplementary benefits are wrong and should be supplanted by the kind of invalidity or disablement pension which is these people's right and without which they are unjustly impoverished. Indeed, when the Disablement Income Group make a claim that sooner or later there should be provided within any social security scheme that is worth while a disability income in itself, they are asking for something which is generally right and could be put into effect with (shall we say?) a taxable pension in respect of loss of earnings, and a nontaxable free benefit pension for the extra expense incurred. In my judgment, at the point of the gravest need, this would be an expression of the true purpose which I believe the Government have in mind in this Bill.

I agree entirely with those who have said so eloquently this afternoon that we are moving into a new age and into new conditions, psychological as well as economic. I believe this Bill is essentially directed towards the ends that are good, and its universality is at any rate a possible argument in its favour as such universality was not possible hitherto. I believe that this Bill needs serious amendment, and especially in regard to those who probably are least able to speak for themselves—those who are disabled, but in whose name I have ventured to speak this afternoon, and whose condition seems to me to provide the acid test of the sensibility and credibility of a Bill such as this. I hope that it will receive a Second Reading but that it will be seriously and severely amended in Committee.

6.17 p.m.

LORD HOY

My Lords, we have had an interesting and general debate this afternoon and I should like to say how much I enjoyed the speech of an old House of Commons colleague, the noble Lord, Lord Boyd-Carpenter. We served together for many years and the speech he delivered was the speech I expected: he had something to say and he said it concisely and did not take long about it. I am sure we shall welcome him on many other occasions in our debates in your Lordships' House.

I should also like to thank the noble Lord, Lord Aberdare, for the way in which he opened the debate. He did it in a kindly way, as he always does; but even if you do something in a kindly way with a bad Bill it does not make that bad Bill kind. So I shall not have many kind things to say about the Bill, and, like my noble friend Lord Soper, I hope it will be substantially amended during the Committee stage. I am grateful also to my noble friend Lady Phillips, who not only will champion the causes of women, as she did when she opened the debate to-day, but, as we all know, has spent a considerable part of her life serving the cause of women, certainly throughout England and Wales.

When the noble Lord, Lord Aberdare, opened the debate this afternoon he described this as a Bill to reform the present position to meet present day needs. In my view that is exactly what this Bill does not do. It just does not match up to it. Indeed, let us remember when we are discussing this Bill, both now and in its later stages, as has been said by my noble and learned friend Lord Gardiner, that it will not really become alive until 40 years from now. So there can be but few of us in this place (I think perhaps I can see one) who will live long enough to enjoy the benefits of this pensions Bill. That is just hard fact, and the noble Lord, Lord Aberdare, will not even seek to deny it.

In concluding her speech my noble friend Lady Phillips, said: Every man or woman who makes a contribution to the community by his or her work has a right to live in dignity if they are sick, disabled, unemployed or retired. Under each of these headings we have had contributions this afternoon which show that this Bill falls far short of meeting the requirements. This Bill simply does not make these provisions.

My noble friend Lord Taylor of Mansfield this afternoon recalled the Committee days of the 1947 Act, a Committee on which I had the pleasure of serving. That was a great Act by any standard or measure and this one in comparison is a poor little craitur—"craitur" spelt with a "u"—and that is the comparison I make of it. But I was grateful to have brought to the attention of the House the points made by the noble Lord, Lord Boyd-Carpenter, and by my noble friend Lord Shepherd, for the proposal that certain contributions can be charged by employers for taxation but if the employee puts it into the Reserve Fund he cannot charge it for purposes of income tax. That took me right back. There is always some mean little mind in some Department somewhere who can think out this type of proposal. I remember all the benefits that were to go to the old-age pensioner in the 1947 Act when my right honourable friend James Griffiths did much better than Lord Beveridge had asked for; but somebody managed to get something in to the effect that old-age pensions would not be increased to old-age pensioners who were in the charge of local authorities. I am certain my noble friend will recall that I did not need to go far to persuade my right honourable friend of that day to make the change, but as a result of it the people in the Crookston Homes in Glasgow were allowed to enjoy their old-age pension increases with the rest of the country. These things often creep into Bills, and it is only by the vigilance of people in this House and in another place that they can be dealt with. I only wish, and I say it quite honestly, that we had been dealing today with a Bill that had been formulated by Mr. Crossman and his assistants. I do not claim that I should have agreed with everything in it, but it would have been a substantial Bill dealing with the problems that confront us in this social field and not putting them off for 40 years. From that point of view our time would have been well spent.

If one deals with old-age pensions, we are grateful for the annual review. Let me say to the noble Lord, Lord Aberdare, that we are grateful for the annual review as we think it will serve a purpose; but except for what they are given when the annual review takes place there is nothing at all in this Bill for those pensioners. I should be grateful if the Minister could tell us what is to be taken into account when the annual review takes place, because so far everyone I have heard has said, "In the course of a year food prices will go up. That will eat into the pension that is being paid, and so by having this annual review we shall then be able to replace what has been lost". Surely the purpose of an annual review must be something greater than that. Are we not always arguing, are not the Government always telling us, that the standard of living is increasing and increasing? If that be so, the purpose of the annual review should not be only to replace that which the old-age pensioner has lost. The purpose of the annual review should not only do that, but should allow the old-age pensioner, together with the rest of the community, to enjoy the higher standard of living. Unless it does that, it fails in its purpose.

There is no provision at all in this Bill to raise the basic pension. One of the greatest condemnations of our social legislation to-day is that there are now 2 million old-age pensioners whose standard of living is so poor and so mean that they qualify for a means-tested supplementary benefit. Surely that cannot reflect any great credit on this country. Indeed on top of that, if the figures with which we are supplied are correct, there are another 2 to 3 million old-age pensioners who are living at a scale of only £1 to £1.50 per week above that means-test level. What we are dealing with to-day are 5 million old-age pensioners who are living just above or just under the means-test level, and as a consequence have to obtain supplementation.

These pensions compare very badly indeed with those of some of our friends in Europe. There they treat their pensioners in a much more generous way. If going into the Common Market does not do anything else—if we cannot increase our own but they increase benefits because we are there—at least somebody will have got something out of it. All I want to suggest to the Minister is that the proposals in this Bill fall far below anything that we should be planning for in the year 2000. What perturbs me more than anything else is that, hard as the position may be at the present time—and hard it is for many people in our country—there will be many men and women who are now only 40 years of age who will never get any benefit. No one can expect to get benefits before the year 2000.

In case anyone thinks that I may be exaggerating the case, let me quote from the Press release issued by the Help The Aged Society on January 15 of this year. It said: If the Social Security Bill now before Parliament"— that is this Bill— becomes law in 1975 it will be 40 years before the proposed pensions reach maturity. So even the 25 year-olds of to-day—and that rules out the one Member I was thinking of in your Lordships' House—will not receive the full pension on retirement. For those who are middle-aged the position is even more bleak. That surely is a condemnation of the Bill before us. It certainly does not meet the situation, and obviously will need to be considerably amended before it is allowed to leave your Lordships' House.

I do not wish to detain your Lordships' House very much longer, but one cannot say that a Bill is welcome when in fact there are so many specific complaints. My noble friends Lady Phillips and Lady Summerskill, and the noble Baroness, Lady Seear, all complained about the provisions in the Bill as they deal with women. Not a single person has expressed satisfaction. One thinks of the section known as the Disabled Income Group with which I have had some association in the City of Edinburgh, where they have a very active secretary indeed. This position was raised by the right reverend Prelate the Bishop of Bristol. That was the one case he was making, saying that provision is not made in this Bill to meet their circumstances. That was repeated by my noble friend Lord Soper.

With all these deficiencies, therefore, I certainly cannot welcome the Bill, except to say that we are given an opportunity to put it right. I hope that your Lordships will take the opportunity and will deal with the points that we have raised in the course of this debate and, perhaps, as we have done on other occasions, by the time this particular Bill leaves your Lordships' House it will be in a very much better condition than when it arrived.

6.29 p.m.

LORD ABERDARE

My Lords, this is a very difficult debate to wind up because your Lordships have covered a great deal of ground and the Bill itself is very wide. But if there was one theme which went through practically all your Lordships' speeches it was the demand for more. I tried to make a list of the various requests that were made by one or another of your Lordships. There were those who wanted better treatment for women; those who wanted to abolish the earnings rule; to raise the basic pension; to abolish the three waiting days; to do more for the disabled; to lower the retirement age; and to do more for old people. I would share all those views. I merely wish to draw attention to the fact that we do have this difficulty, that we never have enough resources to do everything we should like to; it is a matter of priorities.

I thought the one of your Lordships who did not ask for more was the noble Lord, Lord Boyd-Carpenter, who in a very admirable maiden speech, if I may respectfully say so, very wisely, I thought, drew attention to the fact that this Bill seeks to lay the financial foundation upon which we can achieve further expansion. As I tried to explain in my opening remarks, it gives us a flexible form of providing for the future. It gives us a basic scheme with earnings-related contributions which, if we can achieve economic expansion, will mean a rise of earnings and therefore a rise in the contribution level which will enable us in the future to try to deal with some of these extremely difficult problems that have been mentioned in the course of the debate this afternoon. At the same time, it is right that people should be allowed to save for themselves in occupational schemes and to achieve pensions related to their earnings.

We are all aware of deficiencies in our social security system, just as (with my other hat on), we are only too well aware of them in the National Health Service. I must say the only way in which one can sometimes encourage oneself that we are making progress is to give a glance backwards, as the noble Lord, Lord Taylor of Mansfield, and the noble Lord, Lord Maybray-King, did. When we look back I think we can take sonic comfort in the fact that we are making some progress. In my submission, this Bill will take us a further step forward down the road.

May I now try to deal with one or two of the main matters mentioned in the course of the debate. A number of your Lordships, especially the noble Baronesses, Lady Phillips, Lady Seear, and Lady Summerskill, with some male assistance from Lord Maybray-King, Lord Gardiner and Lord Soper, spoke of the position of women. I think they did this Bill an injustice, because, whatever your views may be about what should be done for women, there can be no question that this Bill represents a major advance in women's pension rights. Because women live longer, pensions matter even more to them than they do to men. Women can look forward on average to a retirement lasting some 20 years, compared to 12 years for a man. One of our aims of policy reflected in the Bill is to find a fair deal for women. In the basic scheme, married women will retain their present option to rely for benefits on their husband's contributions.

BARONESS SUMMERSKILL

Shame!

LORD ABERDARE

My Lords, there is no doubt about it that three-quarters of the five million married women employed at present who are earning enough to be liable to pay contributions elect not to do so. In our estimation, women value the option, and we believe it is right to retain it.

BARONESS PHILLIPS

My Lords, would the noble Lord forgive my interrupting? Surely the reason they opt out is that they cannot draw anything if they pay? If they pay the full stamp they do not get the benefits.

LORD ABERDARE

My Lords, if they pay the stamps, then they get benefits.

BARONESS PHILLIPS

They do not get full benefits.

LORD ABERDARE

They may not get the same benefits as a man, because of actuarial calculations, length of life and other factoŕs, but we can no doubt go into that matter at the Committee stage in more detail. I want to make this one major point about the position of women under the Bill; that is, the provision for widowhood. Widows receive extensive cover under the present provisions of the basic scheme, and this is being continued, with some minor improvements resulting from changes in contribution conditions. But the really significant change is in the field of occupational pension provision. The widow's pension provided by a recognised occupational scheme must normally be at least half the rate of her husband's minimum personal pension. Under the Reserve Scheme a widow's pension will be half the rate of her husband's pension or prospective pension under the scheme. This is quite new and of the greatest importance to women. Widowhood cover, and in particular related to earnings, is a vital need for which occupational schemes have only recently begun to realise their responsibility, and the recognition requirements will help to accelerate this development.

Of course, we are aware of the movement towards greater equality between men and women, in the home as well as in employment. Changes in the traditional roles of men and women, and the increased activity of women in the labour force, have important implications, both for the national economy and for the individual family. But while social security provision must keep in step with such developments, we cannot legislate far in advance of any really fundamental change in most people's thinking or indeed in their circumstances. The important feature of this Bill is that we have ensured as a matter of deliberate policy that the structure is flexible, so that it can be developed to take account of social and economic change in the future.

Another main topic that was brought into the debate very admirably, in the first instance by the right reverend Prelate the Bishop of Bristol and subsequently by the noble Lord, Lord Soper, was the question of disablement, and in particular the right reverend Prelate mentioned the disabled housewife. Here again we are indeed very conscious of the needs. I should have thought that as a Government we had shown ourselves to be very conscious of those needs and to have done a great deal towards helping. We may not have gone far enough; we acknowledge that. But I do think that, on our record, we have shown how much we are trying to do to help the disabled. By the end of this year we shall be spending some £100 million more per annum on benefits for the disabled than we did in the year 1970. In three years long-term sickness benefit has been transformed for most of the 400,000 people who get it by the group of changes which accompanied the change of name to invalidity benefit. The current up-rating Bill which is now before another place and which will arrive in your Lordships' House in due course will increase the invalidity allowance again by 40 per cent., and all invalidity pensioners get the benefit of the higher long-term benefit up-rating. I would say to the noble Lord, Lord Soper, that I do think we have tried to improve matters for the long-term disabled. As the noble Lord knows, the invalidity allowance is graded according to the age at which the person is unable to work.

Quite apart from the invalidity allowance, we have introduced the attendance allowance, and we have now extended the attendance allowance, which is already being received by over 90,000 people. So far as the future is concerned, with which I think your Lordships were most concerned, my right honourable friend the Secretary of State has indicated that he has put in hand a very thorough review designed to ensure further progress as soon as possible and in the best way possible. The variety of ideas which have been put forward in the past, and many of them again this afternoon, and the range of disabled people whose needs have been stressed, will be covered by this review.

The noble Baroness, Lady Phillips, and my noble friend Lord Reigate asked about the earnings rule. Without the earnings rule, there would be nothing to prevent a person from going through what would, in effect, be a token retirement and, shortly afterwards, resuming full-time employment and drawing full pension on top of full wages. To abolish the earnings rule and the retirement condition would cost—and I know that my noble friend who has apologised for the fact that he cannot be here this evening has heard this answer before, as, I am sure, has the noble Baroness—£115 million in the first year, although it would reduce to £65 million a year after five years or so if the present trend towards earlier retirement continued. But even if such a large sum were available, we feel that there are greater priorities for its allocation within the social services field. This is particularly so as the extra money, if we abolished the rule, would go to those pensioners who are better off because they have been able to carry on at work on a more or less full-time basis.

I should like to say a brief word about the subject of tax relief on employees' reserve scheme contributions, which was first raised by the noble Lord, Lord Shepherd, in the course of my opening speech, and has subsequently been touched upon by the noble Lord, Lord Boyd-Carpenter, my noble friend Lord Reigate and the noble Lord, Lord Hoy. This matter was exhaustively debated in another place and I have the feeling that maybe we shall return to it on another occasion. But in general it is argued that the contributions of employees to the reserve pension scheme should rank for tax relief, in precisely the same way as contributions to a revenue approved occupational scheme. Those of your Lordships who have taken this line do not accept that satisfactory alternative provision has been made, as I suggested in reply to the noble Lord, Lord Shepherd, by splitting the contribution in the ratio 2½ to 1½ in favour of the employee. But although it is common practice, I admit, in occupational schemes for the employer to pay more than the employee, and indeed, as was mentioned, some schemes are non-contributory, this does not mean that apart from the tax point it would have been unreasonable to split the reserve scheme contribution equally. The employer's contribution to his own occupational scheme is determined by a variety of factors, by no means all of which are relevant to the reserve pension scheme. For example, employers frequently pay additional sums into their occupational schemes in order to provide back service benefits for their existing employees, whereas the reserve pension scheme will relate solely to current service. More important, the cost of an occupational scheme can be taken into account by an employer in deciding on his total outlay by way of remuneration for his employees, so that in some cases a payment by the employer to the occupational scheme may represent, at any rate in part, money that would otherwise have gone directly in wages.

The situation in relation to the reserve scheme is quite different. This is not a voluntary scheme, but is compulsory on those employers who do not operate their own occupational schemes. They have therefore no choice but to meet the additional expenditure, and they are in no position to offer their employees a certain level of expenditure on the reserve pension scheme as an alternative to wage increases, since the amount of the employer's contribution to the reserve pension scheme is not within his own control. A slanting of the reserve scheme contribution split in favour of the employee was a deliberate decision by the Government to take account of the absence of tax relief on the employee's contribution. But for this, we should have regarded an equal split as entirely justifiable. The effect of charging the taxpaying employee at 1½ per cent. contribution without tax relief is little different from the effect of charging him a 2 per cent. contribution with tax relief. But for the employee who is not liable to tax—and there may be between 1 million and 2 million of them in the reserve pension scheme—the allowing of tax relief would confer no advantage. So that he or she is markedly better off paying a 1½ per cent. contribution, even though no tax relief is allowed on it.

I shall try to answer one or two of the special points that were made to me by your Lordships. The noble Baroness, Lady Phillips, asked me about the annual uprating and how it would be made. This is in Clause 38 of the Bill, which provides for annual reviews of benefit rates and requires the Secretary of State to lay a draft order to increase the rates—

BARONESS PHILLIPS

My Lords, I do not want to delay the Minister, but that is not really what I meant. I referred to the noble Lord's statement that he would maintain. I do not quite understand how he is to maintain. There are powers to do it, and I was only asking where they come from.

LORD ABERDARE

My Lords, if I may answer the noble Baroness in conjunction with the noble Baroness, Lady Seear, because I think it is the same point, we have undertaken to review the benefits annually, as we do at the present moment in our uprating Bills, and we have guaranteed that these increases will be in line with the increases in prices. But this is only our basic position and we very much hope that we shall be able to do better than this. In fact, we have done better than this in the last uprating, and in the uprating Bill which will be coming to your Lordships' House soon your Lordships will no doubt see that we have been able to achieve better than the bare minimum which we undertook to do. I only hope, like the noble Baroness, Lady Seear, that if we can achieve a steady expansion of the economy and get these earnings-related contributions which will give buoyancy to the fund, we shall be able thereby to help some of the categories of people whom we are all certainly anxious to help.

May I say to the noble Lord, Lord Boyd-Carpenter, that although the Bill makes no change in the benefit provisions of the Industrial Injuries Scheme, which he asked me about, these arrangements under the Scheme will be developed progressively as changes are made in the basic scheme I thank the noble Lord, Lord Taylor of Mansfield, for his very kindly drawing attention to my Welsh ancestry, but I fancy that, rather than take credit for introducing this Bill, I should join with the noble Lord, Lord Boyd-Carpenter, in putting the credit where it really belongs, with my right honourable friend the Secretary of State who was finally responsible for the Bill and introduced it in another place. Much as I should like it, I do not think he has any Welsh blood in his veins, but it was very kind of the noble Lord to say what he did. He asked me one specific question about the Industrial Injuries Advisory Council, and I can give him the assurance that the Council will continue in being under the existing provision in the Industrial Injuries Act. Others of your Lordships, particularly the noble Lord, Lord Maybray-King, and the noble and learned Lord, Lord Gardiner, referred to the provisions for old people, and the noble and learned Lord also referred to women. Again, I hope that what I have said about the possibilies for the future will bring them some comfort. I particularly welcomed what the noble Lord, Lord Maybray-King, said about Help the Aged, and about the wonderful work which they are doing in the provision of sheltered housing which, I am sure, is something which we must all try to improve. It is a very sound and sensible way of helping to cope with the problem of old people.

My Lords, we started with, I think, a cautious welcome from the noble Baroness, Lady Phillips. The Bill did not get a welcome at all from the noble Lord, Lord Hoy, but at least he welcomed the annual review. Certainly so far as comparisons with Europe are concerned, they are very difficult to make, because once one starts making comparisons one has to take into account free medicine, taxation problems and a whole range of difficulties. But it is true that in many instances their pension provisions are better than ours, and this is something which we are studying very carefully. I have tried to answer some of the points that your Lordships have made. I hope I have not missed out any noble Lord who asked me a specific question, but if I have I shall write and answer him. I should like finally to thank all those noble Lords who have contributed to what I consider to have been a very constructive debate.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.