CONTRIBUTORY PENSIONS REGULATIONS, 1926. (Hansard, 9 November 1926)

§ Mr. RHYS DAVIES
I beg to move, That a humble Address be submitted to His Majesty praying that the Contributory Pensions (Modification of Old Age Pensions) Regulations, 1926, dated 26th July. 1926, be annulled. I do not wish to detain the House unduly, but it is imperative that we 1046 should call the attention of the House to the Regulations issued by the Ministry under the Pensions Act of 1925. In order to explain the position I must refer to the fact that in 1925 we passed the Act under which these Regulations are issued. We do not dispute the Ministry's power to issue these Regulations because such power is given to the Ministry under Sections 14 and 15 of that Act. We want, however, to challenge the Ministry's action in so far as the contents of the Regulations is concerned. We are a little surprised at the action of the Ministry in this connection. What the Regulations purport to do—in very technical language—is to reduce the old age pensions of certain persons who come within the scheme, from 10s. in some cases, down to 1s. per week. The House will appreciate the importance of what I am about to say when I inform them that actually under these Regulations a number of persons ac 65 years of age will receive pensions amounting to only 1s. per week. We had two documents submitted to us when the Bill of 1925 was before Parliament. The Memorandum explaining the Bill included these words: If the holder of an exemption certificate wishes to be insured for an old age pension he must surrender his exemption certificate, and he will then be insured for health insurance and for widows' and ophans' and old age pensions. There is not a single word in that official memorandum issued then by the Ministry as to what is now transpiring under these Regulations. When we turn to a more important document, the Government Actuary's Report then issued, this is all we get: There is a small class of persons, estimated to number about 40,000, who hold certificates of exemption under the National Health Insurance system. Persons of this class are found to a large extent to be provided for in old age, and are accordingly dealt with in the Bill in practically the same way as those who are in excepted employment. The claim that we make is this, that an exempted person under this scheme who surrenders his certificate of exemption is penalised unduly, and we would like the Minister to tell us why this class of person who falls into exactly the same category as others will receive a less amount of old age pension than those who are paying the same rate of contribution. To at least about 40,000 1047 insured persons the Regulation appears to be very harsh. Are these Regulations based on any actuarial calculations, and what in fact is there to differentiate between individuals who come under the Regulations and other classes? I have tried to make myself familiar with all these Regulations, with the Actuary's report and with the Memorandum issued on the Bill when it was before the House, and I cannot remember any explanation given at any time or any hint given by the hon. Gentleman the Parliamentary Secretary nor by the Minister of Health, as to what was going to be done under Sections 14 and 15. When I saw the Regulation itself I was simply astonished as to the figures contained in it. I think I have said enough to indicate that some of us are very apprehensive that if this Regulations comes into force, a number of persons will have been deceived under this Measure; and I trust the Minister will be able to remove complaints which I feel sure he knows exist in this connection.

§ Mr. HADEN GUEST
I beg to second the Motion.

§ The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Sir Kingsley Wood)
I am glad to take this opportunity of giving a few words of explanation of this Regulation, not only for the benefit of the House but for a number of people who, I know, are interested in it up and down the country. The House may remember that when the Widows', Orphans' and Old Age Pension Act was passed in 1925 there was special consideration given to two classes of people—those called exempt persons who came under Section 14 of the, Act, and those concerned in certain classes of excepted employment, who come under Section 15 of the Act. Those Sections foreshadowed, for reasons which I hope to justify, modifications and curtailments of the ordinary rights so far as old age pensions are concerned. The hon. Member was wrong in saying that no statement was made concerning this matter to the House, because on the 13th July, in Committee, in response to a question put to me, I foreshadowed, for what I believed were good and sufficient reasons, that there would have to be some modification for a very small number of people, and I expressly 1048 stated that we might have to make some sort of Regulation such as that which is now being discussed.
All these people who are concerned in this Regulation are segregated from the main body of persons under the pensions scheme by reason of the fact that they are not required to be insured for old age pensions because they possess or are entitled to benefits corresponding to the old age pension already conferred. As far as exempt persons are concerned, they hold their certificates of exemption usually on the ground that they possess certain private means. Persons who are in the other class, namely, that of excepted employment as in the case of the Civil Service and employment under local authorities, are specially exempted from this particular part of the scheme because in the great majority of cases they receive an equivalent benefit to that which they would receive under the Widows' and Old Age Pensions Act itself. These two classes of person are specially treated and are receiving old age pensions equivalent to those mentioned in the State scheme. The reason why we are making in this Regulation special conditions so far as they are concerned is really in fairness to the other contributors under the scheme.
If such a Regulation were not made, there would be nothing to prevent a person exempt from the scheme by reason of private means, or otherwise, and thereby insured only at a reduced rate of contribution for widows and orphans' allowances, continuing to pay that until the age of, say, 60, and then surrendering his exemption certificate, so that for five years only would he pay the necessary contribution for the old age pension under the scheme. By that means, unless some sort of provision such as this were made, these people would get the old age pension for simply a contribution for five years while the rest of the community would have to pay on an average for the whole period of employment, which is generally reckoned at 45 years. Therefore, it is only fair and right that this Regulation should be made. The House will see that so far as the Regulations are concerned the pension is on a graduated scale, and if they will look at the Regulations they will find set out on page 3 a table by 1049 which the payment is made and varies according to age—for example, a person of 45 to 47 receives a contributory old age pension of 9s. a week, and so it decreases as the age gets more because, of course, the contribution has been less. We have given a great deal of consideration to this particular proposal in order that no injustice should be done, and I asked when I heard that the hon. Member was going to raise this question, exactly what would be the ordinary payment made under an ordinary scheme by such a person. For 2d. a week from the age of 45 the Regulations give a pension of 9s. a week at the age of 65, but the equivalent of 2d. a week commencing at the age of 45 under ordinary circumstances and without State assistance would be a pension of only 1s. a week at the age of 65.

§ Mr. RHYS DAVIES
All those consideration affect other people. What is there to differentiate between the treatment of those persons and other persons?

§ Sir K. WOOD
I thought I made that clear just now. Why this distinction is being made is this. If you take the position of exempt persons, they are exempt at the present time for the old age pension scheme on the ground that they have certain private means. The hon. Gentleman knows as well as I do that an exempt person can at any time surrender his exemption certificate; and by that means come under the operation of this scheme as a full contributor. If he chooses to do it at a very late period in life, he can thereby secure an old age pension at a contribution which is utterly inappropriate to the benefit he is going to receive. Therefore, in order to do justice to the scheme and to the contributors, you are bound to make a certain limitation, and the limitation that is in fact made under these Regulations is really a very generous one to the people concerned. If, for instance, the hon. Gentleman takes the age of 50 which is mentioned, the Regulations give a pension of 7s. a week, whereas actually the actuarial equivalent of what he was paying would, if there were no State contribution at all be only 7½,d.
Therefore, I do not think anyone can justly complain of these Regulations at the present time. These Regulations 1050 were issued in their draft form some time ago, and the hon. Member and others did make representation to us as to the position of certain people, but since the final Regulations have been made neither I, personally, nor, I think, my Department has had any objection. I hope, after the explanation I have given to my hon. Friend, he will be satisfied in connection with this scheme, that in this particular matter we have endeavoured to be fair both to the main body of contributors and the people who come in under very exceptional circumstances. You have got to hold a fair balance between the two, and I think that this has been accomplished. There is very good evidence of the very fair arrangements which have been made as far as the widows' pensions are concerned, that, quite the opposite to national insurance, where a very few voluntary contributors came in, one of the most interesting features of the widows' and orphans' scheme at the present moment is the number of people who want, voluntarily to insure under it. If we were proposing or suggesting unfair terms, it is obvious that people would not desire to come under the scheme as they are doing at the present time. Under these Regulations anyone who comes in, even late in life, is receiving very valuable benefits, which they would receive under no private scheme, as the hon. Member knows. I do not think he need hesitate in advising his friends, many of whom, as I know, desire to obtain the benefit of the voluntary side of this scheme, to come in under these Regulations which are really a very good bargain in many respects for people who desire to obtain voluntary insurance. I hope this will satisfy the hon. Gentleman.
In conclusion, may I say that although at the present moment I think we are administering over 160,000 pensions to widows, and we are now making provision for the first time in this country, for no less than 263,000 orphan children, the scheme has been operating with great smoothness. We have been endeavouring to avoid red tape, and we have had the satisfaction of seeing few questions put down concerning the administration of the scheme. It is surprising, in view of the great amount of 1051 administrative machinery to be put into operation, and the very large number of people already under the scheme, that it has worked so fairly and so smoothly. I do not think any one need hesitate to take advantage of the proposals now being put forward. They will be of benefit to the people concerned and also equally fair to the other contributors.