HC Deb 03 July 1939 vol 349 cc928-9
86. Sir W. Brass

asked the Financial Secretary to the Treasury whether he can give statistics showing at what rate the number of non-contributory old age pensioners is diminishing, their places being taken by old age pensioners under the Widows', Orphans' and Old Age Pensions Acts, and what annual saving to the Treasury results there from?

Captain Crookshank

As the answer is a lengthy one and contains a number of figures, I will, with my hon. and gallant Friend's permission, circulate it in the Official Report.

Sir W. Brass

Would it not be possible to use this surplus that is available to increase the present pensions of old age pensioners?

Captain Crookshank

I think my hon. and gallant Friend had better read the reply that is being circulated.

Following is the answer:

The means of old age pensioners over 70 years of age who draw their pensions by virtue of the Widows', Orphans' and Old Age Pensions Act are not investigated and it is, therefore, not possible to state what proportion of them would qualify for a non-contributory pension under the Old Age Pensions Act. Moreover, a small proportion of non-contributory pensioners, mainly where the first award was made before July, 1926, would be able to establish a contributory title if there were need for them to do so.

The number of non-contributory pensioners in June, 1926, was 1,082,000. The number in March of this year was 576,000. At the latter date the number of pensioners drawing their pensions by virtue of a contributory title under the Widows', Orphans' and Old Age Pensions Act was 1,274,000. During the period of 12¾ years since the inception of the Contributory Pensions Scheme the increase in the total number of pensions is thus 768,000; the increase in the by-virtue pensions, 1,274,000, being offset by a reduction of 506,000 in the number of non-contributory pensions. Expressed in terms of money, the total increase in the old age pension cost is £20,000,000, namely, increase of by-virtue pensions £33,000,000, reduction of non-contributory pensions £13,000,000.

The whole of the money required to provide pensions over the age of 70 is provided by the Exchequer under the Old Age Pensions Vote (Class V, Vote 6) which rises every year. As a result of the decennial increases in the rates of contribution, the first of which took place in 1936, young entrants into insurance and their employers do, in theory, contribute something towards the cost of their pensions over the age of 70, though the produce of these contributions is credited to the contributory Pensions Account. In fact, however, the contributions paid under the Contributory Scheme will never be sufficient to finance the whole of the cost of pensions under 70 and of widows' and orphans' pensions, and, therefore, in addition to the provision under the Old Age Pensions Vote (Class V, Vote 6), the Exchequer is required to make a substantial contribution which is increasing annually under the Widows', Orphans' and Old Age Contributory Pensions Vote (Class V, Vote 7). The Exchequer grant from this Vote would have to be correspondingly larger but for the credit of the decennial increases mentioned above.