HC Deb 23 January 1940 vol 356 cc372-80
53. Mr. Riley

asked the Chancellor of the Exchequer whether he can now make a statement on the question of an increase to old age pensions?

54. Mr. Salt

asked the Chancellor of the Exchequer if the inquiry now being made regarding old age pensions includes consideration of pensions for spinsters at 55 years of age, and whether he can now make a statement?

55. Mr. Dobbie

asked the Chancellor of the Exchequer whether he is now in a position to make a statement as to improved financial payments to old age pensioners, and if not, can he inform the House when such a statement may be made?

56. Mr. Markham

asked the Chancellor of the Exchequer whether he can now make a statement on the subject of an increase in old age and widows' pensions?

58. Mr. Leslie Boyce

asked the Chancellor of the Exchequer whether he is now in a position to make a statement regarding the Government's policy in respect of old age pensions?

61. Mr. Lipson

asked the Chancellor of the Exchequer whether he is now able to make a statement on an increase in the old age pension?

64. Mr. Magnay

asked the Chancellor of the Exchequer whether he is now in a position to say what the Government have decided to do regarding the matter of old age pensions?

65. Mr. Mander

asked the Chancellor of the Exchequer whether he is now able to make a statement with reference to old age pensions; and whether it is proposed at the same time to deal with widows' and spinsters' pensions?

66. Mr. Gordon Macdonald

asked the Chancellor of the Exchequer whether he can now make his statement on the question of an increase in old age pensions?

67. Mr. Graham White

asked the Chancellor of the Exchequer whether he is now in a position to make any statement on the Government inquiry into old age pensions?

Sir J. Simon

I would ask these hon. Members to await the statement I propose to make at the end of Questions to-day.

Mr. Salt

Is my hon. Friend aware that while strongly supporting an increase in old age pensions spinsters consider that their claims should also be considered at the same time? Can he say whether that will be so?

Sir J. Simon

Will the hon. Member be good enough to await my statement at the end of Questions?

Viscountess Astor

Will my right hon. Friend bear in mind that many of these aged spinsters are in just as tragic circumstances?


Sir J. Simon

I propose to ask the permission of the House to make a rather longer statement than is usual at the end of Questions. All Members are greatly interested in the subject of old age pensions, and it would be misleading to give a summary of the Government's intentions without briefly giving some of the reasons which have weighed with us. The House will remember that when we last debated this question—on 1st November last—I indicated the Government's intention to resume the investigation which had been promised by the Prime Minister on 27th July but had to be postponed on the outbreak of war. I promised to get in touch at once with representatives of employers and workers as the contributing parties under the contributory scheme and discuss with them the possibility of improvements. Those discussions have now taken place and the whole problem has been explored with a view to seeing what improvements are most needed and how the cost could be met. It was agreed at the outset of the discussions that they should be regarded as confidential and I am not in a position to indicate the views expressed by either party.

The scheme which I am about to outline is the Government's own scheme, but in framing it we have paid close attention to the considerations urged upon us by the representatives of the two contributing parties. There are nearly 3,000,000 old age pensioners over the age of 65 in this country. Most of them, of course, are drawing contributory pensions, but included in the total are 550,000 who are over 70 and whose pension is subject to a test of means. It is natural, when considering the need for improving the pensions system, to concentrate on the case of the pensioner who has no additional resources other than public assistance. But investigation shows that this class of case, which certainly calls for our special consideration and with which I intend to deal, is exceptional. For instance, the latest available figures show that there are at least 375,000 pensioners earning wages in employment—under war conditions the number must be growing. Some may well be earning salaries. Some are Income Tax payers. Large numbers receive supplementary pensions under works' superannuation schemes. A large proportion, no doubt, live with sons or daughters and share the family roof and the family table. It is the minority who have not these additional means of support whose case needs especially to be considered, and the Government propose to deal with the matter by supplementing pensions, where necessary, from central funds, rather than by a flat rate addition all round which, while it is really not needed in many cases, might well prove insufficient where help is most required.

There is a further objection to adopting the method of flat rate addition which I must state plainly to the House. Although pensions under the 1925 Act are called "contributory," the greater part of the money needed to pay them is being provided, not by contributions from employer and workman, but by the general taxpayer. The State contribution to contributory pensions is at present no less than 60 per cent. of the whole; in addition, the State, of course, pays the whole of the non-contributory pensions. I have seen no scheme for increasing, by means of a flat rate addition, the scale of old age pensions all round which would not involve heavy further burdens on public funds, which we ought not to incur in present circumstances without being satisfied of their necessity. If the existing contributory pension was to be brought up to a substantially higher figure—say by adding 5s. a week—by an increase of weekly contributions alone, the weekly contribution for men would have to be raised from 11d. to 1s. 9d. at once and to 2s. 1d. in five years' time, with corresponding increases in the case of women's contributions. Without questioning the willingness of both parties to industry to make some contribution towards an improvement in the existing scheme, an addition of this magnitude is plainly not practicable in present circumstances.

Our latest information is that about 275,000 pensioners get additional relief from public assistance authorities and the annual cost of such relief is in the region of £5,250,000. We propose to take away altogether from the local authorities their present liability to supplement old age pensions, including the pensions of widows over 60 and to place this obligation upon central funds with some appropriate adjustment of finances under the block grant. It will be discharged by a central organisation analogous to the Unemployment Assistance Board under the supervision of the Minister of Health in England and Wales and of the Secretary of State for Scotland in Scotland. Further, we propose that the present family needs test as administered by public assistance committees, which has regard to the income of all liable relatives wherever they reside, should be replaced by the household needs test as now applied in the case of applicants for unemployment assistance. We should not be justified in relieving from all obligation sons and daughters who live in the same house as their aged parents and can make some reasonable contribution to their parents' maintenance. This has been the practice in this country from time immemorial, and it is based on sound social instincts. In considering the need of an old age pensioner we should not, however, take into account the resources of sons and daughters who do not live with their parents but have establishments of their own. The supplementary grant, when fixed, will in most cases not call for constant revision and will really be of the nature of a supplementary pension. It will be paid through the Post Office as is the practice at present with the 10s. pensions.

There are two other changes in the present system of contributory pensions which we see our way to introduce. The first has to do with the wife who is younger than her husband when the latter becomes entitled at the age of 65 to his pension of 10s. The hardship in this case is accentuated where a couple has been in receipt of unemployment benefit or assistance before the husband was 65, since he was previously receiving an allowance for his wife as well as for himself but this ceases when he reaches the age of 65. We have therefore decided to recommend Parliament to lower the age for wives under the contributory scheme to 60, provided their husbands are 65 or over. This involves also considering the admission to pension at 60 of women who are insured in their own right and we have decided to provide for these women also in our proposals. The cost of these two concessions is slightly over £8,000,000 a year at the present time, rising to £10,000,000 in 10 years' time. We propose to meet this cost in the immediate future by appropriate additions to contributions—namely, 2d. per week in respect of men and 3d. per week in respect of women—though, as the years pass, the change will involve an added burden on the Exchequer unless the whole contributory basis of the pension scheme is revised.

The above proposals will require legislation which will be introduced by my right hon. Friend the Minister of Health. The Bill is being prepared and will be presented to the House without delay. We hope to obtain a Second Reading as soon as possible and to make substantial progress with the measure before the Easter Adjournment.

To sum up, the plan I have outlined will, in effect, establish supplementary pensions payable through the Post Office for those who, from the absence of other resources, need them; it will remove from local authorities the burden to which they have frequently drawn attention, of providing relief for old age pensioners by supplementary assist- ance; it will place this obligation upon central funds under more acceptable conditions; and it will enlarge the benefits of the contributory scheme so as to include within it wives and insured women over 60. These are the general intentions of the Government and I hope the House will await the Bill for more precise details.

Mr. Attlee

May I ask the Chancellor of the Exchequer whether he can say what is the basis on which these supplementary pensions are to be paid, or the amount?

Sir J. Simon

There will not be any limit. I regard that as an advantage as compared with fixing a figure like 5s. because I have no doubt that in some cases it will be more than that. There will not be a limit; there will be a scale and the supplement will be fixed having regard to the need of the pensioner.

Mr. Attlee

Does it amount to anything more than a subvention to local authorities for relief?

Sir J. Simon

It amounts to a great deal more. It amounts first of all to providing for regular payments through the Post Office for those people who feel, and I think naturally feel, a considerable sense of humiliation because they have to apply weekly for relief from local authorities.

Mr. Graham White

While expressing much satisfaction at many of the things which the Chancellor of the Exchequer has told us, may I ask whether, in addition to the 275,000 old age pensioners who are we know in such need that they are obliged to go to the public assistance committee he has in the course of his inquiries also taken into account the number estimated at perhaps 200,000, who are suffering need no less than the 275,000 who already go to the public assistance committee, but who because they are too stout-hearted or for other reasons, will not go to the public assistance committee and who would appear, under what he has told us, to escape from this scheme?

Sir J. Simon

The hon. Gentleman is entirely wrong in his concluding sentence. Although, I think, from the inquiries which I have made, that it is true that there are people who would be justified in asking for local relief but who from a sense of independence and pride do not do so, I should think that the estimate which the hon. Gentleman mentioned is necessarily quite without foundation. How can anyone possibly know? At any rate the scheme which I have indicated is a scheme which applies equally to those who go and to those who do not go for public relief.

Mr. T. Williams

Is the right hon. Gentleman aware that mine workers are now accepting weekly deductions from their wages under arrangements in particular collieries—and that is being done in other works as well—and can he say whether such supplementary allowances, granted by working miners to pensioned miners, will be taken into consideration when these cases are examined?

Sir J. Simon

That is a rather detailed question, and I think the hon. Gentleman will appreciate that I would sooner it was dealt with when we have the Bill before us. I appreciate the point.

Mr. Holdsworth

Are we to take it from the scheme which my right hon. Friend has just put forward that spinsters over 60 will get 10s. a week?

Sir J. Simon

Yes, Sir.

Mr. Stephen

While expressing my utter disappointment at the announcement, may I ask the right hon. Gentleman who is going to carry out the investigation for this new operation of the means test? Is it to be the public assistance authorities or the Unemployment Assistance Board, or is he going to create new machinery?

Sir J. Simon

It will be carried out by a central authority. The local authorities will be entirely relieved from the duty. The Minister in the House who will be answerable will be the Minister of Health, and, as I indicated, the scheme is to be carried out by an extension of the organisation of the Unemployment Assistance Board.

Mr. Benjamin Smith

I hope the right hon. Gentleman will not think this an uncharitable question, but is it not a fair assumption that when the Board is set up to which these 275,000 will have to apply the net effect of what they gain through going to that Board will in fact be lost by what they have been getting from the public assistance committees, and the position will be exactly as it was?

Sir J. Simon

I do not think that is so. I fully expect that when this scheme is working in connection with central funds, the effect will be to increase the assistance.

Mr. Attlee

Does not the right hon. Gentleman realise that there will be very serious disappointment among all pensioners affected that there is no increase in the basic pension?

Sir J. Simon

I think it is too early to be sure what the response will be. I would prefer to await the more mature reflections of the public rather than attempt to reply to immediate reactions, but I think there will be a great many old age pensioners who will appreciate that by this method they will get, not an extra 5s. a week, but more than that, and under conditions which are entirely honourable to themselves.

Viscountess Astor

I believe that many old age pensioners will be deeply grateful for the concession and that my right hon. Friend is going a long way to meet a very great need, but may I ask whether it would not be possible just to make the spinsters' pension come a little earlier, because in these days it is very difficult for women over 50 to get a job, as so many young girls enter into industry at a very early age? Would it be at all possible to grant it a little earlier than 60—to give it, possibly, at 55?

Sir J. Simon

I am afraid that I could not encourage my hon. Friend on that point, but I will gladly consider it.

Mr. Woodburn

Am I correct in understanding that when the needs of the old age pensioners are calculated under the household means test, they will be treated with not less consideration than under the present Unemployment Assistance Board's scale?

Sir J. Simon

That is, broadly speaking, the intention.

Mr. Boothby

Has my right hon. Friend made any estimate of the total additional cost to the Exchequer of all these proposals?

Sir J. Simon

Naturally that has been looked into, but I think a statement will probably be better made when the Bill is discussed.

Mr. Pethick-Lawrence

Do I understand that the work of the Excise officers who have hitherto been employed with regard to a very large number of the non-contributory pensioners, and which has given considerable satisfaction, will be entirely superseded by the new machinery and that we shall have other officers dealing with these matters?

Sir J. Simon

I speak subject to correction, but I think not. Nothing that I have said suggested it, and I do not see why it should be so. I recognise that the Excise officers' work has been largely recognised as helpful, and I do not think it is touched at all.

Mr. G. Strauss

Will the scale to which the right hon. Gentleman referred be attached to the Bill in the form of a Schedule; will it be a subject for discussion and Amendment in the House?

Sir J. Simon

That is a very important practical administrative point, but I would ask the hon. Gentleman to he good enough to await the circulation of the Bill. I hardly think I can go into all these administrative matters now.

Mr. Denman

Can my right hon. Friend give the approximate number of women who will be benefited by the reduction in age?

Sir J. Simon

I cannot tell my hon. Friend off-hand, but I will make an inquiry.

Mr. A. Jenkins

Did I correctly understand the right hon. Gentleman to say that with regard to the cost of the increase of the pensions, whatever the payment be, there will be an adjustment of the block grant, and if that is so. and it is treated in the same way as taking over the trunk roads was treated, will it not be a cost, not to the Government at all, but a mere redistribution of the cost among the local authorities?

Sir J. Simon

I think the hon. Gentleman had better wait and see how it will be expressed. I suggest that he should wait because he will find that his assumption is quite wrong.