NATIONAL INSURANCE BILL (Hansard, 20 July 1949)

§ The Minister of National Insurance (Mr. James Griffiths)

I beg to move, That the Bill be now read a Second time."

It was always the intention, from the days of the Beveridge Report, that the contribution conditions for death grant should be relatively easy ones to fulfil so that the grant would ordinarily be payable without question on the death of a person insured under the new Insurance Act or of a member of his or her immediate family. The contribution conditions set out in the Third Schedule to the 1946 Act were framed with this general consideration in mind. There are two contribution conditions which have to be satisfied. The first is that 26 contributions have actually been paid on the insurance on which the grant is claimed; the second condition can be satisfied in one of two ways, either by having at least 45 contributions paid or credited on the last insurance card or, if this fails, an average of 45 such contributions over the period of insurance under the new Act.

This second condition is not a difficult one to satisfy; it allows of payment of full grant despite the fact that seven or perhaps eight weeks are completely unaccounted for both during the year before death and also on the average of the whole period of new scheme insurance. Further, we have made provision that, even where these relatively simple tests fail, a rather smaller grant may still be payable on a reduced life average so that, for example, half the ordinary grant will still be payable where only a quarter of the insurance life is accounted for by stamps or credits.

The Bill now before the House does not propose to alter this second condition in any way, and what I have said about it is merely for the purpose of making clearer the effect of the proposed change in the first contribution condition. The first condition is at present that 26 contributions shall have been paid under the new scheme since 5th July, 1948. In the long run this condition will not debar anyone who has become established in 1507 the National Insurance scheme from full cover for purposes of the death grant.

It has, however, become apparent that there will, at the start, be appreciable numbers of persons otherwise fully covered by insurance under the new scheme on whose death, or on the death of whose dependants, no grant will be payable. This is because 26 contributions under the new scheme have not yet actually been paid on their insurance despite the fact that they are in the new scheme and fully complying with its provisions. The main classes concerned of those for whom this Bill is intended to provide a cover are, first, widows whose husbands died before the new Act or before they had paid the necessary 26 contributions under it and who are qualified for widowed mother's allowance or widow's pension under the new scheme; and, secondly, men and women who have been receiving benefit while sick or unemployed for a long time, and who also will not have paid 26 contributions since 5th July last year.

Both these classes, while receiving benefits, are treated as insured under the new scheme and are credited with contributions under it because, of course, while receiving its benefits they do not pay contributions but receive credits for each week they are entitled to receive benefits. People in these classes may not therefore actually yet have paid 26 contributions under the new scheme. Many of them probably will do so sooner or later and would then be fully covered for this new benefit as well as for the other benefits, but meanwhile they or one of the family covered by their insurance may die and be deprived of benefit because of this initial contribution condition. This Bill enables contributions credited as well as contributions paid to count for the initial contribution test for the death grant. It will fill a gap which I am sure the House will agree ought to be filled in the insurance of people who stand particularly in need of the complete cover of the National Insurance Act.

There is a much smaller, but nevertheless unfortunate gap in the provisions in regard to the death grant cover which the Amendment now proposed will also close. It arises in respect of young people continuing with their education or in the first few months of their employ- 1508 ment. So long as a child is within the scope of the Family Allowances Act and its provisions it is covered for death grant on either the father's or mother's, National Insurance. A child will, however, no longer be covered in this way after 31st July following his or her 16th birthday, even though schooling may be continued beyond that date. Under the National Insurance Act we credit such children with contributions to their 18th birthday so that when they ultimately enter the scheme as contributors they will be able to make a good start.

The Bill will enable contributions credited in this way for these children to count on a claim for death grant in the rare event of the child dying before he or she has actually paid 26 contributions. A slightly different problem arises where a child starts work at or shortly after the ordinary school leaving age. In some cases title to family allowances in respect of the child would continue; for example, where he is an apprentice, but in many cases it will not, and in such cases there will, under the Act as it stands, be a gap of six months in the child's death grant cover.

Under the general arrangements for crediting contributions for National Insurance purposes it is the long-established practice to give what are known as pre-entry credits on first entry into insurance in order to ensure that as soon as the necessary qualifying contributions for a particular benefit have been paid, that benefit can be paid at the full rate despite the fact that insurance commenced after the beginning of the contribution card which would ordinarily settle the rate of benefit. The revised first contribution condition now proposed in this Bill would enable me to give such pre-entry credits in appropriate cases to bridge the gap to which I have referred. The number of cases in which this power would have to be used would, of course, be very small, but I am sure the House will agree that we ought to provide this cover.

It is estimated that at the moment more than 500,000 people are without the death grant cover which the change in the first contribution condition proposed to be made by this Bill would give them. This figure includes not only insured persons but their families, because, as the House 1509 will know, death grants are for members of the family on the insurance of father or mother. The numbers of such persons is half a million now, but it will drop steadily as and when they secure cover by paying the 26 contributions now required, so that while the cost falling on the Insurance Fund from this change may initially be of the order of £200,000 a year, it will ultimately become quite nominal. As is explained in the Financial Memorandum accompanying the Bill, this money is already provided in the finances of the scheme so that no additional burden will be placed on contributors or the Exchequer. This is the benefit which we wish to make available to these people. I hope the House will agree that it was worth while producing this small Bill to give this particular benefit to people who perhaps need it more than anyone else. I hope hon. Members will be disposed to give the Bill a unanimous Second Reading.