Old Age Pensioners

HC Deb 07 November 1950 vol 480 cc757-60

30. Mr. Osborne

asked the Minister of National Insurance if she has any statement to make in reply to the demand for an old age pension of 40s. a week, sent to her by the National Federation of Old Age Pensioners' Associations; how many old age pensioners already draw supplementary pensions; what these cost annually; and if she will give an estimate of how much more it would cost to give 40s. a week to men at 65 and to women at 60 years of age, if these supplementary payments were abolished.

Dr. Summerskill

In reply to the first part of the Question I will if I may circulate in the OFFICIAL REPORT a copy of a letter which I sent recently to my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) on this subject.

Out of rather more than 4½ million retirement pensioners and non-contributory old age pensioners, nearly 900,000 are at present having their pensions supplemented at an annual cost of about £22½ million. The additional cost of granting a pension of 40s. for all men and women on attaining pensionable age would be some £400 million a year immediately, rising to £700 million a year over the next 30 years. Corresponding increases in unemployment, sickness and widowhood benefits would be required and would cost an additional £200 million a year.

Mr. Osborne

May I ask the right hon. Lady two questions? First, has she sent a reply to the Federation, and second, in view of the fact that the Chancellor said there would be a further increase in the cost of living by Christmas, can she hold out no hope that the pensions of the old age pensioners will be increased?

Dr. Summerskill

In reply to the first question, the Federation often communicate with me and, of course, I always reply. In reply to the second question, I think the figures which I have given this afternoon are very big and it is necessary for us to concentrate our available resources on the needs of those pensioners who are worst off. If any pensioner applies to the National Assistance Board, his application will, therefore, be very sympathetically considered.

Mr. Marlowe

Does the right hon. Lady's reply in regard to supplementary pensioners—900,000, I think she said—and National Assistance mean, in fact, that 900,000 pensioners are being subjected to a means test?

Following is the document:

COPY OF LETTER SENT BY MINISTER OF NATIONAL INSURANCE TO Mr. G. R. CHETWYND, M.P.

20th July,1950.

I return the letter and resolution from the National Federation of Old Age Pensioners' Associations which you sent me recently.

Before I deal with the cost of the National Federation's proposal of £2 a week each, I think I ought to remind you what has been done for the older people in the community and at what cost both in the present and in the future.

As you know, the great majority of present pensioners reached the age of 65 (or 60 in the case of women) before the new National Insurance scheme came into operation, and indeed before the new rates of contributory old age pension became payable in 1946. In these cases all, and in the remaining cases nearly all, of the contributions paid towards their pension were based on an expectation of 10s. a week for a single man or woman and 20s. for a married couple of whom both were over pension age.

Since September, 1946, however, all those contributory old age pensioners who had retired or had reached the age of 70 (65 for a woman) without retiring have received, not 10s., but 26s. for a single man or woman, and 42s. for a married couple—including, since July, 1948, a couple of whom the husband only is over pensionable age, the wife being under 60 but dependent on him. Men and women now reaching 65 (60) have similarly paid contributions which represent only a fraction of the cost of their pensions, and this will continue to he the case for a great many years, in fact until the present rates of contribution have been paid throughout the period from school leaving age to pensionable age. In addition, large numbers of persons have been brought into insurance who in the past would have had no cover of this kind, and they can qualify for pensions at the full rate after only ten years' insurance. This places an additional burden on the general taxpayer, and you will understand the magnitude of the problem when I tell you that the cost of subsidising National Insurance benefits at the present rates out of taxation at the beginning of the existing scheme was of the order of £130,000,000 a year and by 1978 it will rise to about £420,000,000 a year, nearly all of the increase being caused by the increasing load of retirement pensions which cannot be avoided since the proportion of old people in the community is rising steadily every year. At the beginning of the century there were only ten people over the present pensionable ages (65 for men, 60 for women) for every hundred people of working age; at the present time there are twenty; in another ten years there will be twenty-three, in twenty years there will be twenty-six and in thirty years' time there will be thirty.

With the best will in the world towards pensioners, and a full appreciation of their difficulties, any suggestion which seriously increases the cost of retirement pension must of necessity be weighed with the utmost care against the cost to the contributor and to the tax-payer both present and future. The immediate additional cost of the proposals put forward by the National Federation of Old Age Pensioners' Associations, which, as I understand it, is that there should he a universal pension of £2 a week from 65 (men) and 60 (women) would be just over £400,000.000 a year. If this additional cost were to be borne in the same way as existing pensions under the Act, the contributions payable in respect of employed men would have to be increased by about 2s. 5d. a week, and for self-employed and non-employed men by about 2s. 3d. a week. After allowing for these increased contributions the additional amount to be found from general taxation would be little short of £300,000,000 a year. The burden falling upon the general tax-payer would thus be increased to more than £400,000,000 a year now and by 1978 the growing proportion of old people would raise it to more than £700,000,000.

But even that is not all: it is a cardinal principle of the National Insurance scheme that the basic rates of all benefits provided in replacement of earnings shall be the same.

The cost of corresponding increases in other benefits would add about another £200,000,000 a year to the figures quoted in the preceding paragraph.

I am afraid that at the present time we cannot contemplate incurring expenditure of anything like this order. We must make the best use of our resources by concentrating any extra payments on those cases where there would otherwise be hardship and as you know we have recently increased the scale rates of National Assistance with this end in view.

E. SUMMERSKILI