§ Order for Second Reading read.
§ 3.49 p.m.
§ The Minister of National Insurance (Dr. Edith Summerskill)
I beg to move, "That the Bill be now read a Second time."
The Chancellor in his Budget Speech has described in general terms what the proposals in this Bill are to be, and why. Although these proposals have been debated at some length in the course of the Budget debate and in discussion which was recently held in this House on the employment of the elderly, I want to take this opportunity to explain in a little more detail the general considerations which we have in mind.
I want at the outset to emphasise the interim character of the Bill. It deals with certain questions which, we feel, cannot wait until the review of the whole scheme which is to take place in 1954. A good deal more experience is needed of the working of the scheme before that review can be undertaken. I remind the House that I am under a statutory obligation to undertake that review in 1954.
In framing the Bill, I have tried to consider everybody's needs and to stretch the available resources to the uttermost, but inevitably there are some whose needs are greater than others, and these needs are reflected in the figures of applications for supplementary assistance. I have always believed that one of the truest measures of the greatness of a Government is its treatment of old people and children. Fine words which we hear about the dignity of labour the serenity of old age and the happiness of childhood, mean nothing if we do not help those people to be dignified, serene and happy.
At the same time, I do not want any of the groups who are entitled to insurance benefits to feel that they are being overlooked. For instance, I recognise that all widows, when suddenly called upon to face up to the responsibilities of the wage earner in addition to those of the home maker, have often to undergo a painful readjustment, but the difficulties of the widow with dependent children must always command our 582 special sympathy, for though she may have been a skilled worker before marriage she cannot, even if she so wishes, re-enter industry unless she can make proper provision for the care of her children. We propose, therefore, to increase the standard benefit rate of the widowed mother with one child to 40s. Over 100,000 widows will receive these increased rates.
Now I come to the question of the children. My own view is that the greatest measure of poverty is found in those families where there are dependent children and, therefore, increases in children's allowances will be given for all dependent children of widows, and of all people on sickness benefit, unemployment benefit, retirement pension and industrial injuries benefit. We propose that the eldest child should attract a benefit of 10s. and the others 2s. 6d. each in addition to the family allowance of 5s. Occasionally, an old person tells me that we are doing too much for the children at the expense of other categories of the community. I cannot agree. Only if a child is adequately fed can he develop to his full mental and physical stature, and for this reason I regard children's allowances of one kind or another as in the nature of a national investment.
In regard to retirement pensions, we propose to increase the standard benefit rates for those over 70–65 for women—to 30s., and to 20s. a week in the case of wives over 65 where the pension is based on their husband's insurance. About 3 million pensioners will benefit from these new rates. I should like to make it clear to the old people of the country that the scheme which has been worked out in regard to their pensions was not designed only with the needs and interests of the old people in mind, but also with the needs and interests of their children and their grandchildren in mind.
The improved expectation of life is something we should welcome as the reward of social progress. But it is agreed by all thinking people that unless the insurance scheme is modified in certain respects, in a comparatively few years' time the financial burden will be too heavy for the workers to carry; and they will be the children and grandchildren of the old people today. Therefore, we are anxious to encourage those who can work to go on a little longer, and in these days of full employment I feel that this policy 583 will not jeopardise the position of other workers in the labour field. The necessity for this will be understood when it is realised that at the beginning of the century there was only one person of pensionable age for every 10 people of working age. At present the ratio is one to five, and in less than a generation it will be one to three. Of course, if this is accompanied by an equivalent increase in the working life of the individual, well and good; but if not, the proportion of non-workers in the community will rise at the same rate and the outlook will be bleak.
Even if we make no improvements of benefits, the Government Actuary estimates that the expenditure on benefits, which is now rather more than £400 million, will reach about £750 million in 25 years' time. During that period the working population, and therefore the contribution income, which will be £370 million will remain almost stationary. The balance will have to be found by the taxpayer or the contributor. The liability of the general taxpayer would reach £360 million a year by 1978 on the basis of present benefit rates and conditions and on the assumption that people will retire at their present ages of retirement.
Fortunately, the increase in the proportion of old people in the population has been accompanied by general improvements in health and fitness among the elderly. The present position is well illustrated by the fact that the expectation of life of a man of 65 is now 12½ years and that of a woman of 60 rather more than 18 years. We are always the tougher sex—I do not know why, neither does anybody else. The right hon. Lady the Member for Moss Side (Miss Horsbrugh) and I, therefore, still have great expectations.
§ Mr. Douglas Marshall (Bodmin)
What is the expectation of life of a woman at 65? [An HON. MEMBER: "It is the same thing."] No, it is not.
§ Dr. Summerskill
I leave the hon. Member to work that out. At any rate, it is approximately the same, within a year or two. Thanks to the improved health and other social services, we may still expect this tendency to continue. But I think the House will agree that this tendency calls for a revision of the general attitude towards old age and retirement. Rising 584 productivity alone cannot take care of the problem. Pensioners will expect, and rightly expect, to share in any improvement in the general standards of living of the people.
From a sample of persons who attained pensionable age after July, 1948, it appears that the proportion of men not retired one month after pension age was about 60 per cent., and the proportion who had not retired about six months after pension age was between 52 and 54 per cent. Of the insured men now reaching the age of 70 nearly one-third are still in employment, and of the insured women now reaching the age of 65 nearly a fifth are still in employment. These are certainly encouraging figures.
It should be remembered that the principle of these improvements with regard to the elderly was introduced in the last Measure. The first step was taken in the present Act when, for old age pensions payable at the conventional age of 65–60 for women—we substituted the retirement pension, with the right to increments, conditional on retirement from work. An unconditional pension is only provided at the higher ages of 70 and 65. I hope that hon. Members when making their contributions to the debate will recognise that this new principle of conditional retirement was introduced in the Act which operates today.
Under our new proposal the worker's eventual pension will be increased by 1s. 6d. instead of 1s. as at present, for every 25 contributions paid after this provision of the Bill comes into operation. This means that a worker who postpones retirement for the full period of five years, up to the age of 70, from that age will have 15s. a week, instead of 10s. as at present, added to his increased rate of pension of 30s., so that he will have a total pension of 45s. If a worker works under those provisions until he is 70 he gets a total pension of 45s.
The combined pensions of a married couple where the wife is not working—which means of course where her pension is not governed by her own insurance—can ultimately be 75s.—£3 15s. If the husband dies first his widow will then get 45s. If the wife has kept her own insurance alive and has gone on working until 65 they can get £4 10s. between them, 45s. each, if they are both insured in their own right.
585 Now I turn to the earnings rule which has limited the amount which may be earned by a retirement pensioner under 70 or a widow without reduction of pension. In the future the limit will be £2 and the widowed mother will not have the amount due on account of her children reduced by her earnings. Those who have not given this matter of the earnings rule considerable thought find it difficult to understand why it should be applied at all. In the first place, we wish to encourage those who can to go on working as long as possible and not to rely on a pension supplemented by part-time earnings. Moreover, I think it must be clear—and I have said this before in answer to Questions at this Table—particularly to trade unionists, that we should not allow a pension to become a subsidy to wages and so offer a temptation to the unscrupulous employer to undercut wages.
Since the principal Act came into operation there have been retirement pensioners who have expressed the wish that fuller consideration should have been given to the whole principle of retirement before they finally decided to retire. This was considered of course when the Bill was going through the House——
§ Mr. James Glanville (Consett)
Is my right hon. Friend aware that in Durham County there are thousands of men who were compulsorily retired at 65 for no other reason than that they had reached 65? What possibility is there of those men now being reinstated in work now that their ages are 67 or 68?
§ Dr. Summerskill
Perhaps my hon. Friend will be patient and hear what I have to say, for I think he will agree that, although there are perhaps groups which he feels have been penalised in the past, there is no reason why I should not try to modify the present provisions and make them more acceptable to present workers. It is possible for trade unions, of course, to make representation of behalf of certain groups of workers in order that their conditions of life may be integrated with the provisions of this Bill.
Old age pensioners have said they wished they had a little more time to think it over as in that case they might have decided to remain within industry. It was felt at the time the original Measure was going through the House that it was not possible to allow people to retire and then change their minds, because it must be 586 remembered that retirement marks the end of insurance contributions and a change of mind calls for the re-establishment of a pensioner as a contributor in insurance.
I have given further thought to this and, having regard to the new and more favourable conditions in this Bill, I think that those who have already retired should be allowed to have second thoughts. They should be allowed to reconsider their position and, if they so desire, to commence work again. For the reasons I have given, this option can only be exercised once and, in order to remove any financial difficulty which these pensioners may experience—they may feel, having retired over that period, that it will be difficult to catch up with the contributions they should have made during their retirement period—we shall be able to give contribution credits covering the period during which the pensioner has retired so as to help him to qualify once more for sickness and unemployment benefits.
These credits, of course, will not count towards increment of pension. A person coming out of retirement will forgo his pension until he finally retires, or reaches the age of 70–65 in the case of a woman—but will then qualify for increments at the new rate. It may be that his wife, who has been accustomed to her husband being retired for a number of years, will be anxious to retain her own pension. She may be willing for her husband to go back to work but be reluctant to give up her own pension. In this case the wife would be allowed to retain her own pension.
It is important for reasons pointed out in the recent debate on the employment of the elderly, that people should think carefully before they retire. This point must be borne in mind by men who are in a position approximating to that which my hon. Friend the Member for Consett (Mr. Glanville) mentioned. If men throw up their regular jobs they may be found difficult to fit into other employment if later they decide to resume work. It is equally important that they should not be encouraged to take their pension as a supplement to their earnings while still capable of full time work I would like to stress both these points
Perhaps I might sum up our proposals: Pensions for men over 70 and 65 for women are to go up by 4s.
587 For pensioners under these ages: The earnings limit is increased to 40s., and the increments for workers are increased from 1s. to 1s. 6d. for each 25 contributions.
People who have already retired will be allowed to resume their place in the industrial field and qualify for higher pensions.
The rates for widowed mothers and children are increased and the earnings limit for all widows is increased to 40s.
Many hon. Members have approached me in regard to National Assistance. The new pension rates will, of course, have to be taken into account in fixing the amount of supplementation in future. How far this will affect the income of a man or woman in receipt of supplementation will depend on the scales of assistance in force when our new pension rates take effect.
As the House knows, assistance scales are a matter for the National Assistance Board in the first place, and I cannot make a definite statement at the moment. [Interruption.] I can, however, say this to my hon. Friend behind me who is tuttutting: I have been told informally that the Board are fully aware that in the light of current price trends, there is a need to increase these scales, and that their intention is to produce proposals which will be brought into force at the same time as the new rates of benefit provided by this Bill. Moreover I understand that they contemplate that the increases in the rate of assistance for single adults should correspond to the increase provided by the Bill. There would, of course, also be suitable adjustments in other rates.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
Before my right hon. Friend leaves that point, may I ask her whether that statement means that neither the Treasury nor any other Government Department will put anything in the way of the National Assistance Board so changing their regulations that those who are applying for assistance will be no worse off than those who are to get the benefits of this Bill?
§ Dr. Summerskill
If my hon. Friend will read what I have said, he will see that it shows that we are anxious that the National Assistance scales should approximate to the rates that I have already mentioned in regard to National Insurance.
§ Mr. Paton (Norwich, North)
This is of great importance. Am I right in thinking that my right hon. Friend stated that the intention is that the National Assistance Board will do nothing until the appointed day? If that is so it will be tragic for many people who are now in receipt of supplementation.
§ Dr. Summerskill
My hon. Friend must remember that from the administrative point of view it is rather important that these two schemes should coincide. Otherwise a pensioner may be having his assistance increased, then reduced and so on, and I do not think that the pensioner will be very happy about that.
§ Mr. Summers (Aylesbury)
Is it not a fact that the rates of national assistance should have regard to changes in the cost of living, far more so than any changes in legislation, quite apart from these considerations?
§ Dr. Summerskill
If the hon. Gentleman reads my words, he will see that I have mentioned that. I had, in this matter, to choose my words carefully because obviously this is a matter for the National Assistance Board and I had no desire to encroach on their province.
§ Mr. Summers
Will the right hon. Lady bear in mind that if changes in the cost of living to a substantial extent arise long before the appointed day, it would become necessary to do something about national assistance rates irrespective of this Bill?
§ Dr. Summerskill
I can assure the hon. Member that the National Assistance Board watches that point.
§ Mrs. Jean Mann (Coatbridge and Airdrie)
My right hon. Friend has said that it is necessary that the National Assistance Board's scales should approximate to the new rates announced in respect of pensions. Many of my constituents are already in receipt, from the National Assistance Board, of rates that approximate to the new pensions. Will they be any better off as a result of the new rates of pensions?
§ Dr. Summerskill
Yes. I think that if my hon. Friend considers what I have said she will see that of course they will toe. I ask hon. Members not to press me on this point. This is a matter for the National Assistance Board, and they have not yet published their proposals. I recognise that my position in this matter 589 is a little curious. I am responsible to the House for what the National Assistance Board does. On the other hand, they are an autonomous body. It would be quite wrong for me, having made this statement, now to anticipate what they propose to do.
§ Mr. Tom Brown (Ince)
I regret to have to intervene here, but this is vital. May I ask my right hon. Friend whether, in the event of this House deciding to bring forward the appointed day, the National Assistance Board's scales, which it is now promised will be raised, will be ready to be paid at the new selected appointed day?
§ Dr. Summerskill
I think that my hon. Friend will agree with me that that is rather hypothetical.
I now turn to the cost of these proposals. I apologise to the House for giving certain figures but I think they will, after hon. Members have carefully digested them, prove to be very useful and interesting. During the first full year the improved benefits are estimated to cost an additional £39 million. Of this, £33 million is accounted for by the improvements in retirement pension, £2,600,000 is in respect of widowed mothers and their children, and £3,200,000 in respect of the children of other beneficiaries. While the last two items are not expected to increase in future years, the cost of the improvements in pensions will rise, over 25 years, to £80 million per year. The additional cost to the Industrial Injuries Fund of the improved increases of benefit for children will be about £300,000 immediately, and may ultimately rise to £400,000.
We are doing all this without making any increase in contributions beyond the 4d. already provided for in the 1946 Act. This has been made possible by the success of our policy of full employment. We have been accused of "raiding the fund." I submit that that is an abuse of language. It is true that for the next few years the annual payments from the Exchequer, taking together the supplementary contribution and the block grant, will not be as large as was required on the assumption of 8½ per cent. unemployment. I wish the House to bear carefully in mind the fact that when the calculations were originally made it was estimated that 590 there would be 8½ per cent. unemployment.
The amounts we are providing for will be adequate, and are designed, as were the original payments laid down in the 1946 Act, to keep the fund in balance but not to increase it indefinitely. There are, of course, various ways of doing this pending the comprehensive review of this scheme in 1954. The Bill proposes to do it by reducing the Exchequer proportionate contribution under Section 2 (3, a) of the Act and maintaining the block grant under Section 2 (3, b) on an ascending scale. I want the House to understand that if the objective is accepted the ways and means of achieving it are obviously open to detailed consideration. My hon. Friend the Financial Secretary to the Treasury may say a few words later on this subject.
I wish to say something about what I call the social security budget. I feel that this is a matter of topical interest. Again I apologise for giving figures to the House, but I would ask Members to examine them at their leisure. It should be remembered that in the Report leading up to the National Insurance Act the Exchequer liability for National Insurance was considered not in isolation but in conjunction with its liabilities for National Assistance, children's allowances and health services. It was what Lord Beveridge called the social security budget.
Round about 1945, when all these schemes were coming to fruition, it was estimated that the Exchequer charge for National Insurance would total £131 million in 1951–52. In fact, the current estimates provide for £144 million, which will be reduced to £86 million as a result of this Bill, but the block grant will of course go up again after a few years. On the other hand, the aggregate of the estimates for 1951–52 for family allowances, non-contributory old age pensions, and assistance, which in 1945—I wish to make it quite clear that this was the estimate made in 1945 for 1951–52—was put at £92 million is now £156 million; and those for the National Health Service, after allowing for contributions from National Insurance, have changed from the £125 million estimate of 1945 to £400 million.
Thus the other Services, though expected—five or six years ago—to cost the Exchequer about £220 million, will actually 591 need nearly £560 million, or £340 million more. For the social security budget as a whole, therefore, so far from cutting its charges, the Exchequer is paying far more than was contemplated so recently as five years ago, when these Acts were first put on the Statute Book. Further, this leaves out of account the increasingly heavy load upon the Exchequer which has been accepted in recent years for the education services. I would point out that while it is true that under the provisions of the Bill the Exchequer in 1952–53 will meet only about 8 per cent. of the whole expenditure on National Insurance, in 25 years' time not only will the expenditure for benefits have nearly doubled at £850 million, but the Exchequer will have to meet more than half of this.
Now I would say a word about our administrative plans. In the White Paper already presented we said it was hoped that all the main provisions of the Bill would be in operation in the week beginning 1st October next. Clearly it was not possible for me to take any steps before the Budget statement, and until the necessary legislation reaches the Statute Book any steps I take can be only of a preparatory character. However, I would assure hon. Members that no time is being lost in making all preparations within our power on the assumption that the Bill will pass in substantially its present form. To give effect to the proposals a considerable number of new and amending regulations will have to be made and laid before Parliament. At the same time, preparations will be going forward for implementing the Bill.
I am glad to say that some important provisions will be brought into force, we hope, almost immediately after the Bill becomes law. These are the new rates of increment of pension for postponed retirement, the provisions still to be worked out for enabling pensioners to come out of retirement and again become eligible to earn pension increments, and, finally, the proposed 40s. earnings disregarded. I hope that these three provisions will come into operation immediately after the Bill receives the final assent.
§ Mr. W. G. Bennett (Glasgow, Woodside)
The Minister has mentioned that 592 she is very anxious to encourage pensioners to come back to work. Would she please tell the House what a person earning £2 a week would get; what a person earning £3 a week would get and what a person earning £3 10s. a week would get from the fund?
§ Dr. Summerskill
If such a person comes back and earns his pension and his increments he will get the amount I have already stated——
§ Mr. Bennett rose——
§ Dr. Summerskill
Perhaps the hon. Member will allow me to continue, because I am in the middle of something entirely removed from that point.
Whereas we are anxious for the provisions I have mentioned to come into operation immediately the Bill becomes law, I cannot promise that we shall be able to expedite the work which is involved in making the increases in the rates of pension. The work involved in ensuring that people shall receive their increased rates of pension is quite a different matter. There are well over three million pensioners eligible for this increase. Where children are concerned payment of the increases will involve the supply of additional information by pensioners and a fairly detailed examination of all these cases at the local offices. But even where there is a straight increase in pension, where there are no children involved, the resulting work will be formidable.
I am probably telling hon. Members what they know, because they are generally much concerned with the conditions of life of the pensioners in their constituencies. Most people know that pensions are paid by means of books of 52 weekly orders, which are security documents, similar to a cheque or money order. These books are held by pensioners and exchanged as they run out at the rate of about 80,000 a week. Pensioners affected by these proposals are therefore at any moment holding something like 75 million of these security documents; and a steady stream of additional books of orders is going out week by week to them. All these orders must be replaced either by orders for the new rates, or by amended orders, properly authenticated, before the Post Office officials can pay the new pensions. I would ask hon. Members to remember that. 593 Some of them have suggested that this money might be paid out without our taking the usual precautions. I think it would be agreed by hon. Members on both sides of the House that that would be an entirely irresponsible approach to this matter.
Mr. P. Hartley (Chester-le-Street)
On that point, may I remind my right hon. Friend that last year about this time, we decided to approve regulations relating to the National Assistance Board? They came into operation in a matter of about six weeks. How does she explain the six or seven months for this change?
§ Dr. Summerskill
The administration of National Assistance is different from the administration of insurance and I am now talking about insurance. We shall do everything in our power to bring the new rates into force as soon as possible. It depends on the present Bill passing through Parliament without undue delay and without serious Amendment, and on the co-operation of other Departments, particularly the Post Office, and the Stationery Office, for whom I think it will be recognised this work presents serious difficulties. Above all, it depends on the pensioners who will be asked in the weeks before the new rates become operative to apply at local National Insurance offices, on a staggered programme, to have their present order books altered or replacement books issued to them.
This is not a job which can be done by a stroke of the pen. I am quite satisfied that the administrative arrangements which we have in mind are the best and easiest way possible of giving effect to the changes provided by this Bill. I know I can rely on the whole-hearted co-operation of my staff and on the pensioners themselves and I shall undertake to do everything in my power to bring forward the date of operation a week or two.
Finally, I would remind hon. Members that this is only an interim measure, but its importance must not be under-rated on that account. It is a further step forward' on the road which leads to health and security for everyone. We might have taken the line that nothing could be done pending the full review in 1954. By putting forward these proposals now we have shown once again our constant concern for those whose need is greatest, and it is in that spirit that I commend the Bill to the House.
§ 4.30 p.m.
§ Mr. Osbert Peake (Leeds, North)
The right hon. Lady has explained this Measure to the House with a lucidity, patience and amiability which we have come to regard as characteristic of her. I hope that that compliment will satisfy even the hon. Lady the Member for Coat-bridge and Airdrie (Mrs. Mann), who I am afraid has now left the Chamber.
We must remember that this is an insurance Bill, and we must emphasise the word "insurance." That implies a relationship between the contributions, which are premiums, and the benefits. I think that our people like insurance. They like to get benefits as of right. They like the contractual relationship between them and the fund which avoids any inquiry as to their means.
The National Insurance Act, 1946, merged and extended the existing schemes to the whole population, and it added some new benefits. It contained one highly novel idea, for which Sir William Beveridge, as he then was, deserves the very highest credit, and that was the idea of supplanting age pensions given in respect of passing a given age by retirement pensions conditional on retirement. This change seems to me to be by no means fully realised in the country generally. There seems very little appreciation that this change has taken place and has nearly become a complete process.
I would reinforce what the Chancellor of the Exchequer said in his Budget Statement, that there is a pressing need that private schemes of pensions of all kinds, whether they be in Government service, in local government service, or in private industry, should be so modified as to make the retirement conditions devised by Sir William Beveridge fully effective. The National Insurance Act was framed on the basis that eventually the fund would be self-supporting, that is to say, that the joint contributions of employers and workpeople, combined with the proportionate Exchequer supplement, would meet the annual expenditure.
But that was only eventually going to come about, because it would not occur until pensioners had earned their retirement pensions by the contributions paid by them or on their behalf throughout the full period, that is, from the age of 16 to 65 in the case of men, and 16 to 60 595 in the case of women. In the intervening period of 49 years in the case of a man—from 1946 to 1995—in order to meet the cost of retirement pensions for those who have not paid the full number of contributions, Exchequer subsidies would be necessary, increasing steadily for the first 20 years until they reached a maximum in about the 25th year, but thereafter steadily diminishing as more and more retiring pensioners have nearly earned in full their retirement pensions.
The Report of the Government Actuary on this Bill is a most valuable document. It shows, in Table II on page 6, that at present rates of contribution and at the present level of benefits the additional Exchequer subsidies will have to grow to some £280 million by 1967 and to £420 million by 1977. These subsidies, as the right hon. Lady has said, as their full weight grows, will throw a very heavy burden on our economy. The deficiences in the fund to be made good by the taxpayer will be a very heavy burden. It is no good any of us blinking or shutting our eyes to that fact.
In one respect, as the right hon. Lady pointed out, the fund has been more fortunate than was anticipated. The forecast for the future of 8½ per cent. average unemployment has, fortunately, not been borne out by experience, Actually it has been 1½ per cent. instead of 8½ per cent. Each 1 per cent. drop in the unemployment level, as far as I can calculate, saves £12 million to the fund in benefits which would otherwise have been paid out, and gains £3 million to the fund by way of additional contributions that are paid in. Therefore, we may calculate that for every 1 per cent. drop in unemployment there is a £15 million saving to the fund.
That means, unemployment being 7 per cent. lower than was forecast in 1946, that the fund has had the benefit of £105 million a year more than would otherwise have been the case. But even on the most favourable forecast regarding the future trend of unemployment, the surplus resulting from low unemployment can never be in any way sufficient to meet the vast bulk of expenditure which is going to occur in respect of the increasing number of retirement pensioners who have not paid the actuarial number of contributions.
596 That is the background of the Government's proposals, and that is no doubt what was responsible for the Chancellor stating in his Budget speech, and the right hon. Lady confirming it today, that it will be necessary, at some not very distant date, to raise the minimum retirement age. We all subscribed in all parties to the Beveridge Plan. We are all equally committed to it. It is necessary to emphasise that if we do more at the present, as this Bill proposes, to relieve the need of the elderly and make more comfortable their declining years, it makes it all the more inevitable that the minimum age of retirement will have to be increased, because otherwise the burden thrown on those of working age in the community will become insupportable, before equilibrium in the fund can be attained in 46 years' time. Few of us in this Chamber may be here in 46 years' time when this fund attains equilibrium. Many of us may have gone to another place, and I use that phrase in more senses than one.
I now want to turn for a moment to the two or three main proposals in the Bill. I do not intend to discuss many of the smaller points which I regard as more suitable for the Committee stage. The right hon. Lady will be aware of the feeling on the benches behind her, which is shared on these benches, that the Bill should be brought into force as early as possible. I think it is obviously the wish of the whole House that the Bill should come into force at an early date. I hope that the date of 1st October has been chosen for purely administrative reasons and has nothing whatever to do with the possible date of a General Election.
Let us consider the proposals in the Bill. The main one is undoubtedly—or at any rate it is the most costly—the raising of the benefit rates for those of 70 in the case of men and of 65 in the case of women. It has been perfectly obvious to everybody ever since this Bill was published that if the most needy of all are to obtain any benefit from the Bill, it will be necessary to make a corresponding adjustment in the National Assistance rates. Personally, I was satisfied with the right hon. Lady's statement upon that point this afternoon.
There are sound and valid arguments both for and against this proposal that the basic rates should be raised at the 597 ages of 70 and 65 respectively. In favour of the proposal, of course, there is first the argument of the considerable hardship which has been caused to elderly people by the progressive rise in the cost of living. This proposal goes some way, but I think not the whole way, towards restoring the value of the benefits as they stood when they were fixed in 1946. The second strong argument in favour of this proposal is the steadily growing number of elderly people who have had to have recourse to the National Assistance Board. There has been a steady increase in those seeking assistance.
On the other side, there is a powerful argument on a matter of principle. One of the basic features of the Beveridge Plan was that the main basic rates of benefit should be uniform, whether for unemployment, for sickness or for pension at the basic rate. That was one of the most striking features of the Beveridge Plan. This proposal cuts across that principle. At the same time, having tried to balance the arguments fairly for and against this proposal, I am not disposed to quarrel with it, but I must make it clear that I, and most of my hon. Friends, could not support the extension downward of the new benefit rates to minimum retirement ages. That would not only be a very costly proposal, but it would act as an incentive to early retirement, and that is the one thing which the Chancellor of the Exchequer in his Budget speech said that we must avoid at all costs.
§ Mr. Paton
When the right hon. Gentleman says that this would be a very costly proposal, surely he has not closely examined two matters with reference to this point. First, the total expenditure could not exceed about £10 million. That would be the highest total figure, because this affects only about one quarter of the total and it must be under £10 million. Secondly, this cost would not fall on the Exchequer, but it could easily be borne by funds which we all know have been swollen considerably above what is necessary.
§ Mr. Peake
I am much obliged to the hon. Gentleman for his intervention, but I do not think that his argument really controverts what I suggested. I say that it would be very costly because it would automatically attract corresponding and equal increases of benefit in the basic rates fixed by the Beveridge scheme for 598 sickness, unemployment and so on. In the case of a man of 62 or 63 who might fall out of employment, it would be wrong to give him differing rates of benefit in respect of unemployment or retirement.
I turn to the proposals for the higher increments. These I thoroughly and wholeheartedly applaud. They are extremely good and, for my part, I would like to see the principle extended further. I am sure that one of the best ways to secure that more elderly people remain in employment after reaching the minimum retirement age is to provide a better scale of increments to be earned by non-retirement. I and my hon. Friends on this side of the House would have liked to see an increase similar to that given to the man, also given to the man in respect of his wife.
Under the Bill, the increment applies only to the man remaining in employment. I should like to see the double increment where the man is a married man. Nor do I see why the increments need to be confined to the case where both the man and the wife have reached retiring age. Many men are married to women who are several years younger than themselves. I should have thought that it was reasonable to provide that a man remaining at work until, say, 67 could earn a double increment where he was married to a woman of 56. I give that instance by way of example.
The principle of these increments is in all respects beneficial. I do not think that it will cost the fund anything to increase the increments. In fact, it will be seen from the Report by the Government Actuary on the Bill that the Government Actuary, who is the soul of caution as a rule, is so uncertain as to whether the fund will gain or lose by the increased increments proposed in the Bill that he does not put any extra figure of cost as resulting from increasing the increments. Of course, in theory——
§ Mr. Daines (East Ham, North)
Perhaps it might be that if the right hon. Gentleman turned to the Report of the Government Actuary published in 1950, he would agree that, by comparison with 1936, the effect was that there was no increase at all.
§ Mr. Peake
That, for reasons which I will not give because I do not want to 599 bore the House, is a false comparison. The rates of pension in force in 1936 were very much lower than they are now. One cannot deduce anything from a comparison with 1936. It will be seen from paragraph 7 of the Report of the Government Actuary on this Bill that the Government Actuary is very doubtful whether any increased cost whatever will result, at any rate in the early years, from the increased increments proposed. Of course, if the increments were on a sufficiently generous scale, then the Actuary's dream might come true. Everybody would remain at work, with the carrot of increasing increments in front of their noses, until they dropped dead in harness and there would be no burden on the fund at all. I will not deal in detail now with the other proposals.
I come now to my main criticism of this Measure. As I indicated in the Budget debate, that relates to the way in which this Bill handles the Exchequer contributions. We can see now in the Bill, and in the Report of the Government Actuary, what the Chancellor only sketched in his Budget Statement. These new documents were not available when I spoke in the Budget debate; but they were available when the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) made, in his resignation statement, what I considered to be some very unfair strictures on the Chancellor of the Exchequer.
The right hon. Gentleman's resignation statement contained only one useful thing that I could see, and that was that it gave us quite a useful addendum to our Parliamentary glossary, one of which I personally have often felt the need, and that was in the word "manoeuvre." If, in the future, I can, without your intervention, Mr. Speaker, say that another hon. Member has been guilty of a characteristic manoeuvre, I shall know exactly what I mean, and my feelings will be correspondingly relieved without any injury to the decorum of the House. The right hon. Gentleman's strictures on the Chancellor will gain him no support on this side of the House.
§ Mr. Peake
I am not at all sure because, in the resignation statement which the right hon. Gentleman made, he seemed to me to be borrowing one or 600 two statements from the speech which I had made on the Budget a week earlier. I should like to remind the House of what the right hon. Gentleman said on this matter. He said that the Chancellor had stolen £100 million a year from the National Insurance Fund, and that the re-armament of Britain was being financed out of the contributions that the workers had paid into the fund in order to protect themselves. He completely overlooked the fact that the Exchequer, in the last four years, has paid into the fund, over and above their normal proportionate contributions, no less than £160 million in subsidies intended to meet deficiencies which, in fact, have not been realised; and that £160 million has gone to swell the present large surplus in the fund. Further, the right hon. Gentleman overlooked the point that the workers, who, in his view, were being robbed in order that Britain could be re-armed, contribute in any event only some 40 per cent., or rather less, of the total contributions.
My criticism of the proposals in the Budget differ very materially—and I want to make this very clear to the House—from those of the right hon. Gentleman the Member for Ebbw Vale. The intention of all parties in this House in 1946 was that the reserve fund should remain stable. It was never intended that the reserve fund should grow, as, in fact, it has done, and it was not intended to build up the reserves in earlier years to meet the great bulge in retirement benefits which will have to be met in 20 or 30 years' time. To build up the fund in that way would be both dangerous and liable to abuse. A fund of this sort is so big that it has to be under the control of the Chancellor of the Exchequer, but to give the Chancellor the power to inject £140 million of new money every year into the gilt-edged market, places temptations in the way of a Chancellor which I think are too great for him to resist.
At any rate, experience has shown that these temptations have proved irresistible in the past, and, while the Government Actuary in this admirable Report says that the reserve fund of £786 million remains intact—and I dare say that is technically true, because the bonds and bits of paper are no doubt still there, and nobody has taken them away yet—their market value is shown by the accounts of the Ministry of National Insurance, 601 which show that over £50 million of the reserve fund has in fact been lost, owing, in my opinion, to investing this money in ways in which it should not have been invested at all.
I now want to turn to the two parts of the Exchequer contribution which go to build up the whole. The Exchequer subsidies, or what the Government Actuary calls subsidies—that is, not the proportionate contributions, but the payments under Section 2 (3, b) of the Act of 1946—starting at £36 million and moving up by steps of £4 million a year until they reach £60 million, were intended to be deficiency payments, only intended to make good the anticipated shortfall in the revenue of the fund; and the payment of them has been made as the result of a miscalculation regarding the future trend of unemployment. These subsidies, or deficiency payments, can be fairly and justly, in my opinion, be dropped for the next few years, until they become necessary once more as a result of the growing cost of retirement pensions.
What I do take the strongest possible objection to is the reduction to a mere token figure of the proportionate and contractual part of the Exchequer contribution. It is to be reduced in the case of class I contributors from 2s. 1d. per week to 6d. a week in respect of each joint contribution, and the joint contribution, now 8s. 5d. per week, is to be raised to 8s. 9d. next October. As the proposed new figure of 6d. per week, which gives £27 million a year, as against £96 million being paid under this head at the present time, the Exchequer contribution will merely cover the cost of the administration of the scheme.
I attach the very deepest importance to the tripartite principle adopted in all our schemes of social insurance over the last 30 or 40 years. It is absolutely fundamental in social insurance schemes. The proportion of the Exchequer contribution has always been one-sixth in the case of sickness, health and pensions, and it has always been one-third in the case of unemployment. These rates were confirmed and re-adopted with general consent in 1946, and the one-sixth Exchequer contribution was accepted by all parties in connection with the new Industrial Injuries Insurance Scheme, with which I had some connection when I was at the Home Office.
602 I remember very well the rather revolutionary proposal, as regards industrial injuries, to abolish workmen's compensation, under which the whole cost fell on the employer, and to share the cost between workers, employers and the Exchequer. That was considered very revolutionary, and I remember the extent to which I had to exercise what persuasive powers I possess with the late Mr. Ernest Bevin, who was concerned in this matter, in order to get the insurance scheme adopted.
I remember also how I had to try to persuade, and was very happily met in this matter, by the present Minister of Pensions, who was then acting as leader on this question for the Trades Union Congress. I remember how we were able to tell them that this pill was gilded a little, because the Exchequer would pay a substantial contribution to the new fund. Therefore, I feel that we ought to insist upon the retention of a substantial regular contribution, proportionate to that of the workpeople and that from the employers, by the Exchequer for the future. After all, if the proportion is reduced, as the Bill proposes, to a mere one-seventeenth in the case of the National Insurance Act, surely the Industrial Injuries Insurance Scheme is going to be the next victim of similar treatment.
§ Mr. John McKay (Wallsend)
While there may be something in what the right hon. Gentleman says about the year immediately ahead, nevertheless I think he will find in actual practice that if they pay more in contributions, it simply means that they pay less in the block grant. I think the right hon. Gentleman will find that as the years go by, the Exchequer will be paying more than half the money needed.
§ Mr. Peake
I can quite understand that it does not seem to matter very much to the hon. Gentleman whether it is paid by proportionate contribution or by way of subsidy, but to me it is absolutely vital, and I believe that the majority of hon. Members are with me in this and believe that the Exchequer should pay a fixed proportion of the contributions of workpeople and employers to the insurance fund.
I would not press that it is absolutely essential to maintain the precise amount of Exchequer payment which is being 603 paid at the present time. A grave miscalculation was made as to the future trend of unemployment before the 1946 Act was passed. Out of the 2s. 1d. contribution which the Exchequer makes at present per week in respect of each joint contribution to the fund in the case of the adult man, no less than 1s. goes towards the unemployment risk which has proved to be so much smaller than was imagined when the scheme was brought forward. Therefore, I believe it is possible to frame a scheme today—I do not believe it is at all beyond the wit of the hon. Gentleman's advisers at the Treasury—which, for the next few years, will fulfil these two conditions, on the one hand, of not increasing the reserve fund, and, on the other, of maintaining a really substantial proportionate Exchequer contribution to the fund year by year.
I hope that when the Financial Secretary speaks in the debate, as I think he proposes to do, he will be able to say something which will meet us on this point. To my mind, the principle is really very vital. It is the State which compels everybody to come into these schemes, it is the State which prescribes the detailed terms of all these insurance policies, and the State may, and often does, vary the terms of the contract between the insured person and the fund from time to time as may be necessary in the public interest. Those are the reasons why it has always been thought right, fair and proper that the Exchequer, compelling all this and doing all this, should make a regular and proportionate contribution to the fund. I feel that this principle must not be abandoned, and if the Financial Secretary can make a satisfactory statement on the matter, as the right hon. Lady rather indicated he might, then we on this side of the House shall offer no opposition to the Second Reading of this Bill.
§ 5.4 p.m.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
There are so many who desire to take part in this debate that it is suggested that we should confine our contributions to a maximum of 15 minutes. I hope that when I have taken up 14 minutes, my right hon. Friend the Member for Dunbartonshire, East (Mr. Kirkwood), will nudge me. Let me make it clear that I am not complaining, but welcome the suggestion, because I think 604 it is good that in our form of democracy there should be such widespread interest in this matter. But it does prevent us from making a close analysis of the Bill before us, and also from doing justice to it. As far as possible, therefore, I shall confine myself to broad principles, and I hope that on the Committee stage we may be able to make a closer analysis of the Clauses.
The Minister stressed that this is an interim Bill, and I must say that that increased my concern about it. It reminded me of the Chancellor's Budget speech and of what he said about this matter. During the whole of the right hon. Lady's speech, she did not mention a word about the greater tempo in industry, with its effect upon those engaged in it, particularly its effect on the working-class man and woman. I heartily welcome the right hon. Lady's statement, if I understood it correctly, that, in the Government's opinion, action should be taken as soon as possible by the National Assistance Board. To that extent, her statement will be generally welcomed throughout the country, and we shall expect the National Assistance Board to implement these desires as early as possible, and to see that those in need through no fault of their own receive the maximum benefit provided in this Bill, and that in the case of women it shall be given at 60 years of age and in the case of men at 65.
All my life, we—when I say "we," I am speaking for the trade unions, the Co-operative Movement and the Labour Movement in which I was brought up—have been keen on bringing about a minimum below which our people should not be expected to live, and as I am only typical of the average man and woman living in large industrial centres, it was with that at the back of my mind that, speaking during the war on behalf of our party, I said that we welcomed the Beveridge Report, that we wanted to seize it with both hands and to have it implemented as soon as possible These aspirations and ideas quickly manifested themselves throughout the Armed Forces wherever our boys were serving. Letters and telegrams on the subject were sent home, with the result that the Government agreed to implement that Report.
The Labour Party was born out of this idea that I am now expressing, and we have a relatively good record on National 605 Insurance. Therefore, I hope we shall watch every step in order to see that we do not spoil that record. Almost every trade union in this country and the Trades Union Congress have, during the whole of my lifetime, stressed the need for pensions for all at 60 years of age. Being realists, we compromised on that 60 years when the Beveridge Report was before us, and as a result we have now had almost five years of the results of its implementation.
It would be wrong on an historic occasion such as this not to remind ourselves that it was Bob Smillie and the miners, in particular, who waited upon Mr. Asquith and Mr. Lloyd George in order to impress on them the need for raising the pension from 5s., as it then was, to 7s. 6d. I intended to put this on record because in these days when large numbers of people are coming more and more into our movement, people with no background and who have had no struggles, it needs to be put on record. I am not complaining about that, and, of course, I welcome them, but nevertheless we must be on our guard in order to ensure that those in this movement of ours, which has been built up on the sacrifices of our people, continue to remember what were the aims of the people who built it.
I want to extend great credit to my right hon. Friend the present Secretary of State for the Colonies, who as Minister of National Insurance was responsible for introducing the Bill which implemented the Report in 1946. The Beveridge Report suggested a period of 20 years for the transition from National Health Insurance to the present scheme. It is greatly to the credit of the 1946 Parliament, in particular, and also of the Government that they were not satisfied with that transitional period, but implemented the Report at once. The result is that millions of people in our country have great cause to bless those who were in that 1946 Parliament.
I must say that I felt very disturbed at one phrase used by the right hon. Gentleman the Member for Leeds, North (Mr. Peake). Those who have been in the House some time remember the contributions he made to our debates in the past. The miners looked forward to those contributions and treated them with great respect because of his great experience in the mining industry. But I am very 606 nervous and concerned about the phrase he used. I am sure that when I remind him of it he will not go on smiling. If I understood him correctly, he said we shall have to raise the minimum age for retirement, sooner or later.
§ Mr. Ellis Smith
I am not smiling. As one who has experienced conditions in large-scale industry and one who knows the tempo of those engaged in industry, I cannot smile at the suggestion that the minimum age should be raised beyond 65. No matter who may believe in it, there will be great opposition to any proposal of that character throughout the industrial areas. The physical effect of modern conditions is not uniform. It varies from industry to industry, and had there been more time, I could have contrasted the contribution made by some people with that which is being made in the highly industrialised areas.
The retirement age should not be changed from 65 years by anyone. George Lansbury, even in 1911, pleaded in this House for the age to be fixed at 65 years. It is on record in HANSARD to be read by everyone. Here, after the mountains of wealth produced by our people, there is the audacious suggestion that the retiring age should be increased beyond 65. I admit that in this very serious economic situation those who desire to work, should be encouraged to work after the age of 65, but it should be a matter for individual decision and not a decision to be made with a penalising effect by the State.
In the industrial areas I see men and women going out in all kinds of weather every day and every week and every month of every year from the time when they are 15 years of age until they are 65. I see them gradually walk more slowly as a result of bronchial trouble, asthma, rheumatism and many other diseases and difficulties of that kind. It is absolutely wrong that men and women who contract diseases and disabilities like that should be expected to work after they are 65 years of age.
I am a very lucky man. I stand here only because medical science 607 saved my life. I am no better than any other man or woman in this country and I visualise myself walking along the roads in industrial areas at 60. Had I been in the state I was in four years ago, I could not have held my own day after day in the present tempo of industry. It is absolutely wrong for anyone to make suggestions of that character.
I have a letter here addressed to a correspondent from the Railway Executive at Wigford House, Lincoln, dated 14th February, 1950. It says:DEAR CLARK,You will shortly be leaving the employ of the Railway Executive, having passed the age of 65 years. I should like to send my best wishes to you for your good health and happiness in retirement and to thank you for the good work done in the 36 years you have been employed in the railway industry.It has been suggested that men who receive letters of that character should work on to 70. Let me read another letter. If after hearing it, anyone entertains the thought that a man or woman should go on working beyond 65, then he must be as cold as an iceberg. Before I read it, let me remind the Minister—and I do not want her to take this in any personal sense—that I was a voluntary contributor for 10 years to safeguard my pension rights, and those of my wife, when I came into this House. Men and women in this country have been voluntary contributors for 10, 20 and 30 years and now when they are nearing 65 years of age, proposals are being made that they should work on until they are 70 or should not have an adequate pension at 65. The letter to which I referred says:As a contributor to National Insurance since May, 1912, under the first Lloyd George Act, I regard it as most unfair that others who have contributed only a few years and many not at all should get the increase at 65. I have been unable to work since May, 1937, through illness and ever since been under the doctor with heart trouble and rupture on which the doctors will not operate; also my wife has been in indifferent health for some years…why should not all over 65 get the increase on production of a doctor's certificate certifying us as unable to work?I have letters from men and women complaining of asthma, bronchitis and silicosis who are walking tragedies in the area I represent. Yet some people have the audacity to suggest they should go on working after 65 years.
Fortunately, this suggestion is out of accord and harmony with Labour's real 608 policy. Here is Labour's real policy as set out in a statement in April, 1949, on page 23 of "Labour Believes in Britain":If the nation is to achieve and maintain prosperity, we must encourage more of our older people to carry on active work. Many old people themselves wish to do this. But…—and this is the point—…those who wish to retire must have full freedom to do so. It would be completely contrary to Labour's policy to get any of the old folk to work against their will.Surely that, logically, means that the pension should be adequate and at the age of 65 years. The Beveridge Report stresses the need for adequacy of benefit. It says that the flat rate of benefit should be sufficient without further resources to provide the minimum needed for subsistence in all normal cases. The Minister of National Insurance implemented the principles by fixing the benefits at 31 per cent. over 1938 prices, and this should be the basis for fixing the benefits at the present time. According to the Library, who have been good enough to obtain this statistical information for me, the cost of living has gone up 97 per cent. since 1938, and in addition one should remember that that is only measured over a limited field of consumer goods. Therefore, bearing in mind that the old age pensioners' needs are relatively small, and that in the main those needs have increased in cost more than the official cost of living, the very minimum increase in pensions should be 97 per cent. over the 1938 figure.
I have now arrived at a period when, as a result of many experiences, I have a certain amount of disillusionment. At the same time, I have great confidence in our form of democracy, but in that democracy it is most important that those who are members of movements which were born out of the aspirations and the needs of the common people of this country should do nothing to undermine the confidence of our people in those movements. Therefore, I hope that between now and the Committee stage, the Minister will be good enough, together with her advisers and the rest of the Cabinet, in particular, to examine all the speeches that are made in this House today so that when the Committee stage is reached we may get the best results from the legislation which is now proposed.
§ 5.22 p.m.
§ Mr. Storey (Stretford)
Like other Members who have spoken, I welcome this Bill as an interim contribution towards meeting the problems of those in receipt of pensions. Some of the proposals are excellent, particularly those for women and children, and the increased increments for those who remain at work. But I must say that I have great doubts whether some of the proposals are sound in principle and make the best use of the money available.
Take, first of all, the increase in the flat rate of benefit for those over 70 years of age. It was noticeable that the right hon. Lady said very little in explanation or in justification of this increase. No one, now that the promise has been made, would oppose the proposals, but I think it is well that we should realise what they mean. Not only is this increase a confession by the Government of their failure to meet the first necessity of any social security scheme—a stable cost of living—not only is it a grave breach of one of the basic principles of social insurance, namely, that there should be a flat rate of benefit for all the principal forms of cessation of earnings, but it is, in my view, a wasteful use of part of the money which is available for alleviating the problems of those who are most in need.
We should always remember that social insurance benefit was never intended to be the sole means of subsistence. It was intended to provide a national minimum which would leave room and encouragement for the individual to make further provision for himself and his family. To the great majority of pensioners, National Insurance is only one of the sources of their income. To increase the flat rate of benefit is simply to spread what should be available to relieve the needs of the most needy, over many who are not in real need and who have other sources of income, and to deprive those who have been prevented from adding to their income of what they might have got if the money had been concentrated upon them.
However, the Government have offered this flat rate of increase and there can be no going back upon it. But in accepting it we should be in no doubt about what we are doing in breaching a principle of National Insurance, and we can comfort ourselves with the 610 thought that with the rise in the cost of living there will be few who, however great the other provision which they may have made, will not find good use for this additional payment. There will also be some to whom it will mean the difference between drawing or not drawing National Assistance.
I welcome particularly the provisions of the Bill which provide increased increments for those who elect to remain at work. I do not know whether all has been done that can be done. Are those who stay at work going to get the full actuarial value of their additional contributions and of the pensions which they do not draw? This is a matter upon which I believe we should have some assurance, for I feel very strongly that those who are prepared to stay at work when the country is in need of additional labour should earn at least the full actuarial value of what they forgo. I am not one of those who want to see the age of retirement raised. I believe that in most industries, and certainly in my own industry, 65 is a high enough age at which to retire; but in view of the present need for labour we have got to make it possible for those who can and are willing to remain at work to do so.
§ Mr. Storey
Newspaper production. Those who can and will remain at work should get the highest possible encouragement to do so, and should get the full actuarial value of what they contribute and forgo.
There is one point which should have further consideration. Many employers and employees today run insurance schemes of their own. I hope the day will come when more will be able to do so. Many of these schemes were drawn up in the days when retirement at 65 was desirable so as to make work for the young, and in many of those schemes retirement at 65 was made a condition of membership. In some the conditions can be reviewed by agreement between the parties to the scheme, but I think that others are governed by trust deeds and this is not possible. The Minister might well consider whether in this Bill she might include some enabling Clause 611 which would make it possible for such schemes to be modified so that they can be brought into line with the provisions of the Bill.
There is another point connected with these supplementary schemes, about which I should like some assurance. All such schemes require the approval of the Inland Revenue, as Income Tax concessions are made to employers because the schemes are for the purpose of providing retirement benefits for their employees. In the past the Inland Revenue has insisted on a provision being included whereby if a member works after the normal pension date the pension shall be withheld until he actually retires. That is unobjectionable if the scheme provides, as the national scheme does, for increased pension from the actual date of retirement, but if it does not it seems desirable that the Inland Revenue should not in present circumstances enforce their requirement. I believe that is the present practice, but I think the position should be made quite clear.
If, on the other hand, the Inland Revenue intend to continue to insist on the pension being withheld, power should be taken to enable those schemes which cannot be amended by agreement, to be amended by providing for pensions being withheld and increments earned by those remaining at work after the normal pension date. I apologise to the House for occupying so much time in raising these two points, but I am deeply interested in these supplementary schemes which I believe are a valuable factor in building up a real partnership between employers and employed. I want there to be no difficulties in their way so that we may have many more such schemes.
I turn now to the proposals concerning the Exchequer contributions to the insurance fund, which I think we are all agreed are the most controversial and difficult parts of the Bill. While all will agree that it is desirable to restrict the growth of the fund which is, as has been pointed out, a constant temptation both to sectional interests among beneficiaries and to raiding Chancellors of the Exchequer or Chancellors of the Exchequer who have a liking for speculating with the funds of their clients, nevertheless I think the Chancellor's proposals go too far. They 612 are not only a serious breach in another principle of social security—namely, that this must be achieved by co-operation between the State and the individual—but, what is worse, they break a contract as to the contributions set out in the Act—a contract between the State, the employer and the employed about which the late Minister gave a most definite assurance.
If the fund is to be reduced by reducing contributions, then I cannot help feeling that the only fair basis is to reduce the contributions all round. But that would undoubtedly reduce the volume of our savings and would increase the amount of money in circulation, neither of which is desirable at the present time. When I consider the alternatives and their disadvantages, I am forced to the conclusion that the least evil is not to restrict the growth of the fund to the full extent which the Chancellor of the Exchequer proposes. Let the Chancellor of the Exchequer withhold the whole of the block grants under paragraph (b) but let him honour in full the contribution set out under paragraph (a) until the date when the review is to be undertaken. By doing so he will maintain the State's contract, will maintain the principles of social security and, over the three-and-a-half years, will achieve two-thirds of the restriction of the fund which he set out to achieve.
Personally, I would rather see the fund increased than incur the disadvantages which I have outlined. But if the Chancellor of the Exchequer is not prepared to go so far, then I hope he will do what my right hon. Friend suggested at the beginning of the debate—that he should at any rate withhold the whole of the paragraph (b) block grant and should instead make a very substantial contribution under paragraph (a). I feel that is desirable so that we should maintain the principle upon which the fund is built and, to a very large measure, if not altogether, maintain the sanctity of contract which is laid down in the Act of 1946.
I do not want to take up the time of the House any further, but I would repeat that although I find objection to some of the proposals, the Bill as a whole is a real step forward. I hope it will not be long before it is on the Statute Book. I hope the right hon. Lady will do everything possible to bring it into being at a 613 date earlier than that at present contemplated.
§ 5.35 p.m.
§ Mr. Wilkes (Newcastle-upon-Tyne, Central)
I was interested in the contention of the hon. Member for Stretford (Mr. Storey) that we had not applied the money which will go to increasing the basic pension in the most economical way so as to meet the greatest need. It is based upon the supposition that although only 600,000 old age pensioners draw a supplementary pension, those who do not draw it—the vast majority of the three-and-a-half million—are not in the most serious need. But nothing gives me greater concern in my constituency—and I think it is a fairly general experience among hon. Members—than to see that many of those who do most need an increase in their pensions are precisely the people who will not go and ask.
I, therefore, welcome the fact that the Government have taken into consideration the psychology of the proud poor and have granted a basic increase. Incidentally, in another sphere of pensions—war pensions—where the basic pension has been kept fairly static but where great increases have been made in the supplementary pensions, we on this side of the House have been attacked on precisely the opposite grounds to those advanced by the hon. Member for Stretford.
Be that as it may, I want to refer to the argument of the right hon. Member for Leeds, North (Mr. Peake), who opened for the Opposition in this debate. I thought he vastly over-estimated the cost of extending the increased pensions to men below 70 and women below 65. It is within the memory of the House that he said it would be a very great cost. But is it really so? On 19th April the Minister of National Insurance herself gave the answer that the cost of applying the increases to all old age pensioners—to men below 70 and to women below 65—would be £10 million immediately. She said that a universal increase of the basic pension would cost £15 million per year in 15 years time, rising to a cost of some £17 million per year in 25 years time.
I cannot see that that is such a great sum to pay each year for the sure knowledge which it would give to hon. Members on both sides of the House that grim 614 and harsh necessity had been banished from the homes of the aged. I feel that a great opportunity has been lost here. If it had been explained bluntly to the people of this country that another few pence upon petrol or even another 2d. or 3d. on Income Tax, whatever it might have been, was specifically to go for the aged so that they would be well looked after, then I am sure the country would have responded. Indeed, I still have hopes in that direction.
May I now refer to the delay in the implementation of the Bill? We have heard a lot about forms to be printed, books to be brought in and books to be sent out, the large number of books in circulation and so on; but even being as considerate as I can to the arguments which have been advanced, I am still not convinced that such a routine, such an administrative job, requires six whole months. I hope that when the Government spokesman replies to the debate we shall be given some sort of assurance that although 1st October is laid down at the moment as the date on which the scheme will start, nevertheless the scheme will be pushed ahead with all speed and, if it should prove possible, as a matter of urgency, to introduce it on, say, 1st September, or 1st August—for every month is important—then that will be done. I think that some pledge such as that should be given.
I want to refer to something which is, perhaps, a constituency matter; and yet I do not really believe it is, because I think it is of rather wider import, and touches the country in a large number of areas. There are a large number of areas, the former distressed areas now called the Development Areas, where the average amount of unemployment has quite considerably increased over the national average of 1½ per cent. Millions of people live in those areas—the shipbuilding areas, the coal mining areas, the former distressed areas. The people who live in them have had a very hard life, for heavy industry is a very hard life indeed. And yet, for example, in Newcastle-upon-Tyne, where we have approximately 5,000 unemployed, and where the slack in unemployment has never been fully taken up, so that we have never had a labour shortage such as is common in Coventry, or Birmingham, or in the south country, it would be 615 almost impossible for the aged to stay at work and to earn their increased increments.
I found the Minister thoroughly academic on this matter—of the old people out of employment coming back, and all those people in employment upon reaching the age of 65 just being allowed blithely to continue. It was thoroughly academic and bore no relation to what happens. When a man reaches the age of 65, he is thrown out on his neck. He has no option, in a large number of cases within my experience. What is required for an opportunity for the old folk to earn more, is a complete revolution on the part of the employers, local authorities and Government Departments in their attitude to the employment of aged folk.
In the Development Areas, where we have quite a large number of able-bodied folk who are not enjoying the benefits of full employment—it is quite true it is only, perhaps, 3 or 4 per cent., but it is still a considerable amount over the national average of 1½ per cent.—it is going to be very difficult for the old people to come back into employment, or to continue in their employment. I do ask the Minister to make a special appeal to all those who, in the Development Areas, employ labour, to take them on, and to stress how important it is from a humanitarian point of view that the opportunity to earn these increased increments should not be denied to tens of thousands of old age pensioners merely through the geographical accident that they live in Development Areas where there is a higher rate of unemployment.
We in this House are taking the view which is, in my view, the correct one, that the people who are suffering most in these days of rising prices are the people with large families—the family man and family woman. Consequently we have so arranged our national finances that this year the man earning between £800 and £1,000 a year with two children will actually pay less Income Tax than he was paying last year—and a very good thing, too. We have so arranged our finances that whatever the status of the wage earner, whether he be sick or unemployed, some help will be given to him, whether only half a crown or a few shillings a week, in the shape of increased allowances for the children.
616 Every credit goes to the Government for recognising that the responsibility of bringing up a family, with the prices of children's boots and shoes and coats as they are, is a very real hardship. All credit to the Government. But there is one point on which I think the present arrangements and provisions should be improved. Bearing in mind that the raising of young children is the problem facing the family man and woman today, is it logical, can it be justified on any ground whatsoever, that the widowed mother should be allowed to earn only exactly the same amount of money in a job, without her pension or allowances being touched, as the widow without any children? Is that logical? Take a widow with two children. She can earn up to 40s. before her pension and allowances are touched. A widow with no children at all can also earn up to £2 without her pension and allowances being touched. I cannot see the logic of that.
This is not a case for increasing widow's allowances. It is a case for increasing the widowed mother's allowances, and I think that there is every case for allowing her to earn £2 10s. or £3 a week, with the responsibility of bringing up a young family today, before her allowances and pension are touched. I cannot see the logic of putting those with children and those without children, on precisely the same footing in this or, indeed, in any other respect. I do hope, therefore, that when this Bill goes to Committee it will be possible to deal with this and other related points.
My final word is this. I think it is becoming increasingly recognised that old age pensions are a dividend on production. It is becoming increasingly recognised that the efforts of our present generation will determine the level at which the old folk will live in 10, 20, 30 years' time. It is becoming recognised that on the young of today, on how they work and how they are allowed to work, and how they face life and the responsibilities of life, depend the standards of living that they will enjoy when they are old and beyond work.
I therefore hope that it will be possible to increase the basic pension to all, even though the cost be £10 million a year, because that will be a guarantee and earnest to all young people in industry 617 today that we have a Government who are determined, within the limits of the present very difficult situation, to do all they can to help our old folk, and thus encourage the young folk in the factories and in the fields, to carry the burden and the heat of the industrial struggle.
§ 5.48 p.m.
§ Mr. Douglas Marshall (Bodmin)
In following the hon. Member for Newcastle-upon-Type, Central (Mr. Wilkes), I should like to say that with a good deal of what he has said I personally agree. I put down a Motion on the Order Paper the other day.
§ [That this House regrets the fact that the Chancellor of the Exchequer has not fully appreciated the plight of old age pensioners due to the alarming rise in the cost of living.]
§ I was flooded in consequence with a great number of letters from all over the United Kingdom, from various people of various ages, upon this subject of the cost of living and the old age pension.
§ The point I particularly wish to make is the point the hon. Member mentioned, that a revolutionary approach has to be made to the question of the employment of people of a certain age. Certain of the letters which I received had nothing to do with the question of the old age pension or with people who have reached the age at which they can draw the old age pension. They came from people of 48, 49 and 50 who said that when they had applied to be taken on at certain jobs, the Government and the rest, as the case may have been, replied, "You are too old to do it." Therefore, if we are to do anything in this Bill, a large measure of which I warmly welcome, in trying to get more people into employment, then these other matters of the employment of people still younger should be looked into by the different Departments of State concerned.
§ I rise tonight to make three points, which I shall make as briefly as possible. First, in a slight interchange between the Minister and myself at the beginning of the debate either there was a misunderstanding or perhaps she did not want to give the answer. I want to put this as fairly as possible. She said that one of the considerations she had taken into account in approaching this Bill was the greater expectation of life; that the expectation was so much at the age of 60 618 for women and so much at the age of 65 for men. I interrupted to ask: "What is the expectation at the age of 65 and 70 respectively?" I am quite certain that the Financial Secretary to the Treasury will not agree with the quick reply given by the Minister, "Well, that is a very simple calculation which you can do for yourself." No doubt one can make the calculation oneself, but the reason I was trying to get the information was to show that it is not so simple a calculation, as I think the Financial Secretary knows full well.
§ Secondly, I hope the Minister and those concerned will look into the point already made on the question of supplementary pension funds. A great number of these funds have naturally been brought into force with the intention of having a retirement age of 65. I agree with the principle of a retirement age of 65, but where it is necessary in the interests of the country for people to work for a few more years, some adjustments can be made whereby, in co-operation with the Inland Revenue, it will not mean that these people do not accept the pension or if they do accept the pension that they have to retire from their employment.
§ Lastly, I come to the major reasons why I wish to take part in this debate. In introducing the Bill the Minister pointed to the great social fabric that has been woven in the United Kingdom, to the extent to which it had been raised, and to its volume, but she said very little indeed about the depreciation of the purchasing power of our money. I do not wish to keep the House for long on this point; I may have the good fortune to be able to raise it on the Finance Bill. The right hon. Lady also referred to the fact that the Bill was designed in conformity with the general expression of the Budget. Is that the case? Hon. Members have already expressed concern about the cost of living today, and the minister also referred to it.
§ Let us not forget that on page 41 of the Economic Survey for 1951—which is also part of the Budget design—it says, in effect, that to buy the same amount of goods for personal consumption our people will pay £600 million more in 1951–52. That will make itself felt on all those with fixed incomes—old age pensioners, and the rest. If that fact has not been related, in a proper fashion not 619 merely to the likely rise in the cost of living but to the actual rise which the Chancellor suggested will take place, a deplorable state of affairs will result.
§ I am convinced in my own mind that all hon. Members have a great feeling for the old people. Perhaps they realise that if they live long enough they will be old themselves, and therefore they are insuring themselves. There is no doubt that at this very moment acute hardship and suffering are taking place, and if there is that additional burden of £600 million that hardship will grow. Therefore, in welcoming a good deal of this Bill, I must reserve the challenge I may make when I see what is to be provided under National Assistance in the future.
§ 5.55 p.m.
§ Mr. Tom Brown (Ince)
It is always a pleasure to me to take part in a debate in which the right hon. Member for Leeds, North (Mr. Peake), opens for the Opposition. I think it is the wealth of knowledge and depth of experience that he obtained when at the Home Office in the early part of 1941, 1942 and 1943 that enables him to put his points so that they appear to be non-controversial until they are analysed closely. Therefore, at the onset I want to deal with one or two things that he said, and to tell him what I agree with and what I disagree with.
He first argued that a revision of existing superannuation schemes was essential. With that I am in complete agreement, because if this Bill is to do what it proposes, there will have to be some revision of the existing superannuation schemes in all departments. He also referred to a further increase in the retirement age at a subsequent date. I must say, I completely disagree with him there. That is certainly contrary to the policy of his own party, and in direct opposition to the policy outlined by the Labour Party. We cannot agree with that. In fact, we do not agree with the increased retirement age contained in the Bill, with which I shall deal in a few moments.
The right hon. Gentleman then said that the proposals of the Bill should be put into operation as soon as practicable. With that we are in complete agreement. I know that there are administrative difficulties. But there were administrative 620 difficulties in 1948; we faced those difficulties and brought part of the 1948 Act into operation on 6th October, and I think that can be done on this occasion.
The right hon. Gentleman reinforced the Minister in saying that the National Assistance scale should be increased so as to be comparable with the increased basic pension. We are in complete agreement with him there, but one of my regrets on this aspect in dealing with old-age pensions is that, no matter whether it be the Conservative Party or the Labour Party that is in power—and I say this with the greatest respect to the Government—from time to time we have to go cap in hand begging for something that ought to be given by a generous hand to old people. Society is so constituted that we have to do that.
Next the right hon. Gentleman said that the Exchequer grant should remain constant in amount. I entirely agree, subject to one thing: that the Exchequer grant is sufficient to help the old-age pensioners to live at a decent standard of life. Do not keep it at the lowest. Keep it at the highest in order that the people can obtain from their pensions the benefit they are entitled to for services rendered to industry and the country.
I have to speak on the Bill in accordance with my convictions, and I begin by saying that I cannot give my wholehearted support to the Bill now before the House. That does not mean that I shall vote against it. I think it was George Bernard Shaw who said, "When you get a perfect Bill, you get a perfect nuisance." This Bill is far from perfect, and our job during its remaining stages is to bring it more into conformity with the wishes of both sides of the House and of the old age pensioners. I must inform the Minister in charge of the Bill that we shall make attempts to improve the Bill as it goes through its various stages. I am not criticising the right hon. Lady, and my criticism does not reflect any discredit upon her, but upon another Department of State, which I had mentioned before and which I do not wish to mention at the moment. We have a saying in Lancashire, "Speak your mind, yet be kind; give good advice, and yet be nice." I am going to speak my mind and try to be kind and nice.
My first complaint of the contents of the Bill is that it differentiates in the age 621 groups. I am profoundly concerned at this, departure from the original policy outlined many years ago, and that the old age pensioners of this country should be split up into age groups by raising the age of retirement from 65 to 70 years for men and from 60 to 65 years for women. To be quite frank, I never dreamed that I would live to see the day when we should be increasing the retirement age in this country. The proposals in the Bill are the proposals which the Government are presenting to us, and we have to face them with courage and human understanding. So far, with few exceptions the speeches have been dealing with the reports of actuaries, but, to me, the problem of the old age pensioners and their requirements is an intense human problem. Whatever way we try to approach it, we cannot get away from the fact that it is an intense human problem, and we have to deal with it, with human understanding.
We have to remember that these people, the majority of whom will be affected by the Bill, have no trade union behind them, but they have the gallant and courageous efforts of past members of the great trade union movement behind them, and for that reason they are entitled to have someone to voice their opinion. They have only their associations which appeal to the Departments from time to time. They endeavour in every constitutional way to bring to the notice of the Departments concerned the problems with which they are confronted. We have a statutory obligation and the Minister has a statutory obligation resting upon her. We are charged with the task of looking after the social and economic welfare of the old age pensioners.