NATIONAL INSURANCE BILL

HC Deb 26 April 1951 vol 487 cc622-81

6.19 p.m.

Question again proposed, "That the Bill be now read a Second time."

Mr. Tom Brown

The interruption was born of tradition and, therefore, one cannot complain. I was saying that the associations which represents the old folk of this country make representations from time to time to the various statutory bodies, pleading that their social and economic welfare should receive attention. The question we have to ask ourselves in considering this Bill is—are we, as Members of this House, by this Measure fulfilling our statutory and moral obligations? That is a very important question. I say very emphatically—now I am voicing my own opinion—that we are not. The Measure should go further than is proposed.

My criticisms come under two or three heads. I consider it morally wrong to draw a line of demarcation between the age groups. That has never been done before in the history of legislation in this country, but the Bill now separates one section of the old age pensioners from another, which is wrong. There are several reasons why the basic rate has been increased, but the main one is to help old age pensioners to meet the rise in the cost of living since 1946. It is not my intention to go over the incidence of the rise in the cost of living because that was very fully stated by my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), but why should we make any difference between the age groups? All old age pensioners have to buy in the same market; they cannot select a different market because their income is lower than that of their next door neighbour; and I consider that all who are now in receipt of old age pensions should be treated alike.

The purpose of the change appears simply to be to compel the lower age groups to seek employment in industry or to remain in industry after the age of 60 or 65. But they cannot get employment. I have been trying to obtain evidence to support the assumption that they can continue in work, but there is not the slightest evidence. My hon. Friend the Member for Stoke-on-Trent, South, and many other hon. Gentlemen on this side of the House have received letter after letter from men and women who want to continue after the age of 60 and 65, and they are already telling us that employers are saying that they must retire at the age of 60 or 65. This happens in nationalised industries. I am not blaming private enterprise entirely. I sometimes think that some aspects of private enterprise are more sympathetic towards old age pensioners than are the nationalised industries. I am bound to admit that.

However, there are industries which are telling old people that they cannot continue after 60 or 65. As I said on 13th April, 1951, when speaking on the Motion dealing with the employment of the elderly and middle-aged, we now have insurance companies demanding higher premiums from employers of labour if they allow people to continue at work after the age of 60 and 65. The right hon. Member for Leeds, North, has suggested that we need to overhaul the superannuation conditions applied to men and women in industry. Many insurance companies have been demanding higher premiums for men over 65 who are employed and, as I said on 13th April, that is a bad policy and contrary to public interest.

The cost is one reason which has been given against treating all old age pensioners alike. We have been told that it would cost too much if we increased the basic rate of every old age pensioner. Surely that cannot have any weight or force in argument. What is the cost? A few days ago a Question was put to the Minister asking what the cost would be of extending the proposed increases in retirement pensions to men aged from 65 to 70 and women from 60 to 65. The written answer said: The annual cost to the National Insurance Fund to extending to men below 70 years of age and women below 65 years the increases in retirement pensions which are proposed for men and women who have reached those ages would be just under £10 million immediately, rising to £15 million in 15 years' time and to £16–£17 million in 25 years: but if, as is probable, the effect were to encourage earlier retirement than at present, the cost would be greater. If the cost were spread uniformly over all contributors without any additional contributions by the Exchequer, it would mean an immediate addition of between 2d. and 2½d. to contributions and more in later years as the emerging cost of pensions increased."—[OFFICIAL REPORT, 19th April, 1951: Vol. 486, c. 195–6.] Surely in a Budget of £4,000 million we could find a further £10 million in order to treat all these people alike. I plead with the Minister not to close her mind to this. This may be my swan-song on the subject of old age pensions, and I plead with her not to close her ears to the arguments which will be put forward today and during the Committee stage.

My next criticism is that the Bill contains no reference to differential occupations. In view of the Government's decision to raise the retirement age, that is a matter of vital importance. I want the Minister to listen to what I have to say. This is a very important matter, especially to those who have been employed in heavy industries like mining, steel, some types of dock work, cotton and jute. However much we may desire it because of the position in which we find ourselves, we cannot expect men in the mining and steel industries to continue until they reach 70.

I have been fighting with my conscience for the last few days. The retiring age for the miner has now been fixed at 55. That has not been done in a half-hearted manner; the age has been fixed after very detailed and continuous examination and the work that the man has to do has been taken into consideration. During the last 25 or 30 years—again I am not complaining—work in the mining industry has been highly intensified by mechanisation. Men are now working in dust-laden atmosphere and high temperatures. In many deep mines today, particularly in my county, men are working in temperatures of 110 to 120 degrees.

We tried an experiment. It was not carried out by the Federation or by a company, it was the responsibility of a highly eminent man, Professor Wheeler. It was to try to find out what weight a man lost at the coal face in the process of six-and-a-half to seven hours' work. As the result of that minute examination we found that men lost from 7½ lb. to 11 lb. in weight every day they descended the shaft. Can anybody in this House, or anybody outside, put forward the argument with any sincerity that we ought to ask those men to continue working until the age of 70? That is an important point.

When I compare the retirement age of teachers, members of the police force and civil servants under their superannuation schemes with the retirement age of workers in heavy industry, I am amazed at the mentality of the people who fix the age of retirement for the men employed in heavy industries. I hope the House will not misunderstand me. This is not put forward from jealousy of those people who have greater benefits than the industrial workers. Rather is it righteous indignation at the difference between sections of the workers, each playing their part in the national life. I am well aware that we cannot all be teachers and policemen and civil servants but, if we are sensible, if we realise our moral responsibility, we can aim at lessening the gap which affects sections of the industry. On that point I appeal to the Minister to give consideration to differential occupations.

I know that arguments have been advanced, and will continue to be advanced, that men who have been at the coal face should be found less arduous work when they are growing older. We have tried that. It should be remembered, however, that some miners have had accidents and are unable to do their pre-accident job and that these are found work of a lighter character, and rightly so. That being so, the middle-aged and the elderly cannot be found jobs for which they are suited after working such a strenuous life at the coal face underground.

If the right hon. Lady the Minister of National Insurance wants any evidence of that, let her go to the mining villages of South Wales, let her go into North-West Lancashire, North-East Durham, and there she will find sufficient evidence.

Mr. Ellis Smith

And North Stafford.

Mr. Brown

There she will find miners suffering from silicosis who are prevented from going back to their pre-injury occupation. I know the Minister is intensely human on these matters and I hope she will pay due attention to the points I have raised. I also hope that when we come to the Committee stage of the Bill she will give sympathetic hearing to the Amendments we shall put forward. In conclusion, while I am profoundly convinced that I cannot accept the Bill in its entirety, I plead that the representations made to the right hon. Lady and to her Department and to the Chancellor of the Exchequer will bear fruit as this Bill goes through its Committee stage.

6.34 p.m.

Mr. Donald Wade (Huddersfield, West)

I feel sure that there is the deepest concern for the old age pensioners on both sides of the House. So far as it goes, this Bill will be heartily welcomed as some contribution towards the relief of the old age pensioners. The background problem is, of course, the growing proportion of elderly people and the growing cost of pensions to the community. The question we have to consider, therefore, is how that is to be met. Can it be met solely by increased Exchequer grants, however they may be made, or can it be met by more elderly people working to a greater age?

I believe that, to a certain extent, it can be met, and must be met, by those who are able and willing to work being encouraged to do so. However, I disagree strongly with the suggestion that there should be an increase in the retirement age. If it is meant that in certain occupations there should not be compulsory retirement at a certain age, that is another matter and I would agree with it. I do not know to what extent, by legislation, one can alter the existing state of affairs where, in a number of occupations, men and women—particularly men—have to retire at 60 or 65, although they are willing and able to continue working. But that is not affected by this Bill and I do not think that was intended when the suggestion was made by the right hon. Gentleman, the Member for Leeds, North (Mr. Peake), that the retirement age should be increased. Generally speaking, so far as pensions are concerned, I hope the retirement age will not be increased.

The way to deal with the problem is to encourage in every way one can, the continuance at work of those who are willing and able to do so. I do not suggest that financial inducements are the only things that count. Some men who like their jobs would go on until 70 and over. I know cases of men continuing until 80. They do so because they like to go on working, and it is not a question of financial inducement. But there are some cases where men and women are discouraged from continuing to work under the present system. The time has arrived when we should consider not merely increasing the amount of permissible earnings to £2, but of abolishing the means test or, as it should be called, the needs test.

Mr. Molson (The High Peak)

The means test?

Mr. Wade

Yes, it is loosely called the means test.

Mr. Manuel (Central Ayrshire)

It is quite different from the means test.

Mr. Wade

I am referring to the needs test.

Mr. Summers

Is the hon. Gentleman seeking to abandon the principle of retirement?

Mr. Wade

No. I am proposing that instead of the limit of £2 which a pensioner may earn without forfeiting his pension, we should endeavour to simplify the system and allow the pension to be paid whatever the earnings, save for the fact that the pensioner would be subject to Income Tax.

Furthermore I deplore, as some hon. Members have already done, the differentiation in ages. That, again, I think should be seriously reconsidered. A number of anomalies have grown up. There is the case, for instance, of a wife who is older than her husband; she has passed the age of 65 although he has not reached it, and she is not separately insured. I think I am right in saying that a wife in that position gets no pension until her husband is 65. In some of these cases which have been brought to my notice, the couples are struggling along as best they can, with neither of them in good health, until the husband reaches the age of 65. These illustrations suggest that the time has arrived when we might have a general inquiry into these various anomalies, into the whole question of encouraging those who are able and willing to remain at work to do so, and into the whole question of the differentiation in ages.

I hope we shall very soon know what the National Assistance rates are to be. A misunderstanding has arisen to the effect that the new benefit will mean nothing because it will be evened out by a reduction in the amount of National Assistance payments. We know that that is not intended, but a number of old age pensioners are under the impression that they will not be any better off as a result of the increased benefits because they will get less from National Assistance. I think they are mistaken, but the sooner the position is made absolutely clear, the better.

Finally, there is the time factor. Many pensioners feel that the Bill is merely making up to a limited extent for the rising cost of living, that they are merely getting a little extra to meet the already increasing difficulty of making ends meet, of paying for the necessities of life. They feel rather sore that the Bill will not come into effect until October. I think that what the Government are attempting to do is the very least they can do for the benefit of these elderly people, who are undoubtedly suffering great hardships. I hope that these benefits will be introduced as quickly as possible.

6.43 p.m.

Mr. Douglas Houghton (Sowerby)

The hon. Member for Huddersfield, West (Mr. Wade) has put forward two suggestions, in neither of which would he carry the House with him. I am rather surprised that a Member on the Liberal benches should put forward the view, flying in the face of the Beveridge Report, that we should discontinue the principle of retirement as a condition of retirement pension, and should return to the old scheme of drawing contributory pensions on reaching a given pensionable age. The total abolition of the earnings rule would surely mean that everyone, on reaching pensionable age, would formally retire in order to draw the retirement pension, and could then continue at work with their earnings as a supplement to their retirement or old age pensions. That is not a principle to which we wish to return.

All of us saw the lack of logic and the failure to satisfy the social need of insured persons when men and women in full employment, able to earn a full week's wage and carry on as if they had not passed pensionable age, were drawing a contributory pension in addition to their normal earnings. We wish to retain the principle of retirement as a condition of retirement pension, but at the same time we do not wish—the Beveridge Report never suggested that we should do so—to regard retirement from regular work as a surrender of all activity and interest in life except the fireside and the carpet slippers.

Mr. Messer (Tottenham)

Does my hon. Friend think it is right for those who are receiving superannuation to draw wages?

Mr. Houghton

I do not know whether that is general, but, certainly in the public service, anyone who is in receipt of a vocational retirement pension from the State, cannot continue to work in the public service and draw a pension in addition to wages. One is limited by the Act of 1834 to a total emolument not exceeding the pay he was getting at the time he retired.

Mr. Messer

That is not the case in the public service. I can tell my hon. Friend of a clerk of a county council who is getting his salary and his superannuation.

Mr. Houghton

That must be very unusual indeed. It is, surely, a condition of most superannuation schemes that if a person continues beyond the normal superannuation age, the payment of his pension is deferred or, if it is paid at all, it is only to make good the gap between his earnings in a lower paid post and his total earnings before reaching superannuation age. It is somewhat difficult to explain, but the effect is that no person who remains in employment after reaching superannuation age gets more in total pay than he was getting beforehand.

Sir Peter Bennett (Birmingham, Edgbaston)

The hon. Member is citing the case of a person who remains in the same service. That does not prevent a person from taking his pension from the service in which he has been employed until superannuation age, and getting an appointment elsewhere, when no account whatever is taken of any pension he receives. Nor have I ever heard that that pension is stopped because he has a job outside in industry.

Mr. Houghton

I quite agree that where a person who draws vocational pension gets employment in another industry or with another employer, there is nothing to deprive him of his pension while he is earning money in some other organisation. Hon. and right hon. Gentlemen on both sides will appreciate the difficulty for anyone of depriving a person of a vocational pension for which he may have contributed directly or indirectly during a long period of service and to taking away the pension because, after retirement, the pensioner obtained work elsewhere.

Mr. Manuel rose——

Sir P. Bennett rose——

Mr. Houghton

I cannot give way. I am standing in the way of others who wish to follow me, and I have no desire to take up a disproportionate amount of time.

The point which we are now discussing is not really important. [Hon. Members: "Oh!"] It is not important, because I do not think that the general consensus of opinion in the House would seek to associate itself with the opinion of the hon. Member for Huddersfield, West.

Mr. Manuel

We cannot stop civil servants and others from working after retirement age and earning, in many cases, more than they earned previously.

Mr. Houghton

I do not think we wish to reverse Beveridge on the fundamental principle of the present National Insurance Scheme, which lays down retirement from regular work as a condition of drawing retirement pension. We associate ourselves with Beveridge, who said that even after retirement from regular work a retirement pensioner should be allowed some flexibility of employment—part-time, marginal, supplementary or whatever other word is appropriate to the type of employment—which would allow a retired man or woman to earn a reasonable amount in addition to retirement pension, without coming up against another principle, which has already been mentioned from these benches. That is that retirement pension should not be a supplement to earnings. The trade unions would certainly look with some anxiety at any proposal to abolish the earnings rule entirely, which might bring many retired workers into the field of industry, perhaps ready and willing to work for less than the trade union rate, who might be easy prey for unscrupulous employers who would take advantage of them.

Nor do I think we should associate ourselves with the second suggestion the hon. Member made, that if the wife is older than the husband, pension should be paid to her, not in her own right, but, presumably, by reason of her husband's insurance, on reaching pensionable age in her case, irrespective of whether her husband was under pensionable age and still at work. The essential condition of the retirement pension is that it should be a replacement of loss of earning power and if the husband is the wage-earner and is able to continue at work—he may not have reached retirement age—there seems to be no case for paying the pension to him, or his wife, merely because she is a little older than he is.

Mr. Wade

How would the hon. Member apply that in cases where the husband is unable to continue work through sickness?

Mr. Houghton

In such a case, obviously, the husband would draw sickness benefit and get an allowance for the wife in the normal way.

My main point in rising to make a contribution to the debate was to deal with the one proposal in the Bill which has been the subject of blistering criticism from this side of the House. It relates to the National Insurance Fund. The right hon. Member for Leeds, North (Mr. Peake), quoted the remarks, to which it was very painful for us on these benches to listen, of my right hon. Friend the Member for Ebbw Vale (Mr. Bevan), who suggested in his resignation speech earlier in the week that the proposal of the Chancellor of the Exchequer with regard to the curb on the growth of the National Insurance Fund was a means of stealing £100 million a year from the Fund and that the re-armament of Great Britain was financed out of the contributions that the workers have paid into the fund in order to protect themselves."—[OFFICIAL REPORT, 23rd April, 1951; Vol. 487, c. 40.] There was some demur on these benches when that statement was made and I think it right that a categorical repudiation of it should be made from this side of the House. The proposal of the Chancellor of the Exchequer in regard to this fund does not mean that £100 million a year will be stolen, nor does it mean that the money will come out of the contributions of the workers, nor does it mean that the money will go to pay for re-armament. There is a triple repudiation of the gross inaccuracy which was contained in the remarks of my right hon. Friend.

The National Insurance Fund, which, after all, is the revenue and expenditure fund of the National Insurance Scheme, was to get its income from three main sources; the contributions of workers and employers, a contribution from the Exchequer in proportion to the contributions paid by workers and employers, and a block grant addition to the National Insurance Fund of a lump sum, increasing by steps as the years go by, to make special provision in the fund for the exceptional expenditure it would have to bear by paying the higher retirement pensions to large numbers of people who have not made any contributions on the higher scale and who, in most cases, have ceased to make any contributions at all.

The right hon. Member for Leeds, North, said that it was agreed in the House at the time of the passing of the 1946 Act that the National Insurance Fund should remain stable and that it was not contemplated on either side of the House that it should grow substantially as the years went by. We have all heard the explanation that the growth of this fund—an increase amounting on the average to £128 million a year—is due entirely, or mainly, to the exceptionally good record that this Government have had in the last six years in connection with full employment. The estimate was made at the time of the passing of the 1946 Act that there would be something like 8½ per cent. unemployment and the Government Actuary made his calculations on what the fund required on that basis. The experience has been a very much lower percentage of unemployment and the fund has benefited by six years of full employment, which were not fully allowed for in the calculations of the Actuary.

Another contributory factor which has helped the National Insurance Fund is the favourable experience on sickness benefit. That has been lower than was reckoned at the time the fund was constructed. Those two factors have led to this fund growing on an average at the rate of £128 million a year and, therefore, the fund now stands at more than £300 million and is considerably in excess of the stable figure of £100 million at which it was expected to remain from year to year. The Chancellor of the Exchequer has said that this position should be altered and that some check should be placed upon the growth of this fund. He is seeking ways and means of holding the fund stable at about the £100 million which it was expected would be the amount of the fund from year to year. He has made two proposals to that end.

Mr. Peake

May I correct the hon. Member on two figures? I think he will find that the reserve fund stands today at about £470 million and that the Chancellor's proposal is to maintain the reserve fund stable at that level and not to reduce it, as I think the hon. Member suggested, to £100 million.

Mr. Houghton

Yes, I thank the right hon. Gentleman; the Chancellor is to maintain the fund at its present level, which is considerably in excess of the £100 million which was originally in mind. He proposes to do it by a combination of two methods. One is to reduce the proportion of contribution to the National Insurance Fund from the Exchequer and the other is to modify the block grant payment.

It this proposal is liable to misunderstanding, and still more if it is liable to misrepresentation, I think the Chancellor of the Exchequer should reconsider the way in which he proposes to achieve his purpose. There must be no misunderstanding about what the Chancellor is proposing to do and no ground for misrepresentation. I therefore suggest to the Financial Secretary, who is to reply to the debate, that if there is an alternative way, which is not open to the misunderstanding which has already arisen, he should seek that way of achieving the purpose which I think will be agreed to on both sides of the House. That is not to let the fund run away with itself, as it will if it is left alone.

The hon. Member for Stretford (Mr. Storey) suggested that he would prefer to see the fund increase somewhat rather than modify the proportionate contribution to the National Insurance Fund. In other words, he would be prepared to abolish, for the time being at all events, the block grant contribution to the fund, but to maintain the original proportionate contribution which we find in the 1946 Act. That is one alternative, though it would not achieve the purpose which the Chancellor has in mind. On present levels of unemployment and sickness claims, the fund would still grow and would still be bigger than is desirable in view of the temptations and other evils which the right hon. Member for Leeds, North, suggested might be before successive Chancellors of the Exchequer. I hope that there may be some way of clearing up any doubts about what the Chancellor has in mind.

There is no suggestion whatever that this money which the Chancellor wishes to stop going into the National Insurance Fund will pay for re-armament. It will go to other savings, and can form part of the national resources for capital and other expenditure, or can be used for the redemption of debt. I think that everyone wishes to be clear as to what the Chancellor has in mind about the money which he will stop from going into the fund to prevent its excessive growth.

Mr. Emrys Hughes

Does not that indirectly contribute to the cost of re-armament?

Mr. Houghton

No, it no more does that, than do the insurance contributions which go into the National Insurance Fund and which constitute part of the savings of the nation. It is surely impossible to isolate and identify a particular saving in the national economy and say that it is being devoted to re-armament. It is most important that we should distinguish between the general savings of the nation which we are asking all persons, companies and authorities to make, and expenditure which is specifically allocated to the re-armament programme.

I wish to say a few words on the general issues which have arisen in this debate. There is no doubt that we have all got to do some fresh thinking on the fundamental problems of our social services. I beg my hon. Friends on this side of the House not to lose faith in what this Government are doing, not to lose sight of what they have done and not to evade the sombre issues which now confront the nation in the state of the world today. We must bear all these things in mind. I wish to remind my hon. Friends on this side of the House, and also to remind hon. Members opposite, that the contributory pension was not increased for 20 years. Between 1926 and 1946 there was no increase in it, and that is the period in which hon. and right hon. Gentlemen opposite were mostly in power.

Mr. L. M. Lever (Manchester, Ardwick)

There was no contributory pension before 1926.

Mr. Houghton

I agree, but the contributory pension remained the same from 1926 to 1946, notwithstanding all the changes in social and economic conditions which have taken place in the meantime.

Mr. Turton (Thirsk and Malton)

Was the £ falling in value from 1926 to 1946?

Mr. Houghton

Whether the £ was falling in value or not, the standard of life of the old people had fallen—that was the important consideration—and nothing was done to provide an adequate standard of retirement pension for the working folk between 1926 and 1946. At the time the contributory pension was increased in 1946, there were about 1,750,000 people drawing supplementary pension under the arrangement which was started in 1940.

The problem which confronts us today is to define the priorities in our social services in the conditions of 1951, and we have to do that with fresh minds, with a degree of courage and with the knowledge that we cannot, in present circumstances, do all that we should like to do in all directions at the same time. The hon. Member for Stretford said that this Bill represented the failure of the Labour Government to restrain the rise in the cost of living and to maintain the purchasing power of the £. He did not say a word about the stress and strain of re-armament upon our economy, and the fundamental disturbance of our whole mode of life, of our whole industrial production and of our whole economy by the pressure of external events and the dread of the final catastrophe in world affairs.

If we overlook that, we shall not understand what this Bill is all about. It is trying to combine the urgent need, in present circumstances, of encouraging all who can continue in work to do so; and at the same time, it is providing a more adequate pension for those who have to give up.

Mr. Ellis Smith

This Bill will in the main apply to industrial workers. Does my hon. Friend, then, agree that every man and woman in this country should be treated in the same way?

Mr. Houghton

No. I think that we shall make a mistake if we regard the whole problem of the position of the workers aged between 65 and 70 years in the case of men and between 60 and 65 years in the case of women, as one relating to workers in heavy industry only. After all, one-third of all the men who have reached the age of 70 are still at work and one-fifth of the women who have reached 65 are still at work. A great many insured workers are in industries which for their physical strain cannot be compared with the mining industry or work in the docks. It is a difficult problem how to differentiate, if differentiation is possible, between certain vocations and others.

The mineworker is fully entitled to say at 65 that he has reached the end of his tether. It would be unreasonable to ask him to carry on in such an arduous and dangerous task. I have the greatest sympathy with him. I have given considerable thought to whether there can be a vocational differentiation or whether there could be a system of medical certification which would enable workers in that age group to qualify for retirement pension no matter in what industry they were serving.

When we consider the problem along these lines, we have to look at the equally moving representations of single women, especially in the textile industries, who at 56 or 58 years of age, have been standing at their looms for 30, 35 or 40 years. In the textile industries especially, the problem of the spinster reaching the age of 60 and being unable to carry on at her job is very difficult. In many cases the spinster is entitled to say, "It is not that I cannot carry on with my industrial job. I am confronted with the difficulties and strain not of one job but of two—doing my work at the mill and, when I have finished there, doing my work at home." The problem of giving a pension at an earlier age in such conditions raises wide issues, and we have to try to bring all these considerations together and try to get our priorities in the right order.

I conclude by praising this Bill for what it contains, by saying that I believe that it is a genuine attempt to combine the two needs that I have mentioned. We must look at it broadly and in the context of the present situation. There will be the opportunity we get during Committee stage to remove some of the errors and anomalies which have been raised. But, fundamentally, this is a sound Bill. I am sure it must have given the Minister great pleasure to introduce it for the things which are welcome, and her disappointment is as great as that of anyone for the features of the Bill which have not met with quite so much approval.

7.10 p.m.

Mr. Thornton-Kemsley (Angus, North and Mearns)

I can make one confident prediction—that my speech will be one of the shortest this evening. I wish to confine myself to one single point and to speak about the guardian's allowance of 12s. a week which is laid down in the Second Schedule of the 1946 Act.

I have always understood that the benefits laid down in the Second Schedule and the contributions imposed by the First Schedule of the 1946 Act were so designed actuarially as to have a ratio between each other, so that, over the long-term, they would, roughly, balance. At any rate, that has been the reason advanced by successive Ministers of Pensions when I and other hon. Members have suggested that this particular amount was inadequate. The Ministers have always taken the line that under Section 39 of the Act, there has to be a periodical actuarial review of the scheme, starting with the interim review to the period 31st March, 1950, and we would have to wait to see what comes from those reviews.

We have had that first review. As many hon. Members have said this evening, we know that, because the rate of unemployment was very much lower—we are all sensible of the effect of that upon the whole of our economy—than the 8½ per cent. assumed, the Fund has increased by about £130 million a year. It is for that reason that the Chancellor, was able to say, in his Budget Speech, and the right hon. Lady is now able to confirm in this Bill, that the standard rates of contributory retirement pensions for men at the age of 70 and women at the age of 65 are to be increased as is now proposed. But even when that has been done, and when the desirable improvements in the war pensions have been carried through, the Fund will still be left with a profit of something of the order of £100 million a year. I am certain everyone will agree that it would be quite wrong to whittle away that surplus in increased benefits all round.

Nevertheless it seems to me that there is one Second Schedule benefit which is quite indefensibly low. The Bill increases the allowances for a widow with one child from 33s. 6d. to 40s. a week, an increase of about 20 per cent. It increases the supplementary allowances in respect of a first child from 7s. 6d. to 10s. a week, which is an increase of rather over 30 per cent. It increases the supplementary allowances in respect of all children after the first from 5s. to 7s. 6d., which is a 50 per cent. increase.

I asked the right hon. Lady in a Question which she has not yet had time to answer what it would cost to raise the guardian's allowance of 12s. by about 30 per cent. to 16s. a week; and by 50 per cent. exactly to 18s. a week? We know from the report of the Government Actuary that only 8,600 of these guardian's allowances were being paid at 31st March, 1950. So if we were to increase the allowance to the 18s. a week—and I do not suggest that that is necessarily the right figure—it would cost very much less than £150,000 a year.

I have two cases about which I know from my own constituency. There is a girl of 15 who is being looked after by her grandmother, aged 74, because both her parents are dead. There is a boy between 14 and 15 whose parents are both dead. He is being looked after by his elder brother, a young agricultural worker who is earning only about £5 a week. This elder brother has a wife and two young children below school age who are also calls upon his income. I know what difficulty is being felt in those two homes.

The case of the boy came to light only because the elder brother applied to the education authority for his brother to be exempted from school attendance because, as he said, "I am finding it hard to keep him in clothing." That is perfectly understandable. Goodness knows, it would be difficult to keep a boy of between 14 and 15 in food on 12s. a week, and when one is expected in addition to keep him in clothing I do not see how it can be done. Twelve shillings may buy him a vest, but it certainly will not buy him a shirt. It takes two weeks' allowances to buy a pair of pyjamas and 12 weeks' guardian's allowance to buy a suit. The local authority scales for boarded-out children allow for increases in the cost of living. One local authority estimate which I have seen bases the clothing requirement of a boarded-out child at £12 a year—the equivalent of 20 weeks' guardian's allowance.

This is not perhaps a great matter, it is not a spectacular matter, and it applies only to a few thousand homes; but I am convinced that in every one of those homes the problem is very real and urgent. It is possible to provide for one's own children in these days, though it is hard enough to do that. There is one of the sweetest satisfactions in life in being able to provide for one's own, but one does not experience the same satisfaction in providing, in cases of this kind, for the children of other people. Making personal sacrifices and depriving one's children and wife of some necessity for the sake of another person's child is not so easy, and I am sure that we ought not to make it more difficult than it is already.

7.20 p.m.

The Financial Secretary to the Treasury (Mr. Douglas Jay)

As my hon. Friend the Member for Sowerby (Mr. Houghton) and the right hon. Member for Leeds, North (Mr. Peake) have addressed questions to me about the Insurance Fund, I think I had better intervene briefly at this stage to reply to them. I am sure that the hon. Member for Angus. North and Mearns (Mr. Thornton-Kemsley) will forgive me if I leave his rather specialised question to be answered later by my hon. Friend the Parliamentary Secretary.

As the Minister explained, there were under the original National Insurance Act two Exchequer contributions to the fund. First, the Exchequer pays a share of the contribution actuarially required to cover the cost of benefits to an entrant into insurance at the age of 16. Second, it bears the whole cost of bringing into full benefit rights at the start of the scheme practically the whole of the population within the field of insurance regardless of their age at that time. These two payments are technically known as the Exchequer Supplement and the Additional Sum. The right hon. Gentleman the Member for Leeds, North, called them the "proportionate grant" and the "block grant."

The proportionate grant, on the basis of the present Act, has been more or less constant at about £96 million a year—about one-fifth of the total actuarial contribution required, since the other four-fifths is provided by the employees' and the employers' contributions. The block grant, on the other hand, is a sum which goes steadily up as the number of pensioners rises. Under the 1946 Act it was fixed, until the end of the sixth full year of the scheme; for 1949–50 it was £40 million, and it rose by £4 million a year thereafter to 1955 when it was due for review. The intention was, of course, that with these two payments the fund itself would remain about constant in amount.

These calculations have been upset for reasons that have been made clear in several speeches today; that is to say, mainly as a result of our success in keeping unemployment down throughout these years to about 1½ per cent. instead of 8½ per cent., which was taken as the basis of these calculations. As a result of that, the fund has actually been rising at the rate of about £140 million a year. It would be perfectly possible, of course, and it would have no injurious financial or economic consequences, to leave all this alone and to let the fund grow at that rate. It would then have continued in effect as one of the various organs of Government saving. We decided, on the whole, not to do that, since this was not the original purpose of the fund.

As a matter of Government accountancy generally, there seemed no good reason for transforming the purpose of the fund altogether simply because our original estimate of unemployment had proved pessimistic.

Mr. Ellis Smith

In view of our past experience, and in order to safeguard the future, might it not be that we may yet need the balance?

Mr. Jay

No, Sir. I do not think there is any reason to think that we shall need the balance. No good reason has been advanced for piling up this particular fund at this rate. I was going on to say that, in our decision to keep the fund, at its present level, rather than to let it grow further, we were not in the least influenced by the desire to appropriate revenue to the Exchequer, or to finance re-armament, or to ease the budgetary problem, for the simple reason, as my hon. Friend the Member for Sowerby has rightly said, that the operation makes not the slightest contribution to the budgetary problem or to re-armament. I should like to emphasise this point particularly, because even the right hon. Gentleman the Member for Leeds, North, who is so expert on these matters, did not make this point perfectly clear in his speech on the Budget.

At present, the annual addition to the fund is, from the economic point of view, an addition to our national savings, and therefore reduces the budgetary gap and the amount of revenue requiring to be raised by exactly the same amount. If, therefore, we reduce the Exchequer annual payment by £100 million, we reduce the national savings by that amount; and though, therefore, we do not need £100 million of revenue to pay into the fund, we need an equal sum in revenue to add to the Budget surplus and make up for the £100 million drop in national savings.

From the Budget point of view it is merely book-keeping and in no way affects the Budget problem, or the financing of re-armament. It is a total misunderstanding—I say "misunderstanding" rather than "misrepresentation," because I am sure the mistake arises out of confusion rather than malice—to suggest that we have somehow proposed to raid the fund or steal something from it in order to cover our defence bill. It is also a distortion to suggest that the Exchequer, which in any case is only the general taxpayer—as we should do well to remember—is by our proposals reducing its total contribution to the social services as a whole below what was contemplated in 1946 and 1947 when these arrangements were first made. The fact is, of course, that while, most happily, our expenditure on unemployment has been much lower than was expected, our expenditure on other services, such as health, education and old age pensions, has been growing very rapidly.

I doubt whether the figures are always realised. The social services, including education, insurance, pensions, housing and food subsidies, cost the Exchequer in 1945–46 about £770 million. The comparable figure for 1951–52, including the National Health Service, which had of course by then been added, is £1,550 million, or just about double. The increase in the present year alone, as my right hon. Friend the Chancellor said, is £50 million. As my right hon. Friend said today, social security expenditure on assistance, family allowances and the health services and non-contributory old age pensions is now £340 million higher than was estimated in1945. Most of these services will go on increasing in cost—certainly education and retirement pensions.

If Members will look at the table in the Government Actuary's Report on page 6, they will see that, with the proposals in the Bill on benefits, the total expenditure out of the National Insurance Fund is estimated to rise—and this is on present retirement age practice—from £456 million in 1952–53 to £850 million in 1977–78. The whole of that very considerable increase will fall on the Exchequer—that is to say, the taxpayer—rather than on the contributor.

It was therefore for the following reason that we decided to make the changes proposed in the Budget Speech of my right hon. Friend and embodied in this Bill. As a bookkeeping matter it seemed anomalous to accumulate in a fund which was intended to be constant in amount a sum vastly exceeding what was needed. Nevertheless, even if it is agreed that the present rate of increase is no longer required, it does, as my hon. Friend the Member for Sowerby rightly said, leave open the question of what form the saving in total Exchequer contributions should take. We propose in the Bill that the proportionate grant should come down from £96 million a year to £27 million a year, because, as the Government Actuary points out, that broadly maintains the principle that the rate of contributions—employees, employers and Exchequer together—should be equated to the value of the benefits at the minimum entry age. But at the same time, as hon. Members will see from the Bill, the block grant after coming down to nothing, in the second half of 1951–52, is then to rise steeply to £10 million, £30 million and £60 million in the three succeeding years, after which it was to be determined by Parliament following the general review. But, as I have said, on our present estimates that block grant looks likely to rise rapidly to over £400 million in 1977–78.

These figures prove the absurdity of any suggestion that we are raiding the fund, or in some way starving the social services, in order to contribute to our programme of other expenditure. The right hon. Member for Leeds, North, while accepting the general accounting argument for an immediate saving in the two grants together, would prefer the proportionate grant, as he calls it, to be left in a higher ratio to the employees' and employers' contribution—I think he referred to a "substantial figure" or something of the kind today—and to offset this for the time being by eliminating the block grant altogether. That is, of course, a perfectly possible alternative.

Though it seems to us that our original principle of treating the fund as an actuarial one was sound, I agree that this is a case where misunderstanding is possible. It is important not merely that justice should be done but that it should appear to be done. We have no strong or dogmatic views on the precise method by which this operation should be carried out, and we did examine several possible alternatives before the Budget.

For those reasons, and since we would wish, on a matter like this, to take account of the views expressed on both sides of this House, I can give the undertaking that we will consider, before the Committee stage of this Bill, whether some such alternative as that proposed by the right hon. Gentleman the Member for Leeds, North, and my hon. Friend the Member for Sowerby might be preferable. That would, of course, be on two understandings; first, that such an arrangement is only justified as an interim measure, pending the 1954 general review. Second, and I think that we ought to remember this, the absence of a block grant for the next three years, if we did adopt that plan, must not blind us to what is really the outstanding fact in the whole of the finances of this fund—that after those three years the block grant would suddenly become necessary again at a high figure, which might be a little awkward for the Chancellor of that time perhaps, and would then rise rapidly year by year. If I give that assurance, on the understandings I have just mentioned, I hope the House will agree that we have fairly met the points of view put forward.

Mr. Eric Fletcher (Islington, East)

As my hon. Friend will appreciate, the 1946–47 arrangements contemplated that there would be a standard rate of benefit on retirement, for sickness and for unemployment. Under this Bill the standard rate of benefit is increased for pensions, but no increase is made for unemployment or sickness benefit. Would my hon. Friend give an assurance that if, either on this Bill or at a later date, Parliament desires to increase the standard rate of benefit for sickness and unemployment, there is nothing in this financial arrangement, which he has explained so clearly, which will make that improper?

Mr. Jay

I do not think there is anything in this financial arrangement that would do so, but I should not like to give assurances about what future Governments may do in hypothetical situations.

7.35 p.m.

Miss Irene Ward (Tynemouth)

This Bill has considerable weaknesses. It creates a series of anomalies, and I cannot feel that it really makes a serious contribution to the problem of the old age pensioners faced with the increasing cost of living.

First, I should like to take this opportunity, because I always like to be fair in these matters, to say to the right hon. Lady that I think, from my experience, that the National Assistance Act, 1948, because of its flexibility and the powers contained in it, has been of great benefit to a wide section of the poorest in our community. I should like also to take the opportunity of saying that the administration of that Act has been done as well as is possible in most difficult circumstances. Therefore, when I carry on with my criticisms of the Bill, I do not want the right hon. Lady to think that I have not appreciated the value of that Act in my constituency, where I have seen it in operation.

What I want to say in relation to this Bill is that there is a tendency to put some of the responsibilities which I think should be borne on the Insurance Fund on to the National Assistance Board. Most people would agree with me who have seen the problem of the old age pensioners, particularly social workers, welfare workers attached to local authorities and the W.V.S. who are running the "meals on wheels" scheme and a whole range of other activities in connection with the aged. I think that we have spent too much time in this debate on the more or less academic side of the problem, without emphasising sufficiently the human problem.

When I listened to the explanation of the provisions of this Bill by the right hon. Lady, and to the speech by my right hon. Friend the Member for Leeds, North (Mr. Peake), it occurred to me that they both regarded this question of retirement pensions from the point of view that a man or woman could say, at the appropriate age, "I intend to continue in employment." If that were so, the whole situation would be altered, but it is not the case. When the right hon. Lady and other hon. Members opposite keep on referring to full employment, I would point out that in my constituency, and indeed on the north-east coast generally, there is a considerable amount of unemployment. I am sure that the same applies to other parts of the country. Therefore, to talk as if full employment is uniform all over the country is not correct. Secondly, to assume that everybody will be able to say, "I shall continue in employment, and therefore increase the increments in my retirement pension" is a fallacy.

In the few remarks I wish to make, that is the point I want to stress. I honestly think that in dealing with this problem it would be wise for all hon. and right hon. Gentlemen to see a little more of our industrial processes. I want to ask the right hon. Lady if she agrees, for instance, that all engine-drivers at the age of 65 are fit to go on driving engines until they are 70? Are lorry-drivers engaged on long-distance transport, or bus-drivers, or people who are engaged in ship-repairing yards dealing with the repairing of large tankers, who have to go down inside these vessels to do extremely heavy work—are all these people necessarily fit to extend their period of work from the age of 65 to 70?

Many hon. Members have referred to the mining industry, and to the men at the coal-face. I do not know whether the right hon. Lady has ever been down a mine or not, but I shall be delighted if she will come to one small pit in my division and go down with me to the coalface. These matters cannot be dealt with in an airy sort of way; they are human problems which have to be faced. I do not think it is always the case that spokesmen for a party express the views of all its members. I do not think that they always necessarily see the industrial problem, either at the coal-face, in the shipyards, on the railways and the like, as we do, and therefore I feel that one of the great weaknesses in this Bill is that the new proposals for increased increments are very much more applicable to the factories and light industries, where men and women can remain working at the bench, than they are to the heavy industries.

That brings me right up against the problem of my particular area, as compared with places like Coventry. Birmingham and all those areas where light industries flourish. If in the heavy industrial areas men are not able to carry on working until the age of 70, they will be at a very great disadvantage compared with the men who carry on working in the areas scheduled for light industries.

Once more, we are likely to come up against the difficulty of the difference between these age groups of women up to 65 and men up to 70 who cannot continue work, as against those who can. The latter would, no doubt, have to go to the National Assistance Board, if they had no other resources. Once more, we, shall emphasise the problem of the heavy industrial areas versus the light industrial areas, and, in areas like that which I represent, we shall have more people going on National Assistance, while, in other areas, people will be drawing considerably increased pensions, because, by the very nature of their occupations, they have been able to carry on working.

That is my great objection to this Bill. In looking round for some means of granting relief from the rising cost of living, we have sacrificed the heavy industrial areas for the benefit of other areas, and therefore, speaking for my own constituency, I take very great exception to it. There is the further point that, in the heavy industrial areas, where there is a tremendous amount of real skill and craftsmanship, there is very little chance of those people who have ceased working, and to whom the Minister referred, starting work again. They may not want to go back to heavy industrial employment in an area where there is a vast range of heavy industries, but in which light employment inside those heavy industries is negligible. We all know of the difficulties experienced in the mining industry in the past, in which there have been large numbers of men injured or suffering from nystagmus looking for light work who were unable to be absorbed in the mining industry itself. It is a very real problem indeed, and I do not think that this Bill deals with this aspect at all.

I must now say a word about women. In a heavy industrial area where, relatively speaking, there is very little employment for women, we have a large number of women between the ages of 60 and 65—widows and spinsters—who find it very difficult indeed to maintain themselves in employment. I do not think that this Bill satisfactorily covers that sort of case at all. From the point of view of my area and of the two groups of people—women between 60 and 65 and men between 65 and 70—this Bill does very little indeed to meet their very real problem, and I am very disappointed that a Government which has always professed to have been so intensely interested in the problems of the heavy industrial areas could not have done better. I am bound to say that I have on occasions spoken against my own party because I did not think that they were paying sufficient attention to my part of the world, and therefore I am even more disappointed that this aspect of the situation has not been dealt with more adequately by a Labour Government.

I come now to my last point. It concerns the whole problem of old age—such questions as the chronic sick and looking after in their own homes old people who are not in homes provided by local authorities. Some old age pensioners, of course, have got some small background of resources on which they can draw, but it is time that we embarked upon a really up-to-date inquiry so that we might see more clearly in this modern age how the problem of the increasing cost of living is affecting elderly people. It would be helpful to both sides of the House if we could have a new fact-finding committee so that we might know whether we are really marching in the right direction towards solving the problems of the old people, and I hope that before long the right hon. Lady will decide to do that.

I must express my disappointment about the position of the heavy industrial areas, and I hope that, when a reply comes from the Treasury Bench, somebody will tell us what they have in mind concerning the heavy industrial worker and what range of jobs the Government think these people can carry on until they reach the age of 70. I should also like to know whether the right hon. Lady has any medical proof on this matter. Although I welcome the Bill from many angles, I can only express the hope that, in future, we shall have something more helpful to offer to the heavy industrial areas to deal with the rising cost of living.

7.49 p.m.

Rev. Llywelyn Williams (Abertillery)

I consider that I have been very fortunate indeed to catch your eye, Mr. Speaker, but I hope I shall show an awareness of the fact that there are many other hon. Members who want to speak in this debate. The Minister will have noticed that there is an unusually large number of hon. Members who want to speak on this subject, not because they are so very desirous of exhibiting in their speeches any gifts which they may possess, but because they believe that, in supporting this Bill, they are assisting the solution of some human problems which are regarded as the most serious and far-reaching of our contemporary situation.

There is a large measure of acceptance of the proposals contained in this Bill, and a willingness to admit that it does take a very marked step forward in the direction of the building up of the Welfare State. When we realise that over three million people will benefit from the proposals in this Bill, then I think we have every reason to be proud once again of the vision of our Government and their preparedness to realise the implications of that vision in actual legislation. But there are criticisms which must be offered, and I shall limit myself to just two or three.

I must confess that I do not feel at all happy about the appointed day, 1st October. That date is a very long way off to the old people, and, in the very nature of things, there must be many thousands of people over 70 years of age who will never live to receive the benefits included in the proposals in this Bill. I am not unmindful of the difficulties, and I do not speak as one who is unmindful of them, but I wonder if it is at all possible for the appointed day to be brought nearer to, say, 1st June, or, again, whether on 1st October some retrospective payments might be made. Let us realise that although for the past few days we have enjoyed a very fine spell of weather, on 1st October we shall be entering the period of late autumn and a weary winter, and that, above all, old people need warmth. They need coal, and the price of coal has just gone up again. Naturally, they would like to ensure some stock of coal.

I suggest that this consideration should be borne in mind by the House when we get down to detailed consideration in Committee. I admit that this may be outside the province of this Bill, but I must inform the House that there is a deep sense of resentment in the mining community because miners who have worked for 30, 40 or 50 years producing coal and who have received cheap coal during that period, find themselves on the termination of their employment, whether voluntary or enforced, deprived of a commodity which for so long they have enjoyed at a cheap rate. I think that we should show some imaginative sympathy where questions of privilege are concerned, and that we should not be unduly ready to terminate privileges in this unimaginative way. I admit, of course, that this matter is completely outside the province of the Minister of National Insurance.

I am sure that the Minister will have understood and will have realised forcibly during this debate that the great criticism of this Bill is the differentiation between men and women of 70 and 65 and men and women of 65 and 60, respectively. That is the major criticism we have to offer to this Bill, and it is a criticism that must really be faced. We shall be told that the National Assistance Board is likely in the near future to offer increased allowances commensurate with the increase of basic pensions which men of 65 and women of 60 will not enjoy. That, admittedly, alters things considerably and mitigates the sharper points of our criticism. But customs and traditions die hard in this country, and no one here will deny that there is a very important difference between the psychological approach of the vast majority of old age pensioners to the receiving of pensions and to their applying for and receiving supplementation from the National Assistance Board.

I am told that the sum involved in this differentiation between the two age groups of pensioners is about £10 million a year. I really wonder whether, in view of all the arguments adduced during this debate, that differentiation can be justified. I fully realise that there must be a new orientation on retirement age in view of the need for more and more production and productivity. I also readily admit that today a man of 65 is considerably younger in capacity and outlook than was a man of the same age 25 years ago. This is attributable to many factors, for some of which we would claim as a Government to be responsible. There are other factors, of course, which are outside the scope of any Government. There is no doubt that better working conditions, shorter hours, better pay, social services, economic security, and medical progress have all contributed to this state of affairs.

But we are increasingly aware that ours is an ageing population and that people must be encouraged to remain at work longer. The Bill proposes inducements to that effect, and we all welcome them. But in the heavy industries the wear and tear in human energy is terrific. There are many men in the mining areas who, although over 65 years of age, are still excellent workers, skilled and conscientious, whose services we could not easily afford to lose. But, by and large, a man who has worked for 50 years in the mining industry, and the majority of those years at the coal face, is entitled to be regarded as having rendered as much service to the community as can be expected from any one of its citizens.

In a mining area, and particularly in a mining valley, alternative employment is simply impossible. The colliery top jobs are taken by the partially disabled miners, of whom there is, unfortunately, such a large number owing to the dangerous and arduous nature of the work. The light industries, which, thanks to the Labour Government, did provide a very useful diversification of employment in the Development Areas, are running very short of supplies of raw materials, and, in many instances, are in danger of having to close down. The Remploy and Grenfell factories can only employ a fraction of the partially disabled workers. Surely, the Minister will realise that here we are face to face with a very real problem of adjustment.

Finally, I wish to mention another differentiation of, in all conscience, too long standing in our National Insurance Acts in the past. I refer to the differentiation between the wife who is five years or less younger than her husband and the wife who is more than five years younger than her husband. Here are the elements of a Gilbertian situation. One would imagine that there was something sacrosanct in the number five. The governing factor in the case of a married couple is the age and earning capacity of the husband. The fact that the wife is more than five years younger than her husband is surely irrelevant.

We who speak with feeling about these matters of old age pensioners do so because we believe they are the real aristocracy of this country. The men who have hewn coal, produced steel and worked in other industries for 40 or 50 years are people who deserve the best an enlightened legislative assembly can do for them. A nation and a Government can well be tested by the standard of treatment of old people. This Government need not be aghamed, indeed it can be proud of what has been done in that regard. But, if I may quote an old Welsh proverb, "Nid da lle gellir gwell" which means, "It is not good if it can be bettered." I hope that that proverb will always be our watchword in these social matters.

8.1 p.m.

Mr. Summers (Aylesbury)

I hope the hon. Member for Abertillery (Rev. L. Williams) will tell the Prime Minister of the Welsh proverb that he has translated for our benefit, for it seems to me to apply to this Government at the present time. He took pride in what he described as the vision of this Government, but it is only right that it should be noted that if this Bill is passed in its present form—after taking into account the welcome increases provided in it— the beneficiaries will be substantially worse off than they were when the scheme was first started owing to the deterioration in the value of money. I calculate some 3s. or 4s. a week as the measure of deterioration of the position of people receiving National Insurance benefit under the provisions of this Bill as compared with their position at the time when the original Act was first introduced.

I was very glad to hear the Minister tell us what she did about the National Assistance rates. The only reason why I made an interjection during her speech was because of the statement that it was hoped the change in the rates would be made to coincide with the date when these benefits are to be provided, namely, 1st October, or sooner if possible. I only wanted to be assured that that would not in any way restrict the freedom of the National Assistance Board to bring in improved rates at an earlier date if the real factor, namely, the cost of living, justifies such a course. I hope she realises that this is an intensely human problem which should be related to the cost of living far more than to catching up with changes in the scheme arising out of this Bill. This is another example of what is too frequently prevalent today, namely, not only the spiral of rising prices and rising wages chasing one another but of one form of government expenditure chasing another, and I do not know how far that will go.

I want to bring to the notice of the House three points directly related to this Bill. Considerable comments have been made on the unfortunate effect of dividing old age pensioners into two groups aged 70 and 65, and earnest pleas have been made that the rate at which improved benefits might be drawn should be 65 and not 70 with corresponding ages for women. It has been said it will cost a mere £10 million a year rising to £17 million in 25 years' time.

No hon. Member opposite, however, has faced the fact that if that were done there would at once come forward a claim on the same ground as is now put forward—that there should be no disparity between two types of old age pensioners—that in justice one should not distinguish between a man over 65 precluded from continuing work who draws a pension and the man who is sick and out of work and unable to draw regular earnings but for different reasons. There were good sound grounds for deciding that the rate of benefit for pension, sickness and unemployment should be uniform when the scheme first came into force. Hon. Members who want to change the date when improved retirement pensions become due under this Bill must in all fairness say whether they are willing to depart from the uniformity of all three main benefits under the Act or whether they are willing to face vastly greater Exchequer costs than the mere £10 million in respect of pensions alone that are affected by this change.

It is a great advantage to have these increments increased, but I am not at all sure the most potent influence upon the decision of people whether to retire or not is not the increasing need for earnings at a time of a rising cost of living. I was very surprised that the Minister, who I know has strong personal views on the subject of equality between men and women and has feminist ideas, should have allowed a Bill to go forward in her name which left the women so much out of account compared with men with regard to the 1s. 6d. increase which can now be earned after payment of 25 contributions.

Dr. Summerskill

I must reply to that, as the hon. Gentleman has criticised my feminism. The woman worker who is in precisely the same position as the man worker in respect of contribution, certainly can earn the same increments.

Mr. Summers

I am well aware of that, but I take exception to the fact that whereas in the past the increment for a man and the increment in respect of his wife have been the same, now the increased increment goes to the man but the increment to the wife remains at the original figure so long as the husband is living. I strongly urge that the 1s. 6d. should be "earnable," if I may use the word, just as much by the wife as by the husband, with the effect that there would be a chance when a man postpones retirement to the age of 70 of earning 80s. pension instead of 75s. as proposed in this Bill.

I welcome the increase to 40s. in casual earnings. It is noteworthy that the average rate of regular earnings since the original 20s. limit was fixed has increased by some 25s. a week; therefore, to raise the casual earnings by 20s. will leave the pensioner slightly further from the normal level of regular wages than when the original limit was fixed. So I do not think the increase to 40s. need be criticised on that ground. What I would like to see however is the limit tailed off by allowing a person to keep 10s. of the next £1 earned.

There is, however, another and even more important aspect of this question of casual earnings to which no reference has been made today. I refer to the principle of treating each week on its merits. I should like to see a longer period than a week being adopted for this purpose. I am well aware that great administrative difficulty and a serious dilemma are involved. If we allow too long a period to elapse between the earnings of excess wages and the collection of them—or the attempt to collect them—it will be found that they have been spent, and possibly even recourse to National Assistance may be required ultimately.

If, on the other hand, the period is very short, then the recipient of those earnings is not going to declare them—which is exactly what is happening today. There are scores of people who are unwilling to disclose casual earnings because they believe the system is unfair. They would be much more willing, even if the effect meant some sacrifice to themselves, to come forward and declare the casual earnings they had earned over a longer period. At harvest time, for instance, many elderly pensioners feel it is perfectly justifiable for them to go to give a hand in the fields and that they ought not on that account alone to be deemed to be employed, but that they should still be deemed to be retired; and they ought not, in their judgment, to suffer a decrease in their pension on that account.

If it were treated in respect of a month, and the level, instead of being £2 a week, were £8 a month—or possibly an even longer period if administratively it could be worked out—then it would become possible for casual workers at harvest time, and doing special work at Christmas time—such as being Father Christmas in the shops, and the like of it—could be employed without violation to the retirement principle, and the facts of the situation would be willingly disclosed, and sufficient time allowed afterwards to work off the liability which, for a short period, would have been incurred. I do not believe that it is so completely impossible to devise a system as it is sometimes alleged to be, and I would urge the Minister, who, I believe, would welcome a system of this kind if it were found practicable, to do something along these lines.

Mr. Kirkwood (Dunbartonshire, East)

On conditions, of course, that these people recognised the current rate for the work they were doing. We do not want to introduce cheap labour, or to have advantage taken of them.

Mr. Summers

I am well aware of the fear that an increase in these earnings might lead to its exploitation, but this does not involve an increase in the casual earnings limit at all. What it does do is to allow the limit to be calculated over a slightly longer period than one week with no work thereafter for a certain period, so that no liability taking the period as a whole will be incurred. I know that in agriculture as in other spheres such an arrangement would be welcomed if it could be organised.

The only other thing I want to say is this. The Minister described this as an interim Measure. I assume she had in mind that it was intended to carry us over until the review foreshadowed in 1954. I think that that is a very optimistic prospect. With the rate at which it appears the cost of living is going to rise I doubt very much if any Government will be able to stick to the terms provided under this Bill for all those affected under the National Insurance scheme. That is why I do hope that those who want to see these benefits applied to every retired person from 65 onwards will bear in mind not only the arguments I used earlier—the effect upon employment and sickness rates—but will also bear in mind that if the shoe pinches harder and harder for the next few years, as I believe it is going to do, it will become increasingly difficult to do justice to the most needy, if the principle of uniform treatment of all retired persons is insisted upon irrespective of the consequences. We may well need to help the really needy at considerably greater cost than is foreshadowed in the provisions at the present time, and I hope that that will be borne in mind, and that the prospective deterioration in our national situation will prompt people to be cautious in the distribution of further money at this stage.

8.15 p.m.

Mr. Slater (Sedgefield)

I have been rather interested in the attitude of the various Members of the Opposition who have spoken in relation to this Bill. Hon. Members opposite have said that they welcome the Bill. That is rather remarkable, considering the attitude of those people in the past. They have been opposed in the past to any introduction of an increase of the basic pension for our aged people in this country, when the Labour Party sought to introduce this policy. It is to the Labour Party, because of all the Measures which they have introduced, especially since they came into power, that the old people ought to be most grateful.

Everyone will agree that there has been much disquiet throughout the country amongst certain sections of the community about the basic pension. I believe that much of the disquiet has been because of the heavy increase that has taken place in the cost of living. The lower income groups are undoubtedly very hard pressed to meet the demands of the day. Like other hon. Members, I have received many complaints about the basic pension and the fact that it is to be for those people who reach the age of 70.

On the face of them, the Minister's new recommendations do carry with them a certain attractiveness. It appears that the will and the power to work up to the age of 70, is to confer certain benefits in monetary value on those who are able to retain their physical ability to work, but I want the House to realise that we must never forget that there are many people in this country who have serious objection to imposing such conditions. To some, such a provision is tantamount to bribery, and it will be very difficult, if not impossible, to remove from the minds of many of those people that such is not the case.

Let me give a simple illustration. I remember many years ago hearing a Methodist minister say that he did not believe in giving prizes to the Sunday school children for reciting monologues on school anniversaries. In his opinion it was wrong because other children in the school who had not the ability or courage and who were for this reason unable to recite, were denied the opportunity to win prizes. It may be that many people would not agree with that minister.

It may be asked what is the analogy I am seeking to draw. The analogy is simply this. I belong, as is well known by hon. Members on this side of the House, to a heavy industry. I think that anyone will agree that the majority of our men are ready to retire long before they reach the age of 65. As a matter of fact, my district association have for a long time felt that, far from a man being called upon to retire at 65, he ought to be able to retire at 60. I have been informed tonight that the object of the association is that pensions be provided at the age of 55. These men have given of their best in getting coal for the country, and they should not be penalised because they are no longer able to carry on owing to physical weakness.

As one who comes from this basic industry, I feel very much on this question, knowing as I do the effect of this upon many of our aged men in the mining districts. Hon. Members can draw their own conclusions when I ask them to consider, in all seriousness, that almost one-third of a miner's life is spent enveloped in darkness, apart from the dangers he has to face day after day. That is a great sacrifice. I could go on elaborating this by bringing before the House many of the things these men have to encounter, which has been primarily responsible for their ageing prematurely. Where I come from, before I came to the House of Commons, we had what is termed a drift. There were 546 cement steps, and at the end of a day's work at the coal-face a man had that to encounter. To see men between the ages of 50 and 65 enduring that, as I used to see it as a young man, touched me very deeply, and I promised myself that if the time came when I could voice a protest on their behalf, and plead that every consideration be given to them, I would do so.

When those in this basic industry have been called upon to make sacrifices and give of their best, have they not done so? The whole country has recognised that. I therefore think it is not too much to ask that serious consideration be given to this group between 65 and 70. Because of their calling in life they have had to be subjected to the most arduous of tasks, which has rendered them more or less unable to go that extra part of the way in life.

I should like to quote from the speech of my hon. Friend the Member for East Ham, North (Mr. Daines), on 13th April, when he said: Retirement is not sought after; let us recognise that. The bulk of the people do not want to retire. They want to keep on doing the things they have been doing and in the way they have been doing them."—[OFFICIAL REPORT, 13th April, 1951; Vol. 486, c. 1380.] There is great substance in that, and I echo those sentiments tonight because I believe them to be true. At the same time, I say that we should concede the right that those with physical infirmity should be taken care of properly.

I have the greatest confidence in my right hon. Friend, and I hope she will, as this Bill proceeds—because it is obvious from the speeches made by the Opposition that there will be no Division on the Second Reading—seriously consider the sentiments I have expressed about those in the 65 to 70 age group. Do not let it be said that people who, because of financial hardship, have been forced into endeavouring to continue to work, when all their inclinations and instincts tell them they should retire, are to be penalised. I wish this Bill every success, but I hope that serious consideration will be given to various Amendments that may be put down in order to ease the position of many of our old people.

8.25 p.m.

Mr. W. G. Bennett (Glasgow, Woodside)

One thing, and I believe almost only one thing, is common to both sides of the House tonight, and that is agreement on the decreasing value of pensions. Pensions today will be worth very much less in three months' time, and the Government say that the cost of living will continue to rise. It appears that the 4s. increase at the pensionable age of 70 for men recognises that fact. Then we are told there is the possibility—and evidently the great possibility—of many between the ages of 65 and 70 finding employment. I represent a Glasgow industrial area, and I would say that at least 90 per cent. of my constituents are engaged in one form of industry or another. I believe it will be very difficult, if not almost impossible, for many of these people between 65 and 70 to find employment. What are these people to do for the next three, four or five years? We must give thought to that question.

Let us assume for a moment that a certain percentage get employment. To encourage employment, the amount which may be earned by a pensioner has been increased from £1 to £2. If a man gets a job at £2 per week his total income will be £2 plus 26s., apart from the wife's allowance, namely, £3 6s. If he gets a job at £3 a week he gets nothing at all for the third pound that he earns; in other words, his pension rate will be 6s. I have tried to check this with the Department and I am told it is correct.

If a man earns £3 10s. a week he is allowed nothing at all, so for the second £1 10s. he is working for 4s. Surely some inducement must be given to these old people if they are to be asked to go out and do their bit in this time of stress and strain. The contribution they are asked to make to the country ought to be a fair contribution according to their earnings. I think we all agree that if a pensioner who earns £3 10s. has £1 6s. deducted, that is not a fair contribution.

In the City of Glasgow we have just concluded the purchase and equipping of two houses, not for the sick poor but for the ordinary poor. We have tried to encourage elderly people who are lonely to go into these large detached houses where they will have comfort in their declining years. These two houses will provide accommodation for 52 persons, 26 per house. The Glasgow Corporation are providing another five, and the total number of people in these five houses will be 81. They are negotiating for another four houses. There are, however, in Glasgow some 1,000 or 2,000 applicants for this sort of accommodation. Why is that? The reason is that most of them cannot afford to live on their pensions. Under present conditions, with the continual rise in the cost of living, we are going to compel most of these people to apply for accommodation through the corporation.

What is the cost? The cost is roughly £4 per person per week. Is that not a good reason for increasing the pension between 65 and 70 where it is necessary, rather than push these people into this accommodation? I ask the Government seriously to consider first, what people are going to do between the age of 65 and 70 who cannot get work; second, what are people to do who cannot live on the pension; and, third, whether it is worth while offering to people who expect to go out to work a little more for their labour at the end of the week.

There is one further thing which I wish to mention. It is rather extraordinary that a man after he has completed an extra five years of work has an expectation of life of 7½ years. I should like to calculate what we are going to take from that man from 65 to 70 years and what we are going to give him from 70 to 77½ years. I think that we shall find that the State is taking very much more from him than it is giving him back. A woman, on the other hand, who retires at 65 has an expectation of life of 18 years. So we have rather overbalanced the weight on the female side on this occasion. We need to consider that when we are considering the man who goes out to work.

Every Member of this House has sheaves of letters telling him what happens. I had a letter today from a man to whom the Government gives 3d. a week as pocket money. He is not allowed to smoke or go to the pictures or anywhere else. Many of us in this House could talk on this subject for at least an hour, but I shall curtail my remarks as I know that others wish to speak. I have much pleasure in putting these facts before the House.

8.34 p.m.

Mr. Rankin (Glasgow, Tradeston)

I know that many of my Scottish colleagues are anxious to make their contribution, and therefore I shall confine myself to one point only. I want to examine briefly the incentive that is being offered to the 65's to continue at work. I should first like to congratulate my right hon. Friend on the Bill which she has presented today. It has met with a large measure of support from both sides of the House. It is interesting to notice that not one word detrimental to those parts of the Bill dealing with widows and dependant children has been made throughout the entire debate.

Much of the criticism is concentrated on the question of the appointed day, and I hope my right hon. Friend will take note of what has been said with regard to 1st October as the day when these new pensions are to be paid. There is a very strong feeling, which has been expressed, that the date is too far ahead. The Bulletin of Information which is issued by the Treasury stated in the April issue that import prices had risen from June to December by 14 per cent. The impact of those prices is now being felt, and will continue to be felt more and more by the people of this country. It is worth noting that for the single pensioner the increase of 4s., which is now being given but which will not take effect until 1st October, has already been consumed by the rises that have taken place, That is totally wrong and unjustifiable, and the postponement of the day until 1st October is something that I cannot defend.

There has also been strong criticism of the differential pensions for those at 65 and those at 70. I want to look a little more closely at one aspect of this because the Bill is designed to encourage those who are eligible for pensions at 65 not to claim them, but to continue in work until they are 70. If we want them to continue at work until that age, I submit that we have to ask ourselves, what is the incentive that we are offering to those at 65 to continue until they are 70?

If we take the total of contributions, which would be paid by an individual who did not retire at 65, we find that the total he paid as continued contributions for five years would be £42 at 4s. 11d. per contribution. That would be his total payment, but in addition he would not draw £337 10s., the 26s. over a period of five years, so that he loses, as it were, £379 10s. during those five years. I know, of course, that he is supposed to be working. I do not think that that point arises in the examination I am seeking to make, because I am looking at the question to some extent from the arithmetical point of view, but it does have economic consequences for the individuals. He does not get it, because there is an incentive to draw £2 5s. a week when he attains 70 years of age.

That means he would get £117 per year, but he has lost £379 10s., so that before he overtakes the deficiency he has to draw benefit for over three years. He does not overcome that deficiency until he is 73 years of age, and my right hon. Friend told us today that the potential life at 70 was 7½ years. He reaches 73 before he overcomes the loss which he voluntarily undertook at 65, and then only 4½ years remain to him. I believe the House will agree that that is wrong. That was in regard to the single man. If we examine this problem in regard to a couple we come to exactly the same finding; the man will be 73 plus before he overcomes the loss of pension.

If we look at it from another point of view, the lack of incentive is still more alarming. My right hon. Friend said that at 65 there was an expectation of life of 12½ years. An individual drawing 26s. a week in the 12½ years of retirement could look forward to receiving a total of £811. We are seeking to encourage people to remain at work until 70 when a pension of £2 5s. will be paid, and at 70 the expectation of life is 7½ years, so that as a result of postponing retirement and paying more into the fund the amount which is drawn is £585. Such a person has a longer working life and at the end of it the total sum is much less than the sum which would have been drawn if retirement had taken place at 65.

Mr. George Thomas (Cardiff, West)

Will my hon. Friend allow me——

Mr. Rankin

I hope that my hon. Friend will forgive me if I do not give way; I am already condensing what I had intended to say. These figures, which I have worked out as carefully as possible, do not indicate that the incentive to continue after 65 is a very strong one. I believe that there is no way of removing the anomaly where we begin to differentiate in the age at which a pension may be drawn unless we make the increase the same for all who are affected by it. I hope that before we come to the Committee stage my right hon. Friend will consider very seriously, in spite of all that we have heard about financial commitments, the possibility of dating the increase in pension from 65 for men and 60 for women.

I know that that raises the question of cost, but in a written answer on 19th April we were told that the immediate cost would be £10 million, which would mean an increase of between 2d. and 2½d. in contributions. The £10 million which is necessary to wipe out the anomaly could be raised if the Minister exercised the power which she possesses to increase the contribution by 2½d. in this present year. I am sorry if I have gone a few minutes beyond the time I proposed to speak. I apologise if my five minutes have gone into 10, but very often I have noticed that 15 minutes in this House extend to 45 and I am consoled by the thought that, if I am a sinner, it is on a very small scale.

8.46 p.m.

Mr. Vaughan-Morgan (Reigate)

I hope the hon. Member for Tradeston (Mr. Rankin) will forgive me if I do not follow him in great detail. I support much of what he said. He particularly had my support when he refused to give way to his hon. Friend the Member for Cardiff, West (Mr. G. Thomas).

The right hon. Lady has had very many bouquets and a good many brickbats, mainly from her side of the House. I have one or two criticisms to make of the Bill but they are general rather than particular. To begin with, in order to forestall any criticism from the serried ranks representative of heavy industry opposite, I want to say that I agree with the remarks they have made, and that my remarks apply more to general industry and to light industry in particular. I hope that will save me from being interrupted too often.

I echo what my hon. Friend the Member for Aylesbury (Mr. Summers) said with regard to the fact that the increment is not to be extended to the wife. The right hon. Lady made a reply to my hon. Friend, but the fact is that this is a new principle which is introduced into this Bill, and she did not attempt in her introductory speech to justify it in any way. I hope we shall be able to hear from the Parliamentary Secretary, when he winds up the debate, what are the reasons for this change. It is an innovation and it should not be allowed to get past without any criticism or explanation.

I fully appreciate that it is necessary to retain a maximum earnings allowance if the retirement principle is to be retained. However, there is one type of employment of which no account is taken in the Bill, a type which existed a great deal in the war, namely, half-time work. If we are to get people back into industry to meet the re-armament drive and to maintain the standard of living of our people in future generations, we must make provision for the type of worker who wants to be in the factory for a half-time working week, that is, an average of 20 or 22 hours.

At the moment the earnings rule cuts out that type of employment, not only by the maximum amount of 40s. but also by the limitation of the decision of the arbitrator that only a maximum amount of 12 hours could be worked. The restriction on earnings operates very much against the higher-paid worker who may want to come back into employment on the half-time basis I have mentioned.

I hope it will be possible at some time in this Bill to make provision for the three categories of employment—casual employment, full employment and half-time employment. I throw out as a tentative suggestion that it might be possible to make provision for a basic earnings allowance of, say, 20s., and then, if the Minister considers it necessary, to deduct, say, 3d. for every 1s. earned over that from the pension. By that means we can attract back into employment a great many people who would otherwise be lost to industry. I am thinking particularly of a man who is reaching the end of his normal working life and cannot do a full day's work. Not only would half-time work be of great assistance to him in maintaining his standard of living and in making his contribution to the needs of the nation, but from the point of view of industry half-time work is the easiest type of work to organise.

Another matter which I should like to raise relates to Clause 5. The right hon. Lady gave many reasons why we wanted to attract back into employment people who had retired. She said that many people regretted retirement, and cited letters which had been written to her on the subject. It ought to be possible in the Bill to make permanent provision for those who have retired to come back into employment after a certain interval has elapsed if they so wish. From experience in my own industry, I know that many men want to take a few months' rest on reaching the age of 65. They then find that retirement is not quite as attractive as they expected. It is more for social than economic reasons that they would like to return to employment.

I have in mind a constituent of mine who has written to me. On his retirement he and his wife moved elsewhere. He has now become a widower, finds life lonely and dull, and now seeks my help to find part-time employment. This is a problem although perhaps not a great one, for which we ought to try to make some provision in the Bill. I hope that both these points may be replied to when the Parliamentary Secretary replies to the debate.

The last point I wish to raise is the question of the employer's contributions for workers over the age of 70, and 65 in the case of women. There is a very strong case for this contribution to be waived. Many hon. Members have said how difficult it is for the elderly to find jobs. This is a very serious problem and one with which so far the Ministry of Labour have hardly known how to cope-There is reason for giving encouragement to employers to keep on, and even to find special employment for, men over 70 and women over 65. One particular firm in Staffordshire has made a great effort to start special shops for men of this age. In answer to a question of mine, the right hon. Lady said that this practice might encourage employers to favour the elderly instead of the young, but this argument cannot be carried very far in view of the fact that the whole theme of the Minister's speech was the desirability of retaining the elderly in employment. I hope we may have an answer to these criticisms, either tonight or on the later stages of the Bill.

I should like to add my pleas to those of other hon. Members for bringing forward the date when the scheme comes into operation. I think the right hon. Lady would be well advised to make her plans for that now because, whether she likes it or not, she may find herself with a statutory obligation to do so somewhere about July or August—provided she is still in office. With those few comments, I give the Bill my blessing.

8.56 p.m.

Mr. Keenan (Liverpool, Kirkdale)

There has not been much said about the need for spreading earnings over a period. I think that the Beveridge Report agreed that it should be on a three-monthly basis, or something like that, and certainly a weekly basis is inadequate for the purpose.

I with other hon. Members deplore the need for asking the worker to extend his period of work beyond 65 years of age. That is regrettable. We have to face what will be the position in a number of years' time in view of the changed circumstances of life. I do not think that what is attempted in this Bill will satisfy or adequately cover that position. If we are to face up to the financial necessities of the future, we have to start making preparations, and if the age of retirement is to be raised, I do not think we are attempting it in the right way. My experience in Liverpool must be similar to that of others with experience of heavy industry. The fact is that many who were compelled to retire, even though they were fit to continue work, have no chance of returning to industry now. A man of 65 cannot return to industry in my area. The men of 65 and women of 60 are just as entitled to the extra 4s. as are those of 70 and over.

We must alter the Assistance Board Regulations and scales, and the sooner the better. When we do that, we shall have to recognise that the man of 65 would be entitled to obtain the 4s. under the new scales just as much as the man of 70 is entitled to supplementation. After listening to the Financial Secretary to the Treasury, it seemed to me that it would not have been a bad thing to give the extra £10 million to these pensioners.

To leave this change until October is fundamentally wrong. Representations have been made by all the representative associations and federations of pensioners. For some months now they have pressed for something to be done. For them to have to wait for another five months is ridiculous. It is not fair to them. These provisions should be brought into operation by 1st July, and I hope that the Minister will direct her attention to that aspect of the matter.

9.1 p.m.

Mr. Molson (The High Peak)

I do not think that the Minister will be dissatisfied with the general reception which has been given today to her Bill from both sides of the House. The Bill must, of course, be judged against the general background of the Budget. Indeed, it was in the Chancellor's speech that we first had an indication of the general lines of this Measure. It is made necessary by the fact of general rising prices and the fact that for as far ahead as we can see, the labour force in this country will remain stable, until it begins to decline.

So far as the first point is concerned, the steady decline in the purchasing power of money, which has been so much accelerated recently and seems likely to continue, will, as my right hon. Friend has pointed out, present the whole scheme of the Insurance Fund with a very great difficulty. Where the actuarial soundness of the scheme is based upon the contributions paid by a boy who enters industry at the age of 15 and does not begin to draw retirement pension until the age of 65, or as we hope at 70, it is obvious that it is desirable and indeed essential that, so far as possible, the purchasing value of money shall remain stable during the whole of that time. If, as has generally been the case in the past, there is a decline in the purchasing power of money, there is a great danger that the contributor will find at the end of his long career of work in industry that the benefit for which he has been contributing for so long, has a smaller purchasing value in the form of goods than he had expected at the time when he was compelled to enter the scheme.

It is largely for that reason that we have twice within the last four or five years been confronted with a problem to which I have ventured to draw the attention of the House. The first occasion was when the Colonial Secretary—whom we are all glad to see here taking a paternal interest in the amendment of a Measure which he piloted through the Committee upstairs and the House with so much tact and good humour—was still responsible for this scheme. We had assistance scales produced which in certain respects were above the level of insurance benefit. I ventured then to draw the attention of the House to the anomaly that when a man or woman has contributed during the whole of a working life in order to obtain a retirement pension as a matter of right, the value of that pension is not greater—when rent is taken into account it may well be less—than the scale of assistance which the Assistance Board considers necessary to prevent a person who is not insured from falling into want. That is an anomaly to which I do not see an entirely satisfactory solution, but it is clearly one to which we must give attention.

For that reason I am glad that in the Measure which we are discussing tonight there is this proposal for the increase in the basic rate of pension to be paid as a matter of right to men over the age of 70 and women over the age of 65. It is a considerable step in the direction of raising the insurance benefit which can be claimed as a matter of right, to a higher level than the amount which has previously been paid by the Assistance Board to those who come to it on the ground of need.

The other dominating cause for this Bill is the importance of keeping the elderly at work, if they are physically capable of work and desirous of continuing. Although there was nothing new or revolutionary in the Budget speech of the Chancellor of the Exchequer, it gave me great satisfaction because I felt that he was directing the attention of the country as a whole to what must become an increasing social problem. If we are to have anything in the nature of a rise in the standard of living in this country, it can only come because of the larger number of the elderly who are continuing in work. I do not rest that contention purely upon economic grounds. I base it also on the need for the provision of workers in the social industries. One of the greatest contributions to the provision of nurses for the hospitals for example, would be if many of those who are in them at the present time, were able and willing to work beyond the retirement age.

This policy met with general acceptance in the House when my hon. Friend the Member for Toxteth (Mr. Bevins) raised it on Friday, 13th April. If we can make it easy and agreeable to those who could retire today to remain on and continue to make their contribution to the prosperity and well-being of the country as a whole, it would make both for their happiness and for the good of the country. I, therefore, feel that the Bill before us tonight is introduced partly because of the need for dealing with the rising cost of living, and partly because of the importance of increasing the labour force.

Having said that, I am bound to ask myself and the House whether the right hon. Lady who introduced this Bill, in a speech so lucid, clear and persuasive, has in fact used the money available in the best possible way. We have heard today a number of quotations from the Beveridge Report. It is right that we should, because the whole of this legislation was based upon that very remarkable Report. There is one passage in it which I should like to quote: It is dangerous to be in any way lavish to old age, until adequate provision has been assured for all other vital needs, such as the prevention of disease and the adequate nutrition of the young. That is no less true now than it was when Lord Beveridge wrote it. I thought that "The Times," in an article on 12th April, written after the publication of the White Paper dealing with this Bill, wrote something which we should all bear in mind. The article said: Yet it is plain beyond doubt that the nation cannot at present afford to raise pensions all round, just as it cannot afford to give pensions to people still at work…the pensioners' share of the national income is larger than the Beveridge Report thought wise… It added that the cost of retirement pensions was double what the Report assumed, while aggregate incomes derived from wages and the ownership of property, from which the cost of pensions had to be found, were only three-quarters higher. It is because of these financial limitations under which the Government, and the right hon. Lady in particular, are labouring, that there has been this departure from one of the basic Beveridge principles—flat rate benefits for flat rate contributions. The Colonial Secretary will remember that that was an accepted principle of the Act when it was introduced.

It is important for the House to realise what a fundamental departure we are making today, when we give a Second Reading to this Bill, in increasing the retirement pension for a certain category of the aged while leaving the benefits of the unemployed and the sick where they are. I think the right hon. Lady is right in this respect, because she has to recognise that she is operating under financial limitations. When I use the phrase "financial limitations," I do not mean merely the matter of money. Money is only worth what it will buy. When we are considering these pensions, we are really considering the goods and services which are to be made available to any class of the community.

I am not entirely sure that this raising of the benefit rate was the best use to which this money could be put. In a reply which the right hon. Lady gave on 15th April, she pointed out that only one-fifth of the men and one-quarter of the women of pensionable age and drawing retirement pensions are in receipt of assistance from the Board. That probably means that four-fiths of the men and three-quarters of the women either have some other source of income or are perhaps living with relatives, and are able to obtain relief from the full burden of the cost of living in that way. It must also be noted, and here I am quoting from the last Report of the Assistance Board, that in the case of the non-contributory pensioners over 70—those who because of their means are able to claim non-contributory pensions—they owned property, apart from the houses which they themselves occupied, of a value of £75,500,000, bringing in an annual revenue of £11,500,000 to them.

Therefore, we have to ask ourselves to what extent this increase in the basic rate of pensions is actually going to those who are in the greatest need. We on this side of the House had decided to press the right hon. Lady for an assurance that the Assistance Board scales would be in-increased in a way comparable with the increase in the basic rate; otherwise, it would have meant that all those pensioners over the ages of 65 and 70 who are at present in the greatest need, as is shown by the fact that they have applied for, and have been granted, assistance by the Board, would only have had their assistance diminished by the amount of the increased pension. Our minds have been set at rest by what the right hon. Lady has said this afternoon, and therefore I do not quarrel with what she has decided to recommend to the House, since the assistance scales are to be increased to a comparable extent, though not necessarily by an identical amount.

Of course, I must say that the majority of us on this side of the House would be entirely opposed to any extension of this benefit to men below the age of 70 and women below 65. We entirely accept the line of argument of the Chancellor of the Exchequer, which was repeated by the right hon. Lady this afternoon, and we consider that this increase in the basic rate is only justifiable in so far as it is going to act as an inducement to persons to stay on for a longer time in industry.

Mr. T. Brown

The hon. Gentleman would not deny pensions or assistance to the blind people of this country?

Mr. Molson

I was not referring to the blind at all.

I recognise that it is quite impossible satisfactorily to deal with all categories of workers in exactly the same way, but I have been impressed by the point made on both sides of the House that we must make quite certain that those who are physically incapable of going on, and especially those engaged in very hard manual labour, which it is far more difficult for them to continue to do than is the case with clerical or light occupations, will benefit. We must, during the Committee stage, make certain that there is no unfairness in the operation of this Bill.

The thoughts of both the Government and the Opposition have been turning in the same direction. On our side of the House, a little committee was set up some time ago to consider what might be done on these general lines. We had two indications that the Government, with their greater resources, were engaged in the same kind of thought. The first indication was the answers returned by the right hon. Lady to the Parliamentary Questions which we put down. The sibylline answers in which she conveyed nothing, made us think that she was thinking a great deal. We made a request to the Government to be allowed to talk to the Government Actuary on these matters about retirement. When we were refused access even to so completely non-political and abstruse a mathematician as the Government Actuary, we thought there was some reason why he was being kept in purdah. When the Budget speech was made, we understood all about it.

There were two matters upon which we had thought of making recommendations. I should like to throw them out tonight, and we may advance them on the Committee stage. We thought it would be a great inducement to many men to continue in industry if by so doing they could earn a comparable increase in the pension for their wives as well as for themselves. Under the law as it is at present, the increase is 2s. in respect of each one of them for each year the man works. Under this Bill, the 3s. increase is only for the man himself, or for the wife in the event of his death. We should like the Government to consider whether it might not be a great inducement if we could give rather more financial advantage by extending that benefit to the case of the wife.

The second point on which we want to make a suggestion is that, as things are at present, a man can earn an increase in the pension of his wife only from the time that she becomes 60 years of age. We feel that there are many cases where a man is married to a woman some years his junior, and that he would be glad to continue in work if, by doing so, he could assure her an increase in her pension. We do not want to carry that to a ridiculous length, and we think it should be limited to the case where the wife is 50. It would become payable only when she reached the age of 60, and where the man had been in the insurance scheme for a period of 10 years. That is an attempt at making a constructive suggestion on a fairly small scale, but one which might serve to advance the purpose of this Bill. We thought that with those limitations it would not lend itself to any great abuse.

This brings us to the fact that at present we know very little about the motives which induce some men to remain on in industry and others to retire. My hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) made a speech upon this subject on 13th April. He referred to the interesting report by Mr. B. M. Osborne, which has been presented to the Minister of National Insurance; but he also pointed out that in what Mr. Osborne had to say about the number of men and women who either retire or stay in industry, he had not distinguished between those who were coming under the operation of the retirement provisions contained in the 1946 Act.

I would urge upon the right hon. Lady that it is extremely important that she should know, by making inquiries from managers of branches in different parts of the country and from the men and women concerned, what exactly are their motives in this matter. My right hon. Friend the Member for Epsom (Mr. McCorquodale), in the same debate, referred to the difficulty of this whole problem, and suggested that it should be examined either by a Royal Commission or by a departmental committee. I much prefer the departmental committee, because I think that a Royal Commission is a steam-hammer for cracking a nut.

I believe that an inter-departmental committee, in which the right hon. Lady's Department and the Ministry of Labour were jointly concerned might result in a number of these problems being resolved. I have become a little bit familiar with these problems in the last few weeks when trying to look into this matter on our unofficial Conservative committee, and I think they are matters which could very well be inquired into by a small body of officials accustomed to the administration of these Measures.

It follows straight and logically from this, of course—although it did not seem to have occurred to the hon. Member for Huddersfield, West (Mr. Wade), that this was so—that if one is going to have retirement pensions and not old age pensions paid arbitrarily at a certain age, one must have an earnings rule. I have no doubt about the need, for maintaining an earnings rule, but the moment one begins to consider exactly what the provisions of that rule are to be, then at once one gets into difficulties in which it is very desirable that we should have knowledge of the way those concerned may react.

We must consider three separate cases. We all want to encourage the largest possible number of regular workers, who are fit and willing to do so, to continue for an extra five years at least in the particular job in which they have been engaged during most of their working life. That is the greatest contribution we can make to their happiness and to the production of the wealth of the country as a whole. Secondly, there is the case to which my hon. Friend the Member for Reigate (Mr. Vaughan-Morgan) referred—the considerable number of those unable to continue in a full-time job who are able and willing to continue in a half-time job. Thirdly, there are those who, despite all we can do to encourage them to stay on, feel they must retire at the earliest possible age because of failing health or for some other perfectly good reason.

When they have retired we do not want to discourage them from making those casual earnings in a job such as gardening which will be to their advantage and to the advantage of the country as a whole. But it is extremely difficult to draft an earnings rule which is going to encourage people to stay on in their permanent job and which is not going to discourage others from staying on in a half-time job and, at the same time, is going to be reasonable to those in casual employment. What we want to do is first to encourage the first category and secondly to encourage the second category and then not to penalise the third category unduly. I urge upon the right hon. Lady that this is the kind of matter which with advantage can be considered by an inter-departmental committee.

I hope the Government will consider the particular case of the orphan, which was put forward by my hon. Friend the Member for Angus, North and Mearns (Mr. Thornton-Kemsley). I did not hear him mention one point which I think the right hon. Lady will find is correct, and that is that in the 1946 Act the National Assistance Board is prevented from giving assistance to an individual under the age of 16. Therefore, the orphan is not able to obtain from the Board assistance of which he stands in need because of the inadequacy of the pension which is paid under the National Insurance Act. It is our intention to put down an Amendment on this matter on the Committee stage. I hope the Government will give sympathetic consideration to it.

I had intended to say something in support of the suggestion of my right hon. Friend the Member for Leeds, North (Mr. Peake), that the Government should modify the proposals of the Chancellor of the Exchequer on the financing of the Fund. Most of us on this side of the House entirely accept his objective, but we do attach the very greatest importance to maintaining the tripartite partnership in this great insurance scheme in which the employer, the employed, and the State all contribute their part; and it would surely be quite wrong if the State, which has been so largely responsible for organising and developing this great scheme, which, in the words of my right hon. Friend the Member for Woodford (Mr. Churchill), brings the miracle of the averages to the support of the poor, did not continue this system of insurance upon the basis which has been so advantageous.

It would surely be wrong that the State should not continue to be a full participant in the scheme as it is at the present time, and therefore we far prefer that the contributions shall continue to be made under the pool scheme of Section 2 (3, a) of the Act, rather than under the block grants that are made under Section 2 (3, b), when this Bill is on the Statute Book, as I hope and believe it soon will be.

When it is necessary for the Ministry to produce a new pamphlet explaining the provisions of the retirement pension, I hope that the existing pamphlet will be completely re-drafted, and that something will be done to show that the real retirement pension is not the minimum retirement pension which can be earned at the age of 65, but that the real standard rate is the maximum rate at 70, 45s. for a man and 30s. for his wife. I believe that if the Ministry approach the thing from the opposite angle, and regard the ordinary rate of retirement as being the maximum rate, and the other as being the proportional rate for those who, for some reason or another, are obliged to retire sooner, we may go a long way to achieve the purpose which both sides of the House have in mind, of encouraging the maximum number of people to remain in industry to the advantage of the country as a whole and, I am sure, to the advantage of those people who continue to work.

9.33 p.m.

The Parliamentary Secretary to the Ministry of National Insurance (Mr. Bernard Taylor)

The hon. Member for The High Peak (Mr. Molson) on this topic has as usual given us clear, convincing and enlightening opinions. I remember that during the passage in Committee of the National Insurance Bill itself his arguments were always listened to with the greatest interest. I am happy in the knowledge that he, in winding up this debate, gives almost 100 per cent. support to the proposals that are contained in the Bill. On the question of the National Assistance scales, on which my right hon. Friend made some comments, we note that the hon. Member—and I think he was voicing the view of all hon. and right hon. Members in the House—is assured.

Let me refer to one other matter—one very important matter—that he raised towards the end of his speech. It was also raised by the hon. Member for Angus. North (Mr. Thornton-Kemsley). It is in relation to the guardian's allowance. My right hon. Friend informs me that particular note will be taken of what has been said about that; it will be examined carefully; it will not be overlooked, and no doubt it will be raised again in Committee. I think I should be voicing the sentiments of the whole House in saying that the debate today has been very interesting and has revealed the depth of interest taken in the problems of those who come within the scope of the National Insurance Act. In passing, I may say that those affected by that Act form a very large family, when we remember that there are in the neighbourhood of 24 million contributors.

I do not propose to go into the details of the Bill, because they were exhaustively explained by my right hon. Friend in, if I may say so, a very charming speech, during which she gave a lot of useful information on every aspect of the Bill, and which I trust and believe will provide substantial material for thought on both sides of the House, and I hope in the country as a whole on this important topic. I should not like this opportunity to pass without reiterating what I thought was a very important passage of my right hon. Friend's speech. I should like to emphasise it with all the force at my command, because I believe that if we do not see this Bill in this perspective we miss its importance. It is an interim Measure to deal with those questions which we at the Ministry feel cannot wait until the general review in 1954.

I do not propose to enter in detail into the question of the finances of the Bill, which were commented on in an interesting speech from the right hon. Member for Leeds, North (Mr. Peake). In view of what has been said today about the financial proposals of the Bill, I ought to say that the Exchequer is not taking one penny piece from the fund set up under the National Insurance Act, 1946. It is estimated that the surplus in that fund, as pointed out by my hon. Friend the Financial Secretary to the Treasury, will be in the neighbourhood of £540 million. I only say that this surplus is due mainly to the fact that instead of unemployment being 8½ per cent., which the Government Actuary assumed on Government instructions, it has been only from 1½ to 2 per cent.

I think that the debate may be summarised in this way. There have been in the main four points constantly in front of the House. First, there is the question of the differentiation in the basic rate of pension to men who have reached the age of 70 and to women who have reached the age of 65. I hope to make a few observations upon this important point which has appeared to exercise the minds of hon. Members, particularly those on this side of the House. The second point which has been much in the forefront of the debate has been the question of the earnings' rule. Point three has been the proposed rate in the increments of those who postpone their retirement, and point four is the question of bringing the proposals into operation at an earlier date than October this year. I know that there have been many other details referred to, but in the time at my disposal I propose to deal as exhaustively as I can with the points which I have mentioned. I think that it will be agreed that the other details, although of importance, will best be dealt with in Committee.

With regard to the differentiation in the basic rate, why have the Government made the proposals contained in the Bill? Of paramount importance is the need for people to continue in employment in the situation in which the country finds itself at the moment. I do not think that any one has denied that that is a matter of importance and of substance. It is vital from the national point of view that people should continue at work as long as possible, so that the steady increase in the proportion of elderly people in the country will not result in a corresponding reduction in the proportion of workers.

How often it has been said, particularly since my right hon. Friend the Chancellor of the Exchequer introduced his Budget, that the age structure of our British population has undergone and will continue now and in the future to undergo a change. Whatever happens from a population point of view in the next 25 or 30 years, there is nothing that will alter that fact. At the moment, one to every five of our working population has reached the minimum pension age, and in 25 years' time the ratio will have undergone a considerable change in as much as it will be one to three.

The second point is that any increase in the rate of pension payable at the age of 65 in the case of men or 60 in the case of women might encourage people to retire at that age and take their pension, supplemented, possibly, by part-time earnings. At that age a very substantial proportion of the people are still capable of full-time employment. If that line were adopted it would result in a loss to industry of many regular workers. There seems to be a general impression amongst hon. Members that the idea of paying a larger pension to men who retire at 70 than to men who retire at 65 is a new idea, but that is not the case. The Act of 1946 provides that a man who retires at the age of 70 should become entitled to a higher pension than a man who retires at 65. My hon. Friend the Member for Ince (Mr. T. Brown) also suggested that we were dividing pensioners into two classes, but again this is not the case. The pensioner under 70 will get a higher pension in his turn.

Mr. T. Brown

But subject to conditions.

Mr. Taylor

May I say two words about the uniformity of benefits?

Mr. Bartley

Would my hon. Friend deal with what I consider an unfair position for some, through the giving of higher pensions to those of 70 years of age to encourage workers to postpone retirement? In this country, particularly in the coalfields, it is not a question sometimes of postponing retirement. There is no adult manpower problem in the Durham coalfield, and it is a case of a man having to retire. In that case he will not get a pension until he is 70, through no fault of his own. Would my hon. Friend deal with that question?

Mr. Taylor

I hope to deal with that point, but before coming to it, may I say a word or two about costs. To extend the increased rates of pension to all persons over minimum pension age would greatly increase the cost to the National Insurance Fund, not only in the immediate future but much later on when, as I have pointed out, the proportion of the population receiving these pensions increases. It has been rightly said by some of my hon. Friends that the immediate increase in basic pension to those under 70 years of age would cost £10 million, rising to £15 million in 15 years' time.

We are endeavouring, by increasing the basic pension for those of 70 years of age for men and 65 for women, to meet those who are in the greatest need. Judging by the applications that are received by the National Assistance Board it is a case of a greater proportion of retirement pensioners in the over-70 age group finding the existing benefit rates inadequate than is the case with the lower age groups. Therefore, we are obliged to meet the need where it is greatest, which is the basis of these proposals. I want to make one other observation on this point which I think is important. People under 70, by continuing to work for only 18 months after 65, will be able to receive increments on their pension, which will bring the rate up to and even above the standard rate which the Bill provides for pensioners over 70. I now want to say a word in reply to my hon. Friend——

Mr. Bartley

Before my hon. Friend leaves that point, I want to put another point to him. Is it realised that the State saves about £120 a year in the case of a man who continues working? My hon. Friend should consider the number of years the man has to draw his pension to get that back.

Mr. Taylor

That is a point which can be raised on the Committee stage. I now want to speak about workers in heavy industries.

Miss Ward

Might I just ask——

Mr. Taylor

If disablement were to be a condition of a higher rate of pension——

Miss Ward rose——

Mr. Taylor

It is not through discourtesy that I do not give way to the hon. Lady; it is the time factor. If incapacity or disablement were to be made a condition of a higher rate of pension, it would be quite impossible to apply different tests from one area to another. It must be recognised that a national scheme can only make provision of general application. Where the special conditions of an industry warrant special provision—I hope the employers and the representatives of the workers will take notice of this—it is a matter of the conditions of employment in the industry and a solution should be arrived at through industrial negotiation. There are about one million retirement pensioners in the under 70 group. We do not know how many of these can be said to be incapable of work, nor do we know the number of pensioners in this group with small earnings which, when added to their standard pension, bring the total above the increased pension rate proposed for the higher age groups.

The hon. Member for Bodmin (Mr. D. Marshall) asked for information about expectation of life. I am informed that the expectation of life for a man is 12½ years at 65 and nine years at 70, and for a woman 18 years at 60 and 14 years at 65. In view of the time at my disposal I suggest that matters relating to the earnings rule and increments should be considered during the Committee stage.

I want now to make one or two observations about what we shall do to publicise the new proposals. In a general way, the widest publicity will be given in the Press and over the radio to all the proposals to ensure that those who are affected by the changes know what they must do to benefit from them. As to retirement pensions, when the time comes retirement pensioners who qualify for an increase in the rate of their pension will be asked to take or send their old books to the nearest national insurance office for uprating. There will be leaflets telling them exactly what to do and these will be available in good time. There will also be a leaflet for retired pensioners who wish to re-enter employment and qualify for the improved increment of pension provided for in the Bill. This leaflet will tell them just where they stand and what they must do.

There are beneficiaries other than retirement pensioners, particularly widows, and the chief change is in the improved allowances for children. As the amount for which the beneficiary will qualify varies according to the number of children in his family, individual invitations to claim the allowances will be sent direct to everyone likely to be affected. Widowed mothers will be sent a letter telling them about the increases in their benefit as well as the improvement in the allowances for children.

Judging from the debate this afternoon there is little or no criticism of the proposals in the Bill, but there are some points of difference respecting things which are not in the Bill and which many hon. Members think ought to be in it. We can have a full discussion of those points during the Committee stage. I rather gathered from some of the speeches made by my hon. Friends that they thought the proposals in the Bill increased the retiring age at which pensions will be paid. If hon. Members have got that impression, I ask them to make a further investigation of the proposals contained in the Bill.

May I commend this Bill to the House and ask that it shall be given a Second Reading. We shall do all we can about the time factor and to advance the date. Although administratively the Ministry of National Insurance is overworked, we shall certainly do our best.

Mr. Niall Macpherson (Dumfries)

Before the hon. Gentleman sits down may I ask a question? Will the Money Resolution be so widely drawn as to allow full latitude for discussion?

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House for Monday next.