§ Order for Second Reading read.
§ 3.30 p.m.
§ The Minister of Pensions and National Insurance (Mr. Osbert Peake)
I beg to move, That the Bill be now read a Second time.
This Bill, as hon. Members will see, is strictly limited to benefits and contributions, both for National Insurance and for the Industrial Injuries Insurance Scheme. In fact, it is the outcome of the actual statutory review, the provisions for which were laid down in Section 39 and 40 of the National Insurance Act, 1946.
Some criticism has been made of the timing of this Measure. As Minister, I am not a free agent in the matter of the timing of the Bill. My duties were laid down in the Statute of 1946, and I cannot act under Section 40 of that Act until the Government Actuary has made his report under Section 39 to the Treasury, and that report has been laid before this House.
Nevertheless, despite the fact that I am acting under this statutory obligation, I am told both alternately and alternatively by different newspapers, often on the same day and by the same paper on different days, that I am acting both too soon and too late—too soon because, it is said, I should have waited to give full consideration to the Report of the Phillips Committee, and too late because I should have acted out of the blue and not waited to exercise my statutory duties under Section 40 of the Act. Those criticisms seem to me to cancel each other out.
The only comment I would make upon the timing of this operation is this. If hon. Members will look at the interim reports of the Government Actuary, made when the right hon. Member for Llanelly (Mr. J. Griffiths) and the right hon. Lady the Member for Fulham, West (Dr. Summerskill) were the Ministers, as well as after I succeeded them and became Minister in 1951, they will see that nearly always it took the Government Actuary between 11 and 14 or 15 months after the close of the financial year to prepare his interim report.
All I did in this matter was to ask the Government Actuary to give top priority 960 to his work on the quinquennial review so that his Report could be available much sooner after the close of the financial year ending March, 1954, than would otherwise have been the case. Of course, I had to wait for the Report of the Government Actuary. Not only was it so laid down in the Statute, but those of us who 'studied the scheme—such as the hon. Member for Sowerby (Mr. Houghton), who I see in his place—all knew that the operations of 1951 had upset the balance of contributions and that there would be a good deal of investigation to be carried out before the new rates of contribution could be worked out.
Let me say a word about the work of the Phillips Committee. We are greatly indebted to that Committee for the work which it has done. That work forms a part of the wider non-statutory review of the National Insurance Scheme which was promised on many occasions by the right hon. Member for Llanelly, by the right hon. Lady the Member for Fulham, West and by myself. I think that we all share this in common, that, when confronted with an awkward supplementary question, we all have said from time to time, "That can well be considered when we come to the quinquennial review." Therefore, the House has been led to expect, and rightly so, that a much wider review of the Scheme would be undertaken than the narrow review laid down by Sections 39 and 40 of the Act.
I do not think that there is any controversy about this matter, and, in point of fact, this wider non-statutory review is proceeding today. The Report of the Phillips Committee forms part of it, and we are to have a day after the Christmas Recess on which we can debate that Report. But there are some very important questions to which I have referred and which are still before the National Insurance Advisory Committee.
For example, that Committee is considering the conditions for dependants' benefit, and that, of course, includes all the provisions for widowhood which were novel in 1948 when this Scheme first came into full operation. Only two years ago we made a review of the maternity provisions, which were also novel, and we found that they needed remodelling to quite a considerable extent. It is quite likely, I think, in view of the 961 National Insurance Advisory Committee's investigation, that we may have to remodel at any rate the provisions for widowhood and other dependants. May I say, in passing, that that review includes the question of the 10s. widow about whom so many hon. Members have from time to time put questions to me.
The Advisory Committee has also before it the contribution conditions for all the different benefits which are exceedingly complicated and which vary from one benefit to another. That, again, is a very important question. Thirdly, the Committee is reviewing the contribution liability of the smaller income groups.
§ Miss Irene Ward (Tynemouth)
§ Mr. Peake
Well, that also is an interesting matter, and I shall look forward to the Report of the Advisory Committee upon it.
I think it is obvious from what I have said that as a result of these much wider issues, it is quite probable, to put it at its lowest, that further legislation will need to be undertaken at a later date. It really would have been quite impracticable from a political angle—and I think that everybody on all sides of the House will agree about this—for us to have taken a long and complex Bill upstairs in Standing Committee, sitting two days a week, with our debates prolonged, perhaps, for several months, while elderly people and other disabled people waited to receive their improvements in benefits which were bound to come about when the quinquennial review was undertaken.
§ Mr. H. Hynd (Accrington)
What about the 10s. widow?
§ Mr. Peake
I do not propose to be diverted, in the course of my speech, to discuss the 10s. widow today. As I say, that question is before the National Insurance Advisory Committee at the present time.
We were always anxious, where it was humanly possible, to see the Phillips Report, but the key date, so far as I was concerned, was that of the Report of the Government Actuary. It would have been a little discourteous to the Phillips Committee to have gone ahead without seeing whether any of its recom- 962 mendations were in direct conflict with anything that we were likely to propose. But, having seen that Report, I think the House will agree that I have acted, and brought this Measure forward, at the earliest possible moment. I can give this assurance. No delay has been caused to any retirement pensioner or anyone else because the deliberations of the Phillips Committee have been somewhat protracted.
From what I have said, I hope that it will be clear to hon. Members that, in this two-day debate on the benefit and contribution rates contained in the Bill, to discuss such matters as the retirement principle, or the earnings rule, or the 10s. widow, would really be a work of supererogation, or, in case that phrase is not fully understood, it would, as the late Sir George Robey said, be a waste of time and breath to do so.
The Phillips Report clearly needs a full day's discussion. One point in it about which I should like to say something is the rather qualified recommendation—about which a good deal of dissent is expressed in the Report—regarding the raising of the pension age. Let no one be dismayed. I, too, as well as the Phillips Committee, have been studying this question of the pension age for three years or more.
Hon. Members will recall that the vista, if I may so call it, of raising the pension age was first opened by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), as Chancellor of the Exchequer in his Budget speech of 1951. I think that some of us who thought that his intentions were serious were led a little way up the garden path by the right hon. Gentleman at that time.
Three years' study of the question makes me more and more sceptical about any gain to the National Insurance Fund or to our national economy by raising the age. The recent report of the investigation made by my Ministry into the reasons why people retire, or why they stay at work, serves to reinforce my view. I am confident that increased claims by elderly people for sickness benefit and unemployment benefit would virtually—and might wholly—cancel any advantage claimed for such a raising of the age. Therefore, let no whispering campaign begin that it is the secret intention of the Government to raise the 963 pension age. Such a whispering campaign would only cause needless alarm and would eventually rebound upon the heads of those who started it.
Let me now turn to one of the two main topics presented in the Bill—the new rates of benefit. Hon. Members will observe that we have taken the 1946 level of benefits—which we undertook to restore in full—and have, broadly speaking, added 50 per cent. to it and have then rounded off the figure in an upward direction. For example, the standard 1946 rate of 26s. has become 40s. A 50 per cent. increase would have made it 39s., but we have rounded it up to 40s. In 1946, the married rate was 42s.; it now goes to 65s., which is, again, rather more than a 50 per cent. increase.
These increases, of course, compare with a rise in the cost-of-living index of 44 per cent. since the same date. I know that hon. and right hon. Members opposite challenge the validity of the cost-of-living index. I would only say that it was, as one used to read on the programmes of the old musical comedies, devised, written and composed by right hon. Members opposite.
I have seen no complaint whatever about the inadequacy of the new rates of benefits. Only the "Daily Worker" and the National Federation of Old Age Pensions Associations have said that they are too little. The party opposite is certainly in no position to complain that these increases are inadequate. It is only three weeks ago, standing at this very Box, that I asked hon. Members opposite—and right hon. Gentlemen, too—to suggest their figure for the increase in the basic rate. And answer came there none. Not a voice was raised. Their minds were open—wide open. Open, I think I may say, to the point of vacuity.
Let the House consider this further point. With the exception of the pension rate, which was raised—for some pensioners only—in the autumn of 1951, all other National Insurance benefit rates were the same in October, 1951, as they were when first fixed in the 1946 Act. Unemployment benefit, sickness benefit—the whole run of National Insurance benefits—were the same when we took office in October, 1951, as they had been five years before. Of course, since October, 1951, there has been a rise in the 964 cost of living of 11 per cent.; yet all these rates are increased by a figure in excess of 50 per cent. That is something for which I think we may feel real satisfaction.
Now let us just look at industrial injuries benefits, because this is a subject in which I, and the right hon. Gentleman opposite, have always taken a great personal interest. They, too, remained unchanged from 1946 until 1951. The one exception was the special hardship allowance, the ceiling—and only the ceiling—of which was raised in 1948. The main benefit rates remained stable.
The injury benefit rate in October, 1951, therefore, was 45s. In the Bill that has gone up 50 per cent. to £3 7s. 6d. The 100 per cent. pension rate is the same as the injury benefit rate. A severely disabled single man in October, 1951, was getting 45s. plus £1 unemployability supplement, making a total of 65s. The Bill proposes that he should get the main rate of 67s. 6d. with an unemployability supplement of 40s., making £5 7s. 6d. in all.
That is an increase of about 65 per cent. since we took office. When we take the very extreme case of the really seriously injured married man with two children, with all allowances, constant attendance, and so forth, the figure was nearly £7 in October, 1951, and £10 15s. 6d. under the Bill. Under the Industrial Injuries Scheme that money is, of course, tax free.
I turn for a moment to contributions, which is, I imagine, a much more contentious topic. But before I come to the serious work I must deal briefly with the intervention in yesterday's debate by the right hon. Gentleman the Member for Leeds, South, whom I am sorry not to see in his place. He has not been selected for this particular test match. But he decided to bowl a few overs yesterday, and he was promptly no-balled by you, Mr. Speaker, and, I may say, rightly no-balled.
But, quite apart from being no-balled, every delivery of his was a wide, and on yesterday's form he does not stand much chance of being selected for a National Insurance test match. I have, however, read in the papers that he and the right hon. Member for Ebbw Vale (Mr. Bevan) are likely to come out from the pavilion 965 together and bat through the Committee stage on Monday.
I recall the bitter attack of the right hon. Member for Ebbw Vale on the right hon. Member for Leeds, South in 1951 when he accused him of having robbed the Insurance Fund of £100 million a year. I shall look forward with eager anticipation to seeing these two batsmen come out together both of Whose main objective is to run the other batsman out.
Let us look at what the right hon. Member for Leeds, South said about this topic yesterday:The Minister of Defence, in winding up a recent debate on pensions, made great play with something that I said during my Budget speech in 1951. He said that we then found £39 million for the increases in pensions and he poured scorn upon us.The right hon. Gentleman went on to say:… at least we can say that when we had to offset the increased expenditure on pensions and other benefits as a result of the measures of 1951, we found the money entirely out of general taxation.What do we have now? We have a scheme costing altogether about £134 million, of which the Government are paying £25 million. Indeed, if we exclude the £15 million for war pensions, and if we are talking about National Insurance and National Assistance only, the Government are paying only £10 million and the contributors themselves are finding £100 million.—[OFFICIAL, REPORT, 7th December, 1954; Vol. 535, c. 799–800.]The right hon. Gentleman there, first of all, for some reason or other, deducts the £15 million which the increases in war pensions are to cost my right hon. Friend the Chancellor in the Budget for 1955–56. He then compares the figure of £10 million, which he gets by deducting that £15 million from the £25 million—the global cost—with the £39 million which was extra expenditure out of the Insurance Fund in the year 1951. It did not come out of the Exchequer in 1951. It came out of the National Insurance Fund.
Of course, the true comparison with his figure of £39 million for 1951 is not the £10 million which he quoted; it is the £120 million out of the Insurance Funds which we are to find as a result of this Bill—[HON. MEMBERS: "We?"]—which is to be paid out by the National Insurance Funds. That is the true figure to compare with the £39 million for which 966 the right hon. Gentleman claimed credit in his speech last night.
§ Mr. Douglas Jay (Battersea, North)
So that we can get the matter clear, will the right hon. Gentleman explain how much of the £120 million coming out of the Fund will be provided by the contributors?
§ Mr. Jay
The right hon. Gentleman accused my right hon. Friend of bowling wide. But when the right hon. Gentleman refers to the £93 million, is he not omitting the £6 million for industrial injuries benefits, making the figure £99 million?
§ Mr. Peake
Yes, the £93 million is for National Insurance and there is £6 million for industrial injuries benefits.
§ Mr. James Griffiths (Llanelly)
§ Mr. Peake
I thought I made this quite clear. The Exchequer pays to National Insurance an extra £23 million and into industrial injuries benefits something over £1 million, making approximately £25 million altogether. That is how the figures are built up. There is no deception about them at all.
I now want to quote, so that hon. Members can understand the position in 1951, what the then Chancellor of the Exchequer said in his Budget speech. Yesterday, he was claiming that the £39 million—
§ Mr. Sydney Silverman (Nelson and Colne)
On a point of order, Mr. Speaker. While one can understand the desirability of a passing reference to yesterday's debate, am I right in saying that yesterday's debate was concluded by last night's vote and that today what the House is considering is a Motion for the Second Reading of the National Assistance Bill?
§ Mr. Speaker
The circumstances are a little unusual. In the course of yesterday's debate the right hon. Member for Leeds, South (Mr. Gaitskell) made some incursions into the finance of the pensions scheme which we have before us today, but he instantly desisted from that course when his attention was drawn to the fact, very properly, because that would have been anticipating today's 967 discussion on this Bill. But the position is that what was said yesterday by the right hon. Gentleman was relevant to today's discussion, and I cannot exclude further references to it on the Second Reading of this Bill.
§ Mr. Peake
I am much obliged to you, Mr. Speaker, for that Ruling.
I was about to refer, once again, to yesterday's debate, in which the right hon. Member for Leeds, South claimed that… at least we can say that when we had to offset the increased expenditure on pensions and other benefits … we found the money entirely out of general taxation.I thought it as well to compare that statement with what the right hon. Gentleman said in his Budget speech in 1951. This is what he said:I therefore propose to reduce the Exchequer contribution"—that is, to the National Insurance Fund—to an amount which will leave the Fund at about its present level."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 853.]He went on to explain that that meant a reduction in the Exchequer payments into the Fund of about £100 million a year.
I hold in my hand the Government Actuary's Report on the National Insurance Bill, 1951, and in view of this claim that the right hon. Gentleman found £39 million that year out of his Budget to help the retirement pensioners, I must quote one or two passages from it. It says:… the Exchequer supplements"—that is, the proportion of contributionare to be reduced from the various amounts set out in … the Act"—the National Insurance Act, 1946. It was 2s. 1d. for a Class 1 self-employed person—to a uniform amount for both sexes.… The amount is 3d. for each weekly contribution paid by an employed person, 3d. for each employer's contribution, and 6d. for each contribution by a self-employed or non-employed person.That is what the right hon. Gentleman was endeavouring to do in 1951.
If we look at the Government Actuary's table on page 7 of the Memorandum on the Bill, we find the following figures set out. In the financial year, 1951–52—which was only part of the full year because these changes were not 968 to come into operation until the autumn of that year—the reduction in Exchequer payments for the part year was £58 million, and for the next full year £111 million. That was what the right hon. Member for Leeds, South proposed in his Budget of 1951.
In point of fact, he was slightly checkmated because I protested very strongly against the reduction in the Exchequer supplements to these merely nominal figures, and I received some support from the hon. Member for Sowerby. That a trained economist like the right hon. Gentleman for Leeds, South should handle these facts and figures so recklessly somewhat shocks and surprises me.
§ Mr. Jay
Does the right hon. Gentleman really understand the principle of budgeting which his own Chancellor of the Exchequer works? In so far as reductions were made on payments into the Exchequer of that year, taxation, of course, had to be raised to correspond. If the right hon. Gentleman does not understand that, he does not understand either his predecessor's or the present Chancellor's Budget.
§ Mr. Jay
If the right hon. Gentleman does understand it, there is no substance in the point with which he is dealing.
§ Mr. Peake
I should have thought that the House would comprehend the quite simple point that the increases now proposed in insurance benefits will cost the Exchequer about £25 million in next year's Budget, whereas, in 1951, the right hon. Gentleman the Member for Leeds, South saved £58 million on his Budget by reducing, or proposing to reduce, the Exchequer contribution to the National Insurance Fund to a purely nominal figure.
One can, of course, oppose the contributory principle altogether. I want now to discuss the contribution increases of 11d. for National Insurance and a 1d. for industrial injuries. There are some, I believe, who would like to scrap the whole contributory principle, but I do not think that they are very numerous. At any rate, the Trades Union Congress firmly endorses the contributory principle, and, so far as I am aware, the principle was endorsed at the recent annual congress of the Labour Party.
§ Mr. William Blyton (Houghton-le-Spring)
That was on the long-term basis of the quinquennial review, but the T.U.C. are strongly opposed to the present 1s. increase.
§ Mr. Peake
I am coming to the point of the 1s. increase. At the moment, I am dealing with the wider point, which is the whole question of the contributory principle as such. Some people, as I say, would like to scrap it.
§ Mr. S. Silverman
§ Mr. Peake
I gather, from his cheers, the hon. Member for Nelson and Colne (Mr. S. Silverman) and other hon. Members opposite believe that that would be the right thing to do. I will only say that not only was the contributory principle endorsed at the annual congress of the T.U.C. and of the Labour Party, but that not one witness appeared before the Phillips Committee to give evidence in favour of the abolition of contributory pensions. No responsible person, I think, advocates the abolition of the contributory principle. A means test would follow, inevitably to become universal, and the whole proposal would then become quite indistinguishable from a universal system of National Assistance.
If one accepts the contributory principle, there then comes the question: should one accept or reject the particular proposal embodied in the Bill? It is possible to argue that this particular proposal is either excessive or unnecessary; but the principle of an increased contribution has, so far as I know, been very widely accepted. I put this very point to the right hon. Gentleman the Member for Llanelly in the debate that we had on this subject in this House on 21st July. The right hon. Gentleman said:The Minister asked whether I am prepared to face up to increased contributions. Of course I am. We provided for a much bigger increase when we built up the scheme. I am prepared to face up to increased contributions, but we think that it is absolutely right that not only should there be an increase from the workers but that there should be one from the employers and the State. There should be proportion in this matter."—[OFFICIAL REPORT. 21st July, 1954; Vol. 530, c. 1475.]That, of course, is what this Bill proposes —[HON. MEMBERS: "No."]—an increase from the employer and an increase from the State.
§ Mr. J. Griffiths
Since the Minister has quoted me, I will say that I stand by 970 those words. I hope, Mr. Speaker, in the course of the debate to catch your eye. Will the Minister say why, in this Bill, he has departed from the proportions I established in 1946?
§ Mr. Peake
I am coming to the question of proportions in a moment. I will deal extensively with them.
In this Bill, we are increasing the Exchequer contribution of the ordinary contribution from 1s. 6d., at which it stands today, to 1s. 10d., that is an extra 4d. from the Exchequer, which can be compared with the corresponding increases required from the workman and from his employer.
§ Mr. Griffiths
Give the comparison with 1946.
§ Mr. Peake
I certainly will. It is very nice occasionally to take a flight into the actuarial stratosphere. Much erudite thought and learning can be found in the Quinquennial Report of the Government Actuary, in the Report of the Actuary on this Bill, and in the Report of the Phillips Committee upon this question of contributions. But when we have done that, it is necessary eventually to come back to earth, and to decide how many pennies are required from the contributors and—as the right hon. Gentleman asked me, and I think that it was a fair question to ask when he propounded this same question in 1946—whether the contributors themselves will accept the proposals as fair and reasonable.
There are three quite distinct features which go to the make-up of what the ordinary man and woman pays by way of their weekly stamps. First, there is the ascertainment of what is known as the actuarial contribution; secondly, there is the question of what, if anything, should be added to the actuarial contribution, to provide for the inevitably large deficiencies which result automatically from giving a full rate of pension to persons who have already passed out of insurance and contributed perhaps to only a part of their pension; and for the deficiency arising from persons who have contributed for only 10, 15 or 25 years, when the actuarial period is 49 years—the deficiencies arising, as they arise on a Bill like this, whenever a new rate of pension is introduced and existing contributors are given 971 entitlement to a pension at a higher rate than that for which they, have been contributing in the past.
Having ascertained what is the actuarial contribution and then having decided what, if anything, should be added to it towards the deficiencies which I have just described, a third question arises, which, I think, we must try to keep separate in our minds. Having found out what is the global contribution actuarily, plus something towards the deficiencies, how should that be divided between the three parties to the insurance scheme—the worker, the employer and the Exchequer?
The calculation of the actuarial contribution involves a great many complicated assumptions. Hon. Members have only to read Appendix 5 of the Report of the Government Actuary on the quinquennial review to see what a very complicated matter this is. It involves forming assumptions about the future trends of sickness claims—which, after all, depend in the long run on whether a doctor says or does not say that a man is incapacitated from work—about the future trend of unemployment, about the future rates of mortality and, perhaps the moat important factor of all in finding out what the actuarial contribution is, about the assumed rate of compound interest at which the weekly premiums paid towards earning pensions are assumed to be accumulating.
This latter is a very complicated factor, but about half of what everybody pays on their weekly sum is the actuarial contribution towards their ultimate pension, and a variation of as little as ¼ per cent. in this assumed rate of interest makes a difference of about 5d. a week on the sum. When the right hon. Member for Leeds, South was Chancellor in 1951 he directed that, instead of the assumed rate of interest fixed by his predecessor, the right hon. Member for Bishop Auckland (Mr. Dalton), which was 2¾ per cent., a rate of interest of 3 per cent. should be assumed for the future.
These sums are not, in fact, funded, so that the whole conception of a rate of interest at which they might be accumulating if they were set aside is a slightly unreal conception, but I would 972 point out that by changing the assumed rate of interest by ¼ per cent. the right hon. Gentleman increased the notional amount available to spend on benefits by no less than £20 million a year. We have done nothing of that sort on this occasion, and I would add, for the benefit of the right hon. Member for Battersea, North (Mr. Jay), who was at the Treasury when this occurred, that this fact about the reduction in the rate of interest was not made known to the public at the time.
§ Mr. William Ross (Kilmarnock)
Send a telegram about it.
§ Mr. Griffiths
Would it not be in the Actuary's Report on the Bill?
§ Mr. Griffiths
§ Mr. Peake
It ought to have been. The right hon. Gentleman is responsible rather than myself. He was part of the Government at the time.
§ Mr. Griffiths
The Actuary is not a member of the Government. The Actuary sees the proposals in the Bill and it is his duty and obligation to make an actuarial report on the proposals.
§ Mr. Peake
It was fully disclosed to the House that the assumed rate of unemployment would be less for the future than it had been in the past, but no disclosure was made at the time that the assumed rate of interest, which affects the contribution to a vital degree, was to be changed upwards, thereby releasing additional money for the payment of benefits.
§ Mr. Geoffrey Hirst (Shipley)
§ Mr. Peake
There are two important things to remember about the actuarial contribution. First, it is calculated only for new entrants to the scheme at the age of 16. For entrants to the scheme at the age of 25, as many people were in 1948, the true actuarial contribution should be 33 per cent. higher than for entrants at the age of 16; and for entrants at the age of 35, the actuarial contribution is double what it would be for a new entrant at the age of 16.
§ Mr. S. Silverman
Does this mean that the assumed actuarial basis of the contribution is only a notional affair and that, in fact, there is no actuarial basis at all for 973 the contributions? Is it not, therefore, a little misleading to discuss the increases in contributions as though they were justified by an actuarial scheme on an actuarial basis, which, confessedly, does not exist?
§ Mr. Peake
I thought I had explained that there are three stages: first, to discover what is the actuarial basis of the contribution; secondly, to decide whether we shall add anything towards emerging costs or deficiencies; and, thirdly, to decide how the total will be divided between the three parties to the scheme.
The second important point to remember when we are looking at an actuarial contribution is that it assumes that the pensions and all other benefit rates will remain unchanged for at least: 49 years—and, of course, that is a somewhat improbable state of affairs in a progressive community.
We come now to the second question which I think is posed and with which the House is faced. Should any addition be made towards the emerging costs and the deficits automatically incurred as a result of bringing late-age entrants into the scheme and giving everybody the benefit of every increase in pension rates which is ever made? There is no new principle in what the Government here propose—no new principle at all. The 1925 Act, the first contributory pensions Act, contained an escalator to operate every 10 years to provide something towards the emerging deficiencies. The 1946 Act did exactly the same thing.
There was an automatic increase in October, 1951, of 4d.; this 4d. was to be added over and above the contribution. That was 2d. on each side and 4d. for the self-employed; 2d. from the worker and 2d. from the employer, with nothing, on that occasion, from the Exchequer towards meeting the emerging deficiencies of the scheme.
§ Mr. J. Griffiths
Would the right hon. Gentleman explain what he means when he says there was nothing from the Exchequer? Surely the Exchequer contribution is provided in the Act?
§ Mr. Peake
The automatic increases in October, 1951, were to operate only on the workmen and on the employers; there was no extra addition into the fund at that time from the Exchequer. That 974 was the scheme of the 1946 Act—there was to be something added over and above the true actuarial contribution towards meeting the deficiencies which would emerge.
§ Mr. Griffiths
These are very complicated matters and the Minister owes it to the House to give a full picture. The 1946 Act contained initial contributions from workmen, employers and the State. The right hon. Gentleman must go back to the beginning. There we have laid down the proportion to be paid by the State by way of weekly supplement and additional payments. I speak from memory about what happened in 1951, but I am sure the Minister does not want to give the impression that the Exchequer made no contribution on that occasion towards the emerging cost. Provision for that is made in the Act. Will the Minister explain this, because it is important?
§ Mr. Peake
I am sorry that the right hon. Gentleman has not followed what I was saying. All I was saying was that the addition over and above the actuarial contribution made in October, 1951, the 4d., was to be borne by the workman and his employer.
There was, of course, an Exchequer supplement under the Act of 1946—[HON. MEMBERS: "Hear, hear."] We all know about that and I am coming to that very point. I shall very soon be reaching that part of the argument. What I am dealing with now is the addition over and above the actuarial contribution provided by the Act of 1946, for which the right hon. Member took responsibility. What we have done in this Bill is to go further, but upon the same principle. We have added a further—
§ Mr. Griffiths rose—
§ Mr. Peake
We have added a further 6d. to each side over and above the 2d. imposed by the Act introduced by the right hon. Member. The result is an addition of 8d. from each side over and above the actuarial contribution to wards the emerging deficiencies. But as well as the 8d. from each side, there is in this case, what there was not in 1951, an addition by the Exchequer as a whole towards emerging deficiencies—
§ Mr. Griffiths
It was in the 1946 Act.
§ Mr. Peake
—which amounts to 2d. That is to say, we are providing altogether in this Bill 8d. from each side of industry—that makes 1s. 4d.—with 2d. from the Exchequer, a total of 1s. 6d., over and above the actuarial contribution towards the vast emerging deficiencies.
§ Mr. Bernard Taylor (Mansfield)
Will the right hon. Gentleman go further back than 1951 and explain to the House the size of the Exchequer block grant? That is very important.
§ Mr. Peake
The hon. Member is too impatient. I am coming to the Exchequer grant in a moment and will deal very fully with it.
All I want to say about the addition to the actuarial figure is that I am informed by the Government Actuary that it is about half the amount which would be required on the formula suggested by the Report of the Phillips Committee in paragraphs 171 to 173, where it suggests that if any increase in benefit rates were made it would be right and proper to add something to the actuarial contribution towards meeting the inevitable deficiencies.
I now turn to the question which is worrying not only the right hon. Member for Llanelly and his hon. Friend the Member for Mansfield (Mr. B. Taylor), but also the Trades Union Congress. [Interruption.] I have been interrupted a great deal and we are to have a two-day debate. The hon. Member for Nelson and Colne is one of the worst offenders. I have fried to deal fairly and fully with this question, as the right hon. Member for Llanelly invited me to do so.
I come now to the question of the global contribution. Having decided what the actuarial contribution should be and added towards the emerging deficiencies, the question arises: in what proportions should that global contribution be distributed between the three parties to the scheme, the worker, his employer and the Exchequer?
Let us look at the history of this matter. The 1946 Act provided a rate of Exchequer contribution which was one-fifth of the total global contribution. It did so because under the unemployment insurance scheme the rate had been one-third and, under the health scheme, it had been one-sixth. The one-fifth was an amalgam of the proportions previously 976 contributed for the purposes of health and unemployment insurance. There was no sort of Law of the Medes and Persians about it, but it was arbitrarily fixed—fairly fixed, I think—at one-fifth. The result was a Class I supplement from the Exchequer of 2s. 1d. per employed worker.
The first change came in 1951. The right hon. Member for Leeds, South introduced the Bill that year. His proposal was to reduce the 2s. 1d. Exchequer supplement to 6d. He was going to provide a one-sixteenth Exchequer supplement in place of the one-fifth adopted in the Act of 1946. The right hon. Member for Llanelly was a member of that Government. That was the proposal embodied in the Bill which the right hon. Lady the Member for Fulham, West introduced and moved the Second Reading, I think, on the last day of April, 1951.
What happened in 1951? I protested very strongly at this severe cut in the Exchequer contribution and I got some support, which was very welcome, at that time from the hon. Member for Sowerby.
§ Mr. Douglas Houghton (Sowerby)
The right hon. Gentleman will agree that, although we differed on the method of cutting the Exchequer supplement, we were agreed that a substantial reduction in the Exchequer supplement was possible and desirable at that time?
§ Mr. Peake
Yes, there is no difference between us there. I protested very strongly against this arbitrary—[HON. MEMBERS: "No."]—reduction in the Exchequer supplement from one-fifth to one-sixteenth.
§ Dr. Edith Summerskill (Fulham, West)
Does the right hon. Gentleman recall that the Fund was increasing by £145 million a year then and that it was necessary to transfer £300 million from the Fund to the reserve fund? The Actuary was alarmed about the position. What has the right hon. Gentleman to say about that?
§ Mr. Peake
No one challenges that at all. What I suggested should be temporarily withdrawn—I think the hon. Member for Sowerby supported me—was the deficiency payments set out in the Act of 1946, which were at that time and, in those circumstances, quite unnecessary. 977 But I made the strongest possible protest against this arbitrary settlement of the Exchequer contribution at that time.
I was very grateful for the support of the hon. Member for Sowerby and went to the Treasury. There I met; the right hon. Member for Battersea, North who, no doubt, was acting under instructions of the Chancellor of the Exchequer. I pressed him on this matter and we agreed over the table that it should be one-seventh. I should have liked it to be one-sixth, which would have been a better figure as the forecast of unemployment assumed when the Act began had been drastically reduced in 1950–51 and, therefore, the amount was to be reduced. In my view, it would have been fair in 1951 to have settled for one-sixth.
I saw the right hon. Member and got a settlement, although he proposed it should be one-sixteenth, I thought I had done a good job. Like a good trade unionist who is offered three-quarters of his demand, I settled for one-seventh.
§ Mr. Jay
Would the right hon. Gentleman agree that we all felt—for reasons which my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) gave—that there had to be some reduction in the total Exchequer payments to the Fund? The only difference was whether it should be by way of Exchequer supplement or block grant. It was not a matter of total payment, but in a sense, of book-keeping. If the right hon. Gentleman gave a fair picture there would be less interruption.
§ Mr. Peake
This is a point about which the Trades Union Congress is most concerned at present. In the Phillips Committee Report we see that the T.U.C. representative said that the T.U.C. would agree to an addition to the actuarial contribution towards emerging costs if the Exchequer proportionate supplement were restored to the figure of one-sixth. I 'believe that since then the Trades Union Congress has declared that it is in favour of a restoration to one-fifth, which was the original figure in the 1946 Act.
§ Mr. J. Griffiths
It was before, and not after, the Report that the T.U.C. said that. It was in the evidence submitted before the Report was published. It is important to get it on the record accurately.
§ Mr. Peake
I do not know that there is much dispute about this. As can be 978 seen from paragraph 173 of the Phillips Report, the trade union representatives on the Committee said that they would agree to something more on the actuarial contribution, provided that the Exchequer supplement was restored to a figure of one-sixth. That is an accurate statement which cannot be challenged.
As a result of my protests in this House, I secured a restoration of the Exchequer supplement from the one-sixteenth proposed by the Labour Government in 1951 to the figure of one-seventh. I should have expected the Trades Union Congress to have sent me congratulations or some token of its respect and affection for the good job which I had done on its behalf. I succeeded in wringing from the right hon. Member for Battersea, North £45 million a year extra as supplement to the Exchequer contribution. And as I left my house this morning, I said to myself:Blow, blow, thou winter wind,Thou art not so unkindAs T.U.C.'s ingratitude.Let us make a few simple comparisons with the 1946 Act to test whether the increased contributions are reasonable. This is how the man in the street will look at this matter. Benefit rates will be 54 per cent. higher than they were in 1946. Contribution rates will be up by only about 33 per cent. The extra new benefits represent an increase over and above the rates current today of 22 or 23 per cent. The contribution rate will go op by only 17 per cent. In 1946, the contribution payable by the worker formed 39 per cent. of his wage packet. After the Bill becomes law, it will form 32 per cent. of his wage packet.
My hon. Friend the Financial Secretary to the Treasury will speak later in the debate upon the further financial results of the scheme, but I should like to give the House an idea of the value of the pensions proposed under the Bill. The capital value of a man's pension at the age of 65 will be £1,050; to a married man, the value will be £2,150. For a woman at age 60, it will be £1,450. The most that anybody, even together with his employer, can have paid into the Fund today is £140, and in 20 years' time the maximum which anybody could have paid into the Fund, with the new contribution rate and together with his employer's share, will be £700 altogether. 979 That shows what a fine bargain National Insurance still is.
I do not think that people will mind paying the extra 1s.—11d. for National Insurance and 1d. towards industrial injuries benefits. A great deal of sympathy has been expressed in the country as well as in the House with the position of the retirement pensioner and of the elderly people. Most people, I think, will be happy to pay the extra 11d. towards the additional benefits which the Bill will provide. If hon. and right hon. Members opposite vote against the new contributions, ordinary people will say that they are simply playing politics and electioneering.
To sum up—
§ Mr. J. Griffiths
Will the right hon. Gentleman explain the industrial injuries part of the Bill?
§ Mr. Peake
I have already spoken about the benefits, and everybody knows that the extra contribution is 1d. The House probably thinks that it has listened to me long enough.
To sum up, the Bill restores the value of insurance and industrial injuries benefits and pensions to the level that we all intended they should command when we settled what they should be in the two great Acts of 1946. Not only does the Bill do that, but it goes much further. It gives to these benefits purchasing power which they have never from the outset commanded and which is, in fact, higher than—in most cases substantially higher than—was considered practicable in 1946. It does all this at a cost in contribution which has, I think, surprised the public by its modesty and its moderation. Even after the new rates have become payable, the contributions will represent, as I have said, a much smaller proportion of the wage packet than the original contributions did in 1946.
The Bill is, therefore, a real attempt to give to the insurance system, which over a period of nearly 50 years has become dear to the British people, a place in our national life which it has never occupied before. Despite the theorists and the critics—and, let me add, the economists—our people remain, and rightly remain, deeply attached to a system which provides them with benefits as of right by 980 virtue of contributions rather than what they regard as gifts and grants subject to a test of means.
Every year since the National Assistance Board was established, in 1948, I have watched with growing concern the steady increase in the numbers of our people being compelled, through the erosion of their savings and the declining value of insurance benefits and pensions, to seek help on a means test basis. From July, 1948, to the end of 1952, the numbers of people receiving assistance grew steadily year by year. In 1953, the rate of increase was checked. In 1954, there has been—we can all be thankful for it—for the first time a small reduction in those numbers.
As we all know, about two-thirds of those seeking assistance are in the pensioner class. With the passage of this Bill, combined with the growing numbers, on the one hand, now drawing pensions at higher rates earned by deferred retirement and, on the other hand, the progressive growth of occupational pensions schemes, we may, if we can avoid inflation, look forward with confidence to a steady and progressive diminution in the numbers of those dependent upon assistance subject to a means test.
Like the right hon. Member for Llanelly, I have a deep respect for the British people. Like him, I know that they set a high value upon their dignity and pride. It is to foster, preserve and perpetuate these great inherited qualities that is the main purpose of the Bill.
§ 4.38 p.m.
§ Dr. Edith Summerskill (Fulham, West)
We all endorse the Minister's peroration, but I only wish that it had set the tone of the whole of his speech. It was most unfortunate that the Minister devoted all this time—70 minutes—to so much detail, which served rather to irritate than to convince even his own back benchers. [HON. MEMBERS: "No.'] That is extreme loyalty, which one might expect. I speak for my own side.
The right hon. Gentleman side-stepped the big issues in this matter by merely mentioning them in his last few sentences. We all agree that the British people are very interested in this matter and are anxious to know what the Minister has to say this afternoon. However, the very 981 big issues he has totally neglected, apart from mentioning them in the first five minutes. These matters are of great importance, I am sure he will agree.
When the right hon. Gentleman announced that the Government were to introduce this Bill, he will recall that I was the first to congratulate him on expediting it. I know perfectly well the difficulties he has; I know quite well the tug-of-war there is between a Minister of Pensions and National Insurance and the Treasury. I know quite well, also, that when a Minister is in the right hon. Gentleman's position he is desperately anxious to expedite such a Bill as this, and I think that since our last debate, which had to be on another Motion of censure, he has done everything in his power to produce a Bill. Within three weeks of that debate this Bill is before the House.
The right hon. Gentleman was, I think, on the defensive when he opened his speech, and he quite rightly said that this was a Bill dealing only with contributions and benefits. He will recall that in the last year or so we have had three debates initiated by this side of the House. Two of them were on Motions of censure. On each occasion I begged him, pleaded with him, to introduce an interim Measure concerned only with benefits and contributions. I did so because I felt that was what the old people needed. They needed immediate assistance. I said to him, "Leave the big Measure, which we are all waiting for, which you yourself are waiting for, until you have all the information you need."
That was the big Measure which the Minister, quite rightly, said that my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) had promised when he was the Minister, that I promised when I was the Minister, after the first quinquennial review. Then we could have the big Measure. I said, "Introduce an interim Measure. Let us have the big Measure when we can have a full debate." I would dare to say that debate on some of these issues would be non-partisan because they are of interest to the whole country.
Each time I have said that to the Minister this year he has—what is the American expression?—"brushed me if," and said, "I cannot accede to the right hon. Lady's request until I have 982 before me the quinquennial review and the Phillips Committee's Report." He has done so time after time. Not only has the Minister said that in debate, but Questions have been put to the Chancellor of the Exchequer, and the Chancellor or one of the junior Ministers at the Treasury has said exactly the same thing.
Indeed, I have sometimes been treated by members of the party opposite as though I have been very awkward in asking for a Measure of this kind, and almost as though I was reactionary because I was prepared to wait for the Report of the Phillips Committee before having the big Measure. The right hon. Gentleman knows that is an accurate description of what has happened in the last year or two.
After all this waiting he has come here today to move the Second Reading of this very limited Bill. I ask him, or the Minister who is to wind up the debate, to tell us how the Phillips Committee and the Report of the Government Actuary have guided them in drawing up the Bill. In the light of all this, I do not think that my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) used over strong language when he called the conduct of the Government in this respect "bogus."
I remember that in the last debate I said that the country was being hoodwinked by the Government, and I remember that there was a frightful cry from the other side of the House. Hon. Members opposite thought that was a most indecent suggestion. My answer to them is that we have been told to wait for this Bill for at least 10 months. It will be 15 months before the old-age pensioners get their increased pensions; 15 months from last March. We have been persuaded that we must wait for all these Reports.
Why have I raised this matter? I have a streak in my make-up which always makes it hard for me to say, "I told you so." I have raised it for this reason. I think that the right hon. Gentleman has treated the Phillips Committee in a grossly inconsiderate manner. This Report, which is of tremendous importance, is a rushed report. I am not giving my own opinion only. Let me quote what "The Times," which is generally accepted by both sides of the House as being fair—[HON. MEMBERS: "NO."] I 983 should qualify that remark by saying that it is accepted as such according to what it says. This is what "The Times" said last week about the treatment of the Phillips Committee by the right hon. Gentleman—for that is. in effect, what it was discussing:Throughout its report there are signs of unfinished thinking and deficient factual knowledge. This is presumably because of the rush in which the committee, for purely expedient and ephemeral political reasons, was obliged to work.
§ Mr. J. Griffiths
Who is playing politics now?
§ Dr. Summerskill
It goes on:But the report does raise the right questions, even though its varying answers will inaugurate a major debate rather than establish beyond dispute what should be done next.That is very strong language, having regard to what we have been saying on this side of the House in the last year, and I think that that language is justified.
I am glad to see the Minister of Health here, because he will agree with me, surely, that the Report of the Phillips Committee is not only of political interest or Parliamentary interest. It is of sociological interest. I read the part on housing this morning, and I recognise that the Report of this Committee, a very strong Committee chaired by a man highly respected in the Civil Service, one of our most distinguished civil servants, its findings, conclusions, and deductions would have been used by Governments all over the world.
Indeed, some of our own Commonwealth countries are in precisely the same position as we are, in that they, too, are wondering how to handle the problem of an increasing proportion of aged people. I remember that when I was in New Zealand in 1943 I was told that there was not enough room in the institutions there and that the New Zealanders, whose expectation of life then was the highest in the world, were wondering how they would settle this problem in the future.
The Minister, quite rightly, set up this Committee, of which we all approved. It was very well chosen and it was doing excellent work. What has happened during the last few weeks is this. The Government, having been prodded by us 984 time after time, and refusing to take the commonsense advice about having an interim Bill like this, to save their face, said to the Committee, "Produce that document quickly."
That is a fact. That must be the truth, because what happened? The Phillips Committee's Report was in the hands of hon. Members the day after the First Reading of the Bill. Yet the Minister told me from that Box in the strongest manner, though I bear him no ill will for it, that he refused to do anything until he got the Phillips Committee's Report. Hon. Members who received their copies of the Report by post got them only last Saturday, and here we are on Wednesday in a debate on the Second Reading of the Bill.
§ Mr. J, N. Browne (Glasgow, Govan)
I agree that the right hon. Lady has a point of view, but is it not possible that the Committee's Report is not all she desires because it does not contribute to the atmosphere of electioneering, of which the party opposite accused the Government because they proposed action when they did?
§ Dr. Summerskill
The hon. Gentleman has made excellent contributions to debates of this kind during the past Session. I myself have heard him. He knows me well enough to know that I would not have said what I have unless I had the greatest respect for the work the Committee was doing. He has only to read its Report to realise that it will be an excellent contribution to the literature we have on the subject.
I am annoyed to think that this fine Committee has been compelled suddenly to bring out its Report so that the Minister should be able to come here and say, "Now I have a Bill and the Phillips Committee's Report as well." That is my objection. I want to ask the right hon. Gentleman how it helps him to frame this Bill. As he has admitted, there are no structural changes suggested in the Bill. He promised us that when this great Measure came along it would introduce structural changes, and we have been waiting for them.
I want to ask the Minister to have second thoughts. I believe that a flexible mind is to be admired. Nobody will criticise the Minister if he has second 985 thoughts, even after he has made his speech. What has he told the House? He has said, after all the controversy of the last year, "Here is the limited Bill for which you ask." I listened very intently to the right hon. Gentleman for 70 minutes, and the best that he could promise us was that we would have one day's debate on the Phillips Committee Report. But what about the big Bill? Are we not going to have a Bill embodying the structural changes as we have been promised? I would refer the Minister to the great issues which concern the whole country. Are they not to be discussed in this House? Will he not have second thoughts even on Third Reading, and do what I ask?
I would ask the right hon. Gentleman to regard this Bill as an interim Measure and, next year, to introduce the large Bill embodying the structural changes. We are not prepared to rush him. He could even recall the Phillips Committee if he feels that it should have a little more time. I suppose it is not unprecedented for a committee to be reconvened. I know that Sir Thomas Phillips is big enough to say that he would be prepared to act if recalled. I have not asked him, but I just say that from my knowledge of his record at the Ministry of National Insurance. He was the first Permanent Secretary there and a man of high repute.
What are the questions that we want discussed and which we had hoped we might discuss today? What about the future financing of the pensions scheme? The Minister said just now—why I do not know, unless he had the idea that it supported his case, but what case I do not know—that the T.U.C. believe that it should be a contributory scheme and we believe that it should be a contributory scheme. But why should the Minister think that people will not have second thoughts about the financing of a colossal scheme like this?
We are talking about the biggest comprehensive insurance scheme in the world. We are talking about a scheme which other Governments may emulate in whole or in part. We are talking about a scheme which has so attracted other Governments that they have sent their Ministers of Social Security or Social Affairs, as they are sometimes called, to our Ministry of Pensions and National Insurance to in- 986 quire how we are doing it. A scheme of this kind can be financed in different ways. We have accepted the contributory principle. France has decided to have a differential rate, and other countries have decided on a social security scheme.
It may be that if a full discussion could be had we would plump for the contributory system. All right, but the time has come to discuss it, to analyse it, and to look at it. There might be controversy on this side of the House. [HON. MEMBERS: "Oh."] Is that not what we are here for? Is that not precisely what the nation sent us to do—to debate, to argue and then finally to decide in a democratic manner what is the best thing to do?
The Minister has financial experts behind him and I listen to them with great respect when they go into what the Minister called the financial stratosphere. They may have views on this which are all very interesting to Members of Parliament, to people with different political views and to the nation generally. Therefore, I suggest that on this subject alone we should have a debate.
Then there is the issue of the retirement age. The Minister went out of his way just now to warn the country not to listen to any whisperings there might be from this side of the House. I would remind the Minister that the great Scandinavian countries, with Social Democratic majorities, have decided to raise the retirement age. Again, there might be argument on this. Hon. Members behind me might say that that is all right for sedentary workers, but what about the miner? He cannot do it. From both sides of the House there are varying views which want analysing and looking at. The Minister must not try to run away from it in that way by saying that we must not whisper about these things because we are not going to do anything. Again, I say that this issue should be debated.
§ Mr. Spencer Summers (Aylesbury)
Would it be reasonable to infer from the right hon. Lady's remarks on this subject that she has a completely open mind and is willing to be persuaded?
§ Dr. Summerskill
The hon. Member knows me well enough to appreciate that on all social questions I am prepared to listen. I can assure him I am never prejudiced about anything except about Conservatives like himself.
987 I come to another point, because I am trying to persuade the Minister—and I am glad the Minister of Health is beside him; I hope he will have a word with his right hon. Friend behind the scenes—
§ Mr. Ellis Smith (Stoke-on-Trent, South)
Am I correct in understanding that my right hon. Friend is suggesting that the Phillips Committee should reconsider the situation? If so, will she agree with me that we on this side of the House must not agree to any increase in the retirement age?
§ Dr. Summerskill
I am not committing myself to anything at the moment. All I am doing is arguing that there are certain aspects of the Insurance Scheme which should be discussed in this House, and I am taking each point and putting the case for it in order to try to persuade the Minister next year to introduce a big Measure so that we can discuss it. This is not partisan. The Minister's speech was distinctly partisan, but I am trying to keep mine on a much higher level.
§ Mr. Raymond Gower (Barry) rose—
§ Dr. Summerskill
No, I cannot give way again.
I come to another point, the annual review of benefits. When that was suggested from this side of the House in the past we did not approve of it, but gradually as we saw the scheme working we felt there might be a case for it. The Minister has set his face against an annual review of benefits, but I should have thought that this year itself should have proved to him that an annual review might be desirable. I am thinking of the debates we have had, the controversy over the cost of living, and the different indices he has mentioned. I am also thinking of the Housing Repairs and Rents Act, which might mean an increase in rents for many people. For all these reasons, the Minister should agree that there is a case for debating the question of an annual review of rates of benefits, and perhaps adopting a more tidy method of arriving at these rates instead of pursuing today's haphazard methods.
Now I come to a rather pathetic little creature, the person whom I regard 988 as the Cinderella of the whole scheme, the 10s. widow. I admit that years ago I had to speak to these women and to conferences of women and explain that, whenever new insurance schemes were introduced, it was inevitable that certain categories did not qualify because in the past they had not made the necessary contributions. These widows have accepted this. Let us recognise the fact that the number of these widows is diminishing and that the few that there are evoke an increasing amount of sympathy from us. I wonder whether in the big debate which we might have we might raise the question of the 10s. widow and perhaps improve her lot just a little.
When I was in the Minister's position, I recall that I discovered a number of anomalies in the Scheme. For instance, there was the question of allowances for dependent children. I remember one case which struck me as pathetic—the case of the mentally defective child who is a child until it dies, a child still at 30 years of age. When the Scheme was framed and we thought in terms of children, we thought that a person was no longer a child at 16 years of age.
I recall that the Ministry was collecting a number of these anomalies. I was told years ago that when this big Bill came we should try to remedy all this by injecting these cases into it. What is going to happen to these cases? When will the Minister have the big Bill for them? That is another strong point for having a big Bill next year. I hope, therefore, that the Minister will regard the present Bill as an interim Measure.
On the question of time, I am not going over last year again—I do not want to weary the House—but really we have had cause for complaint. It is quite indefensible for the former Parliamentary Secretary to the Ministry of Pensions and National Insurance to give a half-promise to the House on 19th March, 1953, that the pensions would be raised and for people now to be told that these increases will not affect them until April or May, 1955. We cannot go back over all that now, but I would remind the Minister that these extra six months to April or May which he has now added will represent a substantial proportion of the remaining life of an old-age pensioner, and that the Minister can do something.
989 I know as well as he does the time that it takes to print. The reason he gave for the delay is that all these documents need to be printed and that he must have six months in which to print them. Every Minister opposite knows that if he applies pressure to the right quarter, if he wants something very badly and says to his Department that it has to be done, it is remarkable how things are hurried up. I plead with the Minister to try to cut down the six months and hold out a greater hope to the pensioners.
As to the contents of the Bill, I recall that the Bill was heralded by the Government as something which would startle and astonish. I recall that three weeks ago the Minister bent forward, his face alight, and pointed at me and said, "Wait until you see it," and how for a moment I thought that the Bill would be quite remarkable. Later in the evening the Minister of Defence, in one of his characteristic knock-about speeches, knowing nothing of the subject, also said, his eyes alight, "Wait until you see it. You will be surprised." Then the right hon. Gentleman was sent to West Derby, where he revealed that he had already seen the Bill and said, "Wait until you see it."
We have seen it. I expected the Minister to produce a quite stupendous rabbit out of his hat. What is the Bill, after all? Surely it is the very least that the Government can do. I do not want to be unfair, but the Minister was a little inaccurate this afternoon. He tried to trip the House by giving certain figures which he knew people could not immediately confirm, but it happened that there were present my right hon. Friend the Member for Battersea, North (Mr. Jay), who was Financial Secretary to the Treasury at the time and who has a very good memory, my right hon. Friend the Member for Llanelly and myself. Some of us knew that some of these things were being handled by the Minister in such a way that they were bound to deceive.
The right hon. Gentleman charged my right hon. Friend the Member for Leeds, South with deceiving the House yesterday. The right hon. Gentleman said, "Why, we were very generous"; but when he was challenged it was discovered that my right hon. Friend was absolutely accurate. My right hon. Friend 990 said that in the Bill, all the Government are giving out of the Exchequer is £15 million for war pensions and £10 million for National Insurance. After all the Minister's figures and after he has tried to tell the House that my right hon. Friend was inaccurate and misleading and that indeed the Government were exceedingly generous, I still charge him—
§ Mr. Peake
The point that I was making, and I am sorry that the right hon. Lady did not fallow me, was that I objected to the right hon. Member for Leeds, South (Mr. Gaitskell) saying that he found £39 million out of taxation when, in fact, he intended to take £58 million out of the National Insurance Fund.
§ Dr. Summerskill
I must admit that the right hon. Gentleman has mentioned many figures today and that figures of that kind on Second Reading are very confusing to anybody. Any responsible person does not like to jump up and challenge them immediately, but there are certain things which we know very well. The right hon. Gentleman said, "We are giving over £100 million," and one of my hon. Friends called out, "What do you mean by 'we'?" When the right hon. Gentleman said "we," it sounded as if he meant the Exchequer, when in fact he was including the workers.
What precisely is the Treasury, with whom the right hon. Gentleman has had to argue, giving? What is the measure of this generosity? What is this wonderful Bill about which the Minister pointed at me and said, "Wait and see, and then you will know"? The Minister cannot deny that I give simple figures which the House can understand. I do not like to juggle with figures in order to bemuse and confuse. I say that the Government are giving £15 million out of the Exchequer for war pensions and £10 -million for National Insurance.
§ Mr. J. Griffiths
Is that not right?
§ Dr. Summerskill
If that is not right, I will give way.
§ Mr. Peake
May I make it quite plain? There are £25 million going into National Insurance—both funds together-—and there is a saving of about £13 million or £14 million on National Assistance to offset against that.
§ Dr. Summerskill
The right hon. Gentleman is making his position much worse. He may try to underestimate the intelligence of my hon. Friends, but they are quite capable of adding £15 million to £10 million and making them £25 million, which is the figure the right hon. Gentleman has just given. My figures then stand—£15 million for war pensions and £10 million for National Insurance. I give way and the right hon. Gentleman says, "We are giving £25 million." Certainly 10 and 15 are 25. We are agreed. I shall come to National Assistance soon. We say that in 1951 we gave out of the Exchequer £39 million.
§ Mr. Peake indicated dissent.
§ Dr. Summerskill
I will come to that. And we did not increase contributions. The benefit rates will be discussed later, but I want to continue with the question of finance, because this is my most serious criticism of the whole Bill. The Government have failed to restore the Exchequer supplement to the pre-1951 level. The right hon. Gentleman sought to explain, by referring to previous Bills, why he had not done so.
The consequence of his action is that the worker's contribution is now fixed at a level which cannot be justified on actuarial grounds. I want to put these figures on record. The total contribution to the National Insurance Fund for the adult man in 1946 was 7s. 11d., and the percentage of the Exchequer supplement in relation to the total contribution was 263. In 1951, the total contribution was 8s. 3d. as against the Exchequer supplement percentage of 16.1. In 1952, the total contribution was 9s. 2d. as against the Exchequer supplement percentage of 16.3. Under the Bill, the total contribution is 11s. as against the Exchequer supplement percentage of 16.6. In other words, the worker is being left to bear a share which is inequitable.
The Minister's answer is, "Well, the Labour Government in 1951 reduced the Exchequer supplement from one-fifth to one-seventh of the total contribution." I will now develop what I said when I interrupted the Minister. It was the only occasion on which I interrupted him, but he did not answer. He suggested to the House that the Labour Party almost raided the Fund. I looked up the 1951 debate yesterday, and I noticed that we 992 were charged with raiding the Fund. Indeed, I believe the Minister made the charge.
§ Dr. Summerskill
All right; we were charged. I then said that it was an abuse of language. I wonder what the financial experts behind the Minister—I believe there are a few—would do if they had to advise a Ministry on a fund which was in the condition of this one. I will remind them of the position. It was believed in 1946—certain assumptions were made—that, as the Minister has said, the unemployment rate would be 8½ per cent. and the interest on the Fund would be at 2¾ per cent. The death and sickness rates were also based on the 1942–43 figures. All those assumptions proved wrong. That was not the fault of the Labour Party. I am sure the right hon. Gentleman will agree with that. Those assumptions were arrived at by first-class economists, statisticians and sociologists, people whom Beveridge had collected around him, and others. It is well known that advice upon the scheme at its inception was given by people who were not politicians. As I said, all those assumptions were proved wrong.
§ Mr. Houghton
They were proved to be favourably wrong.
§ Dr. Summerskill
Yes, that is so. The unemployment rate was found to be 1–2 per cent., the rate of interest earned averaged about 3 per cent., and the death and sickness benefits were lower. Furthermore, in consequence of that, as I said to the Minister—he did not contradict me—every year there was so much money going into the Fund that it was calculated to be increasing by £145 million per year. The Actuary decided that £300 million should be transferred to the Reserve Fund.
Between 1948 and 1951, the surplus income in the Fund was being lent back to the Exchequer in order to help Government capital investment. We then had the ridiculous position that the Exchequer was paying us what were expected to be deficiency contributions and borrowing the money back from the Fund at 3 per cent. interest. Obviously, the Actuary had to give some advice in that most curious situation, and the Exchequer contributions were cut.
§ Miss Ward
If there was all that money in the Fund, will the right hon. Lady kindly explain to me why, when the Labour Government went out of office, all who attained pensionable age after 1st October, 1951, were still entitled to draw only 26s. per week pension?
§ Dr. Summerskill
I would remind the hon. Lady that when the Labour Party came into office—
§ Dr. Summerskill
I am answering it. The hon. Lady is asking me a question about the benefit rates. I would remind her that, when the Labour Party came into office after her party had been in power for many years, the old-age pensioners were getting 10s. a week—
§ Dr. Summerskill
—and not many years before that her party had objected to giving them 5s. a week. In view of the financial situation, we decided not only to increase benefits but also to reduce the Exchequer contributions to the Fund, as the Minister has rightly said, from one-fifth to one-seventh of the total—
§ Dr. Summerskill
—but at the same time we left the contributions at their existing level.
§ Dr. Summerskill
If the hon. Lady looks hard enough at Mr. Deputy-Speaker, I am sure that she will be able to take part in the debate in time.
§ Dr. Summerskill
The Government's present proposals—this is not denied, but it is time it was put from this side of this House in order to explain what our position was in 1951—will mean that employed men and women will be paying more than is actuarially necessary to provide for the benefit which they may expect to draw during their life. In other words, the contributions are helping to subsidise current retirement pensions. We believe that the current retirement pensions should be taken over by the Exchequer, as the 1946 Act contemplated, and the contribution reassessed on the 994 current risks of those now insured. That is what we are asking for. Therefore, I ask the Minister to reconsider the proposal and to restore the Exchequer grant to the pre-1951 level.
We have also made calculations, and I am willing to give them to the Minister in a simple form. I will tell him what we discovered. If he will restore the Exchequer supplement to the pre-1951 level, on that basis the contribution from the worker under the Bill will be nearer 1d. than 1s.
§ Mr. Peake indicated dissent.
§ Dr. Summerskill
The right hon. Gentleman need not shake his head. I should not have put this matter before him if I had not been advised by expert accountants.
Hon. Friends of mine will be able to prove to the Minister later in the debate that the 1d. contribution which he is asking for industrial injuries is not necessary. We have calculated that if the Minister restores the Exchequer supplement to the pre-1951 level the actual amount required from the individual will be 1½d. If the 1d. for industrial injuries is deducted, the contribution from the worker will be reduced to ½d. The Minister will agree that this is a reductio ad absurdum.
In view of that, I again ask him to treat the Bill as an interim Measure and not call for any increase in contribution pending a full examination of the Phillips' Committee's Report. I hope I have at least deployed an argument for a full examination, a full and thorough debate and a Bill which will embody all the structural changes which are demanded not only from this side of the House.
I will say something on National Assistance, for this reason: the Minister quite rightly realised when he announced the increased benefits that he should at the same time have mentioned National Assistance rates, because in so many budgets of poor families National Assistance and National Insurance are more or less closely related. What is suggested?
The draft Regulations, which we shall debate after Christmas, provide for increases in the original scale of 2s. 6d. per week for a single person and 4s. for a married couple. When these draft 995 Regulations are before the House we shall be in a difficult position, because, as the House knows, we shall be unable to amend them. We shall have to accept or reject them. It is for that reason that I ask the Minister to reconsider this matter before Christmas.
I point out to him that we have done a little analysis of what the repercussions will be. Here is my analysis of the situation. There are approximately one million retirement pensioners drawing National Assistance supplementation today. The increase, with National Insurance combined of course, will give the following results. Seventy thousand will get between 5s. and 7s. 6d. per week, 130,000 will get between 2s. 6d. and 5s. per week, but there will be 800,000 who will be only 2s. 6d. a week better off.
Let us look at the position of widows. I have always felt very sorry for the widow who has suddenly—perhaps after many years of married life—to go out and earn her living. She is generally unskilled, and we find that among the lowest-paid workers in the country is a big proportion of widows and married women. They always have the badly paid jobs—let us admit that on both sides. They are exploited chiefly because they are unskilled and because they have devoted so much of their lives to the important job of keeping a husband happy and bringing up a family; then they suddenly find themselves in this strange world.
What is the position of widows? The total number of widows drawing a supplementation is 95,000. Of these, 6,000 will get from 5s. to 7s. 6d. a week, 8,000 from 2s. 6d. to 5s. per week, but 81,000 out of 95,000 will get only 2s. 6d. That is a measure of the Government's generosity.
What about recipients of sick benefit? Let us see what they get. There are 141,000 drawing National Assistance benefits and, as a doctor, I think most of those are the chronically sick, because the people who have some acute illness can generally manage on their savings. So let us think of 141,000 chronically sick and see what their position will be. Eight thousand will get between 5s. and 7s. 6d., 10,000 will get between 2s. 6d. and 5s. and 123,000 of the 141,000 are to get only 2s. 6d.
996 Can the Minister justify his earlier attitude when he turned to this side of the House and said, "Wait and see what we have." What it really means is that the net result of these proposals is that the very poorest in the community will fare the worst. That is why I ask the Minister to reconsider these proposals and come back with a better Bill.
§ 5.25 p.m.
§ Mr. Spencer Summers (Aylesbury)
The right hon. Lady, in opening her remarks, made some rather caustic comments on the use that my right hon. Friend made of his time in introducing this Bill. But I was careful to observe that, although she rose at twenty minutes to five, it was not until a quarter past five that she directed her remarks to the contents of the Bill.
We had the remarkable experience that so difficult did she find it to find fault with the Bill that half the time she took up alluding to the effect of the timing upon the Phillips Committee considerations and the other half attempting to defend the action of her Government in 1948 and 1951.
§ Dr. Summerskill
Does the hon. Member not recall all those very important aspects of the Bill about which I talked and which, during the course of the year, the Minister said would be raised?
§ Mr. Summers
That intervention did not carry us very much further. I listened to every word the right hon. Lady said, and all I am saying is that it is a remarkable tribute to the contents of the Bill that we should have had such an evasive reply from the Opposition benches to the speech that we heard from my right hon. Friend.
I do not think the Minister wild misunderstand me if I say that as much credit is due to the Chancellor of the Exchequer for the state of the economy of this country which has made the Bill possible as is due to the Department concerned. There is no doubt that it would be quite a different question from the taxpayers' point of view to face up to the obligations contained in the Bill if there were not the assurance of a very different state of affairs, economically and financially, than existed under the administration of the Labour Government.
I want to say a word or two about some of the suggestions put forward by 997 the right hon. Lady. Before I come to my particular point, I want to say that I regard it as completely irresponsible for any speaker voicing the views of the Opposition to suggest that a considerable increase in benefits should be accorded without any addition whatever to contributions, for that was the suggestion she asked the Minister to consider.
The critics of the Bill fall mainly into two groups; those who are opposed to the contributory system at all and those who, while supporting the contributory system, find fault with the distribution of the burden among the three parties to the Scheme. I want to make quite plain at the outset that I wholeheartedly support the principle of the contributory scheme, because were that to be abandoned it would at once penalise any form of thrift, because benefits far old age or sickness or unemployment would no longer be capable of being claimed as of right. It would be quite inevitable in the long run that such benefits would be paid only in the face of a means test.
Secondly, there would be a serious risk of all sorts of restrictions on earnings and other matters being imposed in the defence of economy from the taxpayers' point of view if the contributory principle were abandoned. It will probably be found that the critics are more numerous in the other group who, while subscribing to the contributory system, find fault with the distribution of the contribution.
The right hon. Lady complained that the Exchequer contribution was not sufficient and ought to be restored to that greater proportion which used to prevail prior to 1951. I want to advance a few reasons why the 1s. contribution is fully justified, and why it would be a great mistake to reduce that figure for the reasons advanced by the right hon. Lady. It is true that this Scheme is not strictly an insurance scheme, because the proportion from the Exchequer necessary to keep it going is not a constant one. According to the figures supplied by the Actuary, whereas the present proportion derived from the Exchequer is of the order of 13 per cent., in 25 years' time it will have grown to no less than 47 per cent., and if a greatly increased proportion of the cost of such a scheme has to come from the Exchequer—as is thought to be inevitable—we should be extremely wary of cutting down the contributions 998 from the contributors below the figure proposed in the Bill.
I welcome one increase in the Exchequer contribution which, so far as I recall, was not referred to by the hon. Lady, namely, the increase from one-sixth to one-third of the self-employed contributions, which is now to be shouldered by the Exchequer. I have always felt that under the former arrangements the Scheme had far less attractions for the self-employed than it had for other members of the community. Scores of small shopkeepers and traders should be very gratified that it has been found possible, by means of a proportionately increased contribution from the Exchequer, to put them on all fours with other contributors to the Scheme.
In considering whether the extra shilling is justified, I was interested to note the figures quoted by the Minister, which were that whereas, when the scheme started, the worker's contribution was 3.9 per cent. of his then average earnings, under today's proposals and present conditions, the worker's contribution will be only 3.2 per cent. of his average earnings. That shows that there can be no objection on grounds of hardship.
As I understood the right hon. Lady, she found fault with the Exchequer contributing anything to that part of the Scheme which is levied additional to the actuarial requirement of the entrant at age 16. As far as I can discover from my amateur calculations, the amount which the taxpayer, through the Exchequer, is to provide will take care of only about five years of past payments of those already in the Scheme who are going to benefit from the new rates; in other words, a very small but nevertheless welcome fraction of the additional burden to the scheme made necessary by allowing people already in it to draw the benefits that are now proposed.
There is an even more far-reaching aspect of the question of whether or not the extra 1s. is justified. Hon. Members are familiar with the figures to which the deficit will rise in the years that lie ahead. I suggest that there is a very grave risk that if we do not ask the beneficiaries themselves to contribute substantially to the benefits which they will derive, too much will fall upon the taxpayer and that, in turn, will lead to 999 the very inflation which depreciated the benefits of the Scheme when it started and nullified its paper value under the Socialist Government. In effect, it did nothing but cheat the beneficiaries into believing that the rates were of some value—as they were on paper—whereas, in terms of buying power, they were being depreciated with every year that passed.
It is very plausible to suggest that beneficiaries should seek to have somebody else pay their contribution for them—namely, the Exchequer. How attractive that would be. But I suggest that if that policy is carried too far the effect will only be to add to the risk of inflation, which, in turn, will depreciate the buying power of the benefits and so, in the long run, do more harm to those whom we wish to benefit than we shall do by asking them to pay a fair share of the total contribution.
It is relevant to compare the approach of this Government to the question of old-age pensions with that of the Labour Government in 1951. An attempt was then made to postpone the retirement age. That attempt was foiled by a very strong rebellion from the back benches on the Socialist side of the House.
§ Mr. George Thomas (Cardiff, West)
The hon. Member will remember that his own party, led by the present Minister, supported that proposal, and it was a revolt by Labour back benchers which led the Government to change their policy.
§ Mr. Summers
I am concerned only with the fact that the official spokesmen of the Socialist Party attempted to defer the age at which retirement pensions could be drawn. The outcome was that the higher rate finally agreed upon was to be received only by those born 'before a certain date in October, 1951. We find that the effect would have been that 80 per cent. of those eligible for a pension upon retirement at 65 would have had to wait anything from one to five years before they derived the benefit of the increased pensions accorded to them by the Scheme as it was at that time.
I was very glad to hear the Minister say that he was biased strongly against any suggestion of increasing the age of retirement. No evidence has yet been adduced—at any rate, none is recorded 1000 in the Actuary's Report—to show that incentives to defer retirement have in fact induced more people to stay at work than was the case before. In fact, things have gone on in very much the same way. We know that people do not want to give up work unless there is some good reason which drives them to do so, and to assume that we must provide inducements for people to stay at work when we know that most of them want to anyway is introducing into the Scheme something which is both unnecessary and, financially, very expensive.
This is not the opportunity to go into that matter at any length, and I hope that the time permitted for discussing the far-reaching aspects of this subject can be extended to two days.
§ Mr. J. Griffiths
I know that the hon. Member is interested in an important industry. Does he hold his view with regard to the retirement age in the case of occupational pensions?
§ Mr. Summers
I am not quite certain what the right hon. Gentleman means by occupational pensions.
§ Mr. Griffiths
We are discussing a compulsory retirement age. Does the hon. Member think that no compulsory retirement age should be applied to private pensions schemes, as well as to the national Scheme?
§ Mr. Summers
I am concerned only with the age at which a person is eligible to draw a retirement pension. I am merely saying that I personally welcome the intimation that the Government oppose the postponing of the voluntary opportunity to retire, for the reasons which I have given.
I agree with this much of the speech of the right hon. Lady. There are very many aspects of this problem which should be debated in the light of the Report of the Phillips Committee, the experience of the past and the various researches undertaken by the Ministry, and it would be very difficult to do justice to that topic in one day. For that reason, I do not wish to take up time on this topic of the age of retirement and other matters which would be very much better dealt with then.
In the meantime, I have no doubt myself that, when a comparison is made between the general approach to this subject of this Government, coupled with the 1001 sound financial and economic foundations which it has created, and the approach of the Socialist Government, there will be little doubt which party is regarded by the pubic at large as more worthy to be entrusted with the responsibility of administering a scheme of this kind.
§ 5.41 p.m.
§ Mr. Douglas Houghton (Sowerby)
The hon. Member for Aylesbury (Mr. Summers) began his speech with a compliment to the Chancellor of the Exchequer and to the Government for bringing the finances of the country into such a state as to be able to bear the heavier charges upon the national economy which this Bill will eventually bring. Is he aware that, up to this moment, not a single penny piece of the block grant provided for under the 1946 Act, representing payments by the Exchequer to the National Insurance Fund, has been spent on pensions—not a penny?
Under Section 2 (3) of the 1946 Act there was a contract by the Exchequer to pay into the National Insurance Fund, in addition to the proportionate grants, a sum beginning at £40 million a year and rising by £4 million a year until it reached £60 million a year, for five years, when the matter was to be reviewed. A sum of £300 million was contracted to be paid into the National Insurance Fund in anticipation of a level of benefits to be paid, and in order to keep the Fund solvent and not a penny piece of that money has had to be spent until now.
Why was that? It was because, when the contributions were fixed in 1946, there was a contemplated level of unemployment of 8½ per cent. of the employed population. In experience, that turned out to be not 8½ per cent. but never more than 2½ per cent., except for a few weeks during the fuel crisis of 1947. Furthermore there was a much lower sickness record in those years than the 1946 Act contemplated, and that happened under a Labour Government, when we were supposed to be underfed and down and out. The happy state of National Insurance finances in 1951 arose principally from these two favourable factors.
Again, the hon. Gentleman, in common with hon. and right hon. Gentlemen opposite, talked about the taxpayer. They always separate the taxpayer as if he were some separate being from all the rest, but if the hon. Member for Aylesbury, as a 1002 contributor, will look in a mirror, he will find a close resemblance to himself as a taxpayer, because one of these days, if not already, he will, I hope, be a beneficiary under the National Insurance Scheme.
All that is in question when we are talking about contributions, Exchequer grants, and all the rest is how the burden of paying for these benefits shall be spread. We know that we have to find the money somehow, because there is nowhere else from whence it can come. Insurance benefits have to come out of the national product year by year, and if in any year there is not a national product to meet those benefits, they will be worthless. When we talk about the taxpayers and the contributors, we are talking about ourselves to ourselves, and if we get that clear then we can proceed to the next item on the agenda.
§ Mr. Summers
Will the hon. Gentleman allow me? He says that we are talking to ourselves about ourselves. Does he not accept the view that there is a level of taxation above which it is thoroughly undesirable in the national interest that we should go?
§ Mr. Houghton
No. I have said many times before in this House that the level of taxation is what we like to make it if we think that what we want to pay for will be worth it. When it is a matter of defence, hon. Gentlemen opposite say that it is worth paying £1,500 million, and, therefore, we shall tax ourselves to find it. I am not blaming them; I am merely saying that if we want a thing enough we will pay the taxes to pay for it, and that all we shall argue about is who is going to pay what.
I wish now to come to the Bill, which deals with three matters requiring immediate attention—benefits, contributions, and payments from the Exchequer to the National Insurance Fund—and the greatest of these is benefits, because they constitute the human end of this long and complicated story, which was the subject of such unscrupulous wizardry in handling the facts and figures by the right hon. Gentleman. When the Minister said, on 16th November,It would be a simple act of justice, we believe, to give back to the pensioners, at any rate, the value which their pensions bore in 1946,1003 we now ask whether he has done it? What was the 1946 standard? It was the poor relief standard of 1938 cooked up into 1946 prices. The 1946 standard was the 1938 standard of existence in cost, but not in comfort.
In fact, even now, with all the self-congratulation going on on the benches opposite about the benefits in this Bill, they are not yet on a subsistence standard. The Minister himself, on 16th November, also said this:I do not think there is any contention about that between either side of the House, bait hardly any organ of public opinion seems to realise that the insurance pension, since its inception at the 10s. rate in 1926, has never been sufficient for the average pensioner to live on unless he had some other resources.That holds true today, and the Minister in rather a grandiose style, even in his speech on 16th November, posed the big issue, because he said:The question is, on what sort of income do we want these old people to have to rely? And to find the right answer to that is the problem which faces us again today, as it faced us in 1943. Do we want our old people to be dependent on a grant, to get which they must show need, or do we want them to receive an annuity earned by virtue of contributions paid into an insurance fund? That is the big issue."—[OFFICIAL REPORT, 16th November. 1954; Vol. 533, c. 235 and 23".]What is the answer? We did not hear a word about it today—not a single word about the big issue. What we heard was that these benefits were the 1946 amounts written up by 50 per cent. and rounded off to the nearest favourable figure. It was a purely arithmetical process unrelated to any answer to the big issue. Presumably, then, this is the answer to the big issue, or, at least, it is the Minister's answer, and the question now is whether we agree with it.
I think the House should dwell for a moment or two on the question of benefits—the big issue. The first thing I wish to say about these increased benefits is that they do not take a single person off National Assistance. In addition to increasing the benefits under the Bill, we have also found it necessary to propose increases under National Assistance, thereby revealing, of course, a continuing disparity between what is modest subsistence under National Assistance scales and what is not subsistence under National Insurance benefit.
I want to know what the Minister has to say about the progressive increase in 1004 the percentage of retirement pensioners who are having to apply for National Assistance. In October, 1946, 15½ per cent. of retirement pensioners had to ask for National Assistance. That number has increased every year since then, and, without trying to make any party point on this, I say that the percentage increase since the present Government came into office has been almost double the percentage increase which obtained when the Labour Government were in office.
Between 1946 and the date when the Labour Government left office, the number of retirement pensioners who were receiving National Assistance had risen by 2.4 per cent., whereas in the last three years it has risen by 4.4 per cent.
§ Mr. Summers
Does not the hon. Gentleman agree that as the National Assistance rates are increased, the kind of trend about which he is giving figures is only to be expected?
§ Mr. Houghton
Is it worth answering that? Of course, if the basis of subsistence has to be put so much above National Insurance benefits, then, obviously, that trend will continue. I am asking the Minister what he is going to do to check it.
We are surely agreed, even now, that the measure of subsistence need is to be found more truly in National Assistance scales than probably in any other measurement that we have at the moment. If the subsistence need, according to the National Assistance Board, is 63s. a week, plus rent, for a married couple, then 65s. National Insurance benefit without a rent allowance cannot be subsistence.
What, then, is it? Is it a Plimsoll line? Is it a national minimum, or is it an up-to-date version of 1946 standards, which were a cooked-up version of 1938 standards? Does the subsistence level of the National Insurance benefit still have its roots in Poor Law conditions of prewar days? Does the Minister propose to put anything into National Insurance benefits which will give us 1954 ideas of how the poor should live? As the wage earner increases his real wages, do we not permit something of that kind also for retirement pensioners?
I know that the Minister, who, I see, has just returned to his place, may say, "Well, these figures are what the T.U.C. suggested." He may say, that they pretty 1005 well tally with what the special correspondent of "The Times" said in that newspaper on 22nd October, 1954. But I would remind the House that both of those suggestions were merely a restoration of the relationship between National Assistance scales and National Insurance benefits as they existed in 1946, which is just another arithmetical adjustment of 1946 standards.
I do not agree with my right hon. Friend that we always agree with what "The Times" says, but I do agree with what I am about to read from it. It said:The above are not the appropriate rates for next year when, if nothing else, rents will rise markedly.What is there in these National Insurance benefits for the purpose of meeting the prospective increase in rent? The rent increases under the Bill introduced by hon. and right hon. Members opposite may be offset by increased National Assistance allowances in the case of those who have to go to the National Assistance Board, but those who do not will have to bear the full impact of rent increases. Yet the Minister will go about the country saying, "I have restored the 1946 value of your pension." But he will not have restored the 1946 value of the rents which are to be increased next year.
Of course, there are other people who have made calculations as to what the benefits should be. I see that Richard Denman, in the "Liverpool Daily Post," on 19th July last, tried to calculate on the Rowntree standard. At least he tried to get down to fundamentals, and to build something up from something instead of merely recalculating the standard originally taken in 1938.
I ask the Minister, therefore, are National Insurance benefits permanently chained to 1946 standards? If so, where is the progressive improvement in the condition of our old people to come from, and how does the Minister justify depriving the retirement pensioners of any share in the additional national income which is coming from higher productivity?
I now want to say something about contributions, and I wish to preface my remarks by saying that in moving swiftly to bring relief to the old-age pensioners, we must avoid giving the impression that 1006 we are stopping to haggle about who is to pay for it. But there is nothing that I shall say about contributions which implies any unwillingness on the part of workers of this country to pay increased contributions, whether they think them just or unjust, because they will not let the retirement pensioners down.
I know that in its evidence to the Phillips Committee, the T.U.C. said that it was prepared to contemplate some increase in contributions for increased benefits provided that the Government restored the Exchequer contribution, the proportionate grant, to what it was in 1951.
§ Mr. Houghton
I am much obliged to the right hon. Gentleman. No, I mean before 1951.
The T.U.C. also drew attention publicly to something which the right hon. Gentleman has also mentioned, about the proportion which contributions bear to present wages. There is no doubt that present contributions bear a smaller relationship to wage rates than did the 4s. 11d. contribution in 1946.
§ Mr. G. Lindgren (Wellingborough)
§ Mr. Houghton
Yes, on average. Figures can prove anything and averages even more. The T.U.C. was trying to be absolutely fair and honest in its evidence to the Phillips Committee, and yet the right hon. Gentleman saw fit to utter those disparaging remarks about the T.U.C. towards the end of his speech.
Until today, I thought that the right hon. Gentleman was a reasonably good man. I am now convinced that he is a bad man, and if he is not ashamed when he reads his speech in the OFFICIAL REPORT tomorrow morning, then he is an even worse man than I think.
§ Mr. Houghton
The right hon. Gentleman will see them in the morning. As the right hon. Gentleman walked out of his house this morning, he said:Blow, blow, thou winter wind,Thou art not so unkindAs T.U.C.'s ingratitude.It is quite obvious that he rehearsed it before he came out.
1007 The big issue here is whether the actuarial contribution, as it is called, is still to be fundamental to the finances of the scheme. This comes to the crux of the matter so far as our attitude towards contributions is concerned. To relieve the Exchequer burden of the growing cost of retirement pensions, an extra amount is put on the actuarial contribution. That is what is loaded up in the proposed contributions under the Bill.
It is curious that though this idea, admittedly not new but revived, restated and recommended, found a place in paragraph 173 of the Phillips Report, somehow or other the proposal to act on that recommendation was in the Bill three days after the Phillips Report was issued. Talking of the Phillips Committee, I certainly agree that it has been unduly hurried in the concluding stages of its inquiry.
The Phillips Committee sat on Thursday, 25th November, on Friday, 26th November, on Saturday, 27th November—and it had arranged to sit on Sunday, 28th November. It signed its Report on 27th November. Why the hurry? Because it had been told that the Chancellor of the Exchequer wanted the Report by Monday, 29th November.
That was the reason. But the Bill had been written by then. This Bill, by then, was in the printing presses of the Stationery Office. Why, then, did the right hon. Gentleman want the Phillips Report on Monday, 29th November? It was just to say that he had got it, and it suited his purpose had it been handed to him in a sealed envelope. He did not even have to open it. He had to say, as he had said so long, "We must await the Phillips Report," He had to say," I have had to wait for it and now I have got it." I think it a great pity that a Committee dealing with such a comprehensive and complex subject had to be hurried to the end of its labours merely to satisfy the political promises of the right hon. Gentleman.
The recommendation in paragraph 173 of the Report is now incorporated in the Bill. The Minister made reference to the fact that two members of the General Council of the Trades Union Congress agreed to that recommendation, provided that, at the same time, the proportionate grant was restored to the pre-1951 pro- 1008 portion. Let me explain that these two members of the General Council of the Trades Union Congress were not, in the true sense, representatives of the Trades Union Congress.
§ Mr. Peake indicated assent.
§ Mr. Houghton
I am glad to see that the Minister appears to agree with me. They were nominated by the Trades Union Congress, and appointed to the Committee by the Chancellor of the Ex chequer—
§ Mr. Peake
I hope that I did not fall into error in that respect. I would not for a moment suggest that those two gentlemen represented the Trades Union Congress, but that they were members of the Trades Union Congress.
§ Mr. Houghton
I fully accept the right hon. Gentleman's correction, but the word he used was "representatives" of the Trades Union Congress. If representatives do not represent, what on earth do they do?
I want to make it clear that those two gentlemen had not whispered a single word of their deliberations to any member of the General Council. I was completely ignorant of the contents of this Report until it was published. Despite the fact that they knew of my close interest in the work they were doing, not one word was uttered to me.
The General Council of the Trades Union Congress has not yet had an opportunity to study the Report. It will no doubt make a statement in due time. It has already made a statement requesting the reinstatement of the pre-1951 proportionate grant, but it has not yet made any statement which supports the loading of the contributions by this extra amount to relieve the Exchequer of its obligations under the 1946 Act.
When the right hon. Gentleman was making such play with what happened in 1951, I was frankly disgusted, I really was. He must remember that he did not dissent from the proposal made by my right hon. Friend the then Chancellor of the Exchequer, that, as the Fund had been running, year by year, millions over the requirements necessary to keep it in balance, owing to the lower unemployment ratio, the lower sickness ratio, and other favourable factors to which attention has been drawn, he did not then 1009 dissent in principle to reducing the useless transfers from the Exchequer to the Reserve Fund.
What he said on 26th April, 1951, was:What I do take the strongest possible objection to is the reduction to a mere token figure of the propertionate and contractual part of the Exchequer contribution."—[OFFICIAL REPORT, 26th April, 1951; Vol. 487. c. 601.]That is what he objected to, and, as he has said, I objected to it as well. Eventually, as he said, the proposals under the 1951 Bill were altered so that the proportionate grant, though not restored to its full one-fifth, was certainly put at one-seventh, and other adjustments were made to meet the objection to the principle of reducing the proportionate grant.
But why did not the Minister put that right in 1952, when he had the chance?
§ Mr. Peake rose—
§ Mr. Houghton
Why has not he put it right now?
§ Mr. Peake
The hon. Member asks me a question. The answer is that I struck a bargain with hon. and right hon. Gentlemen opposite, and I adhered to it.
§ Mr. Houghton
So there was a little arrangement over the table between the right hon. Gentleman and my right hon. Friends—though he objected to what was being done. On that basis, why have the Government changed so many things to which they agreed when the Labour Government was in office?
In any case, the restoration of the pre-1951 proportionate grant should have been undertaken by the right hon. Gentleman, and, as he did not do it, why has he been complaining so bitterly about these 1951 events, and rummaging among the dusty skeletons of 1951 to see what he could throw at my right hon. Friend the Member for Llanelly (Mr. J. Griffiths)? In doing that he is as respectable as Satan rebuking sin. He had the chance on two occasions to put it right and did not do so.
He knows that the adjustments made in 1951 were temporary in character and that all should have been straightened out at the quinquennial review. Why has he not done it? "Oh," he says, "I struck a bargain." So the right hon. 1010 Gentleman is an honourable man. Before an exceptional load is put upon contributions for future emerging costs under the scheme we want a thorough examination of how the future of the scheme is to be financed. That, surely, is a fair proposition. In the meantime, the right hon. Gentleman certainly could have restored the proportionate grant to the pre-1951 level.
The Minister also referred to the calculation of interest from 1951 onwards at 3 per cent. instead of the previous 2¾ per cent. That was mentioned as though he were letting drop a dark and dirty secret from the archives of the Labour Government. Does he say that it was wrong to increase the calculation of interest from 2¾ per cent. to 3 per cent. when, at the time, the whole movement of interest rates was upwards? Does he say it was wrong then? Does he say it is wrong now? The right hon. Gentleman mentioned this in the hope that those who did not understand, the ignorant and the politically blind, would say, "Ah, another disclosure about the Labour Government."
§ Mr. Houghton
The right hon. Gentleman, if he thought fit to mention it at all for the purpose of his calculations, could have said, "This change was made, but I agree that it was justly made. I have no complaints to make about it. It so happened that it was not mentioned at the time. I mention it now, but I make no point of it at all." That is what an honourable man would have said.
I now come to the time-table. It is very unfortunate that there is such a long time-lag between the decision of Parliament to introduce benefits and the date at which people get the money. If wage earners had to wait five months for their pay increase, there would be trouble. Old-age pensioners have no trade union and that is why they have to come to us, to see that their grievance is remedied.
Five months delay, of course, is not the whole story, because it takes five months to make up one's mind. The Minister has certainly been five months making up his mind about whether to increase pensions. In fact, he has been 1011 promising to do so for five months. By the time the beneficiaries get these improved benefits, they will be well behind events.
In earlier debates the right hon. Gentleman made a certain amount of political play about how long or how short was the time that was taken by the Labour Government to get these benefits in payment. The present proposal is to give retirement pensioners and widow pensioners these benefits in the last week in April, and other changes at the end of May, and the Minister defends the present time-lag by referring to the slightly longer one in 1951. But this timetable shows no improvement on the 1952 time-table. The right hon. Gentleman can show no improvement on himself, and he can show only a week's improvement on anybody who preceded him.
All this political by-play, these political pranks about the time-table, is merely so much boasting about how hard and how zealously the staff have worked to get this job done. In 1951, we had not got the mechanical devices and machines that are now available to do big jobs like this. I know the right hon. Gentleman is very interested in a robot calculator the name of which is Leo, owned by Messrs. Joseph Lyons and Co. Ltd. It is a wonderful machine. It is probably going to do some of this work. The Labour Government had not got any Leo in 1951. It cost £90,000 to build.
I sincerely hope that the Minister will see that the staff will do their best under him, as they did their best under his predecessors. If there is any failure here, it is due to lack of policy decisions on what risk may be run, on security grounds, in adopting short cuts to get these payments made. Another point is that wage earners ask for retrospection, but administrative difficulties are always pleaded as an excuse for not doing that. I conclude by saying that, notwithstanding the great achievements of the right hon. Gentleman's Ministry, I think it is still a reflection on our Administration that those in need and those whose need is greatest must wait longest.
§ 6.15 p.m.
§ Sir Austin Hudson (Lewisham. North)
I think that the whole House will agree that the speech to which we have just listened is a useful contribution to a 1012 debate of this kind. The hon. Member for Sowerby (Mr. Houghton) said that figures could prove anything. For my part, I am no expert in figures, and I should like to bring the debate back to the simpler issues.
The House will remember that we have had quite a number of debates on old people during recent months. There were the debates on the two Motions of censure, in one of which I took part, and there were also one or two most useful discussions which we had on Fridays, when the House is not so full, but when we so often get down to very much more common ground than we can in a full-dress debate of this kind.
It has been generally agreed that we should try to do something for the old people at the proper time. I think that, because of our preoccupation with those four previous debates, we have rather forgotten that this Bill deals with matters as well as the old people. The Bill deals with unemployment insurance, which 10 years ago or so would have incurred so much more cost. Thank goodness, since the war unemployment has been practically non-existent. It deals also with sickness benefit, industrial injuries, maternity benefits, and other matters.
It is about the old people, however, that I want to say a few words. This is a limited Bill, and there is no alternation in the general structure of the Scheme. I myself cannot see how the Minister could have drafted it otherwise if he was to get the Bill through quickly. I do not believe that the hon. Member for Sowerby really thinks that the administration can be very much hurried beyond the three or four months laid down in the time-table. From discussions that I have had on this matter, it has never seemed possible to decrease the time without risking a breakdown. The hon. Member for Sowerby was in the Civil Service himself, and he knows how dreadful it would be to have a breakdown and for the whole scheme to be held up. Therefore, we had to have a simpler and limited Bill with the same structure as before, and, if possible, to pass it through all its stages before Christmas.
I do not think we could have had the Bill last Session. It was necessary, perhaps not to wait for the Phillips Report but certainly to wait for the 1013 quinquennial review. I do not see how otherwise there could have been worked out those complicated figures, which I confess I do not understand, on what the contributions should be. I believe that this is the quickest time in which we could have had a Bill.
The Minister said that he wanted to wait for the Phillips Report. I suppose if there had been anything very drastic in it, it might have been necessary to alter the scope of the Bill, but in that case I do not think we should have got it before Christmas. I plead for not one but two days' debate on the Phillips Report, in which there are a lot of interesting topics which we ought to discuss, particularly alterations in the structure of the Scheme.
I should like to pay a tribute to the patience and common sense of the old people, who have been rather bucketed about in the last month, and have been made into a political issue. I have had very few letters about it, but that may be because I have spoken once or twice in the House on the subject, which of course one's local newspaper reports. I think I have had only two letters.
§ Mr. William Hamilton (Fife, West)
Not a telegram?
§ Sir A. Hudson
Another reason for this is that the old-age pensioner is drawing National Assistance. I have spoken previously on that subject. I always urge these pensioners to apply for National Assistance, because that is what National Assistance is for; but, there is a great disinclination on the part of anybody to go to the National Assistance Board if it can be avoided.
National Assistance involves a means test, which is most unpopular, and a means test results in many people feeling that they are receiving charity. This was, of course, what we endeavoured to prevent in framing the Act, but I am afraid that will always be so. Somehow we cannot get people to understand that National Assistance was designed for just their sort of case, that it is not charity, and that all parties have tried to take it out of such a category.
The pension which we are now discussing is an insurance benefit, received as a right by virtue of contributions, and, of course, there is no question of a means 1014 test. In my opinion there is such a diversity of circumstances amongst these people that some, because of infirmity or for other reasons, will still have to seek the advice and help of the National Assistance Board.
I want to raise an issue which I have raised once or twice before. Perhaps it is a case of my flying a kite which I am always flying. I want to plead that a special department, which could be quite small, should be set up in each borough under the National Assistance Board, or, better still, under the Ministry of Pensions and National Insurance. The duty of the department would be to watch over the welfare of the aged and ageing. It would have no other job. This small department of two or three people would be consulted by the old people, and could deal with such questions as rents and home help.
§ Mr. B. Taylor
Does the hon. Member realise that machinery of the kind which he suggests is provided in the National Assistance Act, 1948?
§ Sir A. Hudson
The hon. Member knows much more about this subject than I do, but in my view the old people at present go to the National Assistance Board and simply meet whoever is on duty. I want them to feel that they are meeting someone who is their particular friend. It may be that this is merely an adaptation of something which it was originally intended should take place, but we shall have more and more of these old people in the future, and I urge that suggestion upon the Minister as a future alteration.
I wish to say a word about contributions. I am quite sure that we must maintain the contributory principle. I realise that this extra shilling will add up to a fair sum, both for the employer, especially where he has a lot of workers, and for the employees, but I believe that the benefits which will result make it worth while. I have a note here which reads, "Wages are high," and we have today heard that the new contributions will be a lesser proportion of wages than they have ever been before.
There is a squabble as to what the percentage of the State contribution should be. I am told that if the figure of one-seventh were changed to one-sixth, the difference would be only 1¾d. per 1015 man per week. To state the difference if the contribution were changed to one-fifth, I should have to do some arithmetic of which I am not very capable. The difference, however, is not a very big sum, and I think the Government were probably right not to alter the structure at all so as to get the Bill through quickly.
I will deal, next, with the question of the necessity of having a contributory system at all, because that will be argued. In my view, we must have a contributory system. If not, and if the benefits were all paid out of taxation, we should have one vast National Assistance scheme. As a result, we should have vast expenditure, and it is certain that some day there would be a demand to cut out pensions for those people who obviously did not need them and did not want them.
That would bring us back to a means test again, and I am dead against that. We do not want the contributions to become too great, but I am certain that a contributory system, under which one contributes and is paid a pension by right, is the right method to adopt in an insurance scheme.
I intended to say something about the retiring age, but I will not do so now because many other hon. Members wish to speak, and we shall have another debate after Christmas. I simply want to wish the Bill well, and to hope that it reaches the Statute Book without undue delay.
§ 6.26 p.m.
§ Mr. Iorwerth Thomas (Rhondda, West)
I, too, will try to be brief, because I am conscious of the fact that this problem is so universal in its character that it has local applications almost everywhere and that many hon. Members on both sides of the House wish to speak in the debate.
I think the Bill is the result of two forces—the dynamic influence of the national organisations which represent the aged in this country and the pressure exercised by this side of the House on the Government in preceding debates. When we examine the agitation in the country by these national organisations which cater for the aged, I think we all accept it as a fact that the basis of the agitation and the content of the demands which have been placed before the Government from time to time have been 1016 that the need of the aged people involved should be satisfied.
I shall not deal with statistics. I want to put them aside for about ten minutes, and to bring to the surface the real problem which faces us. If the Minister and hon. Members opposite agree with my assumption that it was evident to the national conscience that there was a need which required satisfaction, then the test which we must apply to the Bill is whether it has met that national need. In my opinion, the Bill stands condemned because it cannot meet that test. The provisions of the Bill exclude completely the most needy people who are now among the aged population.
We should examine the facts and not be influenced by what is superficial and appears on the surface. The general impression which has been foisted on this House and the country, and will be foisted on the people by the Government between now and the next General Election, is that all these pensioners, particularly the most needy, are to enjoy an increase of 11s. a week.
There are 1,400,000 aged people who depend upon the National Assistance Board for supplementation. The majority of them are the most needy people for whom we have to provide, but this Bill does not provide them with the things they require.
§ Mr. Gower
The hon. Member knows, of course, that the National Assistance Board can make representations for increasing its rates at any time? It would be impossible and improper for any such increase to be included in a Bill of this kind.
§ Mr. Thomas
The relationship of the basic rates with the National Assistance scales which have been announced support the main contention which I am putting forward.
The provisions of this Bill are directed towards the distribution, on the basic pension, of an automatic 11s. a week for those entitled to it. I will give a few examples of how it works out, and invite hon. Members opposite to express their opinion on whether, in the light of those facts, they are satisfied with the intention of the Government, accepting for the time being that the Government are really concerned about providing for those people who are in the greatest need.
1017 There are millions whom we can place in the category of superannuated persons. I am not attempting to imply or to argue that the rights those people enjoy should be taken from them, but I would remind the House that the average labourer will be levied on to the extent of 1s. a week. If he could be assured that that 1s. would be directed to meeting the requirements of the most needy he might have satisfaction. In fact the 1s. will go in another direction. It will be directed into channels where there is no need at all.
I do not want to be misunderstood or thought to be suggesting that the rights of these people should be destroyed. The average teacher's retirement pension today is about £6 a week. If he is a married man, he receives £2 14s. in addition—
§ Mr. G. Thomas
They have paid for it as well.
§ Mr. Thomas
They have earned these things and they are entitled to them. Under the provisions of this Bill that teacher gets another 11s., bringing his total income to £9 5s. The average retiring pension of a local government officer is £5 a week, and he receives the additional £2 14s., raising his income to £7 14s. He will automatically get the 11s. increase under the provisions of the Bill.
§ Mr. Peter Roberts (Sheffield, Heeley)
is the hon. Member going to argue, therefore, that these people should not get the increase, or that there should be some form of means test? If so, what should the level be?
§ Mr. Thomas
If the hon. Member for Heeley (Mr. P. Roberts) was listening carefully—
§ Mr. Roberts
I can assure the hon. Member that I was.
§ Mr. Thomas
—he would know that, under the close observation of my hon. Friend the Member for Cardiff, West (Mr. G. Thomas), I said that I have no desire whatever to deprive these people of their earned rights.
The point I am trying to make is that moneys are to be collected from widows and, as the hon. Member for Wolver-hampton, South-West (Mr. Powell) said the other day, it is nothing more nor less than a poll tax on wages. The example 1018 of the teachers and local government officers could be extended to the police, firemen, and the Civil Service. It could he extended to a very wide category of groups of individuals who obtain their superannuation on a non-contributory basis.
Under the present National Insurance Act, in addition to the basic payment of £2 14s. a week, pensioners can obtain supplementary assistance from the National Assistance Board. The National Assistance Board Regulations allow a scale of £2 19s. a week, plus rent. The supplementation received by a married man for himself and his wife would rise from £2 14s. to £2 19s., plus a rent allowance. Such a man's income is £3 9s. per week at present. What will be the plight and tragedy of this group of people under this Measure?
The basic allowance for which the Bill provides will give to that married couple £3 5s. a week. The anticipated scale of the National Assistance Board is £3 3s. a week. Therefore, millions of aged married couples will be entitled to go to the National Assistance Board and obtain the 10s. additional to the £3 3s., which makes a total of £3 13s., as compared with the £3 9s. that they had before. Under the Bill, therefore, the average additional benefit to which these people will be entitled is 4s. a week.
That brings me back to the contrast with the superannuated family unit whose income is already £8 14s. a week. In their case, there is no need whatever, but automatically the hundreds of thousands of these people with incomes of £8 14s. or £6 14s. a week will get 11s. At the same time, the married man and his wife, who, through circumstances beyond their control, are in the position which I have described, will be entitled to an increase of only 4s.
§ Mr. P. Roberts
Surely, the hon. Member is contrasting one section of persons with another. If he wants to give more to the lower income groups but not to the higher income groups, there must be a means test somewhere. He cannot escape that argument.
§ Mr. Thomas
I repeat that I have no desire to deprive the superannuated persons to whom I have referred—
§ Mr. Roberts
That is not the point.
§ Mr. Thomas
The hon. Member will gee my meaning—of the rights which they earn under the Bill. If hon. Members appreciate the significance of my facts—and they cannot be denied—they will agree that the Bill does not meet this greatest need of all. The House is in this difficulty. Much as we on this side will desire in Committee to provide for those in the lower income groups the full benefit of the basic 11s. which is provided for the others, constitutionally we are not in a position to do so. Even if the Minister himself, as a result of what we have said, desired to remedy the position and to ensure that people on the £3 9s. a week level should get the 11s. equally with people on the £8 14s. level, in view of the forthcoming regulations he is not in a position to effect the alteration.
The regulations, when submitted to this House, are not subject to amendment, but only to acceptance or rejection. Therefore, even if the party opposite were convinced by our arguments, and there were common purpose on both sides of the House, this democratic Mother of Parliaments is prevented from remedying the situation because it has to accept the authority of an ad hoc body outside, the National Assistance Board, which sends the regulations to us for us either to accept or reject.
§ Mr. Gower
I have tremendous sympathy with what the hon. Member is saying, but what he now advocates is exactly what happened in 1952–53. Then my right hon. Friend brought in a rather small increase of the basic rate, but at the same time the National Assistance Board recommended a rather large increase in National Assistance. The hon. Member for Ince (Mr. T. Brown) will, I think, agree that ever since then the complaint of most old people's organisations has been that they do not desire an increase in National Assistance so much as in the basic rate. That is the very thing that my right hon. Friend is doing in the present Bill.
§ Mr. Thomas
I agree with the point that the hon. Member makes. But to obtain his objective, the Minister should withdraw the Bill and introduce a larger basic pension to overcome the handicaps and restraints of the National Assistance Board, so far as the unsuperannuated section of the aged population is concerned.
1020 Do not let us forget the aged people and those of them who are in need. Do not let us become concerned merely about scoring debating points and reminding one another of past defections. Let us look upon the problem as it is now, in 1954. If this House is expected to do its duty, the Minister must re-examine his proposals and ensure that to those millions of people in the low income groups, for whom the Bill will mean an increase of only 4s. a week, not only will justice be done, but it must also be seen to be done.
§ 6.48 p.m.
§ Mr. Raymond Gower (Barry)
I am glad to have the opportunity of following the hon. Member for Rhondda, West (Mr. Iorwerth Thomas), for in many ways both sides of the House will have great sympathy with what he has said. I wish, however, to reiterate, as I tried to say in an intervention, that in 1952 my right hon. Friend, in conjunction with the recommendation of the National Assistance Board, did the very things that the hon. Member now advocates.
Ever since the implementation of the National Insurance Act of that year, combined with the subsequent increases in National Assistance on the recommendation of the National Assistance Board, the complaint which I have encountered from both of the larger old-age pensioner organisations is that the plight of people of slender means who are not receiving assistance has been worse even than the plight of those on National Assistance. Therefore, the pressure has been mainly for an increase in the basic rate.
§ Mr. W. T. Proctor (Eccles)
Surely the hon. Gentleman knows that the people who are worse off at the present time are those who are on National Assistance? The Government which he supports and this Bill deal with them in the worst possible manner by giving them only 4s.
§ Mr. Gower
That is fundamentally different from what I have just suggested. I said that the case made out to me by pensioners' bodies was that the people on assistance were not the worse off; the people who were just above the assistance line were the worse off after the changes of 1952. In 1952 my right hon. Friend increased the basic rate merely by a rather small amount for many pensioners, 1021 but, as the hon. Member for Ince (Mr. T. Brown) will agree, by a larger amount for those who had not benefited by the increase of 1951.
At the same time, on the recommendation of the National Assistance Board, the rates of National Assistance were put up very substantially. Since then, the argument that has constantly been pressed upon me is not what the hon. Member for Eccles (Mr. Proctor) has suggested, that the people on assistance have been the worse off. Though their plight is naturally a serious one, old-age pensioners branches have asserted that it is the marginal people, slightly above the assistance level, who have been decidedly the worse off, drawing on very slender savings and gradually using them up. I reiterate that the pressure brought upon me by organisations of old-age pensioners, not only in my own area but from all over the country, has been for a basic increase in the retirement pension.
There is not power under this Bill to increase National Assistance rates. This Bill is designed to increase the rate payable as of right by pension to old-age pensioners.
§ Mr. G. Thomas
Surely the hon. Gentleman understands that we have been considering this Bill in the light of the regulations which are to be introduced for National Assistance?
§ Mr. Gower
Precisely. I am saying merely that, contrary to what some hon. Members have suggested, it is not possible to include in the Bill a Clause for increasing National Assistance. I repeat what I said in an intervention in someone else's speech, what, I think, my right hon. Friend himself has said, that it is open to the National Assistance Board at any time, from year to year, indeed, if necessary, from quarter to quarter, or even from month to month, to recommend to him an increase in the rates of National Assistance, but it is a much more difficult operation, as we shall, perhaps, learn during the next few weeks, to increase the basic rates of the pensions.
Before I had to reply to these interventions, I was about to say that, if politics could be forgotten for a while, I am sure that this Bill would be warmly received in every part of the House. Apart from the honourable exception of 1022 the right hon. Lady the Member for Fulham, West (Dr. Summerskill), a former Minister, the Bill has had a singularly ungrateful reception from the other side of the House. Yet it is strange hon. Members opposite do not receive the Bill more warmly, because it constitutes for the Minister and the Government a great achievement, following, as it does, another Measure which also increased the rates in 1952. This second increase in the lifetime of this present Parliament constitutes a remarkable achievement in view of the financial heritage with which my right hon. Friends were endowed when they took office.
Not only that. The Bill increases practically every National Insurance benefit. I am open to correction, but I believe that the only benefits which are not increased by the Bill are the death benefit and the payments to certain widows who receive 10s. a week.
§ Mr. B. Taylor
The basic rate of noncontributory pension is not being increased.
§ Mr. Gower
I am grateful to the hon. Member. I said I was open to correction. Perhaps I was being a bit too sweeping in my assertions. However, with those three exceptions, we can say that the Bill increases National Insurance benefits generally. It increases the basic rate of war pension at all levels; it increases the basic rate of the retirement old-age pension; it increases the industrial injury and disablement benefit; it increases sickness benefit; and it increases unemployment benefit.
Nor are the proposed increases unsubstantial. The increase in war pension has already been described as the best ever introduced. We all admire the wonderful, non-controversial, nonpartisan manner in which the British Legion has always pressed its case. I understand that it will press for a larger figure in future, but, nevertheless, those who direct the fortunes of the British Legion must derive considerable satisfaction at the success which has attended their efforts. The increases in retirement pension are also substantial. An increase from 32s. 6d. to 40s. for a single person represents approximately a 25 per cent. increase. An 11s. increase for a married couple is about 20 per cent. of the previous figure.
1023 I know that these figures do not represent a living wage. Let it never be supposed that they did in the past. The hon. Member for Sowerby (Mr. Houghton) implied that they should. I do not know whether he was implying that they ever have. All those who imply in any way that these pensions have ever represented a subsistence wage, a living wage, render a great disservice.
§ Mr. B. Taylor
In the absence of my hon. Friend, I must say that I think the hon. Member is misrepresenting him.
§ Mr. Taylor
I do not think my hon. Friend said anything of the kind. What he said was that these benefits should be related to the increase in productivity.
§ Mr. Gower
Be that as it may, I have heard in recent months speeches made at pensioners' rallies and elsewhere which implied that these pensions were of subsistence value in the past and that probably for the first time in our history they have ceased to be of subsistence level under the present Government. Who could suggest that even the new figure of £2, without other assistance, could be enough to live on? Who could suggest that the figure of 32s. 6d. is enough for subsistence or is a living wage? Could hon. Members opposite claim that the amount paid in the lifetime of the Labour Government was enough for a person to live on decently, or that the 10s. paid before that was a living wage, or that the 5s. paid in the early days was a living wage? These pensions have always been designed to assist people in old age. The Labour Government, when they brought in their legislation, rejected the principle that a pension should be adequate for a person to live on decently.
Nevertheless, although they do not represent a living wage, these increases show that we attach some importance to the changing value of our money. Although we do not consider that they should be enough to live on, we certainly think that pensions paid today should progressively improve over the pensions paid when money was more valuable. Those who in any way give the impression that there has been a change in policy, that we have abandoned something better for something inferior, are 1024 not only doing something unwise but saying what is totally untrue.
I agree with the right hon. Lady the Member for Fulham, West that the Bill is essentially an interim Measure. It could not be otherwise. I am certainly in complete agreement with the right hon. Lady on that point, because I believe that this problem will be possibly the greatest social, economic and monetary problem the country will have to face in the years ahead. Yet this problem of old age is not one about which we should be despondent. As has been suggested, we need more than a debate on the Phillips Report. We need a longer period for consideration of how we may properly finance a decent living standard for the elderly people.
I am told that at present 64 per cent. of our people are of working age, 22 per cent, of school age and 13.9 per cent. are what we have described as old-age pensioners. In 1901 61 per cent. were of working age and only 6 per cent. of retirement age. In 1973, we are told that it is estimated that the pension population will have swollen to 18 per cent. of our population and our young population sunk to 22 per cent. Put another way, in 1901 there were 10 workers to every pensioner; today there are five workers to every pensioner. In 1973, there will be 3½ workers to every pensioner. That represents the immensity of this problem.
In 1949, the 26s. a week paid by the then Labour Government in pensions cost a total of £176 million. In 1952, after my right hon. Friend had increased the rates, the cost was £314 million per annum and this year, if there had been no increase on the lines suggested in this Bill, I am told the total cost would be £355 million. Worst of all, in 1977 the cost, even without these present proposed increases, would amount to £700 million per annum.
We should not be despondent about it. I am very glad that my right hon. Friend today said that he is disinclined to increase the retirement age. He was wise to say so in order to suppress any rumours to the contrary. The right hon. Lady criticised him for making this statement. She said it was not necessary to suppress rumours of that kind. I think it is. Last Friday night in Cardiff I read our evening paper called the "South Wales Echo," and it carried a 1025 report that the Phillips Committee have recommended an increase in the retirement age. Later that evening, a gentleman whose politics I do not know said to me, "I hear that you Tories are going to make us work longer." I explained to this gentleman that this was not the proposal of the Conservative Government but of an impartial, independent Committee. He said to me, "But your crowd appointed it." I want to emphasise that I have not the slightest idea what this man's politics were, or on what side of the House he would sit if he were here. But the House can see what was his reaction to a newspaper report.
While I agree with my right hon. Friend that it would be undesirable in any way to alter the age at which a person now may voluntarily retire, I believe we could do more to induce people voluntarily to work longer. The Report reveals that, with the modest incentives which people now have, there has been an average retirement age of 67 instead of 65. So, with our modest incentives—and we know how modest they are, because if a pensioner earns even a very small sum his pension is affected—there has been an increase of two years in the average age of retirement. I believe that if we increased those inducements and allowed these old people to earn a little more without affecting their pensions, they would voluntarily work a little longer. That could be achieved without in any way contemplating following the recommendations of the Phillips Committee.
Finally, whether this scheme is financed out of contributions, out of taxation, or out of both, I believe that the real remedy for the problem is increased productivity. It has been calculated that we shall have to increase our national productivity regularly each year up to 1970 by some 2 per cent. to he able to afford the pensions we are now paying without the proposed increased rates. It is quite immaterial how it is financed, for ultimately it comes out of the national Exchequer and is a charge on industry and on the working population.
Our remedy is increased productivity. In an interjection, the hon. Member for Cardiff, West (Mr. G. Thomas) said something about our great resources, the new 1026 inventions and the atomic energy which are at our disposal. I agree with him. Let us not be despondent about the immensity of the financial problem. Finally, viewed in this background, this is a considerable Bill, although it is an interim Bill. It does a certain amount not merely to help retired pensioners but to help people who receive so many of the other benefits—those not merely affected by old age but who are victims of sickness or injury in industry. As such, it is an addition to the Welfare State, which all parties in the House and in the country have done so much to create.
§ 7.6 p.m.
§ Mr. Tom Brown (Ince)
I desire to detain the House for only a few minutes, but I want to make one or two observations upon the speech of the Minister. I have never listened to a more clumsy, blundering statement on a Bill than he made this afternoon. I had better be frank. I have no hesitation in saying that he did not reach his normal standard in presenting this Bill.
I do not understand why the Minister went back so many years and told us what had been done in the past. We are dealing with a present-day situation. One thing I admired in his speech was his remark that he would never bring himself to be a party to raising the pensionable age. That was a very admirable statement, which has been reiterated by the hon. Member for Barry (Mr. Gower). I hope he keeps his promise.
This Bill, in addition to its imperfections, contains the seeds of industrial discontent—I repeat, the seeds of industrial discontent—because of the inequality of the charges made upon the contributor, the employer, and the Exchequer. The Minister made reference to what was being granted or transferred from the Treasury to the Insurance Fund. He called attention to what was done in 1951. I know there was a great deal of cross-chat about whether he had given the correct figure or not, but I find that from 1948 down to the present moment, the Exchequer grant to the National Insurance Fund has been a diminishing quantity. Down, down, it has been going, and today it is less than it has been since 1946.
I have taken the trouble to find the exact sums that were transferred from 1027 the Exchequer to the National Insurance Fund in the financial year ended 31st March, 1951. That is done under two Sections of the 1946 Act, as the right hon. Gentleman is well aware. Under Section 3, in 1951, the total was £95,750,000; under Section 2 (3, b) it was £44 millions, a total under the two Sections of £139,750,000.
If we examine what has been transferred under those Sections—there are no other Sections under which the grant could be transferred—we find that the block grant has been declining considerably ever since. The industrial contributor will say, "If you are going to reduce the Exchequer grant to the National Insurance Fund and at the same time increase my contribution, I shall have a grouse," and it will he a justifiable one.
During the whole of my industrial career I have never found a worker, particularly in the mining industry, who was not prepared to pay his fair share to help his less fortunate brethren. Indeed, workers are always ready to come forward and do so. But does the Minister think it is fair to reduce the block grant from the Treasury to the National Insurance Fund and at the same time increase the contribution of the insured worker? Does he honestly think it fair and just?
We have heard a great deal about increased productivity. We all welcome it. We on these benches welcome it as much as hon. Members opposite do, because we know that our people will get the benefit of it if the results are equally distributed. Who is responsible for the increased productivity? Is it the Cabinet? No. Is it the Ministry of National Insurance? No; we do not expect the Ministry to be responsible for it. But the Government are regularly telling us about increased productivity.
The people who have been responsible for our increased productivity over the last few years are the sons and daughters and grandsons and grand-daughters of the old-age pensioners, the men, in the pits, in the mills, on the land, and in the engineering shops. Yet the Government say to them, "Increase productivity, and pay a larger contribution," while the Exchequer has been contributing a diminishing block grant. That is not fair play. I beg the Minister to lock at the problem again.
1028 We have heard a lot about the National Assistance scales being increased, and we welcome it. However, a remarkable thing has happened this time. I am curious to know why the National Assistance scale, which is to be increased by 2s. 6d., is below the basic pension rate. Last time it exceeded the basic pension rate. I do not know the reason for this change, and I should like the Minister to tell me why he has not advanced the National Assistance scale to the level of the proposed increase basic pension rate.
1 am also forcibly struck by the fact that the National Assistance scales are to be increased as and from 17th February whereas the increase in the basic rate of pension will be made at some date in April. If we assume that every person now in receipt of supplementation gets the 2s. 6d. increase, when April comes along they will get the increased basic pension rate and that will prohibit their continuing upon National Assistance. That is another matter about which I should like some explanation.
A great deal has been said about the basis on which the National Insurance Scheme should be founded. I believe that the contributory basis is the right one, provided that the contributions are equitable, and that the State, the worker, and the industry employing the worker pay their share. I cannot bring myself to accept an extra charge of 1s. for the worker at the same time as the block grant from the Treasury is diminishing. It is not fair play, and I beg the Minister to look at that matter again.
The hon. Member for Barry expressed the hope that this will be an interim Measure. I wholeheartedly agree with him, but we have had no assurance from the Ministry that it is not permanent. I hope that the Minister will give us an assurance on this point. I foresee a very grave danger in that when we come to discuss the Phillips Committee's Report in its entirety, with all its ramifications and complexities, we may find that, because the Bill has reached the Statute Book, we are prevented from making recommendations on the basis of the Report.
We want our position to be safe-guarded. I should like an assurance from the Minister that we shall have an 1029 opportunity, perhaps early next year, to discuss the Report, and that the passing of the Bill will not preclude our having further legislation based upon the Report.
The benefits are an improvement, but they are an improvement to people who have been suffering and waiting for a considerable time. No one knows better than I do, except those in the Department, the difficulties of administration, but I beg the Government, in the interests of those who have waited so long and suffered so much because of the rise in the cost of living, to leave no stone unturned, but at once to put into operation the machinery for changing the pension books so that some relief can be given as quickly as possible.
I promised not to speak for more than a few minutes, but, as hon. Members will appreciate, this is a subject near to my heart. That is why I beg the Minister to expedite the machinery and to bring the Bill into operation as soon as he can. When we reach the Committee stage, I hope that he will take a little notice of those of us who understand the problems of the working people.
§ 7.20 p.m.
§ Mr. Kenneth Thompson (Liverpool. Walton)
I am sure that there is no one in the House who has listened to this debate who would not share the sentiments of the hon. Member for Ince (Mr. T. Brown). We recognise him as one who both knows and understands the problem of the old people. We all feel that every effort should be made, both during the Committee stage of the Bill and during the operational processes in the Department concerned, to carry this Measure through as expeditiously and as efficiently as possible so that the increases may reach the beneficiaries with as little delay as possible.
This is not the first debate in which we have engaged in this House on the needs of old people. It is at least the third within recent months. I have been interested to observe the trend of the speeches that have been made from the other side of the House in the two previous debates, which were both by way of being on Motions of censure on Her Majesty's present advisers, and in this debate, which is the Second Reading of a Bill which on the face of it provides 1030 all the answers to the complaints made in the censure debates.
I have read a share of the Press comments that have appeared since the Minister published his White Paper containing these proposals. I read with particular care and interest the observations that have been made by what I might call, without offence, the opposition Press on the details and principles of the Bill.
I was at first puzzled to know what line the opposition of the party opposite would take. Here was a Bill designed to give, as quickly as possible, a very large increase to a very large and very deserving section of the community; designed to do it on as broad and sweeping and generous a scale as possible, and designed to do it in a way which would involve my hon. Friends—and I cannot help hoping hon. Gentlemen on the other side of the House—in working as late as necessary in this Chamber to get the Measure on the Statute Book before Christmas.
It was a puzzle to me, simple as I am, to know on what line the party opposite could possibly resist the Bill, and what line could possibly be pursued in this debate on the Second Reading of the Bill by hon. and right hon. Gentlemen opposite. I am very relieved to discover that I am not the only one who was puzzled to know on what line the Opposition would go. If I was puzzled in the matter, it is perfectly clear to the world, and certainly to the Members who have sat through the debate so far, that everybody was puzzled as to how opposition to the Bill should be conducted.
We have had every possible shade and variety of damning by faint praise, pure and simple misrepresentation, straightforward obstruction, and a good deal of abuse by hinting by the various Members who have spoken. It is evident that there is a good deal of confusion on the other side of the House about what they really want.
The criticism that has come from the benches opposite was exemplified by the speech of the hon. Member for Rhondda, West (Mr. Iorwerth Thomas). He spoke about the plight of the old-age pensioner, obliged by reason of his or her circumstances to apply for National Assistance supplementation. We all know these cases, and meet them in our regular work 1031 in our constituencies, and many of us on this side of the House, not least myself, know them among our personal friends and family connections.
The emphasis and purpose of the hon. Member's speech was that the Bill should have been concentrated on the needs of those people and only on those people. He does not begrudge other pensioners having increases in their pensions too, or begrudge school teachers having pensions when they retire from their honourable and not very generously paid profession. But his main concern was the old-age pensioner who required, by virtue of the circumstances in which he lived, to apply for National Assistance supplementation.
During the two Motions of censure debates, there was barely a mention from that side of the House, either from the right hon. Lady the Member for Fulham, West (Dr. Summerskill), or anyone following her, laying particular emphasis on the old-age pensioner needing National Assistance supplementation. In other words, in a debate on a Bill to satisfy the just demands and the present needs of the ordinary old-age pensioner, the great majority of those who have retired and who draw their National Insurance pension as of right, the party opposite has now completely shifted its ground. That is sufficient evidence that what we are doing in the Bill, so far as the great majority of old-age pensioners are concerned, is right and reasonably generous in view of all the circumstances of the case.
But there has been another form of attack on the Bill by the party opposite, concentrated on how divisions should be made between the various people who contribute to paying for these not ungenerous benefits. It has long been suspected that the party opposite did not really believe in the insurance principle. Even if those who led the party in the past, or lead it today, felt that a contributory scheme was essential, they nevertheless hoped that there would be enough smoke and cloud over the issue to enable them to get the benefits of both worlds by being able to insist on a contributory scheme in this House and by being generally supposed to believe in a scheme financed by direct taxation.
1032 We have adequately, and I hope finally, cleared up that one point this afternoon—that the party opposite is committed, if committed is the right word, to a contributory scheme for the financing of pensions payable under the National Insurance Act.
§ Mr. T. Brown
Provided it is equitable.
§ Mr. Thompson
So long as we know, and the people know, that this House as a whole—at present but not necessarily for ever—is committed to a contributory principle for National Insurance pensions, then we have got somewhere. At any rate, we have cleared up one of the issues designed to confuse the electorate.
The question is not merely whether pensions should be made payable by virtue of contributions or through direct taxation, but also where the emphasis is to fall between the insured, his employer, and the taxpayer. The hon. Member for Ince was troubled about that emphasis, but I do not think that he can have heard the very entertaining and instructive speech of his hon. Friend the Member for Sowerby (Mr. Houghton), who has now been compelled to refresh himself, as I hope to do at not too far distant a time. He said that if a contributor, or any citizen in his role of contributor, were to look into the mirror, he would see himself there in his role as a taxpayer.
That is true not only of a few. It is true not only of the rich. It is true of the miners, the dockers, the piece-workers in industry, and, indeed, the great majority of the ordinary people. We are not shifting the burden from ourselves to somebody else by suggesting that a 1d., 2d. or 6d. of this 1s. should be contributed by the taxpayer. That would simply be transferring the paying from one pocket of one's trousers to another. Until this simple fact is accepted by hon. Members opposite, we shall continue to get a confusion of thought on their part and in the minds of the people they claim to represent.
It is simply, basically and essentially, true, and it must become increasingly true—if that is possible—that the taxpayer and the contributor are essentially one and the same person. The responsibility for providing these benefits cannot be shifted from the contributor on to some obscure, remote, unidentified, and 1033 anonymous taxpayer who does not exist except in the person of the contributor himself.
Having established that fact, the other arguments have no real relevance. Everything harks back to the speech made by the hon. Member for Sowerby, namely, that this is a simple proposition—that those who want these benefits, either for themselves when their time comes or for their fathers and grandfathers who are alive today and are drawing them or are about to do so, must remember that the ordinary people are the only ones who can provide them. With that thought in mind, I hope that this House will give the Bill a Second Reading without further delay, and will allow it to proceed through the Committee stage without unnecessary Amendments, alterations, and attempts to hold it up.
§ 7.33 p.m.
§ Mr. William Blyton (Houghton-le-Spring)
I hope that the hon. Member for Walton (Mr. K. Thompson) will forgive me if I do not follow him, but leave him, instead, to the confusion which he says is apparent among hon. Members on this side of the House.
I heard one hon. Member opposite say that he regarded the Bill as an interim Measure. I regard it as quite the opposite. If this Government are returned to power at the next Election, I believe that we shall see established the basis of a financial structure which will prevent us, in the debate on the quinquennial review, getting what we were promised under the 1946 Act. It will prevent us from amending that Act and removing the anomalies in its operation which we have discovered by experience.
The Tory idea is that the people least able to bear it are to carry the weight of the cost of old-age pensions, which ought to be carried by the Treasury. We have been promised a debate on the quinquennial review, but no promise has been forthcoming from the Government to review the 1946 National Insurance Act or the National Insurance (Industrial Injuries) Act, though Sections 39 and 40 of the former Act clearly indicated that that would be necessary. This Bill comes to us, not as an interim Measure, but as one that will establish the financial structure for the next five years.
There are many problems which we have come to appreciate through our 1034 experience of the operation of both these Acts. There is the important question of the yearly increase in our expenditure on behalf of the aged, and the question whether old-age pensioners ought not to be brought out of the sphere of insurance and placed upon a Treasury footing by means of a social tax, leaving the other benefits remaining upon an insurance basis.
One thing is certain. As this expenditure grows, we shall be heading towards a contribution which will be too prohibitive for the working people to carry. In a few years' time two-thirds of the payments from the Fund will be paid out on behalf of old-age pensioners. Under the provisions of the Bill the benefits for industrial injuries will not rise to the same extent as will National Insurance benefits, and these provisions are to be carried into effect without waiting for the Actuary's Report.
Forty per cent. of the total number of accidents covered by the Industrial Injuries Scheme affect miners, and we shall take the strongest exception to the procedure of the Government unless we are given an assurance that this is a temporary Measure and is not committing us to the future. It is because we are being ditched over the review of all the Acts that we have protested at the introduction by the Bill of a five-year financial structure. It could have provided for a one-year financial structure, leaving us to debate and review the 1946 National Insurance Act and National Insurance (Industrial Injuries) Act, in the light of the actuarial reports and the Phillips Committee Report.
We also regard the proposed benefits as inadequate both in respect of National Insurance and industrial injuries. For reasons that I am prepared to state, we consider that it is the State's obligation to meet these demands without increasing the contributions of the poorest section of the community.
The Minister of National Insurance has brought to his aid the evidence of the T.U.C. to the Phillips Committee. I might say in regard to the Phillips Report that I think it should be renamed the "Work Till You Drop Report," and I regard the Committee's suggestion for increasing the retirement age to 68 as one of the most reactionary suggestions 1035 made in modern times. Many men work very hard in the coal mines, at sea, in our steel works and factories, and they should be left to decide at the age of 65 whether they are able to carry on working or not.
The matter should be left optional, and people should not be forced to work until they drop before they receive a pension. This suggestion in the Phillips Report is deeply resented by all sections of the community, and I am pleased that the Minister today has come down on the side of people who hold that view and is not prepared to accept the outrageous suggestion of the Report.
The T.U.C. did give evidence to the Phillips Committee, but that evidence was given, not for the purpose of this Bill, but in relation to the Report of the Phillips Committee on the quinquennial review and the long-term aspect of this problem, with a view to the long-term Measure which we are expecting next year. It is sharp practice on the part of the Government to use evidence of this character, which was intended to apply to the long-term problem in the framing of this Bill, when that evidence was given for an entirely different purpose to that which this Bill seeks to achieve.
As the Minister well knows, the T.U.C. laid down certain conditions before agreeing to an increase in the contributions, and those conditions have not been fulfilled. Even in connection with this Bill, on which the Government have brought the evidence of the T.U.C. to their aid, the T.U.C. laid dawn the condition that the Exchequer should meet the growing gap between income and expenditure in the years ahead, and that the Exchequer supplement should be restored to one-fifth—the pre-1951 proportion. They also laid down that there ought to be funding of the contributions of new entrants at the age of 16, and they said that consideration ought to be given to the economic burden of retirement pensions.
Therefore, I suggest to the Front Bench opposite that, before they talk about the T.U.C.'s offer on contributions and bring that to their aid, they should accept the implications of the basis on which that offer was made. It is well known that the T.U.C. are definitely against the 1s. increase in contributions provided for in the Bill. This is the second time in the 1036 lifetime of this Government that the contributions have been increased. They were increased by 7d. in 1952, in order to give half-a-crown a week increase for the pensioners, but it has meant that the contributions of the employers and employees have provided £6 million of the £7 million a year which it cost to pay that extra half-crown a week to the pensioners. What will happen under this Bill will be that people will be compelled to pay in order to keep the Exchequer payment down as the increased cost of old-age pensions emerges in the years ahead.
It also seems to be the Government's policy that young men will have to pay out of their contributions an amount over and above that which is necessary to provide for their own benefits, in order to make a contribution towards the increased cost of benefits to older men and those who have already retired. I think this principle ought to be opposed. The uncovered liability of retired people and those who are about to retire, who have not paid the actuarial value of the benefits they receive, should be an Exchequer responsibility. It should be met out of general taxation. If this does not happen, and if unfortunately we should get a steep rise in unemployment in future years, together with the increased cost of pensions, we shall probably reach the stage when, if the Exchequer does not meet the situation, the cost of the contributions will become prohibitive for the workers to bear. In that case, we shall probably have to face an even higher rate of contributions with lower benefits than are now enjoyed.
I want to say a word or two about contributions. It is evident that the Government Actuary in the last few years has revised his ideas and has found additional money. He has taken the unemployment figure of 4 per cent., instead of the original 8½ per cent., and he has taken interest at 3 per cent., instead of the original 2¾ per cent. He has also taken into account the decreased incidence of sickness, and this has meant that the increase in the contribution is less than was originally anticipated. In fact, he says that the proposed contributions are materially greater than the amount of the actuarial contributions.
The proposed contribution increases will mean that contribution income will 1037 be increased by £116 million, of which £23 million is represented by an additional Exchequer supplement. In paragraph 20 of his Report, the Government Actuary states that £60 million is over and above the produce of the actuarial contribution. This is being done to reduce to that extent the burden that should fall upon the national Exchequer. This will hit very hard the new entrants into the scheme. This £60 million over and above the actuarial contribution is equal to the 8d. and 7d. per week of the contributions of the employees and employers, respectively.
The Exchequer supplement is to remain at one-seventh, and, if it was restored to one-fifth, it would provide an additional £30 million a year. When we come to National Assistance expenditure, dealt with in paragraph 8 of the Memorandum, I see that it is estimated that the savings in National Assistance will probably amount to about £23 million, not the £13 million which the Minister talked about today, so that if £23 million is saved on National Assistance—equivalent to the additional Exchequer contribution to the increased benefits under National Insurance—we see that again the workers will be carrying the whole of the burden of this increase, just the same as they did in 1952, when they had to pay another 8d. on the stamps per week.
In regard to the additional Exchequer contributions, I want to say that in 1951, we had some responsibility in the matter, because we repealed the provisions whereby there would be an annual and increasing Exchequer grant of £40 million upwards to meet the uncovered liability and other matters.
This step has been carried on by the present Government and has resulted in a loss of £132 million to the Fund. If we look at the Actuary's Report for 1951, we see that he says that the cessation of the Exchequer grant was only a temporary measure and that in future years it would again become necessary. There is bound to be an increasing deficiency from the uncovered liability, and the amount paid by the Exchequer will depend largely on the outlook of the Government in power at the time. As I see it, this Government intend that the Exchequer shall not pay for it, but that the young people and those in employment shall carry the burden of this uncovered liability.
1038 To summarise the contributions position, I will take the example of the worker. The Government propose to increase the total contribution to 13s. 8d. a week. The increase of 1s. 3d. a week that is, the 8d. paid by the workman and the 7d. by the employer, should not be used to help the Exchequer finance the annual deficiency resulting from the uncovered liability. Actuarially, the contribution needed is 12s. 5d. a week, and this amount should be found by increasing the Exchequer supplement to one-fifth and not by increasing the workman's and the employer's contributions.
No proposal has been made by the Government to increase benefits so as to take into account the increase in productivity. These increases in benefit should, in my opinion, have been found by increasing the Exchequer supplement to one-fifth and by paying back into the Fund the £70 million saved on this since 1951.
Another word or two about benefits. As my hon. Friend the Member for Sowerby (Mr. Houghton) said in his brilliant speech today, these benefit rates have not taken into consideration the fact that rents will go up. Therefore, we must not be surprised if when rents go up by 4s. or 5s. a week there is a great agitation by people in receipt of fixed incomes, because such an increase in rents will depreciate the benefits embodied in this Bill.
The Bill does not take into consideration those widows who are in receipt of 10s. a week. Surely this diminishing class of pensioner should be brought within the scheme. Their 10s. rate was fixed years ago and has not the value today which it had when it was fixed. It is time that the discrimination against this class of pensioner was ended. Then, again, the 1914–18 war widow ought to be brought into the same picture as the widow of the last war.
When we come to National Assistance scales, we see that there are thousands of people who will still be on National Assistance even when the new scales of benefit are put into operation. They are the people who in the inter-war years faced unemployment, low wages and the bringing up of their families under the most harassing conditions. They were unable to save anything in those interwar years.
1039 How are they to be treated? If they are married, they will receive an increase of 4s. a week provided that they pay a rent of 10s. a week, and, if they are single, they will receive 2s, 6d. a week provided that they are responsible for paying the rent of the house. In many cases, the sons and daughters of such people will be paying the extra 1s. a week in order to provide their old folks with a miserable pittance.
I now come to the question of industrial injuries. As I have said, 40 per cent. of the accidents occur in the mining industry. There are many things that need rectifying in the light of the experience of the operation of National Insurance (Industrial Injuries) Act. There are the old compensation cases who before the passing of the Act had, and indeed still have, only 55s. a week. Are those people to be forgotten men? Cannot they be allowed to come within the scope of this Bill by opting to do so?
What about the determination of partial disability? The present scheme of percentage loss of faculty based on the Royal Warrant does not meet the requirements of the great variety of accidents in the mines and in industry. In the matter of pneumoconiosis and silicosis, we are still far from satisfied with the percentage disability allowed to these men. The same applies to pelvis fractures and to disabilities arising from broken limbs.
If the rates of benefit under this Bill had gone up above the 1946 level in the same proportion as have the rates under the basic National Insurance Act, then the benefit should be 69s. and not 67s. 6d. Here, again, the Government Actuary says that this Fund will have to pay for the uncovered liability. It is not equitable that existing contributors should have to pay for the benefits of older men and of those already in receipt of such benefits. Here, again, the situation should be met by the Exchequer supplement being increased to one-fifth.
The special hardship allowance is to be raised from 20s. to 27s. 6d. a week. We cannot accept this unless an assurance is given that this is only a temporary measure. In order to give help to the aged—who ought to have had the increase early this year instead of next year—I shall vote for the Second Reading of the 1040 Bill in the hope that I shall be able to argue in Committee the points which I have outlined.
When I think of what this Government have done for the brewers, the road hauliers, the landlords, the steel barons, in the way of tax reliefs for industrialists and by a reduction in the Profits Tax and the abolition of the Excess Profits Tax, and of the rake-off that the bankers have enjoyed, and when I think of the statement made by my right hon. Friend yesterday about the increase in profits, dividends and capital gains backed by the Government Front Bench, all I can say is that the worker is now being made to pay for pensions and for industrial injury payments because of these benefits bestowed on people who are not in need.
The old-age pensioner and the man who is sick or who is in receipt of compensation have had a raw deal. Many of the old-age pensioners will never receive the increase as they will have passed on before it is paid. Thousands will face a cold winter and the high cost of feeding themselves with no help forthcoming. The Tories have once again run true to form. They are making the people least able to afford it carry the burden. They have fixed a financial structure in this Bill which is intended to prevent a review and any amendment of its provisions by hon. Members on this side of the House.
§ 8.0 p.m.
§ Mr. J. N. Browne (Glasgow, Govan)
In spite of a little electioneering on the last page, the House has listened with great attention to a sincere and well-informed speech. The hon. Member for Houghton-le-Spring (Mr. Blyton) apparently felt that we were in some way jeopardising our right to a full review of the quinquennial review Report if we pass this Bill. I do not take that view at all. The Minister has been quite right to take the fabric of the Scheme as it is, and to build on it. We shall not be prevented from discussing matters in any way we like in the forthcoming debate after the Christmas Recess.
There is one remark which I should like him to withdraw. He called the Phillips Report the "work till you drop" Report. I disagree, myself, with the particular recommendation he referred to, but I do not think we should seek to 1041 tag that sort of label on to a Committee which is impartial, and which has done everything it could to arrive at the right conclusion.
§ Mr. Blyton
If the hon. Member has read the Report he will find that a man would not get a pension unless he was sick or unable to work. What else could such a Report be called?
§ Mr. Browne
I have read the Report, and if the hon. Member will read it again he will see that it does not go so far as that. I do not like these labels put on reports, and I am sure that most hon. Members will agree with me.
The hon. Member for Sowerby (Mr. Houghton), whom I am glad to see in his place, said that we, on this side of the House, now had a "Leo." After listening, not to him, but to many of his hon. and right hon. Friends, I hope that we shall have a whole pride of "Leos" before they have the chance to use that machine.
He raised the question of the subsistence standard. He said that the present level was not a subsistence standard, and said, quite fairly, that the N.A.B. level was only a subsistence standard if the rent element was included. He asked what the right level is. Surely the right level is what the country can properly afford. No other line can be drawn. We could not possibly bring everyone up to the total of the highest, plus rent, N.A.B. scale; neither do we want the pension to be as low as it is at present. It was an interesting point, but that seems to me to be the answer.
He also said that the benefits in the Bill will not take anyone off National Assistance. That is not true. Surely, although the number may not be large, some of them will come off. Does he really think that it will not take off anyone at all?
§ Mr. Houghton
I said that I did not think that, with the upward movement of National Assistance rates, anyone would be taken off National Assistance when the two scales were in operation.
§ Mr. Browne
My view, and my information, is otherwise: but we shall see what happens.
The last of his points which I wish to mention was also raised by the hon. Member for Houghton-le-Spring. That 1042 was that the new scales did not cope with rising rents, because the new scales only restored the 1946 standard. Of course, the new scales do a little more than that, and therefore some element of increased rent is allowed for in them.
The right hon. Lady the Member for Fulham, West (Dr. Summerskill) chided the Minister for this being a tardy, interim Measure. She really did not state the position quite as clearly as I would have hoped she might. She complained about the contributions. She said that because of a new policy that contributors should only get the benefit in accordance with what they had contributed, or, to put it the other way, should not contribute more than the benefit relating to their contributions, there should be no increased contribution at all relative to the new scales. I hope that I have understood her correctly.
Had she come to the Box and said "I do not like the one-seventh. I should like one-sixth, which is 2d. off, or one-fifth which is 4d. off," that would have been an argument which could have been sustained. But what is she doing? She is striking at the fundamental principle of the 1946 Act, and it is quite wrong, in an interim Measure of this sort—and she admits that it is an interim Measure—to strike at the fundamentals of the Act.
Therefore, her suggestion that there should be no increased contribution at all, though it may be sound—I neither agree nor disagree—must be left to another occasion altogether. I do agree with her when she asks "What about the big Bill—the big debate?" I think that both sides of the House realise that, later, there has to be a very big debate to discuss the many points that will arise.
One notable omission from nearly every speech has been to say "Thank you" to the Minister—
§ Mr. Blyton
For the people he is forgetting?
§ Mr. Browne
For a very fine Bill indeed—to say "Thank you" to the Minister on behalf of old-age pensioners who would have been satisfied with, and who expected to get, 5s. increase. That is what hon. Members opposite led them to suppose they would get from them, and it was the target which we set ourselves. Instead they will receive 50 per cent. more.
§ Mr. Ivor Owen Thomas (The Wrekin)
Will the hon. Member explain how much better off will be anyone in receipt of a pension—which is now considered insufficient for sustenance—and who is in receipt of additional payment of 5s. a week from the National Assistance Board? As such people will now receive 5s. additional pension and the 5s. National Assistance payment will cease, how much better off will they be?
§ Mr. Browne
Half a crown—because that is the increase in the National Assistance.
I must say "Thank you" to the Minister on behalf of all the old-age pensioners who, I am sure, would all agree with me. They are getting more than they expected, and more than they would have had from the party opposite. The credit for the increase is something which the Labour Party can never take from us. It is a credit not only to the Minister but to the whole Cabinet, who have put the nation in such a condition that it can afford to pay these increases.
To my many old-age pensioner friends, I would say "Is not this a better way of getting an increase of pension than by taking the reserve fund?" on which they have looked so often with longing eyes? The reserve fund has been built up by the continued high level of employment. It belongs to that particular risk, and I agree with what the Phillips Committee says, in paragraph 175 of its Report:… that the balances of the Funds should not be depleted on account of deficits arising from the payment of pensions.Another thing that I would say to the old people is that I have heard it mentioned in this debate, I have read the Chancellor of the Exchequer's speech of 1951, and I have read paragraph 308 of the Phillips Committee's Report, and disagree with all three in respect to altering the retiring age. I say that I disagree with all three, because I felt that the right hon. Lady had rather an open mind about that. She was not intending to be pinned down by her hon. Friends behind her. But I shall pin myself down until I hear a very good argument in support of increasing the age.
This is an interim Measure. I hope that the Labour Party will not obstruct us and prevent us getting the Bill through for Christmas.
§ Mr. A. C. Manuel (Central Ayrshire)
When the hon. Member says that he hopes the Opposition will not obstruct, he surely does not suggest that we should forgo our democratic right to try to improve the Bill and get better treatment for old-age pensioners?
§ Mr. Browne
I am glad to see the hon. Member in the House for the first time. No, of course not. If necessary, we are prepared to work all day and all night to get the Bill through, but we do want to get it through.
My right hon. Friend the Minister referred to the Budget speech of 1951, and quoted the statement of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), who said:… hon. Members who are feeling exhausted can relax and go to sleep for a bit."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 852.]He also quoted the remarks of the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) who, in his resignation speech, on 23rd April, 1951, said:They did.That is, went to sleep.Whilst they were sleeping he stole £100 million a year from the National Insurance Fund."—[OFFICIAL REPORT, 23rd April, 1951; Vol. 487, c. 40.]This argument about the amount of the contributions is, therefore, an old friend, probably just another disagreement between the Left-wing and the Right-wing on the benches opposite.
§ Mr. Houghton
Does the hon. Gentleman agree with my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) that my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) took £100 million out of the National Insurance Fund?
§ Mr. Browne
I am afraid that my arithmetic is not as strong as that of the right hon. Member for Ebbw Vale, but what I did agree with was that there was disagreement between the two right hon. Gentlemen. That was quite clear.
In this same famous Budget speech the former Chancellor of the Exchequer said:It is really no more than a bookkeeping matter and makes no difference one way or the other to the gap which has to be covered by taxation." [OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 853.]1045 The hon. Member for Sowerby will correct me if I am wrong, but surely it could have affected the contributions.
§ Mr. Houghton
It could have affected the contributions. If my right hon. Friend had thought it desirable, in the economic conditions of 1951, to reduce contributions, it would have been possible to do so.
§ Mr. Browne
Therefore, it was rather a smooth dodge because none of us realised at the time that it could have affected contributions. Still, I am glad to read the headline in the "Daily Herald" today:Pension dodge exposed.Well, it is better late than never, is it not?
On the question of this extra 1s., there are two points of view. We are told that the proposal represents a smaller proportion than in 1946. If that is so, that is a good argument. But there is the other argument. There are the Harris tweed weavers who will now have to pay 8s. 6d. They are self-employed, get no holidays with pay, and have to pay whether they are employed or not. There are people, such as the Harris tweed weavers, to whom the 1s. is a matter of very great importance.
This is a vitally important matter for extreme cases, but I cannot work myself into a fury, with the quinquennial review debate coming on later, about the effect on the great mass of the workers. As the hon. Member for Sowerby said, it seems more of an academic exercise as to which pocket one puts it in and which pocket it comes from. In the end, the nation has got to keep its old folk, and, as the Phillips Report says, it depends on the cake and it depends on the slice of the cake.
I think that paragraph 298 of the Report contains the greatest wisdom. It says:The fund on which the National Insurance Scheme must rely is that of the real capital assets of the community, including its human assets.That, of course, is the truth. The present system is not based on an insurance principle. It is a contributory system, which is State-aided. The insurance principle was never started at all. It was an idea, but it was never started. What 'we have is a State-aided contributory system, and 1046 on a basis which changes from year to year—not even from decade to decade. The State aid goes on and on—1980, 1990 and 2000; still the State aid goes on and on.
Although I may be alone in this view, I think it is an academic exercise to forecast what is going to happen in 1980, when the rates of benefit have been changed three times in five years. I pity the Government Actuary, with his head in the Treasury clouds and his feet on the slippery slope of politics. He has not a chance.
I have long held the view that the contributory system is good for the short-term risk, but I should like to hear stronger arguments against the long-term obligations being a Budget matter. They are now, they always will be, and the contributory old-age pension has not taken the old-age pension out of politics. I have a very open mind on what ultimately we shall do, whatever we say now, and even if we look forward to the next quinquennial review.
It is the duty of the whole House, in the forthcoming debate, to see that structural changes are made. There are some points which I am sure it is proper to raise in this two days' debate, because they will have to be considered later. First, there is the contribution to the National Health Service. The deductions from the employer and the employee are very similar to the Exchequer supplement to the Scheme.
It seems to me that it is possible to hold the view that it is unrealistic, that it gives a false impression to the contributor, to mix up the National Health Service with the Scheme at all. Perhaps if the National Health Service could be taken out of the Scheme altogether, it would clear up one point of confusion. People feel that they have paid for the stamp, and that, therefore, they are entitled to National Health benefits, whereas the stamp represents only one-tenth, or even less.
Then there is the question of increments. Paragraph 82 of the quinquennial review says quite clearly that the increment does not prove to be an incentive, and not even the 1951 increase has proved an incentive. Paragraph 202 of the Phillips Committee Report recommends no increase, but I still feel that 1047 justice has to be done. If we could increase the increment from 3s. to 4s., this would give a single man, retiring at 70 after a life's work, £3 a week, and, if my arithmetic is correct, a man and wife £5 a week. After five years' work, the State could then say, "We have taken you out of National Assistance altogether." Surely that is a very desirable objective.
Another point which has not been raised today concerns tobacco coupons. I should like to read a paragraph from "The Old Age Pensioner" of December, 1952, which is written by one of the officials of the National Federation of Old Age Pension Associations, and which comments on an article in the "News Chronicle." This is what is says:What does the editor mean when he says, 'In some ways old age pensioners have advantages over other people'? Is he referring to the tobacco tokens and the cinema proprietors' matinee concession to pensioners? If so, let me remind him at once that pensioners will be pleased to give these up if they could get the pension they claim. Pensioners do not wish to have advantages over other people, but they do claim entitlement to a pension which will enable them to live with a modicum of comfort which is not quite so near starvation level.I do not know what view the House would take towards taking away the coupons from those who are at present drawing them, even if the pension rates were raised. But is it worth considering whether future pensioners with incomes less than the National Federation level of 50s. could claim their tobacco coupons from the National Assistance Board, and that we should discontinue the as-of-right entitlement to tobacco coupons which has been going on for some years, in relation to those pensioners who were over a certain income level. I have given the House the views of the National Federation spokesman, and I make no comment on whether I am for or against those views.
I have only two further points to make, briefly. One is about the earnings rule. I disagree with the Phillips Committee's comments in paragraph 389 about retaining the figure of 40s. I believe there is an open-and-shut case for the figure to be increased at least to meet the purchasing power difference between 1951 and today. There is no argument whatever against it, and I feel that it should be done.
1048 Lastly, there is the widow with a 10s. pension. I know all the arguments that if the lady had been widowed at the present time and at the same age as when, in fact, she was widowed in the past, she would get nothing. That is the argument, but there is a feeling of injustice which is very widespread, and I wish, as my peroration, to read a letter which I have received dated 4th December—from one of my constituents:What change has been made in my circumstances as a 10s. widow? I think it is cruel that no increase in this pension has been made—and this is the second increase to the others. It is cruel that I have to retire at 60 before I receive the big pension. How am I to manage, and many more I know, paying the big stamp, as a dinner attendant in Moss Park School. I work with widows with 32s. 6d. pension who are only paying 3d., who are over 60 and have not had to retire at all and who have grown up families helping to maintain the home. I live alone. This is my first and only house and I have a great struggle to keep going. Please make it your business whenever you can to voice your opinion.I have made it my business, and I urge the Minister to consider it.
§ 8.22 p.m.
§ Mr. Harold Finch (Bedwellty)
When listening to the Minister introducing the Bill this afternoon, I was reminded of some lines by Shakespeare in "Measure for Measure":O, what may man within him hide,Though angel on the outward side.The Minister has given us Christmas promises which he intends to keep in the spring, although thousands of our old people will be unable to brave the winter and will not therefore be able to benefit from the increases. What does this angelic Bill of his hide? Shakespeare gives us "Measure for Measure," but when we look closely at the Bill we find that the Minister has given us triple-measure contributions for half-measure benefits. An angel he may be, but fallen badly from grace.
I am convinced that had it not been for the debates which have been taking place in the House for the last 12 to 18 months, we should not have had the increases in pensions stipulated in the Bill. I believe that these are largely due to the persistent efforts of the Opposition, of the old-age pensioners' organisations in the country and of the representations which have been made from time to time by the 1049 trade unions. I say that because the question of pensions has been raised month after month—in May, in July and later, and, indeed, in the previous year; and it is only at the end of this year that the Government, in a hurried way, have brought forward the Bill.
Although I do not altogether object to some of the increases, I regard the Bill in many respects as inadequate, and I must protest against a Measure which, apart from these increases, lays down contributions which will last for the next five years. It lays down a structure which will call for contributions—State contributions, too—which will not be altered for the next five years.
Hon. Members opposite have repeatedly referred to some interim report and to some debate which is to take place in the next month or so or early in the next year. Reference has been made to the Phillips Committee's Report coming before the House. But unless I have misunderstood the Government, that will in no way alter the basis which is now being laid down in the Bill. I want the House fully to appreciate that, once we have passed the Bill, the financial arrangements and the structure contained in it will last for five years. Do not let there be any misunderstanding about that. If I am exaggerating the position, I hope the Minister will clarify it in his reply.
What is the financial structure contained in the Bill? First of all, it is stipulated that there shall be a £65 million payment from the Exchequer, making £325 million in five years. Already, as hon. Members will see, we are beginning to look at the five-year structure. Again, it is said that there shall be a supplement of one-seventh from the Exchequer, and here again it is laid down that it shall last for a number of years. Thirdly, and this is what I am very much concerned about, contributors are to be asked to pay £60 million more than is actuarially necessary for the fund.
It will be said that this £60 million will be used for uncovered benefits. We contend that that is the responsibility of the Exchequer. We have had some experience of these funds, and although it may be said that they are run on a simpler basis and with a smaller number of men, because here we are dealing with the whole community, I want hon. Members to look for a moment at these schemes.
1050 The mining industry has a scheme something on those lines. When they set about the task of working out the actuarial basis, they said that it would mean so much from the employer and so much from the worker; and this was based on a person entering the industry at the age of 16 or 18 and retiring at 65, or whatever the age might be. The problem then arose: what about all those men who are nearing 65? How are we to meet that obligation? How can we deal with men who cannot contribute fully to the fund? They may now be 40 or 45 years of age. How can we meet that obligation?
In these circumstances, the employer makes a block grant or supplemental grant to keep the Fund intact. That has taken place in the mining industry. If the National Coal Board had not been prepared to pay for the uncovered benefits, the miners of this country could not have borne the extra contribution which would have been levied upon them. In fact, the Coal Board said, "We will meet that obligation. It is for the workman to meet his obligation towards actuarial contribution." This is a contributory system whereby the workman pays a certain amount, the employer pays his amount and the State says that it will make up for the uncovered benefits, but in this Bill the uncovered benefits are to be provided for by the contributor. The young man entering industry today has not only to pay for his own pension but for that of his granddad as well.
§ Mr. J. N. Browne
Has that not always been the case since the 1946 Act?
§ Mr. Finch
No, here I am referring to the actuarial Report, upon which the Bill is based. It is quite clear:The extra weekly contribution from insured persons and employers … will yield in the first full year and subsequently, an extra amount of about £60 million a year over and above the produce of the actuarial contributions.This extra £60 million is to be paid by the contributors and is largely involved in the 1s. contribution we have been discussing.
The Government are making these increases in such a hurried way that we have not an opportunity of considering the quinquennial valuation. In the mining industry we have been looking forward to the quinquennial valuation. 1051 We know of the anomalies in insurance and the Industrial Injuries Act. We have told constituents that five years after the operation of the 1946 Act—which in some respects began to operate from 1948—the House of Commons would consider the quinquennial valuation and the working of the Act. Parliament would have a great opportunity of reviewing that Measure and the financial structure.
This Bill, which affects practically the whole community, is being rushed through the House in five or six days. We are to have the Committee stage on Monday and Tuesday and, I understand, the Bill will go to the Lords the day after. The least I would have expected would be that the Government would bring about these increases as a temporary arrangement and find means through the Exchequer, or whatever is in the Fund, for bearing the costs for a few months and then give Parliament a full opportunity of going into the details of the quinquennial review.
The 1946 Act was something we had never had before. It was a great comprehensive scheme, a progressive Measure far in advance of what we had before. Now, having had five years' experience of its working, we realise its anomalies and injustices. Therefore, some of us wanted an opportunity to discuss the matter in detail. Some of us believe, rightly or wrongly, that the insurance principle has outgrown its usefulness, that it is too cumbersome and gives rise to a great deal of trouble. In answer to my hon. Friend the Member for Sowerby (Mr. Houghton), the Minister admitted that it is frightfully complex. However efficient an actuary may be there is so much conjecture, so much surmise and assumption to be made.
We had that difficulty with the 8½ per cent. unemployment, which was the figure used When the Act came into operation. That proved wrong and, under a Labour Government, we had only about 1½ per cent. unemployment. Now it is to be fixed at 1½ per cent. next year, 2 per cent. the year after and then is to go back to 4 per cent. How can that actuary forecast what unemployment there will be in the years to come?
It is the same with future increases. We may be faced next year with a further demand for increased pensions if there is 1052 a high cost of living. How is that to be met—by increasing contributions? Is a further demand to be met by State funds? We have to bear these things in mind. Surely the House should have an opportunity of going into these matters to see whether the insurance principle is sound. Other hon. Members hold the view that the contributory scheme is good, but do not agree with the flat rate principle. They believe in the principle of "From each according to his ability, to each according to his needs," and that the higher-paid man should pay a higher contribution than the lower-paid man. There may be some truth in that, but Parliament will not have the opportunity to discuss all these great principles.
What we are doing now has to last for another five years, and the references to interim reports or discussions in the Phillips Committee will not affect the foundation and financial structure of the scheme. I venture to say that if the Government put through a Bill of this kind, based on this financial structure, in six months' time vast numbers of the population will look upon this Measure with severe misgiving.
There is the question of the anomalies that exist already under the Act. The question of widows who receive 10s. a week has already been referred to. I regret that the Minister seemed to be sheltering in these matters behind the Advisory Committee. We know that an Advisory Committee advises the Minister from time to time, but the 10s. a week widow's pension is nothing new. It has been in operation for years, and we debated it in 1952 when considering the increased rates of benefit. Why is the Advisory Committee only now discussing the 10s. widow's pension? The right hon. Gentleman seemed to say that all these anomalies could be discussed after the Advisory Committee had given its advice, but these are matters which should be contained in the Bill. Some of these anomalies should be removed.
That brings me to the part of the Bill which deals with industrial injuries. I agree with my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton). Why there is not to be the same proportionate increase in industrial injury benefit as is being given in National Insurance benefit, I do not understand. Why 1053 should there be a difference in the proportion of increase?. It is true that the industrial injury benefit will go up to 67s. 6d., but if this benefit were given in the same proportion as in the case of National Insurance, the rate would be 69s.
It may be said that there is, in fact, an increase in injury benefit and in disablement benefit, but it does not meet the present position with the ever-rising cost of living. The cost of living index should be based on a different method for people in receipt of fixed incomes.
Only a comparatively small number of men will receive the full disablement benefit of 67s. 6d. The vast majority are on assessments of 10, 20 or 30 per cent., and it must be remembered that a 20 per cent. assessment, which under the new benefit rate will increase from about 11s. to 13s. 6d. a weak, will give only a half-a-crown a week increase to the average disablement pensioner.
The most serious feature in connection with industrial injuries benefit is the hardship allowance for the man who, following an accident, cannot return to his employment. If he has been a skilled engineer or collier or a railway driver, earning £12 or £15 a week, and has lost the sight of an eye or is otherwise seriously impaired, he will be unable to return to his occupation. He will be given his basic pension of 5s. 6d. or 11s. 6d. a week, as the case may be, but he has lost his earning of £12 or £15 a week.
A man in this category might be given a light job at a wage of £6 or £7 a week, but even so, he will have lost £7 a week. The most that a man in these circumstances can get by way of hardship allowance is £1 a week. It is proposed in the Bill to increase it to 27s. 6d. That is not adequate.
This is a grievous matter for skilled men. There are men who have given their lives to an industry, who were apprentices in it, who have worked up a knowledge of it and a skill in it, and who now have lost their employment through what may be regarded in some spheres of employment as a minor injury, but which, however, deprives them of their skill and their livelihood. They are now to be compensated by an extra 7s. 6d. I make a special plea to the Minister for these men. This hardship allowance is 1054 utterly inadequate. This increase does not meet the position, and I hope that in Committee the right hon. Gentleman will give serious consideration to the problem of the hardship allowance.
Although my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) dealt with it, I cannot refrain from also discussing the question of the old compensation cases. There are about 50,000 men in the mining industry alone still under Workmen's Compensation. They have had no increase in their benefits since 1943. The maximum payment that can be made to a single man is £2. There is no provision in the Bill to increase it. We had hoped to have removed this anomaly.
A few weeks ago we were dealing with the old pneumoconiosis cases, and we were congratulating ourselves on having got rid of all the old anomalies between the two different classes of men, those under the old Workmen's Compensation Acts and those under the National Assistance (Industrial Injuries) Act. Yet here we are creating another class of men whose payment is to remain at £2 a week, while men under the National Assistance (Industrial Injuries) Act whose accidents occurred after 5th July, 1948, will get £3 7s. 6d. if they are single. The position of married men will be altered, admittedly, because of the increase in sickness and unemployment benefit, but even so there will be a grave disparity between married men under Workmen's Compensation and married men under the National Assistance (Industrial Injuries) Act.
These are very important problems which are of great concern to the Trades Union Congress, and to the National Union of Mineworkers in particular, and I hope that in Committee the Government will seriously consider these anomalies. If they are not considered, if some Amendment is not made to the Bill, let the Government make no mistake about it, there will be deep concern among the industrial workers and, grave dissatisfaction. They look upon accidents and industrial diseases as extremely important because they affect a man's ability to earn his living and often rob him of his earnings altogether. We shall have to turn our attention in Committee to some of these matters, and I hope that the right hon. Gentleman will bear them 1055 in mind so that we may remedy some of the anomalies in the Bill.
§ 8.43 p.m.
§ Mr. Julian Ridsdale (Harwich)
The hon. Member for Bedwellty (Mr. Finch) said at the beginning of his speech that it was because of the prodding of the Opposition that we have had this Bill. Nothing could be further from the truth. We have this Bill because the sound financial administration of this Government since 1951 has made it possible, and not because of any prodding from the Opposition. When hon. Members opposite were in power I was a candidate in an industrial constituency, and I used to visit the old people and saw their plight in those localities in 1951. Why did not the Labour Party exercise this emotion then? Why did hon. Members opposite not do something about the plight of the old people at that time?
The hon. Member for Sowerby (Mr. Houghton) asked a very searching question. He asked: from where is the progressive improvement of the lot of the old people to come? That arrests all our minds, because this is a problem which we shall have to face during the next 25 years. I take the view that the best help to the old people can come only from stability in the price level, and that can only come through good administration.
In the last 18 months of Socialism prices went up by 12 per cent. In the last 18 months of this Government prices have only gone up to 2.1 per cent. Help to the old people and, indeed, to the whole country can only come from an increase in production. We can make play with figures in this House as much as we like. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite have made great play with them this afternoon, but what matters to the old people is that their coal should be cheaper, their light should be cheaper—[HON. MEMBERS: "And their tea."]—their gas should be cheaper, and their food cheaper. Hon. Members opposite may chide us about the price of tea, but during the time you were in power I was growing soft fruit when you released the price controls.
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)
I hope the hon. Gentleman will be good enough to remember that he is addressing his remarks to me.
§ Mr. Ridsdale
I was referring to the time when the Opposition withdrew the controlled prices for soft fruit. The prices almost doubled, but since then they have come down, and so will the price of tea.
But I am not pessimistic like some hon. Gentlemen opposite. Provided the present increase in productivity continues, I am not unduly alarmed by the fact that in the next 25 years the working population will stay at 23½ million to 24 million while the number of retirement pensioners will increase from 4⅓ million to 7½ million. The change in the age distribution may even act as an incentive to encourage us to move forward to the new industrial age before us. The only worry I have is a change of Government and having a restrictionist instead of an expansionist policy such as this Government are pursuing.
But the problem which has been exercising our minds this afternoon has been the issue of the distribution of the contributions. The existing pensions are financed from three sources, the employer's contribution of 41 per cent., the employee's contribution of 44 per cent. and the Exchequer supplement of 15 per cent. As things are before the proposed changes, the estimated deficit will come to £18 million in 1956–7, £51 million in 1957–58, £107 million in 1958–59 and £126 million in 1959–60. Under the Bill there is a Treasury liability of £275 million for the next five years, and this can only be met out of general taxation.
This is all going to mean increased taxation, and although no one likes to make the employer or the employee pay more, if we agree that taxation is inflationary then we should make this scheme as self-financing as possible. Otherwise, we shall get a rise in the general price level and we shall not help the old-age pensioners, because we shall find ourselves getting into the inflation spiral which we had when the Socialists were in power.
The hon. Member for Sowerby said that the Bill does not take a single person off National Assistance. I particularly noticed that point because I have been alarmed by the number of people in my constituency who do not want to take National Assistance because they have not contributed towards the scheme. They are the ones among the old-age pensioners who have suffered most, and I 1057 welcome the Bill because that class of person will probably be helped more than any other.
§ Mr. Tudor Watkins (Brecon and Radnor) rose—
§ Mr. Ridsdale
I cannot give way because the time is short and there are other points that I want to make.
I hope the increase in the earning rate in respect of old-age pensioners will be raised, and that the treatment of capital for National Assistance purposes will be brought more into line with the present value of money. I would also join in the plea which has been made on behalf of the 10s. a week widow.
We are making a sincere effort to bring pensions up to the present price level, and I welcome the Bill on that account, but in order to help pensioners we must ensure that increasing taxation does not raise the price level still further, for we shall otherwise find ourselves where we were. Consequently, I hope that we shall have in power in the future a Government which will maintain stability in the value of money, because that is what matters more than anything else to the old people. If we had the inflationary policy advocated by the Labour Party in "Challenge to Britain" I should fear very much for the old people.
§ 8.53 p.m.
§ Mr. Bernard Taylor (Mansfield)
I am sorry that the Minister is not at the moment in his place—I am sure no discourtesy is intended by him—because I want to make one or two references to the speech he made this afternoon when moving the Second Reading. I wondered whether he was making a speech in the House of Commons or playing cricket at Headingley.
§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Ernest Marples)
At all events my right hon. Friend is not playing cricket in Australia.
§ Mr. Taylor
Judging by the last two or three speeches which the Minister has made, it seems to me—I agree entirely with my hon. Friend the Member for Sowerby (Mr. Houghton)—that he appears to be going from bad to worse. In our last debate about old-age pensioners he described the campaign of the old-age pensioners' organisation as a scurrilous 1058 one. Requests were made by the Opposition that he should withdraw the adjective, but he refused and persisted in describing the campaign as scurrilous. I would remind him that desperate people are very often angry people, and it is because of the delay that there has been that the old-age pensioners have conducted an intensive campaign during the past few months with the object of getting their standard of life improved.
§ Mr. C. J. M. Alport (Colchester)
My recollection is that my right hon. Friend referred to a certain leaflet as scurrilous and not the campaign by the old-age pensioners.
§ Mr. B. Taylor
We can look up the records and see whether the interpretation I have put upon the Minister's remarks in the last debate is correct.
The right hon. Gentleman this afternoon said that by some individuals, and by sections of the Press, he had been called "Mr. Facing-Two-Ways" for doing something too soon and doing it too late. He is guilty of both. He is guilty of being too late in coming to help the old-age pensioners before oncoming winter, and he is too soon after the publication of the two Reports in bringing a Measure of this kind before the House. As my hon. Friend the Member for Sowerby said, the Bill must have been prepared before the Phillips Committee's Report was published.
The Minister referred to the cost-of-living index. I do not want to make a pronouncement on that, but it is very important not to judge the standards of National Insurance beneficiaries from the angle of the general cost of living. We believe that there should be a special index for that purpose.
I join with my hon. Friend the Member for Sowerby in deploring the criticisms and complaints that the Minister made this afternoon and on previous occasions about the Exchequer supplement being reduced in 1951 from one-fifth to one-seventh. If there were any validity in his criticism, then instead of continuing the reduction he would have seized the opportunity in 1952—and he has the opportunity on this occasion—of restoring the pre-1951 position.
The Minister was not clear today in his handling of the finances of the scheme. [HON. MEMBERS: "Where is the 1059 Minister?"] Insured contributors to the National Insurance Scheme, as laid down in the National Insurance Act of 1946, have since 1951 paid a contribution of 2d. to meet the emerging costs of retirement pensions.
§ Mr. Finch
On a point of order. We are dealing with a very important matter and I should have thought that the right hon. Gentleman would be here.
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)
That is nothing to do with me.
§ Mr. Taylor
The Minister endeavoured to create a wrong impression by a lack of clarity about the finances of the National Insurance Scheme. The 2d. of the insured contributors towards meeting the emerging costs of retirement pensions has been in existence since 1951. The Minister proposes in the Bill to raise that 2d. to 8d. We say that is wrong.
He was very loud in his criticism of the 1951 Act, but this afternoon it has been revealed on his own admission that he did not disagree with what was done, but disagreed merely with the method. I suggest that, in view of his criticisms and in view of his admission this afternoon, it would be better for him to drop those complaints and criticisms. I thought that he was very unfair to the Trades Union Congress, and when he reads, in the OFFICIAL REPORT, the words that he uttered in this respect, I hope that he will regret them.
I now turn to the question of the attitude of the Trades Union Congress to this matter. I was very pleased to read in the Press on Saturday morning that the proposals contained in the Bill were unacceptable to it. I should like to read what was reported in the "Manchester Guardian" on Saturday last, which was as follows:The proposed increase of a shilling in workers' (and also employers') weekly contributions appears to the T.U.C. to be designed not only to pay for the increased pensions announced, but also to contribute towards the extra cost of higher benefit for those already over the initial age for receiving pensions. 'In these two respects the Government proposals are contrary to the submissions previously made by the General Council and are therefore not acceptable,' the T.U.C. says.
§ Sir William Darling (Edinburgh, South)
Is that a quotation from a resolution, or the opinion of the "Manchester Guardian"?
§ Mr. Taylor
This is a report by the "Manchester Guardian" of a statement made on behalf of the Trades Union Congress last Friday.
I take this opportunity of congratulating my hon. Friend the Member for Sowerby on a well-informed, factual, and passionate speech. I was especially glad to hear his reference to the question of increased productivity and what its relation should be to the benefits for the old, the sick, the injured and the unemployed.
The hon. Member for Lewisham, North (Sir A. Hudson) referred to the National Assistance Board exercising itself and providing facilities for the old folk. I should like to reiterate what I said earlier in an interruption, namely, and this was provided for in the National Assistance Act, 1948, and is carried out by the welfare committees of local authorities. The hon. Member for Barry (Mr. Gower) made the rather astonishing statement—at any rate, it astonished me—that the Bill had been warmly received. There is much in this Bill that I and many of my hon. Friends in no way welcome.
This has been a very interesting debate—as was expected, because there has been for many months, both inside and outside the House, increasing anxiety over the plight of all National Insurance beneficiaries, and especially those in receipt of retirement pensions. We have already had three debates this year, and during the past few months many questions have been put to the Minister of Pensions and National Insurance drawing his attention especially to the plight of the old folk, and asking him if something could be done before the winter set in.
My right hon. Friend the Member for Battersea, North (Mr. Jay), during a speech which he made on 8th April last, expressed this matter much better than I could when he said that there was the expectation of an announcement by the Chancellor in his Budget statement that something would be done, if only by way of an interim payment, pending full discussion of a Bill that would deal with the fundamental questions and the anomalies which have revealed themselves in the National Insurance Scheme during the past six years.
1061 Here I should like to say that I noticed in the Press last night that the Chancellor of the Exchequer has domestic difficulties, and that we can understand his absence. All of us, on both sides of the House, sympathise with him in the circumstances through which he is passing.
What did we get in the Budget statement? The Chancellor merely made a sympathetic reference to the old people. He enunciated a policy of wait and see. This is a summary of what he said: there could be no advance in social reform until we had the growth of our existing commitments well in hand. The Chancellor's references to the question of the old people can be found in c. 210 and 211 of the OFFICIAL REPORT of 8th April.
He went on to say that the Minister of Pensions and National Insurance had the problems of the old people very much in his mind, but that it would be useful, before coming to any decisions on these questions, to have before him two Reports—that of the Government Actuary on the quinquennial review and the Report of the Phillips Committee, which was set up in the summer of 1953. The Government have too long delayed action in this field of providing before the oncoming winter additional benefits for the old people, and the pleas that have been made in this House in three debates, and the many Questions put to the Minister, have not received the attention which they deserve.
All that we have had over the past few months has been what I would describe as an alibi—"We must have these two Reports to see what can be clone and where we are going." What is the result? It will be April and May, 1955, before the old people get an increase in benefit.
My deduction from all this is that this Bill now before us is a hurried one. It denotes a change of mind. The reason the Government are now in such a hurry is that they have been moving only at the pace of a tortoise for the last few months and now desire the speed of a greyhound. The reason this change has been made is anybody's guess. It may be electoral, or the result of pressure in this House and outside, or it may be a combination of both.
Quite recently, I had sent to me a provincial newspaper, the "Louth Standard" 1062 of 20th November last, containing a report of an old-age pensioners' meeting. The hon. Member for Louth (Mr. Osborne) is not in his place, but this, at any rate, does not affect him as much as it affects the Government. The chairman of the area council said at that meeting that he could not help feeling that although the announcement of the pensions increase had been promised before Christmas by the Minister of Pensions and National Insurance, the actual making of the increase would no doubt be linked with the date of the next General Election.
I will tell the Minister what steps he should have taken not later than April of this year. In my view, the right hon. Gentleman should have introduced a short Bill seeking Parliament's approval for an interim increase in benefits pending the future of National Insurance being decided upon as a result of the two Reports. Had that been done, the right hon. Gentleman would have had our wholehearted support.
I further suggest that the increased benefits could have been given without increasing contributions. The cost of the interim payments could have been met from the Exchequer, or from the surplus, not in the National Insurance Reserve Fund, but in the National Insurance Fund, which is quite distinct from the Reserve Fund, or from a combination of both. Had that been done in April this year, the administrative job to which my hon. Friend the Member for Sowerby drew attention would now have been completed, and payment of the increased benefits to old-age pensioners and to other National Insurance beneficiaries could have been made in September or not later than October of this year.
For a long time I had hoped and believed that the two Reports to which reference has been made in this debate would provide the opportunity to discuss, firstly, the structure of the existing Scheme, and, second, the anomalies which have revealed themselves during the six years' working of the National Insurance Scheme.
I have only the following comment to make on the question of the structure. Many opinions have been expressed for a long time now by interested organisations. The Minister reminded us this afternoon that even the T.U.C. had come 1063 down on a certain side as far as the structure was concerned. These organisations, economists, bankers, and a lot of other people have expressed their views and opinions on the matter, and it was suggested from the benches opposite today that we on this side of the House might not be united regarding what the future structure of National Insurance should be.
Two weeks ago, the hon. Member for Wolverhampton, South-West (Mr. Powell) made a very powerful and very thought-provoking speech on the subject. I am sure I should not be misrepresenting him if I said that from his remarks I thought that he had arrived at the conclusion that the time had come when we should look at the existing structure of the Scheme. I cannot differ from him.
As what he said was important, I shall quote from it. He gave a lot of factual material, and continued:In these circumstances, I believe that the House, united as it is in determination to provide a means-test-free subsistence retirement pension, has very seriously to face this question, whether it is worth while trying to continue to treat this clement in our social security system as an insurance element at all; whether there are real sound arguments for maintaining the whole as an insurance scheme, or rather taking as insurance all the other benefits and meeting them genuinely year by year on an actuarial, self-respecting basis"—Then comes the operative part—but putting the new retirement pensions on a similar basis to that which we have already in family allowances—a payment which is made without the forms of insurance, which is means-tested through taxation but not means-tested, as it were, at the source, and which is met as a charge upon the general revenue."—[OFFICIAL REPORT, 16th November, 1954; Vol. 533, c. 268–9.]I compliment the hon. Member on that very courageous statement. It indicates that, with regard to the existing structure of the Scheme, there is not complete unanimity on the benches opposite. I interpret that—and if my interpretation is not correct the Minister will correct me—it is the opinion of the Government that the existing structure should continue for a further period of five years at least.
I am not discussing tonight either the merits or the demerits of the existing structure, but I do say that that applies not only to the proposals in the Bill, 1064 but also to the anomalies. We have no opportunity at all to discuss the anomalies, many of which have been mentioned today, and about which I shall have a word or two to say.
I should like to draw attention to three anomalies only. Under the existing Scheme widows are placed in three categories. There are the post-1948 widows, those under 50, who can get the pension. There are those under 50 who, after the first 13 weeks, get no pension at all. I know it is a question of what our social policy should be, but that I do not propose to discuss. I would only venture to express the personal opinion that the age of 50 is too high.
There is also the pre-1948 widow on 10s. a week. After five years' working of the Scheme, that is an anomaly which we should seriously consider removing. Then there is their earnings rule. There is not complete satisfaction about that.
I was very pleased to hear the Minister say, and I expect he was speaking for the Government, that it is not proposed to implement the recommendation of the Phillips Committee with regard to raising the retirement age. That poses another question. Shall we provide the incentives for postponement of retirement? It is impossible to discuss those matters on this Bill in the limited time available. This Bill provides no opportunity at all for discussing these matters of importance.
No one wants to delay the passing into law of those parts of the Bill which—only in six months' time unfortunately—will give some relief to the aged, the sick, the injured and the unemployed. The proposals about benefits are much too late to become effective this winter. That is the responsibility of the Government. On this question the Government are guilty of delay. They should, and could, have done something much earlier.
I now turn to the question of contributions. The lower-paid worker in class 1 will feel the draught under these proposals. His contribution is to be 6s. 4d. plus 5d. for industrial injuries, making 6s. 9d. in all. There are many lower-paid workers in this country earning not much more than £6.
§ Mr. Thomas Fraser (Hamilton)
Some are not getting as much as that.
§ Mr. Taylor
I accept that. When they have paid their contributions, and all the other incidental contributions, it makes a big hole in their wage packets on Friday night.
Then there are those in class 2 who will be faced with a contribution of 8s, 5d. a week. I assert that although numerically they constitute about only one-sixth of the total insured population, to some of these people in class 2 this contribution of 8s. 5d. will indeed be a crushing burden. The type of person in this class who conies most readily to mind is the small shopkeeper with a small turnover and small profits. In fact, his income is not very much outside the optional limit of £104 a year. That is another anomaly that we ought to consider, because if £104 was correct as the optional limit in 1948, it certainly is not correct in 1954.
My right hon. Friend the Member for Battersea, North will deal tomorrow with the financial aspects of the Insurance Scheme in a much better and clearer way than I can. But let me put this to the Minister very seriously. If the Exchequer supplements had been restored to one-fifth, and only the actuarial contribution levied, the two amounts together, translated into weekly terms of the insured person's contribution, would be within 1½d. of meeting the sum of £112 million which these increased benefits will cost in a year.
I wish to say a word about National Insurance. I do not wish to speak much longer, because I have arranged to resume my seat very shortly, although I must confess that I have a lot more to say. Let it not be assumed that the single person receiving a supplementary pension will get a 7s. 6d. increase. He will not. He will get only 2s. 6d. The married man will not get I 1s. a week increase. He will get only 4s. Under the Bill, the poorest sections of the community will benefit the least.
I want to raise with the Minister the question of disregards. I do not know whether he has given any thought to this important matter, but the question of the disregards under the National Assistance Act, 1948, is very important in 1954 because of the change in money values. To take one item only, of a person's superannuation payment the first 10s. 6d. only is disregarded, and as I work it out 1066 —I am open to correction—the equivalent figure today is 14s. My union, and the colliers whom I represent in Nottinghamshire, decided that, because of the plight of the old colliers in that area, they should, from their own funds, give them an increase of 5s. a week in the miner's pension, bringing the figure to 15s. Those Nottinghamshire miners who are in receipt of supplementation will not benefit to the extent of 5s. under the Bill, but only to the extent of 6d., and the ratio of the people in receipt of supplementation is not 25 per cent.; in our coalfields in Nottinghamshire it is at least 50 per cent. and possibly 60 per cent.
Those who come from the mining areas feel very strongly about the question of industrial injury. I disagree with my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) on only one point which he made. He said that the number of accidents happening in mines was 40 per cent. of the total. If he looks a little more closely into the matter he will see that it is 66 per cent. As a consequence, we feel this position very much indeed.
Unless the Minister agrees that these proposals for industrial injury benefits are emergency and temporary proposals only, we take very strong exception to them. Why has he taken this action without receiving the Actuary's review of the Industrial Injuries Act? Why has he not increased the benefits in the same proportion as that in which he has increased the basic National Insurance benefits?
My hon. Friend the Member for Bedwellty (Mr. Finch) drew attention to the special hardship allowance. This is the first time that this benefit has been increased since 1948. The Government did not increase it in 1952, although I remember that in the Committee upstairs we implored the Minister to pay greater attention to the special hardship allowance. It is an important benefit because it helps to bridge the gap between pre-accident earnings and the position after the assessment has been made and the man is unable to return to his pre-accident work or work of equivalent standard.
I reinforce the remarks of my hon. Friend the Member for Bedwellty about what, in the mining areas, we call the old "compo" cases. Are they to be 1067 forgotten for all time? I know that this is a difficult question and that we have been wrestling with it for six years, but will the Minister tell us that he will have another look at it and will do all he can to see that these people receive just consideration of their claims? There are many pneumoconiotics, and partially and totally-disabled people who, under the old Workmen's Compensation Act, have suffered for years, and who will continue to suffer until some action is taken.
To summarise, this Bill does not tackle the anomalies which have been referred to in the debate. It fails to restore the 1946 position in respect of the Exchequer supplement, and we are disappointed about that. It presupposes a continuance of the existing structure for five years, and we do not accept that. The proposed benefits, as pointed out by my hon. Friend the Member for Sowerby, have no regard to the increased productivity which has taken place since 1946.
Subsistence should only be a floor, not a ceiling. In view of the increased production which has taken place since 1946 these rates are very little more than the rates of that year. The old have helped to make increased productivity possible. They ought to have a share in it by an improvement in their standard of living. I hope that the Minister will think again between now and Committee stage, and give to the old people their right and proper share in the nation's increased productivity.
§ 9.31 p.m.
§ The Financial Secretary to the Treasury (Mr. Henry Brooke)
I greatly appreciate what the hon. Member for Mansfield (Mr. B. Taylor) said about my right hon. Friend the Chancellor of the Exchequer and the reasons for his absence. I know that the sympathy of the whole House is with my right hon. Friend. Those who have been acquainted with him, not only as Chancellor of the Exchequer, but in close connection with another great service—as Minister of Education—will understand how sorry he is that he cannot be present in the House tonight.
My principal part tonight should be to get on the record as clearly as possible the main financial figures which must form the background to this Bill. My hon. Friend the Joint Parliamentary 1068 Secretary to the Ministry of Pensions and National Insurance is to speak tomorrow. With permission, I will leave to him detailed matters about the rates of benefit which the hon. Member for Sowerby (Mr. Houghton) and others have raised, and about National Assistance and its linking with the proposals of this Bill, and so forth.
I approach the Bill as a great and understanding contribution to human happiness and to the happiness of those who have the least power by their own efforts to alter for the better their own way of living. I am glad that the debate today has taken place in no bitter atmosphere. There have been criticisms, there have been questions, but I trust that when this Bill goes from us to another place, as it will, we shall all have joined in trying to ensure that when it gets on the Statute Book it is as favourable to the older men and women of this country as the national position and the national prospects make possible.
The hon. Member for Rhondda, West (Mr. Iorwerth Thomas) said that this was a need requiring satisfaction. That is why the Government have brought the Bill forward. They have brought it forward within three years, not five. The hon. Member—rather inconsistently, I thought—called upon us to withdraw the Bill. Of one thing I am certain. It is that millions of older men and women at this moment are profoundly thankful that within, not six months as the hon. Member for Mansfield said but 4½ months, they have the prospect of receiving more money. [An HON. MEMBER: "Too many too late."]
To withdraw the Bill, to seek now to alter its fundamental basis, would have one result, and one result only. It would postpone the time when these benefits could become payable and would snatch enjoyment from the people whom the Bill is designed to benefit. For that reason, what we have to do is, not to speak in terms of scrapping the Bill, but to examine whether this is the best Bill which can be brought forward, as I, speaking as a Treasury Minister, intend to show that it is. [An HON. MEMBER: "But you are from the Treasury."] Yes, and I speak as one who, when he entered political life, was determined among other things to play his part in helping the older people.
1069 If we are to mould the Bill aright, it is essential that we should be certain of our facts. The right hon. Lady the Member for Fulham, West (Dr. Summerskill) stated in her speech that if the trade union recommendation were accepted and if the Exchequer supplement were raised from one-seventh to one-fifth, it would be possible to reduce the extra contribution from 1s. to 1d. or 1½d.
I have examined that suggestion with the greatest possible care and have taken advice upon it. My understanding is that if the Exchequer supplement were so increased, it would be possible to reduce the additional contribution, not by 11d., but by 4d. instead of being 1s., the additional contribution would be, not 1d., but 8d. The cost which would thus be incurred would be an additional cost to the Exchequer of £32 million a year. I put that on record as the first correction which I wish to make.
§ Mr. Jay
To avoid misunderstanding, does the Financial Secretary represent that 4d. as being what the Exchequer would have to pay additionally if the proportion of the one-seventh were altered to one-fifth? When speaking of the 1½d., my right hon. Friend was thinking in addition of the excess over the actuarial contribution.
§ Mr. Brooke
What I understood the right hon. Lady to say was that the alteration from one-seventh to one-fifth would make it possible to reduce the contribution to 1d. [HON. MEMBERS: "No."] What I am now making clear is that that alteration in the proportion of the Exchequer supplement would render possible a diminution of 4d. from the insured person and 4d. from the employer.
I should like, secondly, to refer to figures given by the hon. Member for Ince (Mr. T. Browne), who said, I think, that in the Bill he espied the seeds of industrial discontent. He called attention, quite rightly, to the fact that in the financial year 1950–51 the Exchequer contributed £144 million to the Fund, and he pointed the contrast between that and the figure of £91 million which, under the Bill, the Exchequer will provide next year. What the hon. Member for Ince did not point out was that the decrease from £144 million in 1950–51 1070 to £70 million in the current year is entirely due to the 1951 Act, passed by the Government which he supported. This Bill, far from diminishing the cost which falls upon the Exchequer, will substantially increase it.
The last thing I want to do is to appear to give the House an arithmetic lesson, but I believe that I can possibly best serve the interests of hon. Members on both sides if I enumerate some figures, bearing in mind that this is the end of the first day of the debate and that my words will be on record in HANSARD ready for the continuation of this debate tomorrow and for the subsequent Committee stage. For that reason, I make no apology for going through certain figures which should be on the record.
If hon. Members will look at the Report from the Government Actuary on the First Quinquennial Review, the Blue Book, they will find certain figures on page 23, and they will see that, under the existing law, expenditure from the National Insurance Fund in 1955 to 1956 is estimated to be £550 million, rising in 1959 to 1960 to £667 million and in 1979 to 1980, 25 years' hence, to no less than £917 million. That is under the existing law.
Now let us see the effect of the Bill. If the Bill goes through, the expenditure from the Fund will rise next year from £550 million to £652 million, an increase of £102 million. By 1959 to 1960 the figure will not be £667 million but £800 million. By 1979 to 1980 it will be not £917 million but £1,093 million.
Now let us see what the cost to the Exchequer will be. Under existing legislation the cost to the Exchequer next year will be £70 million. If this Bill goes through it will rise to £91 million, an increase of £21 million. In 1959 to 1960, five years' hence, the cost to the Exchequer under existing legislation will be £194 million. Under this Bill it will rise to £236 million, an increase of £42 million. By the end of the period which we have under review, by the year 1979 to 1980, under existing legislation it will be £434 million, and under the Bill it will be £517 million, an increase of no less than £83 million.
When hon. Members in all parts of the House suggest, as they were suggesting at Question time recently, reductions in this tax or that, I would remind them that 1071 under this legislation the burden which is now £70 million on the Exchequer is going to rise to over £500 million. We have, therefore, to look carefully how the additional cost of benefits is to be met. It is to be met in this way.
In the next financial year, 1955 to 1956, the increase is to be met as to £78 million from contributions from the insured persons and the employers, and as to £21 million from the Exchequer. That is to say, the Exchequer will be carrying 21 per cent. of the increase. Five years' hence, in 1959 to 1960, the excess for which the Bill is responsible will fall as to £91 million on the contributors and as to £42 million on the Exchequer. By that time the Exchequer will be carrying 31 per cent. of the additional cost. In 1979 to 1980 the additional cost will fall as to £93 million on the contributors and as to £83 million on the Exchequer. At that time the Exchequer will be carrying 47 per cent. of the additional cost due to the Bill, as my hon. Friend the Member for Aylesbury (Mr. Summers) rightly pointed out in his admirable speech.
§ Mr. J. Griffiths
We are seeking to follow the hon. Gentleman's figures, and we shall read them with interest tomorrow, but may I ask him whether in his calculations he is taking into account savings to the Treasury from National Assistance?
§ Mr. Brooke
I am speaking entirely of the National Insurance Fund. The right hon. Gentleman will realise that it is quite impossible to forecast many years ahead what the cost of National Assistance will be.
§ Mr. Griffiths
I can quite see that, but already it has been said from the other side of the House that there has been an estimate of saving next year from National Assistance?
§ Mr. Brooke
Then one has to take into account the extra cost of war pensions, too. Those are matters with which I should not complicate these figures which relate solely to the National Insurance Fund.
I must tell the House—and these are the last detailed figures—the way in which the total cost on the National Insurance Fund will be met. The total expenditure from the National Insurance 1072 Fund will be met in this way. After deducting £45 million a year which is available from interest on the existing Fund: next year, 1955–56, as to £516 million from contributions, as to £91 million from the Exchequer; five years hence as to £519 million from contributions, as to £236 million from the Exchequer; in 1979–80 as to £531 million from countributions, and as to £517 million from the Exchequer. At that time the Exchequer will be carrying 49 per cent. of the cost and the proportion will later rise to over 50 per cent.
I read this in the "Daily Herald" this morning. [HON. MEMBERS: "Hear, hear."] I am glad that hon. Members opposite cheer, because it is a shockingly false statement. This is what it says:That extra 1s. on the National Insurance contributions is being imposed to make the workers and the employers pay nearly 90 per cent. of the cost of raising the benefits of old-age pensions.In fact, they are not going to pay more than 79 per cent. and the amount which they pay is going to fall to 50 per cent. That is the answer to the allegations that have been made that the workers are being required to carry the weight which ought to be carried by the Treasury.
I have one more argument, and then I will pass from this part of my speech. The right hon. Lady and hon. Members opposite criticised the Bill on the ground that it contains a great shift of the burden from the Treasury to the contributors. The truth is, as an analysis of the figures will show, that the broad division of the whole cost of future pensions and benefits is unchanged by the Bill. Under the Bill it will be just about the same as was planned under the 1946 Act passed by the Labour Government.
The case of the Opposition is that the increase in the Exchequer payments from £70 million in this year to £236 million five years hence is not enough. That is what we have heard throughout the debate. It is said that more ought to be cast upon the Exchequer in order that the contributions of workers and employers should be lightened. In five or six years time the contributors will be bearing only two-thirds of the cost of National Insurance and the taxpayer one-third. I have heard hon. and right hon. Gentlemen urging that the Exchequer 1073 should pay one-fifth. What I am pointing out is that in five years' time it will be paying one-third.
In the absence of the Chancellor of the Exchequer, I should like to express thanks—I hope it is the thanks of the whole House—to the members of the Phillips Committee for the extremely valuable work that has been done. Hon. and right hon. Gentlemen on both sides of the House have expressed appreciation of the important social contribution made by the Report. The Committee examined the question whether the Insurance Scheme should be contributory or non-contributory, and it formed the view, which has been held by all hon. Members on this side of the House and by some—I dare not say most—hon. Members opposite that it should be contributory. As the Minister pointed out, every witness before the Committee came out in favour of a contributory scheme.
§ Mr. B. Taylor rose—
§ Mr. Brooke
Let me say in passing that, if we were to go over to a noncontributory system, it would cause the burden on the Exchequer to rise from £70 million now to £755 million in five years' time. The hon. Member for Sowerby said, "All you will argue about is who is going to pay what." If £755 million goes on to the Budget, it will be some argument.
Granted that it is to be a contributory scheme, we must also take it for granted surely that increased benefits should be accompanied by increased contributions. Under the Bill an increase of £2 12s. a year in a man's contribution earns him an increase of £19 10s. a year in pension and various other extra rights. Where could one find a better investment than that? [HON. MEMBERS: "In tea."] The next question is whether the amount of the contribution is reasonable. In respect of all those at present drawing pensions, the Exchequer is now paying over 95 per cent. on average. There is not a single person drawing a retirement pension now towards whose pension the Exchequer is not paying at least 85 per cent. A married man, now working, born in 1910, with a wife born in 1915, will, when he retires have two-thirds of his pension paid for by the Exchequer.
1074 The contributions that boys now entering insurance under the new scheme and their employers make will not meet the full cost of their pensions. An Exchequer payment will be needed as a contribution towards every pension.
The Phillips Committee recommended that the triple contribution should exceed the actuarial contribution based on age 16 and should contain something towards the additional cost of raising pensions for existing contributors. The Committee made a recommendation bearing out the provision that existed in the 1946 Act for that very purpose.
§ Mr. B. Taylor
It was not a unanimous Report.
§ Mr. Brooke
The majority recommended a particular formula for this which would call for a figure of contribution from the insured man distinctly higher than 6s. 9d. The Government have not gone as far as the majority of the Committee. As the hon. Member for Mansfield pointed out, a minority dissented.
§ Mr. Taylor rose—
§ Mr. Brooke
I am sorry, I cannot give way.
The trade union members expressed, as they had a perfect right to do, a preference for a different formula. Even the formula put forward in the Phillips Report by the two dissentient members would call for higher contributions than the contribution proposed in the Bill.
§ Mr. Taylor rose—
§ Mr. Brooke
No. In the Bill the benefits are being increased, as the Minister said, by over 20 per cent. If the contribution were increased proportionately it would not be 6s. 9d. but 7s. Under the 1946 Act the main pension rate was 26s. and a man's contribution was 4s. 11d. The benefits compared with the 1946 Act are being increased by over 50 per cent. If the contribution increased in the same proportion as the benefit, it would not be 6s. 9d. but over 7s. 6d.
The important question is: Is the contribution proposed too high for the ordinary man to afford? If the contribution were increased in proportion to the average increase in earnings since 1946, it would not be 6s. 9d. but 8s. 1d. Which- 1075 ever way one looks at it, the Exchequer is paying not only its full share, but more.
The right hon. Lady called on the Government to reconsider their proposals and bring in a much bigger Measure next year. Mark those words—a much bigger Measure. At present the capital liability of the Exchequer under existing legislation is £13,200 million. Under the Bill it will rise by a further £2,500 million to £15,700 million. That is going to require a gigantic effort to pay, but it is well worth while and we on this side believe that it can be carried.
The Opposition say it is not enough. If there were no increase in contributions at all, as some people seem to wish, the capital liability would go up by a further £3,000 million. It would be £18,700 million against which there is only £1,400 million in the Fund.
Is this the way to guarantee that the money will be there to pay the pensions, and is not that the most important decision that the House has to take? Let us be entirely sure that in the ultimate end our power to pay the much better pensions will depend on the continuance of British prosperity and the expansion of our industry and trade.
These things do not happen of themselves. They depend on our taking wise decisions and holding to those decisions. They depend on our making absolutely certain that as a nation we can continue to pay our way.
§ Debate adjourned.—[Mr. Legh.]
§ Debate to be resumed Tomorrow.