NATIONAL INSURANCE (No. 2) BILL (Hansard, 25 April 1955)

§ Dr. Edith Summerskill (Fulham, West)
I have not heard that the Parliamentary Secretary intended to refrain from giving us a short explanation of this Bill. I have no intention of making life difficult for him, but I should like him to expound the Bill to some extent, perhaps quite shortly, in case there may be a point which one of my hon. Friends might like to raise.

§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Mr. Ernest Marples)
I am obliged to the right hon. Lady the Member for Fulham, West (Dr. Summerskill) and reassured by her statement that she will not cause me any embarrassment. I was under the impression that this Second Reading was virtually formal, but I see her point of view and I will give a short explanation of the Bill to the House.
In March, 1954, my right hon. Friend asked the National Insurance Advisory Committee to advise him on the liability for contributions under the National Insurance Scheme of persons with small incomes. That Advisory Committee recommended certain changes, all of which my right hon. Friend proposes to accept. These changes are in a White Paper, Command 9432 which was recently issued. Some changes which the Committee recommended could be made by regulations, but others, under the National Insurance Act, 1946, could be made only by legislation. The Bill deals with three changes that can be made only by amending the Statute.
The first and most important change is this: at present persons who are self-employed or non-employed and who have an income of less than £104 per annum have the option to contract out of the National Insurance Scheme. If they contract out, they do not pay contributions and, of course, there is a corresponding loss of benefit. The 1946 Act laid down the limit of £104 as the limit below which 710 a person could contract out. The National Insurance Advisory Committee considered that, in 1955, £104 should be increased to £156. This means that whereas in 1946 a person with an income of £104 or less could contract out, in 1955, if the House approves the Measure, a person with an income of £156 or less can contract out. The main reason given was the increase in the cost of living since 1946 and in Clause 1 (1) of the Bill we substitute £156 for £104 in Section 5 of the 1946 Act. That is the principal change.
The second proposed change is this: under the 1946 Act a person can be excepted from liability only on his own application. The onus to apply was on him, but it is very ambiguous whether, if once he has applied, exception can be granted with retrospective effect. It is desirable that there should be some retrospective effect and the Advisory Committee recommended that regulations should allow back-dating and so clear up this ambiguity. The Bill carries out the Committee's recommendations and in Clause 1 (2) to allow back-dating it says: … with effect from any date not earlier than thirteen weeks before the date on which his application was made. That will allow the Ministry to back-date, so that if a person applies a little late for exception, he can receive it for 13 weeks before his application. In practice, there has been a limited amount of backdating, but not as much as the Advisory Committee recommended. My right hon. Friend has accepted the Committee's recommendation in full.
The third principal change affects low wage earners. The first two changes dealt with self-employed and non-employed persons. The third change deals with employed persons. The First Schedule of the 1946 Act provides that an employed person aged 18 or over who is remunerated at a weekly rate of not more than 30s. can pay less than the normal rate of contribution and the employer makes up the balance. The Advisory Committee said that the figure of 30s. a week in 1946 was unrealistic in 1955. The Committee recommended that the figure should be raised to 60s. a week and my right hon. Friend agrees. In Clause 2 (1), 60s. is substituted for 30s. in the First Schedule of the 1946 Act.
So there are three changes. The first is to raise the limit from £104 to £156 711 in the case of a non-employed or self employed person; the second is that if a person is excepted from liability, there shall be some retrospection. The third change is that further low wage earners shall pay a smaller contribution. The 1946 Act included them in this category if their wage was below 30s. The new Bill puts the limit at 60s. I was told that this was a non-controversial Bill. What is non-controversial is sometimes difficult to define in human affairs, but I hope that with that explanation the right hon. Lady the Member for Fulham, West will be satisfied and that the.Bill will have a Second Reading.

§ Dr. Edith Summerskill (Fulham, West)
I should like to thank the Parliamentary Secretary. On occasions of this kind we have our financial experts behind us and I like to give them every opportunity to ask questions if necessary. I realise that, in view of the increased cost of living under a Conservative Government, it has been necessary to introduce the Bill.

§ Mr. Marples
Since 1946.

§ Dr. Summerskill
I agree, but there is always a time-lag in these matters, as I know from having been at the Ministry and as the Parliamentary Secretary agrees. It would be grossly unfair if these provisions were not introduced. I understand that not only does the National Insurance Advisory Committee approve the Bill, but so also do trade union organisations which have the interests of these people at heart. We therefore wholeheartedly support it.
I take this opportunity to remind the Parliamentary Secretary—and he might convey this to his right hon. Friend—that we have waited a long time for him to introduce an amending Bill, and an amending Bill of a much bigger scope. I suppose that now the General Election is in sight we must give up hope. I am surprised that he should come along with an amending Bill which is of great value, but of a very limited nature.
The Parliamentary Secretary must know that certain amendments to the Statute are long overdue. They are of a minor kind, and during the last few years we have been promised them time after time. Now the Parliament is coming to an end and these amendments have not 712 been made, though I know that they are in the Ministry. They are matters about which there would be no controversy in the House. I find it difficult to understand why no action has been taken when, on many occasions, we have been given what might be described as half-promises.
However, we must take this crumb. The Leader of the House need not get excited about it; it is quite a small matter and we accept it as that. I am sure that those who will benefit will be grateful.

§ Mr. Douglas Houghton (Sowerby)
The Parliamentary Secretary explained the provisions of the Bill very clearly. We see that the proposals are of a limited character, but there is some urgency about them in view of the fact that a number of people are finding it difficult to keep up their contributions under the present income limits. The Bill will relieve them of the obligation to contribute under the National Insurance Scheme.
None of us in this House would wish to encourage people to contract out of National Insurance. It is important that as many people as possible should remain in. At the same time, we must avoid imposing undue hardship on these who are required by law to contribute quite a substantial sum of money under the scheme out of inadequate means. Unhappily, some people who will be bound to contract out under the provisions of the Bill will have very much modified benefits later on and may have to go to the National Assistance Board to get enough to live on. That is not the sort of thing we want to happen, but under present conditions it is inevitable that that will be the result.
I also wish to comment on the general treatment of these National Insurance matters. From time to time the Minister refers particular problems to the National Insurance Advisory Committee. The result is that we are rather dealing with questions piecemeal. We must watch that we are not running a straggling succession of amendments to this comprehensive Measure. I believe that it was last year that we dealt with maternity benefits on the recommendation of the Advisory Committee. Now we have these three matters relating to those on low incomes—the self-employed, the non-employed and the low-paid worker over the age of 18. We understand that the whole of widows' benefits are being considered and 713 I believe also that the question of the non-contributory pension is being dealt with.
The time will come in the next Parliament when we shall have to consider how to deal with these changes in the scheme. There are some fundamental changes. It is unsatisfactory to keep up a running amendment of the main scheme without being able to take full stock of the consequences, financial and otherwise, of the changes that we make.
This is a Measure to be welcomed. As my right hon. Friend the Member for Fulham, West (Dr. Summerskill) said, it meets with the full approval of the trade unions which are concerned with the third of the proposed changes. I understand that so high is the general level of wages that almost no people over the age of 18 were getting such low pay as to qualify for the reduced contribution under the old arrangement. There is every justification, in present circumstances, for raising the amounts from 30s. to 60s. a week. I am sure that hon. Members on both sides of the House welcome and approve the Bill.

§ Mr. Marples
I thank the hon. Member for Sowerby (Mr. Houghton) and the right hon. Member for Fulham, West (Dr. Summerskill) for what they have said. I would point out that if the matter were to be dealt with comprehensively it would be necessary to delay this Measure and to wait for the recommendations of the National Insurance Advisory Committee on other points. I am sure that the hon. Gentleman would be the last to wish that. The White Paper is dated April, 1955. I think the House would say that my right hon. Friend has acted as quickly as possible after the Committee made recommendations.
It would impose a great hardship on some people if my right hon. Friend had not acted when he did. I think that the right hon. Lady showed a little less than her usual fairness when she said that my right hon. Friend had been rather dilatory.