§ Order for Second Reading read.
§ 11.6 a.m.
§ Mr. E. H. C. Leather (Somerset, North)
I beg to move, That the Bill be now read a Second time.
I may say at once that I and all my hon. Friends who are associated with this Bill are saddened by the absence of that colleague of ours who really wrote the Bill, and who has done all the initial work, for which I take no credit—my hon. Friend the Member for Reigate (Mr. Vaughan-Morgan). He, as Chairman of the Conservative Party Social Services Committee, has been an expert on and a student of the subject for a very long time, and we greatly deplore the illness that keeps him from the House today.
Next, I hasten to say that I do not pretend to be a technical expert on the subject of National Insurance. There are many hon. Members on both sides who know all the details about all the Acts of Parliament that have ever been passed, the exact figures, and how many "bobs" it was in 1928 or 1937 or whenever it was. I am not well versed in such technicalities, nor am I concerned with them today.
We are concerned in this Bill with a human problem, a problem that we now consider has become a social injustice to several hundred thousand old people. This Measure seeks to do something in a very small way to try to right that injustice. We believe, and I am quite sure that public opinion in the country is almost solidly behind us—and in the course of the day we shall see what the opinion of the House is—that there is a real case not merely for putting right the ravages of time, but for taking a small step forward in improving the condition of so many elderly people.
We do not regard this Bill as any great reform, but only as a very small step forward, but it is, we believe, the largest step we are likely to get under the aegis of a Private Member's Bill. Therefore, after much thought and study, we have brought in a Bill to ask that earnings under the earnings rule be raised from £2 to £3.
1217 I propose now to deal very briefly with the Clauses of the Bill, and to take, first, the easy ones, on which I am sure there will be no argument. Clause 2 alters the procedure under the National Insurance Acts, and gives the Minister power to make changes in rates or systems from time to time by regulation rather than by Bill, and Clause 4 lays down the affirmative procedure. We believe that the Government welcome this change, and we hope that there will be no dispute—and certainly no party difference—on this. The present procedure requires that for any such change there shall be a new Act of Parliament, which is a long and cumbersome business and frequently difficult to fit into what is, as far as I can see, an always overcrowded Parliamentary timetable.
Therefore, by giving the Minister power to do this by Order, after affirmative Resolutions of both Houses, we are making the procedure more flexible and we shall bring about a situation where there does not need to be such a great time lag before something can be done. Under the Bill procedure, even after everybody is completely agreed that something must be done, it might take anything up to a year to do it. Under the affirmative Resolution procedure it would take, perhaps, a couple of months. I hope that that will be regarded as helpful.
I am afraid that Clause 3 raises some difficulty, and I think that it would be right for me to say at the outset, in order to put anybody who is concerned out of his misery, that we propose to withdraw Clause 3 during the Committee stage if the Bill gets a Second Reading. The reason is not that any of us—myself or my supporters—have changed our minds about it, but that we realise that the Clause raises quite different issues and subjects which it is extremely difficult to fit in under the general heading of the Bill.
However, I want to say to the Joint Parliamentary Secretary that while that relieves us of the necessity of having any argument or difficulty about the principles involved in Clause 3, I hope that she may be able to give an assurance that the subject is receiving attention. There is no doubt whatever that the existing law relating to dependants under the National Insurance Scheme is anomalous and that 1218 in some ways it causes real hardship. First, there is no real reason why the National Insurance Act should impose much stiffer, tougher regulations than those of the Board of Inland Revenue. This is a most odd state of affairs.
I suppose that, like most hon. Members, outside this House in private life I regard the Board of Inland Revenue as probably the roughest, toughest, most cold-blooded body of men in the world. But we have the strange situation on this issue that the Ministry of National Insurance is even tougher and even more coldblooded.
§ Mr. Leather
I should be happy to employ the hon. Gentleman as my Income Tax consultant from now on—at a fee, of course, and tax free.
I now come to the main Clause, which is Clause 2. I have already said that in my view and that of my hon. Friends this is the absolute minimum which, with any grace at all, this House can now give, or do for these elderly people. I think that "do" is the right word: it is not "give." All these people have contributed. This is supposed to be an insurance scheme, not a national lottery. In an insurance scheme the principle is supposed to be, "You pay your premiums and you make your claims, "not," You get your claims, provided your mother-in-law happened to be born on a certain date and your wife has now got four children" or whatever condition may be imposed that one does not really know about. It is supposed to be an insurance scheme. It may not be working very well, but that is quite another matter.
There is at present the real difficulty that the previous Minister of Pensions and National Insurance submitted this issue to the National Insurance Advisory Committee. Therefore, the Government say, "This issue is now—purely by coincidence—before the National Advisory Committee and it would be grossly discourteous of us to agree with you and to adopt this Measure without even bothering to wait to hear what the Committee has to say." Of course, we accept that argument. Any Government, in relation to any advisory committee and 1219 any Ministry, would be in that situation, and we fully understand it.
That being so, we consulted the authorities of the House and we have taken a step which we hope will relieve us of that problem. We are informed on good authority that the Minister hopes very much to be able to have the Report of the Advisory Committee by the end of April. We have also ascertained that it is possible for us to postpone the Committee stage of the Bill until early in May. Then, however—and I hope that my hon. Friend the Parliamentary Secretary is quite clear about this—everything will depend on that Report and on the action which the Minister takes.
Again, I think that I can speak for all my supporters—and I think for the majority of my party; and I should be very interested to hear the views of the party opposite—when I say that provided that the Advisory Committee produces a Report which is a reform, a step forward at least as good as ours, then we are prepared to support it. On the other hand, if it produces a mean, niggardly Report, or if it suggests the 50s. of the T.U.C., then we will not support it. If that should happen at that stage, I should not withdraw this Bill. That is all in the lap of the future.
The crux of the matter is whether there is a case at all for an earnings rule. Once one agrees that there should be such a rule, then the argument is only whether it should be at a certain figure or drawn in a certain way. I believe that the earnings rule originates from the wartime Report of Lord Beveridge; but now, after ten years' experience of it, I am not at all sure that Lord Beveridge was right. I am not saying that I have come to the conclusion that the earnings rule is wrong and should be abolished, but that it is wrong to regard it as absolutely untouchable, laid down in tablets of stone.
I suggest that the matter merits second thoughts and I hope that during the debate some of that thinking may be revealed. We start by saying that the pension is a retirement pension based on the retirement principle. Then every single one of us, including my friends in the T.U.C., starts talking about old-age pensioners. We never hear anybody in a speech talking about retirement pensioners. It is a standard phrase, and even 1220 the organisation is called the National Federation of Old Age Pensions Associations. A phrase constantly used in the House is "old-age pensions." If people are so wedded to this idea of retirement pensions, it would be helpful if they would refer to them as such instead of referring to old-age pensions. It is a small point, but it indicates what is in people's minds.
Whatever may be said in this House, most members of the public regard this as an old-age pension. I may be wrong but I feel certain that a Gallup poll in any constituency would show that at least 75 per cent. of the constituents would say that it was an old-age pension and if we asked about a retirement pension many would not even have heard of it.
§ Mr. Leather
That is perfectly fair. They may have. I do not want to press the point too far, but I want to emphasise the fact that there is a wide misunderstanding and that even those who are most wedded to the principle contribute to the misunderstanding by continually using the phrase "old-age pensions."
If we really are wedded to the principle of the retirement pension, I cannot see how one can logically reverse the principle five years later. If one was really wedded to the principle and thought that it was so vitally important it should go on "till death us do part", but we applied it for only five years and then, when we thought it was not quite so convenient—let us be frank—we relaxed it. I put it to the House that it was no more than a question of convenience and cost. If we are prepared to justify the earnings rule on those grounds, by all means let us do so, but let us not try to justify it on some larger ground of principle which, in my humble view, is no longer applicable.
Secondly, it is supposed to be an inducement to go on working. We are told time and time again—indeed, I think it was in the original Beveridge Report— that unless there is some limitation it will pay people to retire and they will all stop working; and as we want more people in industry, that would be a bad thing. But is it true? It may be true in a few cases, but mostly, in my experience, the reverse is true. I would say without 1221 hesitation that the reverse is certainly true in the case of every agricultural worker over 60 I have ever come across.
As opposed to the ivory tower of the theorists and the documents of the clever people who work all this out, day-to-day experience of human beings in our constituencies shows that this argument is not true, and I do not believe that it is any longer a valid argument. Fact does not confirm theory. Human nature, and certainly human nature in a period of full employment, reacts in quite a different way from that suggested by the theory.
I must refer to the statement of the Trades Union Congress and the 50s. I know that my hon. Friend—and I will call him that if I may—the Member for Sowerby (Mr. Houghton) is concerned with this principle, but I urge my friends of the T.U.C. to think again. We are reaching an extraordinary position now in which a high percentage of the public opinion of the country wants a great social step taken in the interests of our old people and the only reactionary body in the country which says "No" is the T.U.C. That is a fact, and a fact which I personally deplore.
The T.U.C. says, "This is all very well at the moment, when we have full employment and wages are high, but suppose we have a depression and a lot of unemployment; the situation would then be very different." If I may say so to my friends of the General Council, they are carrying their conservatism much further than I should ever be prepared to carry mine. Because of a fear of something hypothetical, something which might occur in five or ten or fifteen years' time, we are deliberately creating social injustice for hundreds of thousands of old people now. I say that is wrong.
What about the 50s.? The 50s. is no reform at all; it barely restores the figure to what it was supposed to be in the first place—no more. Even when we raised the old-age pensions last time—the retirement pensions I should have said, and I apologise—we did go a little further than just restoring the balance. There was an odd 2s. 6d. or 3s. 6d., or something like that. But the 50s. would not be a penny improvement and I therefore regard it as niggardly and unworthy, and I implore my friends in the T.U.C. to consider the matter again.
1222 The only other argument on which they can justify their attitude is that if we allow people unlimited earnings that will enable unscrupulous employers to undermine the wages structure. Is that a valid argument in 1956? Does anybody believe that would happen? Let me say this quite frankly: if there is any trade union leader who feels that he and his union are so weak that some employer will do that, then he had better get out of the business and let somebody else take it over.
That attitude of fear of the employer is based on the philosophy of the weak and tender young trade union plant of twenty, thirty or fifty years ago and it is hopelessly out of date. We cannot continue to base everything on that antediluvian depression mentality. Indeed, it is the one thing which will bring about a depression again. This is a different world. The trade union movement today is the strongest economic blocin the country. Let them be proud of their power. They are very responsible people. Many of them are friends of mine and I admire them. But let them not base arguments on the assumption that they are weak and tender, and that any small employer in any backwood will undermine their whole structure just because we grant a little social justice to a couple of hundred thousand retirement pensioners. I just do not believe it.
We in the House, the trade union movement and bodies such as this Advisory Committee have done fairly well since the war by the broad mass of the wage-earning people of this country. Those of us in industry—and the majority of us are in industry in one way or another, on whichever side of the table we sit; and I have sat on both sides— have had a pretty good deal. The standard of living of both those in management and those on the shop floor has risen enormously since 1945.
The old people, the retired people living on small pensions, have fallen further and further behind. No one knows that better than the right hon. Member for Llanelly (Mr. J. Griffiths), who has been sympathetic about this. I am sure he will agree with me about it. Time and again in industry we have taken steps forward. We are taking 1223 them now in wage advances which help all of us in industry—workers, management and shareholders. But nothing has been done for the old people. The pension increases which have been granted have constantly, under both our Governments, been eaten away by inflation.
We are asking for a very small step forward today to help a couple of hundred thousand elderly people who are in real need—the new poor, the real poor, the forgotten souls. I am sure that the House, the Advisory Committee, the T.U.C. and anyone else interested cannot do less than grant them an increase in their own earnings. After all, we should not be giving them the money; it is a question of their own earnings which they are to be allowed to earn by our grace—a measly £1 a week. I do not think that is asking too much. I commend the Bill to the House and I hope it will have an unopposed Second Reading.
§ Mrs. Eirene White (Flint, East)
What is the hon. Gentleman's attitude towards the widowed mother who is allowed to earn up to 60s. per week? She ought to be allowed to earn as much as she likes with no earning bar at all, because she should work to get as much as she can in the shortest time in order to obtain money for her children.
§ Mr. Leather
I am grateful to the hon. Lady. I entirely agree with her, but the point is not covered in the Bill. It is covered, I believe, in the Government White Paper which has been published this morning. I entirely agree with her and if she proposes to bring in a Bill to do something about that situation, I will be happy to support her.
§ 11.27 a.m.
§ Captain F. V. Corfield (Gloucestershire, South)
I beg to second the Motion.
I do not propose to make a speech on the Bill because my hon. Friend the Member for Somerset, North (Mr. Leather) has already explained it. I do not pretend to be an expert on the technicalities but I am very much interested in the Bill from the human angle, which my hon. Friend has put very much better than I can. I will therefore content myself by seconding the Motion.
§ 11.28 a.m.
§ Mr. James Simmons (Brierley Hill)
Proposals from the Conservative side of the House affecting the workers are naturally, and in the light of history justifiably, viewed with suspicion on this side of the House. Too often the Tories give with one hand and with the other take away more than they have given. That has been our experience in the past. The intentions of the hon. Member for Somerset, North (Mr. Leather) and his hon. Friends sponsoring the Bill are no doubt impeccable, but there is a quotation which mentions something about the way to hell being paved with good intentions—and that may be an excuse for our caution.
The Tory Party is justly famed as a party of undoers and destroyers; steel, road transport, the attacks on the Health Service—repelled by Guillebaud—are monuments to their fame—or should it be shame? We have heard from the hon. Member that he is not concerned about technicalities, although he spent a lot of his speech in dealing with technicalities. We must be wary of anything which would undermine the basic principles of the scheme for adequate subsistence on retirement as a right. Those basic principles are pensions providing adequate subsistence; the condition of retirement and increments for postponed retirement; employment after retirement to be inconsiderable and remuneration in proportion.
The fact that some pensioners are finding it hard to make both ends meet is an argument for increased pensions rather than increased earnings for retired pensioners. Pensioners of the First World War, of which I am one, will be alive to the danger of pensions being regarded as a substitute for wages. We who were active in the ex-Service organisations immediately after World War I recall some of the very bitter fights we had to put up for the ex-Service men, whose pensions were taken into account when their wages were fixed.
At that time I was a member of Birmingham City Council and took up the case of ex-Service night-watchmen, who were getting miserably inadequate wages and were fighting for an improvement in their conditions. They were taking the fight to the floor of the council chamber. The Tory chairman of the committee, in replying to the debate, 1225 said, "These men are not doing so badly; they have their pensions." I am afraid I was quite un-Parliamentary on that occasion and I believe I let fly a missile at the head of the chairman of the committee who made that disgraceful reply to the debate. It is no use the hon. Member for Somerset, North saying that things are different now. The capitalist leopard does not change his spots. They get fainter or more marked according to the economic conditions prevailing, but the spots are there all the time.
The Phillips Committee was not unmindful of this when it said:Wages might in certain cases be adjusted …That word "adjusted" is a nice, respectable word. The Committee did not say "reduced," or "slashed," but "adjusted," and added:to take account of the fact that a pension was being received.
§ Mr. Simmons
That is in the main Report. I am coming to the exceptions later.
The Report said that representations for changes in the earnings limit were linked in some quarters with proposals for getting rid of the retirement condition altogether. In his reservation to the Phillips' Report, Professor Cairncross wanted the earnings limit and the retirement provision abolished, and said:If this were done, however, there would be a strong case for paying a lower rate of pension at 65 than at 70 and maintaining a gap between the two rates.The Committee also said that if that were done an alternative to differential rates would be an increase in the age at which pensions could be taken.
Here we have the cloven hoof showing itself. Before we monkey about with retirement pensions we must consider the consequences of our action. The Bill proposes to monkey about with the structure of the general scheme. It is dangerous to do it by a Private Member's Bill rushed before the House for the purpose of gaining applause for boldness when as a matter of fact rashness rather than boldness characterises the Bill.
1226 This is not a subject for witty replies with a Canadian accent—
§ Mr. Simmons
I will repeat my remark because I am not ashamed of my accent, which is Black Country and Birmingham. This is not a subject for witty replies with a Canadian accent at an "Any Questions" session of the B.B.C. but for careful consideration by a committee set up for the purpose and having access to all the facts and the right of consultation with interested and affected bodies Let us remember that the amount of the pre-war 10s. old-age pension, not conditional on retirement, was substantially below that of the other social insurance benefits and let us beware of uniformed benevolence sabotaging the general level of benefits. We do not want to return to the old patchwork-quilt pattern of benefits that prevailed before the Labour Government gave us a social security scheme based on Beveridge but better than Beveridge.
In the old days a man was unemployed and received unemployment benefit. He received an allowance in respect of his wife and children. The poor chap, as a result of unemployment, fell sick and his health was undermined through worry, lack of proper nourishment, and care for the future of his family. He went to the employment exchange one morning and was told that as he was sick he could not receive unemployment benefit but must go on to national health benefit. The national health benefit he got was less than when he received unemployment benefit and he received nothing at all for his wife and children just at a time when he needed more help. His physical and mental condition aggravated the illness from which he was suffering.
That was the old patchwork of social insurance, which created far bigger grievances than we are discussing this morning. We do not want to return to that. It is possible that any tinkering with the basic principles of the present social security schemes might be the thin end of the wedge in getting back to that 1227 kind of thing—a scheme under which the benefit had no regard to human need but involved watertight official compartments wherein, if a man was sick, unemployed or old, he was treated differently in each category. The man drawing unemployment benefit went on to a lower scale of allowance when his position became worse.
Differential rates of old-age pensions might be the thin end of the wedge for a return to something like that old pattern. This Bill, backed by twelve Tory M.P.s, including a Minister, is a condemnation of the Government's treatment of old-age pensioners. So long as National Insurance benefits have to be supplemented by National Assistance some relaxation of the rule to enable pensioners to supplement pensions by part-time earnings may well be necessary.
In these circumstances, one cannot vote against the principle of the Bill, which is to give aid in distress caused by the inadequacy of the provisions of the Government for old-age retirement. One has to vote with the proviso that radical amendment will be necessary in Committee, as the relaxation of the earnings rule is no substitute for an adequate subsistence or reason for sabotaging or undermining the fundamental structure of social security benefits.
§ 11.40 a.m.
§ Mr. A. C. M. Spearman (Scarborough and Whitby)
I always think that there is quite a number of subjects which can be approached most usefully in this House in a non-party spirit. Unlike the hon. Member for Brierley Hill (Mr. Simmons), who has just spoken, I think that the question of pensioners is one of those subjects. We cannot possibly all agree upon how they can be best and most effectively helped, but I should have thought we could all agree that we all want to see them helped and could discuss the ways and means of doing it.
The point I want very briefly to raise today is the position of pensioners in seasonal resorts. In places like Scarborough and other, perhaps, lesser but important seaside resorts, it is very difficult indeed for anyone to get part-time work for three-quarters of the year, but it is extremely easy to get well-remunerated work at £5 a week or, perhaps, more for a quarter of the year. This means that if the maximum amount that such 1228 people are allowed to earn is £2 a week —or, if the Bill is accepted, £3 a week— then during, say, 13 weeks of the year all they can earn is £26 or, if the Bill is accepted, just under £40 in the year.
If, however, they were allowed to earn £2 a week, taken over a year—that is to say, if they were allowed to earn £100 a year—I believe that in places like Scarborough and other seasonal resorts there would be easy opportunities for a great many of them to earn about £75 a year. They would still be earning less than an average of £2 a week, but they would have the advantage of being able substantially to supplement their incomes.
I fully realise that there are great difficulties in carrying out this suggestion. No doubt it would mean that administrative expenses were greater and perhaps some losses involved, but, surely, it is worth while making a great effort to overcome these obstacles because of the very material advantages to be gained. First, there might be quite a number of pensioners throughout the country who would be materially aided by an additional income of something like £75 a year, at no cost to the State. The second advantage is that in places where the hotel industry is the principal industry, it is extremely difficult during the season to obtain labour. In fact, it is often quite impossible to get sufficient labour.
I think it would be generally agreed that the hotel industry is not one which simply provides luxury services; it is really an essential industry, which brings in a great deal of foreign currency and provides holidays for our workers. Because of the stress and strain of factory work, we are all agreed on the necessity of holidays with pay. The question of how the hotels are to obtain labour, when they are fully occupied for only a short part of the year, becomes, therefore, a quite serious national problem.
I am delighted to see for the first time sitting on the Front Bench my hon. Friend and nearest neighbour, the Member for Bridlington (Mr. Wood). All of us who come from Yorkshire are particularly pleased with his appointment and give him our very best wishes. I know that he will sympathise with some of the things I have said. I know he is just as anxious as I am to improve the lot of old-age pensioners and that he has experience 1229 of the hotel difficulties of which I have spoken. Of course, I do not suggest that the hotel problem is quite so important at Bridlington or Filey as in the queen of seaside resorts! Nevertheless, my hon. Friend will have had experience of the difficulties, and I ask him to bear them sympathetically in mind.
§ 11.45 a.m.
§ Mr. Tom Brown (Ince)
I compliment the hon. Member for Somerset, North (Mr. Leather) on his good fortune in the Ballot. I also congratulate him on the fact that this is the second or third occasion when he has sought to introduce legislation dealing with a vast human problem. As the hon. Member himself said at the outset of his speech, it is a human problem. I well remember that on a former occasion the hon. Member introduced a Bill dealing with the problem of the unfortunate men in the mining industry suffering from silicosis. Therefore, he is entitled to apply his mind to what are considered to be human problems.
On this occasion, I find myself in a difficulty. I should like to support the Bill 100 per cent., but, at the same time, I must consider principles. One of the principles dominating my mind at the moment is the fact that on numerous occasions at Question Time we have constantly urged the Minister of National Insurance and Pensions to refer these great human problems to the National Insurance Advisory Committee. That is a principle which we have believed to be right. We think it is right and proper that after a committee has been appointed by the House, when matters of complexity and complications arise it should have an opportunity of discussing and considering them, listening to the evidence of interested parties and, in the end, giving us the considered judgment of its members.
Unfortunately, we have not had the Report from the National Insurance Advisory Committee. It may be that this debate will be the means of gingering it up. I understand that the last date on which the Committee received evidence was 31st January. Obviously, we cannot expect the Report within three or four days thereafter. In fact, it has leaked out today that we may expect the Report at the end of April. If today's discussion of this very important problem hastens the presentation of the Report, subject, of 1230 course, to the Bill receiving a Second Reading, the Committee upstairs will be in a position to examine the recommendations of the National Insurance Advisory Committee.
Whilst I regard the Bill as an important Measure, it might be suggested that it is premature to consider the raising of the income limit. The promoter of the Bill and his sponsors would have been in a much better position had they been able to incorporate in the Bill the recommendations of the Advisory Committee. On principle, therefore, I think it would have been much better if we could have had the Report before us and considered it in all its aspects. Had that been the position, the promoter of the Bill might have made a much better job of it.
§ Mr. Leather
That is a perfectly fair point and I do not disagree with what the hon. Member says. I think, however, I am right in saying that we announced our intention to introduce the Bill before the Minister referred the question to the Advisory Committee. The two matters may not have been unrelated.
§ Mr. Brown
I quite agree.
I told the hon. Member on an earlier occasion that his enthusiasm when he came to the House was such as to command my support. He was over-enthusiastic, if that is possible, to do something to remove what he called social injustices. Sometimes we are inclined to be in a hurry, but my experience is that hon. Members are invariably overcautious in dealing with matters of importance.
There is another Report I should like to have the opportunity to discuss. I have been anticipating the Government's giving us an opportunity of discussing the Phillips Report. The two Reports go together. When we get the National Insurance Advisory Committee's Report and the recommendations in it, whatever they may be, that Report with the Phillips Report can be considered in their entirety, and then we can bring forward what I am longing to see, and that is comprehensive legislation to deal with the anomalies which have arisen and accumulated during many years.
I sometimes think that in our enthusiasm to put right some things in our National Insurance scheme, compara- 1231 tively little things, perhaps, though, of course, they are important, we forget to look to what the effect of what we propose will be upon the insured person we try to help. I am on this occasion in some difficulty, I confess—but confession is good for the soul, especially on a Friday. I understand—I may be wrong—that if certain things take place between today and the consideration of the Bill in Committee, certain other things will be accepted by the Government.
Whether that is true or not I do not know, but I think that, in order that we may satisfactorily cope with several problems in our social insurance schemes, we should first have an opportunity of discussing those two Reports, the Phillips Report, which has been on the stocks for some time now, and the other, which will be published in April. Then we shall be able to make a better judgment of the problems and make a better job of overcoming them.
We are continuously building on the foundations which were laid by my right hon. Friend the Member for Llanelly (Mr. J. Griffiths). We have, as it were, laid a course of bricks but have not yet reached the first floor, and, in building in future, we ought to make doubly sure that we build aright. That is very important. The fact that the structure has grown as it has, the fact that we seek to build it higher and better, shows what a great change has come over the mentality of our people. I remember in 1919, when I was engaged on the industrial side, employers of labour took into consideration the 10s. pension in assessing the wages payable to a man. That was a most despicable thing to do.
There is a change of mentality now. I welcome the change. It is a sign of that change that we are now discussing a Measure to raise, irrespective of the wage structure and the existing pension arrangements, what a person on pension may be permitted to earn. It is a great change, and we welcome it. I remember going to a colliery office to fix the wages of an old-age pensioner, and how the first thing the manager said to me was, "This man is in receipt of a 10s. pension and, therefore, his wage rate must be lower." All that sort of thing has gone, and we hope it will never come back.
The hon. Member for Somerset, North made a little play with the terms "old- 1232 age pension" and "retirement pension." I think he was only teasing the House a little. We generally use the term "old-age pension." We have grown up with it. The term "retirement pension" came only in 1946. Before that we always referred to it as an old-age pension, and that expression is deeply established in our minds and our language. The National Insurance Act established the new principle of pension conditional on retirement, and we have to explain to the people that the old-age pension is not now, in the strict sense of the term, what it was before 1946, and that it is now a retirement pension. Some people call it the retirement pension and others the old-age pension, but…a rose by any other name would smell as sweet.The Bill contains a provision for which we have long fought and argued, and I hope that the Government will be prepared, at least when the National Insurance Advisory Committee's Report is received, to support a Measure which will abolish once for all this despicable income limit and, in the light of the changing circumstances, make it easier for people, whom the Bill is intended to assist, who are in an unfortunate position to obtain a total income commensurate with the cost of a decent standard of life.
§ 11.57 a.m.
Mr. W. M. F. Vane (Westmorland)
It was pleasant to hear the tones of the hon. Member for Ince (Mr. T. Brown), after the sour words and sneers of the hon. Member for Brierley Hill (Mr. Simmons) sitting beside him, but both those speeches had in common one thing which I do not quite understand and which I do not think many Members will accept. That was the insinuation that the Bill changes the basic principle of the present retirement pension scheme. As I see it, it changes only one condition, and does not change it so very much, and, in so doing, follows the precedents of the changes which have been already made, on two occasions since the scheme was founded at the end of the war. Therefore, I hope that the two hon. Members will not make too much of the argument that the Bill makes a change of principle.
§ Mr. T. Brown
I am sorry the hon. Member has misunderstood me. The principle to which I referred was the principle which the House adopts when 1233 dealing with such complex questions, the principle of referring those questions to the National Insurance Advisory Committee. Once we have referred matters to the Committee, we should await the Committee's Report.
Of course, I accept the hon. Member's explanation. I understood him beforehand to say that, but I understood that he went further, following the lines of the hon. Member for Brierley Hill, who implied that there was more in the Bill than its backers, I believe, intend.
All of us know from contacts with our constituents that a change in this earnings rule, apart from any other changes in the retirement pension structure, would be extremely welcome. I, for one, hope that we may see some change sooner or later, and the sooner the better. I hope that when the Joint Parliamentary Secretary replies to the debate she will restate the basic principles of the retirement pension scheme. There is much misunderstanding among many people about what was intended, first, by Lord Beveridge and then by Parliament and the Government of the day when the scheme was set up. One way of looking at it is that the pension is received without condition by men at the age of 70 and by women at 65 but can be drawn five years before if the claimant retires from work—generally on account of ill health or disability. But I do not believe that it was ever intended in the financial and political calculations of the day that everyone would draw the full pension from the age of 65 or 60. Hence we had what is called the earnings rule.
I for one do not quite understand the main object of the earnings rule. If a person had listened only to speeches already made today he might be excused for leaving the Chamber with the thought that some people considered that the earnings rule was adopted to encourage people to retire whilst others considered that it was adopted to encourage people to stay in work. Already today both ideas have been expressed. I hope that the Joint Parliamentary Secretary will make clear the Government's view of the earnings rule. I hope that it is to encourage people to continue doing useful work beyond the minimum retirement ages if they feel that they can happily do something useful and profitable.
1234 As it stands at present, the earnings rule is a direct disincentive to anyone to stay in employment and earn more man the small amount of 40s. The T.U.C. proposal raises a little the point at which that disincentive applies. The Bill raises it a little further, but surely another and better way of meeting this whole question is by a graduated scale. I hope that after receiving the advice of the National Insurance Advisory Committee the Government will consider the advantages of a graduated-scale earnings rule as against those of a fixed sum. It seems to me that under such a rule one lifts the point where complete disincentive comes into operation a good deal higher than it can be lifted by any likely fixed sum.
I should also like to support my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) and ask the Government to see whether it is not possible to operate the earnings rule in such a way that people in receipt of retirement pensions can also work in certain forms of seasonal employment such as the hotel industry, which he mentioned. It seems strange that one should be allowed to earn up to £100 a year provided that that sum is spread over every single week in the year; that completely precludes many people from working usefully and, I hope, happily in many seasonal trades in which there is a shortage of labour at present.
I would ask the Government, when they receive the Report of the National Insurance Advisory Committee, not to adopt its recommendations too slavishly One of the evils of government today is to refer almost everything to an advisory committee and then to take up a defensive position behind the advice given by the committee.
In a matter like this it is very helpful to have the advice of such a committee, for the reasons which the hon. Member for Ince has given to the House, but I hope that in the end the Government have a mind of their own and will not just accept what the Advisory Committee suggests. I hope that if they feel that something bolder than the Committee's suggestions are appropriate, they will take such a step and ensure that whatever resources are available will be used in the best way to help these people for whom all of us in all parts of the House want to do our best.
§ 12.5 p.m.
§ Mr. Douglas Houghton (Sowerby)
If the hon. Member for Westmorland (Mr. Vane) will permit me, I will defer some comment on his remarks until a little later. I want to go back to the beginning and to the genial and somewhat emotional speech of the hon. Member for Somerset, North (Mr. Leather). In the course of his speech, the hon. Member threatened the Minister, intimidated the National Insurance Advisory Committee and defied the T.U.C. I thought that that was a pretty good morning's work, and we now begin to understand why the hon. Member finds the Inland Revenue so tough.
What the hon. Member said about the probable course of the Bill modified some of the criticisms which I would otherwise have made about proceeding with the Bill at all. We are confronted with the fact that this matter has been referred to the National Insurance Advisory Committee. It is true, as the hon. Member for Somerset, North said, that the present Minister's predecessor made that reference on 22nd November, whereas the Bill was ordered to be printed on 9th November. Therefore, we concede to the sponsors that they were first in the field. Knowing how Ministers react to pressure and backbench difficulty, one can believe that it is very likely that the Minister decided that that was the best course he could take to avoid a head-on clash with an influential body of his supporters.
The National Insurance Advisory Committee called for evidence from interested parties, and that evidence had to be in by the end of January. The Committee is now proceeding to consider representations made to it and probably will take oral evidence as well as consider written documents. I do not know whether the end of April is, in the circumstances, quite as soon as we could have hoped, but in the knowledge that the House desires the Report at the earliest convenient moment, the Committee will, I am sure, do its best to meet the convenience of the House.
If the Bill is to have a Second Reading, and I would not dissent from that, it should go forth from the House that the amount of the earnings rule in Clause 1 has received only the provisional approval of the House and may be subject to amendment in the light of the recommendations of the National Insurance Advisory Committee.
§ Mr. Houghton
The hon. Member for Somerset, North—we are still on friendly terms—fully accepts it. All that I am anxious to do is to avoid misunderstanding and possible false hopes arising from a Second Reading without a Division today, which seems likely. The newspapers tomorrow may convey to people that there is fresh hope of being able to earn more without deduction from retirement pension. My own anxiety about that is not to prejudge the matter in any way and to make sure that people understand what may happen in the House today.
I come now to the merits of this subject. It is a matter of opinion whether we are helping or hindering the work of the National Insurance Advisory Committee by ventilating our personal opinions on a subject which has been referred to them, but we have the Bill before us and speeches have been made in support of its proposals. I think that arguments used in support of the Bill can quite properly be met by some which perhaps do not support it.
Just to clear up any point of misunderstanding, I should like to say that I understand that the earnings rule as it affects widows and widowed mothers is within the reference to the National Insurance Advisory Committee but is not dealt with in the Report which has come into our hands from the Committee this morning on widows' benefits generally. I have here the reference to the National Insurance Advisory Committee, and it covers widows' pensions as well as retirement pensions in regard to the earnings rule. The widowed mother already has an earnings limit of £3. That she gained in the 1951 Act, when the earnings rule for retirement pensioners and widows without children was raised from 20s. to 40s. per week.
I am by no means satisfied that it is right to encourage widowed mothers to go out to work in order to supplement an inadequate benefit. That is really the crux of the matter which we are discussing this morning, and it comes out more vividly on that example than anywhere else. After all, widowed mothers have children, and they should be looking after them, not forced to go out to 1237 work to supplement their widow's benefit under this scheme. Since the report on widows' benefits was only put into our hands at 11 o'clock this morning I have not had time to study its recommendation in that respect.
I pass now to the question whether the earnings rule is justified and whether it should be lifted beyond its present limit. We have to get back to the principles of the present scheme, and they cannot be repeated too often. I fear that there is much misunderstanding on both sides of the House about the earnings rule, and obviously there is much misunderstanding about the attitude of the General Council of the Trades Union Congress, of which I am a member.
The principles of the 1946 scheme were radically different from the previous scheme of old-age pensions. It specified for the first time that a condition of receiving a retirement pension should be withdrawal from regular work. That is fundamental to the present scheme. There were also provisions for added benefits for those who postponed retirement. There was also an assumption written into the scheme, which has been only more or less fulfilled, that the pension should be adequate for subsistence without recourse to the National Assistance Board for supplementation to maintain a reasonable standard of life. I am afraid that we have drifted far from the fulfilment of that expectation because, whether the numbers on National Assistance are rising or falling—and I believe at the moment they are falling—there is no doubt that they far exceed the proportion of retirement pensioners needing additional help to make their pensions adequate for subsistence that Beveridge or this House contemplated when the original Measure was passed.
So one of the important principles of the present scheme—I stress the word "present" because it is the present scheme we are discussing, and the proposals in this Bill have to harmonise with the purposes and conditions of this scheme or else we change it—is retirement from regular employment. The test of retirement is the amount of work done. Section 20 of the National Insurance Act, 1946, provides that to satisfy the retirement condition work done after retirement must be only occasional, inconsiderable, or 1238 engaged in in circumstances not inconsistent with retirement. And in applying these conditions it is considered that in general work in excess of twelve hours a week should not be considered as inconsiderable.
The House must have that clearly in mind in our approach to this Bill: that the supplementary employment after retirement must be occasional, inconsiderable or engaged in in circumstances not inconsistent with retirement. Otherwise we shall get supplementary employment after retirement which is almost indistinguishable from regular employment, and we shall get into serious complications regarding those who remain at work and who postpone retirement and those who do not.
Those twin conditions of the limit of the amount and the limit of the period of time of employment were intended to safeguard and preserve the retirement principle. When the scheme was first introduced, what did this House do about the earnings rule? It laid down an upper limit of 20s. a week. That was 3s. 4d. a day. That was thought to be the limit of earnings which satisfied the condition that the employment should be occasional and inconsiderable and not inconsistent with retirement.
In 1951 the Labour Government increased the earnings limit of 20s. to 40s. a week. At that time there was no real explanation as to why the upper earnings limit was being doubled when there was no justification for doubling it by reference to the principles of the original scheme. The hon. Gentleman may say that that is perhaps what we are doing now but that there is a good precedent for it. I hope to satisfy him in the end that there is no justification for doing the same thing again.
§ Mr. Houghton
I will not pursue that interruption. In any case it is a long time ago and I am not clear as to what we had in mind about this matter at the General Election.
The House will not overlook the fact that this matter was considered carefully by the Phillips Committee. I will not trouble hon. Members with a lot of quotations, and therefore will merely refer 1239 them to paragraphs 194 to 196 of that Report. It is important to note that the Report states that none of the witnesses advocated abolition of the retirement condition. So when that Committee was considering this matter between 1953 and 1954, no witness urged the abolition of the earnings rule. The Report adds:but a number suggested an increase in the earnings limit.Paragraph 195 continues:Obviously if the latter were raised sufficiently the effect would be equivalent to the removal of the retirement condition.There we have it in a sentence, and that is what we are talking about this morning.
To clinch the argument the Report states:The abolition of the earnings rule and the retirement condition would mean altering the whole basis of the existing Scheme.I say, therefore, that if it is our purpose to alter the whole basis of the existing scheme, we should do it directly and not indirectly. We should not nibble away the conditions and principles of the existing scheme and, perhaps imperceptibly, change its whole course and purpose without considering where we are going and whether we want ultimately a scheme of social benefit without a retirement condition or whether we want a hybrid scheme on the lines of that recommended in a minority Report to the Phillips Committee by Professor Cairncross.
Whichever way it may be done, if there is no retirement condition attached to the retirement pension then obviously there is no case for making that pension adequate for retirement without doing work or without going to the National Assistance Board, if it can be argued that everybody is free to go on working and adding to their pensions by supplementary earnings without any limit.
I think that at present the House will wish to keep this matter within the framework of the existing scheme. If we push it outside we shall get into a labyrinth of difficulties and complexities, and the whole purpose of the scheme may be altered. That is not what we should try to do in a short Bill of this kind, and least of all in a Private Member's Bill. This is a question of national social policy which must be debated fully and frankly on both sides of the House so that we can set afresh, if need be, the compass of 1240 social objectives. I do not deny—indeed, I am fully conscious of it—the need for a good deal of fresh thinking about that.
The Bill proposes to lift the earnings rule limit to £3. The hon. Member for Somerset, North implied that if he could have put it higher, and could have got the consent of the House to it, he would have done so. Thus, he is really a whole-hogger. He is going along the path of abolishing the retirement principle and allowing all retirement pensioners to supplement their pensions by any kind of employment without any limit on earnings or time. That is revolutionary; it changes the whole conception of the existing scheme.
I do not know whether the hon. Gentleman knows it—he is not an unintelligent man—but that path will take him to abandoning the principle of a subsistence pension on retirement. It will destroy any case that he or his constituents may have for an improvement in the present level of standard benefits. There can always be two answers to people who claim an adequate subsistence level of pension under the sort of conditions that the hon. Gentleman foresees. One is "You can earn as much as you like; get on with it." The other is "If you cannot earn anything, there is the National Assistance Board, and you know the way to it." Those are the answers which will be given to people who claim an improvement in the basic standard retirement pension.
§ Mr. Leather
I went a long way with the hon. Gentleman until he made his last point. I regard it as a completely invalid argument. While I agree that one might reach figures where that argument might be applied, I am sure that the social conscience of the people and the strength of feeling on these benches would not allow it to be done.
§ Mr. Houghton
I am grateful to the hon. Member for that intervention, which helps to put him and his hon. Friends right with the House, but I am entitled to my opinion—I hate to make a party point—that I do not think the Conservative social conscience is as reliable as the hon. Member thinks.
In any case, there is a widespread demand in the country today for a reduction in public expenditure. Although the frontal attack on the social services is 1241 not yet clear, I believe that it has its dangers and there may later be a desire to whittle away the original conceptions of the social schemes and make them less expensive by abolishing the claim to a subsistence pension on the ground that it will be easy to supplement an inadequate one by work, by a vocational superannuation scheme or by going to the National Assistance Board.
At all events, at present I stand, and the Trades Union Congress stands, for the principles of the original scheme, which are that there shall be an adequate subsistence pension for those who give up work at retirement age, that those who choose to postpone retirement shall be suitably rewarded for doing so, that those who retire shall not be prevented from doing some work, and that no irksome restrictions shall be placed upon that right but that in the exercise of it there must be limits to preserve the main principles of the scheme of which those people, with others, are the beneficiaries.
Let us look at the matter from the so-called human point of view. A man might say "What is all this nonsense about the earnings rule? I thought this was a free country. I have retired from work, but I am fit and able to do something more. Why cannot I take employment and earn money in addition to my pension?" If we look at his plea from his narrow, personal point of view, it is not easy to give him a convincing answer.
However, there is a two-fold answer; first, "If we concede this to you, we shall probably destroy the basis of the pension which you are now drawing"; and, second, "If you are allowed to work and earn unlimited earnings in addition to your full retirement pension, when you give up that work you will still turn to us and ask where your adequate subsistence pension is." If licence were given to the man to earn without limit, a right which would be shared by hundreds of thousands of others, we should have destroyed the foundations of the scheme to which he looks for an adequate standard of life when eventually he cannot work or is indisposed to do so.
We must look at the £3 limit——
§ Mr. J. C. Jennings (Burton)
Would the hon. Gentleman agree to the spreading over of the upper limit instead of it being dealt with week by week, for there 1242 is undoubtedly a large body of opinion among old-age pensioners that they should be allowed to earn in excess of the amount at present permitted?
§ Mr. Houghton
That is an important point and it needs consideration—not that it has not had some already. I admit that the Phillips' Committee said in its Report that it had not given attention to it. There is no reason why, under the reference given to it, the National Insurance Advisory Committee should not look, first, at the spreading over, and, secondly, at the graduated scale referred to by the hon. Member for Westmorland (Mr. Vane). Those are points of comparative detail, both with some administrative difficulty, and that must be admitted.
If there were a spreading over, there could be some inconvenience to the pensioner himself if there had to be an end-of-year reckoning up and—almost like Pay As You Earn—he found that he had had an excess of allowance and something had to be taken back. He would squeal if long after he had earned money he was told "We are sorry, but you went over the limit and we now have to take something back." The present arrangements have the advantage of squaring matters up week by week. The deduction from pension is made close upon the time of the earnings themselves, and that is a convenience to the pensioner.
I want to apply several tests to the earnings rule proposed in the Bill. The hon. Member for Somerset, North said the provision was doing no more than bringing existing conditions up to date. I shall show that it is doing much more than that. We can apply the test of wage rates. In 1946, when the original Measure was first under consideration, the earnings rule was fixed by reference to current wage rates. It was based upon an assumption of earnings within the sort of working time that could be regarded as not inconsistent with retirement.
§ Lieut-Commander S. L. C. Maydon (Wells)
Is not there an inconsistency in that argument? The earnings rule is related to wage rates, not to earnings rates.
§ Mr. Houghton
If the hon. and gallant Gentleman will be patient for a few moments, I will come to the question of earnings.
1243 I shall not trouble the House with the figures; I shall merely state that if the earnings rule today were in line with the rise in wage rates since 1946 it would be 32s. and not 40s., because wage rates have increased by 60 per cent, during that period, whereas the permissible amount under the earnings rule was increased by 100 per cent. in 1951.
§ Mr. Norman Pannell (Liverpool, Kirkdale)
Can the hon. Member give the same comparison with 1951, when the last increase was made?
§ Mr. Houghton
I am just coming to that. I have to do it by process of deduction. Wage rates had risen by 30 per cent. from 1946 to 1951. By October, 1955 they had risen approximately 60 per cent. above 1946, so it turns out that there has been a rise of 30 per cent. since 1951.
Now I come to the test of earnings. If we take the twelve-hour period of work permissible under the existing rule, in 1946, the average earnings for that period of work were 24s. 3d. for all workers—when the permissible amount under the earnings rule was fixed at 20s. In April, 1955, the average earnings for that period of work for all workers was 46s. 7d.—when the earnings rule figure was 40s. If we were to bring the present earnings rule figure into harmony with the ratio between earnings and the earnings rule of 1946 it would not be 40s., but 38s. 4d. If we take the test of price increases since 1951, the permissible amount under the earnings rule today would be 47s. 6d. For that figure, I rely upon Mr. Abel Smith's broadcast, published in the Listener of 8th December. I hope that those figures show that there is no justification for raising the limit to £3.
§ Mr. Leather
That is on the assumption that the original £I was right. I do not accept that. I think that it was much too low. The hon. Member is engaged in a purely mathematical exercise, based upon an assumption which we do not accept.
§ Mr. Houghton
Then it boils down to a matter of opinion, and hon. Members opposite will have to consider what they regard as the proper limit of earnings. It will have to be within the original definition of retirement, namely, that the amount of work done must be inconsiderable, occasional, and not inconsistent with retirement. In 1946, the correct figure was thought to be 20s. The question now is whether £3 is too much, too little or about right, and upon that basis one can only apply certain mathematical tests. I do not say that they are conclusive, but they are a guide to the answer to the arithmetic of the matter—because we must be guided by some set of principles or line of thought.
It is not a question merely of thinking of some amount. We cannot say that £3 is a nice round figure, because it is no rounder than £4 or £5. It is not a matter for outright judgment. Originally, the 20s.-earnings rule was based upon the average earnings for twelve hours' work. If we base the earnings rule today upon the average earnings for twelve hours work, I have already shown that it does not even take us to 40s., much less 60s. I can only leave the House with those figures to consider, in this connection.
The Trades Union Congress has been guided by all these considerations in giving its evidence to the National Insurance Advisory Committee. The T.U.C. cannot afford to look at these problems from an emotional point of view. It has vast responsibilities to its own members and to the country, and must look at its actions or proposals against a background of social policy and future danger to the trade union movement or to pensioners themselves. It is the easiest thing in the world for hon. Members opposite, quite sincerely and with considerable passion and conviction, to ask the trade union movement to forget its own history—because they have not gone through it.
Although we all want the trade unions to shed their nineteenth century capitalist system thinking—at any rate, I certainly do—nevertheless, they have to have regard to possible dangers if full unemployment is threatened. If large numbers of retirement pensioners were available and willing to take part-time work for low wages in order to supplement their retirement pensions, they could offer a significant threat to wage standards, especially 1245 in certain industries. Hon. Members opposite must not overlook danger, which the T.U.C. cannot entirely remove from its mind.
We do not want the retirement pension to be used as a subsidy to wages, to enable those who are past retirement age to compete with younger workers who still have full family responsibilities and are at the peak of their working lives, by taking jobs and undercutting rates of pay. It is all very well for the hon. Member for Somerset, North to say that trade union leaders should be more conscious of their strength, but he knows as well as I do that 2 million unemployed destroyed all the power of the trade union movement between the wars, and it would destroy it again. We hope and pray that no such calamity will ever befall this land again, and that full employment will be maintained.
We hope that we shall be able to adjust ourselves to the circumstances of full employment, because we are all novices in our approach to it at the moment. We simply do not know enough about it because we have not had it long enough. There are many industrial and social problems, group attitudes, social and industrial fears, and all the rest, which we have to sort out and get rid of where they are no longer justified in modern social and economic conditions. But this is not the way to begin that task.
There is a genuine desire on the part of the T.U.C. to facilitate the lifting of the earnings rule to a reasonably higher limit which will not weaken, still less threaten, the fabric of the present scheme. That is what has guided the Congress in the giving of its evidence. None shall say that it has an irresponsible attitude, and none, I hope, will say that it is unduly conservative.
Three pounds, in the view of the T.U.C, goes too far. Hon. Members on both sides of the House have asked, "What is this niggling improvement which the T.U.C. has recommended in the earnings rule?" Although it looks very mean on the face of it, I hope that what I have said will put the T.U.C. recommendation in a more understandable context, viewed against the background of the scheme as a whole. The Trades Union Congress has in fact recommended that increase with consider- 1246 able reluctance because it sees little ground for it by reference to all the tests which it could apply, except perhaps that of public opinion or opinion in this House.
The T.U.C. is sensible to public opinion and to opinion in this House. It thinks that 10s. above the present limit, though it looks small, is as much as can be recommended to keep the scheme intact and to avoid having a higher earnings rule which, however imperceptibly it is used is a danger and a threat and may possibly lead to a weakening of the structure of the scheme as a whole.
I trust that my rather long speech has put the matter in a better perspective, and that I have done reasonable justice to the point of view of the T.U.C, which undoubtedly is influential in a matter of this kind and whose actions and the motives for them should be fully understood if we are to avoid unjustified criticism of that body. I hope that the National Insurance Advisory Committee will take note of what I have said and the T.U.C. has said, and also what hon. Gentlemen opposite have said and will say during the remainder of the debate, and eventually, after very careful thought and consideration, and careful examination of all the evidence, bring before the House a report which is a product of the thought and study of people with a very strong sense of responsibility towards the maintenance of our present social scheme and to the public.
§ Lieut-Commander Maydon
Can the hon. Gentleman tell us whether the T.U.C. was consulted in July, 1951, or before then, and what was its view on the doubling of the earnings limit at that time?
§ Mr. Houghton
I am afraid that I cannot give that answer because I was not then a member of the General Council of the T.U.C. and I had only recently come into the House.
§ 12.45 p.m.
§ Lieut-Commander S. L. C. Maydon (Wells)
I am very glad to speak after the hon. Member for Sowerby (Mr. Houghton). I hope that he will forgive me if I do not follow his speech too closely, but I want to take him up on one or two points.
1247 I think I can relieve his mind straight away by telling him that I am almost but not quite what he describes as a whole-hogger. He said that retirement was fundamental to the whole of the present scheme. We all agree with that and see the reason for it, but are we all entirely convinced that that fundamental principle is the right one? That is a point which requires considerable further examination.
The other points I wish to raise are referred to in paragraph 195 of the Phillips Committee's Report, page 52, which states:None of the witnesses advocated abolition of the retirement condition.…I do not think that any of us here know —we have never been told—how many of these witnesses actually were pensioners and how many of them were hard-up pensioners entirely dependent on their retirement pension. It would probably have made quite a difference to the opinions which were stated by the witnesses if such people had been called.
The hon. Gentleman spoke of safeguards to prevent undercutting of wage rates. I entirely agree with what he has in mind, but surely there are today many other safeguards in this matter. It is not necessary to underwrite this scheme with safeguards which can only indirectly have a bearing on wage rates. I feel that the hon. Member for Sowerby, who began his speech in such moderate terms and then, quite rightly, pointed out some of the dangers, gradually built up those dangers into real bogies. That. I think, was unjustifiable.
It gives me great pleasure to support my hon. Friend the Member for Somerset, North (Mr. Leather) on this Measure, first, because he is an old friend of mine, secondly, because he is a near neighbour, and, thirdly, because he is my M.P. and his constituency is a neighbouring one to mine. He has said that this is a very small step forward. I would say that it is too small a step forward. For some time past I have been thinking that the retirement condition, the earnings rule and the increment system, all part of this scheme, as they stand at present are really an invention of the devil.
1248 One has only to read two small extracts from a letter published in The Times on 31st January:If national insurance is 'insurance' in any sense that deserves the name, why should the energy and industry of the assured make any difference to his rights? What would happen to the Prudential if they tried to operate such a system?At the end of the same letter, the writer says:The crowning irony of the situation is that if the old-age pensioner has the pluck and the stamina to survive the ordeal of feeling unwanted and being half-starved during the first five years he is then at liberty at the age of 70 to come back into full employment and earn as much as he likes.I should also like to read a letter from one of my constituents who is an old-age pensioner, and whose husband is an old-age pensioner. I can assure the House that I have had a great many letters of this nature in recent months, in fact within the past year or two. I think they started coming in at the time that the Phillips Committee was about to report. The letter says:I trust that Members of Parliament will be able to make way for more earnings; it would be most helpful. It would be better still to give us a free hand, as we know there are many who would earn more …When you get to the age of 70 the free hand given you then perhaps is not much use to you for many are beyond earning a great deal owing to their age and health. To keep you to a certain sum of earnings after paying for the pensions for many years is like keeping a child indoors against its will.That letter speaks for itself.
Another aspect of these limitations is that they bring the whole system into disrepute. I cannot say that I know this, but I have a very strong suspicion that a great many people, both in and out of my constituency, who are in receipt of retirement pension are doing casual work, earning in excess of the limit and saying nothing about it. That brings the whole law on this matter into disrepute. It is impossible to control this without a whole army of snoopers, so let us amend the law so that it can once more be respected. We are told in the Phillips Report that out of one million old-age pensioners about 50,000 receive reduced pensions because of these earnings, and that about 500,000 are over the minimum age and are not retired.
In the words of a leading article in The Times, there is no doubt that these people are bound to be discouraged if the 1249 advantage which accrues to them is negligible. The Phillips Report, in paragraph 196, page 52, says:The abolition of the earnings rule and the retirement condition would mean altering the whole basis of the existing Scheme.The hon. Member for Sowerby rightly pointed that out. The Report goes on:There would no longer be any justification for the increments which are at present paid if retirement is deferred.Later, in paragraph 201, the Report says:Indeed, there is something to be said in favour of abolishing these increments altogether.May I take hon. Members into an exercise upon arithmetic? Let me take the case of a single man who continues work from the age of 65 to 70. He works for a total of 261 weeks during those years. He and his employer contribute between them 12s. 9d. per week and if we multiply that sum by 261 we arrive at £166 7s. 9d. By not drawing his retirement pension at the rate of £2 per week he saves the Exchequer £522. All that money amounts to £688 7s. 9d. When he reaches the age of 70, he ceases to pay contributions and he receives the full increment of his old-age pension amounting to an addition of 15s. a week. If we spread 15s. a week over the time until he makes up the £688 which he has saved for the Exchequer, he has to live 87 years and eight months before he breaks even.
Here is another case, which is more likely, of a married couple. The wife is not insured and is less than 60 when her husband retires. The husband decides to go on working for 100 weeks after 65, during which time he and his employer contribute between them £63 15s., at the rate of 12s. 9d. per week. As a married man with an uninsured wife he saves the Exchequer £3 5s. a week. The total saving to the Insurance Fund is £388. By the time he retires at 67 his wife is still under the age of 60 and, therefore, not eligible for the additional 1s. increment. He has to go on drawing pension until he reaches the age of 91 years 10 months before he breaks even. Any scheme supposed to encourage people to go on working but based on such unrewarding returns is worthy of complete overhaul and reconsideration straight away.
1250 I turn again to the Phillips Report. In page 52, paragraph 198, the Report says:There are grounds for thinking it would be feared that wages might in certain cases be adjusted to take account of the fact that a pension was being received.I know of nothing which is left more in the shadow of doubt than phraseology like "grounds for thinking it would be feared." I have already explained that there are ample safeguards throughout industry to prevent such things happening, and, if necessary, further ample safeguards could be included in any future enactment.
I suggest to the Ministry that the next time pension books are distributed there should be a simple question on a small sheet of paper with provision for its easy return, so that the Ministry can receive replies without great difficulty. The question should be simply this: "If there were no earnings rule how many hours a week do you think you would be able and willing to work?" I am convinced that the Ministry could deduce from the answers without difficulty the benefit to the country if the rule were altered. The gain to the country in man-hours would be considerable. We should have a happier band of pensioners continuing to work and enjoying more money, and we would stop people from making a fool of the law.
§ 12.59 p.m.
§ Mr. John Cronin (Loughborough)
Some hon. Members on this side of the House may have reservations and doubts about the Bill, but there can be no question that it has served and will serve a useful purpose. I would extend my congratulations to the hon. Member for Somerset, North (Mr. Leather) and his hon. Friends who are responsible for promoting the Bill. The fact that the Bill has been moved in a Canadian accent does not make it any less welcome on this side of the House. I can assure the hon. Member for Clitheroe (Mr. Fort) that we regard a diversity of accents as a normal and desirable linguistic phenomenon. That is perhaps a fundamental difference between the two sides of the House.
The Bill deserves congratulation and I would like to give Government supporters congratulations accordingly. Some hon. Members may wonder why a Bill of this nature should have been introduced from the Government side, but social insurance 1251 has had a rather chequered history. I would remind hon. Members that social insurance was first introduced by Bismarck, the greatest reactionary of the last century. He introduced his Bill to outwit the Liberals in the Reichstag. I acquit the hon. Member for Somerset, North of any similar ulterior motive. The Bill is a genuine attempt to improve the lot of old-age pensioners.
In drawing attention to the plight of old-age pensioners the Bill has served a very useful purpose. Anything which draws attention to their present miserable position deserves every commendation. Most of us sitting in some comfort in this air-conditioned Chamber must recoil at the thought of what some old-age pensioners must now be suffering in freezing rooms all over the country. I am, therefore, very grateful to the hon. Member for Somerset, North for raising this very important problem of our economic structure.
He said that the plight of the old-age pensioners has been greatly worsened by inflation, which is another circumstance requiring very careful consideration. Inflation is at present roaring through our economic life like a prairie fire which the Government are fighting with water pistols—but that is not, of course, any concern of this Bill. There is no doubt that this Measure would improve the position of a limited number of old-age pensioners—and to improve the position even of some of them would be helpful. It has also had the important effect of stirring the Minister into taking some action with regard to these old people——
§ Mr. Cronin
We have heard that we are to receive the report of the National Insurance Advisory Committee early in April. That is good news, especially when, as long ago as 12th March, 1954, the Minister promised that the Report would receive urgent attention. We appear to be moving forward.
I am glad that Clause 3 is to be withdrawn. It showed a very strong bias in favour of those young persons who were attending schools and universities rather than those who were apprentices. In the Family Allowances Act, 1945, there were specifically included in the definition of 1252 children those full-time apprentices up to 16 years of age on 1st August. Had Clause 3 been left in the Bill they would have been excluded—very much to the detriment of the country's economic welfare. We need all the skilled tradesmen we can get.
On this side of the House there will be considerable reservations about certain aspects of the Bill. The principal point has been emphasised by my hon. Friends the Members for Sowerby (Mr. Houghton) and Brierley Hill (Mr. Simmons)— the Bill's tendency to draw attention away from the principle of subsistence. I do not wish to repeat their arguments, but the importance of this principle cannot be emphasised too much, and I think that I cannot do better than quote the words used in the Beveridge Report. The Report says:Any Plan of Social Security worthy of its name must ensure that every citizen, fulfilling during his working life the obligation of service according to his powers, can claim as of right, when he is past work an income adequate to maintain him. This means providing, as an essential part of the plan, a pension on retirement from work which is enough for subsistence, even though the pensioner has no other resources whatever.That is a principle from which we have been drifting since we started the scheme in 1946, but it is a principle which we must keep firmly before us. Nothing could be more important. The hon. Member for Somerset, North suggested that most people think of the scheme more as an old-age pension than a retirement scheme—in other words, a supplementary source of income. He instanced, as an argument, the use of the words "old age" instead of "retirement." The obvious explanation is that both "old" and "age" are monosyllabic words, while the word "retirement" has four syllables. It is for that reason more convenient to say "old-age pension."
He also emphasised the insurance aspect. There is a lot of danger in thinking too much of that. National Insurance is fundamentally different from other insurance schemes in that it depends for fulfilment on the future taxation capacity of the country. The ordinary insurance scheme depends on premiums having been paid and invested in the past; and, of course, insurance companies have to bear in mind the danger there is to those investments and of not being able 1253 to meet commitments. National Insurance is wholly and entirely different. It depends on the country's future economic resources, and to confuse it with what might be called ordinary insurance is very dangerous. In fact, there might be some argument in favour of saying that, applied to this scheme, "insurance" is a misnomer.
There is another serious danger. If old-age pensioners are allowed to supplement their earnings to a large extent and do not receive enough pension for subsistence there might be a hidden subsidy for industry. That is a very real danger. The Phillips Report, to which reference has been made several times today, suggests that old-age pensioners' wages might be modified by the circumstance that they Were receiving a pension. We do not want that. We do not want the old-age pension to be merely a subsidy to cheapen wage costs for industry and commerce. We must think, in terms of returning to the original Beveridge idea of having a retirement or old-age pension sufficient for subsistence.
Both in this House and in the country we are rather inclined to think of insurance in terms only of mathematics. We leave insurance questions very largely to actuaries—a very skilled class of professional men for whom I have the greatest admiration. Actuaries can juggle with the most intricate mathematical problems with ease. I would emphasise, however, that the problem is not a mathematical one only. It is very important that we should think qualitatively as well as quantitatively. We must not think in terms only of numbers and figures.
There is a very big difference in quality between the old-age pensioner of today and the pensioner likely to be encountered in twenty or thirty years' time. A large proportion of the old-age pensioners of today have probably spent their childhood in a state of malnutrition and near-poverty. They have grown up to work under the deplorable conditions such as existed before the last war. A large proportion of them have lived in times of soul-destroying unemployment, and many of them have spent most of their lives in conditions which would impair the morale of anyone.
I therefore venture to suggest that a large proportion of the present old-age 1254 pensioners could not take advantage of the terms of Clause 1 of the Bill. Many, as is common knowledge, are unemployable because their lives have been ruined, mentally and physically, by the vicious conditions which existed before the last war. How are those people to take advantage of opportunities to earn additional income? I do not think that there is any hope of that for a large number of them, and we have to keep that in mind.
The old-age pensioners of thirty years hence will have been well fed as children —and well educated, we hope—and will have lived quite happy industrial lives in conditions of full employment under the protection of powerful and vigorous trade unions. They will be quite different people from the type of old-age pensioner whom we have today. We are concerned with the present old-age pensioners, and they require urgent help.
Shortly we are to have the Report of the National Insurance Advisory Committee, and we hope that the Minister will take urgent action, but I venture to suggest that nothing could be more important than that the Minister should consider the matter from a qualitative point of view. I want him to bear in mind that it is the old-age pensioners of the present who are in desperate need. I do not think he need worry too much about the country's future. There is a lot of talk to the effect that in the 1970's we shall be carrying a financial burden which is too heavy to bear. I do not think that we shall. If we can each achieve a steady 1½ per cent. increase in production we can bear the burden quite easily.
Further, I think that in the 1970's we shall find fewer people wanting to take their pensions. They will be fitter and more vigorous old persons, and they will be happy to carry on working; but the present generation of old-age pensioners is composed of very different people. They have lived in most unhappy conditions throughout their lives and they are the people who are now in urgent need. I hope that the Minister, when he considers the Report—and the House for that matter—will bear in mind that the time for action is now. It is the present generation of pensioners who are in desperate circumstances. They are the people who need urgent help.
§ 1.12 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Edith Pitt)
It may be convenient if I intervene at this stage of the debate to give the view of the Government on the Bill.
First, it would be useful to remind ourselves of the background to the earnings rule, about which my hon. Friend the Member for Westmorland (Mr. Vane) suggested that we should try to be clear. The Beveridge Report which was the foundation of the present National Insurance Scheme made a new approach to the provisions for old age and, indeed, for widowhood too; but, taking old age for the moment, instead of the small contributory pension of 10s.—a rate, by the way, which had not been altered for nearly 20 years and which was payable at the age of 65 for a man and 60 for a woman—Lord Beveridge recommended that the provision should not be payable on the ground of age alone, but only after a minimum pensionable age had been reached and the man or woman had retired from regular employment.
This new conception was based on two considerations: first, that the individual is not in need of a pension while working; and, secondly, that it is important from the standpoint of the national economy and the individual himself to encourage him to remain in full-time work while he is still capable of doing so, and the community can still benefit from his services. The minimum age recommended was the same as that already in force—65 for a man and 60 for a woman. The award of increments to those who remained at work after reaching minimum pension age was part of this new conception.
Here, I should like to reply briefly to my hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon), who touched upon this question of increments and the long years which, in his estimation, a man would have to continue working before he received back the amount of money he had saved. The question is not quite so simple as he suggested. He, conveniently and understandably, took the example of a married man who had a wife under 60 and who would not, therefore, qualify for an increment for himself and his wife when he later retired, because his wife was still 1256 under the age of 60. That is the exception and not the rule. I have no figures to prove the point but, generally speaking, a wife is within pensionable age though in most cases younger than her husband.
§ Lieut-Commander Maydon
Surely there must be many men whose wives are approximately ten years younger than them. Among my own friends I can, offhand, think of several.
§ Miss Pitt
I do not dispute that. There must be many examples where a wife is ten or even more years younger than her husband, but the vast majority come somewhere within the span of five or seven years. Even in the case that my hon. and gallant Friend quoted, the wife could. Not only that, but there is the fact that even though a man might continue at work after the age of 65, he might fall sick and have to draw sickness and unemployment benefit, both of which would have to come out of this reserve which, in the theory of my hon. and gallant Friend, is being built up.
Further, it is more than probable that his wife would almost certainly outlive him and continue to draw pension, because women are living longer these days. As I am reminded, if the wife was ten years younger than the husband, this period would be even more indefinite. I realise that my hon. and gallant Friend is concerned about this. Indeed, he was kind enough to tell me in advance that he proposed to raise the question. I have gone into it at some length. If I do not prolong the discussion any further now it is only because I do not want to take private Members' time. I hope that my hon. and gallant Friend will talk to me about it afterwards.
To come back to the main point, Lord Beveridge also recognised that this retirement condition would break down unless a man really retired from full-time employment. Otherwise, what is to prevent a man officially retiring, drawing a life pension and then going back to full-time work? A limitation on earnings— that is the earnings rule—was, therefore, linked to the retirement condition. I hope that that makes the two points clear. The Beveridge idea of the retirement pension, with its corollary of an earnings rule, was accepted by the Coalition Government and it found general acceptance among all parties 1257 when it was embodied in the National Insurance Act, 1946.
There was, however, a feature which has puzzled some people. It is that the earnings rule does not operate after a man has reached the age of 70 or a woman the age of 65. Again, that was a question raised by my hon. and gallant Friend the Member for Wells. What the Act says is that at these ages a person is to be deemed to have retired whatever work he or she is doing. Therefore, since there is no need for any declaration of retirement, no earnings rule is necessary. Hon. Members may like to know that, of men aged 70, one in five is still in full-time work and that of women aged 65 one insured woman in seven is in full-time work.
The reason for taking the age of 70 was perhaps in part a concession to the old idea of an unconditional pension at a fixed age, but also to avoid what might have been difficult decisions by the independent authorities who decide claims. We all know men who have continued to work after the age of 70, but most of us would often find it difficult to say whether a man had retired or not after that age, especially perhaps the small farmer or shopkeeper who does less and less work the older he gets.
I think the House would like to note the figures in the group which we are discussing. At present, less than half the men take their pensions on reaching their 65th birthday and about half the insured women do so on reaching 60. Nearly half-a-million people in this age group have not retired at all and are, therefore, earning increments which will increase their pensions when they do retire. I want to stress this: nearly one-half of those people now starting to draw pensions have them increased by the increments which they have earned.
It is also important to note that of all the people who are drawing their retirement pensions, only about one million are below the age of 70 for men or 65 for women and are liable to the earnings rule, while above these age limits there are 3½ million people who are not subject to the earnings rule and not affected by it, even if they are able to work.
Thus, the group with which we are mainly concerned today is this one million who are below the age of 70 for men or 65 for women. Some of them are not 1258 interested in working any longer, because of ill-health or because they possess other incomes. About 130,000—that is, 47,000 men and 83,000 women—are believed to be working, and of these about 20,000 men and 15,000 women have their pensions adjusted because their earnings exceed the limit of £2; and that is the group with which we are concerned.
So much for the background to the earnings rule and the retirement condition, but before leaving the point I might remind the House, as, indeed, it has been reminded by several hon. Members today, that the rule was looked at by the Phillips Committee—the Committee on the Economic and Financial Problems of the Provision for Old Age. That Committee, which was very representative and included both sides of industry, endorsed as recently as December, 1954, the idea of a retirement pension and pointed out that if it were abandoned pensions would be paid from minimum pension age to people who are in full-time work and would, in effect, supplement wages, which might in certain cases be adjusted accordingly.
If the earnings rule were abolished, the retirement condition and the increments would also be abolished. Pensions would then go to the half-a-million people deferring retirement, and the immediate annual cost to the National Insurance Fund would be very high—£76 million, which is equivalent to the product of about 1s. 5d. on the insurance contribution or nearly 6d. on the standard rate of Income Tax.
I turn to the amount of the earnings rule itself. The Phillips Committee gave a warning against any change which would bring earnings plus pension near to remuneration for full-time employment. In this connection, perhaps I could make it clear—because I think it is not always understood—that it is net earnings which are concerned. The Act and the regulations allow the deduction of expenses, such as fares, tools, overalls and materials, as well as the employee's National Insurance contribution and P.A.Y.E. We ought to make it clear that we talk about the £2 we are talking about net earnings. A widow with a child can also deduct the cost of having the child looked after while she is at work.
There has been widespread questioning during the last two months not only about the present limit of £2 of the earnings 1259 rule but also its form, which, of course, is to take 1s. off the pension for each 1s. earned over the limit in the preceding week. Some people think—and this Bill is evidence of it—that there should be a substantial increase in the limit. Others are, to say the least, doubtful of the wisdom of introducing a high earnings limit, perhaps bearing in mind the effect which this might have upon the people now deferring their retirement and staying in full-time work.
It is interesting to note that in the Second Report of the National Advisory Committee on the Employment of Older Men and Women, the chairman of which was my right hon. Friend the present Minister of Transport and Civil Aviation, the members of the Committee underlined the importance of approaching the problem of employment in old age from the point of view of people continuing in normal employment in their own jobs as long as possible. As I have said in the House before, it has been my own experience, which I am sure is shared by other hon. Members, that the majority of men prefer to continue at work on reaching the age of 65, if they are able to do so. My own personal experience in this matter has largely been confined to men, but the figures which I have already given indicate that a large number of women feel the same about this, and I am sure that in this matter we want to give them all the encouragement we can.
There have been other ideas such as averaging the earnings over, say, a month or a quarter, or even taking earnings over a year; this point has been raised by my hon. Friends the Members for Scarborough and Whitby (Mr. Spearman) and Westmorland. Furthermore, while the Beveridge Report had in mind the strict earnings rule, it suggested the possibility that only part of the earnings over the permitted limit need be deducted. Hon. Members will be aware of the differing views on this subject and how strongly people feel about it. It would, therefore, have been quite irresponsible for any Government to have rushed into a decision on this matter until it had been thoroughly examined.
This, I think, is the point made by the hon. Member for Sowerby (Mr. Houghton), who said we must take all the considerations into account, and the 1260 point made by the hon. Lady the Member for Flint, East (Mrs. White), who intervened to remind us that we must also consider the question of the earnings rule on a widow's pension. The obvious body to make this examination, and indeed the body set up by the National Insurance Act for just such purposes, is the National Insurance Advisory Committee. This Committee represents the contributors to the scheme and it consists of very experienced and able people. Its procedure is designed to ensure, and does ensure, adequate opportunity for the various viewpoints, including those of the trade unions and the employers, to be fully considered.
The Government want to have the views of this Committee before making their own decision. The reference to the Committee is not a delaying tactic. The Government fully appreciate the difficulties which pensioners feel about the earnings rule but, in the light of the considerations which I have mentioned, the House will understand why it would be impossible for the Government now to accept Clause I, as that Clause appears to prejudge a matter on which the Government have themselves sought the advice of the National Insurance Advisory Committee.
We are grateful to the promoters of the Bill for agreeing to put off the Committee stage until May, and I am glad that my hon. Friend the Member for Somerset, North made that clear in his opening speech. We realise that is the latest date possible in view of the difficulties of finding Parliamentary time. On the other hand, the Government welcome Clause 2, because it is likely to enable the Minister to give effect more speedily to any changes which may seem appropriate in the light of the advice of the National Insurance Advisory Committee.
Clause 3 is not acceptable, but, again, my hon. Friend the Member for Somerset, North, has already said that he does not intend to press the point. If I understand correctly the intention of the supporters of the Bill on this point, I think that they will find the recommendations contained in the National Insurance Advisory Committee's Report on widows, published today as a Command Paper and available in the Vote Office, worth their study and their 1261 interest. The Report suggests an age of 18.
The Government find Clause 4 acceptable, but I think I should warn the House that the procedure of the affirmative Resolution suggested in the Clause, while it is a proper safeguard, may entail delay because of the need to find Parliamentary time.
As to when a Report may be expected from the National Insurance Advisory Committee, the House can be assured that the Committee is well aware of the need for speed and is giving the matter priority over all other business. Any reference at an earlier date would not have produced an earlier Report because the Committee was fully occupied with other questions, particularly that relating to widows, to which I have referred.
The Committee has cut down from three to two months the normal period it allows for representations to be made to it, and that period expired on 1st February. In the meantime, much material has been collected and I understand that the Committee will begin to consider that material and representations on Wednesday and Thursday next. We have good hopes that the Report may be in our hands by late spring.
There is ample ground in what has been said already for believing that the Committee will report quickly. Although no Government can commit themselves in advance to the acceptance of a Report, whatever it may contain, the House can be assured that on receipt of the Report the Government will quickly reach and announce decisions in this matter. We all want to help—perhaps "encourage" would be a better word—older people to lead the fullest life possible and in as much comfort as possible. I sympathise with the motives of the promoter and supporters of the Bill, but the House will appreciate the substantial difficulties to which certain parts of it give rise from the point of view of the Government.
§ Lieut.-Commander Maydon
Could my hon. Friend tell us whether the Government would consider the suggestion I made for having a census of old-age pensioners, to see how many of them would be able and willing to work longer hours with an improved earnings rule?
§ 1.33 p.m.
§ Mr. Thomas Steele (Dunbartonshire, West)
May I at once take the opportunity of complimenting the hon. Lady the Member for Edgbaston (Miss Pitt) on her promotion to the Front Bench. Having had some experience in the Ministry of Pensions and National Insurance, to which I am sure she is proud to belong, no doubt she will regard this debate as an indication of one of the problems which will continue to beset her. Her own supporters, it seems, will press her harder and be more difficult than the Opposition. It has been a most interesting experience today, particularly for a new Minister. A private Member has introduced a Bill of which the effective Clause is not being accepted and neither is Clause 3. Out of the five Clauses two important Clauses are not accepted by the Government and two others are accepted, but the Bill still has to go through Committee.
The hon. Lady gave us a very good account of the history of the retirement conditions, but she did not say whether the Government still believed in the retirement condition and were prepared to see that it was maintained. No doubt we may hear something about that at a later stage. She said that sending this matter to the National Insurance Advisory Committee was not a delaying tactic. Unfortunately, as she said it, she was not able to see the faces of her hon. Friends behind her. Apparently, on that at least they were not prepared to accept her view.
The hon. Member for Somerset, North (Mr. Leather), who introduced the Bill and who, unfortunately, is not now in his place, said that he was not well versed in the problem. As his speech continued I thought it became clearer that his opening remark was quite correct. Right away, he announced what seemed an entirely new departure for a Member on the benches opposite—in fact, quite a revolution. I should like to know whether that is to be the new policy of the Tory 1263 Party. In effect, he said that Clause 2 would enable the Minister to bring in regulations to do something quickly. When we recall the arguments we had in this House from 1945 to 1951, and the criticism of our Government on the question of the delegated legislation, it was an eye-opener to have that practice so much sponsored by the hon. Member for Somerset, North. The present Minister of Pensions and National Insurance used to complain about the practice.
The hon. Member for Somerset, North said that this was a matter which he knew little or nothing about. He then said that he would wait on the advice of the National Insurance Advisory Committee and, having got it, if it did not accord with his ideas he would not be prepared to accept it. I agree with my hon. Friend the Member for Sowerby (Mr. Houghton) that the hon. Member threatened the Minister most deliberately as to the action he and his hon. Friends proposed to take. However, that was modified a little in the hon. Member's intervention during the speech of my hon. Friend and it may not be so bad.
The comment that old people did not know the difference between a retirement pension and an old-age pension and the confusion which exists is due, I think, to tradition, as my hon. Friend the Member for Ince (Mr. T. Brown) said. When I was Parliamentary Secretary to the Ministry of National Insurance I made many speeches at meetings and was introduced in many ways, though never the correct one, by the chairmen of those meetings. As my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand) has reminded me, many people today still refer to "National Health Insurance," whereas that title was changed in 1948. The whole thing is traditional and I do not think there is anything in the argument.
In his peroration, the hon. Member for Somerset, North illustrated the great difficulties and problems which old people now have to face. The argument should not be concerned with the earnings rule but with the need for an increase in the basic pension. The hon. Member for Scarborough and Whitby (Mr. Spearman) suggested that the Minister should consider averaging earnings over a period. The Beveridge Report said something about that, but it was not accepted by the 1264 Coalition Government. It has cropped up from time to time and the Phillips Committee Report said that was something which the National Insurance Advisory Committee might consider.
There are, however, some problems concerning it. While averaging might suit some people, others might be adversely affected if it were taken over a 13-week period. If they had the whole earnings taken off in one week, they would be all right, but if their earnings were averaged out over a period their pension could be affected accordingly and they might be worse off. This is a matter that the National Insurance Advisory Committee could certainly consider.
The hon. Member for Westmorland (Mr. Vane) said that we ought not to make too much of the Bill and that it did not represent a change in principle. My hon. Friend the Member for Sowerby dealt effectively with that suggestion and I do not propose to say more about it. The hon. Member proceeded to put two propositions as to the earnings rule and asked whether its purpose was to stop people from working or to encourage them to continue at work. Frankly, it was designed for neither of those purposes. In effect, it was in line with the existing practice in connection with unemployment benefit. We did not wish to deny to anybody the opportunity of doing a little work or to make people feel that they were altogether useless. At the same time, however, it was not envisaged that they would be undertaking any considerable employment.
As I have already pointed out, the hon. Member for Somerset, North, in introducing the Bill, said he did not know anything about the technicalities of the subject. This deficiency was overcome by the speech of my hon. Friend the Member for Sowerby, from whom we had a very good speech which explained in detail exactly the history and the dangers. My hon. Friend's explanation has made my task today very much easier.
I agree entirely with what my hon. Friend said. Social policy and social security have, in fact, been matters which have concerned both sides of the House. I have happy recollections of the Standing Committee in 1946 which helped to bring the present Act into operation. The present Leader of the House was a member of that Standing 1265 Committee and made many useful contributions. We were, indeed, a happy Committee.
The right hon. Gentleman, however, is no longer Chancellor of the Exchequer and his colleague the former Minister of Pensions and National Insurance has now gone to another place. An entirely new team is associated with these problems. We have a new Prime Minister. I could not be sure what would be the classification of the right hon. Member for Woodford (Sir W. Churchill), for example, and whether he would be said to be in inconsiderable employment or retired if these principles were applied to him. He did, however, take considerable credit for some of the social services in the past.
Now we have a new Prime Minister, a new Chancellor of the Exchequer and a new team at the Ministry of Pensions and National Insurance. Therefore, we must be a little careful about what will happen in the future. We have a number of "whole hoggers," as the hon. and gallant Member for Wells (Lieut.-Commander Maydon) described himself, in these matters. There are dangers in this that we in the Opposition must watch very carefully.
When the hon. and gallant Member for Wells described Lord Beveridge as "the devil," I wondered just what going to the other place now meant; but we could hardly agree with the hon. Member in that. He suggested that the Minister might consider circulating a questionnaire. I do not believe that that is necessary. We have had a considerable number of reports on this matter. We have had the report of the Phillips Committee, the very good Annual Reports of the Ministry of Pensions and National Insurance, and the reports about employment in old age. If they are studied carefully, we can get all the information we need.
The first thing that reveals itself is that when a man reaches the age of 65, his decision as to whether he should continue working is not determined by the application of the National Insurance Scheme. His decision is governed, first, by the condition of his health, and secondly, whether his employer permits him to continue in his employment; and then follow the other reasons. From page 27 of the Report of the Ministry 1266 of National Insurance for 1955, one of the disturbing features is that of every 100 men who retire at the age of 65, one-quarter of them have been ill for the previous six months and another 25 per cent. have retired for health reasons or strain.
That accounts for 50 per cent. of those who retire at that age. A number retire because of the age limit imposed by their employers. The interesting feature is that between the ages of 65 and 70, the same proportion seems to apply throughout. Therefore, in considering the earnings rule, we must bear in mind the large number of people who cannot, in fact, take advantage of it and who, because of sickness, strain or health reasons, are quite unable to continue working at the age of 65.
The Minister had the Report of the Phillips Committee in 1954. It has been referred to on numerous occasions today and I hesitate to refer to it again. The previous Minister, however, hurried the Phillips Committee in issuing its Report, for reasons into which I need not go now. The Phillips Committee was a body of some standing. Sir Thomas Phillips, whom I know well, had long experience both in unemployment problems and in social security and the social services. The Phillips Committee having reported, we ought to take some account of what it said.
On the question of conditions for retirement, the Phillips Committee was emphatic. The Report was not as clear on the question of the amount of earnings, although the summary of the Report states that the Committee recommended no change. At the same time, however, it was made absolutely clear that the earnings rule would be ineffective if the pension, when added to the amount that could be earned without suffering reduction, approached the amount of wage which could be earned by regular full-time work. This was a matter which was gone into very carefully by the Phillips Committee, for it was in 1948 that an entirely new conception of, and a new condition for, retirement had been introduced.
This is a matter which has been before the Ministry all this time, and yet, although the Phillips Committee considered it and has reported on it and although the Minister himself has made 1267 no comment on the Committee's Report upon it, has not indicated whether he accepts the Report or not, and without our having had any opportunity of discussing it in the House, the Minister suddenly refers it to the National Insurance Advisory Committee. That is not treating either the Phillips Committee or the National Insurance Advisory Committee with the respect to which both Committees are entitled.
Moreover, it is not a good thing for the National Insurance Advisory Committee that the Minister should in this way refer sticky problems to it; and that he should have done so, so soon after receiving the Report of the Phillips Committee, justifies the reluctance of hon. Gentlemen opposite to take it from the Minister that he did not refer this matter to the National Insurance Advisory Committee merely as a tactic in avoiding his responsibilities.
Much has been said today in support of the argument that the amount under the earnings rule should be increased or that the earnings rule should be abolished. The whole hoggers wish to see it abolished, and one of their reasons for its abolition is the financial need of the individual. In the Ministry's Annual Report there is a finding on the proportion of men on retirement pension who continue at work and their reasons for doing so, and there is a chart which shows that 26.7 per cent. of the men on retirement pension go on working because of financial need. That is an argument we on this side of the House appreciate. After all, the Financial Secretary to the Treasury only yesterday told the House that the purchasing power of the £had depreciated by 1s. since May last year. The cost of living has steadily gone up.
The Beveridge Report dealt with the question of the subsistence level, and Lord Beveridge said that pensions must be adequate. We of this party also said so in 1946. The Phillips Committee seems to have thrown that principle overboard. However, there is a complexity in this matter, for our conception of what is adequate for subsistence has altered since 1946; our conception of what the subsistence level is, of what people are entitled to have, has altered. Then, of course, there is, as there always has been, that gap between the income of a man when he is earning his living and 1268 the level of the pension he receives when he retires. The gap is there now when people are earning high wages and the present pension is what it is.
All this, however, is not, I think, an argument in connection with the earnings rule. It is an argument for reconsidering yet again the whole question of social security and of our approach to it. That is one of the things which, I am proud to say, our party is in course of considering at the present time.
§ Mr. Steele
What I was saying was— and I think that this can be accepted in all parts of the House—that as society progresses, as we improve year by year our standard of life, there is a moral obligation upon us to share out the benefits of that advance as equally and fairly as we can. It is not a question of figures. It is a question of understanding that the standard of pension, or the standard of life, to which people are entitled is higher than in previous years we expected it to be. For instance, the old 10s. pension was well below society benefits, well below unemployment benefits, and so on. What we did in 1946 was to increase that pension so that there was equality. However, this is a question not only of pensions but of other things as well.
The argument we have heard today, from the whole hoggers in particular, is that there is something wrong with the basic pension itself. That is a matter we have to consider. If we tamper too much with the earnings rule we shall, I am convinced, endanger the possibility of having a proper and satisfactory basic pension. I agree that in 1951 the earnings rule for married women with children was increased to £3. I thought that, perhaps, the Minister would be able to give us some information about how that provision operated, and to tell us whether it was satisfactory and carried 1269 out the wishes of the people who sponsored it at the time. We are, instead, told that that also has been remitted to the National Insurance Advisory Committee.
I agree with my hon. Friend the Member for Sowerby, and I cannot emphasise this too strongly, that for the widows with children the alteration of the earnings rule seems entirely wrong, and that we are not facing our moral obligations if a widow with children is not getting sufficient to maintain her, so that she must go out to work. That is a shame upon us. It is a responsibility we have, and we ought to give her an adequate pension.
During the time that I have been in the House, I have always felt unable to justify the Beveridge conception of equality of benefits in this respect. We need only look at the figures to see how unjustifiable they are. For example, an old couple at present receive a pension of 65s. a week, but a widow with two children receives a total of 63s. a week. I claim that the responsibilities and the expenses of a widow with two children are greater than those of two old people, who receive more money than she does.
How can we compare an old couple who are retired and have had opportunities throughout their lives to have other resources and do not require the same amount of clothing and other things with a widow with children? I think that the House has never made proper provision for these women, and to ask the National Insurance Advisory Committee to increase the amount which these women can earn is a wrong approach to the subject. In effect, we are saying to this widow with children, "We are not prepared to give you an adequate amount to live on. There is what we are prepared to give, and you can go out and work for the rest." That is utterly wrong.
§ Miss Pitt
The hon. Member has obviously not had time to read the Report of the National Insurance Advisory Committee on the Question of Widows' Benefits, issued this morning, but he will find recommendations there which will interest him. It is perfectly true that the question of earnings is still with the Committee, but it has obviously given considerable study to the position of widowed mothers with children and the 1270 Report contains several important recommendations.
§ Mr. Steele
I agree that I have not had the opportunity to study the Report. I shall do so with interest. The hon. Lady will correct me if I am wrong, but I believe that when the Minister referred the question to the National Insurance Advisory Committee he made the proviso that it must not consider benefits. Therefore, anything that can be reported upon cannot increase the amount. It can only alter the age limit perhaps. The question whether these women should be entitled to some extra amount, over and above other groups, was not something which the Committee had to consider.
We shall have an opportunity in Committee to deal with the matters which are the subject of the Bill. We on this side of the House have no objection to the Bill going to Committee. We appreciate the Minister's difficulty in the matter. We think that we must have the National Insurance Advisory Committee's Report to study before we can make any alterations. We have no objection to Clause 2 in respect of regulations, and we appreciate what the Minister has said about Clause 3.
This has been a very good debate, but the House should heed the warnings from some of my hon. Friends that this is a matter which must not be dealt with in a piecemeal fashion but must be given the careful consideration which it merits before we take any positive action.
§ 2.5 p.m.
§ Dame Irene Ward (Tynemouth)
I am very glad to give my support to the Bill, not only because of its intrinsic value but because I regard it as one step in the direction of trying to do something for the small fixed-income groups. It is from that point of view that I am concerned with its provisions. I am glad that, on the whole, the Bill has had the blessing of the Government and Opposition Front Benches, though I regarded the speeches of the hon. Member for Dunbartonshire, West (Mr. Steele) and of my hon. Friend the Joint Parliamentary Secretary as somewhat in the nature of shadow boxing. Neither side was very willing to come out fully in favour of an increase in the permitted earnings.
I accept the reasons for the shadow boxing, and to some extent I am in agreement with them. I attach very great 1271 importance to preserving the wage position of those who are earning their livelihood before they come to retirement age. I naturally feel that because I have represented for a long time in the House a highly industrialised area, and I still remember the period when the emphasis was on trying to get the elderly to retire in order that employment could be found for the young. Neither do I forget my own history, which to some extent colours all my observations and contributions in the House.
I was intensely interested in all the references which have been made to the Phillips Committee, but I always deprecate the reading out of one or two sentences from that important Report, mostly out of their context. Ever since the Phillips Committee reported, I have been endeavouring to get the Government to find time to debate it. I have also been trying to stimulate the Opposition to stimulate the Government, or to use such opportunities as come the way of the Opposition itself to ask for a debate on this very important Report. My own efforts in the House necessarily must be very small, but I want to see adequate provision made for pensions for all sections of the community. That is vitally important.
I noticed that the hon. Member for Dunbartonshire, West made great play with the fact that it was only after the Bill was introduced by my hon. Friend the Member for Somerset, North (Mr. Leather) that the matter was referred by the Minister to the National Insurance Advisory Committee. The hon. Member made some reference to the expressions on some faces in the House when my hon. Friend the Joint Parliamentary Secretary said that that was not a delaying tactic. I accept the Joint Parliamentary Secretary's view. She was bound to make that statement.
I realise that when the previous Minister of Pensions and National Insurance understood that the country was becoming desperately interested in the question of permitted earnings he referred the matter to the Committee. But I cannot entirely let the hon. Member for Dunbartonshire, West get away with it, because I also noticed that it was only quite recently that the Trades Union Congress was persuaded to come forward 1272 with any statement of its own on the subject. It also has been extremely cagey on this matter.
In listening with great interest to the hon. Member for Sowerby (Mr. Houghton), I wondered what the Trades Union Congress really feels about this matter. I cannot believe that the difference between permitted earnings of £2 10s. and permitted earnings of £3 in our present economic set-up can engender some of the rather strong remarks that fell from his lips. In the financial setting of today 10s. is a very small matter.
§ Mr. Houghton
Will the hon. Lady permit me to say that it is always difficult to distinguish between one stage and another on a slippery slope?
§ Dame Irene Ward
I accept that intervention, but while I would need much more evidence about the future before I said that the earnings rule should be swept away, I think that too much emphasis on the danger of 10s. is going a little far.
The hon. Gentleman pointed out clearly and helpfully, if I may say so, the original provisions in the first Act. In listening to him I wondered whether the 20s. was not related to the basis of 8 per cent. unemployment, which was the basis on which the original National Insurance Bill was introduced, and I was interested that nobody mentioned that point.
As no one else has mentioned it, may I say that I would welcome an increase in increments because in that way we could get the basis of a suitable retirement pension. That is one reason why I regret so much that we have had no frank, full and all-party discussion on the Phillips Report. In trying to stimulate my own Government, I believe in going from one Minister to another. On every possible occasion the plight of those living on small fixed incomes must be raised, because I want to get action from several Ministers.
May I offer my congratulations to the Joint Parliamentary Secretary on the occasion of her maiden speech at the Box? I am delighted that my hon. Friend is there, and I wish her all success. I hope she will forgive me if I make one observation which I should have made even if her predecessor had been there today. The hon. Lady rightly, and with great pride, emphasised her in- 1273 dustrial knowledge, which is great, as she comes from Birmingham. I approach the problem from the point of view of a heavy industrial area. The industrial problems of Birmingham are very different from those of a heavy industrial area. Indeed, I am delighted at the appointment of the new Chancellor of the Exchequer, coming as he does, from Stockton——
§ Mr. Frederick Willey (Sunderland, North)
The right hon. Gentleman deserted it, as the hon. Lady deserted Wallsend.
§ Dame Irene Ward
I am delighted, because in the old days we used to say that there were no Ministers north of the Trent.
Statistics have been produced about the number of old-age pensioners who retire, the reason for their retirement and the numbers of men and women who continue in work. Could those statistics be broken down region by region so that we can see the problem from the point of view of the mining, iron and steel, shipbuilding and engineering areas compared with other areas which, for the most part, are not dependent on heavy industry?
I ask for this information because the point arises in my area whether we ought to expect miners or railwaymen in the more responsible jobs of engineering and driving, footplate men, signalmen and others working in the blast furnaces, to continue to work after the age of 65. I have never seen that problem faced by hon. Gentlemen opposite, by the trade unions, who give their advice very freely, or by my hon. Friends on this side of the House. I apologise for the fact that my contributions are coloured by the needs of my own area. I am not impressed by what goes on in Birmingham. I want to know what goes on in Tyneside, Tees-side and Weirside. It is difficult to see into the future and how we are to provide employment by increments for people in heavy industry who work after the age of 65. Indeed, from the point of view of safety in industry, it is not always appropriate that people should be encouraged to do so.
Another human aspect of this problem is that people who have taken a real pride in their work, and have made a great contribution to the general econo- 1274 mic work of the country, dislike suddenly to find themselves without employment. Also people often deteriorate in health and lose interest in life because they have not been able to keep themselves interestingly and properly occupied. So although I am wholeheartedly behind my hon. Friend the Member for Somerset, North and indeed am one of the supporters of his Bill, there is a much wider and greater interest to be considered. I am surprised that this House of Commons has not insisted on discussing the complete problem, so that we could have a little more evidence on which to base our future policy.
§ Mr. Willey
Before the hon. Lady leaves that important point, my recollection is that in coal mining and in the heavy industries men tend to retire much later, so that the hon. Lady has revealed a real problem which affects us in the North-East. Has she any proposal to make about this problem? I agree that the industries she mentioned are the very ones in which socially we should try to advise an earlier and not a later retirement age.
§ Dame Irene Ward
I am very much obliged to the hon. Member for co-operating over the problems of the North-East Coast, which are very important indeed.
Often when we debate the mining industry the remarkable work which is being done by the older miners is pointed out. I should not like to be dogmatic about what the answer is, but the problem is a very real and serious one. Many problems have to be considered alongside the main anxiety of all sides of the House to provide a satisfactory and happy way of life for those who have aided the national economy. I cannot be dogmatic on this point because I do not know enough about it. I should like to hear from those who are experienced in these matters. That is why I so much regret that we have never been able to have a full, free and frank discussion of the problems raised in the Phillips Report.
I hope that hon. Gentlemen opposite will forgive me if I say one or two critical things about the apparent attitude of the trade unions towards the matter of married women who work. Incidentally, in my part of the world there is very little work for women. I always understood that part of the reason why the trade unions were critical of any increase 1275 in the earnings rule was that they thought that women reaching the age of 60 might, if there was an increase in the permitted earnings, retire from full-time employment and seek part-time employment. If that is the view, I suggest to those who come from areas where women find employment that the women's wage scales should be looked at.
In the heavy industrial areas there is relatively very little employment for women. I cannot let my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman) get away with it altogether. I have such very distinguished coastal resorts as Whitley Bay and Tyne-mouth in my constituency, and we should find it very helpful if there could be an increase in the permitted earnings.
I would point out that married women, with their husbands, have had substantial benefits from the Inland Revenue which are not given to spinsters or widows. The trade unions have assented to this and it has been allowed to go on for a very long time, and I am not against it in one sense. I am very glad that some emphasis has been placed on the position of widows. Exactly the same applies to widowers and single men. The married man has relief in respect of his wife, and the married woman has her own personal relief. They both get the benefit of graded Income Tax bands. On the whole, such a person is much better off than a married man with not such a high wage whose wife stays at home and looks after the family.
I merely mention this because one would have imagined from the observations of the trade unions about the earnings problem that they were springing to the defence of their movement as against the elderly people. If the trade unions talked to the miners, the shipyard workers or the blast-furnace men, I do not think they would get as much support for their rather niggardly proposals as perhaps the leaders of the unions, who are often out of touch with the rank and file, think they would.
There is another very important point which I have raised on several occasions but absolutely without success. Those who pay Income Tax obtain their social insurance benefit at a cheaper rate than those who do not pay it. I have tried to obtain the reaction of some of my trade union friends to this. I believe that 1276 the cost to the Treasury is about £34 million a year. Those who pay Income Tax—this goes for many late entrants into the National Insurance Scheme—are getting a most wonderful return for their capital outlay. Many have only to pay into the Insurance Fund for ten years, and then they get a very large dividend on their capital. I am always very surprised when those who complain about dividends do not say anything about that.
There are plenty of people to defend the Income Tax payers and plenty of people to defend the big wage earners, but there are very few to defend those who do not pay Income Tax. The fact that those who do not pay Income Tax are really paying more than the others for their retirement pensions is a burning injustice. The Trades Union Congress has made no observations on that. All it can do when it is forced to do something is to deliver a nasty little stab at the grand elderly men and women who would prefer to do a little extra work and earn a little extra money for themselves. That is not cricket. I like justice to be justice.
§ Mr. Houghton
I offered the Chancellor a solution to the problem long ago. It is that the contribution should not qualify for tax relief and, in return, the benefit should not be subject to Income Tax. It is as simple as that.
§ Dame Irene Ward
I am very interested to hear that because I have sought an alteration in the same direction. The hon. Gentleman and I must get together and see what we can do about it.
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)
I think we might come a little closer to the Second Reading, too.
§ Dame Irene Ward
I have come to the end of what I had to say, Mr. Deputy-Speaker. I am very glad that the Bill has, on the whole, had a reasonably good reception. It makes a beginning. I can assure my hon. Friend the Joint Parliamentary Secretary and all other Ministers, if they bother to read HANSARD, that until something is achieved which is satisfactory for the small fixed income groups, I shall continue to talk about them until such time as my constituency dismisses me. I am very glad indeed to have had the opportunity to support the Bill.
§ 2.30 p.m.
§ Mr. Norman Pannell (Liverpool, Kirkdale)
I wish to intervene very briefly in the debate in support of the Bill. It has been said that if the earnings limit is raised by too great an amount it will vitiate the retirement principle. I quite agree, and I also agree that it will deter employees from continuing in employment in order to increase their pensions. But I do not think that an increase from £2 to £3 will have that effect. I think that it strikes exactly the right balance. A married man who now receives a pension of £3 5s., on account of himself and his wife, can raise his total income to £5 5s. by part-time work, and under the provisions of the Bill such a man would be able to earn a total income of £6 5s. a week. In relation to present earning rates that would not deter him from carrying on work if he wished to do so.
I would remind the House that there are certain industries in which the opportunity to continue in employment does not exist. That applies to some nationalised industries, and certainly to municipal corporations. In those cases the employees are automatically retired at the age of 65, and they find it very difficult to obtain alternative employment of a full-time nature, thus being compelled to seek part-time employment. Those people are now suffering very great hardship by reason of the limitation of £2 which is placed upon their earnings.
Another point I wish to raise concerns widows' pensions. It has been said that a widow with dependent children has an earnings limitation of £3. She receives a higher pension than a widow without dependent children, but the latter is subject to an earnings limitation of £2. That is an anomaly which has caused very great hardship. It has been said that the Bill does not deal with that question. I am open to correction on this point, but it seems to me that by amending Section 20 (5) of the National Insurance Act, 1946, the provisions of the Bill apply equally to the earnings of widows without dependent children as to those of old-age pensioners, and in that case, if the Bill is passed, the limitation with regard to those widows will also be increased from £2 to £3. I sincerely hope that that is so, and that it will not be necessary to introduce a further Bill as a result of a study of the Report of the National 1278 Insurance Advisory Committee, which has been placed in our hands today but which we have not yet had an opportunity of reading.
§ 2.32 p.m.
§ Mr. Richard Fort (Clitheroe)
In winding up the debate on behalf of the proposers of the Bill, I ask the House to forgive me for being merely a substitute for the originator—my hon. Friend the Member for Reigate (Mr. Vaughan-Morgan) who is away convalescing from severe illness. He has, of course, worked so closely with my hon. Friend the Member for Somerset, North (Mr. Leather), who was successful in the Ballot.
We have had a very wide debate. My hon. Friend the Member for Somerset, North, who introduced the Bill, adopted a rather sceptical attitude towards the retirement principle. There was then a downright condemnation of the principle by my hon. and gallant Friend the Member for Wells (Lieut.-Commander Maydon) and, later, a lucid defence of the principle by the hon. Member for Sowerby (Mr. Houghton), followed by the hon. Member for Dunbartonshire, West (Mr. Steele), who wound up for the other side of the House. I was delighted to hear someone else on my side speak on the wider aspects, namely, my hon. Friend the Member for Tynemouth (Dame Irene Ward).
Listening to the debate, I could not help feeling that, in introducing the Bill, we had not only given the chance to change the existing earnings limits, but had given the House an opportunity to debate what many of us have long wanted to debate, namely, the whole subject of the retirement principle and pensions and the support of the elderly. Although these matters were discussed in the Phillips Report, neither my own Government nor the party opposite on their Supply Days, have given us any time to discuss them.
From time to time we all have letters from and interviews with constituents who have stories to tell which seem very hard under present circumstances. I do not deny the statistics about the number of pensioners whose pensions are being reduced by the size of their earnings. But in industrial towns everywhere there is a feeling among the people that the present earnings limit is too low. There is some statistical support for this point of view.
1279 I was struck by one of the tables in the Phillips Report. No one has yet referred to it, but it is interesting. It sets out the weekly income and expenditure of a small sample of elderly households in 1953. The fact which stands out so impressively is that even those few households all show that the difference between income—from pensions and earnings of one kind and another—and expenditure was about £1 a week. The rise which the Bill proposes would help to meet that gap. It was £I per week and is probably no smaller at the present time. I would not press the argument too far, but that table struck me as an important if not overwhelming confirmation of the views of the promoters of the Bill.
The hon. Member for Sowerby turned upon us, with a great wealth of statistical information, to show that the percentage rise in earnings and also in wage rates was a great deal smaller than the rise which the Bill proposes, comparing 1946 and 1956. It seems to me that both parties have neglected the full logic of these statistical arguments—not only the promoters of this Bill but also the Labour Government when they gave a similar rise in 1951.
I was glad when, in an intervention, the hon. Member for Somerset, North cleared up his position about the retirement principle. He made it clear that we all firmly support it. It is easy to exaggerate how the suggested increase departs widely from that principle. I greatly regret that we have not had a debate upon the Phillips Report, because this matter is something which we should be thinking about and discussing continually and publicly. I am rather doubtful whether the arrangements based upon the great social survey of Lord Beveridge in 1942—which survey itself was based upon pre-war statistics—are completely in keeping with the present situation of nearly twenty years later.
With the qualification that one must be prepared to discuss what might be best in the future, all the supporters of the Bill are in favour of the retirement principle. I do not think that the increase in earnings limit which we propose indicates in any way that we wish to depart from it. There is one feature about increasing the earnings which can be argued either way on this matter. That is whether increasing the amount which can be 1280 earned before deductions from a pension starts will encourage most people to stay at at least part-time work, or discourage them.
In that connection there is one interesting quotation which I should like to give from the Report of the Committee of which my right hon. Friend the present Minister of Transport was Chairman, in which he said that the provision of part-time work for men should be encouraged as an alternative to retirement. Yet in discussing what effect the earnings rule had on employment, the Report said that there was no information put before the Committee about the effect of earnings on part-time employment, although, as hon. Members on the other side of the House have rightly said, in the earlier Phillips Report there is evidence about the effect of earnings on full-time employment. I think that we should do well to have further information on the matter of part-time employment.
There are one or two points in connection with the Bill to which I should like to draw the attention of the House. We have deliberately inserted a provision that the regulations should be subject to affirmative Resolution, because changes would be made which would greatly affect the lives of many people. Therefore, it seems to us right that there should be an opportunity of discussing the regulations thoroughly in the House, as well as taking advantage of the provisions in the 1946 Act by which the regulations are sent to the National Insurance Advisory Committee before being presented to the House.
I commend the Bill to the House. Clause I may perhaps be amended after the Advisory Committee has reported. If the Bill is finally passed it will enable the new conditions about the earnings rule to come into force immediately, instead of having to wait for the slower proceedings of the regulations going to the Advisory Committee and then coming back to the House. The next change is one which will be quickly carried through, though subsequent changes would have to be made by affirmative Resolutions.
I think that we all want to tell our constituents where they stand in regard to the earnings limits by about the summer, because it is often easier to get work then than in the winter. It is one of the advantages of the Bill that the 1281 new regulations can come into force by the summer, assuming that the National Insurance Advisory Committee reports in time for that to happen. I was very glad to hear the Joint Parliamentary Secretary, speaking from the Front Bench, say that the Committee was doing all it could to speed up its consideration.
I now want to refer to Clause 3. I agree entirely with my hon. Friend the Member for Somerset, North that the Clause seems to be rather outside the scope of the Bill as it now stands. We shall withdraw it during the Committee stage, in order to eliminate further discussion which might be necessary if the Clause were left in.
Other hon. Members have already said much that I feel about the reference to the National Insurance Advisory Committee. Perhaps when we get the Committee's Report we shall see that if the problem was referred to it for not the worthiest of reasons, at least that Committee will have done an extremely good job in examining and reporting to us on what is a complicated if not extensive subject.
We all know what a thorough and excellent job the National Insurance Advisory Committee does. My hon. Friend the Member for Somerset, North said what he hoped that Committee would report, and I know that he was reflecting the view of many people inside and outside the House. I am, for my part, prepared to bide my time for the next few months until we get the Report and can see what it recommends and whether it fits in with our own ideas. I am sure that in that way we shall be finally passing through this House a Bill which will commend itself widely outside and to most hon. Members inside the House, and passing it quickly in a way which will reflect real credit on the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee, pursuant to Standing Order No. 38 (Committal of Bills).