NATIONAL INSURANCE BILL

HC Deb 20 November 1957 vol 578 cc400-43

Considered in Committee [Progress, 19th November].

[Sir CHARLES MACANDREW in the Chair]

Third Schedule.—(PROVISIONS TO BE SUBSTITUTED IN FIRST SCHEDULE TO NATIONAL INSURANCE ACT, 1946.)

3.52 p.m.

Mr. Douglas Jay (Battersea, North)

I beg to move, in page 9, line 15, to leave out "½".

The Chairman

It might be for the convenience of the Committee if the eight Amendments to the Schedule were discussed together, and then, when the time comes, we might have one Division on the first four and another Division on one Amendment to be selected from the second four.

Mr. Jay

Thank you, Sir Charles. The Amendments are intended to raise the Exchequer supplement to the Insurance Fund back from one-seventh to one-fifth of the total contributions, and also to reduce the contributions from the employer and the employee to the appropriate corresponding figure.

If the Minister intends to argue that the "½"—which, I hasten to assure you, Sir Charles, means a halfpenny—figuring in these Amendments is not the correct fraction, I am bound to tell him that as, at present, there is, under our Constitution, no Opposition actuary to assist us and no electronic brain in the House of Commons Library, we have used a halfpenny as a token figure in order to argue that the contributions should be reduced to whatever the appropriate figure would be.

In our view, the Minister, in all this, is putting far too heavy a burden on the contributor and far too light a burden on the Exchequer. On Second Reading, the right hon. Gentleman tried to confuse the issue by saying that in 1951 the Labour Government relieved the Exchequer of a liability of £86 million to the National Insurance Fund. What the Minister did not then say was that the 1951 Measure in no way increased the contribution from the employee, that it nevertheless raised the pension, and that the change in Exchequer supplement— this is the real point—was a purely temporary one due to the unnecessary piling up of the Insurance Fund at that time. It was piling up surpluses which the Government Actuary considered unnecessary and unjustified.

The three-year change in Exchequer contributions made at that time made no difference to the liability of the contributors or the benefit going to the pensioners. Therefore, it in no way shifted any extra burden on to the contributors to the Fund, and it is the burden resting upon them which is the heart of our controversy today.

That, indeed, is exactly what the Minister has now done. He has made a large real transfer of this burden from the Exchequer to the contributors. At a time when the Fund is no longer likely to pile up in the way in which it was doing in 1951, he has raised the contribution from the employee and the employer by far more than he has raised the Exchequer supplement.

It was made perfectly plain in 1951—the Minister entirely failed 4o tell the House this on Second Reading—that the change in Exchequer supplements then was temporary and was designed to last only until 1954, when, as we then thought, the Fund would cease to pile up surpluses. Indeed, the Actuary, in his quinquennial Report, published in 1954, said in paragraph 34, that the 1951 arrangement was an interim arrangement of the amount and method of Exchequer support to the scheme pending the quinquennial review, and that, therefore, the change in the Exchequer grants was a temporary measure.

So, if the Minister intends to deny that that was a temporary measure, he will be impugning the veracity of the Government Actuary, to whose defence he leapt with such gallantry the day before yesterday. As Financial Secretary at the time, I said on 9th May, 1951, that the arrangements were all provisional pending the 1954 review of the National Insurance Scheme. Therefore, when the Minister says that he is now adopting the 1951 formula and does not tell us that that formula was intended to last only until 1954, he is rather misleading the Committee, though I am sure he does it out of ignorance rather than of malice.

Nor, incidentally, did the 1951 change in the supplement in any way alter the amount which the Chancellor had to raise in taxation, because, from the point of view of the nation's saving, the Budget surplus had to be increased by the same amount as the excess payment into the Fund was reduced. But now, when the contribution is being raised, a relief to that extent is being given to the direct taxpayer. Thus, the truth now is that the Minister is transferring the real burden on to the contributor and away from the direct taxpayer.

In that sense, I agree with my hon. Friend the Member for Oldham, West (Mr. Hale) that the Bill is a Swindle on the contributor. That is what my hon. Friends and I object to, and we object to it because—this is the crux of the matter—the employee's contribution, which is now going up by 2s. a week to 9s. 5d. a week, is a higher percentage of a man's income the lower his income is, while direct taxation is a higher percentage of income the higher one's in come is. If the Minister does not understand that point, he really does not understand his job, and if he does understand it he ought not to be introducing the Bill in this form.

4.0 p.m.

By refusing to raise the Exchequer contribution, as we propose, proportionately, instead of raising the employee's contribution, the Minister is really converting this so-called insurance contribution into a form of taxation. The 1s. 2¾d.—the Actuary calls it 14.8d.—which, as I understand, the employee contributor will now pay every week over and above the actuarial figure necessary, is really the measure of the taxation which the Minister is now imposing. What the Government are doing by this Bill, if we measure the taxation element by the excess over the actuarial figure, is to raise taxation by about £100 million a year.

As I understand, an insurance contribution is a payment which the individual makes to his own pension in old age, but a contribution now made to other people's pensions, whether right or wrong, is not an insurance contribution but, of course, a form of taxation. Indeed, the Minister admitted, in a moment of further enthusiasm at the Brighton Conservative Conference, that he is levying this contribution now not as a payment for the individual's own pension in old age, but as part payment for other people's pensions now.

Speaking at Brighton, the Minister said that the increased contribution would "fall"—that was the word he used—on the working population. And he added: When those at work are enjoying the highest standard of living they ever had, it is right they should be asked to make some sacrifice for their elder fellow citizens. Whether right or wrong, that is not an insurance contribution at all. It is simply a tax, and it is an extremely unfair tax because it falls the more heavily on the individual precisely as his income is lower. I wonder whether the Committee realises, or whether even the Minister himself realises, that after this Bill is passed the total yield of this insurance contribution from employee and employer together will actually exceed the total yield of Schedule E of Income Tax; that is to say, the total Income Tax yield on all wages and salaries?

If I am wrong in that figure then I hope that an answer will be given either by the Minister or by whoever is to reply from among the skiffle group of Ministers that I now see before me.

The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter)

That is a reference to the harmony among us.

Mr. Jay

That is a reference to some of the rather odd figures that we were given, among other things, on Second Reading.

This contribution, of course, has a most regressive effect on the individual, and that effect would be reduced if the Minister would now accept these Amendments, increase the Exchequer supplement and scale down the contribution. Of course, the Minister may argue, and it is quite natural that he should, that even if there is a profit for the Exchequer on this operation in the year 1958–59—and, of course, there is a profit, and it really is no good his attempting to deny it, if one takes into account the changes in National Assistance, the tobacco token and war pensions—nevertheless, in spite of that, there will be a huge burden on the Exchequer in future. He actually gave a figure of £357 million a year in 1964–65.

That may be true on the basis of the calculations made by the Government Actuary now, but I think that this Committee should realise, at this date and in this year, what I frankly admit I did not understand in 1946 or 1951, that the Government Actuary—whose Reports, I may say, are extremely valuable in the whole of this discussion—has been consistently too pessimistic throughout the whole of the story.

In 1951, he predicted the appearance of a deficit on the Insurance Fund in a few years. In 1954, it had not yet appeared, and he predicted that the deficit would appear in 1956–57. We now find in 1957 that he does not expect it to appear until 1958–59 This deficit in the Fund is rather like the peak of a mountain that one is trying to climb—it is always moving one stage further on. Indeed, the Phillips Committee admitted quite frankly that the Actuary's estimates on all sorts of points had tended to be consistently too pessimistic, and the Actuary himself, in paragraphs 28, 49 and 73 of his own quinquennial Report, admits the same conclusion.

The Government Actuary always predicts that this emerging deficit will occur rather sooner than it does in fact. I remember once hearing the Prime Minister quoting someone as defining an actuary as a man who is dead on time, but in the matter of this emerging deficit the Government Actuary appears to me to be always a bit ahead of time, because this deficit with which we are threatened tomorrow is always moving a little into the distance.

That means that the Actuary is, perfectly properly, being professionally and actuarially cautious. I am sure that he is acting entirely consistently with the dictates of his professional conscience, but from our point of view it makes us—it makes me, at any rate—a little sceptical about this emerging deficit. For one thing, unless unemployment rises to 4 per cent., and unless interest rates fall to 3 per cent.—which I can hardly see happening if the Government go tottering and doddering on any longer—this deficit will not emerge until some years later than the Actuary prophesies. If it does not emerge, the Exchequer liability will not be what the Minister says, and there will not be any Exchequer grant to add to the Exchequer supplement in order to cover a deficit that has not emerged at all.

That being so, we feel that what it really all conies to is this. If this 9s. 5d. a week contribution that the Government want to levy is an insurance contribution it is actuarially unjustified, and if it is a tax it is certainly not fair. What the Government are doing is to try to place the real burden of a large block of the social services on the contributor and no longer on the direct taxpayer at all. If we look at the figures of Income Tax yield and of contribution yield, it will be seen that the Government are steadily substituting the so-called insurance contribution for the Income Tax on personal earned incomes. We say that that is monstrously unfair and reactionary, and that the best way for the Government to correct it would be to accept this group of Amendments.

Mr. John McKay (Wallsend)

Like my right hon. Friend the Member for Battersea, North (Mr. Jay) I want, if possible, to get some information. When the Labour Party drew up its new programme for pensions I am sure that the pamphlet mentioned that about 3s. 6d. of that contribution went towards retirement pensions, and that that 3s. 6d. was due to tax relief. I have gone through the revenue returns relative to payments made to find out—if it is correct that there is relief on payments made to the pension part of the insurance scheme—how much that relief amounts to in total. One cannot get it accurately without a tremendous amount of help and the spending of a tremendous amount of time.

If that principle is correct, and if there is tax relief on the amount of money paid towards retirement pensions, I estimate that about £30 million goes in the form of relief to the workers on their contributions. The cost to the workers in the scheme varies according to the amount of taxation which is paid.

Without going into details, if we stop that relief on taxation and spread the amount of money that will actually be paid next year—about £350 million in 1958 is to be paid by the workers in general—the Exchequer will get the benefit of about £30 million which is about one-twelfth of the actual contributions paid. If we were to use that money, instead of taking ½d. off we could take 9d. a week off the contributions paid by the individual worker.

The Government tell us that the cost to the National Insurance Scheme is borne equally by the workers, but that is not true. The higher the wage a man gets, the more relief he gets. I estimate that next year workers receiving £800 and £900 a year will be in the 8s. 6d. Income Tax band. They will each be paying about 4s. a week towards the pension. I do not know what the exact amount will be, but 3s. 6d. has been mentioned in the pamphlet, and, therefore, I should think it is bound to be about 4s. If we take into account the 8s. 6d., it will mean a relief to them of about 1s. 8d. a week.

The Joint Parliamentary Secretary is smiling, but if the main principles that I have outlined are anywhere near the actual position, then what I have said in general is nearly correct. If what I say is anywhere near correct, if about £30 million is going in tax relief on the amount of money paid, and we use that money in the way that I have suggested so that everybody pays the same amount, about 9d. a week less will be necessary in contributions paid by the workers. I should like the Minister to tell me whether there is this relief, and what is likely to be the amount of the new contributions next year. I should think it is bound to be 4s.

4.15 p.m.

The next point on which I want information is this. About £350 million is to be paid next year in contributions by the employers. I put it to the Minister that over the country as a whole it is correct that Profits Tax, tax on dividends and on undistributed profits amounts to approximately 50 per cent. of the total revenue. I think I have heard hon. Members opposite saying that Profits Tax was more than 50 per cent. Yet the poor under-dog, the man earning £7, £8, £9 or even £10 a week, with a family, gets no relief whatever. He pays the full contribution.

One would naturally expect that in a national scheme of this kind the great section of employers would be required to pay the actual cost involved, but, in fact, other things being equal, prices and profits remaining the same, the employer obtains relief in taxation to the extent of half his contributions. Therefore, the amount of money obtained by the Exchequer from the employers' contributions will be not £350 million but only half that amount. Leaving aside party politics, I should like to know from the Minister whether what I have been saying is anything like correct.

Mr. A. E. Cooper (Ilford, South)

I find it a little difficult to follow the arguments of the right hon. Member for Battersea, North (Mr. Jay). When he was Financial Secretary to the Treasury he was a great upholder of the principle of subsidies. He may not have realised it, but the granting of subsidies is a promiscuous handing out on a fiat-rate basis of national funds to people irrespective of their income. The man earning £1,000 a year and more is not in need of a subsidy of any sort, but it was the policy of the Labour Party to give him a subsidy. We have done away with that, and by bringing into the general pool a greater sum of money it has been possible to provide greater benefits to people on lower income scales.

Mr. Jay

Does the hon. Gentleman realise that a subsidy on food gives much more assistance to the man on the lower income because he spends a larger proportion of his income on food? Therefore, a case for a subsidy on those grounds is precisely the same as the case against a tax of this kind which falls more heavily on the man on a lower income.

Mr. Cooper

I do not think that the right hon. Gentleman can sustain that argument for a moment. If the Treasury is giving money to people who do not need it, then, obviously, they have less money available to give to people who do need it. It is really as simple as that. The reason the Income Tax gross figures have fallen, as the right hon. Gentleman has pointed out, is quite simply because of the tax reliefs which the Conservative Government have been able to give to the country, and that has relieved from tax liability a very large section of the community.

Mr. Jay

In the first place, I did not say that the tax figures had fallen, and, in the second place, it is not true. The total yield of Schedule E Income Tax has gone up. I said that as a result of this increase in contributions, next year's total yield of contributions would be greater than the total yield of Schedule E Income Tax.

Mr. Cooper

Perhaps I expressed myself badly. The fact is that because of the increase in the national product the amount received by the Treasury from Income Tax must of necessity be higher, but if it had been at the same level of taxation that was operating when we took over, the level would be considerably higher than it is today. We have, in six Budgets, made substantial concessions to Income Tax payers which 'have relieved from Income Tax liability a large section of the community.

The right hon. Gentleman must, therefore, face the fact that the lowest-paid workers now, through direct taxation, make no contribution whatsoever towards their pensions and only make a contribution through their weekly stamp. But the higher-paid worker not only makes a very substantial contribution to all of these things through direct taxation—and the higher his income the greater the contribution—but he also contributes through his weekly stamp.

Therefore, it seems to me that under our taxation system and the way in which we are operating today the lowest-paid worker gets a fair deal out of this. [HON. MEMBERS: "No."] We must also consider that in a large section of the lowest income classes wives go out to work as well, and this is true not only on the lower scale of income but on the medium rates as well. In the great majority of cases the wives opt out of paying their full contribution, but when their husbands retire, or they reach retirement age, they get the full benefit of these pensions without making any contribution to them. It is a very substantial amount.

I now come to the question of indirect taxation to which the right hon. Gentleman referred. If his argument as he advanced it today, and other hon. Gentlemen have advanced it in the past, was a valid one, why did not the Labour Party, when it was in power, do something about indirect taxation, because indirect taxation is always levied on a flat-rate basis? One pays so much on a gallon of petrol, so much on a packet of cigarettes and so much on tobacco, and the man who gets hardest hit by that form of taxation is the lowest-paid worker.

The right hon. Gentleman never advanced this argument when he was Financial Secretary to the Treasury. As is so typical of right hon. and hon. Gentlemen opposite, when they are in office they adopt one argument but when they are ii opposition they use an entirely contrary argument because they think it is a good thing with which to beat the Government.

Mr. A. E. Hunter (Feltham)

I am very pleased to support the Amendment so ably moved by my right hon. Friend the Member for Battersea, North (Mr. Jay). Before I deal with some of the points that I wish to put in support of the Amendment, I should like to refer to what was said by the hon. Member for Ilford, South (Mr. Cooper), who has had a good deal of experience of industry and must, therefore, know that these contributions fall very heavily on the lower paid workers.

The argument that the lower-paid worker does not pay taxation falls to the ground. The lower-paid worker pays Purchase Tax. He pays it on cigarettes, he pays it when he has a glass of beer, and he pays it on many other things.

Mr. Cooper

I am sure that the hon. Gentleman does not want to misrepresent me. I specifically referred to direct taxation.

Mr. Hunter

The impression that I got from the hon. Member for Ilford, South was that the lower-paid worker was escaping taxation. I want to draw the attention of the Parliamentary Secretary to the rates of contributions.

The contribution under this Bill goes up for a man over 18 to 9s. 5d. and for a woman to 7s. 8d. We have moved a long way from my boyhood days of the Liberal Governments, when the cry was "9d. for 4d." I think that the contribution in 1911 or 1912 was 4d. a week. That was paid only by a certain number of industrial workers. So we have travelled from 4d. to 9s. 5d. a week. That is a considerable amount to many employees in many industries.

Let us consider the agricultural worker. His minimum wage is under £8 a week and he will pay 9s. 5d. Take the case of many employees engaged in distribution. They are often in the lower group of weekly wage earners. The same is the case among some clerical workers. In fact, throughout some sections of industry today, one would find some employees riot earning £8 a week.

When we come to women's rates, the wage in some cases is only £4 15s., or probably £5 per week, and the 7s. 8d. contribution which they have to pay is a very heavy burden on them. The purpose of my right hon. Friend's Amendment is to increase the Treasury grant so that the Minister can make proposals to decrease this very heavy contribution. If we get a higher Treasury grant, which will probably not appeal to the hon. Member for Ilford, South, then it will come out of taxation. The lower paid worker and the higher income group all play their part in payment of taxation.

It has been pointed out by my hon. Friend the Member for Coventry, East (Mr. Crossman), on many occasions, that while we keep to a flat contribution it is bound to hit the lower paid worker very much indeed. The man earning £7, £8 and £9 a week will have to pay the same contribution as the man earning £20, £25, £30 or £40 a week, and the same argument applies to women. Surely, if we could get away from the flat rate contribution, we could reduce the contributions of workers in lower paid jobs.

I appeal to the Minister to consider our Amendment again. For many employees in the lower paid sections of industry, an extra 2s. a week will be felt as a heavy increase. If he can meet us at this stage, he will, I am certain, have the support of many hon. Members on both sides of the Committee, for all hon. Members must realise the burden of the new contributions on the lower-paid employees.

4.30 p.m.

Mr. Tom Brown (Ince)

I wish to say a few words about the Exchequer grant, because many of us are disturbed at the way the practice is changing. Before I come to that subject, however, I would appeal to the hon. Member for Ilford, South (Mr. Cooper). He always attempts to strike a discordant note, somehow, in our debates. He is smiling now, but every time he rises in his place to address the Committee, he tries to tell us what the Labour Party should have done when it was in power.

Mr. Cooper

Quite right, too.

Mr. Brown

I am asking him to tell the Government what they should do while they are in power. I hope that, as the debate proceeds, we shall not indulge in what I call a political slanging match.

There are three sections of the community responsible for creating the Insurance Fund, from which benefits are paid. There are three sections responsible for maintaining the Fund after its creation. They are the Exchequer, the workers and the employers. They are charged with the responsibility, under the National Insurance Act, 1946, of maintaining the Fund so that the benefits under that Act, and under this Bill, will be made possible.

During my speech in the debate on Second Reading, I made a passing reference to this matter, and I wish to amplify the argument this afternoon. I said then: The insured workers will have to pay. There is no question about it. We cannot think of a pension scheme unless the workers are prepared to pay towards it, but I say that the payment ought to be on an equitable basis—equitable in every sense of the word. Therefore, I say that the Exchequer is not paying its equal share of the scheme. It is true that the Minister made some reference to increased contributions from the Exchequer"— the right hon. Gentleman did at that time say that the Government were increasing the Exchequer grant for the year 1957–58— but I think that if he will turn back the files he will discover that in 1952, 1953 and 1954 the Exchequer grant to this Fund went down sharply."—[OFFICIAL REPORT, 13th November, 1957; Vol. 403, c. 1040.] I am not blaming the right hon. Gentleman for it going down. The Treasury has a great deal of power. I have often said that, when we engage on any effort to bring about reforms, whatever they may be—industrial, social or economic—the Treasury plays a very important part. I know that many right hon. and hon. Gentlemen do not agree with me, but I believe that in every step we take towards improving our national situation the Treasury is the nigger in the woodpile.

I will quote the figures for the years in question, which I mentioned on 13th November. For 1950–51, the Treasury grant was £139¾ million; in 1951–52, it had fallen to £104½ million; in 1952–53, it had fallen again to £65,326,000; in 1953–54, it was £70 million; in 1954–55, it was £71 million; in 1955–56, it was, according to the latest figure available to me, £92 million. The figures indicate that there has been a tendency for the Exchequer to escape its full responsibility.

When the 1946 Act was first put on the Statute Book, the Treasury paid one-fifth. Now the proportion has been reduced to one-seventh. The Treasury should pay its fair and equitable share. I know that the question then arises as to what in our opinion, and that of the Government, constitutes a fair share. I say that that share must bear some relation to the amount of contribution called for from the insured worker.

Be it remembered that I am not advancing the argument that we should try to put all the responsibility for the scheme on the Exchequer. I wish we could. That would be in keeping with my philosophy. However, with the system as we now have it, that is impossible. We must, therefore, concentrate, with a fair mind and generous heart, on what is the best way to ensure equity between the three sections of the community to which I have referred.

My hon. Friend the Member for Feltham (Mr. Hunter) referred to the effect the increased contributions would have on lower-paid workers. I know that the higher-paid worker today may be able to bear without any undue strain upon his resources the payment of the increase, but the lower-paid worker is not, in comparison, in a position to pay the increased contribution.

Yesterday, though I may have been just a little off the mark at the time, I ventured to put to the Minister the effect which the increased contributions would have upon a representative lower-paid worker. I examined over the weekend some of the pay tickets showing the wages earned by such workers, and I took as examples the wages of young men between the ages of 18 and 21, who are the lowest-paid workers in the mining industry, that being the industry with which I have had the closest association.

I have here a copy of one young man's pay ticket; his pay number is 450. His gross wages for last week were £6 15s. 10d. He is entitled to a bonus, and for last week the sum was £1 7s. 2d. Thus, his gross wages for that week were £8 3s. But what about deductions? That is the salient question for the industrial worker, "How much are they stopping from my wages to meet the cost of the scheme?" Here they are: miners' pension scheme, 1s. 6d.; permanent relief society, 9d.; welfare club, 2d.; baths, 4d.; trade union contributions, 1s. 7d.; supplementary insurance, 4d.; the new rate of contribution will be 9s. 5d. Also, he pays Income Tax to the extent of 12s. Therefore, the total deductions from that young man's wages last week were £1 6s. 1d. His net wages to take home, to his mother, widowed mother, whoever it may be, were, therefore, reduced to £6 16s. 11d.

Will anyone suggest, in these days of so-called high standard of living, that £6 16s. 11d. is a magnificent wage for a young man of 20 working in the pits? I do not think it is. I am using these figures to prove how this Bill will affect the man in the street. It is the man in the street whom we have to satisfy. I do not think that the people are 100 per cent. satisfied.

I remember an old professor telling me, when I went to technical school, when I was confronted with a problem, "Difficulties are a means of progress if they are tackled in the proper way. Always remember, as you journey through life, that there is no such thing as satisfaction. The human heart and the human mind are always craving after something more." We can bring a degree of contentment to these people, and I think that the Minister will be well advised, if he does not do it this year, to consider the question on a subsequent occasion. He may not be able to interfere. The procedure may not help him, but I think that it is worth his consideration.

If this scheme is to be a success—and I hope it will be, in spite of all its faults and failings—we must carry the industrial workers with us, because there is nothing more disturbing to an industrial worker, whether he works in the pit, in the mill, on the land, or in the factory, to think that somebody is "putting one across" him. I am using my own Lancashire parley, but if he gets the idea that the Government are "putting one across" him then he has not much love for them.

We are anxious that the Exchequer should bear its fair share, but not more than its fair share. We are aware of its difficulties. This Amendment is an attempt to get the Exchequer to bear its fair share of the scheme. Let us have fair play for the Exchequer, for the employer and for the worker. If we can work together, bearing in mind those three sections, and see that we get as near to equity as possible, then I think that we shall be well on the way to creating some degree of contentment in the minds of the workers.

Mr. R. E. Prentice (East Ham, North)

should like to make a brief reference to the remarks of the hon. Gentleman the Member for Ilford, South (Mr. Cooper). I think that his contribution was typical of the rare contributions that have been made during this stage of the Bill from his side of the Committee, in that all the Members who have spoken from that side have failed to defend the Measure before us but have tried to suggest that in some way or other the Government are doing better than the Labour Government did in their day. I do not believe that the pensioners, who are disappointed at the length of time it has taken the Government to produce anything, and are disappointed at what they have produced, will be impressed by political red herrings of that sort.

If I may throw a brickbat in return, am proud of the fact, as a member of the Labour Party, that in 1946–48 the Labour Government did more for the pensioners than any Government in our history and gave a lead to the world in introducing a comprehensive social insurance scheme for the first time. When the Conservative Party produces, something comparable with that it will then have the opportunity to make party points out of pensions. It has not yet produced anything comparable.

The hon. Member for Ilford, South also went to some pains to point out that the higher-paid worker was contributing more for his pension than the lower-paid worker. Of course he is. That has always been the intention. It was never the intention that the scheme should be a purely actuarial scheme, run on the basis of a commercial insurance scheme. It was intended to be a part of our Welfare State, in which people would to some extent pay according to their means. The point that the Committee has to decide is whether or not these proposals go far enough in that direction and whether they ensure that the people who are better off will to some extent help those who are not so well off in providing their pension.

4.45 p.m.

My hon. Friends the Members for Ince (Mr. T. Brown) and Feltham (Mr. Hunter) have given many details from their experience of the way in which these new rates will be a burden on the lower-paid worker. I do not want to go over that ground again, but what worries me is the fact that it leaves this or any future Government very little room for manoeuvre. Having put up the contribution of an adult male worker to 9s. 5d., how much higher can we go in future? There will come a time when we shall want to go higher.

Even to maintain the very poor value of the pensions proposed in the Bill, there will have to be some allowance made for future rises in the cost of living. Looking only a little way ahead, the new pension rates will come into effect next January and the full effects of the Rent Act will be felt next April. Many pensioners will have to pay very large increases in rent as a result. There will be a demand for a further rise in pensions which I suggest will come very soon.

We on this side of the Committee are not satisfied with keeping the pension at the present level. We want to achieve something better. It is time that the community faced the moral responsibility of making bigger and better provisions for old age, sickness, unemployment, and other needs of this kind. Flat rates at the present level leave no room for manoeuvre.

The point was made on both sides of the Committee during Second Reading that this was probably the last Bill which could be produced on the old basis. If we want to produce a Bill on the old basis in future—and the Labour Party want to put it on a new basis—then there will be little or no room for manoeuvre on the flat-rate contributions as they stand. The best solution is to produce a scheme such as the Labour Party produced for graduated contributions. A second solution, and one which is better than the solution proposed in this Bill, is that we should make sure that the Exchequer pays a larger share, and, in fact, pays the share it was intended to pay when the 1946 Act was introduced.

I think that it is time that we returned to that basis and I therefore commend the Amendment to the Committee.

Mr. Boyd-Carpenter

Although I sometimes sympathise with Oscar Wilde's view that one can resist anything except temptation, I shall not succumb to the temptation of the hon. Member for East Ham, North (Mr. Prentice) to deal with, as I am sorely tempted to do, his very gallant and chivalrous attempt to support the record of his right hon. Friends when they were in office.

The right hon. Member for Battersea, North (Mr. Jay) bears much more responsibility for that shabby record than the hon. Gentleman, and, therefore, I will not succumb to the temptation so adroitly and agreeably dangled before me in the speech of the hon. Member for East Ham, North.

Mr. Prentice

Has not the Minister misquoted Oscar Wilde? Did he not say that the best way to get rid of temptation is to give way to it?

Mr. Boyd-Carpenter

I am certain that, although the hon. Gentleman is now guilty of a misquotation, it is a misquotation which, in intellectual matters, has governed his way of life for many years.

That leads me to what I was about to say. As the right hon. Gentleman and I worked against each other on Finance Bills for three very long years, as they seemed, it seems very like old times to hear him agreeably and plausibly putting forward wholly unsound financial propositions and then treating without any discomforture whatever the demolition which inevitably follows them. It really is like old times.

Before I proceed to deal with the right hon. Gentleman, I should, however, like to reply, first, to the rather separate issue raised by his hon. Friend the Member for Wallsend (Mr. McKay) in connection with the application of the Income Tax Acts to these benefits. As I understood him, the hon. Member appeared correctly to state the present position: that is, that so far as the long-term benefits—retirement pension and widow's pension in particular—are concerned, allowance is made for Income Tax in respect of the contributions but the benefits themselves when they come to be paid are taxable in the hands of the recipients. The position concerning the short-term benefits—sickness and unemployment—is the opposite. That, I understand, has been the position for a number of years.

I take the point made by the hon. Member; it has been, as he knows, taken before. He will, of course, appreciate that although to reverse the position would no doubt result in some additional revenue to the Exchequer, account would have to be taken of the fact that if the contributions themselves were not to be allowed for tax, it would be morally necessary to make the pensions free from tax in the hands of the recipients. There would, therefore, be an offsetting factor, a more offsetting factor, perhaps, in the future than in the past, because with the entry of the late-age entrants into benefit next year there will be rather more recipients of these pensions in the higher Income Tax brackets than there have been in the past. I have, however, noted the hon. Member's point.

I would only add the comment that if his point was, as I think it was, that this arrangement works somewhat unfairly in the case of the man who pays Income Tax as opposed to the man whose remuneration puts him below the Income Tax level, it is, of course, the fact that the man who pays Income Tax is also in that way making some contribution to that element in the finances of the fund which we are at present discussing: that is, the amount found by the taxpayer himself. For that reason, it is, perhaps, not quite as inequitable as the hon. Member was disposed to think.

At an earlier stage—and I must hand to right hon. Gentlemen opposite at least the pedestrian virtue of consistency in this matter—when I made my announcement, the first reaction of the party opposite was to complain that these proposals did not put sufficient expenditure upon the taxpayer. I would certainly stress the word "taxpayer". The right hon. Gentleman himself, no doubt from sheer force of habit, referred to the Exchequer, but there is apt to be a certain confusion of thought, magnificently exemplified last night by the hon. Member for Nelson and Colne (Mr. S. Silverman), who, I regret to say, is not in his place, when he referred in another context to the fact that the Treasury could do without its £16½ million and could itself bear the cost of certain matters, apparently under the illusion that the Treasury has a heap of gold independent from the taxpayer which could conveniently be used to finance social changes. I acquit art least the right hon. Member for Battersea, North of more than a slip of phraseology; I am perfectly certain that there was no misunderstanding on his part. I thought it necessary to make that point in view of the fact that misunderstanding apparently exists in other directions.

The series of Amendments themselves are rather odd. They propose, first, very substantial increases in the Exchequer supplement, and secondly, very small reductions in the contributions, and by male workers only. I understood the right hon. Gentleman to refer to the latter as being intended to be on a token basis. I am bound to comment that if the right hon. Gentleman intends to take the matter to a Division, it is a somewhat unbalanced Amendment to press which proposes the full intended additional load on the Exchequer while proposing, at the same time, a very modest modification of the other contributors' contributions.

Although the expedient of a token—even though it is only one-half of the equation which is in token form; the other half is in very solid form indeed—is perfectly understandable in the circumstances, the right hon. Gentleman would put himself in a very odd position if he went to the point of seeking to put these particular very curious figures into the Bill, because the right hon. Gentleman is, no doubt, quite clear what the effect of doing it would be.

The effect would be, from the third year, only to deprive the contribution revenue of the Fund of £3 million a year. From the third year, it would leave the Exchequer where it will anyhow be, as the increase in Exchequer supplementation would serve to reduce the Exchequer deficiency payment; and in the interim two years the effect would be to accumulate smallish additional surpluses in the Fund at the cost of the taxpayer. It would, therefore, as a practical contribution to the finances of the Fund, be a somewhat futile thing to do. I hope that the right lion. Gentleman will bear these considerations in mind when we come to the conclusion of our discussion.

Mr. Jay

The Minister will, I am sure, realise that we, like him, are anxious to get the Bill through fairly rapidly, because it does make some increase in pensions. Therefore, we did not want to take a great deal of extra time in getting these fractions exactly right.

Mr. Boyd-Carpenter

I appreciate that and I am sure that the right hon. Gentleman, having admitted that he does not regard them as exactly right, will not seek to write them into the Bill.

The major point is the broad criticism of the level of the Exchequer supplementation as compared with the load upon the contributors. The two propositions that have been put forward by the Opposition are, first, that more ought to be on the Exchequer, and secondly, that in any event the Exchequer is making a profit. I shall seek to deal with both those propositions, which I shall begin by saying seem to me to amount to an error of reasoning based upon a false hypothesis of fact.

The point, as I understand it, is the point which was raised with a great display of energy by the hon. Member for Coventry, East (Mr. Crossman) on Second Reading, when he took the view that this particular arrangement of contributions was, in his own elegant phraseology, a swindle. Indeed, he suggested to me that I had no right to object to that because I had myself in the past used, and would, no doubt, in the future use, fairly firm language concerning a scheme in connection with which he has at least some measure of responsibility.

I should like to make it clear that I have no objection to the strength of the hon. Member's language but only to its inaccuracy. It is, of course, the fact that in the arrangements for the Exchequer supplement we are following very closely the line taken by the right hon. Member for Battersea, North and his colleagues when they were in office, although, alas, so far as the deficit payments are concerned, we shall certainly have to assume for the Exchequer a much heavier obligation than they did.

The right hon Member for Battersea, North tried to anticipate my reference to what he and his colleagues did in 1951, which, he said, was right, because the Fund was then in surplus. The right hon. Gentleman, I take it, admits the rather curious passage of events. The right hon. Lady the Member for Warrington (Dr. Summerskill), then Minister of National Insurance, introduced a Bill which at its introduction would have reduced the Exchequer supplement to the contributions to a figure of 6d.—on the then contribution of 8s. 9d., something like 5½ per cent. It was only the objections raised by my noble Friend who is now Lord Ingleby and the then right hon. and learned Member for Cirencester and Tewkesbury (Mr. W. S. Morrison) which induced the right hon. Lady and her colleagues to bring forward modified proposals providing the one-seventh formula and reducing, at any rate, the proposed gains to the Exchequer. Even as it was, however, the Measure of 1951 reduced the Exchequer contribution to the Fund by way of both supplement and deficiency payments by no less than £86 million.

It is not good enough for the right hon. Gentleman to say that the Fund was then in surplus. The Fund was then being built up. The right hon. Gentleman knows that its building-up was checked by that Act. That has the effect that the situation is in some measure today less easy than it would have been had the Fund been allowed to accumulate further with the interest payments, which we can draw on annually in aid of the payment of benefits, proportionately increased. Therefore, we must start on the basis that right hon. Gentlemen opposite have, on their own record, absolutely no basis for taking any high and mighty doctrinal stand on the doctrine of a precise Exchequer contribution, whether based on the 1946 formula or any other.

5.0 p.m.

Mr. Jay

The right hon. Gentleman would agree, would he not, as to the difference between the arrangements originally suggested in the Bill of my right hon. Friend the Member for Warrington (Dr. Summerskill) and the legislation as it finally went through, that there was no material difference in the total Exchequer liability but merely a book-keeping amendment between the proportion of it which came under Exchequer supplement and the proportion which came under Exchequer grant? It was merely a bookkeeping arrangement made to satisfy both sides of the Committee, and really there was nothing between us at all.

Mr. Boyd-Carpenter

The right hon. Gentleman has not quite got it right. If the right hon. Lady's proposal had gone forward as it originally stood the actual amount paid to the Fund would have been reduced. It is perfectly true that in response to the pressure she raised it; that the surplus, though less than it would have been under the 1946 contributions, still continued in some measure; and that in the normal way the Exchequer borrowed it back for use from the Fund; but the right hon. Gentleman must face the fact that the growth of the Fund was checked by that Statute. I am not pronouncing whether it was right or wrong to do so. What I am doing is—

Mr. John Paton (Norwich, North) rose—

Mr. Boyd-Carpenter

I hope the hon. Member will forgive me if I do not give way. This is a somewhat complex financial argument, and though I am willing to give way, if I do give way I shall break the thread of my argument.

Right hon. Gentlemen opposite are not really in a position to take any doctrinal view of the 1946 formula as though there were any element of a sacred cow about it. They sought to mutilate that cow even more seriously than they were allowed to. We must approach this on the basis of what is a common sense arrangement and not on the basis of the 1946 arrangements, which merely took into account the arrangements of the pre-existing Funds as the basis.

Mr. Paton

I know the difficulty of arguing these rather complex matters and I am grateful to the right hon. Gentleman for giving way to me now. I am speaking from memory because I have not refreshed my mind on this matter, but is it not true to say, and ought it not in fairness to be said, that any action which was taken by the Labour Government of that time arose from certain considerations advanced by the Actuary himself in his Report, when he drew attention to what he considered to be certain undesirable aspects of the finances of the Fund? It was in that situation, attention to which had been directed by the Actuary, that the Labour Government then acted.

Mr. Boyd-Carpenter

I shall be referring to one very important change, which has a considerable bearing on this matter, which originated from that Report, but the hon. Gentleman really cannot ride off on the shoulders of the Actuary—

Mr. Paton

I do not want to. I admitted the responsibility of the Government.

Mr. Boyd-Carpenter

As I understand it there is no quarrel between us here. I am not arguing the merits one way or the other of the decision, but I am referring to it as vitiating the claim of right hon. Gentlemen opposite always to have maintained and always to have desired to maintain Exchequer supplements on the 1946 or some other, older basis.

Let us deal with this as a practical matter. I think the first practical point is that, as a result of the Exchequer supplement and contributions being provided now, the contributors to the Fund are going to receive an absolutely first-class bargain. I gave the figure on Second Reading of the advantage gained by a married man who retires at the age of sixty-five as long ahead as 1978. For nearer dates the figures are even more striking, but I wanted to take a figure in the middle-distance of time. That man receives a pension whose capital value is £2,650. If he has contributed the absolute maximum under this scheme and under the older schemes and not received, as many people do, credits from time to time he could not towards that capital sum have contributed more than £970. I work it out that for that £970 he could on those same terms obtain in pension under this Bill a pension of 80s., but he would get only 29s. 6d. if he received his pension simply on the basis of his contributions.

I could multiply these examples, but that man will get for what would earn him a pension of 29s. 6d. a pension of 80s. That is the clearest indication possible of the support being given both by the employer and by the Exchequer to the pension arrangements under this scheme. In replying to those hon. Members who have been good enough to refer to this matter as a swindle I can only express the hope that somebody will try to swindle me along the same lines.

The hon. Member for Coventry, East (Mr. Grossman)—I am sorry he is not here—said that young people would have to pay more under the scheme than would be necessary to get their pension. That, of course, is not true. If account is taken both of Exchequer contributions and of employers' contributions, it is in fact the case that a person now entering insurance gets an extremely good bargain on the proposed terms. As the hon. Member for Coventry, East is not here I shall not carry the matter any farther, but if the hon. Member's objection is to what is called an overload on the contri- bution—one or two hon. Members have also referred Ito that overload in abusive terms, as if there were some sinister object by the present Government—let me remind them of what the Report of the Phillips Committee said. In paragraph 305 it said this: In the event, however, of an increase in the pension rates, the consequent addition to the contribution should not be confined, as it has been in the past, to the increase appropriate to an age 16 entrant. There should, in our view, also be added such further sum as will be sufficient, on average for the whole body of contributors at the time, to meet the part of the cost of the increase in the pension rate not covered by the increase in the age 16 contribution. One-seventh of the total increase in contribution thus assessed should fall on the Exchequer. Similar principles should be applied on the occasion of any further increase. If we were now to follow the very distinguished Phillips Committee it would be a little bold of any hon. Member to describe the proposition recommended by that Committee as a swindle, but in truth and in fact we have not gone as far as that, and the overload included in these contributions on top of the previous one does not amount to as much as would be justified on the principle of the Phillips Committee recommendation.

I think all this confusion that has arisen on the benches opposite on this subject is due to a certain misunderstanding of the future position of the Fund, and in particular the failure to appreciate that the Exchequer contribution is not the only element in the burden on the Exchequer as it might well have been in earlier days, but that we have to take into account the liability of the Exchequer to make up by supplementary payments the deficits into which the Fund will shortly go.

I was rather surprised to hear the right hon. Gentleman the Member for Battersea, North—I think a little petulantly—grumbling because the expected deficit of the Fund did not develop as soon as he had hoped—

Mr. Jay

Contemplated.

Mr. Boyd-Carpenter

I thought, from the right hon. Gentleman's unhappiness in the delay of the arrival of this deficit, he hoped it would have come sooner, but he prefers the word "contemplated."

I am extremely glad that that has not arisen, but it is sheer wishful thinking on the part of the right hon. Gentleman in the face of the figures to dispute the imminence of this deficit now.

We must take account, as I say, of the Exchequer liability to make deficiency payments. For those hon. Members who are disposed to think that the Exchequer's part in this is inadequate let me recall the figures I used on Second Reading, that the total capital liabilities of the National Insurance Fund will amount, when this Bill is law, to £42,000 million, of which under present arrangements some £17,500 million falls on the Exchequer.

Mr. T. Brown rose—

Mr. Boyd-Carpenter

I said the total capital value of the liabilities of the Fund as from when the Bill is law. I hope the hon. Member understands me now. I should have thought that that was a pretty substantial contribution by the taxpayers.

Let me take again the argument about the percentage which the Exchequer contribution bears to the total amount provided by the contributors. The 1946 formula, in the first full year of its operation—1949–50—provided 38.6 per cent. as that percentage, and I will make right hon. Gentlemen opposite a present of the fact that under this Bill next year the corresponding figure will be 19.6.

Mr. Jay

Hear, hear.

Mr. Boyd-Carpenter

The right hon. Gentleman's "Hear, hear" indicates the danger, even to his acute intelligence, of falling into the mistake of basing calculations in a matter of this sort on figures for one year. In the changed situation of the Fund—and I hope that the right hon. Gentleman will say "Hear, hear" to this—for 1960–61, it is forecast that the figure will be 35.8 per cent., and for 1961–62, 42.9 per cent.

Mr. Jay

As the right hon. Gentleman keeps referring to me, may I ask him this question? Supposing the Government, before 1962, should raise the contribution from employees still further, would not the figures be falsified?

Mr. Boyd-Carpenter

If any Government should alter the basis of the present Act, the figures will be different. The right hon. Gentleman does not require me to tell him that. What he does require me to tell him is that it is misleading and intellectually dishonest to base a criticism, in the case of a National Insurance Fund such as this, on the percentage of the Exchequer contribution in one particular year, if we know, as the right hon. Gentleman has every reason to know, that that figure will sharply rise in the following few years.

It indicates another thing. It would he grossly irresponsible, had this Government, in coming to a decision on this matter, concentrated simply on the first year of operation of this scheme, ignoring the fact that, with the increased number of beneficiaries, the liability for deficiency payments must rise in the years that follow.

Therefore, I think we can say that the "swindle," as the right hon. Gentleman calls it—the right hon. Gentleman's suggestion that the Exchequer is getting out of this lightly—simply does not bear examination. If the right hon. Gentleman will allow his mind to wander past the first year of operation of this Bill—and it must wander if he and the Committee are to form a sensible view about the development of this National Insurance Fund—he will realise that that is so.

5.15 p.m.

Then, the right hon. Gentleman said that the Exchequer would be making a profit out of it in the first year. Even in the first year, it will not. Even then, the result of the changes to which the right hon. Member for Battersea, North referred will be to superimpose, taking the savings and loss of revenue together, about £20 million falling on the Exchequer—an additional load on the Exchequer over and above the increase which next year will throw on the Fund a further liability of £44 million. I think that the right hon. Gentleman is not only wrong on his facts in saying that the Exchequer will make a profit even in the first year of operation, but wrong still more in the spirit of his argument if he really thought that any such profit which would result in the first year would have any serious relevance to the developing fortunes of this Fund.

I have shown in truth and in fact how the obligation laid upon the Exchequer, on the percentage basis, varied from that originally contemplated, and the right hon. Gentleman and his colleagues must not seek to get away from that. For the right hon. Gentleman to suggest that my right hon. Friend at the Treasury was responsible for this, and that I was merely a passive and consenting party, shows that he does not know me very well, and it simply is not borne out by the facts.

The point on the burden of the contribution is a real and understandable point, but I think that we must look at this matter realistically. I see that the hon. Member for Coventry, East is now in his place.

Mr. R. H. S. Crossman (Coventry, East)

I apologise for being absent during the earlier part of the Minister's speech.

Mr. Boyd-Carpenter

I quite understand, the hon. Gentleman has obligations that make demands on him. While he is here I will make reference to one or two points concerning the scheme for which the hon. Gentleman is responsible, and which does contemplate very substantial increases in contributions.

On his own figures, as I understand them, the total employee contribution under this Bill of 9s. 5d. will be reached at earnings of £10 5s. under his scheme. I think that the hon. Gentleman himself appreciates, from a footnote which he added to that calculation, that it takes no account either of the National Health Service contribution or of the contribution necessary to pay the £3 short-term benefits. I am not arguing with the right hon. Gentleman about a few shillings, but the figure of 9s. 5d. for the employee's contribution under this scheme intersects the level of wages at the comparatively modest figure of £7 10s.

Therefore, we go on to discuss the matter on the basis that it is contemplated, and rightly so, I agree, that in view of the great increases in earnings and the changes in the value of money, it is right and proper under this scheme to contemplate some increase in contributions. I do not want to weary the Committee by repeating the figures I gave on Second Reading, but the Committee will recall that I pointed out that, as a percentage of average earnings in manufacturing industry, the new contribution is actually lower than contemplated in 1946 and that it is only a little bit higher than in 1948 when the Act came into operation. When one takes into account on the other side of the equation the fact that higher benefits in real terms are being provided, I suggest to the Committee that these contributions as they now stand in the Bill are fully justified.

I must not take the matter further because the right hon. Gentleman has tactfully reminded me about delay, and we have another couple of debates before we come to Third Reading, which we are all anxious to make sure that the Bill receives today. I would ask the Committee not to underestimate the burden being assumed on the part of the Exchequer as the result of this Bill and as a result of the present National Insurance Scheme, on which this Bill is to be superimposed. Even in 1958–59 the total burden on the Exchequer will be little short of £140 million. It will rise by 1964–65 to £357 million, if the present basis is maintained.

Whatever criticisms may be made—and let me say that I welcome them, and that I am glad to have the opportunity of dealing with criticisms of the Bill—I must say that the criticism that under this Bill, we shall be imposing an insufficient burden on the taxpayer, in the light of the figures I have given, is an argument that will not stand up. On the contrary, we are more likely to be subjected to criticism because of the very heavy burden we are asking the community to assume on behalf of the aged and disabled sections of the population.

Mr. H. A. Marquand (Middlesbrough, East)

The Minister rather poked fun at the Amendments which we have put on the Notice Paper, and pointed out, quite rightly, that if they were taken literally and exactly, they would involve a much heavier load on the Exchequer without any corresponding reduction in the burden on the contributor. This is easily explained. We could not put down any Amendments until after the Second Reading of the Bill, and we had to work hard on the Bill during the Thursday. We put our Amendments down deliberately on Thursday night because we hoped it would help the right hon. Gentleman in the preparation of his notes for the debates on the Committee stage. We are perfectly well aware that the reduction of a halfpenny is not significant. We had neither the time nor the statistical staff at our disposal to work out the exact figure by which the contribution might be reduced in order to enable the Exchequer supplement to be increased by the amount which we propose.

When we come to the point of Division, as we shall do, we propose to divide on those of our Amendments which propose an increase in the Exchequer supplement. The whole point is that if our Amendments are carried, imposing some increase in the Exchequer supplement, then, of course, it would have to follow, as night follows day, that a reduction in the contribution that is needed from the contributor would result.

The right hon. Gentleman said that he would resist the temptation to support my hon. Friend the Member for East Ham, North (Mr. Prentice) in supporting my right hon. Friend the Member for Battersea, North (Mr. Jay), but I hope the right hon. Gentleman realises that very much more than the supporting of one hon. Member on this side of the Committee in his support for another is involved here. I hope the right hon. Gentleman realises that the very fact that my hon. Friend the Member for East Ham, North is a prominent and active member of his trade union and has held office in it carries a great deal of weight and significance in this debate.

What we are putting forward today, as the Minister knows very well, is the considered view of the Trades Union Congress, and I hope that the right hon. Gentleman has not forgotten how the Trades Union Congress has reiterated again and again the view that if there were to be further increases in flat-rate contributions there ought to be an increase in the Exchequer supplement.

My right hon. Friend the Member for Battersea, North has done a good service in reminding us this afternoon that the reduction in the Exchequer supplement made in 1951 was made deliberately as a temporary measure. It was explicitly stated at that time that it was provisional pending a quinquennial review of the whole scheme in 1954. Opportunities have since been had to study the working of the scheme, and the opportunity given now to study the change in the scheme leaves no one in doubt that the time has come to restore the Exchequer supplement to the level at which it stood in 1946 and from which it was changed in 1951.

Whatever was right or wrong in 1951, it seems to me, is entirely irrelevant at the present time. What is happening now under these proposals is a deliberate attempt to increase the burden on the contributor so markedly that it becomes, as my right hon. Friend said, a regressive tax falling much too heavily upon the lower paid wage earner. Therefore, we propose to shift that burden from the lower paid wage earner on to the taxpayer. The taxpayer is, of course, in part, the contributor. We know that perfectly well. But the shifting of the burden in this way from the flat-rate contribution on to the graduated Income Tax will spread the burden more fairly. It will impose it less heavily on the lowest paid wage earner and more heavily on the better paid wage earner and will impose some of it on the wealthy Supertax payer and profit earner who always profits, as I said yesterday, from the process of inflation which is the main cause of concern to increase benefits at the present time.

We feel very strongly about the failure of the Government to increase the Exchequer supplement at a time when they are proposing a big, and I admit some necessary, increase in contributions because it seems to us to be in line with the Government's whole General fiscal policy of redistributing the income of the nation in favour of the profit earner and the Surtax payer. The Government have deliberately taken away reliefs which existed for the poor in the form of cheap milk for children or subsidised bread for all and have handed over the money saved in this way by way of reliefs to the higher Income Tax and Surtax payers.

It is true that, in face of these protests, the Government have made some adjustment in the social services of the country, but even in regard to the social services, when they got the chance, they laid a heavy burden on the poorest of the poor by placing increased charges on Health Service appliances and medicine. Every time the Government have the opportunity to redistribute the wealth of the country they seize it in favour of the class that supports them and against the class which we on this side of the Committee represent.

The Minister told us that his present scheme is a first-class scheme for the contributors, that on the new rates of contribution to be paid by the employers plus the State—the other contributor—the insured person will get a good bargain. I do not doubt it. We have never doubted for a moment, and are delighted to find the Minister agreeing with us, that State insurance is a good deal better bargain for the workers than private insurance That is proved by the figures which the right hon. Gentleman gave us.

Mr. Boyd-Carpenter

And yet hon. Gentleman opposite call it a swindle.

Mr. Marquand

A State insurance is always a better buy in this way, and always must be.

Mr. J. C. Jennings (Burton)

Would that apply to private superannuation schemes too?

Mr. Marquand

It probably applies to a good many of them, yes. State insurance, generally speaking, is a better buy.

The question at issue this afternoon is not whether it is a good bargain, generally speaking and in broad general terms, but whether it is as good a bargain as it used to be and whether the method of finance adopted places too heavy a load on the lower paid worker. When we examine the figures we remain convinced that the bargain was a better bargain when it was first started and that it would be a better bargain now if only the change which we seek to introduce by our Amendments were accepted by the Committee.

Whereas in 1946 it was estimated that by 1958 the contributions of the employers and employed, £334 million, would constitute 51 per cent. of the cost of benefit, £545 million, under these proposals they are to constitute 79 per cent. of the benefit. The employers and employed together were by now, according to the reckoning in 1946, going to pay 51 per cent. of the cost of benefit. Under the Bill they are being required to pay 79 per cent. of that cost.

To put it in another way, the Actuary's Report on the 1954 Bill anticipated an overall deficit in 1957–58. After allowing not only for contributions but for normal Exchequer supplement it was anticipated that by this year there would be an overall deficit in the Fund of £54 million. At that point, the State would have to sub-vent the Fund in respect of those large numbers of persons who had not paid an actuarial contribution.

That year has now arrived, and the Bill proposes to raise the contributions so that there is an overall surplus of £7 million. The day of the deficit is steadily being pushed forward. Indeed, I think that was part of the right hon. Gentleman's case when he spoke just now. But when the nation accepted the all-inclusive Beveridge Plan in 1942 and incorporated it into law in 1946 we all understood that one day the taxpayer would have to come to the aid of the Plan because of the larger numbers brought in who, as I said, must become entitled to benefit before they have paid an actuarial contribution.

It was then agreed that something larger than the actuarial contribution should be charged on the new entrants. The man was to pay 8d. and the employer 7d. over and above what was required on the actuarial contribution. But this Bill puts the actuarial contribution at 1s. 3d. for the man and 1s. 2d. for the employer. Proposals of this kind might be acceptable if they were related proportionately to the income of the contributors, but when they are flat-rate contributions and when the flat rate is increased by this amount we are bound to say that they are a complete departure from the original conception of the scheme.

My hon. Friend the Member for Feltham (Mr. Hunter) reminded us that when Mr. David Lloyd George first launched social insurance in this country he promised 9d. for 4d. The Minister is now offering 9d. for 10d. That is how the calculation works out now. We feel that it is unquestionably wrong that so heavy a burden should be placed on the contributors. The proportions are wrong and the increase levied on the contributors becomes a regressive tax. The proportions ought to be redistributed. The tax ought to be taken off the lower paid worker and shouldered by the general Income Tax payer of the country. We propose to divide the House on this important Amendment.

5.30 p.m.

Dame Irene Ward (Tynemouth)

I must apologise for not having been in the Chamber to hear the whole of this discussion, but I had another engagement which I could not avoid. I should very much dislike letting these Amendments be put to the Committee without making my observations on the general level of contributions and the Exchequer payment. I was very glad to hear the right hon. Member for Middlesbrough, East (Mr. Marquand) talk about the burden on the lower-paid workers. I fully agree with him.

The position of the lower-paid workers has always been a very difficult one. In my association with my constituents over quite a reasonable period in investigating the question of contributions to the National Insurance Fund, I have come across very many heart-rending cases of responsible men and women on low salaries and incomes having to meet the full burden of contributions. I agree that an increase in the contributions to meet the additional retirement pension has placed an enormous burden on people who can ill afford to find these additional contributions.

I have argued this case for a very long time with members of my Government but, up to the moment, without success. I feel rather jubilant today, however, because I listened with very great care to what the right hon. Member for Middlesbrough, East said about placing a greater burden on the general taxpayer. Although, unfortunately, I was not able to hear it, I also gather that the right hon. Member for Battersea, North (Mr. Jay) had accused my Government of perpetrating a swindle on the contributors because of the situation now arising in relation to the Exchequer contribution.

I have been arguing for a very long time that Income Tax relief which is given in respect of National Insurance contributions to those who pay Income Tax should be abolished; and I think it is fair to assume that those who pay Income Tax are in a better position to pay increased contributions than those who do not pay Income Tax. In the main, the people who are in the lower-income groups are the people who do not pay Income Tax. I have always felt that it was quite wrong that those who pay Income Tax should get their National Insurance benefits cheaper than those who do not pay Income Tax. I know that to abolish the remission to Income Tax payers would not reduce the contribution of the lower-income groups, but at least we should have the satisfaction of knowing that the higher-income groups did not get the benefits at a cheaper rate than those who did not pay Income Tax and did not therefore attract Income Tax reliefs.

When the right hon. Member for Battersea, North accused my right hon. Friend of perpetrating a swindle on the contributor I venture to say that the Chancellor of the Exchequer at the time when the National Insurance Act, 1946, was introduced perpetrated a swindle on those in the lower-income bracketbecause, by carefully providing Income Tax relief for those who paid Income Tax—though I believe that Surtax payers were not included—he ensured that those who paid Income Tax, especially those in the late entrants scheme, had their insurance benefits at a personally lower charge than did those who had to pay the full contributions.

The last time that I asked what the Income Tax reliefs in respect of insurance contributions cost the Treasury, the figure was given by the Financial Secretary as about £34 million per annum. I hope that the Minister will convey to the Chancellor of the Exchequer that I, and I think most of my hon. Friends, would prefer that the £34 million should be paid into the Insurance Fund, rather than that it should be paid to people who are in the higher-income groups, and that the money should be used to reduce the contributions for those who are in the lower-income brackets. [HON. MEMBERS: "Hear, hear."] I am delighted that hon. and right hon. Members opposite should keep saying "Hear, hear" but, of course, they are responsible for this anomaly. They are responsible for the swindle on those in the lower-income groups who have had to pay more for their retirement pensions and other benefits. I am delighted to know that hon. and right hon. Members opposite are now seeing the error of their ways.

The argument put forward against me by Conservative Chancellors of the Exchequer has been that when insurance benefits are drawn they are taxable. That is true, and those who do not pay Income Tax during their working years, and have to pay the full contributions to keep themselves insured, are not likely when they retire and draw retirement pension to have to submit their incomes to taxation. At the same time, one cannot ensure that the people who have to pay tax in retirement are exactly the same people as those who received Income Tax reliefs in the earlier stages. Some people will get it both ways—no tax and tax reliefs. Nor is the fact altered that the people who do not pay tax never had the benefit of Income Tax reliefs.

As far as I can see, there is no possible way of making up to them the discrepancy and the deficiency under which they have suffered or compensating them for having had to pay more for their insurance benefits than those who are better off. This is a very difficult dilemma to resolve. I hope that I may be able to persuade my right hon. Friend to make representations to the Treasury to have this matter put right in the next Budget. I am not very good at mathematics, but I calculate that a young single man of 21 or 25, doing a skilled job and drawing a quite substantial wage, receives Income Tax relief of at least £10 a year over a very long period in respect of his National Insurance contributions. This relief substantially reduces the cost of his contribution to the National Insurance Fund and, of course, imposes a charge on the Treasury in respect of these reliefs.

A deduction of £10 a year by way of Income Tax relief from the total contributions over the years is a substantial amount which reduces the cost of the insurance benefits considerably to the person concerned. I hope, therefore, that when the next Budget comes along, the request of right hon. Gentlemen opposite will be granted for an amendment of their own Act—which is what it amounts to—so that the taxpayer accepts a proper share of the burden, and thus the position between the higher and lower income groups will be equalised.

I hope that my right hon. Friend will hand on this information to the Chancellor of the Exchequer, and I hope that the Chancellor will be brave enough to see that £34 million per annum from Exchequer funds is lost in respect of those who draw Income Tax relief in this way. I hope that the right hon. Gentlemen opposite, and all those who support them, will support the Chancellor and thus make the position of the two groups equal.

I hope that right hon. Gentlemen opposite realise what a swindle they have perpetrated on those who cannot defend themselves by causing widows, struggling spinsters and men in the lower-income brackets to pay more for their insurance contributions than others. I am not in the least surprised that right hon. Gentlemen opposite did not draw attention to what they themselves did, when they were making such grand speeches about the burden on the contributors.

I do not know whether I can persuade my right hon. Friend to get to his feet again. Of course, I agree that increases in retirement pensions have to be paid for by the employers, the employed and the Exchequer. I do not know whether I can persuade my right hon. Friend now to give me an assurance—particularly having regard to the fact that he listened to the speech of the right hon. Gentleman the Member for Middlesbrough, East—that he will discuss this matter with the Chancellor and will assure my right hon. Friend that if he makes this new arrangement, it will at any rate help towards a general scheme of equality, and that there will be no trouble from right hon. and hon. Gentlemen and hon. Ladies opposite during the next Budget debates. I should then have the greatest pleasure in saying that, at any rate, my Government realised that those in the lower-income groups were entitled to a fair deal and should not have a greater burden of contribution placed on them than those drawing higher incomes.

Mr. Charles Royle (Salford, West)

Before the hon. Lady sits down, would she remind the Committee what party has been in power during the last six years, and also who is now proposing to increase the contribution?

Dame Irene Ward

That is hardly a valid interruption. [HON. MEMBERS: "Oh."] Not at all, because my right hon. Friend is offering increased retirement pensions, and he has done much more for the old people than anybody upon the other side of the Committee. I agree with the hon. Gentleman that my party has been in power for some considerable time, but what I cannot understand is the humbug of the argument from hon. and right hon. Gentlemen opposite, who know that the basis of the argument I have deployed today has arisen from the fact that they themselves gave reliefs from the Exchequer to those who pay Income Tax, which they denied to those who do not have taxable incomes. That makes sheer nonsense and humbug of their case, and I am glad to have an opportunity to say so.

5.45 p.m.

Dr. Horace King (Southampton, Itchen)

I apologise for keeping the Committee a few minutes, but the simple answer to the hon. Lady the Member for Tynemouth (Dame Irene Ward) is that, in spite of her speech, she will be supporting a Government who are increasing the burden on the lowest-income groups.

Dame Irene Ward

If the hon. Gentleman will forgive me for interrupting him, I am a perfectly honourable person and I shall not be supporting the Government. I shall not be casting a vote. I would not vote with hon. and right hon. Gentlemen opposite, who have behaved in this extraordinary way, but I shall certainly not be voting against the Amendment. That is how my position is looked after.

Dr. King

I am grateful to the hon. Lady for that assurance. In view of the vehemence of her speech, I thought she ought to vote with the Opposition. I am detaining the Committee for a short time merely because of the romantic version given by the Minister of the debate in 1951, and to tell him that when he was taunting this side of the Committee with being illogical about the respective contributions from the workers and the State the picture he gave was so unreal, according to what I remembered, that I referred to HANSARD to find out how wrong he was.

I will stop when the Minister chooses to intervene to correct me, but the facts are that Mr. Osbert Peake did not object to the cutting of the Treasury contribution. He objected to the technical way in which it was done. He thought some proportion ought to remain between the Treasury contribution and the contributions of the workers and the employers, but he did not mind the proportion being lowered. He did not in any way suggest that the workers' contribution ought to be reduced. The entire case he made in an earlier stage of the debate on the Bill was a technical one, and when the Labour Government at the time made a change by varying the proportion instead of by a fixed amount, he not only declared himself satisfied but he supported them entirely. Mr. Osbert Peake said in Committee: It has seemed of vital importance to me that a regular and a substantial Exchequer contribution to the Fund should continue which should be proportionate to the contributions of employees. While holding that view very strongly, I shared the doubts of the Chancellor of the Exchequer whether it was wise to allow this Fund to continue to increase annually as it has done in recent years through unemployment having fallen so far below the level anticipated…The proposals tabled by the Minister will satisfy these two conditions, that is to maintain a substantial Exchequer contribution to the Fund, and at the same time for the next four years to get rid of the annual growth in the Fund. He went on to attack certain hon. Members who wanted to reduce the workers' contribution in proportion to the reduction that was being made in the State contribution, and said: I think that there is justification for some reduction in the regular Exchequer contribution, which was fixed on the high side in 1946. It would obviously be contrary to the Chancellor's general financial policy to increase purchasing power by an all-round reduction in contributions at present."—[OFFICAL REPORT, 9th May, 1951; Vol. 487, c. 1968 and 1969.] What the Labour Government did at that time as a temporary measure was regarded by the bulk of the House as a bookkeeping transaction merely to prevent a surplus from accumulating, and it had the full support of the chief spokesman for the Tory Opposition at that time. It is worth putting on record that the only purists in the House at that time were the right hon. Member for Thirsk and Malton (Mr. Turton), who refused to be convinced, and my right hon. Friend the Member for Ebbw Vale (Mr. Bevan).

Mr. Boyd-Carpenter

As I am sure the hon. Member will agree, he is referring to the Amendment introduced by the then Government to the original proposal which had been introduced by the right hon. Lady the Member for Warrington (Dr. Summerskill). What my noble Friend, as he now is, was expressing satisfaction in was the removal from that Bill of the proposed reduction of the Exchequer contribution by 6d. and the substitution of the one-seventh formula which, as far as Class I is concerned, still persists. There is no misunderstanding about it.

Mr. McKay

I do not want to take up time unnecessarily, but I agree entirely with the spirit displayed by the hon. Lady the Member for Tynemouth (Dame Irene Ward). In principle, she is quite right.

I tried to obtain some information from the Minister about the whole matter of taxation relief and how it affects insurance contributions, as well as how it affects the great principle which we always propound that we all pay the same amount and get the same benefits. People have said that from certain points of view there has been a swindle. In my view there is a genuine swindle now. We allow a system under a great national scheme whereby, in practice, the higher paid workers and people with still higher incomes, instead of paying the full amount of insurance contribution, are given a substantial reduction in a backhanded way. If, after reasonable examination, we can show that, with practically no extra burden upon the Exchequer, we can reduce the contribution of each worker by 9d. a week, I suggest that it is a matter for consideration, particularly by hon. Members on this side of the Committee. We are pleading for the lower paid workers.

How can this reduction be brought about? I am not dealing with the amount of money paid by the employer, but am restricting my remarks entirely to the contribution made by the remainder who participate in the insurance scheme. The Minister did not dispute this argument; he had not gone into the matter and he could not dispute it. As far as we can gather, practically £30 million is given back to the higher-paid workers and others with even higher incomes in a backhanded way. If we take that £30 million as a proportion of the total being paid in contributions at the moment, it comes to exactly one-twelfth of the contributions; and one-twelfth of a man's contribution is about 9d.

Consequently, simply by passing a Regulation to the effect that the contribution for pension shall not be allowed as a tax relief in future we can bring about a relief to the Exchequer of £30 million, which would enable the Minister, without more ado, to reduce the workers' contributions by 9d. each. The hon. Lady the Member for Tynemouth gave a figure of £10 as the tax relief received. She was a long way out. It is more like £5 a year.

There was an important fact which she seemed to forget, probably because of her attitude as a Tory towards employers; perhaps she is more partial to the employers than she is to the lower paid workers. What is the position in respect of the contribution of £350 million paid by the employers? We all know that the employers receive about £175 million in taxation relief on that £350 million; they are getting about 50 per cent. relief in respect of taxation.

The Minister dealt in a lighthearted way with the questions put to him, but I want to put it to the present Government and to any future Government that we must be loyal to the lower paid workers. Let us admit that there is a weakness in the scheme and that the higher paid members of the community are being given some backhanded relief. It is not equitable. There is a swindle somewhere. Let us say that in future we shall all pay alike in fact as well as in theory.

I did not entirely follow the Minister's argument, but the right hon. Gentleman said that if we abolished this taxation relief, then some relief which the pensioners receive at present might be taken away. I would point out to him that a married couple today have to have an income of £320 before they pay Income Tax at all. I therefore cannot see how

there would be any after effect on future pensions if we took the step I have suggested.

I am serious about this, and I want to emphasise what the hon. Lady the Member for Tynemouth said. We have an injustice here which ought to be prevented. To prevent it, the Government, whichever party is in office, have to show themselves more humane and more genuine. They have to introduce a system by which all workers pay the same and by which there is the same cost to everyone. Moreover, they should say, "In any new scheme we are not prepared to put on paper a statement that the employers are paying a certain amount of money when, in fact, we know that they are receiving nearly 50 per cent. back in taxation relief." I will not go further into how this can be done, as I want to speak on the subject on another Amendment.

Amendment negatived.

Amendment proposed: In page 11, line 23, leave out from "13 12 33 26" to end of line and insert:

21 20 47 36.—[Mr. Jay.]

Queston put, That "13 12 33 26" stand part of the Schedule:—

The Committee divided: Ayes 243, Noes 205.

Division No. 11.]	AYES	[6.0 p.m.
Agnew, Sir Peter	Bryan, P.	Farey-Jones, F. W.
Aitken, W. T.	Burden, F. F. A.	Fell, A.
Allan, R. A. (Paddington, S.)	Butcher, Sir Herbert	Finlay, Graeme
Alport, C. J. M.	Butter, Rt. Hn. R. A. (Saffron Walden)	Fisher, Nigel
Amery, Julian (Preston, N.)	Campbell, Sir David	Fort, R.
Amory, Rt. Hn. Heathcoat (Tiverton)	Carr, Robert	Foster, John
Armstrong, C. W.	Cary, Sir Robert	Fraser, Hon. Hugh (Stone)
Ashton, H.	Channon, Sir Henry	Fraser, Sir Ian (M'cmbe & Lonsdale)
Astor, Hon. J. J.	Clarke, Brig. Terence (Portsmth, W.)	Freeth, Denzil
Atkins, H. E.	Conant, Maj. Sir Roger	Gammans, Lady
Baldwin, A. E.	Cooke, Robert	Garner-Evans, E. H.
Balniel, Lord	Cooper, A. E.	Glyn, Col. Richard H.
Barlow, Sir John	Corfield, Capt. F. V.	Godber, J. B.
Barter, John	Craddock, Beresford (Spelthorne)	Gomme-Duncan, Col. Sir Alan
Baxter, Sir Beverley	Crosthwaite-Eyre, Col. O. E.	Goodhart, Philip
Bell, Ronald (Bucks, S.)	Crowder, Petre (Ruislip—Northwood)	Gower, H. R.
Bennett, F. M. (Torquay)	Cunningham, Knox	Graham, Sir Fergus
Bonnett, Dr. Reginald	Currie, G. B. H.	Grant, W. (Woodside)
Bevins, J. R. (Toxteth)	Davidson, Viscountess	Grant-Ferris, Wg Cdr. R. (Nantwich)
Bidgood, J. C.	D'Avigdor-Goldsmid, Sir Henry	Green, A.
Birch, Rt. Hon. Nigel	Deedes, W. F.	Gresham Cooke, R.
Bishop, F. P.	Digby, Simon Wingfield	Grimond, J.
Boothby, Sir Robert	Dodds-Parker, A. D.	Grosvenor, Lt.-Col. R. G.
Bossom, Sir Alfred	Donaldson, Cmdr. C. E. McA.	Gurden, Harold
Bowen, E. R. (Cardigan)	Doughty, C. J. A.	Hall, John (Wycombe)
Boyd-Carpenter, Rt. Hon. J. A.	Drayson, G. B.	Harris, Frederic (Croydon, N.W.)
Boyle, Sir Edward	du Cann, E. D. L.	Harris, Reader (Heston)
Braine, B. R.	Duncan, Sir James	Harrison, A. B. C. (Maldon)
Braithwaite, Sir Albert (Harrow, W.)	Duthie, W. S.	Harrison, Col. J. H. (Eye)
Bromley-Davenport, Lt.-Col. W. H.	Eden, J. B. (Bournemouth, West)	Harvey, Sir Arthur (Macclesfd)
Brooke, Rt. Hon. Henry	Elliott, R.W. (N'castle upon Tyne, N.)	Harvey, John (Walthamstow, E.)
Brooman-White, R. C.	Emmet, Hon. Mrs. Evelyn	Hay, John
Browne, J. Nixon (Craigton)	Errington, Sir Eric	Heald, Rt. Hon, Sir Lionel
Heath, Rt. Hon. E. R. G.	Macdonald, Sir Peter	Redmayne, M.
Henderson, John (Cathcart)	Mackeson, Brig. Sir Harry	Rees-Davies, W. R.
Henderson-Stewart, Sir James	Mackie, J. H. (Galloway)	Ridsdale, J. E.
Hicks-Beach, Maj. W. W.	McLaughlin, Mrs. P.	Rippon, A. G. F.
Hill, Mrs. E. (Wythenshawe)	Maclean, Sir Fitzroy (Lancaster)	Robson Brown, Sir William
Hill, John (S. Norfolk)	McLean, Neil (Inverness)	Rodgers, John (Sevenoaks)
Hinchingbrooke, viscount	Macleod, Rt. Hn. Iain (Enfield, W.)	Roper, Sir Harold
Hirst, Geoffrey	MacLeod, John (Ross & Cromarty)	Ropner, Col. Sir Leonard
Hobson, John (Warwick & Leam'gt'n)	Macmillan, Maurice (Halifax)	Russell, R. S.
Holland-Martin, C. J.	Macpherson, Niall (Dumfries)	Scott-Miller, Cmdr. R.
Hope, Lord John	Maddan, Martin	Sharples, R. C.
Hornby, R. P.	Maitland, Cdr. J. F. W. (Horncastle)	Shepherd, William
Hornsby-Smith, Miss M. P.	Maitland, Hon. Patrick (Lanark)	Simon, J. E. S. (Middlesbrough, W.)
Horobin, Sir Ian	Manningham-Buller, Rt. Hn. Sir R.	Smyth, Brig. Sir John (Norwood)
Horsbrugh, Rt. Hon. Dame Florence	Markham, Major Sir Frank	Spearman, Sir Alexander
Howard, Hon. Greville (St. Ives)	Marshall, Douglas	Speir, R. M.
Howard, John (Test)	Maude, Angus	Steward, Harold (Stockport, S.)
Hughes Hallett, Vice-Admiral J.	Maudling, Rt. Hon. R.	Steward, Sir William (Woolwich, W.)
Hughes-Young, M. H. C.	Mawby, R. L.	Storey, S.
Hulbert, Sir Norman	Maydon, Lt.-Comdr, S. L. C.	Stuart, Rt. Hon. James (Moray)
Kurd, A. R.	Milligan, Rt. Hon. W. R.	Studholme, Sir Henry
Hutchison, Michael Clark (E'b'gh, S.)	Molson, Rt. Hon. Hugh	Summers, Sir Spencer
Hutchison, SirlanClark (E'b'gh, W.)	Morrison, John (Salisbury)	Sumner, W. D. M. (Orpington)
Hutchison, Sir James (Scotstoun)	Mott-Radclyffe, Sir Charles	Taylor, Sir Charles (Eastbourne)
Hyde, Montgomery	Nabarro, G. D. N.	Taylor, William (Bradford, N.)
Iremonger, T. L.	Nairn, D. L. S.	Teeling, W.
Irvine, Bryant Godman (Rye)	Neave, Airey	Thomas, Leslie (Canterbury)
Jennings, J. C. (Burton)	Nicholls, Harmar	Thomas, P. J. M. (Conway)
Johnson, Dr. Donald (Carlisle)	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Thompson, Lt.-Cdr. R. (Croydon, S.)
Johnson, Eric (Blackley)	Nugent, G. R. H.	Thorneycroft, Rt. Hon. P.
Joynson-Hicks, Hon. Sir Lancelot	Oakshott, H. D.	Tiley, A. (Bradford, W.)
Kaberry, D.	O'Neill, Hn. Phelim (Co. Antrim, N.)	Tilney, John (Wavertree)
Keegan, D.	Orr-Ewing, Charles Ian (Hendon, N.)	Turton, Rt. Hon. R. H.
Kerby, Capt. H. B.	Orr-Ewing, Sir Ian (Weston-S-Mare)	Vaughan-Morgan, J. K.
Kershaw, J. A.	Osborne, C.	Vickers, Miss Joan
Kimball, M.	Page, R. G.	Wakefield, Sir Wavell (St. M'lebone)
Kirk, P. M.	Pannell, N. A. (Kirkdale)	Walker-Smith, Rt. Hon. Derek
Lagden, G. W.	Partridge, E.	Wall, Major Patrick
Lambton, Viscount	Pickthorn, K. W. M.	Watkinson, Rt. Hon. Harold
Leavey, J. A.	Pike, Miss Mervyn	Webbe, Sir H.
Leburn, W. G.	Pilkington, Capt. R. A.	Whitelaw, W. S. I.
Legge-Bourke, Maj. E. A. H.	Pitman, I. J.	Williams, Paul (Sunderland, S.)
Legh, Hon. Peter (Petersfield)	Pitt, Miss E. M.	Wills, G. (Bridgwater)
Lindsay, Hon. James (Devon, N.)	Pott, H. P.	Wood, Hon. R.
Lindsay, Martin (Solihull)	Powell, J. Enoch	Woollam, John Victor
Linstead, Sir H. N.	Price, David (Eastleigh)
Lloyd, Maj. Sir Guy (Renfrew, E.)	Price, Henry (Lewisham, W.)	TELLERS FOR THE AYES:
Low, Rt. Hon. Sir Toby	Prior-Palmer, Brig. O. L.	Mr. Barber and Mr. Gibson-Watt.
Lucas-Tooth, Sir Hugh	Rawlinson, Peter
McAdden, S. J.
NOES
Ainsley, J. W.	Cove, W. G.	Griffiths, Rt. Hon. James (Llanelly)
Albu, A. H.	Craddock, George (Bradford, S.)	Griffiths, William (Exchange)
Allaun, Frank (Salford, E.)	Cronin, J. D.	Hall, Rt. Hn. Glenvil (Colne Valley)
Allen, Arthur (Botworth)	Crossman, R. H. S.	Hamilton, W. W.
Allen, Scholefield (Crewe)	Cullen, Mrs. A.	Hannan, W.
Awbery, S. S.	Dalton, Rt. Hon. H.	Harrison, J. (Nottingham, N.)
Bacon, Miss Alice	Darling, George (Hillsborough)	Hastings, S.
Balfour, A.	Davies, Ernest (Enfield, E.)	Hayman, F. H.
Bellenger, Rt. Hon. F. J.	Davies, Harold (Leek)	Herbison, Miss M.
Beswick, Frank	Davies, Stephen (Merthyr)	Holmes, Horace
Bevan, Rt. Hon. A. (Ebbw Vale)	Delargy, H. J.	Howell, Charles (Perry Barr)
Blackburn, F.	Diamond, John	Howell, Denis (All Saints)
Blenkinsop, A.	Dodds, N. N.	Hoy, J. H.
Blyton, W. R.	Dugdale, Rt. Hn. John (W. Brmwch)	Hubbard, T. F.
Boardman, H.	Edelman, M.	Hughes, Emrys (S. Ayrshire)
Bottomley, Rt. Hon. A. G.	Edwards, Rt. Hon. John (Brighouse)	Hunter, A. E.
Bowden, H. W. (Leicester, S.W.)	Edwards, Rt. Hon. Ness (Caerphilly)	Hynd, J. B. (Attercliffe)
Bowles, F. G.	Edwards, Robert (Bilston)	Irvine, A. J. (Edge Hill)
Braddock, Mrs. Elizabeth	Edwards, W. J. (Stepney)	Irving, Sydney (Dartford)
Brookway, A. P.	Evans, Albert (Islington, S.W.)	Isaacs, Rt. Hon. G. A.
Brown, Rt. Hon. George (Belper)	Evans, Edward (Lowestoft)	Janner, B.
Brown, Thomas (Ince)	Finch, H. J.	Jay, Rt. Hon. D. P. T.
Burke, W. A.	Fraser, Thomas (Hamilton)	Jeger, Mrs. Lena (Holbn & St. Pncs, S.)
Butler, Herbert (Hackney, C.)	Gaitskell, Rt. Hon. H. T. N.	Jenkins, Roy (Stechford)
Butler, Mrs. Joyce (Wood Green)	George, Lady Megan Lloyd (Car'then)	Johnson, James (Rugby)
Callaghan, L. J.	Gibson, C. W.	Jones, Rt. Hon. A. Creech (Wakefield)
Champion, A. J.	Gooch, E. G.	Jones, David (The Hartlepools)
Clunie, J.	Greenwood, Anthony	Jones, Elwyn (W. Ham, S.)
Coldrick, W.	Grenfell, Rt. Hon. D. R.	Jones, Jack (Rotherham)
Collick, P. H. (Birkenhead)	Grey, C. F.	Jones, J. Idwal (Wrexham)
Corbet, Mrs. Freda	Griffiths, David (Rother Valley)	Jones, T. W. (Merioneth)

Kenyon, C.	Paling, Rt. Hon. W. (Dearne valley)	Steele, T.
Key, Rt. Hon. C. W.	Palmer, A. M. F.	Stewart, Michael (Fulham)
King, Dr. H. M.	Pannell, Charles (Leeds, W.)	Stones, W. (Consett)
Lawson, G. M.	Pargiter, G. A.	Strachey, Rt. Hon. J.
Ledger, R. J.	Parker, J.	Strauss, Rt. Hon. George (Vauxhall)
Lee, Miss Jennie (Cannock)	Parkin, B. T.	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Lever, Harold (Cheetham)	Paton, John	Summerskill, Rt. Hon. E.
Lindgren, G. S.	Pearson, A.	Swingler, S. T.
Lipton, Marcus	Peart, T. F.	Sylvester, G. O.
Mabon, Dr. J. Dickson	Pentland, N.	Taylor, Bernard (Mansfield)
MacColl, J. E.	Plummer, Sir Leslie	Taylor, John (West Lothian)
MacDermot, Niall	Popplewell, E.	Thomas, George (Cardiff)
McInnes, J.	Prentice, R. E.	Thornton, E.
McKay, John (Wallsend)	Price, J. T. (Westhoughton)	Timmons, J.
McLeavy, Frank	Price, Philips (Gloucestershire, W.)	Ungoed-Thomas, Sir Lynn
MacMillan, M. K. (Western Isles)	Probert, A. R.	Usborne, H. C.
MacPherson, Malcolm (Stirling)	Proctor, W. T.	Viant, S. P.
Mallalieu, E. L. (Brigg)	Pryde, D. J.	Watkins, T. E.
Mann, Mrs. Jean	Randall, H. E.	Weitzman, D.
Marquand, Rt. Hon. H. A.	Rankin, John	Wells, Percy (Faversham)
Mason, Roy	Redhead, E. C.	Wheeldon, W. E.
Mellish, R. J.	Reeves, J.	White, Mrs. Eirene (E. Flint)
Messer, Sir F.	Reid, William	White, Henry (Derbyshire, N.E.)
Mikardo, Ian	Robens, Rt. Hon. A.	Wigg, George
Mitchison, G. R.	Roberts, Goronwy (Caernarvon)	Willey, Frederick
Monslow, W.	Robinson, Kenneth (St. Pancras, N.)	Williams, David (Neath)
Moody, A. S.	Rogers, George (Kensington, N.)	Williams, Rev. Llywelyn (Ab'tillery)
Morris, Percy (Swansea, W.)	Ross, William	Williams, Rt. Hon. T. (Don Valley)
Mort, D. L.	Royle, C.	Williams, W. R. (Openshaw)
Moss, R.	Shinwell, Rt. Hon. E.	Willis, Eustace (Edinburgh, E.)
Moyle, A.	Silverman, Sydney (Nelson)	Wilson, Rt. Hon. Harold (Huyton)
Noel-Baker, Francis (Swindon)	Simmons, C. J. (Brierley Hill)	Winterbottom, Richard
Noel-Baker, Rt. Hon. P. (Derby, S.)	Skeffington, A. M.	Woodburn, Rt. Hon. A.
O'Brien, Sir Thomas	Slater, Mrs. H. (Stoke, N.)	Woof, R. E.
Oliver, G. H	Slater, J. (Sedgefield)	Yates, V. (Ladywood)
Orbach, M	Snow, J. W.	Zilliacus, K.
Oswald, T.	Soskice, Rt. Hon. Sir Frank
Owen, W. J.	Sparks, J. A.	TELLERS FOR THE NOES:
		Mr. Deer and Mr. Short.

Schedule agreed to.