§ Order for Third Reading read.
§ 3.43 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Edith Pitt)
I beg to move, That the Bill be now read the Third time.
We have come to the final stage in this House of this Bill which is designed to provide graduated pensions. When passed, it will add to the system of flat-rate pensions which has served us for fifty years. The scope for flat-rate pensions has widened, the qualifying age has been lowered, and benefits have increased, but always the flat-rate system has remained as the basic provision for old age. One of the reasons for making a change now is that the flat-rate system keeps all at the lowest level. It is tied to the contributions which the lowest-paid workers can afford. I think there is general agreement that we should progress to a system of pensions related to earnings. Where hon. Members on each side of the House differ is over the dimensions of a wage-related scheme. I will return later to that point.
It is common knowledge that the present National Insurance scheme is "in the red" and the reasons for this are also well known. We have accepted responsibility for the payment of pensions in full to those already retired, those retiring now and those retiring in the years immediately ahead, whose contributions pay for only a small part of the pension which they enjoy or will enjoy. In addition, the proportion of old people in the population increases year by year, and the annual deficit under the present scheme was £39 million last year. It is expected that in twenty years' time it may rise to over £400 million. There is general agreement that this problem of the finances of the National Insurance scheme must be faced, and the provisions contained in this Bill will put those finances on a sound footing.
Another reason for change, a very important one, is the growth in occupational pension schemes. When the first 819 official inquiry was made by the Ministry of Labour twenty years ago, pension schemes were limited very largely to the public services, to railway undertakings, banks, and comparable employments. But the survey issued by the Government Actuary in 1958 shows that during those twenty years the number in industry and commerce covered by such pension schemes had risen nearly fourfold. At the date of the issue of the report it was estimated that over 8,750,000 people were acquiring pension rights in various schemes, including the public service schemes. This figure represents about 40 per cent. of the employed population and nearly half of all employed men. About half of this total of 8,750,000 are manual workers and the spread of such schemes among manual workers has been one of the most striking and welcome developments in the sphere of occupational pensions in recent years.
One other point about private schemes which is worth noting, and it is shown by the survey, is that they total about 37,000. Of these, 28,000 have less than 50 members and only 600 have more than 1,000 members; so that, contrary to what is often thought, the majority of occupational schemes are small, or rather the schemes are those of smaller firms.
From this development emerges the fact that there exists what, in Disraeli's phrase, may be called "two nations," those people who in their retirement may look to some additional pension provided by virtue of their occupation, and those who as yet have no such entitlement. Alongside this difference between those who may look to a pension from employment on top of the State pension, and those who as yet are not in any occupational scheme, is the high level of prosperity and the rising standard of living of recent years especially for weekly wage earners. This further accentuates the sharp difference between full wages and the basic retirement pension tied to the lowest level of earnings.
I said that I would return to the question of the dimensions of the new scheme embodied in this Bill. The graduated contributions will be collected on that proportion of earnings, for men and women alike, between £9 and £15. After 820 careful consideration, the Government are of opinion that this modest proportion is right for these reasons. It is against their philosophy to compel people to make provision through compulsory State insurance above a modest level; it avoids the danger of inflation, which would be an immediate consequence of higher premiums on a wider band of earnings; it does not discourage private saving; and the proposed modest limits make contracting out a reasonable and workable proposition, so ensuring that those responsible for existing schemes—to which the Government attach the utmost importance—will be able to choose to continue them as an alternative to the State scheme or to live alongside the State scheme. Further, the scheme is not so large as to deter new developments in the private field which we hope will continue to be the pattern in the days ahead.
The hon. Member for Islington, North (Mr. Reynolds) suggested yesterday, on the Report stage of the Bill:I have not yet heard any occupants of the Government Front Bench state definitely that they really believe in the Ministry of Pensions and National Insurance providing wage-related pensions for people who cannot get them from any other source through their employers."—[OFFICIAL REPORT, 8th June, 1959; Vol. 606, c. 691.]That is not correct. It has been said many times from these benches. Since this is my first contribution to a major debate on this subject, I welcome this opportunity of declaring my own support for a plan which provides an opportunity for a measure of wage-related pensions for those not yet covered by the existing schemes.
I know from my own industrial experience that a pension related to the job is greatly valued. It promotes both independence and security, and it plays a considerable part in good industrial relations. I regard the Bill as progress in social security. Where industry has not been able to provide such an opportunity for an occupational scheme—there are particular difficulties in some industries, as hon. Members on both sides appreciate—the machinery of the Bill will afford an opportunity, with the proviso again that its proposals are not so large as to damage the prospects of developments in the private sector where this valuable addition to security and independence in old age began.
821 The House will not wish me to cover again the detailed provisions of the Bill, but I would refer again to Part II which contains the contracting-out proposals. The aim of the Government has been simplicity. The test for equivalency is that to contract out of the State scheme occupational pensions must be financially sound. They must provide pensions at least as good as the maximum of the State scheme and they must preserve, if the employee leaves that employment before retiring age, rights equivalent to what he would have earned at the maximum in the State scheme. In the interests of simplicity, some refinements have had to be sacrificed, but we believe that contracting out will work, and if we succeed we shall have done what no other country in the world has found possible.
I would like to say a word or two about the way in which the new contributions will be collected and to give some of the reasons which led us to decide to continue the present methods for collecting the flat-rate contributions. The graduated contributions will be collected along with the pay-as-you-earn Income Tax. The employer will record the contributions on the same card as he uses for P.A.Y.E. deductions and he will pay over the money to the Inland Revenue at the same time, that is, normally each month, as he pays over the tax.
On the other hand, the minimum insurance contributions of those within the scope of the graduated scheme, as well as the flat-rate contributions of those in contracted-out employment, we shall collect in the same way as National Insurance contributions are collected at present, that is, by stamped cards or by the special methods of direct payment now used by an increasing number of the larger employers. We considered very carefully whether the flat-rate and the minimum contributions should be collected, like the graduated contributions, through the P.A.Y.E. system but, for the reasons I shall mention, we became convinced that it would be unwise to start off the new scheme on that basis.
In the administration of these vast, nation-wide schemes there is a great deal to be said for proceeding by steps rather than by jumps, and for not shifting the full weight from one foot to the other until the ground has been well tested. 822 By continuing the present methods of collecting the flat-rate and minimum contributions we ensure that the machinery for assessing and paying promptly the short-term benefits, such as sickness benefit and unemployment benefit, remain undisturbed. As the House knows, the present system rests on the division of the insured population into four groups for contribution purposes. The contribution card for each group covers a period of one year, but for one group the year starts in March, for another in June, and for the others in September or December.
This method of staggering the exchange of contribution cards and the recording of contributions makes it possible to link entitlement to the short-term benefits with the person's recent record of contributions. Thus a person's rate of sickness or unemployment benefit is related to his contributions on his last complete contribution card from about five months after that card has expired. The collection of these contributions through the P.A.Y.E. arrangements would involve transferring everyone to a single contribution year, the financial year, and the resulting annual peak of work would almost certainly make it necessary to extend the interval between the end of the contribution year and the time at which benefits begin to be affected. Any appreciable extension of this interval would make the record of contributions a less realistic test of recent employment and, therefore, a much less satisfactory basis for assessing entitlement to sickness and unemployment benefits.
Examination has shown that the collection of all these contributions through the P.A.Y.E. system would complicate that system much more than might at first appear. Liability for the flat-rate and minimum contributions of employed people will remain on the present "week of work" basis and must do so if, for example, the present arrangements for giving credits for weeks of sickness or unemployment are to continue. The graduated contributions, on the other hand, will be levied on pay packets as received. This means that the two sets of contributions will often not be precisely in step. There can be no doubt that if the combined collection were attempted the resulting complications 823 would prove very troublesome, particularly for the smaller employer, and that there would be many mistakes.
When discussing these insurance matters, we sometimes tend to talk as though the population were divided permanently into three classes, the employed, the self-employed, and the non-employed. In practice, people often switch from one of these classes to another and then back again, in the course of a year. The person who goes on unpaid holiday provides an example. It is a great convenience to people in these cases to have an insurance card which can be used for the appropriate contributions of whatever class in each week. The card also has other advantages as a personal insurance document with which I need not occupy the time of the House.
It may, however, interest hon. Members to know that though the present system of collection is based on sticking of stamps on cards, a large and increasing proportion of the contributions of employed men and women are collected by alternative methods of payment. Some of the larger employers apply for and are given permission to use machines for impressing stamps on cards so that the need to purchase and stick on adhesive stamps is obviated. Others have special arrangements with the Ministry for direct payment of contributions by cheque. These facilities can usually be arranged for any employer having 250 or more employees. In the result, roughly one-third of the total sum now collected in contributions is paid by one or other of these methods under which the ordinary insurance stamps—not insurance cards—are dispensed with.
I hope that this rather striking figure shows in itself that we are very ready to adapt our methods of collection as circumstances require. I certainly should not like to leave the impression that we regard the arrangement which I have outlined as incapable of later refinement or improvement. We are, in fact, taking powers in the Bill which could be used if later on we found it possible or advantageous to collect more, or indeed, all of the contributions of employed people through the P.A.Y.E. system. That day may come, but it is not yet; nor would I expect it to come until a great deal 824 of experience of the working of the graduated system has been gained.
One other matter on which I think hon. Members will wish to be informed is the procedure for making regulations under the Bill. Wide regulation-making power is taken and in this we follow the method adopted in the main National Insurance Act. Since the beginning of National Insurance, it has been accepted that the necessarily complex structure of the schemes should be filled in by regulations and this system gives flexibility. The general lines of legislation laid down by Parliament may remain valid for many years, but experience and changes of practice in industry or of public opinion may suggest the need for running adjustments.
It is for these reasons that the special procedure for making regulations has been evolved over the years. It is designed to ensure that anyone concerned has an opportunity to make representations before the regulations are made.
The regulations themselves and any representations about them are thoroughly examined by an independent expert committee, the National Insurance Advisory Committee, before they are made. I think that hon. Members on both sides of the House would agree that the ability and work of the National Insurance Advisory Committee is of considerable assistance to the work of my Department. Those safeguards I have outlined will apply to the regulations which we shall make under the Bill.
So far as regulations made by the Minister of Pensions and National Insurance are concerned, the procedure which has worked with general approval since 1946 is laid down in Section 77 of that Act. It is well known to those in regular contact with the scheme as it stands, but the new graduated scheme, and, in particular, contracting out, raise points of interest to many bodies not hitherto very much connected with National Insurance, some of whom have expressed anxiety about the sort of consultation which will precede the making of regulations.
The 1946 Act requires that the Minister, before making any regulations, must submit to the National Insurance Advisory Committee a preliminary draft of the regulations he proposes to make 825 and must provide it with any information it might reasonably require about them. The draft is published and put on sale by H.M. Stationery Office. The Committee must publish notice that it has received a preliminary draft, and allow at least 14 days within which representations may be made. In practice, the maximum of 28 days is usually allowed. Official notices are always published in the London and Edinburgh Gazettes, and, in addition, a Press notice is issued to the national Press and to a large number of interested bodies.
The Committee must consider the preliminary draft and any objections that have been received, and report in writing to the Minister. This report must be published, and laid before Parliament with the relevant regulations, together with a statement by the Minister indicating any departures from the preliminary draft, the effect given to any recommendation by the Committee, and, if any such recommendation has not been adopted, the reason.
Provisional regulations may be made, to operate before this procedure has been completed, if the Minister certifies that they should do so on account of urgency or other special reason, but this does not exempt the regulations from going through the full procedure in the ordinary way. A preliminary draft must still be put to the Committee, and the regulations the Minister has put into force provisionally cannot continue for more than three months from the date the Committee reports on the draft. This explanation will do much, I hope, to reassure those who feel some concern about the filling in of the regulations to be made under the Bill.
To come back to the main provisions of the Bill, I should emphasis one important aspect. That is that the Bill enables the Exchequer subsidy to be concentrated on the lower paid workers—something not possible with a flat-rate scheme where any Exchequer contribution must apply to all in the scheme and, obviously, the further spread the more thinly spread. It is a proper allocation of aniy social subsidy that it should go to those most in need. That is what the Bill will make possible. The amount whipped in from the taxpayer—no less than £170 million a year as a minimum and rising 826 in the years ahead—will benefit the lower paid. Their weekly contributions will be reduced from 18s. 2d. to 15s. 4d. for a man, and from 14s. 9d. to 13s. 6d. for a woman, when the Bill takes effect.
I want also to say a word about what my friends in the factories of Birmingham would call "the foreigner" in the Bill, that is, the Clause relating to increments of the flat-rate pension. This proposes an improvement in the increments awarded for work after minimum pension age. For every 12 contributions paid for such work the addition to pension on retirement—or, on reaching age 70, when retirement is deemed—will be an extra 1s. for a man plus 6d. for a wife's pension on his insurance. In the event of his death, the sixpences awarded to his wife will be increased to the 1s. rate. The 1s. increase applies also to women for work done between 60 and 65.
These improvements implement a promise given by my right hon. Friend to consider the steps for increments, because tinder the present rate of 1s. 6d. for every 25 contributions cases have arisen where wastage has occurred. A man has gone on working but not built up the full 25 and that wastage can be as many as 24 contributions. Many hon. Members have brought cases to our notice and the improvement, I am sure, is welcome. It will mean extra benefit for those who continue at work, payable when most needed. It is significant that over half the men at present retiring and claiming pension have earned on average six increments. As I said in Committee, we want to bring this improvement into effect as soon as possible after the Bill has gone through all its stages. We hope to do so within a month of the Bill receiving the Royal Assent.
§ Mr. J. T. Price (Westhoughton)
Since the hon. Lady has made reference to the high proportion of pensioners who earn increments over the normal pension, she will realise that this does not prove the point she has in mind. If it proves anything, it proves that a very large number of people who reach age 65 cannot afford to retire on the present State pension.
§ Miss Pitt
It does not prove anything, but it shows what we are doing and what we hope will benefit those who retire in the immediate years ahead. It certainly 827 does benefit the many people now retired. All hon. Members would agree that if we can make it more attractive for men and women to continue at work we should do so because that is part of the broader social policy. We want to encourage all fit and able people to continue working as long as they possibly can.
Finally, may I say that when I was first appointed to this Ministry—just over three years ago—I came, like most newcomers, with ideas of what I could contribute to National Insurance. My greatest wish—no more than a wish at that stage—was that I might help to obtain for others the benefit of a pension related to earnings. I knew the value of this in industry. It was something I had enjoyed myself for twenty years. I had helped to introduce a scheme to the manual workers in a firm, and I knew some of the difficulties of introducing such a scheme. This was in the days of expansion of private schemes and in some cases one had to "sell" the idea of insurance.
I knew and saw the growing confidence, respect and independence such a scheme gave, the value set upon it by the men and women concerned. I was very happy to find this same idea in the forefront of my right hon. Friend's thoughts on his new responsibilities. At a later stage, there followed the tremendous amount of study and work which have resulted in this Bill, which now offers to all the prospect of a pension in retirement related to their earnings. I am happy to be associated with it and to be able to move the Third Reading today.
§ 4.10 p.m.
§ Mr. H. A. Marquand (Middlesbrough, East)
The hon. Lady the Joint Parliamentary Secretary referred to the immense amount of study and work which has gone into the consideration of these proposals since our start last November. We have now reached the concluding stages of our consideration, and I have no doubt that every right hon. and hon. Member, on whichever side of the House he sits, has some sense of relief that we are approaching the end. It has been a long period of study. We have had many discussions upstairs and in the Chamber which have occupied many hours. Behind all that there has been 828 a great amount of private study, inquiry and search for statistics, and discussions with colleagues on aspects of the plan.
Even if we still disagree very much with the provisions contained in the Bill, we cannot help feeling that perhaps our work has not been entirely in vain. We wish that we could have made more improvements than we have been able to make, but we are able momentarily to congratulate the right hon. Gentleman and his hon. Friends on the end of this period of excessive labour. At the same time, we congratulate ourselves.
It was also with pleasure that we listened to the modest and charming way in which the hon. Lady, speaking, as she said, for the first time in a major debate on the Bill, explained in detail its various provisions. It was perhaps right for her to do that with modesty, because it is only modesty that the Bill deserves.
When we debated the Government's general proposals as contained in the White Paper, we on this side of the House expressed serious misgivings about some aspects of them. Later, when we discussed the Second Reading of the Bill, we expressed very strong dislike of it, and on behalf of my right hon. and hon. Friends I moved an Amendment to the Motion, "That the Bill be now read a Second time". It was an Amendment asking the House to decline to give it a Second Reading because of certain major omissions from the Bill. The Second Reading debate was mainly concentrated on omissions. Today, we can talk no more about omissions, because we must talk solely about what is in the Bill.
There remains a great deal to be said, because during the various stages of the Bill we may discuss it in detail, but again and again our procedure inhibits us from discussing it as a comprehensive whole. For example, on Clause 1, dealing with contributions, according to the rules of order we can talk solely about contributions. Later, when we reach the Clause dealing with benefits, we can talk solely about benefits. We cannot adequately at any time discuss the relationship between contributions and benefits. That is only one example of some of the difficulties which we encounter because of the rules of order, which have been built up to ensure that there is no waste of time in the discussions of the House.
829 Today, we are considering what is in the Bill, and I hope that those who report our proceedings in the national Press will not feel that they have to devote so much time to the Bill which preceded this Bill this afternoon that they cannot find any room at all to report some of the criticism which we want to make of this Bill. The provisions of the Bill, bad though they are, are more important to the generality of the population of this country than the fate of The Times newspaper.
During the long debates which we have had we have been able to secure only two or three minor, I might almost say minimal, Amendments to it. Although the right hon. Gentleman and his two Joint Parliamentary Secretaries have valiantly defended the various detailed provisions in the Bill, very few of their hon. Friends have felt moved to support them in these efforts to defend the Bill. We are particularly looking forward this afternoon to hearing from some hon. Members opposite who were so silent in Committee. We learned from what was said in Committee by hon. Members opposite little more than we already knew, namely, that the hon. Member for Barry (Mr. Gower) will follow the Government into whatever morass they may decide to lead him. From the others we heard very little, and we look forward this afternoon to hearing them expound the Bill and defend its provisions.
The hon. Lady referred to what we all agree—although we on this side of the House were the first to draw attention to it—is the most glaring defect in our present system of social security. That is the existence of two nations in old age. One nation consists of those who have a weekly national pension amounting to £2 10s. for a single man and £4 for a married couple, plus National Assistance. On the other hand, there are a number, perhaps an equal number, of persons who have that basic national pension when they reach old age plus other resources, possibly from occupational schemes or from personal savings or from the inheritance of property or from many other ways of acquiring that independence. We have two nations in old age. One is living on the basic pension and either drawing National Assistance or finding itself continually 830 on the verge of the dire poverty which involves drawing National Assistance. The other is comparatively well-to-do in old age.
For millions of workpeople earning less than £9 a week the Bill perpetuates that division of the nation into two nations in old age. It does no more for the existing pensioner than is already done. There is some relief for a time to contributors to pensions through a lowering of the contribution, but it is only for a time. Within five years the contribution which has been lowered begins to be increased, and it goes on being increased for a considerable time during the course of the operation of the Bill.
§ Sir Keith Joseph (Leeds, North-East)
I think that the right hon. Gentleman will agree that he made a mistake in saying that the contribution will be increased. As the Bill stands there is power to increase the contribution, but even the right hon. Gentleman cannot predict what will happen in five years.
§ Mr. Marquand
If the right hon. Gentleman cannot predict what will happen in five years he is at least willing to make a bet about what will happen if the present party remains in power. There can be little doubt that under the provisions of the Bill, if they are not improved substantially, it will be necessary to make this increase in contributions to carry out the financing of the whole scheme. We have been told again and again that it is wrong for us to separate the basic and the graduated pensions. It would be a great mistake for us to hold out hopes in the country that if the right hon. Gentleman and his hon. Friends remain in office, then work-people will be exempt from the prospective tax provided for in the Bill. If this state of affairs continues, for millions of people it will still be true that in retirement they will either have to have recourse to National Assistance or will be extremely near the National Assistance level.
§ Mr. Raymond Gower (Barry)
The right hon. Gentleman said that the Bill perpetuates the present situation of two nations in old age. Does he look forward in the fairly near future to a state of affairs in which any large proportion of the population—speaking of men with dependants—will be earning less than £9 a week?
§ Mr. Marquand
The hon. Member is attempting to make me break the rules of order by going outside what is in the Bill and making a forecast of some indefinite future. Undoubtedly, what I am saying is true. Unless there are some remarkable changes in the rate of expansion of our economy in a very short time—and we see no reason to expect it under the present Administration—the perpetuation of two nations in old age is a major part of the Bill. It will be found at the very beginning.
The White Paper, which preceded the introduction of the Bill, declared thatsocial and financial considerations alike point to the need for a new and bold step away from the universal flat-rate system.In our opinion that new and bold step is not taken in the Bill. Some step is taken, and we shall examine that in a moment, but the new and bold step which was required, according to the White Paper, to get right away from that system clearly has not been taken in the Bill, otherwise the First Schedule and the provisions concerning the basic pension would not be in the Bill at all. The only bold step taken in the Bill is to create a big and complicated machine for the collection and calculation of the benefits which the hon. Lady described to us in some detail this afternoon.
I believe that it will cost millions of pounds to inaugurate this new collection machinery. If I am wrong I can be corrected later. I believe that it will require the enrolment of hundreds of additional civil servants. I would make no complaint about that if I thought that the benefit to be derived from this vast new machinery would be commensurate with the size of the machine. But, when all the calculations have been made, when all the stamps have been affixed to the cards and when all the P.A.Y.E. forms and pay packets have been completed, the benefits which will come from the new machinery will be paltry.
I do not wish to weary the House at this late stage by giving many examples. As a fair sample, let us consider the case of an average male worker aged 30 today and earning £12 a week, which is an average wage for male workers in most occupations in this country. He will pay at first 4¼ per cent. on that band of his income between £9 and £15 a week, but later he will pay a larger 832 proportion of that income. After paying that for thirty-five years this average worker will receive the magnificent addition of 15s. a week to his basic pension which, if that is all he has at the end of his days, will perhaps be sufficient to keep him just above Assistance level, where he would otherwise have been.
It is incredible, but true, that a woman of the same age and income and paying the same proportionate contribution will receive only 10s. a week addition to her basic pension.
§ The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter)
Will the right hon. Gentleman state at what age she will receive it?
§ Mr. Marquand
She will receive it when she is 60, five years earlier than a man receives his pension. I was going on to state that.
§ Mr. Frederick Gough (Horsham) rose—
§ Mr. Marquand
I will not give way again. I have given way about four times already and I am sure that the hon. Member for Horsham (Mr. Gough), who was a member of the Standing Committee, will have no difficulty in catching your eye later, Mr. Speaker, and making his point.
This discrimination between men and women is a notable and most regrettable aspect of this so-called bold step away from the universal flat-rate system. Under the universal flat-rate system women pay a lower contribution, but receive the same benefits as men at an earlier age. Under the Bill they will pay the same, but will receive less. The discrimination against women, for discrimination against women it is, is defended on the ground that women retire earlier and live longer than men. That is true, and no hon. Member wants to alter either of those two facts. But, if they live longer, their needs grow greater. That was recognised by Lord Beveridge.
Because these facts are as they are and because of the needs of elderly women, who live longer than men and sometimes to a very great age when they are extremely enfeebled, the flat-rate provision was incorporated in the Beveridge Plan and included by my right hon. 833 Friend the Member for Llanelly (Mr. J. Griffiths) in his Bill in 1946. Now—for the graded portion of this new bold step away from the flat-rate pension—it is abandoned. Humanity is sacrificed to financial expediency.
The Bill not only discriminates between men and women; it discriminates between man and man, because the new graduated contribution is to be proportionate to wages only up to the level of £15 a week. Thereafter, the higher the wage the smaller the proportion to be paid in graduated contribution. That is the exact opposite of the principle of progressive income taxation which every civilised country has adopted in the past. Not only does it discriminate in that way against the moderately paid in favour of the well paid; it discriminates against those who, because of the nature of their employment, have no superannuation from private sources, but must remain in the national scheme. It discriminates against them in favour of those who have private occupational schemes and can contract out.
As I said last night, the burden will be proportionately heavier upon workers in the textile and pottery industries, in the building trade, in farming and in a whole host of industries where employers are small, financial resources are small, competitive conditions are difficult and workers tend on the whole to be lower paid and have difficulty in retaining their employment. The burden upon those workers per man and per £1 of income will be heavier than it is upon those who are allowed to contract out, who are already the more fortunate.
The main purpose of the Bill is fiscal, not social. This is not a pension Bill. The hon. Lady rightly referred to the emerging deficit, which is a problem which any Government would have to face. The essential facts about how this emerging cost of pension promises made in the past or back-service pensions, as they are sometimes called, has to be met are set out in Table 3 of the Government Actuary's Report. I select Table 3 because on previous occasions when I have quoted from Table 2 my attention has been drawn to Table 3.
Let us look at Table 3. If the Bill were not introduced and never reached the Statute Book, the net Exchequer liability to the Insurance Fund would be 834 £172 million in 1961–66. The Bill proposes to reduce that to £3 million. The Government speak of the concentration of Exchequer subsidy on the lower-paid workers in the scheme. I want to draw the attention of the House to what is even more important, namely, the concentration of the burden of paying for this emerging cost upon other workers in the scheme, upon those workers who are in the graduated scheme and essentially those whose incomes are more than £12 per week.
It is now generally admitted that if a worker is earning more than £11, if not £10 10s., a week it will be better for him to be contracted out of the scheme than to remain in the national scheme, for a good reason. It is because these burdens of the emerging cost are being concentrated mainly upon one section of contributors that the pensions they receive in return for their contributions are so pitifully small and do not bear comparison with what is paid in other countries.
In 1966, the liability of the Exchequer, to which I have already referred, would have been £258 million without the Bill. By the provisions of the Bill it is to be reduced to £4 million. For the succeeding five years a liability of £338 million is to be reduced to £3 million. After that the otherwise mounting liability is to be wiped out and replaced, twenty-five years after the scheme begins—I go no further than that in order to be scrupulously fair—by a credit of £19 million.
In the face of these figures it cannot be denied that the liabilities of the Exchequer, which are the liabilities of the nation as a whole, are being transferred to contributors. It is the contributors, employers and employees together who, under the terms of the Bill, are to meet these liabilities. But what it is sought to cover up all the time is that the burden falls more heavily on the lower paid than on the higher paid; and far more heavily upon those who have no private scheme and remain in the national scheme than it does upon those who are able to contract out.
In our debate last night, the best that the right hon. Gentleman could say was:… to say that they are completely cleared of a contribution is not the fact."—[OFFICIAL REPORT, 8th June, 1959; Vol. 606, c. 720.]835 Very well—the higher-paid workers contracted out are not completely relieved. I will accept that, if the right hon. Gentleman tells me so. They may not be completely cleared, and it may have been extreme to suggest that they were, though I am not sure that I did. Nevertheless, the greater proportion of the load will fall on the contributors to the national scheme, and contracting out will be a privilege to opt out of almost the whole, if not the whole, of the burden of meeting the emerging cost which we had all thought, when we undertook that obligation in 1946, was to be borne, to some degree or other, on the shoulders of everyone in the nation.
The Bill makes private occupational or employmental superannuation schemes part of the national provision for old age. This is, in a sense, a return to the old system of National Health Insurance in which the friendly societies assisted the State in the administration of the sickness and health benefits and provisions.
We do not object to that in principle. We would not propose, for example, that teachers, who already pay 6 per cent. of their incomes as well as their flat-rate National Insurance contribution and get a reasonable pension for the combined amounts, should now be obliged to pay a further 4¼ per cent. rising to 5¼ per cent., of their incomes between £9 and £15 a week. We agree that good schemes like that should be allowed to continue, and to be an alternative to entry into a national scheme, but we do say that the conditions laid down for equivalence between the national and the private schemes are not sufficiently stringent.
The failure to make these tests of equivalency sufficiently strong and valuable was well illustrated in the attempt made last night by my hon. Friend the Member for Sowerby (Mr. Houghton) to put into the Bill a new Clause that would have provided a special addition to pension, where a man, having contributed—having earned, as it is called, his right—to a pension, was obliged to retire from active work before he reached the magic age of 65. That suggestion was turned down.
We thought that such a provision ought to go into a National Insurance 836 scheme, and ought to be required of a private scheme before that scheme qualified for exemption. In particular, it is a scandal, and a gross scandal, that private schemes are not to be required to provide an additional widows' retirement pension on the same terms as are contained in the national scheme.
The national scheme does not provide any breakdown pension, so it could be argued that it would be wrong to insist that the private scheme should so provide, but the national scheme does provide a widows' pension. Last night, our effort to introduce provision of a widows' retirement pension as a test of equivalency for private schemes was rejected. The result is that, without such an Amendment, we shall create a new class of widow with a grievance. We already have, as we all well know from our postbags and interviews, a class of widow with a grievance—the so-called "10s. widow". In fact, I do not think that they have a fully justified grievance, although they think that they have.
This Bill will add a new class of widow with a grievance. We shall create a situation in which it will be possible for two widows in the same street, one having an addition, albeit a small one, to the widows' pension because her husband was contributing for some time to the national scheme, and the other, whose husband was, perhaps, working in a similar occupation for another employer and, perhaps, receiving a similar rate of wages, but who had been exempted from entering the national scheme, with no such provision. The one widow will draw the supplement and the other will not, and nobody will ever be able to explain to the non-recipient widow why that differential exists. It is a very sad thing that that small Amendment could not have been accepted.
We have had many National Insurance Bills in the past about which it has been necessary to complain of their inadequacy, but about which it has not been necessary to carry our disappointment or grievance into the Lobby. Today, we have before us a Bill against which, at these various points, there are far more objections to be made than we have ever been able to make about any other National Insurance Bill.
837 Perhaps, very briefly, I may be permitted to recapitulate those objections. The Bill perpetuates the system of two nations in old age. The added benefits to be provided for part of the nation under the scheme are paltry, and poor value for money. The Bill discriminates against women. The Bill discriminates against the mass of contributors who must, perforce, remain in the scheme, in favour of those allowed to opt out. The Bill provides tests of equivalence for private schemes sharing in the new system of State social security that are, in our view, inadequate.
In particular, the Bill makes a gross discrimination against widows. The Bill fails to provide any breakdown pension—any special treatment for those unfortunate persons who have made graduated contributions, with their employers, over a period, and are then obliged to give up work, and to live only on sickness benefit.
Above all, the Bill is a tax bill. It imposes a discriminatory and regressive system of taxation. It is discriminatory against those who remain in the national scheme. It is regressive because it puts an increased burden upon those whose incomes are below £15 a week, and lowers the burden for those whose incomes are higher than that, while relieving those who are contracted out of the greater part of the obligation to meet the emerging cost of past pension promises.
This, therefore, is a finance Bill, seriously discriminatory in its administration and viciously regressive in its fiscal effects, and we shall be bound to register our displeasure with it in the Division Lobby, at the conclusion of the debate.
§ 4.39 p.m.
§ Sir Keith Joseph (Leeds, North-East)
The right hon. Gentleman the Member for Middlesbrough, East (Mr. Marquand) made, in a moderate manner, a most specious speech in which he contrived to criticise the Government's Bill without mentioning any of the difficulties with which any Bill dealing with this subject must cope. I think that nearly all my comments on the points advanced by the right hon. Gentleman will come out in the praise I want to credit to the Bill, and I shall, therefore, refer to his speech during by own.
The fact with which I want to start is that neither party, when legislating in 838 this field, is legislating in a vacuum. If a Government desire to help the elderly, as any Government would, they have to make sure that in so doing they do not cause more harm to the ultimate interests of those affected by excess in any of the measures used. The purpose of the Bill, as I understand it, is sixfold. It is to concentrate tax help where it is most needed in the provision of pensions.
The fact that the Bill reduces the contribution by the lowest-paid people in this country by a significant amount—3s. 8d. a week, of which 1s. 7d. is the employee's—is continually obscured in the speeches of right hon. and hon. Members opposite. Would there not be an outcry if the lowest-paid people still had to pay the same level in future as they have to pay today? Would there not be a great outcry, and a justifiable one, if their rates of contribution went up? It is not fair, when the Government succeed in reducing the rates of contribution, to give them credit for this great relief week by week to those millions of contributors who, either because they are in low-paid work or, in most cases, because they are very young and not yet at full earning power, have not high earnings?
The first objective is to concentrate the help of the taxpayer where it is most needed. As a corollary of that, there is also the withdrawal of tax subsidy from those who do not need it so much. This is consistent with the policy of the party to which I belong, that the taxpayer should be asked to contribute his tax for people who need it, not for people who, by hypothesis, are in the higher ranges of income and do not need it so much. Those are two of the objectives.
At the same time, there is a third objective. In dealing with pensions, the Government must be very careful not to cause inflation. It is very easy to dismiss the charge about inflation as mere politics, but the fact is that the Government Measure increases contributions, taking employer and employee, by only¾ per cent. of earnings. I admit at once that any increase of contributions to that extent produces an equivalent danger of question of degree. We can hope to increase contributions from employer and employee by a small amount without setting in train the search for higher 839 wages and moves to pass on to the consumer the higher prices which would inevitably result from any higher degree of contribution.
The alternative scheme in the Socialists' booklet increases contributions by no less than 3 per cent. and it is admitted on page 119—
§ Mr. Marquand
On a point of order, Mr. Deputy-Speaker. Is there anything in the Bill about this scheme which the hon. Gentleman is purporting to describe?
§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
On Third Reading, we may deal only with what is in the Bill.
§ Sir K. Joseph
The right hon. Member is frightened of the comparison.
This is entirely a question of degree, and I do not need to bring in examples to show that the increase of contributions introduced by this Bill is so slight that there is very small danger indeed of any difference being made in costs in the shops or in wage rates. If I need to do without an example of the dangers of inflation from any alternative scheme, I need only quote the comments of Lord Beveridge, in another place, when he begged the public and the Labour Party to reconsider their solution to this problem, which was, he said, bound to be inflationary.
§ Mr. George Lawson (Motherwell)
The hon. Gentleman is talking a great deal about inflation both now and in the past. Will he tell us about the inflationary tendencies which might come from private industrial schemes?
§ Sir K. Joseph
I am very grateful to the hon. Member. That is the next point in my notes.
I come now to the fourth objective of the Government. After relieving those who earn least, after withdrawing the subsidy from those who do not need it, and after avoiding inflation, the objective is not to discourage occupational schemes. We are always told that occupational schemes may be inflationary too and, in principle, that might be so. But the fact is that occupational schemes are introduced one by one as the competitive and economic position and market situation relating to any particular firm or 840 industry permits. They are normally paid for out of the profits of an enterprise and they have not so far seemed to be accused of having any influence whatever on the wage-price structure. Of course, hon. Members opposite must recognise that they have their own problem in dealing with occupational schemes. I need do no more than remind the House of the bitter objections offered by the secretary of the Co-operative Insurance Society to the general Labour attitude to the problem of occupational pension schemes.
The fifth objective is to encourage savings. It is obviously dangerous to savings if any party enforces a level of compulsory contribution to a pension scheme so that people generally have the impression that they do not need to bother, that everything is being looked after. In fact, if a scheme is too ambitious, it may merely succeed in switching savings from private to public hands, with no net surplus of savings for the national benefit, whether they be intended for investment or anything else.
The sixth objective of the Bill, as my hon. Friend the Joint Parliamentary Secretary so aptly said, is to make a beginning towards the social justice of graduated pensions. In making this beginning, the Government, in my view absolutely rightly, had to steer between the various objectives and dangers which I have tried to outline. It is by their anxiety to avoid endangering occupational pensions schemes or savings and to avoid causing inflation that the size of the wage band affected by contributions, namely, from £9 to £15 a week, has been dictated. So much for my support for the Government in the general size of the scheme they are putting before the House.
I come now to the method of finance. Here I believe that there is extremely little difference in principle between the parties, despite all the oratory of the right hon. Member for Middlesbrough. As I understand it, the view on this side of the House is that the main burden must be borne by contributions, while, at the same time, of course, the Exchequer must continue to play its part, an increasing part, as is shown by the Bill. It is important that the contributor should bear the main burden, because we all attach importance to the idea that pensions must be obtainable as 841 of right. If they are to be obtainable as of right, the citizen who wishes to claim them must show that he has contributed. This is not the view of one side of the House. As I understand, it is the view of right hon. and hon. Members on both sides.
I find that the difference between the parties in this matter rests on an assumption which I wish to challenge. It is the assumption running throughout all the speeches we have heard from the benches opposite, in particular the speech of the right hon. Member for Middlesbrough, that the taxpayer is richer than the contributor. As a general principle, this is not tenable. Whether the taxpayer is richer than the contributor depends entirely on such absurd factors as whether a particular taxpayer is a heavy smoker or not. Hon. and right hon. Members opposite continually confuse the taxpayer with the direct taxpayer. As we know in our own private lives, half the revenue of this country comes from indirect taxes.
It may well be that any particular contributor may be better off than any particular taxpayer. Nothing can be laid down as a general rule. It may be said that the Bill moves some of the prospective obligation from the taxpayer to the contributor, but it is merely, for the most part, moving it from the same person to the same person, moving it from a burden which, as a taxpayer, a person would have to bear from his own pocket whether he were ill or working, to a burden which, as a contributor, he has to meet only if he is working and in good health.
I shall be told by the critics that the position of the Surtax payer is different. Is it not true that, by moving the prospective burden, or part of it, from the Revenue to the contributor, the Surtax payer is being relieved? I wish to meet this point. The Surtax payer features in the payment of pensions in two ways. He features, first, as a contributor and then as a taxpayer. It is true that, as a contributor, he now pays no more, whatever his income, than he would if he were earning £15 a week. But this must be so in any scheme which allows opting out for occupational pension schemes or for any other purpose. All the schemes which have been tabled in this country allow opting 842 out into approved occupational pension schemes.
Obviously, the person who is likely to opt out into occupational pension schemes is likely to be the person who derives most advantage from so doing. Owing to the particular nature of the provision for occupational pension schemes, both under the present law and under the law suggested by any alternative scheme which I have seen, it is likely to be the Surtax payer who will opt out.
Therefore, whether he contributes or not is likely to be entirely at his own option, and it cannot be said that the Bill saves the Surtax payer from making the contribution which under any other method of dealing with this problem he would be obliged to make. It is true that as a taxpayer, as opposed to a contributor, he is being relieved of a certain amount of the prospective burden, but it is also true that he will have to bear his share, and a very heavy share, of a tax load which is being substantially increased by the Bill.
I would suggest that the transfer from the taxpayer to the contributor in an economy which is growing steadily more wealthy is entirely fair, particularly as it saves the sick person from bearing any extra contribution, and particularly as the lower-paid wage earner actually has to bear not even the same contribution as now, but a lower one.
The next point which the right hon. Gentleman stressed is one upon which I very violently take issue. He put as his first charge against the Bill that it would perpetuate two nations. The implication was that any other conceivable Bill could avoid this. The fact is that the Bill does not set out to abolish poverty nor can any other purely pension Bill.
We have heard a lot of talk about 10s. extra for all pensioners. We know perfectly well—it was the right hon. Gentleman himself who said it—that a very large number of pensioners do not need help at all. It needs to be said that if we want to help the poorest, as both sides of the House wish to do, they can be helped effectively only by spreading the help less thinly for all pensioners and giving it where it is most needed, namely, through the National Assistance Board scales.
843 This business of National Insurance is constantly complicated by allegations that many people refuse National Assistance to which they are entitled. I do not believe that there are many such people. I believe that there are many who are ignorant of their rights and who do not claim. It is not because of deliberate refusal, but because of ignorance. It is very sad that some people still are ignorant.
I should like to take this opportunity to refer to the view of Lord Ingleby, who was my very distinguished predecessor in the seat which I now represent. He always maintained in this House that it was a fair yardstick of the state of health of pensioners to see what proportion of them were receiving National Assistance. I believe that is a fair yardstick if conditions are stable, that is to say, if we face a future in which the population is steady, in which wealth is not increasing, and in which the standard of living is stable.
I realise that all ages are transitional and if I claim that this age is transitional in the provision of pensions, I shall be making no special claim for it. It is a fact that people growing old today and for the next generation are themselves people who spent much of their working lives during years when there was not full employment before the war. Although it is true that a very high percentage contrived, all the same, to put savings aside, it must have been extremely difficult to save during those years.
§ Mrs. Harriet Slater (Stoke-on-Trent, North)
They could not save; they could not live. Does the hon. Member not know that during that period there was great poverty and they could not possibly save? They could not even live at a decent standard.
§ Sir K. Joseph
That is the point that I am making. I am making, also, the point, with which I think the hon. Lady will probably agree, that there is still an extraordinary number of people who, despite all the difficulties, which I readily acknowledge, did manage to save.
We are living in a transitional age because these are the people who are now growing old. Their children will have spent their working lives during an age 844 of full employment and higher earnings and will be reaping the harvest of the fabulous record of savings today, and of the constant fast growth of occupational pension schemes. I believe that in twenty years or so almost everyone will be covered in several ways in old age. They will have their own savings; they will have occupational or private insurance of their own; they will have the flat State benefit, and they will have the graduated State benefit.
I believe that private insurance has a very great part to play not only in the economy as we know it but in a steadily more wealthy economy, because private insurance provides cheaply a very flexible safeguard for many of the hazards of life; not a safeguard which emerges only as a weekly benefit in old age, but a safeguard which can be used as a loan, which can be surrendered against its value, and which can be used in many of the emergencies of life.
§ Mr. G. W. Reynolds (Islington, North)
I am very interested to hear this argument. Is the hon. Member applying it particularly to the 7 million people with earnings under £9 a week who get no benefit from the scheme? Is he seriously saying that people with family commitments and earning under £9 can go in for the sort of thing he mentioned on a scale sufficient to eke out?
§ Sir K. Joseph
The hon. Gentleman will realise that 4¾ million of the 7 million are women, many in part-time jobs, and that of the other 2¼ million the large majority are young men beginning to earn. This picture of 7 million people earning £9 a week or less is not a fair one of the adult insured worker. I would maintain—I think the hon. Gentleman will see the point in a moment—that if it is true that in twenty years people on the whole will have many resources in old age, what we must do during the intervening twenty years is to help those who have not been able to help themselves, while making sure that we do not clog by too heavy taxation the dynamism of those who have to earn for the future.
We have to put the pension rate up as the gross national product grows, but we should not be content with that, because that will not rescue the poorest from the lowest current level of mere subsistence. To rescue the poorest at 845 any one time during this transitional period we need to raise not only the pension as the national wealth grows but also the National Assistance Board scales more than equivalently.
The reason for this argument is that if we are prepared to do that, we must discard the yardstick which Lord Ingleby rightly at the time used of the percentage of pensioners at any one time on National Assistance Board scales. I have taken this view of the future because I believe that the Bill is a step towards this desirable period when people will have so many resources in old age, but we must recognise that on the way to that time there will be this transitional stage.
There is, however, one worry which I have about the Bill. That is the inevitable complexity of its arrangements. This is inevitable whatever arrangements are made for the future if we are to preserve and nurture the occupational pension schemes. During the next two years employers and employees and their advisers will need to take a large number of decisions on a mass of information which can only be digested and presented to them by experts. They will need to decide whether to opt in, opt out, or to modify all or any part of their schemes.
I should like to pay tribute to the Minister and to my hon. Friends the Joint Parliamentary Secretaries for the astonishing precision, accuracy and humanity of their work and their patience during discussions on this Bill. I hope that they will crown this edifice by doing all that they possibly can to ease the work of those people who, during the next few years, have to take decisions. We know that a registrar is to be appointed and regulations are to be made. I am sure that my right hon. Friend will get on with these jobs as quickly as possible. Would he please realise that any information he can release, without misleading the public, as soon as possible will enable this process of intellectual digestion to start so that the advice on which the whole scheme depends can be made available at the periphery as soon as possible?
The Bill steers successfully towards a desirable objective without endangering a number of desirable achievements which the country already has to its credit. Because it does this without 846 involving any risk of inflation, without involving danger to the occupational pension schemes which are growing and without risking savings, which are at such a record level, I support the Bill.
§ 5.0 p.m.
§ Mr. Harold Finch (Bedwellty)
There has been no significant change in the Bill since we considered it on Second Reading. Any hope which we on this side had of improving the Measure has long since been abandoned. I feel sure that when the country fully realises the restrictive character of the Bill there will be feelings of bitter disappointment. It is not my intention to deal with the many Clauses which have been amply debated in Committee, but I must refer to some of the principal restrictive Clauses which the Bill contains and which have given rise to the discontent to which I have referred.
It is all very well for the hon. Member for Leeds, North-East (Sir K. Joseph) to dismiss, as he did, what he calls the lower-paid category consisting of the 4¾ million women and the 3 million men.
§ Mr. Finch
They are not necessarily part-time. The hon. Member dismissed them and the 3 million men who are getting £9 a week and less. One of the principal objections to the Bill is that it leaves out of the graduated scheme those receiving £9 a week and less. They will never be able to achieve a higher pension, no matter at what age they begin to contribute. This very section of the community which needs a more adequate pension is being left out.
I have already referred to the 3 million men who are getting £9 a week or less. They are in what may be described as the lower grades of employment. I refer to certain grades in the distributive trades, in addition to some who are employed in agriculture, on the railways and in mining. This 3 million men is in addition to the 4¾ million married women—
§ Mr. Finch
No, I agree—who come within the category of £9 a week or less. Therefore, with their retirement pension, poverty will be their lot and National Assistance will have to come to their aid.
Much has been said about the "two nations". The two nations will remain. The Bill will not remove this serious discrepancy in our social system. I agree that if wages rise, some of the lower grades may ultimately come within the graduated scheme, but even so, in a large number of cases the remaining years before retirement may not be many and the resulting pension will indeed be meagre.
As for the higher-paid categories, the graduated pensions will be restricted to earnings of up to £15 a week. This will give little encouragement to those earning over £15 a week to keep within the scheme. Rather will they desire to contract out. It must be recognised that if we have an expanding economy, a higher proportion of workers may earn more than £15 a week. They will be on the flat rate based on £15 a week, however, and this will give rise to considerable discontent. The man earning £30 or £15 a week will pay the same contributions and receive the same pension. For those earning between £9 and £15 a week and who come within the graduated scheme, the pension will be very low.
After all the speeches which we have heard, and those yet to be delivered, in support of the scheme, let us consider what it does. It has already been said that, taking the most favourable case, a man entering the scheme at the age of 18 and continuing as a £15 a week man until the age of 65 can get a maximum of another £2 1s. on top of his basic pension. That is on condition that he continually earns £15 a week. There are many men, however, who cannot do this.
Consider a miner who commences work at 18 years of age. Will he work regularly and lose very little time from 18 to 65 years of age? We all know the history of the miner. There are very few miners who work from the age of 18 until 65 and do not lose time because either of accident or disease. We have only to look at their records to be reminded that miners may be idle for periods of six or twelve months. There 848 are very few miners who are in a position to say that they can earn £15 a week from 18 to 65 years of age. Another possibility is that there may be a breakage of machinery, a stoppage at the colliery or men being transferred from one pit to another, a problem which, in fact, faces the mining industry today. Owing to the state of the industry, the £15 a week man has a break in earnings until he is transferred, perhaps, to another pit. Therefore, he cannot hope to get the maximum addition of £2 1s. a week, because he will not be earning £15 a week for all these years.
There is also the possibility of injury. At 45 years of age, a £15 a week man may sustain an accident and never be able to return to work. Possibly he is totally and permanently disabled. He will have the cover of the graduated scheme only until the age of 45 and must wait until he is 65 to get his pension. Many of the disabled will be in that position. It is one which the Bill does not seek to remedy.
What kind of pension will other people receive? A person earning £12 a week and entering the scheme at the age of 40 will get a pension of £3, or an increase of 10s., on retirement. This is no encouragement to the industrial worker to hail the scheme as a great new charter for the pensioner. If a £12 a week man enters the scheme at 50 years of age, he will receive £2 16s. a week, or an increase of 4s. The £10 a week man must be in the scheme at the age of 50 to get an additional pension of 2s. a week. A man earning £11 a week and entering the scheme at the age of 60 will earn an additional 1s. That is what it amounts to. The industrial workers will bitterly oppose this Measure on the ground of the inadequacy of the pensions and the way that the scheme is put forward in the Bill.
It may be contended that those earning between £9 and £15 a week will get partial protection against rising prices if they get an increase in wages. An increase in wages, however, will involve an increase in contribution. Their increased benefit will not be anything like in proportion to the extra contributions, because the graduated contribution receives no Exchequer grant. There can be no doubt that one of the principal purposes of the Bill is to help to pay for the basic pension. It follows, therefore, 849 that in terms of graduated pension the pension will not be worth what has been paid for it by way of graduated contribution.
It is no wonder that the Economist, which is not by any means a Socialist paper but rather one which hon. Members opposite support, stated that the main feature of the scheme—indeed, in some ways its whole essence—is that it is expected to save the Exchequer £99 million in the first year of its operation rising to no less than £428 million in 1981–82.That is the purpose of the Bill. The failure to protect pensions in the event of rising costs and prices is the strongest condemnation of the Bill. I therefore venture to suggest that in a few years' time we shall be debating this subject again and going over all the old arguments. Questions will be put down to the Minister of the day about rises in the cost of living and about how many pensioners are receiving pensions and the need for increasing the rates of pensions.
I thought that the Bill would remove from party politics once and for all the position of pensioners. The right hon. Gentleman had a great opportunity in the Bill to deal once and for all with the arguments about the rates of pensions so that we could get on with the other important business of the House. However, we shall spend a great deal of time in future in once again debating pensions. It will remain in the realm of party politics for years to come.
The Manchester Guardian says:A more thorough-going reform of State pension will have to be undertaken before many more years have passed.We shall raise the same arguments in the same debates in years to come. The then Minister will have the same headache as the right hon. Gentleman in answering the arguments against the low rates of pension.
The Bill makes provision for four increases in contribution beginning in 1965 and thereafter at five-yearly intervals. Each increase will be up to 5d. on the minimum contribution and 9d. on the maximum contribution, the amount being dependent on the financial position of the fund. It must be borne in mind that these increases will not enable anyone to earn an extra graduated pension. It is worth noting that comparable increases will also be 850 made in the flat-rate contribution for employees in contracted-out private schemes and workers in the State scheme who earn less than £9 a week.
There is quite a mixture in the Bill. It is partly flat rate, partly wage-related and allows to some extent for increases in costs for those earning between £9 and £15 a week. For the others, there is no provision for increasing costs. I would describe the Bill as a sort of shandygaff, and a poor one at that. In spite of all that has been said about the need for getting away from flat-rate contributions, they remain in the Bill.
Also, an employer is given the power to decide whether a person will contract out of the scheme. I appreciate that the Minister has gone some way towards helping in this matter. He referred yesterday to the arrangements that will be made by which negotiations can take place with organisations and workmen in this matter, but the fact remains that the power will remain with the employer. One can see the difficulty which the employer will be in. The hon. Member for Leeds, North-East referred to the complexities of the scheme. It will certainty be a complex scheme for the employer who employs thousands of workmen.
There are some important features and snags in the system. A contracting-out employee will have to pay a contribution of 9s. 11d., which I think includes 2s. 6½d. for industrial injuries and National Health. That contribution will secure for him and his wife a pension of £4 a week. The contracted-in employee will pay only 8s. 4d. for the basic pension. If he earns no more than £11 a week he can get an additional graduated pension for another 1s. 8d. a week. The extra 1d. will give him another 13s. a week in pension if he enters the scheme at 18 years of age. He will certainly want to know from an employer who contracts out why he should be charged more for getting less. All employees receiving less than £11 a week will rightly object if their employers contract them out of the scheme. Employers will have a very difficult time in deciding what steps should be taken. Difficulties will arise with the employees. On that basis alone we are in for a very difficult time in administering the scheme.
851 I could deal with other anomalies in the Bill, but I will leave them to my hon. Friends. I thought that on this occasion the Government would present a scheme which would fit in with the economic and social planning of the economy. We are facing great technical changes. As years go by, automation is gathering in momentum and, as a result, redundancies will take place in industry. The mining industry is facing a serious situation at present. If the scheme gave added security to those retiring at 65 it would enable the industry to work smoothly. Men reaching the age of 65 could retire in the knowledge that they would get an adequate pension, but as the scheme is at present and as redundancies take place men will have to give up work at 65 in the knowledge that they will live in insecurity and, in many cases, poverty.
As my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand) has said, the Government have failed. They have not been bold enough and have not looked to the future contingencies which will arise in industry to enable men to receive an adequate pension. The miners have a modest scheme of their own. They do not pretend that it gives adequate security, but it is better than the Government's scheme, and they will seek to contract out of the Government's scheme. What can be said of the miners can be said of a large section of other industrial workers. Thousands of employers will queue up to contract out and this piece of legislation will become an empty shell. That is what we have before us today. I shall oppose the Bill because I realise its inadequacy in present circumstances.
§ 5.17 p.m.
§ Mr. Arthur Tiley (Bradford. West)
It gives me great pleasure to follow the hon. Member for Bedwellty (Mr. Finch), because he was one of the faithful attenders at our many deliberations in Committee. He said that our discussions and debates have produced a headache for my right hon. Friend, and there is no medical term sufficient to describe the energy which he has shown in the last few months. I am sure that the whole House will compliment him and the Joint Parliamentary Secretaries on the way in which they have stood up to their ordeal.
852 I shall deal later with many of the points which the hon. Member for Bedwellty mentioned.
§ Mr. Lawson
Would not the hon. Gentleman agree that if the Bill had been a half-decent Bill there would not have been an ordeal at all?
§ Mr. Tiley
The hon. Member jumps up and down like an india-rubber ball, full of wind. I think it is the haggis which does it. I proposed to be non-provocative, and I intend to be.
The hon. Member for Bedwellty referred to disabled miners. Here is a sector of the community with which all of us have sympathy. I have always respected the way in which coal miners go out of sight for hours on end and face many dangers in digging out coal. From experience, I know the severe injuries which they suffer. As my hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, this is a sphere in which the nation's assets can be spread more adequately, provided they are not wasted in unnecessary directions. In other words, we on this side of the House wish to use our resources in directions where they are most required. The hon. Member for Bedwellty mentioned one direction in which our resources are required. There is no greater tragedy than for a man of 45 to be disabled for the next twenty years of his life, especially if he has a young family. This is a direction in which we ought to concentrate more help.
The hon. Member for Bedwellty also mentioned the shortage of employment which may come about in mining. We may find it in my own district with textiles. We have seen it in Lancashire, but with cotton the nation's resources are being harnessed to help. We shall be able to help in other directions so long as we do not waste our assets where the need is not greatest.
I ought to declare an interest in this debate. The whole House now knows of my connection with the insurance industry. I said earlier that I did not intend to be provocative, and I shall not be. In an earlier speech which I made on pensions I described the grave disquiet which always accompanies every introduction or talk of pension schemes whether done with trustees, in the private field of life assurance offices or in the 853 greater field of teachers' superannuation schemes, and so on. There is always debate, argument and disquiet. But there comes a moment—and surely the Third Reading of a Bill provides that moment—after we have argued all the things that puzzle and trouble us, when we have to try to make the scheme work. It would be a great pity if on the Third Reading of this Bill the Opposition divided the House.
The whole country knows the stand which each side of the House takes. The time eventually comes in a democracy when, as I say, we have had our say and when it is surely an essence of our Constitution that we should try to weld together in order to deal with the scheme in the country. It has been a great pleasure to sit in Committee with some hon. Members opposite. There are many people outside the House, and some who write to that newspaper which is shortly to be nationalised, who think that the best brains no longer come here. I have seen brains in commerce and politics, and I can see no difference in the standard of mental stature and ability of the people here and of the people in business outside.
The hon. Member for Islington, North (Mr. Reynolds) made several contributions in Committee which would have done credit to any meeting of experts in any insurance institute in the country. We listened intently to the detailed examinations which he made of the various matters. Indeed, we had to listen intently because he rattled it off at 250 words a minute. Someone ought to say a word of praise for the shorthand reporters who took it down. Then there was the hon. Member for Motherwell (Mr. Lawson) who spoke for Scotland so well, so long and so often. I used to think that the Scots killed each other off with clan warfare long before pension age and that those who survived died from the bitter Scottish winters. The points which the hon. Member made showed what a detailed study he had made of the Bill.
Then we had the notable contributions from the pension "Panzer division" which held the line from Middlesbrough to Sowerby and on to Coventry. Their mighty deeds are recorded for posterity in the columns of HANSARD.
The debates have been a great addition to the Government's strength, but 854 that is a point which, I think, the Opposition have failed to recognise. The whole country now has a better knowledge of the records of the parties in this matter than it ever had prior to November last year. It recognises that promises in connection with pension matters are tawdry things. It is performances that count, and the country is beginning to see that pensions and their value depend on our trade and our economy and not on speeches made in the House of Commons.
Most people realise what a huge problem confronted my right hon. Friend when he had to draft the Bill. Even the Institute of Actuaries has realised belatedly with a notable essay which it has contributed that there is a problem in front of the country. One might say of its booklet that there is nothing new in it. The Institute teaches Members of neither Front Bench anything about pensions. All the problems enumerated in "An Appeal to Statesmanship" have been considered for years by those of us on both sides of the House who are interested in the subject. All that the Institute has done in its book is to pose the problem. But my right hon. Friend knew all this. He has to solve the problem, not just talk about it. The Government have to govern, not just debate.
Many people say that discussions on pension policy should be taken out of the party arena. But they say the same about education, health and hospitals, and also about foreign policy. Democracy, however, depends up to a point on our divisions of opinion here. I do not want to be governed by experts outside the House. If they wish to contribute to the economic life and welfare of the country they should come here and join us.
Experts are often wrong in spite of their great knowledge. Had we asked the actuaries in 1940 to estimate whether this country would be competent or not to fight, all the figures would have shown that the battle was already lost. But we in the House deal more with human qualities than with figures. I often laugh at the story of the schoolmistress who asked the class, "If there were 100 sheep in the field and ten went out, how many would be left?". One little boy said that none would be left and got his face 855 slapped as a result. He said afterwards that though the mistress knew all about arithmetic she did not know sheep.
In compiling statistics we are apt to forget human qualities. Let us consult the actuaries and the trade unions. Let us seek expert advice. I would, with respect, remind my right hon. Friend that thousands of nurses and midwives have an established machinery for consultation in the Royal College of Nursing. Let us seek advice, but never let us be afraid to govern, because that is the purpose of Government.
I want for a few minutes to look at some of the things which the Bill does, because, surely, when the debates are over we ought to look not at all the difficulties which were in being when the Bill was prepared, but at some of the more forward-moving things that the Bill does for us. My right hon. Friend was confronted with a state of affairs in the pension field in which half the male workers in the country were in private pension or superannuation schemes and half were outside. The Bill is an innovation to make sure that everyone henceforth will have the opportunity to share in a graduated pension scheme.
My hon. Friend the Member for Leeds, North-East pointed out that we must not ignore the fact that one of the problems, to which I have listened for four years in this House, was that the lower-paid worker was being asked to contribute more through his weekly stamp than he could possibly afford. Time after time when the increases have been made we have found the Opposition in their fiercest mood on this very issue. No one on the benches opposite is giving any credit to my right hon. Friend that he has found for the first time a way in our complicated economy of helping the lower-paid workers. It has been needed for a long time, and we on this side welcome that part of the Bill.
Secondly, I can assure hon. Members opposite who consider this matter seriously that we do not wish to do harm to the 40,000 schemes which are at present in operation, brought about voluntarily, largely by the humanitarian outlook of modern employers, whose outlook has changed in my lifetime considerably. We do not wish to harm those schemes. That is why my right hon. Friend has pitched 856 the limit at the maximum of £15. I take issue with the hon. Member for Bedwellty on this point.
I am sure that what we shall see after the Bill is passed is that the better schemes, which I would loosely describe as being schemes which will provide a complete pension in retirement irrespective of what the State is doing, will contract out and will not be impaired because of the pitch at the level of £15. The second consequence of the level being at £15 will be that a multitude of other schemes which have been brought in to help the lower-paid workers to supplement the State pension will be continued, and those schemes will not be contracted out. I do not see how it will be possible for many of our competitive industries to have the wholesale contracting out of schemes because of the fear of the future; but we shall not see them cancelled when they have been drafted, when they have been created, when they have been brought into being as supplementary to the State pension. We shall see that they are amended and that they remain in force, and we shall also see that there will be an encouragement given over the next five, ten, fifteen years to all those firms which have not yet found it possible to supplement the State scheme by a pension scheme, and that there will be an impetus given now in that field.
The Bill will also remove the fear of the deficit. An hon. Member says "Hear, hear." So he should. I cannot imagine why any hon. Member in any part of the House should think otherwise. Here is something which would imperil the very security of pension schemes in force now. The Government have found a way of dealing with it. That should be plain, and it augurs well. No one opposite is yet able to tell us how they would dispose of the £400 million deficit in future when it arises. My right hon. Friend is to be complimented on tackling this problem now.
Another point, too, is that private thrift will still be encouraged, because an extravagant scheme is not introduced. We on this side believe that we should retain as much as possible of our wages in our own pockets. I do assure hon. Members opposite, from my experience of these schemes, that there is deep resentment on the part of the wage earner 857 at the compulsory deductions being made in his pay, especially if he loses control of those savings.
The Bill, for the first time, makes a notable move forward in regard to the private schemes. One of the serious consequences of withdrawing from a private scheme in the past has been that a member took out with him, more often than not, his retirement pension at that moment, in cash. Mr. V. R. Jackson has made a notable contribution to this problem in the lecture which he gave to the Association of Superannuation and Pension Funds in November last year, in London at its autumn congress. He told those present that 95 per cent. of the male works staff who left their scheme took out their money and cancelled their pension rights. This has been a very serious impediment to the focal point of a pension fund, which is that it should save up this money for the age of 65. In a private scheme hitherto there has been no way of dealing with it. It does not just apply to the new members of the scheme or new employees. Mr. Jackson, in the same speech, said of the male workers with up to 15 years' service that 94 per cent. of them, when they left, took out their money. Up to the new limit of the £15 band this Bill is for the first time establishing a frozen pension, and surely that is a step in the right direction.
I want to say a word or two about the benefits. There is no doubt, I think, that the "pay-as-you-go" method is by far the best method for a National Insurance pension scheme. The smaller the contributions the more chance there is that their extraction from the wage packets in industry from employer and employee will not mean a loss of trade. What we should ask ourselves is not, "What are we prepared to pay?" but, "How much will the foreigner pay in the price of our goods for the pension schemes which we in this country introduce?"
It is right that we should emphasise, as has been done on many an occasion, that there are not two schemes in the Bill. There is one scheme, one contribution, one pension benefit; and I can assure the House that it is a bargain at any age and at any wage.
When yesterday I heard such glowing tributes paid from the benches opposite 858 to the life offices, their methods, the returns under their schemes, the returns under their policies, I felt that I should rush across to the Prudential and buy myself another policy. It made me wonder why the Opposition spent so much time in considering a pension scheme of their own. When they felt such pride in the accomplishments and attainments of the private insurance schemes did they go to the trouble—and trouble it was—to produce this massive work in considering this matter themselves?
However, it is quite foolish to compare the private operations of the life offices' world with the State pension scheme, because I have not seen one yet introduced that took in all the old people at the same value as the young ones. If we saddle on to the cost of the private schemes those millions of pounds which the employers have contributed from their profits and their reserves to the purchase of past service pensions, if we saddle all that cost on to the weekly contribution, then we begin to see how much nearer the Government scheme is to the private insurance field. It just simply is not right to exaggerate the difference between the two worlds, because there is no basis for comparison.
When the debate raged yesterday and there were those suggestions about what a bad bargain this was, I took the trouble to work out what exactly a man of 25 gets out of the scheme. After all, that is the question which everybody asks when these schemes are introduced. When one looks at a photograph with 50 people in it one does not wonder, "Which is Bill?" What one wonders is, "What do I look like?" And when a pension scheme is introduced one asks, "What do I get myself?"
A man of 25 with £9 a week pays 8s. 4d. For a man in the private insurance field to obtain a policy to pay £2,000 at 65—and I have given the life offices the benefit of the whole 40 years of compound bonus at 50s., which is very high at this moment—it would cost him approximately that same 8s. 4d. per week.
Now, for the 8s. 4d. under the National Insurance scheme he is getting not only his pension but the sickness and accident benefit which, at the age of 25 in the private insurance field, is worth 4s. a 859 week—and there are many occupations where it would be impossible to get that benefit. The 4s. a week is the value of the sickness and accident benefit and he has already had the full value of 8s. 4d. in the maturing endowment. In addition, his wife gets maternity benefit and widow's benefit, and there is the child special allowance, the death grant and industrial injuries benefit. It is, of course, a wonderful bargain for every member of the National Insurance scheme.
§ Mr. Lawson
I am sure that the hon. Member would not wish to present a one-sided version. Would he not agree that it is not 8s. 4d. that is paid in respect of the man but 16s. 4d.? His employer pays 7s. and that goes into the fund.
§ Mr. Tiley
I admit that, of course, but I am trying to show what a man gets for his output of 8s. 4d. That is the question that man will ask himself. He will say, "They knock out 8s. 4d. from my wage packet. What do I get for it?" That is the list of benefits that he gets. At £15 a week he pays 13s. 5d. and it takes about 13s. 4d. per week to provide a maturing policy of £3,000 at the age of 65. There is nowhere in the private market where such a bargain could be obtained. It should be our duty and our pleasure to see that this information reaches the country so that when the scheme is launched men will readily accept this small higher contribution for the greater benefits that they are to obtain.
Almost the whole of the book on national pensions published by the Institute of Actuaries was written because of one fear, and that is the fear of inflation. I am glad that in Committee on the Bill it is on record that the hon. Member for Sowerby (Mr. Houghton) said:The bogy of inflation is raised again by the hon. Member for Bradford, West (Mr. Tiley)"—[OFFICIAL REPORT, Standing Committee A, 10th March, 1959; c. 358.]The hon. Member for Sowerby is a great expert on these matters. I envy his technical knowledge on taxation always, and we all readily listen to him.
I am glad that that phrase is on record because a word like "bogy", 860 which means "spectre" or "spirit," is a massive understatement when we think of inflation. It is not something that can be wafted away. Inflation is a serpent that strikes at all pension schemes, at all thrift or saving and at all the country's economy. That should be the foremost thought in our argument. That is why I am glad that my right hon. Friend has recognised it as such an enemy and that the Bill tends to ward it off, and I am glad to support it.
§ 5.43 p.m.
§ Mr. Douglas Houghton (Sowerby)
The hon. Member for Bradford, West (Mr. Tiley) is always agreeable to listen to and, on this side of the House, we regret that we heard too little of him in Committee. That goes also for the hon. Baronet the Member for Leeds, North-East (Sir K. Joseph). It must have been the discouraging glances of the Government Whip that prevailed on so many hon. Members opposite to hold their peace in Committee, when it was obvious that they had much to say which it would have been very pleasing and useful to the Committee to have heard from them.
I cannot agree that my hon. Friend the Member for Motherwell (Mr. Lawson) resembles an india-rubber ball bouncing up and down. The truth is that under his relentless pursuit of points of difficulty and complexity he added to the discomfiture of hon. Members opposite and of the Minister. We should remember that he is a schoolmaster, and a Scottish master at that. He frequently got under the skin of hon. Members opposite, who felt that he was probing too deeply and surely into the defects of the scheme.
The hon. Baronet the Member for Leeds, North-East has a thorough grasp of this subject and deploys his arguments with such ability that I think sometimes he is a danger to us and perhaps an embarrassment to his own Front Bench. He certainly could have contributed more to our deliberations. There were occasions in Committee when he came fully equipped to contribute at considerable length to our discussions, but often it all came to nothing. I will not ask what he brought in to the Committee so frequently which we did not have the benefit of hearing.
861 The hon. Member for Bradford, West was good enough to quote a speech which I made in Committee when I said that the bogy of inflation had been raised again. Of course, inflation is a real and dreadful thing, but when inflation is paraded unnecessarily and brought before us to frighten people off steps which in our view are justified and would not be inflationary, it becomes a bogy. That was what I had in mind when I made that speech.
I believe that National Insurance contributions and payments for social benefits are the least inflationary of the burdens imposed upon the people of this country, because they are the most acceptable. Why are they the most acceptable? It is because the idea of contributing towards security is so deeply embedded in our social thinking and experience that people will accept that contribution without demanding insulation from its effect on their domestic expenditure, whereas they might react less favourably to other impositions. The hon. Member for Bradford, West appears to dissent, but I believe that it has been easier to raise the National Insurance contributions on a flat-rate basis than it would have been to raise taxation on a proportionate or progressive basis, because the tradition of insurance is so accepted in social thinking on matters of this kind.
§ Mr. Tiley
It is a privilege to debate with the hon. Member. He is making a very definite statement. There is no example which can be quoted at this stage of a demand not being made for additional pay as a result of an increase in contributions for pensions. I would quote the example of the occasion when a fuss was made about the teachers' superannuation scheme when an increase of 1 per cent. in contribution was demanded.
§ Mr. Houghton
That is really outside the scope of this discussion. The reason why the teachers objected to an increase in their contribution towards their own teachers' superannuation fund was not their unwillingness to pay contributions for superannuation benefit. It was an objection to the way in which the scheme was being manipulated to their disadvantage, and contrary to the contract or earlier expectations of the scheme. I believe that that is fully within the 862 recollection of the House and I do not want to pursue it further now.
I thought that the hon. Member was going to refer to some dissent from one increase in National Insurance contributions which then was not so much against the level of the contributions as against the disturbance of the relationship between contributions from the insured person and the contribution from the Exchequer. There had been a manipulation of the contributions from the three partners in the existing scheme—the employee, the employer and the State.
Nothing has been said on the other side of the House today or during the Committee stage which destroys the hypothesis that the beginning of this scheme was not the desire of the Government to provide better or different superannuation benefits. The beginning of this scheme was a desire to solve the financial problems of the existing scheme. That is the genesis of the proposals before the House in this Bill.
We have heard a great deal about the emerging cost. Nothing was done about that when increases in benefits could be paid by modest increases in contribution or even without increases in contribution, because for years there was a surplus in the National Insurance Fund. In other words, more was going into it by way of contributions than was going out in the payment of benefits. A lot of people, quite mistakenly, thought that the surplus was being saved for them. They believed that something would be done with it one day to meet emerging deficits in the scheme.
We have realised since that the Government cannot invest in itself. This National Insurance Fund, for the purposes of practical use, was a fiction; it could never be used for the purposes for which many people believed that it could be used, that of distributing benefits later when contributions failed to match the level of benefits. We realise now that to have used the National Insurance Fund for that purpose would have involved either raising additional taxation to fill the gap in the National Insurance Fund, which had been invested in Government securities, or additional borrowing in order to make good the loss to the Fund. It could not be done by simple disbursement of accumulated surpluses.
863 So now we have realised, after some years, that this scheme has been on a pay-as-you-go basis all along; there has been no reserve built which could be used when difficulties arise. This pay-as-you-go system has been largely obscured by the fact that up to now the contributions coming in have exceeded the payments going out, and this year, for the first time, the National Insurance scheme is in the red, with the prospect of a sharp rise in the deficits in years to come.
I am not complaining in the least that the Minister has felt it necessary, and has had the courage, to tackle what he believes to be, and what a great many other people have believed to be, a growing burden of taxation which might threaten the principle of benefits as of right, which would destroy the insurance principle to which a great many people attach importance. Whether the Exchequer contribution was maintained at a reasonable level or not, the Minister felt it necessary to make an attack upon the large deficits which would emerge in a few years from now.
The question is, has the right hon. Gentleman set about it in the right way? Does this scheme solve not only the financial problems of the existing scheme but, at the same time, give to the contributor and to the taxpayer a fair settlement of the consequential adjustment of both contributions and benefits? I suppose the Minister's first approach to the matter was this: have flat-rate contributions gone as high as they can? Can I raise them further? Have I reached the limit? This is a matter of judgment and, as I said earlier, it is surprising how national insurance contributors have accepted this form of taxation more readily than they would have done alternative forms of taxation.
My opinion, probably not worth a great deal, is that the flat-rate contribution has not gone too high. My own opinion is that it could go higher yet. The fact is that it is going higher yet. In regard to the contribution to be paid by those who are contracted out under these proposals, the flat-rate contribution may go higher yet by 3s. a week if the increases over the four 5-year periods become effective.
The flat-rate contribution of those who go into this scheme will be reduced 864 in the case of men by 1s. 7d. a week now and will be increased by 1s. 8d. a week if the increases provided for in the Bill become effective; that is to say, 1d. a week more than now. It is a small enough addition, but I am making the point that if the Minister felt that the flat-rate contributions were already as high as they should go, he is in fact proposing to increase them more, particularly for those who will be contracted out of the scheme.
Whether the limit has been reached or not, whether the limit might be here or there, I think we all agree that there is a limit to the level of flat-rate contributions. We realise that we could not provide adequate pensions for large numbers of people of varying circumstances, and on a wide range of incomes, which would be adequate for old-age on a flat-rate contribution. When a suggestion was made some years ago to the Trades Union Congress that flat-rate contributions should be abandoned, and graduated contributions should be put in their stead though still with flat-rate benefits, the idea was firmly rejected. The Trades Union Congress was not as egalitarian as all that, and the idea of having graduated contributions unaccompanied by graduated benefits had to be abandoned.
So the Minister, feeling that he could not raise the flat-rate contribution in a way that would make real inroads into the emerging deficits, feeling that he could not introduce graduated contributions without flat-rate benefits, decided that he must have graduated contributions and graduated benefits, and that is how the scheme comes to us today. It follows, however, that by the very nature of the situation the graduated benefits provided under the Bill cannot be value for money in relation to the graduated contributions. They cannot be, because the Minister wishes to milk the graduated contributions in order to reduce the deficits and thereby reduce the rising charge upon the Exchequer which would otherwise take place.
It is not really a scrap of use the hon. Gentleman the Member for Bradford, West looking at the contribution of the worker alone in relation to the benefits received and saying what a splendid bargain he has got. The truth is that this scheme was not conceived on that basis at all. This scheme was conceived on 865 the basis of the co-operation of three parties—the employers, the employees and the State—and it was agreed when the scheme began that a fundamental condition of the introduction of a universal scheme of this kind was that the State had to play its part, and an important part, and that principle has been accepted all along.
All we are arguing about today is how big or how small that part should be. Here again, there may be differences of opinion as to what part the State contribution should play in the scheme. The Minister has said that a contribution of a little more than £175 million is about right. That is a matter of opinion. As far as I know, it is not related to anything; certainly it is not related to the ability of the nation to pay. It will be a smaller contribution in relation to the total obligation to the fund than has been in contemplation for years passed.
The hon. Member for Leeds, North-East says that it is a myth to think that the taxpayer is richer than the contributor and can therefore bear a heavier share of the burdens of the scheme. Nobody pretends that taxpayers taken as a whole are necessarily richer than contributors taken as a whole, but I think the hon. Baronet will agree that the relief which is being given to the Exchequer—that is, to the taxpayer—in order that the Exchequer contribution may be concentrated on the lower-paid workers is to be given over the whole range of taxpayers, direct and indirect, small taxpayers and big taxpayers, rich companies, partnerships and the rest, and recoupment concentrated on the narrow contribution band of £9–£15 a week. That is the effect of the transfer from the taxpayer to this band of contributors.
This band of contributors is not, as is popularly supposed at times, confined to those who are getting between £9 and £15 a week. The additional contribution is being demanded from the range of pay from £9 to £15 a week. That means something else, that those earning more than £15 a week will have the additional contribution concentrated less upon them than will those who are earning absolutely between £9 and £15 a week. These are arguments that cannot be refuted. Without, I hope, using an objectionable word, this is a manipulation of the finances of the scheme. Great play has been made of the fact that it has been possible to 866 reduce the flate-rate contributions of those who will come into the scheme.
§ Sir K. Joseph
Just to get the proportions right, does not the hon. Gentleman agree that the amount extra to be contributed by the individual earning, say, £14 or £15 a week will be between 2s. and 3s. and that such people are numerically far in excess of those earning more than £15 a week? We are dealing with about 14 million people within the band to which the hon. Gentleman refers compared with under 1 million outside that band. This is a very wide, thin spreading of the contributors' burden.
§ Mr. Houghton
I fully accept that, but the hon. Baronet, who has no doubt been following the debates on the Budget and the Finance Bill, will remember that to take all the numbers of taxpayers relieved by the Budget is no index to the amount of tax relief given to the bigger taxpayers. We find that relief amounting to millions of pounds is being given to a limited number of people and nothing like the same proportion of relief from tax is given lower down. Numbers by themselves are no index to the mathematics of this matter. The hon. Baronet cannot dispute the fact that a man getting £30 or £40 a week will bear a smaller individual proportion of this contribution of the £9–£15 a week people than a person earning £10 a week. These are fairly simple sums, or I should not have been able to do them while on my feet.
§ Mr. Houghton
I am content to make the point that this is what we are doing, and it is as well that the country should understand it. I strongly complain of the disingenuous way in which so much publicity given to the scheme in both the Conservative Party pamphlet and the White Paper fails to reveal to the public exactly what is happening and how it is being done. That is to be regretted because, as I have said, so many people accept this form of taxation easily, and it is wrong to deceive or mislead them in any way. They are entitled to the truth so that they can see exactly how the new scheme is being made possible by the financial reconstruction behind the scenes.
As an example, I will quote paragraph 34 of the White Paper on the Provision 867 for Old Age. Referring to the flat-rate contribution, it says:The principle of graduation would, however, permit this minimum contribution to be materially lower than the existing flat-rate. The lower wage-earner would thus be relieved of some of the burden he has to carry at present.Paragraph 35 says:The introduction of contributions graduated according to earnings would make it possible to concentrate the Exchequer contribution where it is most needed.What those paragraphs really mean is that if people are made to pay more for their graduated benefits than they would in a private scheme there will be a surplus available for transfer from one part of the scheme to another or, alternatively, those people who are in the graduated scheme will be made to pay for both their flat-rate benefit and their graduated benefit by the withdrawal of the subsidy and the shifting of the emphasis lower down the scale.
Do people outside really understand this? I very much doubt it. They must be very mystified when they find that those who go into the graduated scheme are to have their flat-rate contributions reduced whereas the contributions of those who are to be permitted to contract out because they have equivalent benefits in a private scheme are to remain as they are but will be subject to further additions as the years go by. Why is there that difference between the flat-rate contribution of the person who comes into the scheme and the flat-rate contribution of the person who contracts out?
The explanation is—but how many people realise it?—that by keeping the flat-rate contributions as they are for the people who will be contracted out an additional contribution is being obtained from them to finance the flat-rate benefits of all in the scheme. It is a form of taxation imposed upon them because if they do not go into the scheme their graduated contributions cannot be milked in the way I have described.
That brings me to the point that those in the scheme are to have their graduated contributions milked for the flat-rate scheme and that those who contract out of the scheme are to pay a higher contribution for the same flat-rate benefit as those who go into the scheme. With those two things existing side by side, 868 the question arises: why should there be any opting out at all? Surely this question has passed through everybody's mind: What is the limit of compulsory universal social provision? Is the present flat-rate scheme the limit? I do not think it is, and never have thought so.
Granted that in introducing a scheme involving a much higher level of contribution and a much higher level of benefits account has to be taken of the existing commitments of the many people who will be concerned, and some adjustment has to be made if we are to avoid imposing a double burden which might become intolerable to them. However, that cannot be said of this scheme.
Is this scheme so bold a step into the future of graduated pension schemes that additional contributions and additional benefits cannot be built in, as it were, to existing occupational schemes? Universality for the flat-rate scheme has never been challenged since it began. We have doubled contributions since the scheme began, but the question of departing from universality has never been raised, and it seems clear from what I have already indicated that the flat-rate contributions will go still higher in some cases without the question of universality for the flat-rate scheme being challenged.
Does the mere fact of entering into a graduated scheme mark the point of departure from a universal obligatory scheme? I do not think that it necessarily does, more particularly when it gives rise to all the problems which we are now to have with contracting out and the enormous administrative burdens which will arise from it. The Parliamentary Secretary said, with some pride, that if contracting out worked, we should have done something in this country which no other country had yet accomplished. I do not necessarily regard that as being something to boast about.
If the time came when one had to embark on a scheme of contracting out in order to provide some measure of social justice, that attempt would be worth while and its accomplishment would be a matter of pride. But in this scheme—and I am talking of this scheme and of no other—the graduated contributions and benefits do not go beyond what should be provided by a compulsory scheme on a universal basis. 869 After all, at least in the initial stages of the scheme, the additional contributions will be modest and the benefits from those contributions will be more modest still—not only modest, but totally inadequate. It seems to me that the anomalies which will arise as between those in the scheme and those outside it, and the problems of contracting out, are scarcely worth while for a scheme of these small dimensions.
That brings me to the further point of the question of contracting out, the power of the employer. We failed to get the Minister fully to accept what we believed to be the merits of joint negotiation between employers and employees in a matter of this kind. It is a strange aspect of our machinery of joint negotiation on wages and conditions that fringe benefits are far less important in this country than they are in others, particularly in the United States of America. I have always regretted that and I have never seen a reason for it. Fringe benefits, as they are frequently called, can be just as important a part of conditions of service as paid holidays, paid sick leave, hours, wages and conditions and terms of service. There is a growing appreciation of that, especially where, in conditions of rising national wealth, it is possibly more prudent economically to make provision of that kind than to raise wages by the full amount which would otherwise be demanded. One finds that in wage bargaining in America.
In Clause 12 the Minister has provided that in the public sector, where a Minister is to be given the power to represent the employing bodies, consultation shall take place with recognised associations. In the private sector, all attempts to get anything more firm than the Amendment which the House accepted yesterday have failed. All that Amendment did was to give power to the Registrar to withhold his certificate of exemption in order to give time when it seemed to be necessary for discussions between employers and employees on any matter which might be in dispute, or on any action which the employer proposed to take.
As things are, the employer would have the last word. In argument that has been justified on the ground that it 870 is his scheme, that he is the only man who can decide. I dispute that. Such a scheme belongs jointly to employer and workpeople. It is jointly owned, and even if the employer puts most of the money into it he does so as trustee on behalf of his work people. All these things should be done by agreement, and failing agreement it would have been wise to include a form of arbitration to enable any disputes to be settled by a fair-minded person looking at all the facts and circumstances. However, it is too late now, although we tried our best to improve the Bill in that respect.
Let us consider the discretion which the employer will be able to exercise in selecting which work people are to be able to opt out of the scheme. The Minister reminded us yesterday that an employer will not be able to opt out anyone whose occupational scheme does not satisfy the test of equivalency, but he may decide who is to opt out and who is to remain in the scheme, without let or hindrance. He can tell some of his workpeople that they are to go into the scheme, that he will not contract them out and that he will adjust their pensions scheme to take account of the fact that they are in the Government scheme. There is nothing to prevent an employer doing that, but how unfair it would be.
That brings me to the point where I doubt very much—and the more I study it the stronger my doubt becomes—whether opting out is justified. I do not want to discuss the possibilities of opting out and remaining in over the vast field of the public service schemes, but some difficult problems may arise there and wage negotiations may be stimulated by the difference between those who are opted out and those who remain in the scheme, especially in the case of those in non-contributory schemes. From the point of view of wage negotiations and arranging conditions of service by agreement, it is better to have everybody on the same terms and subject to the same conditions with the same contributions so that there is no disparity between one and another.
What the country's verdict on the Bill will be will not emerge until people come closer to it. They will not appreciate it now, but as the scheme comes to fruition and the Registrar gets 871 through his enormous task of considering claims for opting out, some of the realities and the injustices of the scheme will emerge. If there is any advice which the House can give on this matter, it is that, as far as possible, employers should leave people in the national scheme. We want as many people as possible in the national scheme. I have been distressed at hearing the Minister and the Parliamentary Secretary say that they want to make it easy for people to contract out. With a scheme of this kind, which is part of a financial reconstruction, it is better to have more rather than fewer people involved in the operation. The measure of justice of the scheme will be judged by how many people remain in it and how many among those in vocational schemes stay out. I hope that most people will remain in.
§ 6.20 p.m.
§ Mr. Frederick Gough (Horsham)
Whatever the differences are between both sides of the House, and they are very real differences, I think all right hon. and hon. Members on both sides will agree that we have had plenty of time in which to air them. That is especially the case in regard to the Committee stage. I am sorry that the hon. Member for Motherwell (Mr. Lawson) is not here. I believe that at the moment he is still on a point of order, hopefully waiting for the return of the Chairman of the Committee.
§ Mr. Gough
It was because we had so much time in Committee that I was not terribly impressed by the opening argument of the hon. Member for Sowerby (Mr. Houghton), who normally impresses me very much. He started an argument about my hon. Friends merely because we support the Bill now but had not spoken very much during the Committee stage. Of course, we listened with rapt attention to the long and sometimes valuable arguments of the hon. Member and his hon. Friends, and we occasionally put them right when they were making glaring howlers particularly in the actuarial field.
§ Mr. Gough
I should like to congratulate the Joint Parliamentary Secretary 872 on a very notable first appearance in a major debate. She ended her peroration by saying that one literally had to sell pension schemes in days gone by. I must declare an interest in this because I was one of those who had to sell them.
I am sorry the right hon. Gentleman the Member for Middlesbrough, East (Mr. Marquand) is not in his place at the moment but he defied—I think that was more or less the proper definition—my hon. Friends and myself to defend the Bill. I have no intention of doing so, because it does not need defending. I propose to extol its virtues and to discuss those under the five headings which I thought were neatly taken by my hon. Friend the Joint Parliamentary Secretary.
The first is that the Bill faces the financing operation. The hon. Member for Sowerby and his hon. Friends appear to think that it is wrong to put the financial side of things in order. I do not believe that the hon. Member would think much of a man who says to his grandson, a small chubby boy aged six: "Don't you worry. I have put things aside and I have arranged for you to be looked after. When you get to the age of 65 you will have a pension." When that chubby boy becomes an old man—and one hopes that every year he will put flowers on the grave of his grandfather—he will not be pleased to find the position to be quite the opposite of the promises made, and that he has to pay not only for his own pension but his grandfather's and his father's as well.
That is what hon. Members opposite are saying. They are saying that they do not mind a £400 million deficit in 40 or 50 years' time. We on this side of the House mind very much, and that is why I agree with my hon. Friend the Parliamentary Secretary when she says that one of the objects of the Bill is to put this matter in order.
§ Mr. R. H. S. Crossman (Coventry, East)
I know the hon. Gentleman likes being fair and I do not think it is fair to say that of us. We have been rebuked time and again by the Minister for our intention to build up a very considerable surplus in the first twenty years. For the party which has done the unpopular thing of 873 urging a large surplus, it is a little hard to be told that we are not concerned about liabilities.
§ Mr. Gough
I know that the hon. Gentleman could not be here all the time, but I am quoting from speeches made by his right hon. and hon. Friends. The hon. Member and his hon. Friends may have reasons for building up this large surplus, but we have been told that we were wrong, in fact it was a dreadful thing for us to do, to offer promises of wonderful pensions to people in 20, 30, 40 or 50 years' time and to not make financial provision for them.
I do not wish to take up much of the time of the House because pretty nearly everything that can be said about the Bill has been said, but my hon. Friend's second point is really the nub of the whole problem. It is a question of philosophy. Right hon. and hon. Members opposite believe, and it is a very genuine belief, that everybody in this country should be forced into a pension scheme. They believe that a State pension scheme should be sufficient to meet all the needs of all the people as they get older. Our philosophy is different. We believe that private enterprise should take its place and be encouraged to deal with this problem in its major aspect. On the other hand, the Government should make themselves responsible, first, for seeing that there is a platform and, secondly, seeing that the majority of the money collected is used for the most deserving, namely, those who are in the lowest income brackets. I am sure that there is no point in continuing these arguments from the other side because if right hon. and hon. Members opposite are honest about it, as I am sure they are, they will recognise that we are putting forward a scheme which we are convinced the nation will want and will accept against the preconceived ideas which have encouraged hon. Members opposite to lose the last two General Elections and will undoubtedly continue to act in the same way at the next one.
The third point is that of inflation, and here I take the hon. Member for Sowerby to task. Nothing could be more inflationary than to leave things as they are today. The hon. Member himself said that we have only just discovered that we have not been doing pay-as-you-go. We have only just dis- 874 covered that we have these deficiencies building up and the hon. Member said this afternoon that he realised the dangers of inflation. Nevertheless, he is prepared to be laissez-faire on the subject. We are not. We say that unless we tackle the problem now and put in a pensions scheme which is financially and economically sound we shall be doing something against every single step that we have all been trying to take since the war to avoid inflation.
I have talked to a lot of my friends who are professionally most capable in the field of actuarial work and pensions and I believe that we have here a scheme which is capable of being looked at and possibly capable of improvement in the future but one which will not run away with the economy and immediately start us off, or help in making some contribution to starting us off, on another inflationary run. Again, as my hon. Friend the Parliamentary Secretary said, it continues to help private savings because it is not too ambitious.
The fifth point, which I think is really the one which is being taken up by right hon. and hon. Members opposite, is that it is said that this is a modest scheme. Ruder comments than that have been made, but I shall regard hon. Members opposite as having said that this is a modest scheme. The hon. Member for Sowerby said that we had to make a bold move and that this was not a bold scheme. I think it is. It is not a foolhardy scheme. As my hon. Friend the Joint Parliamentary Secretary said in her peroration, we are achieving something that no other nation in the world has done. For heaven's sake, Mr. Speaker, we do not want to go into new fields like this and think that we have already got our experience. Let us run this scheme for one quinquennium or two to see how it works. We may then be able to take a further step forward.
During the Report stage yesterday hon. Members opposite were quoting particulars of schemes of various life assurance companies, and saying, "Such-and-such a company can provide a pension for widows, or a joint pension for a man or his widow, whoever lives longer." That is true, but those companies can do that only because of their hundreds of years of experience in this matter. Hon. Members opposite are 875 asking us to go much faster than we are proposing to do, because they believe that we can assume that we already have sufficient experience. We have not got it; we have to obtain it, and we do not propose to buy it dearly. For that reason I am particularly grateful to my right hon. Friend for this scheme.
I want to end on a slightly different note, which was referred to by the Joint Parliamentary Secretary but had not been referred to very much before. It concerns the question of procedure. I do not think that there is one Clause in the Bill which does not have some reference to regulations. The Bill is absolutely riddled with provisions for regulations—as it should be. That means, however, that a great deal of consultation will be necessary. I am glad to hear that the existing machinery of the National Insurance Advisory Committee will be utilised. I believe my hon. Friend said that it was appreciated that the scheme was different from anything that we have done before, and that it created wider relationships. It creates a much closer relationship than we have ever had before between those concerned with private pensions, insured pensions and the scheme itself.
That means that many people who previously would never have been very interested, and whose advice would not necessarily have been germane to the argument, will be vitally interested. I hope that, in addition to the National Insurance Advisory Committee, my right hon. Friend will consider appointing an even wider advisory committee, perhaps to meet twice a year, and to include both sides of the industry—the actuarial profession, representatives of private funds and insured schemes, various pension consultants and other people who are interested in the question.
Whatever type of scheme had gone forward, I am certain that hon. Members on both sides of the House realise the necessity to take a step forward. Hon. Members opposite seem to think that we should be galloping, whereas we think that we should start by treading carefully, but both sides of the House agree that we should take a step forward in State insurance. I am convinced that the most important thing in the next five years will be the administration of 876 the scheme. I congratulate my right hon. Friend on bringing it forward, and I am sure that the ability and intelligence that he has put into its framing will ensure that it runs smoothly in the future.
§ 6.34 p.m.
§ Mrs. Harriet Slater (Stoke-on-Trent, North)
The hon. Member for Horsham (Mr. Gough) said that the difference between those on the Government benches and hon. Members on this side of the House was one of philosophy. That is indeed why we shall divide tonight. It was rather naive of the hon. Member for Bradford, West (Mr. Tiley) to suggest that at this late stage we might not divide. We shall divide, because on grounds of philosophy we differ violently from the Government.
One reason why we do so is just the point made by the hon. Member. He said that the Government put private enterprise first. Hon. Members on this side put the needs of men and women first. That is the fundamental difference between us.
§ Mrs. Slater
Whichever way the hon. Member wants to put it, it is because of our deep conviction that the State must make adequate provision for men and women that we put them first. That is where the cleavage comes.
The more we hear about the Bill the more we realise how inadequate are its provisions. In Committee I was appalled at the number of times hon. Members opposite put forward the case that what we need is an improvement in National Assistance scales—and that argument has been put forward today. At the same time, hon. Members opposite argue—as the hon. Member for Leeds, North-East (Sir K. Joseph) argued—that people do not apply for National Assistance because they are ignorant. I strongly believe that many thousands of people do not apply because they have a deep and abiding resistance to what they consider to be charity. They may be misguided, but they have that feeling. It is a relic of the past, and to argue that 877 an improvement in National Assistance scales is an answer to some of the problems is completely to misunderstand how the minds of many working-class people react today.
Hon. Members opposite have put up a case for the Bill, and I want to put a few arguments against it. One of the fundamental respects in which the Bill falls down is that, in spite of all the Government and their supporters have said, it fails to make any increase in existing pension scales. There is very strong resentment amongst old-age pensioners that the Government, by the Bill, have failed to recognise that they have an obligation to give pensioners at least a share in any step forward which is being made. It may be that before the year is out old-age pensioners will be presented with an increase, because a General Election in imminent. The fact remains that the Bill fails to make any provision for an increase.
Another respect in which it falls down, as we tried to point out in Committee, is that it makes no provision for reviewing the value of pensions by an annual review of the cost of living or any other method to ensure that, whether people are on the flat rate or a graduated pension, the value of their money will be related to the amount of goods which the £ can buy.
Another failing of the Bill is that it does not guarantee to those people who will benefit from the graduated pension—
§ Sir Spencer Summers (Aylesbury)
On a point of order. We have heard the hon. Lady argue about three points which are not in the Bill. Are we to be allowed to reply to those points?
§ Mr. Speaker
I was somewhat doubtful when the hon. Lady referred to the cost of living, because that is not referred to in the Bill. On the other hand, I would not be too hard on the hon. Lady on account of any general criticism she may make of the Bill. If she can get her argument nearer to the provisions of the Bill, however, and point out its defects, it would make it easier for everyone.
§ Mrs. Slater
Thank you, Mr. Speaker. I was merely referring to points which were discussed during the Committee stage.
878 In the opinion of hon. Members on this side of the House, the people who will benefit from the provisions of the Bill will not receive adequate security. There is insufficient safeguard against a drastic reduction in their standard of living at the time of receipt of an old-age pension. Anyone who has examined the benefits as detailed in the White Paper would agree with that.
We violently disagree with the Government contention that the provisions of the Bill should relate only to a certain number of people within a narrow earnings band. We have heard a lot about people whose earnings are above the £15 limit. But there are 7,750,000 people who earn less than £9 a week, and for whom no provision is made. Their circumstances will not be altered. More than half of those people are women, and not all of them married women or women who left employment at the time of their marriage and who afterwards returned to employment. A large number receive a lower rate of pay because they are women. No provision has been made for a large number of women in industry who are doing an essential job but who are paid less than men doing the same work.
One of the reasons why I am opposed to the Bill is that it legislates against women. A woman must pay more for the benefit she will receive. We are told that the woman retires earlier, but it will take her much longer to build up her benefits, because, generally speaking, a woman earns less than a man for doing the same job. Before coming to the House I was fortunate in that I earned the same salary as my male colleagues, and while I was doing the same work and assuming the same responsibilities as they did I built up the same amount of pension rights for myself. But I resent the fact that women should be asked to pay more for their pensions. Even though a woman retires at 60 and a man at 65, the fact that it takes longer for a woman to build up her benefits is something which should receive more consideration than is shown by the provisions of the Bill.
Another factor which has been repeatedly stressed is the protection which it is sought to give to occupational schemes by this Measure. I am proud of the fact that it was the Co-operative movement in this country which led the 879 way in the matter of occupational pensions and superannuation. Long before private enterprise firms considered that they had any responsibility for things of that kind, the Co-operative movement believed that although the people it employed were paid for their work, they should also receive something at the end of their service to help to provide security in their old age.
The Government, we are told, are seeking to encourage occupational schemes and to protect them, but at the same time they are failing to protect some of the people who belong to such schemes. If the Government feel a moral obligation to make sure that in a State scheme widows are protected, they have also a moral obligation to make sure that in occupational schemes the same protection is provided. We feel strongly about that and also about the fact that it may be possible for an employee who has worked for a number of years to find that he has been contracted out of the State scheme by his employer who has a preference for one group of people being in the scheme as against another. We have heard a statement from the Minister that consultation will be considered, but we should like it laid down more clearly that the employee shall have an equal say about whether he should be contracted out of the State scheme.
We were told repeatedly during the Committee stage, and we have been told again today, that this Measure represents a marvellous step forward. We have been warned not to take a light view of the debt in the present flat-rate system. We are still paying war debts incurred by our great-grandfathers, and so hon. Members on this side of the House wish to make sure that any welfare scheme or social service which may be introduced will not burden future generations with a debt which may prove difficult to bear. Therefore, we are not likely to take a light view of a debt of £400 million. The scheme with which we would replace the provisions in this Bill includes adequate provisions to safeguard against that.
We consider that the Government have not introduced this Measure because they were confronted with occupational schemes, as was said by the hon. Member for Bradford, West, but because of the 880 challenge represented by the Labour Party scheme. We hope that when the Government scheme is put into operation, for no doubt this Bill will become law, there will be consultation at every step to ensure that all the difficulties arising from such an inadequate scheme may be solved as easily as possible. We say to the Government that this Bill is an inadequate attempt to meet the challenge of modern times. In these days the needs of all old people must be met by a scheme which will guarantee them security in their old age; not the possibility that they must continue to depend on National Assistance, even though such Assistance may be improved. The old-age pension, whether it be flat-rate and graduated, or just graduated, as it will be in time to come, must bear a more realistic relationship to the standard of living which the pensioners enjoyed before reaching 60 or 65 years of age.
§ 6.50 p.m.
§ Sir Spencer Summers (Aylesbury)
I cannot help being surprised that the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) and other hon. Members should point, on the one hand, to what they describe as a puny and inadequate scheme, while in the same afternoon's debate the hon. Member for Sowerby (Mr. Houghton) speaks of the large proportion of people who should opt to go into it. We cannot accept both those approaches as being reconcilable.
The hon. Lady the Member for Stoke-on-Trent, North had a complaint about the position of women in this scheme. I cannot understand how an individual—not merely because she is a woman—who becomes entitled to benefit five years sooner than a man and, from our experience, is bound to live appreciably longer, can expect, despite those differences, to get the same annual benefit for the same contribution. If she is to get the same benefit for the same contribution but for the longer period, that individual has to be subsidised. If that is what the hon. Lady wants, I would prefer that she made it plain. I am certain that the figures do no other than reflect the actual mathematical facts in regard to age and expectation of life. It is very unfortunate if she feels that there are better prospects for women outside the scheme and gives the impression that in some manner the State figures have been 881 manipulated to women's disadvantage. Nothing of that kind has happened.
I welcome the Bill for reasons which have already been advanced. I hope not to repeat too much of what has already been said, but I must add that I welcome these proposals firstly because they are modest. An indication of that is that even if a man is earning £15 a week or more it will take him nearly twenty-five years to increase his basic pension by £1 a week. We have argued that to make that improvement quicker and the benefits still more effective would entail contributions so high as would inevitably lead to wage demands and the inflation that would follow as a consequence.
This modest scheme is described by the actuaries in a document which hon. Members may have seen and which is entitled "An Appeal to Statesmanship". The scheme is described as one about which great care should be taken because the cost of the graduated benefits is very small in the early stages and it will be a very long time before they fully mature. It is easy, it is said, to promise too much because the price to be paid to fulfil the promise will not have to be paid for a very long time. The document goes on to say that of recent years increases in standard benefits have been paid forthwith and have acted as a restraint on irresponsible Members of Parliament who might otherwise have demanded too much.
I think the writers have left out of account that one of the main difficulties with which the Bill has to contend would never have arisen had it not been for the fact that increased benefits were given promptly in the past without waiting for the time for contributors to build up their rights over a long period. After all, it was Lord Beveridge who recommended that the contributor should wait. For reasons that we all know and to which we were all a party, we decided not to wait.
One of the reasons why I support the Bill is that it will in course of time make far fewer people dependent in old age solely upon the basic retirement pension. Figures are constantly quoted and statements are made to prove that old people without private resources are dependent upon the standard benefits. Those statements ignore the increments which 882 deferring retirement automatically brings to them and which have been recently increased. In addition to the normal process of increasing their benefits, they have a chance here to earn the graduated benefit as well. If this reduces the number of people who are on the basic pension rate, that will be a very good thing in itself.
A number of hon. Members, and particularly the hon. Member for Sowerby, referred to the alleged transference from the taxpayer to the contributor of obligations emerging from the past. The hon. Member praised my right hon. Friend for facing up to that situation, but went on to say that he did not like the way in which my right hon. Friend had resolved it. The rules of order may have prevented the hon. Member from saying how he proposed to resolve it, but he did not give us the benefit of his alternative solution.
One factor in this situation does not get the attention it deserves. I refer to the insurance element. The amount which the beneficiary has in fact contributed, and by so doing has transferred his benefit into a right, has been only an extremely small part of the benefit that he has enjoyed. I think I am right in saying that, expressed in one way, no man can as yet have contributed more than 6s. of the pension currently paid. I asked my right hon. Friend yesterday a question on this point and he has been good enough to provide me with the information. I asked by what time the oldest contributor would have earned by his contribution half of the benefits currently paid. I find that it will be 1983 in the case of a married man and 1970 for the single man.
§ Sir S. Summers
By that time he will have paid a quarter of the contribution due and half his personal share. The reason I mention this point is that unless we contrive to get the insurance element greater, there will be demands for applying a means test and the like to the benefits later on. The step taken of transferring to the contributor from the taxpayer the liability built up in the past has at least one advantage. I think it is acknowledged everywhere that greater entitlement is given to the contributor by the increased burden that 883 he has accepted as the result of that transference.
There are one or two matters of concern to which I would refer which do not in any way detract from the merit of the Bill at this stage, but which, nevertheless, must be referred to. One is that under the Bill and the forecasts associated with it, the graduated principle which is accepted on both sides of the House—we for its modesty and other hon. Members because they would like it to be greater—contains the seeds of its own decay. It has a wage band fixed from £9 to £15. Over the years, wages may increase at the rate of 2 per cent. per annum, as forecast by the actuaries. That means that in ten years' time the average wage-earner will be up to the ceiling, having increased his wages from something like £12 10s. to £15.
I do not want to go again over the ground about the married woman on part-time work and so on, who says that she is being left out of the scheme. In process of time the 2 per cent. per annum increase in wages, irrespective of what trade union demands may produce, will mean an increase for the under £9 a week man. That man or woman is out of the scheme now, but it is almost certain that he or she will come in later. There will be a smaller and smaller proportion of the nation subjected to the graduated band wholly for all their earnings. As they get up against the ceiling, the proportion of their earnings does not bear the same share as the proportion of those in the band.
I had thought of trying to devise some means to take care of that process in this Bill, but the more I looked at it the more I came to the conclusion that it was impossible to foresee how best to alter the Clauses in the Bill to deal with the situation over the years without the experience of at least some years so that we could see how it would work out. If we do not take note of that and begin to think how in the course of time we are to preserve the element of graduation much in the same proportion as it is now, we may find ourselves facing a difficult situation without having had due account taken of it in the past.
In the pamphlet from which I have quoted, reference is made to the danger 884 of a kind of auction on pensions between the two sides of the House and to the danger of promising more than makes sense having regard to the fact that the price would not emerge for many years. The suggestion is made that, perhaps by the creation of some statutory body which could report to the nation from time to time, an element of restraint or wisdom may be introduced into our proceedings which otherwise might be overlooked.
I do not think this subject—as the authors of that suggestion claim—can ever be taken out of politics. It is far too much involved on financial and social grounds to be taken out and, as it were, dealt with by some impartial set-up responsible to neither side of the House. Nevertheless, I am not at all sure that there would not be value in having some body, without responsibility, which could tell the public what would happen over the years as the members of that body saw things from time to time. They would not have any responsibility beyond making plain what they saw. For what it is worth, I hope that consideration will be given to that suggestion without in any way trying to take responsibility from the parties concerned in this field. There might then emerge some instrument which would be of value to both sides.
Reference has been made to contracting out. The hon. Member for Sowerby hoped that in future very few—indeed, I think he would hope, none—would contract out. Since the provision is there, he hopes there will be very few. I have always held the view that far fewer than is forecast would contract out for a variety of reasons, but as matters stand it is extremely difficult for those responsible in this matter to decide whether they ought to contract out or not.
There is the future of the basic pension and how it is to be financed. No doubt I should be out of order were I to embark on that topic, but that is one of the bogeys, one of the things round the corner, which affects forecasts made by experts on a Bill of this kind. My reason for mentioning it is only to urge that, so far as he can, my right hon. Friend should eliminate uncertainty. By doing so he would assist those who are in doubt whether to contract out or not 885 and greatly help those who are thinking of contracting out as he would wish them to do.
Whilst I understand the reason for the difference in contribution between those who contract out and those who contract in, I hope that will not deter employees consulting with employers and contracting out into a scheme which might seem to them more favourable than the Government scheme, by reason of the fact that they have to pay 18s. 2d. rather than 15s. 4d. when that happens. Those who dislike that, and I think the hon. Member for Sowerby is one, can draw the consolation that in so doing such people would be carrying a larger share than if they carried only the 15s. 4d. of the transfer, of which the hon. Member made mention.
I think it a pity that equivalency has been put at the level of £15 a week whether those concerned are in fact earning that or not. We debated that matter and the Bill is drawn on grounds of simplicity I understand, but that again could act as a somewhat deterring influence. If, as I believe to be the case, the outside schemes for better-paid people are certainly more advantageous than the State scheme, I hope they will not be deterred on that account from taking the advantage that offers.
Reference has been made to the enormous complications inherent in all this business. We have all too little time between now and the supposed appointed day to work out all the arrangements and complicated regulations which have got to be contrived. I hope it will not be necessary to defer the appointed day because the complications have not all been resolved. I hope no time will be lost, as soon as the Bill becomes law, in getting on with the preliminary arrangements, for I think there is little enough time to complete them satisfactorily.
§ 7.8 p.m.
§ Miss Margaret Herbison (Lanarkshire, North)
The hon. Member for Aylesbury (Sir S. Summers), on the occasions when he spoke in Committee on the Bill, I thought attempted to make his case as objective as possible. This evening I feel he has done the same. However, when I speak about the position of women under the Bill I shall certainly 886 cross swords with him on the statements he has made.
I have listened to much of the debate and I was interested in the points made by the hon. Member for Bradford, West (Mr. Tiley). He felt that we ought not to have a Division tonight, that, after all, we had argued this case very fully in Committee and we ought now to let the Bill go through without a Division. I am very glad that it has been decided that we shall vote on the Bill tonight. There are very important reasons why we should do so.
First of all, I feel that the provisions in the Bill and the return for the graduated contributions are miserable and inadequate. I had hoped that when the Government introduced such a Bill—for a scheme which in some of their publications is called superannuation—they would at least attempt to see that its provisions ensured that the standard of living of those who had retired would not drop as drastically as it must still drop under the provisions of the Bill.
The hon. Member for Bradford, West said that he was glad that by the Bill the Government had solved the question of the deficit. He seemed to think that we on this side of the House were not concerned about the deficit. We are concerned about it, but we are also concerned with the manner in which the deficit is to disappear, and we feel that justice has not been done in the Bill. Throughout the Committee stage the Government could never refute the statements made from our side of the Committee that those who will pay the graduated contributions will pay a higher amount weekly than they should pay for the graduated pension which they will receive on retirement. That is a great indictment of the Government's scheme, because a British Government are to give a smaller pension for contributions than any outside private insurance company would give.
When one has tried to find the reason for this, it has become clear throughout these weeks of discussion. The reason is that we are asking those in the £9 to £15 a week range—and I know that those earning over £15 a week will pay the same contributions as those earning £15 a week—to carry the burden of the deficit. We are asking those people whom I would describe as moderate 887 wage earners to carry the burden of providing the basic pension for those earning less than £9 a week. That seems very wrong to me, because I am sure that we shall find that the majority of those earning more than £15 a week in wages or salaries will be men and women who will contract out of the Government's scheme. In the end the Government have placed the burden of the deficit on the shoulders of those wage earners who earn moderate wages, between £9 and £15 a week. I am certain that if the Government had been concerned about doing justice to those people they would never have introduced such a scheme as this.
The hon. Member for Aylesbury pointed out that women retire five years earlier than men and can expect to live longer, but in Committee, from a question which I put, I learned from the Joint Parliamentary Secretary that, if we calculate it at retirement age, there is a difference of only one-and-a-half years. Even if we take that difference as only one-and-a-half years, I would remind the hon. Member that he did not tell us that women will have to pay more for each 6d. of pension. The hon. Member said that the contributions were the same for men and women but that apparently women wanted a much greater benefit. I would point out that the woman must have a unit of £9 before she has earned 6d. pension whereas a man, on the other hand, has to have only a unit of £7 10s. before he has earned 6d. pension. It is the difference in the unit to which we object.
§ Sir S. Summers
Surely that is reasonable if the 6d. paid to the woman is paid for more years than that which is paid to the man.
§ Miss Herbison
I am taking the point which the hon. Member made that apparently women were expecting a greater pension for the same contribution. The fact is that the woman has to pay £9 in contributions before she receives the 6d. in pension whereas the man has to pay only £7 10s. That is an important difference.
Miserable and inadequate as are the provisions of the Bill, I am glad that at least it contains some provision for the widow. How is that provision found? 888 It is based on the man's pension. In his contribution he is contributing not only to safeguard a pension for himself but also to safeguard a pension for his wife. That seems to be an added reason why the woman should make the claim which my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) has already made for her—a claim which I, too, am making—that her unit should be only £7 10s. also.
§ Sir S. Summers
If the hon. Lady is so worried about the position of women in this matter, why is it that the scheme which she advocated on behalf of her party would have paid the same increase to a single man as to a married man?
§ Miss Herbison
That may be the case, but I am not concerned about single men or married men. My concern is about women. In the Bill women are most unjustly treated, for the reason which I have given.
When we consider the bar at £9 a week, we realise that many women will not come under the scheme at all and that in the future they will have to look forward to completely inadequate basic pensions and possibly recourse to the National Assistance Board. At present over a million old-age pensioners in this country have to have assistance from the National Assistance Board, and the Minister must be well aware of the fact that there are many other old people who do everything they can to hide their poverty and their misery rather than go to the National Assistance Board. It seems to me that a scheme introduced by the Government which will leave out completely so many women from the graduated pension provisions is a scheme which could not possibly be supported by hon. Members on this side of the House.
The Minister has made it perfectly clear that he wants to make it as easy as possible for contracting out. Indeed, yesterday and throughout the Committee stage he refused to accept Amendments, which I felt had great justice behind them, because he said that, if accepted, these Amendments would make it more difficult for people to be contracted out where they were in certain occupational schemes.
In this connection I want again to mention women and widows. Before I 889 became a Member of Parliament I was a teacher. I was interested in a point made by the hon. Member for Bradford, West. When my hon. Friend the Member for Sowerby was saying that people were much more ready to pay insurance contributions—hon. Members may call them a tax or whatever they like—than they were to pay in any other form, the hon. Member for Bradford, West said that that just was not the case when the Teachers (Superannuation) Bill was going through the House.
The hon. Member for Bradford, West did not seem to be aware of the real objections of the teachers in Britain to the superannuation scheme. When their contribution was to be raised from 5 per cent. to 6 per cent., they made it absolutely clear that they were more than willing to pay 6 per cent. provided that there was adequate provision for widows. It was because the Government would not make adequate provision for widows under that scheme that there was that very great objection by the teachers.
Many occupational schemes in this country make no provision for widows. The Government have felt it incumbent upon them, miserable though the provision is to make some provision for widows in the graduated part of their pension; but, because the Government are so keen to ensure that occupational schemes will stay out, they are ready to say that, even though occupational schemes make no provision for widows, they shall continue. It seems to me that occupational schemes could still be continued. The Government or the Registrar need only tell the promoters of occupational schemes to alter their schemes and make provision for widows. If the Government had made that decision I am certain that most of the workers in those schemes would have been ready to make the alteration.
Although this is Third Reading, I hope that there will be such strong representations from outside the House that the Minister will use another place for ensuring that before occupational schemes pass the test of equivalency they make provision for widows.
I am glad that we are to vote against the Bill, because that will let the country know that in Committee and yesterday we did everything we possibly could to 890 try to improve its miserable provisions. We have failed to do so, and by dividing the House tonight we mean to show the country how miserably inadequate the Bill is.
§ 7.23 p.m.
§ Mr. Anthony Kershaw (Stroud)
At this stage of the debate it is perhaps a little difficult to find anything original to say about the Bill. Both sides of the House can draw some comfort from that fact, because during the course of the very long debates which we have had each side has been forced to state its position of principle perhaps more clearly than it was when the debates started. That is possibly of value. Therefore, as we come to the end of the consideration of the Bill in the House, I believe that both sides can be content with the way in which it has been conducted. Judging from the Committee sittings and the debates in the House which I attended, the debate this afternoon has been of the highest possible standard.
It was obvious that within the next two or three years the pension position in this country would be tackled, and had to be tackled, by any Government in power, because the emerging deficit, rising from 14 per cent. to 40 per cent. within twenty years, will make it almost impossible for the position to be held as it has been in the past. Both sides of the House and both parties in the country have expressed very grave alarm at the position.
The first principle about which we must make up our minds before we know how to proceed with this urgent question is whether we are to give to everyone a pension adequate to his or her needs or whether we are to try to concentrate the resources of the country only upon those who need it most. That reveals the first fundamental difference between the parties. It has been made clear today, especially in the speech of the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater), that the party opposite is of the opinion that the basic pension should provide a full living standard for the retirement of old people today. That is fundamentally wrong at present. I do not believe that a retirement pensioner should be entitled to live solely—I emphasise "solely"—on his retirement pension, irrespective 891 of whether the retirement pensioner has other resources, because that is a wasteful way of distributing the assets of the country at present. The Bill tries to concentrate the resources of the country upon those who need it most.
There is, first, a reduction in contributions. It is the first time that has been done. Some measure of tribute should be paid to the Government for having, for the very first time, reduced the contributions of those least able to pay them. I do not want to go into detailed figures, but it is a fact that in relation to his own contribution everybody in the scheme earning up to £15 a week will receive a better than actuarial return. It is also true that those in the lower half of that spectrum earning up to about half way between £9 and £15 a week will receive a better than actuarial value, taking also into consideration their employer's contribution.
The consequence of that is that the richer person, namely, the taxpayer contributing by his taxes to supplement the pensions and contributions of those less fortunate than himself, does not under the Bill receive increases which he does not require. His taxes will go to help those who need them more than he does. They will not also go to help himself. For some time I have not seen the logic of taxing people in order to give them something which they are well able to supply for themselves.
It has been said today with justice that the Surtax payer is receiving a greater relief in reduction of taxation than he is giving by way of contribution to pensions. That is only a facet of the problem how further to relieve in direct taxation the man who does not pay any direct taxes. No one has ever been able to supply a complete answer, or any answer at all, to that problem.
Another basic difference which has been revealed is that the pension should be the only resource of retired persons. That is not the case at present. We know that there are about 5 million pensioners, of whom only one-fifth are in receipt of National Assistance. We should not be too proud of that, but we can say with some satisfaction that the number on National Assistance has been falling in recent years and now stands at its lowest.
892 There are other resources that should be available to the retired person in this complicated society of ours. At least half of the retirement pensioners have some income from occupational schemes, and in present conditions many more are approaching that position as they come to their retirement. Then there are savings. I know that during the difficult years of the 'thirties it was not easy for many of those now on pension to save. Nevertheless, many retired people have some sort of savings, and it is only right that we should try to perpetuate conditions in which those savings have the value that the saver thought they would have when he was accumulating them.
Again, more than half of the retirement pensioners earn some sort of increments on the State pensions, the average to those who earn them being about 9s. a week. That is a fruitful source of addition to the basic pension and will, of course, increase under the recent arrangements. Further, as I said only last week in the House, it is untrue to suppose that the resources, the health and comfort that older people get from their families have been in any way significantly reduced in recent years. This Bill, by increasing the possibility of earning increments, by increasing the possibility of earning something additional to the basic pension, is fundamentally on the right lines, and I support it for that reason.
Today, we have also discussed inflation. There is absolutely no doubt that inflation is the danger that most pensioners fear, and it is inflation that has eaten away their sense of security as well as their pensions during the last few years. It is fundamental to the position of pensioners that inflation should be conquered, and it would be a pity if, as the hon. Lady the Member for Stoke-on-Trent, North asked, we were to incorporate in the Bill any device that geared the pension to any future inflation.
I see, Mr. Speaker, that you are not looking very approvingly in my direction. I was only attempting to deal with the hon. Lady's remarks, but perhaps I may leave it there and say that there is no doubt that the greatest benefit that any Government can give to our pensioners is the elimination of inflation from the economy.
893 The Bill tends to do that. Admittedly, as my hon. Friend the Member for Aylesbury (Sir S. Summers) put it as his first recommendation, it is a modest Bill, but I fail to see how any Bill that is not to be inflationary can be other than modest. If we are to have a massive increase in the basic pension the effect of the equally massive extra contribution that would have to be made by the ordinary taxpayer and wage earner would be demands for higher wages to pay those contributions or taxes.
The hon. Member for Sowerby (Mr. Houghton) denied that that was so. I freely admit that it is, perhaps, a matter of opinion, but I think that it is an opinion that is shared by nearly everybody. The obvious danger of increasing contributions above a certain height is that they will be inflationary in character. There are various methods by which one can stop that, but this Bill certainly avoids that danger by asking only a modest increased contribution from the average wage earner and, admittedly, giving only a modest increase in the benefits that may be earned by those contributions.
There is a limit to the amount of contribution that people will pay, and I think that the hon. Member for Sowerby rather overlooked that when he said that he did not think that the limit of contribution had yet been reached. That is probably true of the better-off people. The man earning £20 a week will not bother so much whether his contribution is 8s. 10d. or 18s. 10d. a week, but those who would be most affected by a great increase would be those on the lowest wage, and it is a matter for congratulation that the Bill decreases the contribution of those earning least.
It is said in answer to that that the contribution will go down only for a time because later it will be increased every five years or so, but we can hope that in the normal course of increases in wages it will be found that these people will also share the increase in wages as they have done in the past, and that the increased contribution in the future will not fall more heavily on them than it does at present.
The contribution exacted from contributors in other countries, especially in Germany, is higher than that which we 894 say we can handle here, but in Germany, in particular, the fear of inflation is such that they would never do anything to bring it back. In this country, our fear is more of unemployment, and inflation takes, perhaps, a secondary place.
A third reason for my welcoming the Bill is that it will make possible the continuation of the Savings Movement, which has been such a remarkable feature of our economy in the last few years. It is fundamental to our prosperity that that should go on. I do not think that a national compulsory scheme, which everyone was forced to join and in which contributions went up as a result, would contribute to savings. In the first years of such a scheme it would be found that quite large accumulations of capital would be made, but in this Bill those accumulations are avoided. We are not taking from people more than is necessary to balance the scheme from year to year. That is very important, and another reason for commending the Bill.
Occupational pension schemes, of course, provide one of the very largest sources of savings. They, also, will be able to continue, and it would be very harmful to our Savings Movement if they were harmed in any way. Fears have been expressed about contracting out, and about the decision being with the employer. I wonder whether the decision does lie with the employer in exactly the way that has been expressed?
The employer, of course, has formally to say whether this or that scheme, the whole of his works or part only, is or is not to be contracted out, but in these days of the power of the trade union in each factory it would be madness for the employer to take his decision against the will of his employees. These occupational pension schemes are introduced into businesses to make employment more agreeable to prospective employees, and to secure the loyalty and skill of those already in it. For that very reason, it would be madness, and against his own purposes, for any employer to force his employees to contract in or contract out against their will.
If the employees did not like the decision to the extent that has been suggested, they would be free to leave that employment, and to take their benefits 895 with them to any future employment. Therefore, I do not think the fears expressed—though one understands them—are well founded. I believe that it is an administrative necessity that these contractings out should be organised by the employer, after due consultation with those who will be affected, and I have no doubt that that consultation will take place, as it must in present-day industrial circumstances. That will make possible the continuance of the occupational schemes that are so vital to our Savings Movement.
It has been said that the scheme is extremely complicated, and anxiety has been expressed as to whether it will be possible to get it ready in the time stated. Undoubtedly, it is an extraordinarily complicated scheme, but I fail to see how any scheme which could adequately be imposed upon the already complicated pensions structure of the country could fail to be anything else unless it were to be, as it were, very blind and, in some cases, almost, destructive in its incidence.
I should not like to leave this point without saying that the very complexity of the Bill and the speed with which it has been prepared and presented to Parliament reflects the greatest possible credit on my right hon. Friend, whose labours must have been really Herculean during the past months. I think that the Bill will prove to have justified his efforts. I believe that it represents a new and important point of departure in our pensions policy for the future, and I hope that the House will pass it tonight.
§ 7.40 p.m.
§ Mr. George Lawson (Motherwell)
The hon. Member for Stroud (Mr. Kershaw) told us that he believed that those whose incomes were up to £15 a week would, under the Bill, be receiving better than actuarial value. I thought that the Minister and the Government had abandoned all pretence that there was any application of the principle of calculating contributions on the basis of actuarial values. That the hon. Gentleman should tell us at this very late hour that, in his belief, those with up to £15 a week will receive better than actuarial value astonishes me.
§ Mr. Kershaw
I should like to make it clear that I was referring to the contributions paid by the employee, not the 896 double contribution, so to speak, paid by both. [HON. MEMERS: "Oh."] That is a perfectly justifiable observation. After all, the person who has to pay, the employee, wants to know what he will receive for his 8s. 2d. or 8s. 4d. When one sets it out, one finds that he will have something better than what he would have if he paid 8s. 2d. or 8s. 4d. to a private insurance company.
§ Mr. Lawson
The hon. Gentleman likes to pick and choose, and he is certainly picking and choosing very much. The fact is that the contribution is a joint contribution. The Government receive the joint contribution. They do not turn down the employer's contribution. They receive the joint contribution and use it.
The employer does not make this contribution of his for nothing. The contribution can rightly be regarded either as deferred wages or, indeed, as wages. The employer calculates it in his cost of production and, normally, he will add it to the price of the product he is marketing so that this particular part of the contribution will be paid for either by the wage-earner, in the form of part of his earnings, or by the person who will consume or buy the product. We should understand that what has to be taken into account is what is paid jointly and not just what is paid singly.
Indeed, looked at properly, as my hon. Friend the Member for Sowerby (Mr. Houghton) pointed out, in National Insurance it has not been a two-way bargain; it has been a three-way bargain. The State from the beginning has entered in and made its contribution. A large part of our grievance against the Bill is that, in our opinion, the State is shelving or wriggling out of obligations undertaken in the past and recognised by all as having been undertaken. That is one of the basic condemnations or criticisms which we make of the Bill.
Even on the basis of actuarial calculation, the Bill has been welcomed, on the whole, by people in the private insurance world, for good reasons, I think, from their point of view, inasmuch as they have been greatly perturbed at the thought that a genuine State superannuation scheme might be too good for anything they could produce to compete with it. In this venture 897 by the State into superannuation, by graduated contributions and graduated benefits, the private insurance world has been most concerned to see that the State does not make too good a job of it and does not make it too difficult for private insurance companies to carry on their schemes. The private insurance companies are very happy about the Bill because it is, in this respect, so bad that there is no insurance company which could not give far better benefits than are given under the Bill.
Although the insurance companies have welcomed the Bill, for the reason I have given as their principal reason, nevertheless there have been criticisms from them. There was, for example, the very interesting comment made in the publication "Provision for Old Age" produced by the Life Offices' Association and the Associated Scottish Life Offices. It is a comment on the White Paper, "Provision for Old Age". In one section of this document, speaking about ultimate contribution rates, the life offices make clear that the Bill provides for four quinquennial increases in the basic contribution and in the graduated contribution. This organisation of life offices, which certainly cannot be regarded as pro-Labour Party or pro-Socialist, speaking about the actuarial value of the pensions, says:After the four quinquennial increases the joint contributions would be more than double the commercial cost of the combined flat and graduated pensions, and this would apply for all new entrants hereafter".It is true that the document here refers to new entrants. The life offices are referring to the actuarial cost, what they describe as the commercial cost, calculated normally at the stage when a person starts in a particular scheme.
Under the State scheme, in the past the actuarial cost has been based upon what it would cost at the time a person entered, usually at 16 years of age, into the National Insurance scheme. On this basis, according to the life offices, all new entrants, all young people entering the State scheme, both as regards the flat-rate benefit and as regards the graduated benefit, will be paying more than double what they would be required to pay on a commercial or actuarial basis.
The hon. Member for Leeds, North-East (Sir K. Joseph), who is not present 898 at the moment, came here and gave us a stirring address and then left. He talked in terms of a right to—
§ Mr. Denzil Freeth (Basingstoke)
My hon. Friend the Member for Leeds, North-East (Sir K. Joseph) remained in the Chamber during at least three speeches after he had sat down and was here until a few minutes ago, when he left to have dinner.
§ Mr. Lawson
I should have thought that the hon. Member for Leeds, North-East, who thought that this was such an important subject about which he was extremely concerned, would have remained to listen to what others had to to say and would not have left so soon after he had made his own speech.
§ Mr. Lawson
The hon. Member for Leeds, North-East spoke about a pension as of right. I should have liked to have asked him what he had to say about those who pay double the cost of the pension. What right have they? That is what is emerging from this particular Bill.
It has been said that the purpose of the Bill is to put the finances of the National Insurance scheme on a sound basis. The hon. Member for Horsham (Mr. Gough) spoke about a chubby-faced grandchild of his who would, when he reached manhood, find himself burdened with the cost of other people's pensions. The argument of the hon. Member for Horsham, of course, was that, by means of the Bill, this grandchild of his would not be burdened by the cost of those emerging pensions.
My reply to the hon. Member for Horsham, when he speaks about paying for pensions twenty, thirty or forty years hence, is that the payment can be made only by those who are living and working twenty, thirty or forty years hence. We are concerned about the way in which the cost is allocated. It can be allocated largely on the basis of Exchequer contribution, for example, and this means taxation which can be spread much more equitably over the people as a whole. On the other hand, if the cost is heavily allocated in terms of contribution, especially if the contribution is a flat-rate contribution, then there is in this sense, as it were, a poll 899 tax. Those people with the lowest income, who are the least able to carry the burden, will be carrying a disproportionately large part of the burden. The burden must be carried by that future generation. When the Minister talks about future generations, I would point out that we are concerned with the debts that are being imposed on future generations. We are, as it were, writing out for ourselves in this generation I.O.U.s on a future generation.
I would say to the Minister and to the actuaries of Scotland and England who produced the Report that has been mentioned, "An Appeal to Statesmanship", that this applies every bit as much to the private industrial scheme as to the State scheme. If a man has been obtaining during his working life a very large income, perhaps several thousands a year, and retires on two-thirds of that income, he is being maintained by the working population just as much as the person drawing £2 10s. a week. Do not let us make any pretence about that. Future generations will carry the burden, but I would certainly admit that, in providing future generations with the means to better equip and train themselves, and by raising the wealth of the nation, we are making it very much easier for them to carry this burden.
When this side of the House is taunted by hon. Members opposite about what our solution would be, the answer is very simple. We would bend every effort to raise the nation's wealth, expand the nation's output and increase the nation's capacity to produce wealth with a smaller and smaller social and human effort, and in that way the burden of pensions would not be a burden at all.
This Bill, I would say, is in its long-term effects the most important Bill that the Government have introduced. To my mind it is much more important than even the Rent Bill. It is a Bill which establishes principles and develops new practices which will have a long-term effect on this country. We should have looked very closely into those principles. We tried in Committee to discuss them, but, unfortunately, we had only twenty-five sittings. I think that we could have gone on very well for another twenty-five sittings.
When we talk about the question, for example, of the Exchequer liability, it 900 has been, in fact, admitted by the Minister, because it could not be denied, that one of the principal purposes—I would say the principal and outstanding purpose—is to get rid of the emerging deficit. What is the position? Perhaps very few people are aware that up to last year, 1958, there has not been any deficit in the social insurance scheme at all. It has been running on the basis of a surplus. The three-way contributions have been greater than what has been taken out. We had last year, for the first time, a deficit of £39 million. That deficit is expected to increase.
The position as we find it in the Government Actuary's Report for 1961 is that the Government's supplementation payment, Exchequer supplement, is £123 million. That is under the present scheme. On the basis of calculation there will be a deficit of £138 million, so altogether we can say that in the year 1961–62, as things are developing according to the Government Actuary's own calculations, the Government will be responsible for £261 million, that is, the normal supplement plus the deficit. By my calculations that would work out at a total of some 26 per cent. of the total expenditure on the whole of the National Insurance scheme, not just pensions. I am excluding in this case the contributions which go towards health and industrial injuries, but taking all the rest, employment benefit, sickness benefit, widows' benefit, death benefit, and so on.
Under the Bill, which is designed, as it were, to come into operation in that year, contributions are raised and the Government supplementation, or the Exchequer supplement, although not absolutely fixed, is taken as a minimum figure of £170 million, which may rise slightly according to the total basic contribution, the flat-rate contribution, but no contribution at all comes from the Exchequer towards graduated contribution.
The position that emerges in 1961 under the Bill is that there will be this Exchequer supplement of £170 million. If this is taken as a percentage of the total expenditure under the whole of the National Insurance scheme in that year, it means that the Exchequer's share drops from what it would have been, 26 per cent. to 17 per cent. This deficit will emerge for the simple reason that large 901 numbers of people will have been brought into the scheme who have only been in it for a few years and because of inflation the benefits for which they pay will have fallen when the value of money is measured up to take account of it. It will emerge for the reason that the contributions paid in the past year have fallen in value.
For these and a variety of other reasons the deficit will emerge and if we take the position on the basis of the Government Actuary's own calculations which will emerge in 1981–82 we find that the liability for which the State will be responsible under the present scheme will amount to about 41 per cent. of the total expenditure, whereas under the Bill the liability is 14 per cent.
We can, therefore, see the enormous shifting of the burden. We may argue whether or not this is the right thing to do. I think that this side of the House has made itself clear on this point, but it should be seen that that is actually what is happening—the liability of the Exchequer of 40 per cent. of the total expenditure incurred over the years becomes a supplementary contribution of 14 per cent.
A feature that amuses us, although not perhaps in the happiest way, and which has obtruded itself upon us time after time in Committee and in the House, has been the insinuation that everyone in the national scheme is getting a good bargain and paying so much less than he or she ought to pay and receiving so much more than he or she ought to receive. It would seem almost that people make no contribution at all towards the pension. How is it, then, that everyone can receive such a splendid bargain and yet the State can wipe out all deficit and make such a small contribution as the one that I have described?
On the basis of so small a contribution from the State, how is it that the miracle can be performed of everybody receiving so much better value than he or she pays for? That brings out the fact that people do not receive this value at all and that the so-called value of the benefit is a fallacy and deception. This is clearly seen in the superannuation scheme which has been introduced in the Bill.
I am sorry that we have a superannuation scheme which is so bad. I believe 902 that there is genuine need for a scheme. I agree with my hon. Friend the Member for Sowerby (Mr. Houghton) that the country is faced with a problem. An ever-growing number of our workpeople are being covered by private superannuation schemes, some of them very poor schemes and some very good. Nevertheless, a growing number of eight million people are already covered in one form or another by private superannuation schemes. As well as the private superannuation benefits that are accumulating to their credit, they will draw the flat-rate benefit.
The position is rapidly emerging in which, as other hon. Members have said, we have two nations in old age. One is a nation with flat-rate benefit plus superannuation benefit, which is sometimes a handsome superannuation benefit. The second is that part of the nation which has no superannuation benefit and which has nothing more than the basic or flat-rate benefit that comes from the basic part of the scheme.
On this side of the House, there is complete agreement that we have to meet this problem. If suitable private schemes are not to be provided to cover all the workers, the low paid as well as those earning over £9 a week, the State must provide a suitable superannuation scheme. Our deep grudge against the Government on this occasion is that the superannuation scheme which they are providing is fraudulent. That is why we feel so strongly about it.
§ Mr. Lawson
The Minister has talked about producing a wage-related scheme, in which we support him, but it is the nature of the scheme which he has produced to which we are so much opposed. We want to see a good scheme, but just as the private schemes are self-financed and self-contained in terms of contributions and benefits calculated separately from the State basic scheme, so the State superannuation scheme should be separated from the State flat-rate scheme. We ought to be able to look at the State superannuation scheme separately and judge whether it is good or bad and not have it tied up always with the State flat-rate scheme.
903 The Minister refuses to do that. Every time we make any criticism of the superannuation scheme he tells us that we must take into account the total benefit that a person will receive, that he will receive 50s. flat-rate benefit and that his graduated benefit is on top of his basic rate. The private schemes, however, are financed separately from the State scheme and will be supported or condemned on the basis of their worth as separate schemes. We ought to be able to judge the Government superannuation scheme in the same way, but we are not permitted to do so.
The Minister tells us that part of the contribution that goes into the superannuation scheme will be used to pay for the flat-rate benefit, not of the person making the contribution, but of everybody's flat-rate benefit, including, for example, that of the person who came in, say, ten years ago with an income of £2,000 or £3,000 a year, whose flat-rate benefit is to be subsidised from the graduated contributions that will be paid under the Bill. The Minister will not deny this.
I have with me an actuarial statement produced by the Government and given by the Minister when we pressed him urgently to do so. From it, we find that after 47 years' contributions a person who enters the graduated part of the scheme at the age of 18 with an income of £15 will receive the maximum benefit of £2 1s. According to the statement by the Government Actuary, however, the cost is only 4s. 4d.
That is not what the contributor will pay. Between them, he and his employer will pay, to begin with, 10s. 2d. The contributor will pay 5s. 1d. per week, on top of his flat rate payment of 8s. 4d. His employer pays 5s. 1d. of the graduated contribution too. Thus 10s. 2d. a week is being paid in respect of the contributor's graduated benefit.
If an Amendment of ours had been accepted yesterday, the 10s. 2d. a week would have been paid for forty-seven years. According to the Bill, however, because of the rejection of our Amendment yesterday, it will not be 10s. 2d. that is paid, but the Minister will have power to raise the contribution at the end of each of the four separate five-year periods. Twenty years hence, 904 instead of the contribution being 10s. 2d., it will be something like 12s. 6d. that will be paid for a benefit which remains the same and is worth 4s. 4d. actuarially. That is the crux of the matter.
It might be said that I am taking an extreme case, but many people will be paying on this basis. I have shown that the contribution to the superannuation scheme is much in excess of what the benefit will cost. As we brought out yesterday when discussing an Amendment, if the 10s. 2d. were invested with a private insurance company it would provide a pension of about £5 6s. a week instead of £2 1s. That brings out what is so interesting—I would say nauseating—when we consider the Government's proposals.
Hon. Members opposite believe in and want to encourage private enterprise. Here, however, is an example of the State scheme being tied hand and foot. It is made so bad that any twopence-halfpenny private enterprise scheme could compete with it. It is no wonder that the Bill is being welcomed by the insurance companies. It is no wonder that the actuaries talk as they do and use the word "modest", and not "fraudulent", as we on this side do. Nevertheless, the scheme remains fraudulent.
Every youngster entering the scheme, as is said in the quotation which I have made, when those increases take effect, in both the flat rate as well as the graduated contribution, will carry double the burden that he should carry. We want a good superannuation scheme, but why should not the State produce a superannuation scheme which is at least as good as that of the Legal and General? The State has every advantage. I do not say that the State should heavily subsidise private superannuation schemes, but the State scheme should be put on a sounder footing and should be as good as that offered by the Legal and General or any of the other insurance companies. When I said that a contribution of 10s. 2d. a week would produce a pension of £5 6s. a week after 45 years, I was quoting the terms of the Legal and General. No doubt many other companies would give as good, if not better, terms. People who are compelled to pay into the State superannuation scheme are being filched.
A great deal of fuss has been made about freedom, and hon. Members 905 opposite have spoken about their philosophy of not believing in compelling people to do various things and to pay towards insurance benefits in excess of their needs, but they are doing precisely that to people with an income of £15 or less. There is no choice for the man or woman wage or salary earner with an income of £10, £11, £12 or £15 a week whether he or she wants to go into the State superannuation scheme. That person goes into the State superannuation scheme unless his employer decides otherwise. The employee cannot take himself out but his employer can. If his employer does not provide a scheme, then willy-nilly he must go in the State scheme despite the fact that he is being milked. If hon. Members opposite think that we should not compel people to spend more money than they need for their retirement, should we compel the poorest of our people to spend more money than is necessary for the benefits that accrue to them? That is what is happening. The poorest people are being compelled to pay more than is necessary for the benefits which they will receive. In Committee, we said that the Government scheme was a swindle, and we were checked when we used the word too often. We repeat that it is a swindle and it should be said.
There are many other points which I should like to raise, but my hon. Friend the Member for Islington, North (Mr. Reynolds) is straining at the leash. There is so much that he wants to say and can say so admirably. In conclusion, I should like to say a word on the question of contracting out. We debated this matter in Committee, but we did not get very far. One of my grievances is that employers are not only given the absolute right to say whether their employees will be in the State scheme, but they are given the right to pick and choose which employees will be in and which will be out.
An employer can say, for example, "None of my women workers will be in my private scheme; they will be in the State scheme". He can say, "I shall put my staff in an excellent private scheme and my other workers who are not so important to me will be out". He can take the aged out and put the young in. He can do as he pleases. He 906 can utilise the powers of divide and rule in the Bill. He can utilise one section of workers against the other. He can discriminate between trade unionists and non-trade unionists. He can say, "These are nice obedient fellows. They are good chaps. I will bind them to me. I will give them a stake in the firm. I want to establish and to maintain their loyalty. Therefore, I will establish a good scheme and will take them in, but the other fellows who have caused a bit of bother on occasions are out". He can use this power regularly as a means of dividing and ruling. It is a very objectionable practice.
I should now like to refer to a point which I tried to make at the close of our discussion last night. This Bill is an insult to Scotland. The Bill vests the job of appointing adjudicators to the Lord Chancellor.
§ Mr. Lawson
The Lord Chancellor has no jurisdiction in Scotland. He does not even appoint justices of the peace. That power was taken from him some years ago. Under the Bill the Lord Chancellor is brought back into Scotland. We do not want him in Scotland.
§ 8.16 p.m.
§ Mr. Denzil Freeth (Basingstoke)
The hon. Member for Islington, North (Mr. Reynolds) can rest assured that I will not equal the hon. Member for Mother-well (Mr. Lawson) in speaking for 35 minutes. I will do my best to divide the 45 minutes that remains until nine o'clock equally between us.
The Opposition have attacked this Bill roughly under three heads. The first head is that it is a Finance Bill; the second that it is a fiddle; and the third that it is feeble. I think that their attacks on the first aspect have been weakened by the fact that they have spoken with two heads throughout the debate and have talked out of the back of the neck of each. The right hon. Member for Middlesbrough, East (Mr. Marquand) implied that there was something disgraceful in introducing a Bill to put the finances of the National Insurance pensions scheme on a proper footing. If that is not so, there was no point in mentioning it as a point against the Bill.
907 Various hon. Members opposite, such as the hon. Member for Sowerby (Mr. Houghton), said that they thought that the emerging deficit was a very serious problem. The Labour Party's booklet talks about the Labour Party being gravely alarmed by the present emerging deficit and they limit the Exchequer liability. It would therefore appear that, although the words "finance Bill" are evidently considered by some hon. Members opposite to be a term of degradation, they agree, at the same time, that something had to be done about the emerging deficit. If something is to be done about it, basically it is a good thing to do it by contributions rather than by taxation.
That would appear to be the view of the authors of the Labour Party's national superannuation scheme since, if the deficit were allowed to fall on to the Exchequer, the Exchequer grants and supplements would be no less than 40 per cent, of the National Insurance Fund as at present constituted in 1981–82; the Labour Party's scheme limits the Exchequer contribution to 21½ per cent.
We are all agreed that there is a deficit which must be met, and I think we are all agreed, by and large, that it is a good thing that it should be on contributions rather than on the Exchequer than that the burden should lie. Only in this way is it possible to have pensions of right, and to ensure that the money paid to meet the deficit comes from those who are working—and only those who are working pay contributions—whereas taxation is paid to a greater or less degree by those who are sick, even by those who are unemployed and certainly by those who have retired.
The second attack is that the Bill is a fiddle. Hon. Members opposite have even tried to prove that if is a fiddle to those persons who earn under £9 a week. It is very hard to see how it can be so since they will still retain the same benefit rights as they have at present and pay a notably smaller contribution.
The right hon. Member for Middlesbrough, East rather excelled himself when he said that they pay less now, but with the quinquennial reviews the reduction would soon disappear and that none of us imagined for one moment that the full amount of increase would not be 908 necessary as the years go by. He has been a little disingenuous there. After all there are a large number of uncertainties even in the calculations of the Government Actuary. Each quinquennial review as stated in the Bill gives the Government the power to raise the National Insurance contribution by 5d., and that will bring in about £65 million. I would remind the right hon. Gentleman that the Government Actuary's forecasts assume a rate of unemployment of 3 per cent. None of us believes—certainly none of us hopes—that an average rate of 3 per cent, will be maintained over the next, say, ten years the first ten years of the new scheme, and for every 1 per cent. that unemployment falls below 3 per cent. the National Insurance Fund will benefit by no less than £32 million a year in the earlier years and rather more in the later years.
Therefore, if unemployment fluctuates during the 'sixties between 1.2 and 2.8 per cent. so that the average is roughly 2 per cent., the Fund will be £32 million better off, and my right hon. Friend or a Conservative successor of his as Minister will not have to bring in the full amount of the increased contribution.
Similarly, if earnings rise in excess of the 2 per cent. per annum, which the Government Actuary postulates, the National Insurance Fund will benefit by about £13 million a year in 1966–67 and by no less than £50 million in 1981–82. Therefore, I think that the right hon. Gentleman will agree upon reflection that it is possible that the Government Actuary has based his forecasts on very conservative terms, and that it may not be necessary for the Minister of the day to inflict the full increase in contributions which the Bill permits.
§ Mr. Marquand
The hon. Gentleman asks me whether I agree with what he has said. Perhaps I may ask him whether he will not agree that even if all that he says is right there still remain two nations in old age and the basic pension will still be £2 10s. per week.
§ Mr. Freeth
Yes, I am prepared to admit that, but I shall deal with that in another part of my speech.
The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) said that the great lacuna in the Bill was that there was no guarantee given to the pensioner against the rising cost of living 909 should it continue to rise in future years. She suggested that at the minimum it ought to have made some connection between the retail price index and the pension rate so that the two would go up together. If her hon. and right hon. Friends had been on the Government benches I would fully agree with them from the Opposition benches, because when they were in power they never did any such thing, and the final increase in the pension which they gave in September, 1951, was less than would have been demanded by the cost of living. On the other hand, since my right hon. and hon. Friends have taken office the pension has not only made up for what it lost under Labour Governments but it has added as well. So there is no need for this provision provided that we have Conservative Ministers: that is the best way of safeguarding the purchasing power of the pension that one could possibly have.
When one comes to the graduated pension, there is a charge that the contribution has been fixed too high for the pension which will be received. As the hon. Member for Motherwell mentioned, my right hon. Friend circulated a sheet of statistics to help us during the Committee stage of the Bill. It is noteworthy that anybody earning £9 a week would have to pay a contribution in excess of the contribution which he has to pay under the Bill in order to get the pension which he will get under the Bill. In the case of someone earning £12 a week, it is true that if he is 18 today he will pay more in contributions than is needed to buy his own pension. However, I do not think that any of us who are the younger members of the community would think other than that—I do not think that any politician since 1946 has ever thought any other—the younger members of the community would be subsidising the older members of the community and helping with the problem of the late entrants.
Therefore, the person aged 18 will be paying in total—the contributions of the employer and the employee—16s. 7d. under the Bill against an actuarial contribution based on 3 per cent. interest of 15s. 8d. while people of 30, 40 or 50 earning £12 a week are better off. At £15 a week the same is true. According to my hon. Friend, a youth aged 18 earning £15 a week is paying a total con- 910 tribution of 21s. 9d. whereas he should be paying only 17s. 10d. In the case of older contributors, one finds that at the age of 30 there is only 1d. in it. The balance goes heavily in favour of the elderly contributor, who does much better under the Bill than he would on an actuarial contribution.
I should like to quote a remark made by the Minister in our debate on 29th October last year, when, comparing the scheme under the Bill with the scheme produced by the Labour Party and referring to the pensioner under the latter scheme, he said:… it will be seen that he accumulates 1s. of pension for every £35 of graduated contribution paid as compared with the £30 which produces a similar amount of pension under the White Paper proposals."—[OFFICIAL REPORT, 29th October, 1958; Vol. 594, c. 167.]These are, of course, in the Bill before us.
Now we come to the charge that the Bill is feeble. If ever we on this side of the House state that we have a philosophy of life we always expect shouts of derisive laughter from the Opposition. We are a little more polite to hon. Members opposite. However, I am willing to believe that all hon. Members have various philosophies and that one cannot agree with them all. But I believe that if one happens to be starting a very large scheme there is something to be said for starting on a modest or smaller scale and then expanding. It is always very easy to expand. It is almost impossible to take away.
§ Mr. Lawson
We are objecting not to the smallness, but the lack of honesty. Does not the hon. Gentleman agree that there should be honesty as well as smallness?
§ Mr. Freeth
I thought that I had dealt with the question of honesty, of how much the graduated contribution produces, and how much the total contribution produces in total pension.
I was coming to the third of the main criticisms. It is surely right that one should not dictate to people how they should spend their own money, if one can possibly avoid it. I thought that that was the fallacy in the attack of the hon. Member for Motherwell, who said in his closing remarks that of course we were dictating to people who earned less than £15 a week and who had no 911 occupational pension scheme to which to belong. That is perfectly true, and any kind of State social security system must envisage a certain amount of compulsion; but one wants to make that compulsion as little as possible rather than as much as possible.
Therefore, I do not apologise for a scheme of this nature. Nor do I apologise when considering the views which have been expressed about inflation. I do not believe inflation to be the bogy which it was suggested to be by the hon. Member for Sowerby (Mr. Houghton). Even the Socialist Party's yellow book on national superannuation envisages the employers' higher contributions being passed to the consumer in the form of higher prices, and I very much doubt if the higher contributions of the employee would not be reflected in wage demands.
There are two criticisms which have some point. It has been asked what would happen when one came to the time when many workers had moved over the £15-a-week band and when the £9 to £15-a-week band of workers included not two-thirds of the working force, but some very much smaller proportion. The answer is that one must then wait and see what best action to take. It might be decided that it was a good thing to shift the band. It might be decided to widen the band, possibly with an increase in the basic National Insurance contribution with a corresponding increase in the basic rates of National Insurance benefits. I believe that it is a good thing to see where one is going and not to attempt to prophesy too far ahead.
We then come to the question of private insurance pensions schemes and contracting out. I say quite categorically that I believe it to be Conservative philosophy that one should help and encourage private pension schemes. It is an excellent thing for people to belong to private pension schemes. On the other hand, there is the question, raised by the hon. Lady the Member for Lanarkshire, North (Miss Herbison), of the person who might be contracted out against his will because an employer decided to contract out all his workers, or a section of them.
I doubt whether that kind of nineteenth-century dictatorship would apply 912 today. Let us think of the matter not so much in terms of a moral obligation as in terms of practicability. If it is said that the employee should have the right to contract out of the employer's pension fund, then it postulates that the employer is still continuing to run his pension fund. If it is demanded that a person shall have the right to stay in a pension fund, then it has to be assumed that people have the right no longer to run pension funds.
One cannot make people run pension funds any more than one can make people work. We just do not happen to live in that sort of world. It is very important to remember that an employee's right to remain in, to be contracted out, or not contracted out, partly depends on the employer having a fund to which the employee can belong. One has therefore to approach the question on the basis of its practicability. I should have thought that in general the problem would not arise, because people belonging to a good pension scheme would probably all have the same attitude towards this scheme and would accept the line put by their employers.
Basically, I like the Bill. It approaches an enormous and difficult subject modestly and prudently. I do not think that it will lead to inflation. I think that it will help the lot of a good many people and it will relieve the Exchequer of a burden which is out of proportion. It will keep National Insurance benefit as a definite paid-for right instead of part of a scheme largely financed by the Exchequer, so that one is always wondering whether the Chancellor might not wish to reduce benefits should the nation run into difficulties.
Finally, it is a step forward in a new field and a step forward which still retains, as part of its general purpose of help for the old, the private insurance schemes which it does not attempt to freeze out on the perimeter by some mammouth kind of superannuation scheme, such as we have suggested in the Labour Party's yellow book, a suggestion which would amount to the virtual nationalisation of that section of the insurance world.
§ 8.35 p.m.
§ Mr. Donald Wade (Huddersfield, West)
My remarks will be brief. During the debate three hon. Members 913 have described the Bill as modest, but I think they would have to agree that the modesty of the Bill is in inverse ratio to its complexity. I should like to see an "Oscar" awarded every year to the Bill reaching the Statute Book which is worded with the greatest simplicity and clarity and which is most easily understood by the general public. I think the Minister would admit that this Measure is not likely to receive that award.
The Bill is extremely complex, and that comment applies particularly to Part II. This is unfortunate because it will affect a large number of people. A large body of people will have to try and understand the Bill, and I think they will find considerable difficulty in understanding Part II. The difficulty arises largely from an introduction of compulsory graded pensions and contracting-out provisions. I do not propose to repeat again the concern and objection that I feel about compulsory graded pensions. I would, however, point out one or two of the limitations and dangers that I see in this scheme.
So far as limitations are concerned, it should be made clear that the Bill only touches the fringe of transferability of pension rights, and I am now referring to occupational schemes. When the Government scheme was announced I got the impression that one of the consequences of their plan would be to bring about much greater transferability of pension rights as employees moved from one firm to another. I have been disappointed. It is true that an attempt has been made in the Bill to provide that where an employee moves from one non-participating employment to another he will be broadly in the same position vis-à-vis the Government scheme in the first employment and the second, but the Bill does not bring about any greater transferability of pension rights generally as between one scheme and another. I have raised this question in the House on other occasions and I think an opportunity has been missed for dealing with that wider aspect of the transfer of pension rights.
My second point under the heading of a danger relates to the application of the pay-as-you-go principle. After studying what has occurred during the last ten years, I have come to the conclusion that the pay-as-you-go principle must be 914 applied to the basic pension. I think, however, that a distinction has to be made between what I call the basic pension—and I mean by that an adequate basic pension—and the whole of the superannuation payments which retired persons will receive. Similarly, I would make a distinction between the basic pension and the graded pensions which may eventually become the whole of the superannuation payments which retired people receive. In other words, I think that there should be some saving for the future.
It has been suggested by some hon. Members that there is no real distinction between pay-as-you-go and saving for the future; that it is all paid under any scheme by the earners of a particular period. I am not convinced that that is so. For example, the members of a large family might decide between themselves to set aside so much of their current income for the benefit of those members of the family who had retired. That would be pay-as-you-go in its simplest form, but in a complex society that is not possible. There must be an element of saving for the future or we should be binding our children to pay us more and more in the future.
That point has been brought out in the Report of the Councils of the Institute of Actuaries and the Faculty of Actuaries of Scotland, which has been referred to several times in the debate. It says:We are promising ourselves, now, that our children will pay us larger pensions in the future than we are willing to pay now to our parents.The point is made even more clear in these few sentences:The Government is proposing to charge contributions which are graduated according to earnings (subject to an overriding minimum and maximum).
§ Mr. Wade
I will endeavour to continue until the candles are brought in. The Report continues:In return, graduated pensions are to be granted, the amount being based on the total amount of the graduated part of the contributions paid before retirement. In this sense 915 the graduated pension 'depends upon' the contributions paid but it is not 'bought' by them, as is commonly believed. Contributions paid by one person are used immediately to pay current benefits to some other person, and nothing is left to be carried forward. Thus the eventual payment of the graduated benefits is an additional obligation placed directly upon future generations.The risk is that, as the proportion of graded pensions increases, as compared with voluntary schemes, there will be more and more of the pay-as-you-go element, until the time arrives when the whole of the retirement income received by pensioners may be paid on a pay-as-you-go basis, and less and less of it will be provided by savings for the future. That is the risk. It has not happened yet, and it does not happen immediately under the scheme. Nevertheless, it is a risk that I foresee, because we have applied the pay-as-you-go principle not only to the basic pension but to the graded pensions.
For that reason the suggestion put forward by the Institute of Actuaries should be considered very carefully. I support the proposal that a National Pensions Council should be set up. It should not conflict with or duplicate the very good work done by the National Insurance Advisory Committee. There is a strong case for setting up such a council, and it should be treated as a matter of urgency.
I shall not repeat my objections in principle to the introduction of compulsory graded pensions, but after studying the Bill I find I am confirmed in my view that it has not set about solving the problem of helping our old people in the right way, and it is for that reason that I cannot support its Third Reading.
§ 8.45 p.m.
§ Mr. Raymond Gower (Barry)
I apologise for my recent absence from the Chamber, I was called out for a short time owing to the arrival of some visitors.
This Bill has been criticised mainly because of its supposed inadequacy. It is true that my right hon. Friend the Minister of Pensions and National Insurance, and the Government, could have produced a much more ambitious scheme with much larger contributions and benefits. That might have had the effect of making contracting out far less likely, as was suggested by the hon. 916 Member for Motherwell (Mr. Lawson). It might have led to the disruption or abandonment of some of the private occupational schemes. It is also conceivable that considerably larger contributions could have been regarded as a burden by the contributors, or some of them, and might have led to substantial claims for increases in wages and salaries.
I should deplore most of those possible consequences, particularly the abandonment of large numbers of private occupational schemes. The hon. Member for Motherwell thought the Government scheme so bad that any private scheme should be able to compete with it. The hon. Member seemed to be longing for a State scheme which was so good that no private scheme could compete with it. That seemed to be the tenor of his remarks. I lean towards the view expressed by the hon. Member for Huddersfield, West (Mr. Wade). I should like to see a State scheme operating over a relatively small sphere. I hope that we may look forward to the day when industrial and occupational schemes will be extended to cover the majority of our people.
Most of the speakers from the benches opposite seemed to find in a universal State scheme some virtue which did not exist in private schemes. I think there is virtue in private schemes which, inevitably, is lacking in a State scheme. It has been suggested that any failings likely to be found in a State scheme would be found in private schemes. The hon. Member for Bedwellty (Mr. Finch), who always speaks clearly and in an interesting manner on this subject, implied that a State scheme could provide better benefits than a private scheme. He and other hon. Members opposite implied that were there inflationary tendencies in a State scheme they would also be found in a large private scheme, but I do not think that is the case.
If we consider the institution of a large State scheme, it will be found that it would be brought in on a particular date, and that the impact of the change would be instantaneous and extend over the whole sphere in which the scheme would operate. Millions of contributors in all kinds of industries would be affected. Therefore, were it at all inflationary, the effect, if not universal, would extend over a very wide area.
§ Mr. Lawson
Would not the hon. Gentleman agree that wage increases are often described as inflationary and they all come together?
§ Mr. Gower
Wage increases seldom come all at the same time. It is true that they occur sometimes in a large industry, but they come in single industries or in one or two industries at a time. The impact of a State scheme of the kind to which I am referring would be felt immediately over a wide area.
Let us compare that with the private schemes which have evolved over a long period of time. In some cases they commenced on a very modest scale. The hon. Gentleman said that some schemes were better than others. Some are far better today than when they started, but those which are not so good will eventually become as good as the best. Private occupational schemes in industry have had a gradual growth, according to the ability of the industries to support them. That is a fact of tremendous importance. Those who instituted them usually did so after very definite consideration of the state of the industry and of the impact the schemes would have not only on costs of production but on the workers. They usually brought in those schemes after very careful consultation between the two parties in industry. A friend of mine who instituted such a scheme after the war said he did it only after fullest consultation with the trade union concerned and in particular with the local representatives of that trade union.
Such schemes are an integral part of their industries and the inflationary effect of their impact was diminished because they were spread over a long period in a comparatively narrow field. If those schemes have gradually spread over a much wider field and for a longer period, the impact is less than when a very large scheme is brought in.
Most of my hon. Friends on these benches believe that the State should make provision of this kind where provision cannot otherwise be obtained. We do not believe that the State should usurp the provision of such benefits where these can be obtained effectively through private initiative. It is the same in the question of housing. There is a difference of attitude between the two 918 parties in this House. I quite understand the point of view of hon. Gentlemen on the other side, who favour wholesale action, but we believe that the State should be the floor and not the ceiling. This is a difference in emphasis, at least.
Another important point concerning the deficit was brought out by the hon. Member for Motherwell, who spoke of it in strong terms. Anybody who knows the background of the growth of National Insurance since 1948 is aware that obligations have emerged in regard to the basic pension. They are not something which has emerged suddenly. It is true that the deficit emerged only recently, but many years ago we were all aware that a deficit was inevitable. Some people said from the beginning that such a deficit would emerge and that was probably obvious also to those who, from the inception, decided to confer the whole benefit on people who could not, by reason of age, make an adequate contribution.
The deficit is the natural consequence of bringing in a State scheme, whether of superannuation or pension, which is devised to confer large benefits upon those who have not contributed to the scheme from an early age. This scheme has been associated with the State pension scheme and my right hon. Friend has not disguised that fact. He has not pretended that it has been done as a separate measure. The figures which have been supplied refer at all times not only to the superannuation contributions and benefits, but also to the basic pension.
Another criticism has been that this will still leave a certain number of people under the £9 limit who will be the "other nation" as it were. Associated with that criticism was the criticism of the hon. Member for Bedwellty about those with more than £15 a week. It is significant that both in Germany and the United States there is an upper limit. In Germany the limit is not greatly different from our own. It must be obvious to the hon. Member for Bedwellty that if all the people on the lowest scale had been brought in, even the relatively lower scale of contribution which would be involved had they also to contribute to superannuation benefit would have been a very burdensome thing for them.
919 My hon. Friend the Member for Leeds, North-East (Sir K. Joseph) was right to point out that the number of people involved is proportionately low and the number of people who today receive wages of under £9 a week is largely composed of young people or women, married or otherwise. It is our belief on this side of the House that in the relatively near future there will not be many people who have to support families on an income of under £9 a week.
§ Mr. Gower
Of course, there will be a number, but the large proportion will be earning above that amount. The large majority of the male population will be earning more. The number in that category is small today and in a short period it will be even smaller. On the other hand, the upper limit of £15 is in accordance with what my hon. Friend the Joint Parliamentary Secretary, who initiated the debate, considered as our desire for the State to make reasonable provision. I should have thought this House and this country would wish to encourage people to make for themselves the sort of provision contained in what have been described as "top-hat schemes" and so on.
§ Mr. Gower
If people make provision for themselves, that reduces the burden on the State and reduces the impact of the provision that the State has to make. If we reduce to as small proportion as possible the sort of provision the State has to make, as one of my hon. Friends suggested, we can direct far greater help to those who really need it. The fact has been skated over by many hon. Members, but there is an appreciable benefit in the Bill for those low-wage earners who will have to contribute to the basic pension. It is not insignificant that after several years in which they have faced regular increases in contribution they can at last envisage the time when their contribution will be actually reduced.
§ 8.59 p.m.
§ Mr. R. H. S. Crossman (Coventry, East)
Mr. Deputy-Speaker, I feel bound to ask through you if I 920 may apologise to the House for the fact that I was absent from the House for the first forty minutes of the debate and so missed the speech of the Joint Parliamentary Secretary. I was very sorry to have missed her speech. I have been told, however, from everyone who heard the hon. Lady that she conducted herself on what she called the first occasion on which she had opened a major debate as she conducted herself in Committee—she made her points simply and attractively and impressed the House. I am sorry that I missed the performance.
I turn to another point on which I think I shall also get some agreement. I am delighted that the hon. Member for Bradford, West (Mr. Tiley) and the hon. Member for Aylesbury (Sir S. Summers) both said something I wanted to say from this side of the House about the document which has been quoted a great deal, "An Appeal to Statesmanship" issued by the Institute of Actuaries. I gather that it was not timed to appear before the debate, but it was certainly timely. The Institute felt it to be its duty to rebuke the Government nearly as severely as it rebuked the Opposition for the irresponsible nature of our graduated pension schemes. It showed its strictly non-political attitude by finding the Government scheme outrageously dangerous, and at the end of its document it recommended thatthere should be set up an authoritative and independent body to guide the country through the financial, economic and technical aspects … Its functions should include the duty of keeping national pensions under review and the responsibility of making recommendations.I agree with hon. Members opposite that the actuaries seem to be usurping the functions of Parliament. I agree entirely with the hon. Member for Aylesbury. We should have found their document considerably more valuable if they had used their unrivalled knowledge and expertise in working out the detailed implications of the Government's scheme and the Labour Party's scheme, enabling the public to judge objectively between them, rather than pontificating on the problems of democracy. I am glad that both sides of the House at least agree on this.
There is one criticism, however, made by the actuaries which I accept. Though the benefits which the Bill propounds 921 are pitiable, I agree the Bill is an important Measure and in one sense an epoch-making Bill. It includes unique departures from existing practice. We can sum up the departures in three points. First of all, for the first time in history it introduces a system of wage-related contributions superimposed on flat-rate contributions—something, by the way, which we proposed from this side of the House but which is a complete departure from practice both in other countries and here.
Secondly, and even more remarkable—and here we depart from the Government—it proposes that this wage-related system of contributions should not be comprehensive, but should be imposed on one segment of the workers, excluding all those under £9 a week and permitting most of those who are well off to get out of the scheme under the conditions of contracting out. This leaves the system effectively operated only on the middle bracket of wage earners. A selective, discriminatory system is indeed an extraordinary system, and it needs a good deal more justification than we have heard in the debate.
The third unique aspect is to be found in the provisions for contracting out. As I pointed out on Report last night, it is a misnomer to call it contracting out. Really it is authorising employers to provide a substitute for State welfare. It is a novel idea that we should charge employers with doing something for their employees which is normally done by the State for everyone. There, again, we want to look at the scheme with extreme care.
I agree, with the actuaries when they say that what is disconcerting is the way in which this remarkable Bill has been received, the little understanding it has received and the way in which the public has not seemed to be aware of the situation at all.The new proposals,they say,bring a new sitation and we are convinced that so far from there being full understanding, there is widespread misunderstanding.Here I agree. I in no sense blame the Minister, or his back benchers, for this. Having railed at his back benchers a good deal in Committee, let me say at once that I appreciate why they remained silent, because we saw them all in action this afternoon when their 922 silence could not have helped the Bill through more quickly. I will say to the Minister that although I think that this is a miserable Bill which he has had to push through, he has pushed it through with forbearance and with skill and has presented us with the facts of the case. If anybody bothered to read this volume of the Standing Committee reports and understand it he would have no excuse for not understanding how outrageous are the proposals in the Bill.
What is disconcerting is that up to now the public outside has showed virtually no awareness of what is going on. This is partly because the Government Press has sought to give the comforting impression that there are two rival complicated schemes for old-age pensions, that nobody will be affected for a long time, that those schemes do not much affect ordinary people and that as they are both very complicated, there is not much to choose between them. I can well understand it being in the interests of Government newspapers to give this impression.
Secondly, this impression is sharpened by something else. I am afraid that I must say this, and I hope that the Minister will understand it. If the Civil Service Union had not been permitted to contract out, if those who drafted the Bill had been compelled to pay these outrageous contributions in order to receive these miserable benefits, if all the middle class and executive persons who are to be let off had been within the scheme, there would have been a much louder protest against the Bill than we have had at present.
Finally, there is the basic fact that, because the Bill does not come into effect for two years and because most people do not like to face growing old until they are too old to face it, the public will not accept the importance of the Bill. One of the things which I hope we shall do by having a General Election is to have a little political education of the public on the real meaning of the Bill.
I shall use my words now fairly carefully. I want to repeat what has been said from the back benches behind me. We regard the Bill as a fraud. What I mean by "a fraud" is that it is really a "phoney" prospectus. It is not a fraudulent prospectus, because it does not say anything untrue. All it does is to give 923 a completely false impression to the man in the street, both of the purpose of the Bill and of what he will get out of the Bill. It does it extremely cleverly. It does it in such a way that I do not think the Minister could be put in prison for it if he were a private person. He would merely be congratulated by people by whom he would not like to be congratulated. Furthermore, the Bill provides a gigantic administrative facade of social services which disguises that it is a purely financial manipulation.
It is on those two grounds that I want to argue the political fraudulence of the Bill. I will start by quoting that magnificent and remarkable document—I am speaking as an ex-propagandist—the Minister's own pamphlet, to see how the "phoneyness" is achieved without actual fraud. On page 5, there is this passage:Q. How will the scheme help those workers not covered by occupational pension schemes to get a pension related to their earnings before retirement?A. In spite of the welcome growth of occupational schemes, to which some 9 million workers now belong, two-thirds of the workers in industry are not covered by any such scheme. For many years there are likely to be some workers not adequately covered by occupational schemes. The new scheme makes it possible for these workers to start earning a pension more in line with their earnings before retirement.That is not true. It cannot be said that it is an actual lie, but the fact is that the amount of graded element they will receive is so miserable and such a pittance that that passage creates an entirely false impression.
I will not go through all the figures again. I will merely state three figures which we had to repeat time after time in Committee and which should once again go on record on Third Reading. Let us look at the amount of contributions and the amount of benefits paid out. It must be remembered that this is not a funded scheme. This is a so-called pay-as-you-go scheme, an assessment scheme where the Government merely collect the money to pay it out. In 1971, £295 million will be collected in contributions and £16 million paid out in graded benefits. In 1981, £391 million will be collected in graded contributions and £63 million paid out in graded benefits. In 2001, £537 million 924 will be collected in graded contributions and £199 million paid out in graded benefits.
It has not been disguised that the whole of the employers' contribution is taken by the Chancellor of the Exchequer for other purposes than paying the pensions of those who made the contributions. It is not denied that over half of the employee's contribution is taken and used, not to pay him a pension, but to pay somebody else a pension. This means simply that we have not a scheme of graded benefits, but a scheme of graded contributions with no relation between these contributions and the benefit received.
The contributions can be halved or doubled. Either would be equally satisfactory. So, too, the benefit can be halved or doubled, because there is no relation between what is paid in and what is received at the end. It has no relationship whatever, except a purely arbitrary one fixed by the Government. This, of course, is disguised—and again it is very near a fraud—by a great deal of talk of units and bricks. Here, again, we have been able to prove these to be extraordinary bricks, because their value declines every five years. All the talk about units and bricks is a deception. What we have here is a clever new method of collecting extra money to cover the Exchequer liability of past years.
I want to make it quite clear, yet again—because it has been denied so often from the other side—that we on this side admit that the Exchequer liability must be met. The issue is not whether it must be met, but in what proportion the burden should be imposed on the various sections of the community as between an Exchequer contribution paid by the taxpayer and contributions paid by employers and employees. That is the whole debate. We observe that by cutting or by severely limiting the amount of the Exchequer contribution, and also by putting a ceiling on the graded contribution, there arises the gross social injustice of concentrating the main burden on the middle-bracket taxpayers.
All this is concealed even further by what I have described as the façade—the administrative façade. I have received a most interesting report—I cannot say where I got it, but I know that 925 it is authentic—of the Minister's intentions with regard to staffing, buildings and costs. To run this scheme will cost, in administrative costs alone, an extra £4 million a year. At least 800 more staff are to be hired at Newcastle-upon-Tyne, and there is to be a large amount of extra building. No wonder—for in order to collect these new graded contributions we have to tell the Revenue authorities to prepare a new Income Tax form which will have in it one new column in which will be recorded the new graded contribution. One might have thought that "stamps" would have been abolished and the whole thing be done by P.A.Y.E.—but no! They are retaining all the staff necessary to deal with flat-rate contribution, and adding to it a new, special administration designed to deal solely with this miserable graded contribution.
As a result of the floor being put at £9 and the ceiling at £15, from week to week the conditions will vary as to whether half a million people are inside or outside the scheme. That will depend on whether their earnings are over £9 a week and whether they are under £15 a week. If a man is but 2½d. above the £9, a fractional contribution will be recorded against him by the Inland Revenue. It has then to be microfilmed and taken to Newcastle where it is rerecorded, by methods unknown, by the Ministry of Pensions and National Insurance. Let us not wonder the scheme will cost an extra £4 million a year and need an extra 800 civil servants.
We on this side do not object to someone building a large administrative structure for a large social purpose. If we were to transform the nature of old-age pensions, if we were to introduce an all-in graded scheme, with half pay on retirement and everyone graded from top to bottom, we should certainly need this new administrative structure. But I agree with my hon. Friend the Member for Sowerby (Mr. Houghton), who said that this particular kind of change recommended in this Bill cannot possibly justify either the administrative structure or the organisation of contracting out.
Certainly, if there is to be a large Government scheme such as we propose, we must have contracting out, but for a pitiable scheme like this, to impose 926 on the employers all the uncertainties that have been described by the hon. Member for Aylesbury, and all the complexity of recording, is ridiculous—unless one is concerned mainly to conceal one's intention under a facade of social service. Of course, if it is the main intention to give the impression that one is doing something about wage-related pensions when one is really not, if it is one's main concern to prevent people realising the nature of the financial wangle which is being done under this cover, then £4 million a year. I suppose, for a Conservative Government, is a relatively cheap price to pay for mass popular deception. I do not deny that we shall have quite a job to explain to ordinary people just what will happen to them.
I come now to the problem of benefits. I know that this is a tender subject for the Minister. He does not really like, even on this matter, a frank and open discussion of what people will actually have under the scheme. He particularly dislikes any comparison between his benefits and a private insurance company's benefits. That is why I shall repeat again the figures worked out by the actuaries who advise us. Their figures show that a man earning £15 a week, entering the Government scheme at 18, will qualify for £2 1s. of graded pension, whereas if he saved the money and put it in the Post Office Savings Bank he would have £5 3s. At age 30, he would have £1 10s. from the Government and £2 16s. 2d. from normal savings. At 40, the comparative figures are £1 2s. and £1 11s. 1d. What is proposed is that people shall be forced to pay contributions to the Government and then receive in benefits less than they could have got in the Post Office.
We think that this is outrageous. I know that the Minister will say that it is very unfair to compare the graded element with an investment or an insurance policy with a private company. I agree that that comparison is partly unfair, because we also admit that part of the contribution will have to be used to pay the Exchequer liability. I will, therefore, make another comparison. I shall compare this contribution and this benefit with those which could apply in another type of scheme, under which, shall we say, one levied 3 per cent. from 927 top to bottom, from those earning £47 a week to the bottom, and one really kept the money as deferred pay and used it for pensions. What would a person have under that scheme? I say at once to the Government that, in this case, I shall add the figures together and give the total pension a person will receive, including his flat-rate pension.
Under the Government scheme, on entering at 18, at £15 a week, a person will draw a total of £4 11s. Under the Labour Party scheme he would draw £8. On entry at 25, under the Government scheme, the figure would be £4 5s. Under the Labour Party scheme it would be £6 15s. At 35, under the Government scheme, £3 16s. Under the Labour Party scheme, £6 2s. At 45, under the Government scheme, £3 7s. Under the Labour Party scheme, £5 10s. But, our old friend the hon. Member for Bradford, West will say, the Labour Party's contributions are very much higher. So they are. I will give the difference. At £15 a week, under the Labour Party scheme, a person will pay 4s. 5½d. more than at present. Under the Government scheme, he will pay 3s. 6d. more. Thus, he will have that difference in benefit for 11½d. a week.
§ Sir K. Joseph
Under the scheme the hon. Member for Coventry, East (Mr. Crossman) is postulating, would there still be freedom for anybody to opt out into occupational schemes?
§ Mr. Crossman
The hon. Member knows perfectly well that there are elaborate provisions for that. It has been said time and again, and he is well aware of it. That was a very time-wasting intervention.
The real difference between the two schemes is perfectly simple. First the Labour Party allows for a much larger Exchequer contribution. We propose that the Exchequer contribution should not be 25 per cent. of the flat-rate contribution but 2 per cent. of average national earnings. Therefore, it will go up with the rise in national prosperity and roughly cover the present Exchequer liability. That is the first thing. Secondly, the Labour Party scheme has no ceiling at £15. It goes up to £47, and, therefore, brings in a great deal of money from people at the higher income levels, 928 which they will have back later on in graduated pensions. I quoted those figures merely to indicate the total inadequacy of the Government's scheme measured even by the possibilities of a State graduated pension scheme.
I know that there is now a new answer which the Government make. The Minister gradually learned to make it during the Committee stage. At first he gave us all those very interesting tables prepared by the Government Actuary and the Conservative Party, with calculations of what people will receive in the year 2010. But after my hon. Friend the Member for Islington, North (Mr. Reynolds) took those figures and really worked them out, the Minister replied peevishly that we must not take the tables seriously. There is, he said, no actuarial basis in his scheme. Indeed, his phrase, in rebuking my hon. Friend, referred to the "fallacy of basing any assessment of a State scheme on actuarial calculations." I think that the Minister ought to make up his mind. Either he issues a prospectus telling the workers of this country what actuarially they will get out of this scheme by the year 2010, or he must say that these tables are "phoney". He must not use these two arguments, using the one whenever it seems more convenient than the other.
We should like to hear this evening whether he now says, what he said in Committee, that these tables are actuarial tripe and should be dismissed from our thoughts, because they bear no relation to what people will actually get, in which case we shall know where we are. He is just taking as much cash as he likes, year by year. That is all right. That is a pay-as-you-go scheme. That is one thing. Alternatively, he is giving us an insurance scheme. He is offering wage-related pensions. That is what he promised. We cannot have wage-related pensions without an actuarial calculation of what pension a person will get in accordance with his wages over a certain number of years.
I think that this Third Reading debate is valuable if only for one thing. It will give the Minister an opportunity of telling us whether he has really given up the reason behind the tables he produced or whether that argument was just thrown in to embarrass my hon. Friend, the Member for Islington, North, who I 929 am sorry has failed to catch your eye, Mr. Speaker, because he would have made this point much more effectively than I can.
We on this side of the House entirely renounce the view that there can be no actuarial basis for Government pensions. We renounce it for serious reasons. If we are asking people to save and defer part of their pay and put it away for their old age, we must be able to give them an actuarial calculation of what they receive in return for their contributions.
What has been wrong in the past—here I agree with critics opposite—has been the blanketing-in of elderly people which undermined the actuarial basis of the old National Insurance scheme. Our aim is to restore sanity to the scheme and make it a genuine insurance scheme and to see that the savings are sufficient to pay out the benefits. That is why we believe that the scheme must be funded as against a mere assessment scheme.
Frankly, if the Minister wants it to be a pay-as-you-go scheme it would be better to scrap the whole basis of insurance and pay pensions straight out of taxation as they do in Australia and many other countries. Then there is no nonsense and people know where they are. Each year the State levies so much for the Chancellor who pays out whatever democracy thinks the pensioner should have. If we want pay-as-you-go, that is the only honest and candid way of doing it. If we are talking about restoring the genuineness of national insurance, if we are talking about wage-related pensions and benefits, we must not dismiss tables and say that there is no actuarial basis to a Government scheme.
I want in conclusion to take ourselves back—and I think that it is essential each time we debate this that we should do so—to considering for a moment the central social problem with which we are trying to deal. What contribution does this Bill make to solving the problem, which I am glad no one on the Government side today denies exists, the problem of the two nations in old age, the problem of the lucky one-third in superannuation schemes and the unfortunate two-thirds condemned to National Assistance after a means test if they cannot make out on their own personal savings, 930 and if, through no fault of their own, they have not been members of a superannuation scheme?
We on this side thought that the House had agreed that this was a great social problem to be solved and that poverty of this kind for old people in the midst of prosperity of the kind which our people enjoy since the war is a disgrace which we have to get rid of by State action. I agree with the Minister that we must not promise or pledge too much for the future, but it is equally important to point out that we must not pledge too little for the aged. There is a social obligation on us to remedy this defect. Let us be clear that the Bill remedies nothing. On the contrary, it legalises and perpetuates the division between the two nations in old age.
In the course of the Committee stage we tried in debate after debate to introduce a little humanity into the Bill. We tried to introduce something for the existing pensioners—the £3 minimum—but by one vote the Minister had his way and the Bill must not even go on record as giving £3. We then suggested that we should have merely a guarantee of the value of the pension. The Government would not have that.
Next, there was the discrimination against women which, we thought, no new Bill to deal with pensions could possibly perpetuate. Why not knock out the discrimination against women who are in the scheme and, as for those outside it, at least insist that any scheme permitted to contract out must provide a widow's pension? No, the Government would not have it. Proposal after proposal which we sought to include has been excluded on the ground of moderation. "Moderation" is another word for refusing to remove the assumption that between 1 and 2 million old people must always be on the National Assistance level. "Moderation" means accepting that as inevitable and suggesting that there would be inflation if we remedied it. That has been the constant reply by the Government. We have been told that if the nation felt sufficiently ashamed to act there would be inflation.
It has not been explained why a private pension with 10 per cent. contributed by the employer and 5 per cent. by the employee is non-inflationary but that if we try to do this for the rest of 931 the community, it immediately becomes inflationary. Having sat in the Committee, I know the reason. There is a good reason why the Government want to make sure that State schemes are inferior, cheap and miserable. It is because they have some very important backers in the insurance companies. We notice the sums of money that are being spent in a large-scale advertising campaign by certain insurance companies concerned to assist the Government with the Bill. We know why. The insurance companies said to the Minister, "You must introduce no kind of State graduated pension which poaches on our preserves, and our preserve is anybody who helps to contribute to the rate of profit of the insurance companies."
In our scheme, we have been careful to lay it down that there must be fair play between the private and the public sectors. We have taken great trouble in working out our scheme to ensure absolute fairness to the private occupational schemes and to the insurance companies who are doing their job. What is intolerable to the community is that when it has been demonstrated that private insurance and private occupational schemes cannot, at best, cover more than one-half of the working population in the next ten years and that the other half will be uncovered, we should be told that the State shall not do the job which private insurance has shown itself incapable of doing. It is intolerable socially. But it is only too intelligible from the present Government. Let us understand what "moderation" means. It means squaring the boys, the boys upon whom the Government rely in the coming months.
I was pleased by one sentence spoken by the hon. Member for Aylesbury, who said one cheerful thing. He said that the Government scheme is a tree which contains the seeds of its own decay. In an able speech, the hon. Member proved that it will take only ten or fifteen years for the Government's graded pension scheme to have sunk below the surface of the average wage. Curiously enough, on the Government's own calculation of a 2 per cent. increase in national income each year, £15 will be a low wage in twenty years' time and by then we will have got back to a flate-rate pension.
932 So we have this spark of consolation. We know that by waiting twenty years, the Government scheme will be self-liquidating and we shall be back again on an overt flat-rate National Assistance pittance. But we are not prepared to wait twenty years. We will cut this dirty tree down, sow our own national superannuation and grow it up.
§ 9.30 p.m.
§ The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter)
It seems quite a long time since we published the White Paper in October and had the first of the debates in this House on the scheme embodied in the Bill, which now reaches its last stage in this House. It is perhaps interesting to look back on the original White Paper and to reflect that the proposals outlined in it, although I think that they have been subjected to more intensive Parliamentary debate than any set of proposals which I recall during my membership of the House, still stand tonight in this Bill on the broad lines which we put forward in the White Paper.
It is inevitable that in the course of long debates on a controversial matter the House or Committee should get involved in intricate and controversial details. At this stage it is right that we should come back to the main outline of the Bill which the House in a few minutes will be asked to send on to another place.
As I said, the broad White Paper scheme—with its introduction of what the hon. Member for Coventry, East (Mr. Crossman) referred to as an historic and epoch-making proposal for a scheme of graduated contributions and pensions; with its introduction for the first time, not only in our history but in that of any country, of a contracting-out system from a graduated scheme; with its provision for the abandonment of the universal flat-rate principle; and with its concentration of the Exchequer subsidy following the lines of the Government's social policy on those who need it most—is deployed in the Bill. Although in the course of Parliamentary debate, as the hon. Member for Coventry, East has acknowledged, some of the details have been improved and some of the administrative arrangements made better nonetheless the broad outline of the scheme in the White Paper is 933 reflected in the Bill to which the House is being asked to give a Third Reading.
In those circumstances, I think that I can best serve the House by first replying to a number of the specific points made in the debate and then coming back at the end to what seem to me the vital features of the scheme. Let me first take the point raised by my hon. Friends the Members for Leeds, North-East (Sir K. Joseph) and Aylesbury (Sir S. Summers), namely, the problem of timing the implementation of the scheme.
When we introduced the White Paper in October we stated, somewhat tentatively, that the intention was that the scheme should come into full operation in April, 1961. That remains our intention. I fully appreciate what has been said by my hon. Friends and what has been represented outside, namely, that this kind of timetable will impose very considerable burdens, particularly upon those professionally engaged in this business and upon employers. On the other hand, I think that it is vitally important in introducing a scheme which provides for people to earn an additional pension and which makes no provision for back service liability, that their opportunities to earn it should operate as soon as is physically possible.
I think that it is equally right in dealing with the present scheme, the lamentable financial position of which has been described many times in our debates, that remedial measures should operate as soon as physically possible. Therefore, I say to my hon. Friend and to those outside who have made these representations that, while we are, of course, not unaware of the very considerable amount of work that will have to be done in making arrangements in connection with the graduated scheme, we are of the view that the date of April, 1961, should stand.
We will, however, endeavour to do all we can to make the inevitable rush as little difficult as possible. The main problem I think, arises in connection with contracting out and the modification of schemes in order to comply with the contracting-out conditions and we cannot, of course, actually set up the Registrar who will adjudicate on questions of contracting out until not only is the Bill law but the regulations 934 dealing with the Registrar's functions have been through the National Insurance Advisory Committee; but I have in mind before the Registrar can for that reason actually function to appoint a Registrar-designate, a senior official of under-secretary rank, who will be able to give that sort of informal advice which the Inland Revenue at present gives in connection with tax applications in relation to occupational schemes.
As soon as the Royal Assent has been given, I will also arrange for the production of a leaflet setting out the scheme as clearly and in as much detail as possible so as to assist those who have to apply their minds to the problem of whether to modify their schemes, whether to apply to contract out or whether to leave their own position as at present and come into the State scheme in full. I will certainly undertake in that way, and in as many other ways as we can, to make the administrative task for all concerned as quick and as easy as possible.
It has been said, and it is perfectly true, that this Measure involves some considerable additional administrative work by my Department. Fortunately, advances in the technique of mechanical office work in recent years make that task much less formidable than it would have been even a few years ago, and I am in touch at the moment with manufacturers of electronic computers so that we may be able to consider the most efficient machinery for the recording of claims and benefits, and for the maintenance—this is of considerable importance to the contributor—of a record of contributions which will be available to a contributor who desires from time to time to know how his position stands.
I greatly enjoyed, and so did the House, the speech of my hon. Friend the Member for Bradford, West (Mr. Tiley). I was grateful to him for bringing out one point which in all our long debates has not, I think, received the emphasis that it should have. That is the impetus which the Bill and its contracting-out provisions in particular will give to the development of the preservation of rights in private pension schemes. I am certain that all hon. Members who have studied this matter appreciate the enormous value of preserving pension 935 rights and the advantage of stimulating this by making it a condition of contracting-out in one form or another, either by payment in lieu or otherwise. We are, I think, going to give a considerable and wider impetus to that development in private pension schemes, and I think that from the broadest point of view the House will agree that that is a fortunate and good feature of the Bill.
I will come in a moment to some of the observations which have been made about the bargain to the contributor. I think the House is indebted to my hon. Friend for bringing out with his accustomed clarity and vigour the point already made in paragraph 11 of the White Paper, the very considerable bargain that the flat-rate scheme taken by itself provides for the contributor.
The right hon. Gentleman the Member for Middlesbrough, East (Mr. Marquand) and his hon. Friend the Member for Bedwellty (Mr. Finch) criticised the Bill's treatment of the people earning less than £9 a week, which we have often discussed. The first thing that hon. Members will want to have in mind is precisely who these people are. There seem to be among them very few—and there will plainly be many fewer by April, 1961—mature men in whole-time work earning less than £9 a week. In fact, inquiries show that the figures which have been given include a wide variety of people—a very large number of married women doing part-time work, apprentices and people on juvenile rates of pay. They also include—and the House may not have appreciated this—everyone in receipt of sickness or unemployment benefit.
The problem becomes a little clearer when one appreciates that there are relatively few people in whole-time work in that category, and that even if someone is earning less than £9 a week now, for example, because he is a juvenile, there is no reason to believe that he will always continue to do so. That is even clearer and even more important in connection with those who are now sick or unemployed.
There then arises the question of how these people should be treated in their various categories in a wage-related scheme. It follows quite plainly that in 936 a wage-related scheme the person on a lower wage will make a lower contribution and get a lower benefit. That is of the nature of the scheme. It is also right when dealing with people of these quite modest earnings that one of the things which can be done for them is to lower their contribution, which is precisely what the Bill does. The total contribution is reduced by no less than 2s. 10d. When one recalls our earlier debates on other National Insurance Bills and when one recalls the pleas made from both sides of the House about the weight of the present contribution on the lower-paid worker, I should have thought that it would have been accepted as one of the very best features of the Bill that the contributions of people to whom the present National Insurance contribution is plainly substantial, those earning £9 a week or less, were to be reduced. That reduction, by the concentration of the subsidy upon those people, is a very good and advantageous feature of the Bill.
One hon. Member said that that would be for only a little time. Even if all four quinquennial increases were made in full—and, as the House knows, that matter is left open; there is power to reduce each of them when the time comes—there is in fact to be a reduction in the contribution of these people for at any rate twenty years, and at the end of the twenty years the increase would be only 1d. I ask hon. Members when thinking about this problem—and it is relevant to any wage-related scheme—to agree that the right course for the lower-paid workers is that which we have taken, to give them their full existing rights in return for a substantially reduced contribution.
The right hon. Member for Middlesbrough, East and other hon. Members, and for a moment the hon. Member for Coventry, East, all attacked the provisions of the Bill on the grounds that they were, to put it broadly, unfair to women. The case, which the right hon. Gentleman made at considerable length, was based upon the view that by making the unit which produces 6d worth of pension a week £9 in the case of women as compared with £7 10s. in the case of men, the women were being treated unfairly. I ventured to intervene in the right hon. Gentleman's speech and to direct his attention to the fact that a 937 woman's pension becomes payable five years earlier. It is surely the plainest and most obvious truth that pensions due five years earlier are more valuable than those payable five years later. In fact the Government Actuary advises that pension rights for a woman at 60 are worth 20 per cent. more than similar rights for a man at 65. If the House studies the relationship between £7 10s. and £9, the House will be able to see how closely that difference of value is in fact illustrated in the different prices of the unit.
I can put it in another way which may help the right hon. Gentleman to understand the point. The woman can of course go on working, if she is fit and able, until she is 65. Under the provisions of the Bill as they stand, with the provision for graduated increments, if she works on to 65 and has the same earnings as a man of 65, her pension will then be a shilling or two higher. That makes it clear that, unless we varied the price of a unit in the way we have, the scheme would be plainly unfair to the man by being over-favourable to the woman. I hope therefore that we shall not have any further suggestion that the Bill discriminates against women.
I am sorry that after our long debates the hon. Member for Coventry, East should have marred the concluding moments of his speech by an imputation which was wholly false, and which he must have known was wholly false. He ascribed to us an improper motive for the scale and scope of this scheme. The hon. Gentleman and I, and our right hon. and hon. Friends, differ profoundly on the scale of the scheme, but just as I do not challenge the sincerity as well as the ability with which the hon. Member put forward his proposals, I must ask him not to base his criticism of our proposals on wild, damaging and wholly inaccurate allegations which I think he should apologise for.
As he has done so often before, the hon. Gentleman drew a comparison between the yield of private schemes and the graduated portion of the scheme in the Bill. Once again I have to remind the hon. Gentleman that the Government scheme should not be looked at as two separate parts. This is one pension and one contribution, and it is the bargain 938 as a whole which he ought to have in mind for the purpose of these comparisons.
The hon. Member with great adroitness skirted about the rules of order to show the superiority of his own proposals as being in part due, from the beneficiary's point of view, to the higher Exchequer subsidies which he proposed. He did not tell the House that for the first fifteen years of his proposals the Exchequer subsidy would actually he less than the estimated surplus. This would mean that the whole cost of his scheme would fall on the contributors, employers and employees, without the help of a single penny from the Exchequer.
In this connection I do not use the words "fraud," "swindle" and others which seemed to leap so easily to the hon. Gentleman's lips, simply because I do not think that our discussion of this infinitely important and infinitely difficult matter is facilitated by language of that sort. But if I were tempted to follow the hon. Gentleman's suggestion, that particular argument would subject me to a very sore temptation.
As has been said many times, the Bill provides, as one of its more conspicuous features, for an opportunity to contract out. This is a new and daring experiment. We are providing this because we appreciate that all expansions of National Insurance plainly provide dangers for the private schemes, for the simplest of all reasons, namely, that there is a limit to the total contributions that either employer or employee is prepared to pay, and if the payments to the State scheme are increased there is a risk or likelihood that the private schemes may be cut down, reduced or abolished. That is why we are determined to operate the contracting-out procedure.
I do not think that it is possible to over-rate the value of the private schemes as a source of saving and investment, as a help to good industrial relations, and as a real contribution to the stability of our economy. It is because we are anxious that these proposals shall not damage that source of investment and good industrial relations that we have evolved a workable scheme of contracting out and put it into the Bill.
939 In the course of this debate much criticism has been directed to our determination to restore the solvency of the National Insurance Fund. A great deal of time has been taken up by hon. Members opposite in saying that this is merely a case of shifting some of the liability from the Exchequer. So far as I am aware, it has never been accepted or thought right that the whole of this large emerging deficit should be borne by the taxpayer; indeed, it would be extremely wrong if that were so, not only on financial grounds but because it would fundamentally change the whole character of our National Insurance scheme: I cannot do better than quote some very fine words about this:As long as the benefits are 'earned' by payment of contributions and financed out of an Insurance Fund, they are felt to be something which the worker receives as of right and which no politician can take away from him.That is the case for maintaining a true basis of insurance which is not predominantly tax-supported, and it comes from page 10 of the Labour Party pamphlet.
§ Mr. Reynolds rose—
§ Mr. Boyd-Carpenter
I have a long debate to answer and very little time in which to do it. I have given way to the hon. Member many times in the course of our previous discussions and I hope he will forgive me if I do not do so tonight.
One of the features which I believe has commended itself to responsible opinion in this country and outside has been the fact that we have dealt so courageously—as the hon. Member for Sowerby (Mr. Houghton) was courteous enough to say—with this large emerging deficit. But it would be wrong that it should go out from this House that we have done it solely by way of an increase in contributions. The Bill contains a provision fixing the Exchequer subsidy at a minimum of £170 million, rising proportionately after that. As it maintains the original one-quarter proportion in relation to the minimum contribution, it is fair to say that we are preserving the insurance basis of the scheme, with employer, employee and the Exchequer bearing their fair and reasonable shares. I was glad to hear one or two hon. Mem- 940 bers opposite say that they appreciated that the contributor must pay his share in dealing with the very large liability which has been allowed to emerge.
§ Mr. Reynolds rose—
§ Mr. Boyd-Carpenter
When I commented upon one of the observations made by the hon. Member for Coventry, East I promised to deal with the point that the real clash between us lies in the size of the schemes which we think it right to put forward.
It is always a temptation to politicians to offer large and grandiose schemes with large and imposing benefits. One could perhaps apply to hon. Gentlemen opposite the remark which Oscar Wilde applied to himself—"I can resist anything except temptation." But I think it is essential to contemplate the reasons why we on this side of the House regard a scheme of moderate size as the right solution to this problem. The hon. Member for Coventry, East quoted from and referred to a booklet issued by the Institute of Actuaries and the Faculty of Actuaries. There is one sentence from that booklet which I should like to quote:It is a normal aim of Government not to tie the financial hands of its successors too closely, but there is real danger that with national pensions a rapidly expanding share of the future national income can—almost unknowingly—become committed.It is only too easy, when one is going forward with a scheme of this sort—and when it is a scheme of graduated pensions it is perhaps particularly susceptible to this—to promise improvements which will cost very little in the short run but which will pile up very heavy liabilities in the long run. It is painfully easy, because it costs so little at the beginning, and I am quite sure, whatever one may think of their own proposals, that the actuaries were right to warn us and the country of the dangers which lie behind too excessive an advance of this kind.
It is only too easy to expand a scheme, but once a scheme has been put into an Act of Parliament, once it has been enacted and once people have designed their own lives and habits in relation to it, it is completely impossible to cut it down. I suggest to the House that the right thing to do, when we are going forward with this great change and this not 941 inconsiderable experiment, is to err, if we must err, on the side of moderation. My hon. Friend the Member for Horsham (Mr. Gough) reminded us that the machinery we are setting up is new and untried. I suggest that, starting in that way, the modest dimensions of this Bill are the right ones, at any rate at the beginning.
I will not trouble the House at this hour with the clash of social philosophies involved. I know that people on this side of the House hold the view as sincerely as hon. Members opposite hold their view, that it is not right for the power of the State to be used to compel people to make provision for their old age over and above the moderate levels which general opinion in civilised countries regards as suitable and right. Therefore, we rest our case on this Bill. We shall rest our case on it in the debates which the hon. Gentleman has warned us will take place in the country. We rest our case on the
§ view that this step forward is large enough, that it will provide a new system, perhaps a new basis as the years pass, for further advance, but that it would be wrong to promise now, with pledges given in directions not completely charted, the undertaking of burdens and the undertaking of liabilities which cannot be precisely calculated.
I am not sorry that hon. Members opposite have decided, as they have, to vote against this Bill. That will leave us as the years pass with the credit for it, and it leaves us with the reflection
Quem deus vult perdere prius dementat
When Providence decided to destroy the Labour Party, it gave it its present leadership.
§ Question put, That the Bill be now read the Third time:—
§ The House divided: Ayes 309, Noes 248.945
|Division No. 123.]||AYES||[9.59 p.m.|
|Agnew, Sir Peter||Butcher, Sir Herbert||Galbraith, Hon. T. G. D.|
|Aitken, W. T.||Butler, Rt.Hn.R.A.(Saffron Walden)||Gammans, Lady|
|Allan, R. A. (Paddington, S.)||Campbell, Sir David||Garner-Evans, E. H.|
|Alport, C. J. M.||Carr, Robert||George, J. C. (Pollok)|
|Amery, Julian (Preston, N.)||Cary, Sir Robert||Gibson-Watt, D.|
|Amory, Rt. Hn. Heathcoat(Tiverton)||Channon, H. P. G.||Glover, D.|
|Anstruther-Gray, Major Sir William||Chichester-Clark, R.||Glyn, Col. Richard H.|
|Arbuthnot, John||Clarke, Brig, Terence (Portsmth, W.)||Godber, J. B.|
|Armstrong, C. W.||Cole, Norman||Goodhart, Philip|
|Ashton, H.||Conant, Maj. Sir Roger||Gough, C. F. H.|
|Astor, Hon. J. J.||Cooke, Robert||Gower, H. R.|
|Atkins, H. E.||Cooper, A. E.||Graham, Sir Fergus|
|Baldock, Lt.-Cmdr. J. M.||Cooper-Key, E. M.||Grant, Rt. Hon. W. (Woodside)|
|Baldwin, Sir Archer||Cordeaux, Lt.-Col. J. K.||Grant-Ferris, Wg Cdr. R. (Nantwich)|
|Balniel, Lord||Corfield, F. V.||Green, A.|
|Banks, Col. C.||Craddock, Beresford (Spelthorne)||Gresham Cooke, R.|
|Barber, Anthony||Crosthwaite-Eyre, Col. O. E.||Grimston, Hon. John (St. Albans)|
|Barlow, Sir John||Crowder, Sir John (Finchley)||Grimston, Sir Robert (Westbury)|
|Barter, John||Crowder, Petre (Ruislip—Northwood)||Grosvenor, Lt.-Col. R. G.|
|Batsford, Brian||Cunningham, Knox||Gurden, Harold|
|Baxter, Sir Beverley||Currie, G. B. H.||Hall, John (Wycombe)|
|Beamish, Col. Tufton||Dance, J. C. G.||Harris, Frederic (Croydon, N. W.)|
|Bell, Philip (Bolton, E.)||Davidson, Viscountess||Harris, Reader (Heston)|
|Bell, Ronald (Bucks, S.)||D'Avigdor-Goldsmid, Sir Henry||Harrison, A. B. C. (Malden)|
|Bennett, F. M. (Torquay)||Deedes, W. F.||Harrison, Col. J. H. (Eye)|
|Bennett, Dr. Reginald||de Ferranti, Basil||Harvey, Sir Arthur Vere (Macclesf'd)|
|Bidgood, J. C.||Dodds-Parker, A. D.||Harvey, John (Walthamstow, E.)|
|Biggs-Davison, J. A.||Donaldson, Cmdr. C. E. McA.||Harvie-Watt, Sir George|
|Bingham, R. M.||Doughty, C. J. A.||Hay, John|
|Birch, Rt. Hon. Nigel||du Cann, E. D. L.||Head, Rt. Hon. A. H.|
|Bishop, F. P.||Duncan, Sir James||Heald, Rt. Hon. Sir Lionel|
|Black, Sir Cyril||Duthie, W. S.||Heath, Rt. Hon. E. R. G.|
|Body, R. F.||Eccles, Rt. Hon, Sir David||Henderson, John (Cathcart)|
|Bossom, Sir Alfred||Eden, J. B. (Bournemouth, West)||Henderson-Stewart, Sir James|
|Boyd-Carpenter, Rt. Hon. J. A.||Emmet, Hon. Mrs. Evelyn||Hesketh, R. F.|
|Boyle, Sir Edward||Errington, Sir Erie||Hicks-Beach, Maj. W. W.|
|Braine, B. R.||Erroll, F. J.||Hill, Mrs. E. (Wythenshawe)|
|Braithwalte, Sir Albert (Harrow, W.)||Farey-Jones, F. W.||Hill, John (S. Norfolk)|
|Brewis, John||Fell, A.||Hinchingbrooke, Viscount|
|Bromley-Davenport, Lt.-Col. W. H.||Finlay, Graeme||Hirst, Geoffrey|
|Brooke, Rt. Hon. Henry||Fisher, Nigel||Hobson,John(Warwick & Leam'gt'n)|
|Brooman-White, R. C.||Fletcher-Cooke, C.||Holland-Martin, C. J.|
|Browne, J. Nixon (Craigton)||Forrest, G.||Hope, Lord John|
|Bryan, P.||Foster, John||Hornby, R. P.|
|Bullus, Wing Commander E. E.||Fraser, Hon. Hugh (Stone)||Hornsby-Smith, Miss M. P.|
|Burden, F. F. A.||Freeth, Denzil||Horobin, Sir Ian|
|Horsbrugh, Rt. Hon. Dame Florence||Maitland, Cdr. J. F. W.(Horncastle)||Russell, R. S.|
|Howard, Gerald (Cambridgeshire)||Maitland, Hon. Patrick (Lanark)||Sandys, Rt. Hon. D.|
|Howard, Hon. Greville (St. Ives)||Manningham-Buller, Rt. Hn. Sir R.||Scott-Miller, Cmdr. R.|
|Howard, John (Test)||Markham, Major Sir Frank||Sharples, R. C.|
|Hudson, W. R. A. (Hull, N.)||Marlowe, A. A. H.||Shepherd, William|
|Hughes Hallett, Vice-Admiral J.||Marples, Rt. Hon A. E.||Simon, J. E. S. (Middlesbrough, W.)|
|Hughes-Young, M. H. C.||Marshall, Douglas||Smithers, Peter (Winchester)|
|Hulbert, Sir Norman||Mathew, R.||Smyth, Brig. Sir John (Norwood)|
|Hurd, Sir Anthony||Maudling, Rt. Hon. R.||Soames, Rt. Hon. Christopher|
|Hutchison, Michael Clark(E'b'gh,S.)||Mawby, R. L.||Spearman, Sir Alexander|
|Hyde, Montgomery||Maydon, Lt.-Comdr, S. L. C.||Speir, R. M.|
|Hylton-Foster, Rt. Hon. Sir Harry||Medlicott, Sir Frank||Spence, H. R. (Aberdeen, W.)|
|Iremonger, T. L.||Molson, Rt. Hon. Hugh||Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)|
|Irvine, Bryant Godman (Rye)||Moore, Sir Thomas||Stanley, Capt. Hon. Richard|
|Jenkins, Robert (Dulwich)||Morrison, John (Salisbury)||Stevens, Geoffrey|
|Jennings, J. C. (Burton)||Mott-Radclffye, Sir Charles||Steward, Harold (Stockport, S.)|
|Jennings, Sir Roland (Hallam)||Nabarro, G. D. N.||Steward, Sir William (Woolwich, W.)|
|Johnson, Eric (Blackley)||Nairn, D. L. S.||Stoddart-Scott, Col. Sir Malooim|
|Johnson, Howard (Kemptown)||Neave, Airey||Storey, S.|
|Jones, Rt. Hon. Aubrey (Hall Green)||Nichols, Harmer||Stuart, Rt. Hon. James (Moray)|
|Joseph, Sir Keith||Nicholson, Sir Godfrey (Farnham)||Studholme, Sir Henry|
|Kaberry, D.||Nicolson, N. (B'n'm'th, E. & Chr'ch)||Summers, Sir Spencer|
|Keegan, D.||Noble, Comdr. Rt. Hon. Allan||Sumner, W. D. M. (Orpington)|
|Kerby, Capt. H. B.||Noble, Michael (Argyll)||Taylor, Sir Charles (Eastbourne)|
|Kerr, Sir Hamilton||Nugent, Richard||Taylor, William (Bradford, N.)|
|Kershaw, J. A.||Oakshott, H. D.||Teeling, W.|
|Kimball, M.||O'Neill, Hn. Phelim (Co. Antrim, N.)||Temple, John M.|
|Kirk, P. M.||Orr, Capt. L. P. S.||Thomas, Leslie (Canterbury)|
|Lagden, G. W.||Orr-Ewing, C. Ian (Hendon, N.)||Thomas, P. J. M. (Conway)|
|Lambton, Viscount||Osborne, C.||Thompson, Kenneth (Walton)|
|Lancaster, Col. C. G.||Page, R. G.||Thorneycroft, Rt. Hon. P.|
|Leather, E. H. C.||Pannell, N. A. (Kirkdale)||Thornton-Kemsiey, Sir Colin|
|Leavey, J. A.||Partridge, E.||Tiley, A. (Bradford, W.)|
|Leburn, W. G.||Peel, W. J.||Tilney, John (Wavertree)|
|Legge-Bourke, Maj. E. A. H.||Peyton, J. W. W.||Turner, H. F. L.|
|Lennox-Boyd, Rt. Hon. A. T.||Pike, Miss Mervyn||Turton, Rt. Hon. R. H.|
|Lindsay, Hon. James (Devon, N.)||Pilkington, Capt. R. A.||Tweedsmuir, Lady|
|Lindsay, Martin (Solihull)||Pitman, I. J.||Vane, W. M. F.|
|Linstead, Sir H. N.||Pitt, Miss E. M.||Vaughan-Morgan, J. K.|
|Llewellyn, D. T.||Pott, H. P.||Vickers, Miss Jean|
|Lloyd, Rt. Hon. C. (Sutton Coldfield)||Powell, J. Enoch||Vosper, Rt Hon. D. F.|
|Lloyd, Maj. Sir Guy (Renfrew, E.)||Price, David (Eastleigh)||Wakefield, Sir Wavell (St. M'lebone)|
|Longden, Gilbert||Price, Henry (Lewisham, W.)||Walker-Smith, Rt. Hon. Derek|
|Loveys, Walter H.||Profumo, J. D.||Wall, Patrick|
|Lucas, Sir Jocelyn (Portsmouth, S.)||Ramsden, J. E.||Ward, Rt. Hon. G. R. (Worcester)|
|Lucas, P. B. (Brentford & Chiswick)||Rawlinson, Peter||Ward, Dame Irene (Tynemouth)|
|Lucas-Tooth, Sir Hugh||Redmayne, M.||Webbe, Sir H.|
|McAdden, S. J.||Rees-Davies, W. R.||Webster, David|
|Macdonald, Sir Peter||Remnant, Hon. P.||Whitelaw, W. S. I.|
|Mackeson, Brig. Sir Harry||Renton, D. L. M.||Williams, Paul (Sunderland, S.)|
|McLaughlin, Mrs. P.||Ridsdale, J. E.||Williams, R. Dudley (Exeter)|
|Maclean, Sir Fitzroy (Lancaster)||Rippon, A. G. F.||Wills, Sir Gerald (Bridgwater)|
|McLean, Neil (Inverness)||Roberts, Sir Peter (Healey)||Wilson, Geoffrey (Truro)|
|Macleod, Rt. Hn. Iain (Enfield, W.)||Robinson, Sir Roland (Blackpool, S.)||Wolrige-Gordon, Patrick|
|MacLeod, John (Ross & Cromarty)||Robson Brown, Sir William||Woollam, John Victor|
|McMaster, Stanley||Rodgers, John (Sevenoaks)|
|Macmillan, Maurice (Halifax)||Roper, Sir Harold||TELLERS FOR THE AYES:|
|Macpherson, Niall (Dumfries)||Ropner, Col. Sir Leonard||Mr. Legh and Mr. E. Wakefield.|
|Abse, Leo||Bowles, F. G.||Darling, George (Hillsborough)|
|Ainsley, J. W.||Boyd, T. C.||Davies, Ernest (Enfield, E.)|
|Albu, A. H.||Braddock, Mrs. Elizabeth||Davies, Harold (Leek)|
|Allaun, Frank (Salford, E.)||Brockway, A. F.||Davies, Stephen (Merthyr)|
|Allen, Arthur (Bosworth)||Broughton, Dr. A. D. D.||Deer, G.|
|Allen, Scholefield (Crewe)||Brown, Rt. Hon. George (Belper)||Delargy, H. J.|
|Awbery, S. S.||Brown, Thomas (Ince)||Diamond, John|
|Bacon, Miss Alice||Burke, W. A.||Dodds, N. N.|
|Baird, J.||Burton, Miss F. E.||Donnelly, D. L.|
|Balfour, A.||Butler, Herbert (Hackney, C.)||Ede, Rt. Hon. J. C.|
|Bellenger, Rt. Hon. F. J.||Butler, Mrs. Joyce (Wood Green)||Edelman, M.|
|Bence, C. R. (Dunbartonshire, E.)||Callaghan, L. J.||Edwards, Rt. Hon. Ness (Caerphilly)|
|Benn, Hn. Wedgwood (Bristol, S.E.)||Carmichael, J.||Edwards, Robert (Bilston)|
|Benson, Sir George||Castle, Mrs. B. A.|
|Beswick, Frank||Champion, A. J.||Edwards, W. J. (Stepney)|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Chapman, W. D.||Evans, Albert (Islington, S.W.)|
|Blackburn, F.||Chetwynd, G. R.||Finch, H. J. (Bedwellty)|
|Blenkinsop, A.||Clunie, J.||Fitch, A. E. (Wigan)|
|Blyton, W. R.||Coldrick, W.||Fletcher, Eric|
|Boardman, H.||Collick, P. H. (Birkenhead)||Foot, D. M.|
|Bonham Carter, Mark||Corbet, Mrs. Freda||Forman, J. C.|
|Bottomley, Rt. Hon. A. G.||Crossman, R. H. S.||Fraser, Thomas (Hamilton)|
|Bowden, H. W. (Leicester, S.W.)||Cullen, Mrs. A.||George,Lady Megan Lloyd(Car'then)|
|Bowen, E. R. (Cardigan)||Dalton, Rt. Hon. H.||Gibson, C. W.|
|Gordon Walker, Rt. Hon. P. C.||MacColl, J. E.||Royle, C.|
|Greenwood, Anthony||MacDermot, Niall||Shinwell, Rt. Hon. E.|
|Grenfell, Rt. Hon. D. R.||Mcinnes, J.||Short, E. W.|
|Grey, C. F.||McKay, John (Wallsend)||Silverman, Julius (Aston)|
|Griffiths, David (Rother Valley)||McLeavy, Frank||Silverman, Sydney (Nelson)|
|Griffiths, Rt. Hon. James (Llanelly)||MacMillan, M. K. (Western Isles)||Simmons, C. J. (Brierley Hill)|
|Griffiths, William (Exchange)||MacPherson, Malcolm (Stirling)||Skeffington, A. M.|
|Grimond, J.||Mahon, Simon||Slater, Mrs. H. (Stoke, N.)|
|Hale, Leslie||Mallalieu, E. L. (Brigg)||Slater, J. (Sedgefield)|
|Hall, Rt. Hn. Glenvil (Colne Valley)||Mallalieu, J. P. W. (Huddersfd, E.)||Smith, Ellis (Stoke, S.)|
|Hamilton, W. W.||Mann, Mrs. Jean||Snow, J. W.|
|Hannan, W.||Marquand, Rt. Hon. H. A.||Sorensen, R. W.|
|Hastings, S.||Mayhew, C. P.||Soskice, Rt. Hon. Sir Frank|
|Hayman, F. H.||Mellish, R. J.||Sparks, J. A.|
|Healey, Denis||Messer, Sir F.||Spriggs, Leslie|
|Henderson, Rt. Hn. A. (Rwly Regis)||Mikardo, Ian||Steele, T.|
|Herbison, Miss M.||Moody, A. S.||Stewart, Michael (Fulham)|
|Hewitson, Capt. M.||Morris, Percy (Swansea, W.)||Stonehouse, John|
|Hilton, A. V.||Morrison,Rt.Hn.Herbert(Lewis'm,S.)||Stones, W. (Consett)|
|Hobson, C. R. (Keighley)||Mort, D. L.||Strachey, Rt. Hon. J.|
|Holman, P.||Moss, R.||Strauss, Rt. Hon. George (Vauxhall)|
|Holmes, Horace||Moyle, A.||Stross,Dr.Barnett(Stoke-on-Trent,C.)|
|Holt, A. F.||Mulley, F. W.||Summerskill, Rt. Hon. E.|
|Houghton, Douglas||Neal, Harold (Bolsover)||Swingler, S. T.|
|Howell, Charles (Perry Barr)||Noel-Baker, Francis (Swindon)||Sylvester, G. O.|
|Howell, Denis (All Saints)||Noel-Baker, Rt. Hon. P. (Derby, S.)||Taylor, Bernard (Mansfield)|
|Hoy, J. H.||O'Brien Sir Thomas||Taylor, John (West Lothian)|
|Hughes, Cledwyn (Anglesey)||Oliver, G. H.||Thomas, George (Cardiff)|
|Hughes, Emrys (S. Ayrshire)||Oram, A. E.||Thomas, Iorwerth (Rhondda, W.)|
|Hughes, Hector (Aberdeen, N.)||Oswald, T.||Thomson, George (Dundee, E.)|
|Hunter, A. E.||Owen, W. J.||Thornton, E.|
|Hynd, H. (Accrington)||Padley, W. E.||Timmons, J.|
|Hynd, J. B. (Attercliffe)||Paget, R. T.||Tomney, F.|
|Irvine, A. J. (Edge Hill)||Paling, Rt. Hon. W. (Dearne Valley)||Ungoed-Thomas, Sir Lynn|
|Irving, Sydney (Dartford)||Paling, Will T. (Dewsbury)||Usborne, H. C.|
|Isaacs, Rt. Hon. G. A.||Palmer, A. M. F.||Viant, S. P.|
|Jay, Rt. Hon. D. P. T.||Pargiter, G. A.||Wade, D. W.|
|Jeger, George (Goole)||Parker, J.||Warbey, W. N.|
|Jeger, Mrs. Lena(Holbn & St.Pncs,S.)||Parkin, B. T.||Watkins, T. E.|
|Jenkins, Roy (Stechford)||Paton, John||Weitzmann, D.|
|Johnson, James (Rugby)||Plummer, Sir Leslie||Wells, Percy (Faversham)|
|Jones, Rt. Hon. A. Creech(Wakefield)||Prentice, R. E.||Wells, William (Walsall, N.)|
|Jones, Elwyn (W. Ham, S.)||Price, J. T. (Westhoughton)||Wheeldon, W. E.|
|Jones, T. W. (Merioneth)||Price, Philips (Gloucestershire, W.)||White, Mrs. Eirene (E. Flint)|
|Kenyon, C.||Probert, A. R.||White, Henry (Derbyshire, N.E.)|
|Key, Rt. Hon. C. W.||Proctor, W. T.||Wigg, George|
|King, Dr. H. M.||Pursey, Comdr. H.||Wilkins, W. A.|
|Lawson, G. M.||Randall, H. E.||Willey, Frederick|
|Ledger, R. J.||Rankin, John||Williams, David (Neath)|
|Lee, Frederick (Newton)||Redhead, E. C.||Williams, Rev. Llywelyn (Ab'tillery)|
|Lee, Miss Jennie (Cannock)||Reeves, J.||Williams, Rt. Hon. T. (Don Valley)|
|Lever, Harold (Cheetham)||Reid, William||Williams, W. R. (Openshaw)|
|Lever, Leslie (Ardwick)||Reynolds, G. W.||Willis, Eustace (Edinburgh, E.)|
|Lewis, Arthur||Rhodes, H.||Wilson, Rt. Hon. Harold (Huyton)|
|Lindgren, G. S.||Robens, Rt. Hon. A.||Woof, R. E.|
|Lipton, Marcus||Roberts, Albert (Normanton)||Yates, V. (Ladywood)|
|Logan, D. G.||Roberts, Goronwy (Caernarvon)||Zilliacus, K.|
|Mabon, Dr. J. Dickson||Robinson, Kenneth (St. Pancras, N.)|
|McAlister, Mrs. Mary||Rogers, George (Kensington, N.)||TELLERS FOR THE NOES:|
|McCann, J.||Ross, William||Mr. Popplewell and Mr. Pearson.|
§ Bill accordingly read the Third time and passed.