§ 10.18 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Edith Pitt)
I beg to move,That the National Insurance (Earnings) Regulations, 1959, a draft of which was laid before this House on 4th March, be approved.The National Insurance (Earnings) Regulations, 1959, which the House now is being asked to approve, are draft Regulations and their purpose is to increase the amount which beneficiaries under the National Insurance Scheme can earn without any loss of benefit. The beneficiaries concerned are retirement pensioners and widow beneficiaries who are subject to the earnings rule. These Regulations are proposed under powers conferred by Section 2 of the National Insurance Act, 1956. Previously, any change in the earnings rule, as I think hon. Members will remember, would have needed legislation, but that Section of the 1956 Act gave the Minister regulation-making power to recommend alterations in the level of the earnings rule, although not to abolish the rule itself.
These Regulations are the first to be made under the power conferred in the 1956 Act. I think that all hon. Members will be familiar with the operation of the earnings rule, so I shall not take time covering the background, but explain what the Regulations set out to achieve. The present earnings rule in operation is, in the case of retirement pensioners and widowed pensioners, that any earnings above 50s. a week affect their benefit. The deduction becomes due on net earnings above 50s. a week. It operates on a sliding scale and 6d. in the 1s. is deducted over the next £1 of earnings.
For widowed mothers, the earnings rule begins to operate when earnings exceed 60s.. and, again, there is the sliding scale —6d. in the 1s. is deducted for earnings between 60s. and 80s.— —
§ Mr. Douglas Houghton (Sowerby)
Would the hon. Lady say whether it would be permissible to include in these Regulations provisions to remove entirely the limit on the earnings of the widowed mother?
§ Mr. R. J. Mellish (Bermondsey)
But would not that position be met if the figure mentioned here were at such a level that it would not be possible for any widowed mother to earn enough to be affected by it?
§ Miss Pitt
That is an ingenious idea, but, were it adopted, I only hope that the hon. Gentleman would have a fairly accurate picture of the likely earnings of all the widowed mothers he knows.
As hon. Members will be aware, the earnings rule applies only to male retirement pensioners under 70 years of age, and to women retirement pensioners under 65. If they retire and take their pension, within the age group of 65 to 70 for men and 60 to 65 for women they are affected by the rule. I sometimes think that there is not a sufficiently clear understanding in the country that the rule ceases to operate when a man reaches 70 or a woman reaches 65. By comparison with the total number of retirement pensioners, those affected by the rule are fairly limited in number. There are, at the moment, about 5¼ million retirement pensioners, and about 1¼ million are within the age group affected.
The rule applies only to the widowed mother's personal allowance. Whatever her earnings may be, no deductions are made from payments in respect of her children. Since I have been asked about the children's allowances, those paid in respect of the children of a widowed mother are 5s. higher than those for the children of any other beneficiary under National Insurance. They are 20s. for the first child, and 12s. for the second child and subsequent children, plus the family allowances.
I would also remind the House that the rule is applied only to net earnings, that is to say, the individual concerned may deduct from earnings any fares and any payments for overalls or the like. And the widowed mother may take from her gross earnings anything she may pay for the care of her children while she is at work.
547 These Regulations propose to raise the levels at which the rule begins to operate. The earnings level of the retirement pensioner and the widow is increased from 50s. to 60s., and the earnings level of the widowed mother is increased from 60s. to 80s. Above those two new figures, the 6d. in the 1s. will continue to operate over the next pound of earnings.
The Regulations have been considered by the National Insurance Advisory Committee, which advises my right hon. Friend on matters pertaining to our work. The Committee's Report has been laid before Parliament, and I imagine that hon. Members have copies before them. The reason for this proposed change is that the present earnings rule came into force on 30th July, 1956, and my right hon. Friend has frequently assured the House that he keeps this subject under constant review.
Since we last amended the rule, average full time earnings of men have increased by about 15 per cent., and of women by nearly 16 per cent. Hon. Members will, therefore, realise that the increase my right hon. Friend now proposes in the earnings which do not give rise to any deduction will more than make good any change in average earnings.
It is also relevant to remind the House that the National Insurance Bill proposes to improve increments for persons who postpone their retirement. That has some bearing on the earnings rule. I will not delay the House by detailing the proposed improvements on increments. We propose to bring those into operation in advance of the general provisions of the Bill. It is appropriate to point out that the National Insurance Advisory Committee, in considering these draft Regulations, said that the proposed alterations in increments reinforced the case for the relaxation of the earnings rule.
The Advisory Committee devoted special attention to the earnings rule which applied to the personal part of the widowed mother's allowance. It pointed out that the rule is already more favourable to the widowed mother than to other pensioners. The Regulations we now ask the House to approve will improve the favourable position of the widowed 548 mother, because her advantage is increased by raising the amount by 20s. instead of by 10s. in the case of the retirement pensioner.
If the Regulations are accepted, the widowed mother will be able to earn up to £4 net without any loss of benefit. Then the sliding scale will come into operation. The retirement pensioner and the widow pensioner will be able to earn up to £3 net before the earnings rule comes into operation, the next £1 again being subject to the sliding scale.
If the Regulations are approved—and they have to be approved by both Houses—we propose that they should come into effect on 20th April. That is the earliest date by which we can do the job, because of the administrative arrangements, including printing and distributing 3 million leaflets and 25,000 posters describing the change.
I hope that the House will be prepared to accept the Regulations, because they propose to effect a welcome easement of the earnings rule and they will benefit retirement pensioners, widows and widowed mothers.
§ 10.27 p.m.
§ Mr. H. A. Marquand (Middlesbrough, East)
As the hon. Lady has said, the number of persons affected by the proposed Regulations is comparatively small compared with the total number of persons affected by National Insurance. Nevertheless, the total numbers are large. The effect of the Regulations upon that large number of persons deserves the careful attention of the House. As the hour is late, I shall try to be as brief as possible.
The Report of the National Insurance Advisory Committee, which has been given to us with the draft Regulations, shows that both the British Employers' Confederation and the Trades Union Congress in general approved the draft Regulations. It is valuable to bear that in mind.
In doing that, both the British Employers' Confederation and the Trades Union Congress were necessarily thinking of National Insurance only as it exists today. They were concerned with the existing flat-rate benefits. Had they been concerned with some other form of insurance, such as national superannuation, their conclusion might have been different.
549 I wish to ask one question about the operation of the new rule upon retirement pensioners. How far will the proposed relaxation of the earnings rule be stultified by the operation of the rule that a person can be deemed to have retired if he works or intends to workonly occasionally or to an inconsiderable extent or otherwise in circumstances not inconsistent with retirement"?That is provided in Section 20 (2, a, ii) of the National Insurance Act, 1946. There is, then, not merely the earnings rule, but the earnings rule is part of the retirement conditions. Retirement is judged, in part, from the number of hours worked as well as by the amount of earnings made.
In a recent letter to my right hon. Friend the Leader of the Opposition, the private secretary to the Minister wrote as follows:The Commissioner has taken the general line that work can be regarded as 'inconsiderable' if it does not occupy more than 12 hours a week, but he has made it clear that in some circumstances a longer working week may, in fact, be consistent with retirement. In deciding whether or not a person is retired, the amount earned is not the decisive factor; it is the number of hours worked (or intended to be worked) which has to be taken into account.I think that those facts are sometimes overlooked in discussions about this matter.
The proposed Regulations now before us would make it possible for a retirement pensioner to earn up to 60s. in a week without forfeiting pension. If it also be true that he may not work more than 12 hours a week, it means that only those persons who are able to earn 5s. per hour will be able to earn 60s. a week. This is a fact which ought to be known. If I am mistaken, of course. I shall be happy to be corrected.
§ Miss Pitt
I am grateful to the right hon. Gentleman for giving way. Perhaps I might put him right before he becomes further involved in the point. He is confusing two quite separate issues. One is the retirement condition. It is true, there, that the Commissioner has laid down that one of the things to be taken into account in determining whether a person may be treated as retired is the number of hours worked. But the number of hours is not sacrosanct; it can vary, and, indeed, it is a matter of individual decision in each case. Each case is decided on its merits.
550 But once retirement has been accepted, then the person comes up against the earnings rule, if, in fact, he takes up employment and is earning, but there is no question of how many hours he works. The amount of earnings is the determining factor in the second condition of the earnings rule.
§ Mr. Marquand
As I understand, the hon. Lady's explanation is that they first have to be deemed to be retired. Then, as I understand, having read the letter which the right hon. Gentleman's secretary sent to my right hon. Friend, there can be instances in which a person already, under the existing provisions, was not allowed to earn up to the £2 10s. a week limit provided for under the existing Regulations because, to do so, at the rate of wage he was offered, he would have to work more than 12 hours.
I do seriously assure the hon. Lady that that does seem to arise from this correspondence. Perhaps I ought to have given her more notice about it, but it only came to my attention quite recently. Indeed, the letter is of recent date. She might like to consider that during the course of the discussion and perhaps reply again later. I raise it as a perfectly serious point. If I am mistaken, I shall be glad to be corrected. Whatever the position is, I think that retirement pensioners ought to be informed about it and the country ought to know.
I want to make only one other observation about this earnings rule. As the hon. Lady quite rightly reminded us, it affects a comparatively small number of persons, a comparatively small number of retirement pensioners between the ages of 65 and 70 for men and 60 and 65 for women. Among them, there must be many people who already are so incapacitated by age and the disabilities which frequently go with age that the question of their working could never arise. I do not suggest that it has been done tonight, but it would, therefore, be entirely mistaken if anyone drew the conclusion that a relaxation of the earnings rule had anything to do with the argument about the basic pension. It could never be a justification for saying that the basic pension was adequate.
I turn now to the earnings rule as it applies to widows and which the National Insurance Advisory Committee discussed at length in its memorandum. The 551 N.I.A.C. said that the widowed mother is in a special position and that the earnings limit proposed in the draft Regulations would enable her to receive her full allowance in addition to earnings from quite a substantial amount of work. The position in regard to her is, therefore, considerably different from what it is in regard to the retirement pensioner. There is no question of 12 hours' work a week or anything of that kind and the limit is a good deal higher than for the retirement pensioner.
The widowed mother can, if she is able to do so, make substantial additions to her earnings. Her position is also different, because she may draw the allowance much longer than the retirement pensioner does. If I remember rightly, she can go on drawing the widowed mother's allowance under the most recent legislation until her last-born child reaches the age of 18. Therefore, she may be drawing this allowance for a considerable time. All these things make her position quite different from that of the retirement pensioner and the same considerations do not exactly apply.
Obviously, therefore, there is here a strong case for relaxation of the earnings rule, even, perhaps—although, no doubt, we are not entitled to refer to it now except momentarily, in passing—a case for total abolition, provided, as comes out clearly in the Report of the N.I.A.C. —and, certainly, I feel strongly about this—that this will serve the main purpose of the allowance. A widowed mother's allowance is given not only because she is widowed, but because she is a mother. It is given to her to help her to maintain her children. The relaxation of the earnings rule, still more an abolition of the earnings rule, could only be justified on the ground that it will help her better to maintain her children than previously she was able to do.
In that connection, I am entitled to remind the House that no fewer than 52,000 widowed mothers are drawing National Assistance. That is the latest figure available, for December, 1958. It is still a substantial number. The National Assistance Board has told us that not all but the great majority of these 52,000 widows are widowed mothers who have large families, with 552 several young children. These are the mothers about whom we should be most anxious in considering this relaxation of the earnings rule. Will it help, will it hinder, or how will it affect these widowed mothers?
The National Insurance Advisory Committee, in the document which is before us, reminds us that these widowed mothers receive in respect of their children—I am thinking particularly of those with the large families of three, four, five or even more children, still of a young age—20s. a week for the first child and 12s. a week for each child after the firstplus, of course, the 10s. family allowance.
Twenty shillings for the first child and 22s. for each subsequent child is what these mothers receive to help them to look after their children. It is not uncommon for them to have four or five young children. I find such cases quite frequently in my constituency. Middlesbrough has a high birth-rate and considerable numbers of these large families. If the mother has four or five small children, some of them under school age, she must certainly—I think she should—remain at home to look after them and should not go out to work. If she remains at home she has to keep them on 20s. for the first child and on 22s. for the subsequent children.
All the figures of the Food Survey and the like show, as we were reminded the other day in another place, that 28s. a week is the average expenditure on food. If we discount that average somewhat and consider more precisely what it costs a week to keep a child, we cannot put the figure for food alone at anything less than these amounts of 20s. and 22s. All the other things that a child needs—I have said this many times before—such as clothing, shoes, soap and toothpaste, and all the other things that it ought to have, are not covered by the allowances.
This measure is no solution at all for that type of family, which is the family that most needs help. I beg my hon. Friends who wish to say something more about the further relaxation or possible abolition of the earnings rule—and there may be a lot to be said for it—not to forget that it is these children and these widowed mothers with the large families which a relaxation or abolition of the rule will not help at all. Indeed, it might 553 possibly tempt such mothers to neglect their children. If they are doing their duty it will not help them at all.
I beg hon. Members, the National Council of Women, Parliament and the country not to forget these widowed mothers and their children.
§ 10.42 p.m.
§ Sir Spencer Summers (Aylesbury)
I am sure that many thousands, if not millions, of people in the country will greatly welcome the increase in the amount of earnings which may be received during retirement without prejudicing the pension which they draw. Indeed, in my experience there are very large numbers of people who cannot understand why there is any limit at all. I have never been convinced of that, and I am an unashamed supporter of a genuine test of retirement.
First, I wish to welcome the opportunity that was taken by the right hon. Member for Middlesbrough, East (Mr. Marquand) to ask for further elucidation on the effect of the number of hours worked in addition to the amount of money earned. I confess that even after my hon. Friend the Parliamentary Secretary, who is always so lucid in these matters, has intervened I stilt feel a little puzzled. In case there may be others who are equally puzzled, I would ask her to refer to the point again.
I understood my hon. Friend to say that when a person reached retirement age and was entitled to draw his retirement pension there was an unspecified period during which the number of hours which he worked was at least a primary consideration in determining whether he had, in fact, retired or not. When that period had ended, and it was established that he had retired, he could earn up to the earnings limit irrespective of the number of hours.
I understand that that is a fair description of the position. But those who want to take advantage of the Regulations as they stand ought to know for how long they will be limited to 12 hours before they can safely assume that they are deemed to be retired and need not consider the number of hours which they work but only the amount of money which they earn. I think that further elucidation is needed in discovering how long the hours test is necessary before 554 only the money test becomes relevant and overriding in its implications.
When the Minister announced his intention to submit to the National Insurance Advisory Committee recommendations for increases in the amount of money people could earn without prejudicing their pensions, I said at the time that I was disappointed that he had not found it possible to increase the amount By more than 10s. for the retired man and the widow and 20s. for the widowed mother.
Although it sounds, on the face of it, a convincing argument to say that if wages have gone up 15 per cent. or 16 per cent. and the amount of money people can earn without prejudice has gone up to, say. 20 per cent. they are more than doing justice to the new situation, I do not believe that that is a proper way to consider the matter. If only, say, 20 per cent. of the increase in earnings is allowed to be retained without prejudice there will inevitably be a wider and wider gap between current wages while at work and the average amount of money people can earn without prejudice to their pensions.
We have learned that the average wage has gone up by, I think, about 30s. since the earnings limits were fixed in 1956 and that a person can earn another 10s. without prejudice. The gap between wages and earnings without prejudice has increased by £1 since 1956. I would have thought that a fair test to take, where a man has retired and ought to be allowed to draw his retirement pension, even if it is subsidised to some extent, is the relationship between earnings without prejudice to the wages of the day. The further these two calculations go apart the worse is the relationship between them.
That brings me to another point which I should like to take this opportunity of referring to. If it is a reasonable thing to say that a person should be allowed to earn a sum of money reasonably related to but not too near the current earnings, and consideration is given, at the same time, to the entirely new situation which is to come about where graduated pensions are the order of the day—I fancy that was what the right hon. Gentleman the Member for Middlesbrough, East was referring to—then it seems to me only reasonable to say that the graduated principle shall be extended 555 to the earnings without prejudice to pension.
Another way of expressing that is to say that it should be reasonable for a person to earn without prejudice a certain percentage of what was deemed to be his normal wages while at work. It would not be impossible at all to calculate what should be the sum which each person, when he decided to retire, should have as the criterion of his working wage. I quote no figures, but a reasonable percentage would be that which he could earn subsequently without prejudice and still be deemed to be retired. Obviously, the effect of this idea cannot be given at this stage, but it is a question which affects many people and is one in which so many take an interest. Indeed, there are many more hon. Members here now than we usually have when matters of this kind are discussed.
I hope that when the overall conditions have sufficiently changed, either because the average wages have again gone up substantially, or because the graduated pension principle has been introduced, consideration will be given to what, I think, is probably an entirely new principle, that the test of retirement should not be a universal one applicable to everyone irrespective of working wage but related to the individual working wage, with a certain percentage allowed, and the pensioner still deemed to be retired.
§ 10.50 p.m.
§ Mrs. Eirene White (Flint, East)
I should like to say a few words about the earnings rule for widowed mothers. I recognise that, as we are dealing with a draft Statutory Instrument, we cannot go into a subject which requires legislation, that is to say, we cannot discuss at any length tonight the desirability of complete abolition of the earnings rule where it concerns widowed mothers, although I would favour that. The Report supplied by the National Insurance Advisory Committees makes the point that it was not within the Committee's terms of reference to consider total abolition. It could consider only, within the limits, the extent to which special consideration should be given to widowed mothers.
It is quite true that the widowed mother is dealt with somewhat more generously than the other classes of bene- 556 ficiaries, but it seems to many of us that she is still in an unfavourable position. I have some information which probably other hon. Members have had supplied to them by the National Council of Women, which is very much concerned with this matter. This is a non-party organisation of long standing, with representatives in many parts of the country. I have the honour to be its Welsh president.
The organisation feels very strongly that the limitation, even under the Regulations which we are discussing tonight, still bear unnecessarily harshly on the woman who has to act the part of breadwinner owing to the death of her husband and bring up her children. The Council has made inquiries which show that of the sample it took 36 per cent. of the widowed mothers concerned were in full-time work, 51 per cent. were in part-time work and rather more than 12 per cent. were not gainfully employed. Much the higher proportion of them, therefore, were working and just over a third of them were earning £3 a week or less, and of those about one-third were on National Assistance. It will be recognised that £3 has hitherto been the limit beyond which deductions were made.
When questioned, a number of those earning £3 a week remarked in some such terms as, "I cannot see that it is worth while to earn any more. It is no good trying, with the earnings rule. I had two offers of cost-of-living increases, but because I am a widow I was unable to accept them. I would work harder if I did not know that the money would be taken off my wages." These remarks were made by the third who were earning £3 or less, but two-thirds were earning more than £3, and the average earned income was £5 14s. If the allowances for expenses and the children's allowances are also taken into account the average income comes to £7 18s.
Two points arise from this. First, if the average income of £7 14s. is compared with the average national earnings of men, which are now rather more than £13 a week, it will be appreciated that even when all the allowances and earnings are taken into account there is a large gap between what the family of a widowed mother has to live on and the average earnings of a family in which a man is the main breadwinner. Even if one deducts 557 the cost of supporting the man himself, there is still a gap between what the family of the widowed mother has to live on and the average earnings for families where men are the main support.
Furthermore, the average income without the allowance, that is, the income subject to the earnings rule, even with the present addition to the limit before deductions take place, still leaves some gap. Therefore, even if one is not arguing for total abolition, one can still say that the proposed limit under these Regulations is still not high enough.
Some of us take this attitude because we believe that there is a fundamental difference between the position of the retired person and that of the widowed mother, that the social requirements in the two instances are totally different, and that the considerations which might be thought to apply to the one do not apply to the other.
The Advisory Committee seems to have come to a curious conclusion. In paragraph 7 of this Report, it saidIf, however, the amount of earnings to be disregarded were further increased, many widows would be able to draw the allowance in addition to earnings from virtually full-time work and we think this would be inconsistent with the purpose of the benefit.One then has to ask what is the purpose of the benefit. If it is to enable the widow with children to bring up her family in some comfort, without having to go out to work at all, then, as my right hon. Friend suggested, the allowances for the widow and the children should be very much higher.
With the present allowances, it is quite unjustifiable to suggest that the purpose of the benefit is to enable the widowed mother in all circumstances simply to sit back and say, "There is no need to go out to work, because these allowances are generous and ample and my children can have a fair chance in life and I can devote myself exclusively to the home." We cannot, with justification, say that the allowances for the widow herself and for the children are of such dimensions that one can argue in that way.
Furthermore, the great majority of people in this country, certainly the widows concerned, would regard part of the purpose of the benefit at least to be compensation for the loss of the main 558 breadwinner in the family, believing that that should be taken into account and that these widows should not be penalised if, in addition to that, they feel it possible and desirable, recognising their duty to their children, to add something to the family income. At present, even with the proposed increase, the widowed mother is penalised if she tries to improve her family position beyond the barest minimum.
I know that some of my hon. Friends wish to speak on this matter, and I will, therefore, not go further into it. It is a subject about which I feel very strongly and I very much hope that this whole question of the widowed mother will be still further considered. It is something on which the women's organisations feel extremely strongly, and I am certain that they will not give up the struggle to have the position radically changed.
§ 11.0 p.m.
§ Sir James Duncan (South Angus)
I am not an expert on this question, but if has been raised in my constituency on many occasions. Perhaps we are a bit old-fashioned in the deep rural areas. We have never really accepted a retirement pension as opposed to the old-age pension. It has not been easy to explain the difference between the old-age pension, which, in the past, people have been used to receiving as a right at a certain age, and the new retirement pension, which depends on retirement.
To the extent that these Regulations improve the rate of earnings I welcome it, but the sort of thing that happens in the country among the older men is that they go out to work in the summer and do specialised jobs. Some of them are experts, at thatching, blacksmiths' work, or helping out in the harvest fields. They do not work all the year, and it is extremely difficult to explain to them that the new system is based on weekly earnings. They say, "Why not base it on yearly earnings?"
Suppose that under the new dispensation a man were allowed to earn up to £150 a year before any deduction for pension were made. What is wrong with that? I have never been able to give a satisfactory answer, except that this is a great national scheme, worked out mainly for weekly wage earners.
559 I would ask the Parliamentary Secretary to ask the National Advisory Committee to consider whether it could be worked out on a yearly or six-monthly basis for these older men who help the farmers in the summer months. Otherwise, these old gentlemen will not work. They will say, "I am not going to work if I am to have my pension docked. I will sit at home." If it could be arranged that they would not have their pension reduced or taken away during the period they were working it would be of great assistance to the countryside.
§ 11.4 p.m.
§ Mrs. Lena Jeger (Holborn and St. Pancras, South)
I shall be referring to the Regulation dealing with the widowed mother's earnings allowance. The only proper thing to do with this allowance is to abolish it altogether, but I recognise the limitations of the rules of order, and the necessity for legislation that this would involve.
I am sure that the whole country would welcome a very great stepping-up in the sum. I do not think that there would be any public objection if it were lifted to £20 or £25 a week. What is the Minister doing by raising it from £3 to £4? Absolutely nothing, in practice. I asked the Minister in November, 1958, what amount the £3 earnings limit for widowed mothers would need to be raised to be equivalent in purchasing power to the £3 at the time it was introduced. The reply I got was, "Just under £4." The only contribution that he is making tonight is to keep pace with the rising cost of living, which has been a characteristic of life for all our people under a Tory Government.
Our difficulty when considering the earnings rule is that there are about 117,000 widowed mothers; about 22,000 of them have been having their allowances reduced under the £3 rule, and 1,500 have had the allowances completely extinguished. I was told, in answer to another Question, that it would cost £2 million to abolish the earnings limit altogether. I am wondering whether the Minister can tell us how much the present proposals cost. We are now getting into the realm of chicken feed. The time has long since passed when we could have swept the whole thing away, or made the limit so high that no hardship would have been involved.
560 This situation seems to me to be the result of a failure to make up our minds whether these widowed mothers' allowances are given as of right, as part of the insurance scheme, or are more of a social service. It seems to me that a widowed mother whose husband had a full contribution record should be entitled, as of right, to her pension. There is a suggestion that her place is at home with her children. My view is that we should do all we can to give her complete freedom of choice in this matter.
Many widows find great comfort in being at home with their children, if they can possibly make both ends meet, but there are others whose children are of school age, and have their mid-day meals at school, to whom it is a greater comfort and help to go out to work. One of the worst results of the personal disaster of losing one's husband is the sense of isolation and loneliness that one feels. I know what a tremendous help work has been in coming back to life and getting over this loss. I feel that it is no help, however kind the intention, to discourage a widow from going out to work.
Before the law, we are told, all men are equal, but before the law all widows are very different. We are discussing the earnings rule tonight, but that limit applies only to certain widows. Whether or not it applies depends simply and solely on the way a woman's husband dies. It is a law which has no logic and no social justice behind it. If a woman's husband is killed in war she gets her full pension, as of right, and there is no earnings rule and no deductions. If he is killed in a road accident the earnings rule applies immediately. If the husband dies from an industrial disease or accident the earnings rule does not apply, and the widow gets her pension as of right, and if he dies of pneumoconiosis there is no earnings rule; but if he dies of pneumonia there is.
I submit that the result of the earnings rule which the Minister has asked us to consider tonight is to maintain this absurd classification of widows, which anyone with any common sense must accept as unjust. I can illustrate the difficulty from the case of a constituent whose husband died recently from a fall 561 at work. This was reported as an industrial accident and there was no earnings rule. The firm is seeking to prove that he died because he was an epileptic and fell, and that he would have died in any event. If it is decided that this man died of a brain disease and not of the injury from the fall at work, the widow immediately will become subject to the earnings rule which we are discussing. I submit that we need an answer to these anomalies. I find it impossible to give an answer to widows who put these questions to me.
Another difficulty which arises from the earnings rule is the fact that, unintentionally, I believe, the Minister is forcing women to work harder and longer than they should. As I have said, in some circumstances it may be a help for the mother to go out to work, but I think that we all want her work to be arranged so that she can be home when the children return from school, and she should not have to work long hours and arrive home too exhausted to care for them. The earnings rule has the effect of making a woman who wants to have sufficient income to maintain her children's standard of living work longer hours in order to overtake the loss of the £2 10s. of which the Government deprive her.
As I understand the situation, under the Regulations as they existed until tonight a widowed mother with two children who was earning nothing would have an income of £4 10s. a week. If she went out to work and earned £3 a week, under the present rule she could have a gross income of £7 10s., but if she were hard up and had the chance of overtime or an extra job, and if she earned another £2, making £5 that week, she would take home only 10s. of the extra £2 which she had earned. To raise her income from £7 10s. to £8 a week she would have to earn an extra £2. I do not think that it is the intention of Parliament or of successive Ministers of Pensions and National Insurance that such a situation should arise.
I hope that the Minister will help me with the figures when he winds up the debate, but my impression is that even with these changes it would be immaterial whether a woman earned £5, £6 or £7 a week; she would have the same income. Because of the impact of the rule, her income would remain stationary.
562 I am sure that many hon. Members have received letters from constituents on this subject, and I am glad that many of these women are becoming more articulate, because they have suffered too silently for too long. I should like to read an extract from a typical letter—one of many which I have received. This widow has written:I have for years felt a grievance that we widows are penalised for going out to work instead of asking for National Assistance. I have been a widow for six years. I went out to work immediately after the death of my husband. Immediately money is taken off my pension and there are these deductions. If I were a lazy woman I could sit back, keep the £2 10s. and also apply for further Government money in the form of National Assistance. Surely if we have courage enough to go out to work they should at least let us keep what we earn.
§ Mr. Houghton
Is the lady a widowed mother or a widow? There is no indication in the letter that she is a widowed mother.
§ Mrs. Jeger
To save the time of the House I have not read the whole of the letter. She is a widowed mother.
I should like to ask the Minister why he has decided on the figure of £4. Perhaps it is simply to keep the pension up to the purchasing power of the £3 which was introduced by my right hon. Friend the Member for Warrington (Dr. Summerskill) when she had responsibility for these matters. In any case, £4 seems a strange sum to have chosen in relation to earnings, as I will try to explain.
The average wage for a woman worker today is about £6 11s. a week; and there are many part-time jobs in which women can earn between £5 and £6 a week. Women who, before marriage, were secretaries, or had a similar qualification, can earn that amount without being away from their homes for a full day and I can see no virtue in having picked on £4 as the limit. At present, the widowed mother who is earning £6 is no better off than if she were earning £4.
§ Sir S. Summers
While the hon. Lady is on this point, I would say that they can earn a much larger proportion of the current average wage without prejudice to their pensions than can men without lessening their pensions.
§ Mrs. Jeger
That may be so, but we are dealing with a woman who has to be the breadwinner as well as a mother; 563 a woman who has to bring up a growing family. There may well be a mortgage on the home of which she and the children are very fond, and we must split the widowed mother completely from the retirement pensioner. She is in an entirely different category. There is no point at all in looking at the two together.
There is one other point which I should like to mention, and that is to ask the Minister how far is the payment of any bonus affected by the earnings rule. Not long ago I had a letter from a widowed mother who told me that her firm had given a Christmas bonus of £16 to its workers. Most of the women at this firm were married, and many had husbands in good jobs. All her married friends were working out what extra Christmas treat they could have; what luxuries this gift might buy.
But this widow thought not of those things, but of the desperate necessities which her £16 would bring at last for her family. Her rejoicing was soon cut short by a letter from the local office of the Ministry informing her that her bonus was equal to extra income of 6s. 2d. a week and that her allowance would be reduced accordingly. I do not think that the Minister would want the earnings rule to work in that way and I hope that he will take the opportunity tonight of saying something about this.
One other type of what one could call a hard luck case about which I need advice is that of the widowed mother who is not receiving the full amount. We are dealing with the maximum in these paltry allowances and the Minister takes the view that this is an insurance benefit related to contributions if there is any deficit in the late husband's contributions.
I am thinking of a widowed mother whose husband, while alive, was unwell for long periods; he then drifted off at times, and was not an ideal husband. He died, leaving her with two children. When the father's fund was checked, it was found that there were gaps in the stamps. This widowed mother, with two children, receives a total allowance from the Ministry of 25s. a week. Yet, when she goes out to work, the full earnings allowance, the £3 allowance, applies to her just as if she were receiving the full allowance.
564 I know that the Minister is not able, within the ambit of these Regulations, to deal fundamentally with what many of us consider to be a social injustice, but I hope that he will be able to say something tonight which will show that he is, at least, considering approaching the matter in a different way, in order to give some sort of justice to these women who have enough burden and responsibility already in bringing up fatherless children. I am sure that we all want to save them from the extra despair of poverty, yet that is what many of them are having to grapple with at present.
§ 11.21 p.m.
§ Mr. Denzil Freeth (Basingstoke)
I agree with the hon. Ladies the Members for Flint, East (Mrs. White) and for Holborn and St. Pancras, South (Mrs. L. Jeger) in saying that there is a very good case to be made for looking into the whole matter of widowhood and National Insurance benefits: whether, in this century, one wishes to go further along the line of merely looking upon the National Insurance benefit as being a temporary benefit to set the widow up again as an independent member of the community, able to look forward to making her own new life, or whether one wishes to try to give her compensation of a fairly permanent nature for the loss of her breadwinner.
Of course, the widowed mother's plight is much more serious because the children remain with her and may be very young. There is much to be said for the case which has been made out—were it in order to pursue it at length—for abolishing altogether the earnings limit for the widowed mother. Perhaps it may be possible, at some time, to debate this at greater length.
I feel that the hon. Lady the Member for Holborn and St. Pancras, South might have given my right hon. Friend a little more credit for increasing the maximum amount which may be earned, without deductions by a widowed mother by twice the amount of the increase in the case of the retired pensioner or the widow without children. At any rate, it is a step in the right direction that we should make a larger jump in her case. I hope that my right hon. Friend has listened to what has been said from the benches opposite and will listen to what I have to say, because I feel that there is a very good 565 case for looking once again at the whole matter of widowhood, and particularly at the position of the widowed mother.
We are now reaching the stage in the National Insurance scheme when we ought to consider what happens when the earnings limit has been reached. My right hon. Friend, in 1956, I think, introduced the principle that, instead of the total pension being immediately obliterated by earnings over the maximum, there should be a first 20s. in which, for every 1s. earned, only 6d. would be deducted. I cannot help thinking that it would have been very much better if we had pursued that method right up to the obliteration of the pension, that is to say, deducting only half the earnings from the pension instead of ever reaching the stage when the whole of the earnings were deducted from the pension in respect of any one shilling. I believe that the "black spot" where, for every 1s. earned, 1s. is deducted from the pension, whatever its merits may be in strict National insurance theory, appears as nothing but injustice to the earner or pensioner. That is a line of approach which we might well pursue in future years.
In congratulating my right hon. Friend for making this increase in the earnings limit, which, I believe, is at least due, I congratulate my hon. Friend the Joint Parliamentary Secretary, who introduced the Regulations tonight, on emphasising the words "net earnings." Only recently, I had before me the case of a widow who decided to use a room in her house to let as lodgings. When she first filled up her form stating what income she was earning, she foolishly, under a misapprehension, entered in the column not what might be called the net profit that she was making from the lodger, but the total amount that the lodger was paying her.
I am grateful to my hon. Friend for emphasising the word "net" concerning earnings. I hope that it will be the instruction of my right hon. Friend to his officers throughout the country that, in such cases as lodgings let by a widowed, or even retired, pensioner within the earnings-rule wage limits, a degree of sympathy shall be shown in computing what might be described as the net profit on any lodgings that may be let. Once again, I congratulate my right hon. 566 Friend and his Department on bringing forward the Regulations.
§ 11.27 p.m.
§ Mr. Douglas Houghton (Sowerby)
This is a perplexing problem and there can be two views about it. In general, I am in favour of the retention of the earnings rule. If we are to regard a retirement benefit as something a person gets and keeps in addition to anything he may earn, we must have a fresh approach to our social benefits. It could lead to a standard guaranteed benefit at an earlier retirement age, stepped up later, when the pensioner's capacity for earnings grew less, to a more adequate pension. That is the Cairncross proposal. There can be all sorts of variants.
The main purpose of social security benefits, however, is maintenance. Do not let us lose sight of that. During sickness, it is the maintenance of the family when the breadwinner is laid aside; during unemployment, it is the maintenance of the family when the breadwinner cannot find a job; in retirement, maintenance when a worker has finished normal working life; in widowhood, maintenance for the widow and her children; and for a widow without children, maintenance none the less. That is the purpose of social benefits, to replace earnings, whether by the beneficiary or by the husband. The real mischief is that we have allowed those benefits to fall below maintenance and are now looking round for ways and means of permitting supplementation of inadequate maintenance benefits by earnings and other means.
The Trades Union Congress has frequently been criticised for a kind of stick-in-the-mud attitude on the earnings rule question. It has been thought that the T.U.C. has been in favour of the maintenance of the earnings rule because it is afraid that retirement pensioners would be used by thoughtless or unscrupulous employers as a means of forcing down wages for those under retirement age. That is not the main reason. I doubt whether it is a reason at all.
The real reason is that the T.U.C. has stood steadfastly for retirement benefits adequate for reasonable maintenance without supplementation by National Assistance and without being forced to go out to work to live. The T.U.C. has held the view, and so do I, that 567 the more scope we give for the supplementation of retirement benefits by earnings the weaker the case for an adequate maintenance pension and the stronger the case for regarding National Assistance as the alternative supplementation to earnings if a retirement pensioner can no longer go out to work.
Let us have those issues clearly in mind. I am in favour of an adequate retirement pension on the Beveridge principle. We are now being told that that is more than the country can afford. That is why we hear so much about the earnings rule, because those who believe that the country cannot afford an adequate maintenance pension want to relax the earnings rule so that retirement pensioners can afford to live by going out to work to supplement their pension.
We are getting this social benefit question very badly mixed up just now. We are losing sight of our main social objectives. We do not know whether the retirement pension is supposed to maintain a person in retirement, whether it is a supplement to earnings, or anything very much about it. And yet the original aim was clearly stated in the Beveridge Report.
It was said by one hon. Member opposite—the people in his constituency may be old-fashioned—that he cannot get people to understand that the retirement pension today is different from the old-age pension of years ago. I admit that. But the old-age pension of years ago never rose above 10s. a person and Lord Beveridge rejected that as a principle Of social provision. He substituted the retirement pension, with the retirement condition, for the automatic pension of earlier days.
The old-age pension was completely inadequate. It always had to be supplemented by Public Assistance. It never pretended to be an adequate pension. What it pretended to do, I never knew. It was just a payment of 10s.
§ Mr. W. Griffiths (Manchester, Exchange)
Is my hon. Friend saying that now, or, indeed, since 1946, people have been able to live on the retirement pension without supplementation from the National Assistance Board?
§ Mr. Houghton
I am not going to reply to that question, Mr. Deputy-Speaker, because I think I explained in the course of my remarks what I felt had happened to the level of our social security benefits today. We are discussing the earnings rule in the spirit that we are this evening because it has become of more importance as the adequacy of the pension has fallen in relation to living costs today.
As I say, I am in favour of the retention of the earnings rule.
§ Sir S. Summers
May I try to get the hon. Gentleman to be a little more forthcoming still on this very important aspect of the subject under discussion? He said, as I understood him, that he wanted the earnings rule maintained lest people should be content with the present pension. Once the pension was, in his view, adequate, what would be his attitude to the earnings rule in relation to supplementary income derived in that way? Would he permit earnings without regard to limit if the retirement pension were adequate.
§ Mr. Houghton
No, I should be in favour of the retention of the rule as I am now. There would be a stronger case for its retention then than there is now. The strength of the case for an earnings rule is the strength of the case for an adequate pension. We are tending to regard the facility for supplementation by earnings as a substitute for an adequate basic pension. We are apparently quite complacent about those who cannot earn going to the National Assistance Board. That is why we have two sets of retirement pensioners, those who are able to supplement their pensions with earnings and those who have to go to the Board. In neither case is the pension by itself adequate, and the proof of that is in the National Assistance scale itself.
I believe that the earnings rule proposed in these Regulations should have gone higher in present circumstances. An increase from 50s. to 60s. is not enough. I should have liked to see it go 10s. more. That may be regarded as inconsistent with the theory which I have just expressed, but we have to deal with the facts as they are, and the problem is how to harmonise for the time being the two purposes of an adequate retirement pension and reasonable facilities for those who have not got an adequate retirement pension to supplement it by earnings.
569 In a Committee upstairs we have been discussing the pension rate, but I think that a little more relaxation of the earnings rule for the time being would have been appropriate. At some future time I see no reason why the earnings limit should not be reduced in relation to greater adequacy of the retirement pension.
Now I come to the widowed mother. It was my right hon. Friend the Member for Warrington (Dr. Summerskill) who first made the distinction in the position of the widowed mother from that of the widow or other beneficiaries under the National Insurance Scheme. My right hon. Friend did that on an Amendment moved to a Bill by my hon. Friend the Member for Flint, East (Mrs. White), if I remember aright. The position of the widowed mother was distinguished to the satisfaction of the House.
The question is: what is the widowed mother's benefit for? It is for maintenance. It is of the same amount as that for the widow. By the same token, it is the same for the widow as it is for the retirement pensioner. All the individual benefits are standard for maintenance, whether it be the retirement pensioner, whether it be the person on sickness benefit, or on unemployment benefit or widow's benefit. The question of maintenance, therefore, is written throughout the piece. If the widowed mother is to be distinguished from all other beneficiaries under the National Insurance Scheme she should be distinguished in the amount of the benefit and not only, if at all, in the matter of the earnings rule.
I think, if I may say so, that my hon. Friends have not addressed themselves to the point that what is the real mischief about the earnings rule now proposed for the widowed mother is that we have not yet given her adequate benefit, and probably have not made up our minds whether we really mean the widowed mother to stay at home to look after her children, or whether we want to give her facilities to go out to work to earn money, and, if she does, whether we will pay her less benefit than if she stayed at home.
§ Mrs. L. jeger
Surely my hon. Friend is not making the case that under the Industrial Injuries Scheme a widow who 570 goes out to work should be deprived of her benefit.
§ Mr. Houghton
No. These are questions of different risks. The country has recognised the different risk for the woman who loses her husband in war and the woman who loses her husband through pneumonia, which is a more normal risk than the risk of death in war. The country has distinguished between those who lose husbands on account of industrial injury or disease and those who lose husbands through the course of normal illness.
These differentiations may not be justified on any social basis or any other basis, except perhaps sentiment, although there is an element of the difference in risk, looked at from the point of view of the ordinary hazards of life. But we can deal only with the fact that up to now the social security scheme has differentiated between the woman who loses her husband through the normal hazards of life, the woman who loses her husband through industrial injury or disease, and the woman who loses her husband on account of death from wounds or illness in war.
Again, we may have to address ourselves differently to these different risks and ask ourselves whether it makes any real difference to the widow anyhow or to the children and whether we should see, however widowhood comes about, that there should be adequate maintenance under recognised conditions, with or without any interference with her freedom to earn money without prejudice to her maintenance benefit. The nation may ask whether, if we give the widow adequate maintenance benefit and she chooses to go out to work to supplement it, we are justified in continuing to give her the full benefit we have provided for maintenance purposes.
§ Mrs. White
May I ask a relevant question? We are considering, in Standing Committee, adding supplementary superannuation for retirement purposes to make some allowance for the differential standards obtained during working life. If my hon. Friend is going to say that there must be an earnings rule for widowed mothers, he must also provide some sort of other supplementation on the basis of the same kind of philosophy as that of the superannuation scheme. What sort would that be?
§ Mr. Houghton
When we have a graduated scheme, different considerations may apply either to the scheme as a whole or to one part of it. That is the matter under discussion in Standing Committee A. But I am considering all widows on standard widow's benefit without any supplementation or addition on account of a graduated pensions scheme. I am trying, in a rather hesitant way to clear my mind, and, if I can, the mind of the House on what are our real social purposes in the matter under consideration.
I feel, with my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand), that we cannot look at the earnings rule without, at the same time, asking the fundamental question whether the maintenance benefit for widows is adequate and whether, in deciding that benefit, we have yet defined our attitude to the mode of life of the widowed mother. What do we want her to do? Shall we load her benefit to give her complete freedom of choice, with no bias in favour of going to work but leaving her free to do so if she wishes, as she would probably desire to do, at some domestic expense to herself so that she should have greater freedom of occupation, in a profession or a job, to enable her to restore a balanced life and enjoy it the more?
I conclude with another thought on this question, and that is for the widow. I am sure that all hon. Members will have had letters from widowed mothers who say, "Now that my child has left school and become more expensive than before, the limit of earnings I am permitted to have falls from £3 to £2 10s." The same will occur again under these draft Regulations. While she is a widowed mother with a child at school, she will be able to earn £4, but as soon as her child leaves school she will be able to earn only £3 before there is any effect on her pension.
Some women have complained bitterly. They have said that it means virtually being put out of a job, because they have to adjust their hours of work and the employer may not be very satisfied about that. Have we considered the effect there? If a widowed mother has been subject to no earnings rule and then, as soon as the child leaves school, a £3 earnings rule is imposed, that is a new complication. It is one which arises in a 572 marginal form under the Regulations. It is inevitable when we have a differential earnings rule as between widows and widowed mothers.
It is all very complicated and tricky and here we are dealing with Regulations which continue the existing rules and modify the amounts, and that is all we have before us. Much more fundamental thinking is necessary before we can be clear on the purposes of our social security benefits and what restriction, if any, of this kind should be imposed upon them.
§ 11.46 p.m.
§ Mr. R. J. Mellish (Bermondsey)
I am sure that the House is indebted for the views of my hon. Friend the Member for Sowerby (Mr. Houghton). I have very great personal regard and affection for him, as I think he knows, but I was completely at variance with him in his line on the question of retirement pensions and pensions for widows.
I was very glad to hear my hon. Friend say that the trade unions' objection to the whole question of the earnings rule was not based on the fear that employers might tend to employ such people and thus cheapen the labour market, and so on. Many people have had that impression for a long time and have believed that that was the basic objection of the trade unions. I was very glad to hear my hon. Friend, who is a prominent member of the trade union movement, say that that was not so.
I think that the time is coming when the House will have to consider the problem of the earnings rule in its entirety. It is shameful that a man should be offered the incentive of an increased pension, if he stays at work until he is 70 and does not draw his pension until then, only to find, when he becomes 70, that for some extraordinary reason he is not allowed to earn more than a certain amount without having that amount knocked off his pension.
§ Mr. Mellish
I am sorry that I made a mistake. I should have thought that that sort of person was more likely to be used by unscrupulous employers.
I do not believe that anyone can make out a case for having an earnings rule applicable to widowed mothers. In my 573 constituency, we have probably the best employers of female labour in the country. We have firms with very fine reputations for good wages and good conditions and which employ women in great numbers. Again and again, both employers and the women have said that the earnings rule affects them very badly.
Under the Regulations before us, a widowed mother can earn up to £4 a week without being bothered by the earnings rule. If she earns more than £4 but less than £5, then 6d. is deducted for every 1s. over £4 which she earns. If she earns more than £5 a week, 1s. for 1s is deducted. I do not see how such a position can be justified. If a woman with young children is able to go to work, she should not be deterred in any way and she should be allowed to earn as much as possible.
There is no logic in this. It would be fair to say that many employers are distressed about this because of the way they have to alter their system of working. A famous and extremely good firm for labour conditions, Peek Frean's, one of the largest manufacturers of biscuits, has to resort to extraordinary methods to retain these women at work, and its labour department has to get up to extraordinary dodges to keep these women, because they can only work X number of hours or they start to lose their pensions. The time has come to look again at this earnings rule. If a person is entitled to a pension he should have it, irrespective of the work he may do.
If I were a policeman, did thirty years' service and retired at 50 on a substantial pension, say, £10 a week, I could go to work for Peek Frean's and earn another £10 and no one would question my pension. The trade unions would not object. It would be said, "He paid into a private scheme and that is not the State's business." But most people would like the opportunity to pay into a private scheme. Many people have no such chance, and can only get what a reasonable Government are prepared to give them. Yet the moment these people start earning over a certain amount they get it deducted at the other end, so to speak.
The earnings rule will be abolished one day, but I appreciate that this would require legislation.
§ Sir S. Summers
Would the hon. Gentleman bear in mind that if the earnings rule were abolished, as he is virtually advocating, many people would say to those over 65 earning more than £20 a week—and I could introduce the hon. Gentleman to such people—"Why should we subsidise the pension they are entitled to draw in addition to their wages?" Surely the whole basis of a subsidised pension would be called in question if it were paid to people with earnings of that kind.
§ Mr. Mellish
There is a fundamental difference of approach between us. I do not think that when a person reaches 65 anyone should question what he has in the bank or what he is earning. There will always be the odd case of someone drawing a pension to which morally he is not entitled. One could say that there are some hon. Members earning £35 a week who are of such an age that one wonders why they have not given up politics a long time ago.
This could lead us into an argument about tenants earning certain amounts of money who are living in council houses, and so forth. But if the yardstick is right and the majority benefit, let it be so. We can never make laws so that everyone is brought into line. I do not deny that there would be anomalies, and some people abusing any scheme.
If a person reaches the age of 65, probably with not very much money saved after bringing up a family, it is not a bad thing to give him a chance to put some money by through having a pension and a decent job. I may be asked what a person of 65 would be saving money for. There are some people who, in old age, are fresher and better than some of us who are younger.
Without being diverted too much, I want to refer the House to the Report of the National Insurance Advisory Committee on the matter. Dealing with widowed mothers, it says:If, however, the amount of earnings to be disregarded were further increased, many widows would be able to draw the allowance in addition to earnings from virtually full-time work, and we think this would be inconsistent with the purpose of the benefit.The Report goes on to say that one member of the Committee dissociated himself from the opinion of the others, for the 575 reasons given in the dissenting note. Had I been a member of that Committee I should also have dissented.
§ 11.55 p.m.
§ Mr. W. Griffiths (Manchester, Exchange)
I agree with almost everything that my hon. Friend the Member for Bermondsey (Mr. Mellish) has said. I want, first, to take up the interjection of the hon. Member for Aylesbury (Sir S. Summers), who challenged my hon. Friend about the position of the pensioner, now earning £20 a week, if the earnings rule were abolished. He said that people would resent this, since the pension was subsidised by the taxpayers.
The hon. Member does not raise his voice against the pensioner of over 70 years of age who is in that position, but he thinks that it is wrong between the ages of 65 and 70. The present lunatic position is that a pensioner of over 70 years of age, having not been allowed to draw his pension and continue at work between the ages of 65 and 70, can, from the age of 70 onwards, continue in full employment if he can carry on, and draw his full pension. On the basis of the argument employed by the hon. Member in his interjection, that is an indefensible state of affairs.
For a number of years there has been mounting dissatisfaction with the application of the earnings rule. Many hon. Members who have spoken tonight have said that it is not appropriate to argue for the abolition of that rule, because that is not the matter which is before the House. Nevertheless, the Minister, who must be acutely aware of the anomalies in our insurance set-up at the moment and of the injustices pinpointed by my hon. Friend the Member for Holborn and St. Pancras, South (Mrs. L. Jeger), could, if he were determined to do so, remove them by raising the earnings limit to an astronomical level which no pensioner would ever achieve. By doing that he would abolish the earnings rule.
My hon. Friend the Member for Sowerby (Mr. Houghton), who is one of the most distinguished experts in the House on insurance, and, who, as my hon. Friend the Member for Bermondsey said, is always listened to with great attention, quite properly said that the Trades Union Congress and the Labour Party stand for and desire adequate maintenance. I venture to suggest that 576 such a happy and desirable state of affairs has never obtained, because the original Act of 1946, coming into operation in 1948, was already to some extent devalued by inflation, and increasing numbers of workpeople in my constituency and the constituencies of other hon. Members have been faced ever since, under successive Governments, with the need to have recourse to the National Assistance Board—and hon. Members opposite have now been in office longer than the Labour Party were.
The Beveridge conception of an adequate pension to permit of retirement has never been realised since the National Insurance Act was introduced by my right hon. Friend the Member for Llanelly (Mr. J. Griffiths). There is ample evidence of that, although I need not weary the House with it at this late hour. Many pensioners are unable to pay even the 1s. prescription charge without recourse to the National Assistance Board. So much for the adequacy of the retirement pension.
The basic conditions of these retirement pensions is manifest. I cannot understand some hon. Member, who talk about the need to maintain the earnings rule and see nothing evil in it and who, at the same time, think that there is nothing wrong in a society in which the superannuated, or those who have been fortunate enough to gather savings together, or ex-Service Regular officers who retire on pension, also draw their National Insurance pension if they have qualified by contributions. They want the earnings rule applied in those circumstances to people whose working life in the 'thirties was spent amid mass unemployment and who were, therefore, unable to save.
I was grateful to my hon. Friend the Member for Sowerby for what he said about the T.U.C.'s attitude towards the earnings rule and for reminding us that the principal objection was not a feeling that unscrupulous employers would use the pension as a subsidy for low wages, although I pause to recall that, absurd as it seems in 1959, it is within my recollection that the 10s. old-age pension before 1939, in vastly different economic circumstances, was used by a minority of unscrupulous employers as a subsidy for low wages. I accept that the position is vastly different today from that which obtained in those days among, perhaps, a 577 tiny minority of employers. The economic situation is vastly different, the level of employment is much higher, and the trade unions are in a much stronger position to protect their members.
I have referred to the hon. Member for Aylesbury and to the ludicrous situation in which the earnings rule is applied between the ages of 65 and 70 but not over 70. As with many hon. Members, this is on my doorstep, for my father, still working at 73, has for the last three years been happily enjoying his retirement pension and his wages. Between 65 and 70 he carried on work, and had he drawn his pension he would still have done so, but he felt a little cheated that he was not then able to draw his pension.
§ Mr. Griffiths
He could increase his pension, and I support such advantages being given, but in preference to the increment it would be better if such men could draw their pensions at 65.
We are told that to abolish the earnings rule would cost about £100 million. How realistic is that figure? The pensioner who is earning the high wages which the hon. Member for Aylesbury mentioned, and who is also receiving his pension, is dealt with by the Inland Revenue. He does not get away scot-free. In addition to direct taxation, he returns considerable sums to the Treasury by the extra money which he spends on articles subject to indirect taxation.
§ Sir S. Summers
No one is complaining about the size of the incomes of people, whether they are 65 or more. The point is whether it is reasonable for people who are able to continue to work to receive, in addition to their wages, a pension three-quarters of which is provided by other taxpayers.
§ Mr. Griffiths
I have already dealt with the anomaly which exists at present by virtue of the fact that people of more than 70 years of age can draw wages and their pension. They may carry on at work. I have just said, but I will repeat it, because the hon. Gentleman the Member for Aylesbury does not seem to understand, that my own father is working: at the age of 73 and is drawing a full wage as well as his pension. He is not retired, but he could not have his pension between the ages of 65 and seventy.
§ Sir J. Duncan
Will the hon. Member make this clear? Did his father retire at 65, but go on earning and lose his pension, or did he postpone his retirement and thereby qualify for the increased pension at seventy?
§ Mr. Griffiths
He did the latter; but my point is that he carries on working and receiving a full wage as well as his pension. All that I am saying is that he, and other pensioners, should have been paid it at 65. I think that the whole of this business should be swept away.
I should like now to turn, briefly, to the effect of the earnings rule in the matter of the even worse cases of the widowed mothers. Here the situation has always been the most ridiculously anomalous. My hon. Friend the Member for Holborn and St. Pancras, South has already referred to the position which a widowed mother occupies if she loses her husband in an industrial accident compared with that if he is killed in war. The Minister must himself admit that here we have a really absurd position. One could mention, for example, a bus driver who is involved in an accident while driving his bus. He is killed, and his widow is able to draw the pension without the earnings rule applying.
If, however, he had come off duty half an hour before, and was travelling in the bus not as the driver but as a passenger, and was killed in the accident, the earnings rule would then apply. Is this not a state of affairs which should be remedied? The relevance to our discussion tonight of what I have been saying is that, even without legislation, if the scales were raised sufficiently high they would, in reality, look after the widowed mothers who are in a less advantageous position.
While the Regulations do something to improve the existing position, it must be admitted that the sooner the Government, and the House, get down to considering how, while the present basic rate remains, there can be action to sweep away this utterly absurd earnings rule the sooner there will be a greater measure of social justice than exists today. It would not cost the Treasury anything like the figures which have been given.
§ 12.10 a.m.
§ Dame Irene Ward (Tynemouth)
I could not agree more with the view that this whole matter really needs much 579 more vigorous and humane consideration. I have always understood that, when public opinion is strongly behind something, then public opinion prevails. This has not happened in this case, partly, I think, because we always have to debate these matters so late at night that the public really does not know that the debate is going on.
When I think of the number of Gallup polls which take place, I am surprised that a Gallup poll is not conducted to ascertain what the public view is about this particular question. I commend to the great newspapers which conduct public opinion polls the suggestion that there is here a new subject in which they should interest themselves.
I wish particularly to emphasise one point which has been made about the position of the widowed mother. If I may say so, I was very glad that the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. L. Jeger) spoke particularly about the bonus at work. That is the kind of anomaly which, of course, does create a very great sense of grievance, and rightly so.
A great many points have been made about all kinds of situations, and I wish to refer again to the fact that the widowed mother, when her circumstances are compared with those of the married woman with children who works, is in a very unfortunate position. The married woman can go to work. She can earn what salary she likes. She has the benefit of the special Income Tax allowance, and she also has the benefit of the graded allowances in the same way as her husband does.
I listened to what my hon. Friend the Member for Aylesbury (Sir S. Summers) said about the subsidising of the widowed mother partly by the taxpayer. Naturally, I do not object to all the Income Tax allowances which are given to people who work, but, if we do make these special allowances for married mothers who go to work, they, in their turn, are being subsidised also by the rest of the community because, in fact, the money is not going into the Treasury.
After listening to all that has been said tonight, I wonder how far all the anomalies have been considered by the National Insurance Advisory Committee. My right hon. Friend is, of course, 580 in a very strong position, because he has this Committee, which makes certain recommendations. He can then come to the House and find himself in a much easier position. But the question remains as to how closely in touch with all these anomalies which have been mentioned tonight is the Advisory Committee.
These Regulations must go through. They slightly improve the position. But if one can slightly improve the position at this particular juncture, one can go on improving it. I should like to know when we can expect the National Insurance Advisory Committee to reconsider the position in the light of all the anomalies about which we have heard, taking a much wider point of view and taking into account how much better off is the married woman with children who has a husband to protect her and work for her compared with the widowed mother who must take on the responsibility of both parents.
Taking the matter by and large, as I have said, I believe that, if this question were really put to the country, the country would be in favour, in spite of all the difficulties which could arise, of sweeping away the earnings rule.
§ 12.14 a.m.
§ The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter)
It might be convenient if at this stage I sought to reply to a number of the points which have been made on the Regulations. In the strict sense, they have been welcomed. The only criticism of them that I have heard during the whole debate was that they did not go further.
As one who has always taken an interest in the form, as well as in the substance, of Statutory Instruments, I was rather disappointed that in the course of our two hours of debate no hon. Member has observed, or at least commented upon, the fact that the Regulations contain as Schedules what I believe are now colloquially called "Keeling" Schedules—in other words, Schedules setting out the Sections of the Statute which this Statutory Instrument amends, as amended by it. These Schedules, understand, are known as the "Keeling" Schedules in deference to a former colleague of ours who represented Twickenham and who took a great interest in the matter. They have been used several times in Statutes, but I 581 believe that this is the first time they have been used in Regulations amending an Act. I had hoped that some hon. Member might have noticed them and spared me the necessity of quickly inviting the attention of the House to the fact.
The discussion has covered a number of points relating to the whole structure of the earnings rule but although it is a fascinating subject I do not think that the House will expect me at this hour to deal with it at any length. I might, perhaps, be somewhat doubtfully in order were I to attempt 'to do so. I might, however, be permitted to say that amendment of the earnings rule would involve legislation, and legislation of great seriousness, in so far as it would involve throwing overboard one of the original concepts of the Beveridge scheme, a concept which has been operated for a good many years and which involves serious financial considerations.
The figure which has been given, and often quoted, for the cost of its abolition is a substantial one. I can give the details of it. Eighty-five million pounds would be expended in paying pensions to people who have not retired from work under the present rule and £12 million it paying pensions in full to those whose pensions are reduced by the earnings rule. There would be a loss of contribution income of £10 million. This adds up to £107 million, but it is fair to offset a saving of about £6 million on sickness and unemployment benefit. At this stage, I need only say that it would be a serious matter to suggest the use of that large sum, raised either from the contributors or the taxpayers, or a mixture of both, largely for the purpose of paying benefit to people who, ex hypothesi, were in receipt of substantial earnings.
The right hon. Member for Middlesbrough, East (Mr. Marquand) and my hon. Friend the Member for Aylesbury (Sir S. Summers) both raised the question whether the easement given by this Statutory Instrument might not be stultified by the need, first, to establish retirement. My hon. Friend the Joint Parliamentary Secretary gave a clear explanation of the fact that we were here dealing with two separate and distinct things. Before a retirement pension can be put into payment, retirement must be judged by the statutory authorities to have taken place or, alternatively, the 582 age of 70 for a man or 65 for a woman must have been reached, at which point retirement is presumed.
The provisions concerning retirement are statutory. They are contained in Section 20 of the National Insurance Act. 1946, and alteration of them would require legislation. The vital words are:For the purposes of this Act…a person may, subject to the next following paragraph, be treated as having retired from regular employment at any time after he has attained pensionable age…notwithstanding that he is engaged or intends to engage in a gainful occupation, if he is engaged or intends to engage therein only occasionally or to an inconsiderable extent or otherwise in circumstances not inconsistent with retirement".Construction of those words has been placed by Parliament in the hands of the adjudicating authorities, leading up to the Commissioner, and it was the substance of Commissioners' decisions that was given in the letter which my private secretary sent to the private secretary of the Leader of the Opposition.
In the first place, therefore, we cannot touch this without legislation. In the second place, it is quite a separate stage. It is the preliminary stage, and it is only after the applicant has, if I may use a colloquialism, got through the hoop of retirement that the subsequent point of having, as a retired person, his earnings subjected to the earnings rule arises.
I do not think these two separate processes will inter-act on each other, and I would add, for the purpose of clarification, that this question of the number of hours worked is germane only to the question of establishing retirement and not to the subsequent question of the earnings which may be permitted without deduction from pension during retirement.
The hon. Lady the Member for Flint, East (Mrs. White), who is no longer in her place, drew attention to paragraph 7 of the National Insurance Advisory Committee's Report. She read out very fairly, though she disagreed with them, the words in that paragraph which make it clear, in respect to the earnings limit for widowed mothers, that we were acting in a way which had secured the approval of that Committee. The hon. Lady raised, however, the question of the figures for earnings.
583 I have obtained from my right hon. Friend the Minister of Labour and National Service certain figures relating to women's earnings which are, perhaps, particularly relevant. These figures are for last October and show that, taking the manufacturing industries—and the House knows that that is the zone of employment in which the most comprehensive figures are collected—the average earnings of part-time women employees were £3 6s. 5d. a week, a figure which I think has a certain relevance to a proposal to place the limit which can be earned without deduction at £4.
My hon. Friend the Member for South Angus (Sir J. Duncan) suggested that it would be desirable to refer to the National Insurance Advisory Committee the question of averaging out the assessment made of earnings. My difficulty in doing that is that it has already been before that Committee in the not very distant past. In its Report in 1956, Cmd. 9752, the Committee dealt in paragraphs 58–67 both with this suggestion and the linked suggestion of aggregation of benefits for this purpose. The Committee came down against it, and set out very clearly the difficulties which would arise from such a step. It brought out very clearly the fact that, though it was a change which might well benefit certain people, it would, compared with the present rule, work very much to the detriment of others. On my hon. Friend's specific suggestion of a reference to the Committee, it has been to the Committee as recently as 1956, and I cannot believe that a further reference would produce any different advice.
The hon. Lady the Member for Holborn and St. Pancras, South (Mrs. L. Jeger) asked what the cost of the proposals contained in the Regulations was. The cost is about £1 million a year. She also referred by way of criticism to the application to an insurance scheme of an earnings limit, or, indeed, a retirement principle. I cannot think that there is any inherent objection to it if it is a plain and obvious condition of the scheme, as in this scheme it has been since the beginning.
The hon. Member for Sowerby (Mr. Houghton) gave a very clear indication of what the applicant insures against. I do not think I need repeat what the hon. 584 Gentleman said. It was rightly said that this was an insurance scheme and the premiums would be substantially higher if these conditions did not exist.
I noticed with great interest a number of the points raised by my hon. Friend the Member for Basingstoke (Mr. Denzil Freeth). Then the hon. Member for Sowerby, to whose speech I have already referred, made a most interesting contribution which I followed with interest. He touched, of course, on the extremely important point of the adequacy of the rates. Though I should incur your displeasure, Mr. Speaker, if I were to go into them in detail, I am at least able to remind him that in the benefits of the National Insurance Scheme the biggest proportionate improvement from the original base of the original Act is in respect of the widowed mother. The percentage figures are really quite impressive and show that we have paid attention to a view to which I attach great importance, and to which I know the right hon. Gentleman the Member for Middlesbrough, East does, from previous speeches he has made on this very subject, and that is the need to keep a very close eye upon the adequacy of benefit in this very special case. The figures, as I say, do show an impressive improvement.
The standard rate of benefit has, in cash terms, increased by 92 per cent. For the widowed mother with one child the improvement is 109 per cent, on the original, and where there is a widowed mother with three children, if account is taken of the improvements made at the same time in family allowances, the increase is over 150 per cent. So one can say that this class of beneficiaries, from the point of view of the adequacy of the rate, and particularly as a result of the 1956 legislation, has been treated with special consideration and care. This is a point which ran also through one or two other speeches, and those hon. Members concerned will perhaps acquit me of any discourtesy if at this hour I do not specifically mention them.
In reply to the hon. Member for Bermondsey (Mr. Mellish), I would again refer to the figures I gave of the cost of this change.
The hon. Member for Manchester, Exchange (Mr. W. Griffiths) said it was wrong—he called it an indefensible state of affairs—that a pensioner on reaching 585 70 if a man, or 65 if a woman, should be presumed to have retired and that, therefore, no question of earnings limit should apply. As I understand it, this is a provision which goes back to the beginning of the scheme, based on, I think, a wise assessment that if we did not presume retirement at some age there would be a number of people—farmers living on their farms, shopkeepers living above their shops—who, though they did less and less work as they grew older, could never be shown conclusively to have retired, and, therefore, would never get the benefit of the pension. Therefore, the clear logic of the retirement principle was quite deliberately compromised, I think for humane and sensible reasons, by saying that when that age is reached retirement should be presumed. Really, I do not think that that is a condemnation of the general principle.
Nor, frankly, could I accept the suggestion of the hon. Member for Manchester, Exchange, that to get over the difficulty of having to legislate in order to do away with this rule, if one wanted to, a proper method of doing so would be to use the powers in the Act of 1956 to increase the earnings limit to what he called an astronomical figure. That would be a plain abuse of the power conferred on the Minister by Act of Parliament, because the purpose of this power is quite obvious. It is a power of adjustment to meet movements of figures, particularly, as my hon. Friend the Joint Parliamentary Secretary said, of earnings levels, and not to do away with the principle enshrined in the Statute. Nor, for the avoidance of doubt, would I say, even if that were a proper thing to do in the Parliamentary and constitutional sense, that it would be right to take so grave, so serious, a step in altering in this way one of the major original principles of the National Insurance Scheme.
To sum up, I am sure that the change embodied in these Regulations will give appreciable relief in directions where we all want to give relief, and that it will do so without endangering the major conceptions involved in the retirement principle and the major financial issues involved. For that reason I hope the House will give its approval to it, and if another place does the same, then, as my hon. Friend the Joint Parliamentary Secretary said, we propose to operate it 586 as soon as possible, in other words, from 20th April.
§ Question put and agreed to.
That the National Insurance (Earnings) Regulations, 1959, a draft of which was laid before this House on 4th March, be approved.