PENSIONS AND BENEFITS

HC Deb 02 November 1960 vol 629 cc169-78

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

I should like, with permission, Mr. Speaker, to make a statement.

First, war pensions. The Royal Warrant is being amended so as to raise the basic rate of pension for 100 per cent. disablement by 12s. 6d. a week, and proportionately for lower assessments. Thus, the rate for a private with 100 per cent. disablement will be raised from 85s. to 97s. 6d. The standard rate for war widows with children or for widows over 40 years of age or incapacitated will be raised by 10s. a week, with appropriate increases in the rates for their children. Thus, a private's widow in these categories will have her own pension increased from 66s. to 76s.

There will also be increases in the allowances for constant attendance, unemployability, wear and tear of clothing, lowered standard of occupation, education, and in the maximum rent allowance payable to war widows with children.

New provision will also be made as follows. There will be an extension of the rent allowance to cover officers' widows with children at the same rates and on the same conditions as those for the widows of other ranks with children. The constant attendance allowance, now limited to pensioners assessed at 100 per cent. for war disablement, will be extended, subject to certain conditions, to those assessed at 80 per cent. An allowance will be introduced for the relatively few pensioners who, on account of exceptional disablement, qualify for an award of constant attendance allowance at a rate above the normal maximum, and who, none the less, are ordinarily in employment.

All these improvement will come into force on the first pay day in April next. The additional cost to the Exchequer will be about £11½ million in a full year. I will circulate a list of all the principal changes in the OFFICIAL REPORT.

I am presenting today a Bill to increase the flat-rate benefits and flat-rate contributions of the National Insurance Scheme and to increase Industrial Injuries benefits. The Bill will be available in the Vote Office at 4 o'clock this afternoon, together with an explanatory White Paper and a Report by the Government Actuary. It is proposed that, if the Bill is approved by Parliament, the changes shall take effect at the same time as the start of the graduated scheme in the first week of April next.

It is proposed that the standard rates of National Insurance flat-rate retirement pension, and of unemployment benefit and sickness benefit, shall be increased from 50s. to 57s. 6d. a week for a single person and from 80s. to 92s. 6d. for a married couple. The standard rate of widow's pension will also be raised to 57s. 6d. a week. There will be increases in the allowances for dependants of National Insurance beneficiaries, including an increase of 2s. 6d. in the allowances for children. In the case of the widowed mother her personal benefit will be increased to 57s. 6d. a week, like other benefits, but the allowance for each of her children will be raised by 5s. This will provide allowances of 25s. a week for the first child, and of 17s. a week in addition to family allowances for each other child.

Under the Industrial Injuries Scheme, the standard rate of injury benefit and of the 100 per cent. disablement pension will be increased from 85s. to 97s. 6d. a week. The widow's pension of 56s. will be raised to 64s. a week, and the rates for a widow's children will be increased.

In the first year, the extra cost of the higher rates of pensions and benefits will add nearly £150 million to the expenditure of the two funds. In a contributory scheme, improved benefits must, of course, be matched by increased contributions. It is proposed to retain the joint flat-rate National Insurance and Industrial Injuries contribution for an employed person not contracted out of the graduated National Insurance Scheme at about the present level instead of reducing it when the graduated scheme starts next April. Contributions for other classes, which were not to have been reduced, will be correspondingly raised. There will also be an increase of about £15 million in the first year in the net amount to be provided by the Exchequer in accordance with the proportionate formulae for the Exchequer contributions to the two funds.

I should like to make it quite clear that the Bill will in no way affect the rates of graduated contributions and retirement benefit or the conditions for contracting out of the graduated scheme. The Bill makes the same increase, over the rates under the 1959 Act, in the contributions of those who are contracted out and those who are not, and so leaves their relative positions unchanged.

The Bill also deals with a problem arising from the so-called 12 hours' rule. It provides that where a person claiming retirement pension intends to work to an extent which will enable him to earn no more than the limit of earnings laid down from time to time for the purposes of the earnings rule, the number of hours which he proposes to work shall not prevent him from being treated as retired.

Finally, National Assistance. As the House will recall, substantial improvements were made last year in the standard of provision for those on assistance. The National Assistance Board has been informed of the Government's proposals in respect of National Insurance. In the light of them, and of the fact that the increased pensions and benefits to be provided will have to be taken into account in calculating the need for supplementation, the Board has submitted proposals for certain increases in the scale rates of National Assistance to take effect at the same time. These proposals, which the Government have accepted, are for increases of 3s. 6d. per week for the single householder and 5s. for the married couple, with appropriate increases in the other rates. I have today laid the necessary draft regulations, with an explanatory memorandum by the National Assistance Board.

The House will remember that the improvements in benefits which came into operation in 1958 raised them in real terms to higher levels than ever previously attained. So far as National Assistance is concerned, this improvement in standard was taken a stage further by the increases put into effect just over a year ago. Thanks to the high degree of stability of prices in recent years, these levels have in large measure been held. These further changes constitute, therefore, a marked improvement in the standard of those receiving these benefits. This implements the policy of the Government that they should share in the rising standards of the nation.

Mr. Houghton

While, on these benches, the general tenor of the Minister's announcement will be welcomed, the adequacy of these proposals will need to be closely considered and argued in debate. My first reaction is that they are not enough. The share which the Government propose to give the poorest people in the community of the rising standard of living of the nation is not high enough, and we Shall come to that later.

The first thing we must strongly criticise, and ask the right hon. Gentleman about, is the effective date of these proposals. Why is it that on this occasion the improvement cannot come into operation until next April, whereas in 1957 a Bill was introduced on 13th November, received the Royal Assent on 28th November, and the increases came into operation in the last week in January of the following year?

Why have we to take so much longer this time in giving effect to this improvement? Should we not increase the benefits earlier, even though the adjustments of contributions might have to be delayed until April? To avoid undue confusion in connection with the introduction of the new scheme, let any deficiency arising from that be taken out of the National Insurance Reserve Fund. What is that fund for, except to meet emergencies of this kind?

How many people does the right hon. Gentleman estimate will come off National Assistance under these proposals, and what saving will there be on expenditure on National Assistance? Will he also say whether, in laying on contributions, he has taken into account the report of the Government Actuary, in his second quinquennial report on the Industrial Injuries Fund, that the contributions under the Industrial Injuries Scheme are in excess of the requirements of existing benefits? The Government Actuary estimates that at the end of the century there will be about £600 million surplus in the fund. We shall want to know what relationship between the Industrial Injuries contribution and the National Insurance contribution the Minister has brought into his proposals.

Finally—[HON. MEMBERS: "Oh."] The Minister has made a very lengthy and comprehensive statement, covering a wide range of benefits, and if right hon. and hon. Gentlemen opposite become impatient with comments and questions about it they will raise the whole issue of whether announcements of this kind should be made in these circumstances.

My final question is to ask the Minister whether he thinks that an increase of expenditure of only £11½ million on war pensions represents a fair share of the rising standards of the community. Does he realise that dividend strippers and bond-washers would regard that as chickenfeed? Does he think that the proportionate increase in the Exchequer contribution of only £15 million is an adequate additional contribution to be made from the Exchequer to the additional cost of the higher National Insurance benefits? I hope that the right hon. Gentleman will be able to give us at least some running replies on burning questions which are sure to be raised in later debate.

Mr. Boyd-Carpenter

Taking the questions of the hon. Member for Sawerby (Mr. Houghton) in the reverse order, the increase in the Exchequer contribution in respect of National Insurance is, in fact, governed by the proportionate formula of the 1959 Act, with which the hon. Gentleman is familiar. I do not think that ex-Service bodies and those who have closely interested themselves in these matters over the years will regard the improvements in war pensions as chickenfeed. On the contrary, I am glad to say—and I hope that both sides of the House will be glad to agree—that they constitute a real increase in the real standards of these payments.

When they have had an opportunity to study the details which I am circulating in HANSARD, hon. Members will see, quite apart from the improvements in the basic rates, a considerable number of very valuable improvements in the allowances which go to the most severely disabled men of all. Hon. Members will have noticed a fully proportionate increase in the provision for war widows to which the ex-Service bodies, in particular, attach considerable importance.

The Government Actuary's quinquennial report on the Industrial Injuries Fund has been taken into account and as a result it has proved possible to increase Industrial Injury benefits to the extent outlined in my statement while reducing the Industrial Injuries element in the contribution by 1d. a side.

I would rather not now speculate on the National Assistance numbers. There will, of course, be a more than off-setting reduction in the cost of National Assistance as against the cost of the increases in the scale rates.

The hon. Gentleman referred to the timing of the increases. He was quite right to say that the timing was shorter on the last occasion, in 1957–58. On the other hand, the time from the announcement to the proposed date of operation on this occasion, if the House approves the Bill, is 22 weeks, which is extremely close to that of all previous occasions other than 1957–58. It compares not unfavourably with the 20 and 24 weeks taken in 1951, when hon. Members opposite were responsible. The comparison is perhaps even stronger when one recalls that on that occasion there was no question of the complication of the introduction of the graduated scheme, but there was undoubtedly a very compelling urgency owing to the situation, which does not now arise, of a headlong increase in prices.

Mr. Rees-Davies

I am sure that everyone on this side of the House will warmly welcome what has been said about disabled war pensioners and the other provisions mentioned by my right hon. Friend. However, there is one important question of principle upon which I ask my right hon. Friend to preserve an open mind and to acknowledge that he will do so.

The House will have observed that the rates for the 100 per cent. disability war pensioner rise from 85s. to 97s. 6d. per week, a very considerable rise for which, I am sure, they will be much indebted. The rate for Industrial Injuries pensioners is to rise to precisely the same extent. There is a strong feeling throughout the country that the war disability pensioner ought now to have some differential between his case and that of a man with industrial injuries. [HON. MEMBERS: "Why?"] I do not propose to debate these questions now, because this is not an appropriate time, but both on grounds of service to their country and of being unable to have any claim at law, there is a strong case for saying that such war pensioners should have some preference.

Will my right hon. Friend be prepared to listen to arguments upon that matter and to draw that differential if he is convinced of the rightness of such a case?

Mr. Boyd-Carpenter

My hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) has touched on what he himself recognises to be a difficult but important point. At this stage, I will say only that while, on a matter of this sort, I will listen to views expressed on both sides of the House, the line which we are following with these proposals is that taken on previous occasions, that is, on the one hand, preserving the same basic level of payment for disability in war pensions and the Industrial Injuries Scheme and, on the other, maintaining a preference and priority for the war disabled both in respect of the allowances, some of which do not apply, as the House knows, in the case of industrial injuries, and also in respect of the basic rate for widows. In other words, in broad measure these proposals follow the line which the House has approved on previous occasions, although, in some cases, they may alter the relativities a little.

Mr. Grimond

While I appreciate the difficulty of bringing the increases into operation more quickly, will the Minister bear in mind that a delay of 22 weeks will run slap through winter, which, as he knows, is the most serious time for old-age pensioners? Does he appreciate that anything that he can do to speed up the implementation of these proposals will be welcome?

Secondly, did I understand the right hon. Gentleman to say that when the increases in supplementation are operated the total increase will be at most 3s. 6d. a week? As he specifically related that to the increase in the country's standard of living, has he any figures to show that 3s. 6d. is an adequate reflection of that increase?

Mr. Boyd-Carpenter

The hon. Gentleman will realise, as I said earlier, that the situation on this occasion is different from that on previous occasions, as practically the whole of the increase is an increase in standards and not an attempt to cope with a rising cost of living. The hon. Gentleman will recollect that recipients of National Assistance received an increase in their real standards only just a year ago. If one bears that in mind, in connection with this proposed increase, their position, as compared with 1958, when the last main changes were made, shows a somewhat larger advance for them than for the recipients of National Insurance.

Mr. Gower

Will my right hon. Friend carry that somewhat further and confirm that this is the first time since the scheme was initiated that there have been increases of these dimensions within a very long period of stability of prices?

Mr. Boyd-Carpenter

Although a small increase in prices since January, 1958, has to be taken into account, this important series of proposed changes is unique in that it overwhelmingly represents not a competition with rising prices, but an advance in rising standards.

Mr. Wigg

There was one omission from the right hon. Gentleman's statement. He said nothing about the position of those ex-officers and other ranks and widows Whose pensions are taken on the Service Votes and whose increases are carried out by the exercise of the Royal Prerogative. What will be their position?

Mr. Boyd-Carpenter

It is not for me to answer on behalf of my right hon. Friends the Service Ministers but I understand that, in respect of the disability awards which they administer, my right hon. Friends contemplate parallel action.

Several Hon. Members

rose—

Mr. Speaker

Order. We shall have an opportunity to discuss this matter when there is a Question before the House. We cannot do so now.

Following is the list:

PRINCIPAL CHANGES IN WAR PENSIONS
								Present rate	Proposed rate
Disablement pensions (100 per cent. assessment):
ex-private or equivalent	…	…	…	…	…	85s. a week	97s. 6d. a week
ex-non-commissioned officers	…	…	…	…	Increase of 12s. 6d. a week
ex-officers	…	…	…	…	…	…	…	Increase of £34 a year
ex-Regular officers—disablement addition	…	…	Increase of £34 a year
The amounts of weekly allowances and terminal gratuities for assessments of less than 20 per cent. will also be increased proportionately.
Education allowances	…	…	…	…	…	…	up to £80 a year	up to £120 a year
Constant attendance allowance	…	…	…	…	…	17s. 6d a week	20s. a week
								26s. 3d. a week	30s. a week
Normal maximum	…	…	…	…	…	…	35s. a week	40s. a week
								52s. 6d. a week	60s. a week
Exceptional maximum	…	…	…	…	…	70s. a week	80s. a week
The constant attendance allowance, now limited to pensioners assessed at 100 per cent. for war disablement, will be extended to those assessed at 80 per cent. or 90 per cent. for such disablement, where they are 100 per cent. disabled from all causes and their need for attendance is equally great and arises mainly from the war disablement.
Allowances for wear and tear of clothing:
Lower rate	…	…	…	…	…	…	…	£6 a year	£7 10s. a year
Higher rate	…	…	…	…	…	…	…	£10 a year	£12 10s. a year
Unemployability supplement	…	…	…	…	…	55s. a week	63s. a week
The allowances payable with this supplement (and with treatment allowances) will also be increased—
Allowance for wife or other adult dependant	…	30s. a week	35s. a week
Allowance for first child	…	…	…	…	15s. a week	17s. 6d. a week
Allowance for other children	…	…	…	…	7s. 6d. a week	9s. 6d. a week
Allowance for lowered standard of occupation	…	…	up to 34s. a week	up to 39s. a week
A new allowance of 20s. a week will be introduced for pensioners who on account of exceptional disablement qualify for an award of constant attendance allowance at rates above the normal maximum and who, despite their severe handicaps, are normally in employment.
Widows' pensions:
Widow of ex-private or equivalent	…	…	…	…	66s. a week	76s. a week
Widows of ex-non-commissioned officers	…	…	…	Increase of 10s. a week
Widows of ex-officers	…	…	…	…	…	Increase of £26 a year
Allowance for each child—
Other ranks	…	…	…	…	…	25s. a week	29s. a week
Officers	…	…	…	…	…	…	£73 a year	£83 10s. a year
Rent allowance for widows with children	…	…	…	up to 25s. a week	up to 29s. a week
The rent allowance is being extended at the same rates and on the same conditions to officers' widows with children.
Pensions for unmarried dependants who lived as wives of men now deceased:
Other ranks	…	…	…	…	…	…	…	58s. 6d. a week	68s. 6d. a week
Officers	…	…	…	…	…	…	…	£177 a year	£203 a year
Orphans' pensions:
Other ranks—
under 15 years	…	…	…	…	…	…	30s. a week	34s. 6d. a week
15 years or over	…	…	…	…	…	…	40s. a week	46s. a week
Officers—
up to 18 years	…	…	…	…	…	…	£112 10s. a year	£128 10s. a year
Adult orphan incapable of self-support	…	…	…	50s. a week	57s. 6d. a week
Parent's pensions:
Increase in basic means standards used in calculating the need of parents who lost sons as a result of the 1939 War:
from 70s. a week to 80s. a week for one parent and from 105s. a week to 120s. a week for two parents, and comparable increases in the means standards applicable to the parents of officers.