Clause 2.—(HIGHER RATES OR AMOUNTS OF CONTRIBUTIONS AND BENEFITS UNDER NATIONAL INSURANCE ACT. 1946.)

HC Deb 22 November 1960 vol 630 cc1024-95

Mr. Houghton

I beg to move, in page 2, line 20, at the end, to insert: Provided that not less than one year nor more than fifteen months after the said substituted provisions have come into effect the Minister shall review those provisions having regard to any change in the gross national product or in the prices of consumer goods and services, or in the average weekly earnings of manual workers and unless he is satisfied that the value of the benefits and increases mentioned in those provisions has not fallen since those provisions came into effect, either in terms of purchasing power or in relation to the gross national product or in relation to the average weekly earnings of manual workers, he shall amend the said benefits and increases so as to compensate for any such fall; And that at a similar interval after the first review a second review and any consequent amendment shall take place and so on at similar intervals until Parliament enacts otherwise; So, however, that a report of each such review shall be laid before Parliament and that any amendment under this subsection shall be made by an order in the form of a statutory instrument subject to annulment by resolution of either House of Parliament. The Amendment is an act of political chivalry intended to help the Government to keep the pledges which they made to the country a year ago. The Bill is a partial fulfilment of the pledge that was given last year. We are not satisfied that it goes as far as it should in present circumstances. We are anxious to have a closer definition of the basis upon which future reviews shall take place and some greater assurance that reviews will take place at reasonable intervals.

The first thing we ought to do is to look at what the Government said they would do about the level of National Insurance benefits. The hon. Member for Aylesbury (Sir S. Summers), who has temporarily left his seat, made an intervention a few moments ago in which he stressed that the pledge related to the old. That is literally true. The Bill, however, quite properly adjusts other benefits—unemployment and sickness—to the new level proposed for retirement pensioners. We would not have it otherwise. Our main thought, however, in moving the Amendment is for the welfare of the old people. The Minister said on 20th May last that the pledge was that we shall ensure that 'pensioners continue to share in the good things which a steadily expanding economy will bring'."—[OFFICIAL REPORT, 20th May, 1960; Vol. 623, c. 1712.] The Prime Minister, in a television broadcast on 6th October, 1959, after a little political propaganda about the past, said: It means that we have made a start on doing something all of us want—to give the pensioner a share, and a fair share, in the increasing prosperity of the country. And I give you this pledge, this personal pledge: In the next Parliament we shall go on doing it. The Bill does something towards the fulfilment of that pledge. The Amendment is intended to encourage the Government—and, indeed, to require them—to go on doing it. It requires the Minister, in a period of not less than a year from the passing of the Bill and not more than fifteen months afterwards, to undertake a review.

By the Amendment, the Minister would be required to review the present level of benefits by reference to any change in the gross national product or in the prices of consumer goods and services, or in the average weekly earnings of manual workers and unless he is satisfied that the value of the benefits and increases mentioned in those provisions has not fallen since those provisions came into effect, either in terms of purchasing power or in relation to the gross national product or in relation to the average weekly earnings of manual workers, he shall amend the said benefits and increases so as to compensate for any such fall. I stress that the criteria contained in the Amendment, while of a three-fold character, have to be judged on the test of any one of them. We do not require all three—an increase in the national product, a rise in the cost of living and a rise in the average weekly earnings of manual workers—as a condition of a favourable review. Any one of the three shall be taken as the basis of the review. I know that the Minister will criticise this proposal, first, on the ground that he does not like mandatory periodical reviews in any event, and secondly, because it would be a mistake to tie oneself too closely to any particular factor or set of factors for a review of National Insurance benefits.

The next thing I should do it to look at what the Minister has said about those factors which he takes into account in reviewing benefits. We had some long debates on this matter in the course of our proceedings in Standing Committee A on the National Insurance Bill, 1959. We debated at great length what should be done, not only about the amount of increases in National Insurance benefits that we then desired, but as regards the future. The right hon. Gentleman constantly reiterated his faith—if that is the word to use—in the wisdom of the Phillips Committee. He referred to it then. He referred to it again in reply to a Question asked by my hon. Friend the Member for Salford, East (Mr. Frank Allaun) on 14th November, 1960, as reported in column 18 of HANSARD. Indeed, almost every time that we discuss the principles on which a review should be undertaken, the Minister takes refuge in the Phillips Committee.

The interesting thing about the Phillips Committee is that it was the most shabbily treated committee of inquiry in my experience, because we have never even debated its Report. It reported in 1954. It was pressed very strongly by the Minister of the day to speed up its Report because he wanted to act, and he had frequently told the House that he could not act until he had the Report. So he almost coerced the Committee into making a hurried Report. Then he snatched the Report from the hands of the Committee, dropped it on the Treasury Bench and introduced proposals for improvements in the National Insurance benefits in the National Insurance Measure of 1954.

The Minister picks out particular paragraphs of the Phillips Committee Report without saying whether the Government have ever accepted the whole of the Report. One proposal the Minister's predecessors dropped like a hot brick. It was that the retirement age should be lifted a year at a time at intervals of five years. That the Minister was not going to have, and nobody pressed him to implement that recommendation. He certainly was not urged to do so by hon. Members on this side of the Committee and hon. Members opposite remained silent in acquiescence in his judgment that it was not politically expedient then; and it is not politically expedient now. So the Phillips Committee, though it has undoubtedly assisted us in consideration of these and many other matters, has not had the honour of having its Report made the authoritative policy of the Government.

I would also remind the Committee that the Phillips Committee's Report of six years ago is strangely out-dated by many things which have happened since. What it said about economic and financial problems of the provisions for old age is today obsolete because of the complete change in the financial arrangements of the Scheme embodied in the National Insurance Act, 1959. Its references to the charge upon the Exchequer of increases in the National Insurance benefits no longer hold good because of the introduction last year of the pay-as-you-go scheme which does not come into full operation until the first week in April. So it seems to me that the Minister is relying unnecessarily on the Phillips Committee for the suggestions that it made regarding the criteria to be taken into account.

What the Committee did say, as summarised in paragraph 215, was: On the whole, the conclusion we have reached is that there cannot be any stereotyped formula for fixing the level of benefit and changes should not be made except at infrequent intervals and unless there are compelling reasons; when they are made their nature and amount should be decided on a balance of a number of considerations, in particular the following …". The Committee mentioned The change in the cost of living, due regard being had to the circumstances giving rise to it and the likelihood of its continuance. The Committee also mentioned the extent to which pensioners have recourse to national assistance, this being broadly indicative of the relation between the pension rate and the cost of subsistence: Thirdly, the Committee referred to the amount of the additional contribution required by an increase in pension rates and of the increase in the future charge on the Exchequer. We freely acknowledge that the cost of living factor, so important six years ago, is, for the time being, not anything like of importance in fixing National Insurance benefits. I know that there are many people who will argue that the costs in the Retail Price Index do not adequately reflect the actual cost of living today. The difficulties of averages we well know, but taking the only index we have, the Retail Price Index, we acknowledge that the rise in recent years has been slowed down. Indeed, the pledge given last year, which we welcomed and which we ourselves would give, is that the pensioners, particularly, and others receiving social payments, shall share in the increased prosperity of the country. Their position relative to that of other sections of the community shall be adjusted from time to time.

6.15 p.m.

In the Amendment I do not think that we suggest anything which is too stereotyped. Indeed, if these criteria are not taken, What do we take? Surely the fulfilment of a pledge by reference to general economic conditions in the country must take account of a rise in the gross national product. It must take account of any increase in the price of consumer goods and services and it must take account of any rise in the average weekly earnings of manual workers. I regard the third of those as being much the more important. But there are circumstances in which a rise in wage levels alone would not give a true index of the adjustment which might have to be made. There are circumstances where, if there is no rise at all in average wage levels, there would be justification for improving the payments to those on a minimum basis.

We have done the best we can in setting out in this Amendment a reasonable basis on which the Minister can take further action. I do not think that we have been unreasonable, either, regarding the time factor in the review which we ask him to make—not less than twelve months nor more than fifteen months. That is reasonable enough. If, by reference to the factors we mention, no adjustment is necessary, the Minister reports accordingly, and we move on to the next period of review. It would give these people, particularly retirement pensioners, a more hopeful basis for the periodical review of their position in the light of contemporary economic circumstances.

Nearly every other section of the community has ways and means and machinery for making its claims upon a rise in the national income. Trades unions, company meetings, arbitration machinery, wages councils, organisations which represent different sections of the community, provide opportunities for saying what particular interests should be served and to what extent. There are many spheres in which very substantial claims can be made upon the national income where the Minister has no authority and no power whatsoever. There are many trade union negotiations which are just as important in their effect on the economy as any adjustment the Minister has yet proposed to make in National Insurance benefits. These people are the unrepresented, except in this Committee, and we all know the difficulty of making effective demands in the House of Commons within the rules of order.

It is well known that under the rules of the House none but the Government can introduce Measures placing a charge on the Exchequer. That sterilises the Opposition in putting forward specific claims and proposals in particular circumstances. The conditions, business and rules of the House are not like the atmosphere of a boardroom in which negotiations can take place and where, in the event of disagreement, an arbitration tribunal is waiting round the corner. There is no Pilkington Commission for these people; there is no Guillebaud Committee for the retirement pensioners; there is no Priestley Commission for the retirement pensioners.

There, we have three very large groups of public servants whose position relative to other workers and professional persons has been the subject of critical and exhaustive reviews by independent commissions, out of which have come proposals for the adjustment of their pay by reference to a new principle called fair comparisons, fair relativities. Where are the fair relativities for the retirement pensioners except what this House of Commons may give them?

We do not want to leave this review to the hazards of Parliamentary business, or to the caprice—a word which I use without offence—of the Minister or the Government. We want it to be an ordered affair. We want the retirement pensioners to know where they stand, when to look for a review of their position and the factors by reference to which that review will take place.

We hope that the Minister will not spurn this genuine attempt to help him in his task. Surely he cannot complain if the Opposition want to underwrite the pledges which the Government have given and wish to encourage him in the review which I know he would wish to make as frequently as may be without any directions from the House. But it is important from our point of view that same principles should now be written into our whole conception of the future of this scheme. For too long it has been left to rather haphazard action, taken in different conditions of political expediency and economic change, but especially political expediency, and we now want it to be on a more ordered basis.

I hope that it will be possible for the Minister to study this Amendment in a constructive spirit. There is nothing here that this Committee would be rash to pass. There is nothing here which it would be unreasonable for retirement pensioners to expect. This is the only way, as we see it, of keeping these benefits in continuous relationship to the changes in the social and economic conditions of other sections of the community.

There is only one remaining point on which it seems to me, doubt may be cast. Do we want to go on improving these minimum standards of benefit, or is there to be a fundamental change in our approach to them? No one on the other side of the Committee has challenged this principle of continuing to review these benefits in the light of contemporary conditions, and I hope that it will not be suggested that this Amendment is proposing to do something which the Minister would no longer want to go on doing.

We believe that in this great debate, which will, no doubt, go on for a time, on the question how much as of right and how much subject to a means test, we should not falter in our determination to provide a minimum benefit as of right which will not compel a disproportionate number of beneficiaries to go to the National Assistance Board. Too many are having to go there already. We should like to see the number reduced. We should like to see pensions more adequate for a reasonable standard of living so that recourse to the National Assistance Board should not be necessary. I am not saying for a moment that there is any stigma, or that we should say that there is any stigma, in going to the Assistance Board. What we do say is that it should not be used as the main instrument of social benefit alongside the National Insurance Scheme.

I therefore hope that I have submitted to the Committee and the Minister a sufficiently forceful argument to enable him to view this Amendment with favour, because we on these benches regard it as of fundamental importance.

Vice-Admiral John Hughes Hallett (Croydon, North-East)

I do not propose to follow the hon. Member for Sowerby (Mr. Houghton) in his closing remarks, because it seems to me that they were more appropriate to the debate that we shall doubtless have on the Question, "That the Clause stand part of the Bill". I propose to keep strictly to the Amendment.

I was interested, in fact rather amused, to find that the hon. Member began by saying that this was an act of chivalry on the part of the Opposition, because it was helping the Government to keep their election pledges. I should have thought that there was some evidence that the Government were keeping this particular election pledge fairly well already. Indeed, the fact that we are all gathered in this Chamber discussing yet another Bill to increase pensions seems to me to be fairly conclusive evidence that that is so.

The idea that there should be a statutory review is not a new one. To be fair to the Labour Party, it has put it forward with great persistence for a number of years, and certainly throughout the short period in which I have been in politics. I am bound to say, however, that I very much question either the wisdom or the need for a regular statutory review of this nature.

Let me say a word, first, about the need. It is not accurate nowadays to speak of retirement pensioners as if they were a tiny, forgotten group in this country There are 5½ million of them, and their number is rising. It is true, and has been true for some time, that no political party can expect to succeed at an election if it were to pursue a policy which united the pensioners against it. The pensioners are potentially the most powerful single pressure group in the nation.

Furthermore, and for that reason, the whole question of retirement pensions, their levels, the contributions and the whole structure of this National Insurance system is continually in the very forefront of politics. I know that there are those who say that it ought not to be, and that we should take this matter out of party politics. I do not agree about that. I do not think that it can be done, and I remember that the last time we had one of these Bills before the House the hon. Member for Nelson and Colne (Mr. S. Silverman), with whom I do not often agree, pointed out what rubbish it was to talk of taking this matter out of politics and making the whole machinery automatic, because pensions are and will always remain the very stuff of party politics. I do not see how that can be avoided. I do not think that there is the slightest danger, and I am sure that the Opposition will guard against it, of the level of pensions being forgotten when they are raised continuously inside this House, by the pensioners' associations outside and they are under continuous review, I am quite sure, within the Government.

After all, the evidence is to be found in what has happened. I have been in this House for six years, and this is the third Bill to increase pensions which I have debated with other hon. Members during that short time. There is a certain familiarity in the arguments which take place on these Bills, although a stranger might wonder whether we were not engaged in the enterprise of reducing the pensions level. The only novel feature which I have noticed about the debate is the absence of the hon. Member for Coventry, East (Mr. Crossman) from our proceedings.

Let me now take the question of the wisdom of a review. It may be argued, in fact, I am sure it is, by some hon. Members, that although it is not necessary to have this review, nevertheless, for some of the reasons which the hon. Member for Sowerby gave, it would be wise so to do. I do not agree at all. I think that the great disadvantage of having a regular review is that it would lead the people, in this case the pensioners, to believe that when one of the various factors which have been mentioned indicates that an increase of pensions on these grounds would be justified, the rise would take place automatically. He spoke with some approval and pride of the various reviews which already exist for people still in active work. He might have added the undertaking given quite recently that there should be a biennial review of the pay of members of the fighting Services. I may be alone in this, but I think that it was very unwise of the Government to give that undertaking.

6.30 p.m.

It is a mistake to have these regular, automatic reviews. I say that because there is one factor which the Opposition have not included, one factor which has not been mentioned in this debate, but which is the most important. I refer to the current state of the national finances. I have never been one of those who, on public platforms, or in this House, have criticised or made disparaging remarks about the Labour Government for not having raised pensions to match the rising cost of living between 1948 and 1951. I have not done that because I am certain that the reason that was not done was not because they would not have liked to have increased pensions, but because the state of the nation's finances would not have justified it. It would have been a rash act.

Suppose, however, that when the right hon. Member for Llanelly (Mr. J. Griffiths) introduced his Bill in the first place there had been a provision in it of this nature. I believe that the Cabinet of the day would have been faced with an almost irresistible demand to make considerable increases every year in the level of pensions between 1948 and 1951 to match the rising cost of living. Had that been done, although it would then have been very agreeable to old-age pensioners, in the long run it would probably have had the reverse effect from what was intended because it would have embarrassed still further the nation's finances and retarded our recovery after the war.

Furthermore, it would have been unwise, even if the finances of the nation at that moment seemed to be adequate to bear a rise, to say that one should necessarily increase pensions merely because one of the three factors mentioned in this Amendment was justified. As I understood the hon. Member for Sowerby, although I may have misunderstood him, his theory was that we did not require all three factors to justify a rise, but any one would justify a rise. I will not say more about the cost of living, because I consider that as something quite distinct from the other factors and if the cost of living rises, if it is humanly possible the pensions must also be increased.

Taking the other factors in isolation, there have been periods since the war—speaking from memory, 1956 was one—when the average earnings of the country as a whole rose substantially faster than the rise in output. That resulted, naturally, in a rise in prices and, as night follows day, in considerable financial embarrassment during 1957. If we had chosen that moment, at the beginning of 1957, to make a bigger increase in all retirement pensions we should merely have intensified the financial crisis which followed in the autumn of 1957.

Nevertheless, this Amendment raises the very interesting question of what ought to be the yardstick which one should apply when carrying out a pledge such as the pledge to which we are committed, namely, to allow the old people to share in the rising prosperity of the country. That was a matter discussed at some length during Second Reading of the Bill, when three alternative suggestions were put forward. One was a rise in the gross national product, another the earnings level and the third the wage index. Although, at one time, I was an ardent supporter of the theory that if one could one should tie pensions to the earnings level, on reflection I have come to the conclusion that that would be a mistake.

I do not claim to be a great expert in statistics, but I have noticed—as I am sure all hon. Members have noticed—that in the Monthly Digest of Statistics there is always a considerable lag before the published earnings appear. Obviously, it takes some time to work them out, and, comparing one number of this interesting publication with another, one finds that sometimes they are corrected for back years. I presume that further information shows that the first estimate was wrong.

Earnings fluctuate violently from time to time and it would be a dangerous thing to use earnings as a yardstick for that reason. At present, earnings in the motor industry have dropped dramatically. Should that be a reason for lowering pensions? I think not. On the other hand, I do not think that the wage index is satisfactory because we know that earnings can be considerably increased and often are, with any change in wage rates. This happens when a shortening of the working week is negotiated. It is not reflected in any change in the wage index, but it results in a substantial increase in weekly earnings.

Pensioners would have a legitimate complaint if we said that we should relate their pensions solely to wage increases for that reason. If one is to have a yardstick at all, I think that the best is the gross national product. That is the yardstick by which I satisfy my conscience that the present Bill adequately fulfills the pledge which has been given because, at the end of 1957, when the last National Insurance Act was introduced and the last increase in pensions was made, the gross national product was running at £19,400 million a year.

Mr. Houghton

I want to be clear on a point about wages. We do not suggest, in this Amendment, using the wages index. The term used is "average weekly earnings of manual workers" That is the definition of the survey undertaken by the Ministry of Labour, usually published in the April of each year and based on information collected in the previous October, covering all manual workers, men, women and juveniles. It is very broadly based and an average, thus protecting the final result from fluctuations of earnings in particular industries.

Vice-Admiral Hughes Hallett

I fully appreciate that, and I mentioned the wage index only because it was mentioned on Second Reading and has often been advanced as an alternative to what is contained in this Amendment. I concede that if one must use one of these figures earnings is the better, but it is not satisfactory. I think that the gross national product is better and that it is very easy to test the Bill in the light of that.

The gross national product was running at the time of the last pensions increase at about £19,400 million a year. It now looks as if it is running at about 10 per cent. more than that, something of that kind. The increase under this Bill is 15 per cent. in the flat rate of these pensions. That, I think, shows that the pledge has been fulfilled with a great deal to spare. One also has to remember, when considering the terms of the Conservative Party's pledge at the last election, that the old people benefit in other ways than by the actual level of their pension. They benefit by improvements in the Health Service. They benefit by improvements—slow it may be, but none the less real for those who benefit—in housing arrangements for old people. These things absorb a great deal of the national income. It is only fair to take them into consideration as a whole when one is asking whether my right hon. Friends on the Front Bench have met the pledge or not.

These are some of the reasons why I hope that my right hon. Friend will not accept this Amendment, not that I quarrel in any way with the spirit in which it has been put forward, or the way in which the hon. Member moved it.

Dr. King

I am sorry to find the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett), to whom I always listen with interest whenever he intervenes in the debate, apparently even more complacent about the questions which we are raising in the debate than his right hon. Friend is on any issue, except when we are fighting major political battles.

I will not follow the hon. and gallant Gentleman's last remark about the improvement in the Health Service and in housing conditions which the Government have brought in the shape of increased rents and health charges imposed on the old people, but all the time that he was speaking I felt the truth of the old, cynical remark, "How easy it is to endure the miseries of other people". Most hon. Members belong to professional groups enjoying superannuation conditions in their retirement which bear no relation to any of the factors mentioned in the Amendment, and I would have liked to have heard a little more awareness during the debate of the sadness and the hardships of the problems which we are discussing.

The claim of the old-age pensioners since 1946—and both sides of the House are to blame for this—is that whatever benefits they have had come too little and too late. I concede to the Minister that the position of the old-age pensioner and his standards of living have improved during the last few years and that, as the nation's wealth has increased, so the old-age pensioner has shared in it, but there is no answering the case which the old-age pensioners themselves have put again and again—that that rise in their standards of living has been too slow and that their share in the increased national prosperity has always been too little.

Each pension increase has come as a result of long agitation—and the hon. and gallant Member was right; it was political agitation. Indeed, if the then Opposition, when we were in power in 1946–50, had played their part as an Opposition, and had campaigned on behalf of the old-age pensioners, there might have been some improvement in the lot of the old-age pensioners in the static period, 1946–50. Ever since the present Government have been in power the Opposition have been pressing the claims of the old-age pensioners, and so have the trade union movement and the old-age pensioners themselves. The National Federation of Old Age Pensions Associations rightly complains that it has been campaigning for twenty-two years, that always the concessions made by the Government are miles behind the claims which it makes and that by the time some increase in pension takes place, events have caught up and whittled away some of the value. I illustrate this by the simple fact that 1¾ million of the pensioners who benefit by this Bill—those who have their pensions supplemented by National Assistance—will find that most of the gains which they receive under the Bill are offset by the increase in the price of coal this winter.

Despite what the hon. and gallant Member said, the old-age pensioner associations are a very weak pressure group. They have not the financial resources of the trade union movement, of any professional group or of any busi- ness group. Most of them are old and tired. Indeed, to me one of the remarkable things is the energy and vitality shown by some of the 70-year-old campaigners inside their organisation, the National Association of Old Age Pensioners.

Most of the old-age pensioners—and I am sure that I shall carry the whole Committee with me in this—shame the rest of us by their contentment, by their acceptance of the position and by their cheerfulness under hardship, and during elections they vote according to deeply held political convictions which have little to do with the issue of old-age pensions. They must, therefore, depend on the efforts of the Trades Union Congress, hon. Members on both sides of the House, and, indeed, on the Minister for the Minister's own works over these last years has been to act in fulfilment of his duty as a pressure group on his own Cabinet—a Cabinet from which, incidentally, this Minister is excluded, although I have never been able to understand why.

Our proposal would make obligatory a review at fixed periods rather than a policy of leaving the matter until enough political pressure has been created in this country to make the Government secure a re-examination and some increase in pensions. I hope that the Minister will accept the Amendment in the spirit in which my hon. Friend the Member for Sowerby (Mr. Houghton) moved it. If he claims that the old-age pensioners are receiving their fair share of the increased prosperity in Britain, then he has nothing to fear from such a review. If that fact is as clear as the hon. and gallant Member suggested, then the review will impose no charge on the Government.

But I believe that in the hands of a keen Minister of Pensions, such as the present Minister, it would provide a system by which he would be fortified in the battle which always takes place between Ministers administering the social services and an unwilling Treasury; a battle which will go on right through this century and in which a social Minister could do well to arm himself with the result of such an inquiry as we propose.

Vice-Admiral Hughes Hallett

I understand the hon. Member's argument. What I do not follow is how the review would result in pensions increasing more in proportion than either earnings or the cost of living, which has, in fact, happened.

Dr. King

I am sorry that the hon. and gallant Gentleman did not understand me. If the review reveals a state of affairs such as he imagines, then there is no reason why he should not accept the Amendment. If it shows that we have carried out every pledge and that there is no need for a further advance in the standards of living of old people, then he need not fear accepting the Amendment. That is what I said just now.

6.45 p.m.

The issues in the Amendment are profound. We should be asking ourselves from time to time how poor are the poor—how poor are the poorest people in this country to be; and nobody, not even the hon. and gallant Gentleman, would say that the answer is either easy or final at any time. I doubt whether we think that we have reached a final answer to this question when it is a simple fact that 1¾ million people will find the proposals which we are making in the Bill inadequate; when 47 per cent. of all those who retired in 1959 had continued working after the age of 65 and had not wanted to retire because their income when retired would be so low; and when many of the others, who retired at the age of 65, retired either because it was compulsory or because they were physically unable to carry on.

I do not think that we can call this issue settled. We cannot leave it merely to the building up of political pressures, as long as we have two nations in this country, one retiring at a proper retiring age on half or two-thirds of the salary which they have drawn during their lifetime, and the other, consisting of the great mass of the people, who fear the day of retirement. Under the Amendment, incidentally, everyone who takes part in such an inquiry as we would make obligatory on the Minister will belong to the group which is protected for life and will be inside a profession which has its superannuation provisions. The Amendment merely asks for an examination every fifteen months of the condition of those to whom the basic pension is the only means of subsistence, plus what they get from the National Assistance Board in their retirement.

We have often said that everybody ought to be able to retire, when their life's work is done, in honour and in comfort. It is true that we have removed the grim poverty which haunted the lives of old people at the beginning of the century. The Trades Union Congress has asked the Minister this very same fundamental question: what is the new national basic minimum at any moment below which we say a British citizen ought not to fall? That new national basic minimum will change year by year, even if the cost of living remains static.

The old age pensioners, in their own magazine, put it in a much simpler way, quoting an article from the late lamented News Chronicle: How much money does it take, in Britain 1960, to live a decent life? We might ask ourselves whether 35s. for the wife of an old-age pensioner meets the requirements.

I conclude by reminding the Committee of my own experience, which must be the experience of many hon. Members who hold weekend "surgeries". One of the most pitiful experiences in my life as a Member of Parliament is when people come to me about pension matters and I make inquiries. We pay our tribute to the local officials of the Ministry of Pensions and the National Assistance Board. We very often find that what is wrong is not that the Ministry of Pensions and the National Assistance Board have not given them all they are entitled to, but that when we have given them all the protection of the Welfare State they are still too poor to "get by". This is the kind of question we ask the Minister to examine every fifteen months.

Mr. Raymond Gower (Barry)

The Amendment has been moved most persuasively by the hon. Member for Sowerby (Mr. Houghton) and supported most persuasively by the hon. Member for Southampton, Itchen (Dr. King). Yet the remarks of my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) underline the fact that, however well intentioned the Amendment may be—I believe that it is well intentioned—it seems to have some aspects which must cause misgivings to many of us who have been thinking about this problem.

This is a much more sophisticated edition of proposals which we have heard for many years for the alteration of pensions with changes in the cost of living. The hon. Member for Sowerby explained how he and his colleagues had been at some pains to write into the Amendment a much more reliable formula than the rather general words which were previously employed.

Even so, I cannot feel that this would be the appropriate means of ensuring that people who are elderly and in need shall not suffer from sudden or occasional changes in the cost of living. That object would be accepted on both sides of the Committee as most laudable. However, the formula now before us would involve somewhat regular changes in the basic pension and, accordingly, somewhat regular changes in contributions.

That in itself may be an objection. Our experience of the pension scheme over about twelve years has been that we have changed the basic rate of pension perhaps every two and a half or three years. On the other hand, there have been far more frequent changes in the rate of National Assistance. Many people might think that this type of formula would be much more appropriate if attached to changes in the rates of National Assistance, which is designed to deal with immediate hardship.

We are dealing with a basic retirement pension which, after all, is paid not only to people in need but to a very large section of the community, a very large proportion indeed of the whole population. As my hon. and gallant Friend reminded the Committee, this is an ever-increasing proportion of our population. It seems that this machinery may not be the most appropriate to achieve that object.

One can imagine that regular changes in the contributions annually, or at intervals of thirteen, fourteen or fifteen months, would not only be a cause of extra administrative work in my right hon. Friend's Department, but would occasion much disorganisation in industry, because all the books and all the rates and contributions of all employing organisations, whether State owned, local authority, or private industry would have to be changed. Unless a very powerful case is made out, this might appear to be a too regular period for this upheaval.

Mr. J. T. Price

I would remind the hon. Gentleman that it is necessary to put alongside his argument the fact that from April, 1961, when the National Insurance Act, 1959, will come into force with the new graduated pensions, every business which has not contracted its workers out of the scheme will be called upon to make frequent monthly or six monthly adjustments, because as wages change contributions to National Insurance will change. Therefore, there is not a great deal of validity in his argument.

Mr. Gower

The work necessitated by the formula proposed in the Amendment would be superimposed on that work, which perhaps rather strengthens my argument.

But there is another and far stronger point. I am not sure that the formula would enable pensioners to do as well as they have done under the system which we now have. The hon. Member for Sowerby who is a great expert in this field, will concede this point. He will recall the Measure introduced by my right hon. Friend in 1955. Had the pensioners been operating on this formula they would have been worse off than they were after my right hon. Friend introduced the Measure of that year. Similarly, pensioners would be considerably worse off if the formula were introduced than they will be when the Bill is enacted.

The hon. Member for Sowerby may have thought, and reasonably thought, that this would be a help to pensioners, but might it not have the exact opposite effect? Might not Administrations of any complexion feel that the pensioner's case is not nearly so bad if looked after by this automatic formula? There might not be the same reason for it to be pressed so feverishly by Oppositions in the House of Commons.

There is another consideration. If this formula were adopted and pensions were adjusted automatically, it would be done by Order. I do not consider that to be the most appropriate method of making changes of this magnitude. They should be dealt with in the form of a Bill, subject to debate and Amendment.

Mr. Ross

Does the hon. Gentleman apply that argument to National Assistance?

Mr. Gower

I will come to that in a few minutes. Our ideas about the care of the aged and the improvement and modification of the Act of twelve years ago are changing in a rapidly changing society. It would be a retrograde step for these important changes to be conferred in this way upon my right hon. Friend's Department in the form of the automatic formula, which would result merely in an Order which would, in the words of the Amendment, be subject to annulment by resolution of either House of Parliament. It should be in each case a Bill of the same importance as the Measure now before us. It should be subject to debate, amendment and the mature consideration of both sides of the House of Commons.

There is another objection to the proposal, in addition to the objections mentioned by my hon. and gallant Friend. Our dealings with the problems of age may vary from year to year. For example, in one year it may be deemed proper for the Government of the day not to increase the rate of pension but for some reason, as happened about a year ago, to increase considerably the rate of National Assistance and the disregards. By that method we would be able to bring the maximum assistance to those in the greatest need; by this formula we would be bringing the minimum assistance to those in the greatest need.

It should be left to the judgment of the Government of the day, and to that of Parliament after mature consideration of a Bill, to decide whether the basic rate should be increased in a particular year, or whether the Government in their wisdom, or lack of it, should deem it preferable in a particular year substantially to increase the disregards or substantially to increase the rates of National Assistance.

Those are some of the misgivings that I, like my hon. and gallant Friend, have about this very well-intentioned Amendment, which might have the ultimate effect of not helping those whom it is intended to help and who would, if the position were left as it has been in the past, find themselves in a better position.

7.0 p.m.

Mr. Donald Wade (Huddersfield, West)

It is right that the Committee should discuss the whole subject of periodical reviews raised by this Amendment. I do not want to be unduly cynical——

Mr. J. T. Price

Then do not be cynical.

Mr. Wade

—but there will be a certain amount of agreement when I say that there is a tendency for increases in contributions and pensions to occur in a period following a General Election. Promises are made at General Elections to increase pensions of various kinds, but not so much is said about the contributions. The promises are carried out to a greater or lesser extent in the period fallowing the General Election, but that is not necessarily the most appropriate time.

Even though it may be said that my remarks are not fair, I am sure that the political factor does tend to enter unduly into the timing of increases——

Mr. Gower

I do not suggest for one moment that the hon. Member's remarks are unfair, but I think that on reflection, he will find that they are not historically accurate. In some cases these changes have been introduced just before a General Election and, in this case, afterwards. I think that the hon. Gentleman will find that that is so.

Mr. Wade

If I may pursue my remarks, the hon. Member may agree with my next point.

I further believe that increases in contributions and benefit will tend to be made at the wrong time of year, because it is politically convenient to announce these changes at the beginning of the Parliamentary Session. We all know that such changes involve a great deal of administrative work, with the result that the increases both in basic pension and in contributions occur about April, as will be the case here.

It seems to me inevitable that increases in the basic pension should coincide with increases in National Assistance, and April is not the most helpful time to introduce increases in National Assistance rates. We all know that those who have to rely on National Assistance are in greatest need in the winter months. Reference has already been made to the price of coal, which is probably one of the best examples. January, February and March are the most difficult months for the elderly, but I foresee that these increases in basic pension will tend to be announced at the beginning of the Session and that the corresponding increase in the National Assistance rates will tend to occur—if it occurs at all—in April or May.

Mr. John McKay (Wallsend)

The hon. Gentleman's point seems to be that we must keep National Assistance rates and basic pension together. Does that mean that if we could see our way clear to raise pensions to £3 a week we must of necessity raise National Assistance rates to the same extent? In other words, has the basic pension to be governed not by an independent view of what it should be but by subsistence level?

Mr. Wade

I look forward to the time when it will not be necessary to rely on National Assistance at all, but we must be realistic. At present, about a million pensioners have to rely on National Assistance. I do not advocate it, but I do say that as long as that is so we will find that the tendency is to increase the National Assistance rates at the same time as we increase the basic pension. Whether one likes it or not, I think that it will work out that way.

For a long time we have departed from the principle that the basic pension should be directly related to the amount paid in by the contributor. The original idea contained in the Beveridge Report of building up the fund was departed from when the National Insurance scheme was introduced in 1948. Having once departed from that principle, it is almost impossible to get back to it.

Mr. J. T. Price

Will the hon. Gentleman support what he has just said by quoting to me any section or paragraph of the Beveridge Report that suggested that old-age or retirement pensions on the scale then envisaged should be fully covered by contributions necessary to make them possible when, in fact, even before the Beveridge Report or the National Insurance Act of 1946, the whole extent of pensions was paid for by the Exchequer? I think that the hon. Gentleman is wrong in fact.

Mr. Wade

If the hon. Gentleman studies the Beveridge Report he will there see that idea of building up the fund, but it would involve quoting at great length from the Report to support that contention. However, I think he will find that that is correct.

Once one departs from the principle that the amount a pensioner receives is related directly to what he has paid in—in other words, something similar to a contribution to an ordinary pension policy through an insurance company—one must have some other principle on which to work. I think that it would be a good idea to relate the payments, first, to the cost of living and, secondly, to the standard of living. That, I think, is the idea underlying this Amendment, though there may be technical objections to it.

In the context of "cost of living" I refer to some special cost-of-living index related to the kind of articles that old people buy rather than to the cost-of-living index that applies to the public generally. If one is to have a principle at all, one should attempt to work out some scheme whereby the payments are related to both the cost-of-living and the standard of living.

The other problem relates to how often the reviews should take place. I can see difficulties in an automatic review every fiften months—two years is, I think, as short a period as is practicable—and there is some force in the argument of the hon. Member for Barry (Mr. Gower) in making a distinction between basic pensions and National Insurance rates. There is a better case for having more frequent changes in the National Assistance rates than there is for having them in the basic rate of pension.

To return to the underlying problem, we have reached a situation in which pensions are being paid on the pay-as-you-go principle, as was made clear in our debates on what is now the National Insurance Act of 1959. That imposes on Parliament the responsibility of deciding how much the community shall contribute to old people, and we cannot escape that responsibility. Again, one must have some principle upon which to decide how much the community shall contribute to its old people.

The 1959 National Insurance Act has already recognised the need for periodical reviews. I do not think there is any dispute about the fact that there are to be periodical reviews. The point is whether they should be subject solely to political pressure. It may well be that some degree of political pressure is inevitable, but I should like to see the political factor lessened as far as possible.

I therefore ask the Minister to say on what principle these reviews are to take place. Is it to be entirely fortuitous? Is it to be related in some way to the cost of living or to changes in the standard of living? Will a particular period in the Session of Parliament be chosen? Are there any principles that will guide the Minister? It would be helpful to be enlightened on that, and without such enlightenment I would feel inclined to support this Amendment because I think that the ideas underlying it are helpful.

Mr. John Jackson (Derbyshire, South-East)

Nobody is more sympathetic towards old people or to disabled people than I. As a secretary of S.S.A.F.A. for some time I have seen some pretty nasty things, and have dealt with them, but I think that when we deal with some of these matters we forget that people are very proud. They like to look after themselves, and, of course, they require enough money on which to live.

Pensions, however, are not the right of people. They are granted by popular wish. It is an evidence of civilisation that people are willing, when they are earning, to pay part of their earnings into a pool so that those no longer earning can take from that pool, being entitled to it because of what they have previously done; and the amount must be enough.

On the other hand, this Amendment seems to be an extraordinary one. The Government themselves have put forward a proposal to increase these pensions, and members of the party opposite then say, "All right, the Government have increased these pensions—let us prod them to review the matter every so often". Her Majesty's Government are reviewing the matter—that is why this Bill is before us. I would sooner pin my faith in Her Majesty's Government than in some funny little review that may take place, perhaps by some civil servant.

Mr. Houghton

The "funny little review" is to be made by the Minister in whom the hon. Member has such confidence.

Mr. Jackson

I think that this matter is under constant review by the Minister. It is not, I think, altogether understood in the country that the individual National Insurance contribution does not begin to provide statutory responsibility.

It is very easy to be humanitarian if one is not responsible for the cost. The question is what are people prepared to pay. There is no question of some widow's cruse—nothing like that. The amount of money available is calculable and has surely to be dispensed in many directions. If we say that the old people are getting too little, are we to say then that some sick people are not to be treated, that some unemployed are not to receive their benefit? This is the point.

Right hon. and hon. Members opposite say that the contribution of the earner is too great, that the increase of pension is too small, and that the date of grant too late. Well, Euclid coined a phrase for this mathematical situation—"which is absurd".

7.15 p.m.

Mr. J. B. Symonds (Whitehaven)

I support the Amendment. When I listen to some of the statements made by hon. Members opposite, I, as secretary of an old people's welfare committee, wonder whether they ever visit any old people who are in need. If they did, they would be only too pleased to support this Amendment calling for a review at least every 12 or 18 months.

I have heard hon. Members opposite saying that it is a question of how much money has been paid in, and that the money must be distributed accordingly. My experience is as the secretary of an old people's welfare committee; I am not talking about an old people's club. I am speaking as secretary of an organisation responsible for looking after people who were invalids, who could not get out of the house and who required extra nourishment. I heard an hon. Member opposite talking about the benefits which old people get through the National Health Service and so forth. I remember the right hon. Lady the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance speaking at Llandudno where the old people were promised a chiropody service. I have not yet seen that chiropody service supplied under the National Health Service.

The Temporary Chairman (Mr. Diamond)

The hon. Member will have very great difficulty in seeing it on this Amendment.

Mr. Symonds

I accept what you say, Mr. Diamond. An hon. Member opposite spoke about the benefits which could be obtained under the National Health Service, and I was merely replying to him on the basis of my experience.

A large number of the married couples who are at present in receipt of £4 a week are still independent and just will not go to the National Assistance Board. Of that £4 a week, 15s. will go in rent and 15s. for two bags of coal, if the couple can afford it, and that leaves them £2 10s. a week on which to live—7s. a day. Hon. Members will pay more than that for two cigars to enjoy after their dinner. Yet the old people have to find three meals a day out of that. What we have to consider is the price of clothing and other commodities such as butter and milk—foodstuffs of that nature which are the mainstay of the diet of old people. The prices of those commodities rise from time to time, but no account is taken of that in the amount of pension provided. Consequently, the amount made available to these people to spend upon ordinary necessities should be reviewed periodically. Is 12 months or 18 months too long for that purpose?

It must also be remembered that the older people of this generation were at one point the young people of the generation and the backbone of the country. At one time they were lauded to the skies. We ought now to review the sum which is given to them. Yet we are told that that cannot be done because it will cause too much work in April or make too many civil servants busy.

Yet, at the same time, the old people lack the money they require to keep body and soul together. There are some tragic cases. It is because of such hard cases that some of us can come to the House of Commons and speak with authority about the plight of these old people. The Conservative Party General Election Manifesto said that the prosperity of the country would determine the amount which the old people would receive. I have heard some marvellous statements made by right hon. and hon. Members opposite about this country's prosperity, and I have read about what certain people in the country are receiving.

Last winker the old people expected their pensions to be reviewed, and then they expected a review and something being done this winter, but now they find that they have to wait until April of next year, when the winter is over. I am afraid that some of them will not have the opportunity to enjoy the rise next April because they will have passed on. Consequently, I feel that the Amendment is justified and that the position of the old people should be reviewed every 12 or 18 months so that they may benefit from the prosperity of the country about which we have heard so much.

Mr. W. Griffiths (Manchester Exchange)

I should not have risen had it not been for the remarks of the hon. Member for Derbyshire, South-East (Mr. Jackson) and his contemptuous reference to the Amendment. He expressed his views by saying that he implicitly trusted the Minister, who had the matter constantly under review. The right hon. Gentleman nodded enthusiastically at that observation. But the Minister knows—and so should the hon. Member—that even if he is moved on any occasion with the maximum amount of compassion, as I am sure he is, for the people who benefit under the National Insurance Act, he has to argue with his Cabinet colleagues every time he wants to adjust the benefit rates.

I should lave thought that the right hon. Gentleman, so long as he remains Minister of Pensions and National Insurance—he has been in the office a very long time, and looks like being a long time there still, at least until the next General Election—would have welcomed a provision of this kind to help him against members of the Cabinet who want to spend a disproportionate amount of the national income on the defence programme and other forms of Government expenditure which I regard as grossly wasteful. We are seeking to strengthen the Minister's position in relation to the members of the Government.

There had not been a yardstick which any Minister of Pensions and National Insurance under any Government since the war could apply to determine the appropriate time for benefits to be increased. All Ministers of Pensions and National Insurance, whether Conservative or Labour, have been subjected to the pressures of the National Federation of Old Age Pensions Associations and these people have undoubtedly been used by the politicians. I should have thought that the right hon. Gentleman would welcome the Amendment. Perhaps the actual form of words is not acceptable, or perhaps the period envisaged is not suitable. If the right hon. Gentleman can accept the principle, perhaps he would suggest a better period. I am sure that he would wish to be freed from outside pressures which make pensions a political plaything.

The hon. Member for Barry (Mr. Gower) said that if the Amendment were accepted the pensioners would at a given moment of time have been worse off. The increases which the Government have given pensioners of all classes may sometimes have been late, but I have welcomed them anyhow. I would point out that the Amendment says: … the Minister shall review the provisions having regard to any change in the gross national product or in the prices of consumer goods and services, or in the average weekly earnings of manual workers and unless he is satisfied that the value of the benefits and increases … has not fallen". All we are seeking to do is to put a weapon in the hands of the Minister to prevent him from being subjected to political pressure, to prevent pensioners from being overtaken by inflation, as they have repeatedly been under all Governments since the war, and to allow an automatic increase to be made by Order laid by the Minister without having to bring legislation to the House.

If the hon. Member for Barry, who objects to this procedure, has in mind any alterations of principle or of substance, I agree that they would have to be dealt with by legislation. If perchance the hon. Member agrees with me that, for example, the earnings rule for widowed mothers ought to be abolished, perhaps he will help me persuade the Minister that even this Bill might be amended to bring about that desirable state of affairs.

Unless the Minister can convince the House that there are ways in which this built-in insurance for pensioners against inflation can be arranged better than is envisaged in the Amendment, he has no right to rest his case upon his own degree of compassion and his own personal responsibility, knowing as he does perfectly well that he is subject to all kinds of political pressures and subject to the competing claims of Departmental Ministers and actions in the Cabinet.

7.30 p.m.

Mr. William Hamilton (Fife, West)

This has been an interesting debate, and I want now to try to anticipate the right hon. Gentleman's reply to it. It will probably go along the lines that the man in Whitehall knows best, that he can be trusted to do his duty as he sees it, and that the Minister would not like to be tied down to a specified periodic review such as is suggested in the Amendment.

I say at once that I should agree with that more readily if those who sit on my own Front Bench were sitting on the Government side of the Chamber in place of the right hon. Gentleman and his colleagues. It is precisely because we do not very much trust the right hon. Gentleman's colleagues that we seek to regulate proceedings. I confess that I do not greatly like the mechanics of the procedure suggested in the Amendment. I do not like the procedure of annulment by Resolution. I like my party politics too much for that. The hon. Member for Barry (Mr. Gower) was, I think, quite right to point out this shortcoming in the Amendment. But that is no reason for rejecting the principle behind it.

By all means let the Minister say what his criticisms of the Amendment are, but let him say, also, whether he accepts the need for some principle upon which a yardstick can be worked out so that we may ascertain what the economic facts are and not only provide for pensions keeping pace with a proportion of the gross national product, as the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) said, but also to ensure that the pension has some relationship to earnings. In my view, this is the most cosely relevant point in the Amendment.

If the Minister looks at the facts and figures for the past few years he will find that the gap between the income of the pensioner and the earning power of the average wage earner at any given time has been widening, despite what the Government have done in increasing the basin pension. This is the bone of contention of the pensioners. While their pension has increased, they have lost ground relative to the average earnings of the workers. My party has continually sought, over several years, to close that gap. When the Labour Party introduced its national superannuation scheme which was before the electorate at the last election, this was one of its prime motives, to ensure that when a pensioner retired he would have as pension not less than half his average earnings over a period of years. I believe that the Government must eventually come to the view that those two factors must be measured one against the other, the pension and the average earnings of adult workers.

In reply to the comments of the hon. and gallant Member for Croydon, North-East, I must say that I find it distressing sometimes that party politics should play such a large part in these matters. As I say, I like party politics as well as anyone, but it is a little distasteful to feel the pressure building up. One has the impression that there is a reluctant Minister yielding the minimum to satisfy or quieten the political unrest and then, having done that, sitting back and waiting for it to build up again. This is a deplorable aspect of our society today. If we can regulate the procedure by a method of this kind, not necessarily following the exact mechanics enunciated in the Amendment, that would be for the benefit of all concerned.

Vice-Admiral Hughes Hallett

Surely there is nothing to be ashamed of in party politics playing a part in these affairs. The growth of nearly all our social services has been due largely to the perfectly healthy rivalry between the parties in or out of power. That is the motive force which drives democracy along.

Mr. Hamilton

I entirely agree. I do not want to take the matter completely out of party politics. Nor would this Amendment do that. Indeed, we are making sure that, every year or fifteen months, we should have a full scale debate with the Minister coming down to justify his actions periodically, but not, as happens now, with the build-up of pressure followed by placatory action on the part of the Minister, who then sits back again and waits until he takes his next decision.

The Minister decides now when he next comes to the House, and he is subject to all kinds of pressure, on his side in one way and on our side the other way. We seek to regulate these matters, to ensure all the time that we have our political debate and argument in the House at not less than twelve-monthly intervals.

This seems to be a very desirable objective, and I hope that the Minister, if he picks holes in the Amendment, as he is quite entitled to do, will at least enunciate some principles on which his future action will be based.

Mr. John McKay (Wallsend)

To my mind, this could have been one of the great debates of our time on this subject. I say that because we are dealing here with one of the things which really matters for the whole nation. It is open to a great deal of thought and a variety of opinions. I agree entirely, and always have done, with the principle of the Amendment. After all is said and done, although we may have ideals about helping people, our ideals are always governed by our ability to fulfil them.

The question before us involves many factors. We cannot simply pass an Amendment of this character without embarking on a consideration of the principle involved. The principle must be settled before we talk about the method of moderating it or applying it from time to time according to economic conditions. To pass an Amendment like this without having any stipulated standard to which we agree would be to do nothing at all. There is not only the question of the standard itself but the question of the method of payment.

When dealing with a big issue affecting the whole nation very closely we must try to establish clearly what it is that we have in mind. We have been dealing with this problem for fifteen years. There has been constant agitation for higher pensions. The political stage has altered from time to time, but so long as the present methods continue there will be the usual situation, with the political parties being governed not so much by the principle which matters but by a consideration of how we can affect the situation to our advantage as a political party. That is one of the main features of this subject.

Have we not now reached the stage when we ought to think the matter out a little more? Is the position such that we cannot spend a little more time on this matter before we fasten ourselves down to anything definite?

I have been working like a donkey in looking at this matter from a hundred different points of view, but I did so with the principle in mind. I tried to fix a sum which I thought we could afford to pay as pension, and then, having fixed the principle and the remuneration, I tried to work out how it should be paid. Not enough attention has been devoted to that question. There are Amendments on the Notice Paper dealing with the payment which should be made. Have hon. Members worked out how much extra in contributions is needed to meet the increased pensions which we are demanding? I have not worked it out in detail, but I estimate that instead of an increase of 1s. 6d. with which to implement the increased pension which we are trying to get an increase of 3s. 6d., or something like that, is needed. Surely the question of the contributions is as important as the benefits themselves?

The Temporary Chairman (Sir James Duncan)

Order. I think that the hon. Gentleman is getting a little wide of the Amendment, the main object of which concerns a periodic review. If he deals too much with the question of benefits and contributions he may impinge on other Amendments which are to be called later.

Mr. McKay

I agree that what I have been saying is not pinpointed in the Amendment, but, with respect, I must differ from you, Sir James, about the liberty which ought to be given in discussing this issue. We cannot pass an Amendment like this without it being laid down definitely what is to be paid and how we are to pay it. If you will give a little more consideration to the matter, Sir James, I am sure that you will allow me a little more latitude. We should not be tied down when discussing matters of national importance. This is not a triviality. We are discussing a big national issue.

To my mind, it is wrong to talk about increased pensions when no progress is being made in the method of supplying the money for them. There are tremendous differences among contributors. Surely the question of what advantage one body of pensioners has compared with another has a bearing on the matter. Before the principle of the Amendment is embodied in legislation we must seriously consider what the pension ought to be

7.45 p.m.

It is a pleasure for me to see—I admit it openly—that the Tory Government have broken away from the old, silly, stupid tradition of basing things on the cost of living. They have broken the ice, although in a wrong and niggardly way. No one knows better than the Tory Party how much it could improve the situation of the pensioners. No one knows better than the Conservative Party how easy it is to get money from the people for pensions and all the important matters attached to them. There is the question of the unemployed. The situation in Coventry may get worse. Other parts of the country may be similarly affected. The trade unions should be watching the situation very carefully. They should devote more thought to and bring more pressure to bear on the question of National Insurance, because it affects their members so much. Unless a special fund for the unemployed is created it is only by National Insurance that we can help the unemployed and the poor fellow who has been lying on a sick bed for months.

There is too much talk about the pensioners. Let us be realistic in this matter. One million people need assistance from National Insurance week by week. They need the money just as much as the pensioner. Therefore, to the trade union movement and to all the workers of Britain this Bill is of great importance, and not sufficient pressure is being brought to bear to bring it to a conclusion to which we look with pleasure and pride. In thinking of how the pension should be paid and how in future the amount of payment should be governed we must of necessity try to fix a figure which will stand the test of time.

The Temporary Chairman

Order. I have stopped the hon. Gentleman once when he was speaking on this point. He is back on it again. I must point out to the hon. Gentleman that this is a fairly restricted Amendment. Much of what he has had to say might be in order on the Question "That the Clause stand part of the Bill", but it is certainly not in order on this restricted Amendment.

Mr. McKay

I will try to remain in order. I always try to keep in order, although it hampers me on occasions. Some hon. Members can whirl about all over the world and they never seem to be called to order. I like to be obedient to authority in so far as it is suitable.

The principle embodied in the Amendment is very good. We cannot pay more than we can afford. Despite all the theories about our always being able to keep full employment, we shall find it difficult to do so on occasions. The principle embodied in all our taxation laws is that the individual should pay according to his ability, and this principle should, as far as possible, be embodied in National Insurance. The principle is that, when it has been decided what is a reasonable payment in respect of pension and other benefits, the unemployed and the sick shall not have to depend on the Government of the day and that if the national average income rises National Insurance benefits also will rise. The principle of the Amendment is good and I hope that it will be accepted.

The Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance (Miss Patricia Hornsby-Smith)

It might be for the convenience of the Committee if I intervene at this stage. We have had an interesting debate on this topic, which strikes new ground in as much as it gets away from the one-time suggested cost of living or retail price index basis and offers a tripartite edifice on any point of which, apparently, changes in the pension may be founded. I thank the hon. Member for Sowerby (Mr. Houghton) for the manner in which he introduced the Amendment. I assure him straight away that we welcome the spirit and intention behind what he proposes. Indeed, I assure him that my right hon. Friend has every intention of continuing the constant review of pensions with which he is so regularly preoccupied.

The Amendment would make the rates of benefit and increases payable under National Insurance, but not those under industrial injuries, subject to review at intervals of between a year and 15 months and would make revision subject to movement in any one, irrespective of the other two, of three indices. As the hon. Member for Sowerby rightly pointed out, an increase in any one of these three indices could give rise to an increase in pension: the gross national product, the price of consumer goods and services—I cannot think why that one was chosen—and the average weekly earnings.

Mr. Houghton

We chose the second one as a safeguard—a good one.

Miss Hornsby-Smith

It is not quite so good, perhaps, as the hon. Member thinks. If prices were to stand still and wages went up, pensions would go up. If wages stood still and prices went up and we had inflation, we should still have to put up the pensions. I welcomed the comments by the hon. Member for Wallsend (Mr. McKay), because he was the only hon. Member on the opposite benches who drew attention to the fact that within the Amendment, whilst there is provision for putting up pensions, there is not the slightest indication how those increases are to be paid for.

Mr. McKay

I did not have a chance to debate that.

Miss Hornsby-Smith

It was certainly an effective enough comment for me to pick up the point that the hon. Member had in mind.

It is a serious defect of the suggestion that whereas we would be committed by the Amendment to raising pensions, perhaps by small amounts, perhaps by large amounts, no provision whatever is made within it for paying for those increases. Furthermore, in the switch that could take place among the different indices, it would be perfectly possible for an increase to arise under one of them at one review, under another at another review, when it did not apply on the other two, and on the third of them at another review, with the result that no one basis would consistently be used for the increase of pensions We should be in the position that over a period of years pensions might be increased, because of the incidence of a rise in one of these three criteria, far more than the overall position of the economy justified. There is, for example, no provision in the event of a recession for any adjustment other than upwards. So that if there were a recession and difficulties arose—one always hopes that they would not—the whole working population might be hit, but the benefits would be untouched.

I said that I thought it strange that hon. Members opposite should have chosen the price of consumer goods and services as an alternative to using the retail price index. The retail price index represents the shopping basket of ordinary, working people, and I should have thought it was a much better guide to standards for the old people, or for those on sickness or unemployment benefit, than was the price of consumer goods and services, which include Rolls Royces, furs, jewellery, luxury hotels and the rest. It does not seem to me that that is very good index.

Mr. W. Griffiths

What is?

Miss Hornsby-Smith

I said that the the retail price index is a more reasonable index.

In case hon. Members opposite consider that I am being unfair to the retirement pensioner, I should like to point out that on its record over the last few years, the price index of consumer goods and services has gone up less than the retail price index. So that had that index been the barometer for the rise in pensions, retirement pensioners would not have done as well as they did under the retail price index.

Mr. W. Hamilton

The right hon. Lady will not see any reference to an index in the Amendment.

Miss Hornsby-Smith

The hon. Member is quibbling over words. The Amendment specifies that the level of benefits shall be judged by the three criteria: the gross national product, which, presumably, must be assessed and worked out over the many and varied items and an index of some sort produced; the earnings of manual workers, the average of which is produced six-monthly by means of an investigation; and the prices of consumer goods, which cover a wide range of goods and of which an index would be produced. If the hon. Member likes to call it a schedule or something else, I do not quibble, but the purpose of the operation is precisely the same.

There is the added difficulty that, with none of this information very up to date when it is announced, the effect of such an arrangement could be to give an increase of pension over the years which was much lower than the corresponding increase in the respective indices, since available information about changes in national income and consumer prices would not be available for the current year and the increase in earnings would be known for only half a year. Therefore, it might be much longer before an increase came than can be, and has been, the case when the Government, after analysis of all the circumstances and considerations, recommend, as at present, increases based not only on the price index, but also on the general situation and giving due regard to the level of wages. However, once we peg it we are tied to making adjustments possibly of very small amounts.

8.0 p.m.

As hon. Members know, there is a regular statutory review at the present time. The National Insurance Act provided, in the terms devised by hon. and right hon. Members opposite when they were in office, that there should be a quinquennial review by the Government Actuary of the financial condition of the Scheme and of the adequacy or otherwise of the contributions, and that has to be followed by a quinquennial review by the Minister of the benefits of the Scheme. In fact, as my right hon. Friend's Report after his second quinquennial review pointed out, in recent years this five-year review of the benefits has been replaced for practical purposes by a policy of keeping all aspects of the Scheme under continuous review.

At the same time, we cannot ignore that if provision is made for these rises, provision must also be made as to how they are to be paid for. It is idle for hon. Members opposite to suggest that this would go through automatically, that millions of pounds in money could go through automatically, because there was an automatic review, without the normal procedure or the right of full debate in the House as to how the money should be raised and how it should be spent, or on decisions in the regulations as to the varying rates and benefits. Here we have a recommendation to provide regular increases without one thought in it of how we could pay for them.

Nor is consideration given to the effect of such increases on the financial soundness of the Scheme. The 1959 Act has placed the Scheme on a sound pay-as-you-go footing. Clearly, periodical increases in benefits unrelated to any consideration of contribution income would upset the whole balance of the Scheme laid down in the 1959 Act. As the Government Actuary said at the end of his Report after the second quinquennial review: It does, however, appear that any increase in benefits would have to be accompanied by a provision for increasing the income in order to maintain the 'pay-as-you-go' basis of the scheme. I think it would be irresponsible of this Committee to pass an Amendment which, while providing for increases, makes no provision whatsoever as to whence or how the money is to come.

Any change in rates of pension and other benefits is a very important matter, affecting not only the beneficiaries at any one moment but also the lives of nearly all in this country, either as contributors or taxpayers, as well as the finances and security of the Scheme itself, and, indeed, the national finance. Such changes should be made only after full opportunity for Parliamentary scrutiny has been afforded by the normal legislative process. It would, in my view, be quite inappropriate to make changes of the range and consequence involved here by the procedure of regulations subject, as outlined in this Amendment, only to the negative Resolution procedure, by which dissent can be registered only by an attempt completely to annul the entire regulations.

This consideration is the more powerful when, as in this case, the proposal is not simply to measure the value of the pension but also to give the pensioners an increase in real terms. On this Bill we had a second reading debate last week, and we have three days this week for the remaining stages. Yet hon. Members opposite say they would sweep all this procedure away, the proposal could be automatic and subject only to a negative Resolution. [HON. MEMBERS: "Nonsense."] Where then is the claim that the Amendment will save legislative time? The central aim of the Amendment, as I understand it, and as I understand the reasons put forward for it, is to avoid the delay caused by the need for a Bill. Some hon. Members have not read fully their own Amendment. The idea of the Amendment is to replace the type of Bill which we have before the Committee, on which we are spending three days this week, by a regulation which would be subject merely to a negative Resolution, so that the whole thing would have to be either annulled or passed in entirety.

Although it may be claimed that it would be time-saving—I think that was one of the reasons for it put forward by the supporters of the Amendment—it would still be necessary to have complicated legal instruments to give effect to the changes, not only in the main rates but also in the subordinate rates and to deal with minor and consequential amendment. For example, the regulations needed to supplement the 1957 Act extended to 44 pages.

Then we have to consider the administrative effects. As the right hon. Lady the Member for Warrington (Dr. Summerskill) explained in great detail when she was Minister of National Insurance, changes in benefit rates are a vast administrative operation. They involve the alteration of well over 100 million pension orders held by pensioners. Suppose that the indices, or any one of them, required an increase of 1s. on the basic rate, according to this Amendment dependent wives would have an increase of 7d., and eldest children would qualify for under 4d., and there would be lower, proportionate, increases for rates of pension below the standard figure. There is no provision here at all as to a limit. If there were a change of only a few pence the whole administrative machinery would have to be operated for only a small, derisory, increase. That is what would happen if we took the three items on which this Amendment has been based.

I think that this Amendment has been outmoded by the record of my right hon. Friend. The retail price index—I use that because it has gone up more than the price of goods and services index, and so is much more generous to retirement pensioners and other beneficiaries—has gone up by 3 per cent. since the last increase in benefit rates, and the food index, the last one published in September, by less than 1 per cent. We are increasing pensions by an average of 15 per cent. So on that score there is nothing which this Amendment could do which my right hon. Friend has not done already.

The average earnings of male manual industrial workers have risen by 11½ per cent. since the last increase. Pensions and benefits are going up 15 per cent. If we had been tied to this average the increases we have included in this Bill would not be as high as they are. As for the gross national product, this covers many aspects of our national life, but it takes no account at all of the numbers supported by that income. The figures for recent years show that to have based pension increases on this would have been less favourable than to have based them on average earnings.

Therefore, with great respect to hon. Members who have suggested that if we were to refuse the Amendment we should be lagging behind in what we are doing for the old-age pensioners, I say that in fact the reverse is the case because, taking the three criteria which they have in this Amendment, the present increases are higher than would have been made if they had been governed by these indices. As a political exercise this Amendment would involve a vast administrative burden, sometimes for a trifling sum, sometimes for a much larger, more worth-while one. It is outmoded by the current method which operates on simpler lines and by which my right hon. Friend maintains a constant review of all these aspects of national and economic life and their relationship to pensions and benefits. If we had followed this formula in the past the pensioners would be worse off than they are today, and certainly worse off than they are going to be under the proposed new rates.

Finally, as to the many choppings and changings which might take place, whilst with his usual subtlety the hon. Member for Sowerby——

Mr. Houghton

Subtlety?

Miss Hornsby-Smith

—and also a little pugnacity—returning the compliment he paid to me—quoted very fairly the recommendations of the Phillips Committee, I would remind him that that Committee did come down against rapid and small changes.

But far more important perhaps is the opinion very firmly expressed by the right hon. Member for Llanelly (Mr. J. Griffiths) when he answered a claim in the House that the pension should be tied to the cost of living, when he affirmed on behalf of the then Government: We are definitely of the view that it is undesirable, as well as impracticable, to have automatic adjustment. This method of pegging benefits to a specific cost of living and adjusting them automatically was tried at the end of the last war in war pensions, and broke down the first time it came to be applied. We are convinced, after examination, that it will break down again."—[OFFICIAL REPORT, 6th February, 1946; Vol. 418, c. 1741.] I hope that the Committee will reject the Amendment, first, because it would not do as well for pensioners as the present system and, secondly, because it makes no provision whatsoever for finding the additional money. It would be wholly irresponsible to pass a Measure providing for automatic increases without giving some consideration to how the money is to be raised. Finally, if I may answer the hon. Member for Sowerby in a sentence which he applied to my hon. Friend the Joint Parliamentary Secretary a little while ago, "Unless you reduce this to simple terms, you will get nowhere."

Mr. William Ross (Kilmarnock)

I think that the right hon. Lady the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance will not be surprised if we on this side of the Committee completely dissent from her forcible expressions of opinion about the Amendment. She started to speak rather sympathetically, but she then lathered herself into a perfect fury and that sympathy melted in a quagmire of quibbles.

Let us appreciate exactly what the right hon. Lady said. First, she said that we had not mentioned anything about the financing of future increases. Indeed, I had the impression that what she wanted was not an Amendment but a new Bill. The right hon. Lady knows as well as I do that, working within Parliamentary practice, one deals with one Amendment at a time, and we have already found it difficult to get our Amendments in order today. I admit that finding the money is important, but we on this side have never shut our eyes to the need for facing the situation involved in financing increases, and we have declared that we believe that the nation is prepared to do that. But the first thing that the right hon. Lady and her right hon. and hon. Friends have to get into their heads is that we want an adequate basic pension.

The hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) said, and this was equally implicit in the right hon. Lady's speech, that if we had applied the case that we are now applying to the present pension the pensioner would not be so well off as he will be under the Bill. With all due respect, we are not asking for that application. We are asking for the application of this proposal to this Bill and to future increases. We are not satisfied with the present basic pension, and when 15 per cent. is mentioned the important question is: "Fifteen per cent. of what?" The right hon. Lady will, of course, get a better result by retrospective application of this proposal even to her right hon. Friend's activities.

8.15 p.m.

What we are concerned about and what I thought the whole Committee was concerned about was that, having secured a decent but not, we would say, an adequate basic pension, we should keep it that way. That is the minimum, but we are concerned also that if national prosperity rises the old people, the unemployed, the sick and the widows should share in that prosperity. We are not looking at the past and judging by the application of this proposal to the past. We want to keep the Minister on the right road. The Tory Party, both by speech and by pledge, is tied to the proposal that we have put forward. The right hon. Lady indulged in all the quibbling about an index and in great glorification of what has already been done, but she must realise that since the Minister made his speech on Second Reading the index has already changed, and changed for the worse.

If the right hon. Lady likes percentages, I can tell her that 33⅓ per cent. of the slide has taken place since the right hon. Gentleman made that speech. It is, of course, a silly percentage. That is why I talk about the right hon. Lady's stale adventures into statistics and her failure to face the actual position of the old people and what the nation wants to be done about it. This whole matter arises out of the history of pensions, but all the right hon. Lady does is to present us with all the difficulties of making a review every year or every fifteen months. The right hon. Lady should realise that we are having a review every three years. There have been reviews in 1952, 1955 and 1957, and now there is one again in 1960.

This has been the record of the right hon. Lady's party. There has been a three-year gap before we have had the redress of the old people's grievances, and the very people who cannot afford to wait three years are retirement pensioners. Three years to them means a great deal more than it does to young people who are starting out in industry and to middle-aged people. Three years to them are vital. We intend to argue at considerable length and with considerable vehemence against keeping them waiting an extra five months, but the right hon. Lady is defending a period of three years before action is taken, a period during which the position of the pensioner becomes worse.

The right hon. Lady spoke of the record. I will speak about it in relation to the three-year gap. The Minister was asked on 4th April whether he could give for each year from 1952 to 1957 the value of the single retirement pension of £1 6s. in terms of 1946 values, that is to say, the pension that was so adventurously raised by the Labour Government immediately after the war. Here is the record under a Tory Administration. The value at October, 1946, prices in October, 1952, was 23s. 7d.; in October, 1953, it was 23s. 2d.; in October, 1954, it was 22s. 7d. Then, of course, we had an increase in pensions in April, 1955, but by October, 1955, the value at October, 1946, prices was 26s. 5d. In October, 1956, the figure was 25s. 5d.; in October, 1957, it was 24s. 4d.

Thus, we find this slide in a three-year period in the standard of living of old people—and three years passing before something is done to put it right. That is what we are trying to drive home to the right hon. Lady.

Miss Hornsby-Smith

Is not the hon. Member comparing it with the basic 26s. and ignoring the increases made by the present Government?

Mr. Ross

I am not ignoring them. These figures were given by the Minister himself. I will again read the Question, which I myself put to the Minister. It was to ask the Minister of Pensions and National Insurance in which years, as at October, from 1952 to 1957, the value of the single retirement pension exceeded £1 6s., in terms of 1946 prices. In other words, I wanted to find out how far the old people had advanced from their standard of living in 1946.

These were the figures: in October, 1952, the figure was minus 2s. 5d.; in 1953, minus 2s. 10d.; in 1954, minus 3s. 5d. Then came a pensions increase, and it became plus 5d. in October, 1955. By the end of another year, in October, 1956, it was minus 7d., and in 1957 it

was minus 1s. 8d. Then we had the last pensions increase Act, which, according to the Minister's own figures, raised it by 3s. 10d. in real value, taking 1946 prices. But we must remember that 2s. 4d. had been taken off when tobacco coupons were abolished.

Remembering all this, the achievements of this Government are not so good when measured against the affluent society of which we have heard so much. We are entitled to ask the Prime Minister and those other members of the Cabinet who pledged, during the election, that the old people would continue to share in the good things to face up to that pledge and be prepared to put into the Bill some such words as we propose.

We are not satisfied with the pension. We have tabled Amendments to increase it. What we want is a better pension for old people which is more realistic within the terms of the standard of living which this country can afford to give them, and, having done that, to maintain it in harmony with increases in the prosperity of the country.

We were told last night that the offer for Fords was a vote of confidence in Britain. A far better vote of confidence by the Government to the nation would be to write into the Bill some such Amendment as we propose to show that they are prepared to stand by the needs of the old people and by the pledges which they gave at the election.

Question put, That those words be there inserted:—

The Committee divided: Ayes 161, Noes 216.

Division No. 6.]	AYES	[8.24 p.m
Ainsley, William	Callaghan, James	Fletcher, Eric
Albu, Austen	Castle, Mrs. Barbara	Foot, Dingle
Allaun, Frank (Salford, E.)	Chetwynd, George	Forman, J. C.
Allen, Scholefield (Crewe)	Cliffe, Michael	Fraser, Thomas (Hamilton)
Awbery, Stan	Collick, Percy	Galpern, Sir Myer
Bacon, Miss Alice	Craddock, George (Bradford, S.)	George, Lady Megan Lloyd
Baxter, William (Stirlingshire, W.)	Cullen, Mrs. Alice	Ginsburg, David
Beaney, Alan	Davies, G. Elfed (Rhondda, E.)	Gooch, E. G.
Bence, Cyril (Dunbartonshire, E.)	de Freitas, Geoffrey	Gordon Walker, Rt. Hon. P. C.
Benson, Sir George	Delargy, Hugh	*Gower, Raymond
Blackburn, F.	Dempsey, James	Greenwood, Anthony
Boardman, H.	Dodds, Norman	Grey, Charles
Bowden, Herbert W. (Leics, S. W.)	Donnelly, Desmond	Griffiths, Rt. Hon. James (Llanelly)
Bowles, Frank	Dugdale, Rt. Hon. John	Griffiths, W. (Exchange)
Boyden, James	Ede, Rt. Hon. Chuter	Grimond, J.
Braddock, Mrs. E. M.	Edwards, Rt. Hon. Ness (Caerphilly)	Hamilton, William (West Fife)
Brockway, A. Fenner	Edwards, Robert (Bilston)	Hayman, F. H.
Broughton, Dr. A. D. D.	Edwards, Walter (Stepney)	Herbison, Miss Margaret
Brown, Thomas (Ince)	Fernyhough, E.
Butler, Herbert (Hackney, C.)	Finch, Harold	* See correction in column 1131, 23 November, 1960.
Butler, Mrs. Joyce (Wood Green)	Fitch, Alan
Hewitson, Capt. M.	Mapp, Charles	Snow, Julian
Hill, J. (Midlothian)	Marquand, Rt. Hon. H. A.	Sorensen, R. W.
Hilton, A. V.	Marsh, Richard	Soskice, Rt. Hon. Sir Frank
Holman, Percy	Mason, Roy	Spriggs, Leslie
Houghton, Douglas	Mellish, R. J.	Stonehouse, John
Howell, Charles A.	Millan, Bruce	Stones, William
Hughes, Emrys (S. Ayrshire)	Mitchison, G. R.	Strauss, Rt. Hn. G. R. (Vauxhall)
Hughes, Hector (Aberdeen, N.)	Monslow, walter	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Hunter, A. E.	Moody, A. S.	Sylvester, George
Irving, Sydney (Dartford)	Morris, John	Symonds, J. B.
Janner, Barnett	Mort, D. L.	Taylor, Bernard (Mansfield)
Jay, Rt. Hon. Douglas	Moyle, Arthur	Taylor, John (west Lothian)
Johnson, Carol (Lewisham, S.)	Mulley, Frederick	Thomas, George (Cardiff, W.)
Johnston, Douglas (Paisley)	Neal, Harold	Thomas, lorwerth (Rhondda, W.)
Jones, Dan (Burnley)	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Thompson, Dr. Alan (Dunfermline)
Jones, Jack (Rotherham)	Oswald, Thomas	Thornton, Ernest
Jones, J. Idwal (Wrexham)	Padley, W. E.	Timmons, John
Jones, T. W. (Merioneth)	Pannell, Charles (Leeds, W.)	Ungoed-Thomas, Sir Lynn
Kelley, Richard	Pargiter, G. A.	Wade, Donald
Kenyon, Clifford	Parker, John (Dagenham)	Warbey, William
Key, Rt. Hon. C. W.	Pearson, Arthur (Pontypridd)	Watkins, Tudor
King, Dr. Horace	Pentland, Norman	Weitzman, David
Lawson, George	Popplewell, Ernest	Wells, Percy (Faversham)
Ledger, Ron	Prentice, R. E.	Whitlock, William
Lewis, Arthur (West Ham, N.)		Wilkins, W. A.
Loughlin, Charles	Price, J. T. (Westhoughton)	Williams, D. J. (Neath)
Mabon, Dr. J. Dickson	Proctor, W. T.	Williams, W. R. (Openshaw)
McCann, John	Rankin, John	Wilson, Rt. Hon. Harold (Huyton)
MacColl, James	Roberts, Goronwy (Caernarvon)	Woodburn, Rt. Hon. A.
Mclnnes, James	Ross, William	Woof, Robert
McKay, John (Wallsend)	Royle, Charles (Salford, West)	Yates, Victor (Ladywood)
Mackie, John	Slater, Mrs. Harriet (Stoke, N.)	Zilliacus, K.
McLeavy, Frank	Slater, Joseph (Sedgefield)
Mallalieu, J. P. W. (Huddersfield, E.)	Small, William	TELLERS FOR THE AYES:
Manuel, A. C.	Smith, Ellis (Stoke, S.)	Mr. Probert and Mr. Redhead.
NOES
Agnew, Sir Peter	Dalkeith, Earl of	Hicks Beach, Maj. W.
Aitken, W. T.	d'Avigdor-Goldsmid, Sir Henry	Hiley, Joseph
Allason, James	Deedes, W. F.	Hill, Dr. Rt. Hon. Charles (Luton)
Arbuthnot, John	de Ferranti, Basil	Hill, J. E. B. (S. Norfolk)
Ashton, Sir Hubert	Digby, Simon Wingfield	Hirst, Geoffrey
Atkins, Humphrey	Doughty, Charles	Hobson, John
Balniel, Lord	du Cann, Edward	Hocking, Philip N.
Barlow, Sir John	Elliot, Capt. W. (Carshalton)	Holland, Philip
Barter, John	Elliott, R. W.	Hollingworth, John
Batsford, Brian	Emery, Peter	Hopkins, Alan
Baxter, Sir Beverley (Southgate)	Emmet, Hon. Mrs. Evelyn	Hornby, R. P.
Bell, Ronald (S. Bucks.)	Errington, Sir Eric	Hornsby-Smith, Rt. Hon. Patrioia
Berkeley, Humphry	Erroll, Rt. Hon. F. J.	Howard, Gerald (Cambridgeshire)
Bidgood, John C.	Farr, John	Howard, John (Southampton, Test)
Bishop, F. P.	Fell, Anthony	Hughes Hallett, Vice-Admiral John
Black, Sir Cyril	Finlay, Graeme	Hughes-Young, Michael
Bossom, Clive	Fisher, Nigel	Hurd, Sir Anthony
Bourne-Arton, A.	Fletcher-Cooke, Charles	Iremonger, T. L.
Box, Donald	Fraser, Ian (Plymouth, Sutton)	Irvine, Bryant Codman (Rye)
Boyd-Carpenter, Rt. Hon. John	Freeth, Denzil	Jackson, John
Braine, Bernard		Johnson, Dr. Donald (Carlisle)
Bromley-Davenport, Lt.-Col. W. H.	Galbraith, Hon. T. G. D.	Johnson, Eric (Blackley)
Brooman-white, R.	Gammans, Lady	Johnson Smith, Geoffrey
Bryan, Paul	Gardner, Edward	Kerans, Cdr. J. S.
Bullard, Denys	Glover, Sir Douglas	Kerr, Sir Hamilton
Bullus, Wing Commander Eric	Glyn, Dr. Alan (Clapham)	Kimball, Marcus
Burden, F. A.	Godber, J. B.	Kirk, Peter
Campbell, Gordon (Moray & Nairn)	Goodhart, Philip	Kitson, Timothy
Carr, Compton (Barons Court)	Goodhew, Victor	Lagden, Godfrey
Carr, Robert (Mitcham)	Gough, Frederick	Leather, E. H. C.
Chataway, Christopher	Gower, Raymond	Leavey, J. A.
Chichester-Clark, R.	Grant, Rt. Hon. William (Woodside)	Legge-Bourke, Sir Harry
Clark, Henry (Antrim, N.)	Grant-Ferris, wg Cdr. R. (Nantwich)	Lewis, Kenneth (Rutland)
Clark, William (Nottingham, S.)	Green, Alan	Lilley, F. J. P.
Clarke, Brig. Terence (Portsmth, W.)	Gresham Cooke, R.	Linstead, Sir Hugh
Cleaver, Leonard	Grlmston, Sir Robert	Longbottom, Charles
Cole, Norman	Grosvenor, Lt.-Col. R. G.	Loveys, Walter H.
Collard, Richard	Gurden, Harold	Lueas-Tooth, Sir Hugh
Cooke, Robert	Hall, John (Wycombe)	MacArthur, Ian
Cordeaux, Lt.-Col. J. K.	Hamilton, Michael (Wellingborough)	McLaren, Martin
Corfield, F. V.	Harris, Reader (Heston)	MacLeod, John (Ross & Cromarty)
Costain, A. P.	Harrison, Brian (Maldon)	McMaster, Stanley R.
Coulson, J. M.	Harvey, John (Walthamstow, E.)	Maginnis, John E.
Craddock, Sir Beresford	Hastings, S.	Manningham-Buller, Rt. Hn. Sir R.
Crosthwaite-Eyre, Col. O. E.	Hay, John	Markham, Major Sir Frank
Crowder, F. P.	Heald, Rt. Hon. Sir Lionel	Marlowe, Anthony
Cunningham, Knox	Henderson, John (Cathcart)	Marples, Rt. Hon. Ernest
Currie, G. B. H.	Hendry, Forbes	Marshall, Douglas

Mathew, Robert (Honiton)	Ridley, Hon. Nicholas	Tnornton-Kemsley, Sir Colin
Matthews, Gordon (Merlden)	Robinson, Sir Roland (Blackpool, S.)	Tiley, Arthur (Bradford, W.)
Mawby, Ray	Ropner, Col. Sir Leonard	Tilney, John (Wavertree)
Maxwell-Hyslop, R.	Russell, Ronald	Turner, Colin
Montgomery, Fergus	Scott-Hopkins, James	Turton, Rt. Hon. R. H.
More, J.	Sharples, Richard	van Straubenzee, W. R.
Morgan, William	Shepherd, William	Vane, W. M. F.
Morrison, John	Simon, Sir Jocelyn	Vaughan-Morgan, Sir John
Nabarro, Gerald	Skeet, T. H. H.	Vickers, Miss Joan
Nicholls, Sir Harmar	Spearman, Sir Alexander	Wakefield, Edward (Derbyshire, W.)
Nicholson, Sir Godfrey	Speir, Rupert	Walker-Smith, Rt. Hon. Sir Derek
Noble, Michael	Stevens, Geoffrey	Watts, James
Oakshott, Sir Hendrie	Steward, Harold (Stockport, S.)	Webster, David
Osborne, Cyril (Louth)	Stodart, J. A.	Whitelaw, William
Page, John (Harrow, West)	Stoddart-Scott, Col. Sir Malcolm	Wills, Sir Gerald (Bridgwater)
Partridge, E.	Studholme, Sir Henry	Wilson, Geoffrey (Truro)
Pike, Miss Mervyn	Summers, Sir Spencer (Aylesbury)	Woodhouse, C. M.
Pitman, I. J.	Sumner, Donald (Orpington)	Woodnutt, Mark
Pitt, Miss Edith	Talbot, John E.	Woollam, John
Proudfoot, Wilfred	Tapsell, Peter	Worsley, Marcus
Ramsden, James	Taylor, E. (Bolton, E.)	Yates, William (The Wrekin)
Rawlinson, Peter	Temple, John M.
Redmayne, Rt. Hon. Martin	Thatcher, Mrs. Margaret	TELLERS FOR THE NOES:
Rees, Hugh	Thomas, Leslie (Canterbury)	Colonel J. H. Harrison and
Rees-Davies, W. R.	Thomas, Peter (Conway)	Mr. Frank Pearson.
Renton, David	Thompson, Richard (Croydon, S.)

Motion made, and Question proposed, That the Clause stand part of the Bill.

8.30 p.m.

Mr. Houghton

I must express regret, on behalf of hon. Members on this side of the Committee, at the presence of subsection (5) in this Clause. It excludes from the provisions of the Bill those who are drawing non-contributory pensions, commonly known as the over-70 pensions. I referred to this in my speech on Second Reading, when I said that we hoped to move an Amendment to bring them in. Unfortunately, that is not possible under the rules of order, so I cannot now do more than protest against the persistent exclusion from benefits given to the retirement pensioners of the older people covered by the Old Age Pensions Act, 1936.

Their pensions have remained unchanged since 1946 with the exception of the compensation addition of 2s. 4d. in 1958 for the withdrawal of the tobacco concession. The maximum pension for a single person under the noncontributory scheme is 28s. 4d. For a married couple, it might presumably be 42s., plus 4s. 8d. for the withdrawal of the tobacco concession. Neither the needs test nor the level of benefits has been changed for these pensioners since 1946, except for the small matter to which I have referred consequential on the withdrawal of the tobacco concession.

It seems to be time that we should review the position of this group of pensioners. I know that they are a dwind- ling class, because most people are now covered through the National Insurance Scheme and benefit in that way, but there are still about 160,000 of these over-70 pensioners, and many of them are among our most worthy citizens. Many of them have been clergymen, professional workers, or small businessmen. Many of these small businessmen have paid contributions for their workers over many years, but who were excluded from the contributory pension scheme by legislation in the past. Not being employed persons, they could not come into the contributory scheme, but there was on one occasion the opportunity of persons becoming voluntary contributors, subject to an age and income limit. These persons were excluded by the law of pensions from the contributory scheme when it was introduced in 1926.

Many of them are leading very sad lives. They have a little capital to live on, and they are having to eke out as best they can. Admittedly, the needs test for the over-70 pensioners is a little more liberal than the needs test for National Assistance, but many of them are leading lives of cloistered, threadbare poverty, and it is a disappointment to us that the Minister has not done something about this group.

I know that they have been left out hitherto, and that he can quote their exclusion from earlier changes in pensions benefits, but it is no good brooding over the past and mistakes that may have been made in the past. We have to look at this group in the context of the present situation, and a new concept of social provision is now being built up behind the Bill. I express regret that the Minister has found it necessary to include in Clause 2 a provision to exclude this group from any benefit under the Bill.

Mr. Christopher Chataway (Lewisham, North)

I should like to invite my right hon. Friend to look at the position of these non-contributory pensioners, and, by the same token, those who are on modified pensions, because there seems to be a difference of principle in this increase that has not perhaps applied before. On this occasion, the increase is neither related to the previous contributions of those who are to receive the increase, nor is it in any way intent upon restoring the real value of the pension to which they may have felt, while they were contributing, they would be likely to be entitled.

I questioned at another time whether this is the most useful way of trying to help those old-age pensioners most in need. However that may be, by the system being adopted on this occasion, if there is to be a transfer of wealth from the working population to all elderly people, irrespective of need and contributions, it seems that those who, by mischance, or through their greater age, have not had the opportunity to make the necessary contributions, will receive either no increase or a modified increase. If it is accepted by the House that it is right to increase the pensions received by elderly people irrespective of the position in which they may be, surely, irrespective of the amount of contributions they have paid, all should receive a similar increase.

I know from cases in my constituency, and from people who have been to see me on this point, that elderly people in this position fail completely to understand why this grant should be made to their neighbours, who, perhaps, are younger and have had the good fortune to make the necessary contributions, and not be made to them. The people who are outside the scope of the full increases say, "My neighbour is getting this increase. She has in no sense paid for it. My need is greater why should I not get the increase, too?" I find that argument extraordinarily hard to meet or in any way counter. I ask my right hon. Friend to look at the matter again.

Mr. Wade

I support the remarks of the hon. Member for Lewisham, North (Mr. Chataway), but I will not cover that ground again.

I wish to raise the subject of the self-employed, which I think is relevant to this Clause. I understand they will pay the increased contributions and still be subject to the disadvantages which have applied in the past. The self-employed as a whole do not come off too badly, but that is not true of all of them. There are those on a low income, such as the very small shopkeepers, certain craftsmen, crofters, fishermen and others who have to pay a contribution but do not gain the same benefits as employed persons. This also applies to certain people who are treated as self-employed, some in the artistic and entertainment professions, who earn very little. They, in fact, are employed, but employed by a number of different employers. Therefore they are treated as self-employed. To them this contribution can be quite a hardship.

I am, of course, aware of the low income exemption, but that results in a loss of part of the sickness benefit and retirement benefit, which gives rise to a real sense of grievance. It seems that fundamentally the problem arises from the fact that this is a poll tax. The amount of the contribution is the same however low the income, apart from the special low income exemption.

I should like to know whether the higher contributions will apply to the self-employed and, as it seems clear that they will, whether the objections I have mentioned will still apply.

Dr. King

I have two comments to make on this Clause. First, I want to raise a point about contributions. I regret very much that time after time most of the financing of increased benefits is coming from contributions. As the Committee knows, the financing of all State insurance benefits comes from Exchequer grant, on the one hand, and contributions of employers and employees on the other. State grants come from taxes, and taxes, apart from indirect taxes, are levied according to income, but the contributions, as the hon. Member for Huddersfield, West (Mr. Wade) pointed out, are in the nature of a poll tax.

The millionaire and the farm worker will each pay the same increased contribution, but with the difference, the ironic difference which the hon. Member for Tynemouth (Dame Irene Ward) pointed out in this House and in a recent letter to the Daily Telegraph, that the millionaire will get Income Tax relief on his contribution whereas many of the poorest people in the country will not.

8.45 p.m.

Ever since Lloyd George's "Nine-pence for Fourpence", the whole country, including the Labour Party and the trade union movement, has insisted that the benefits should be insurance benefits and that there should be contributions from the worker, chiefly because it was feared that if the whole financing of benefits were from the State, the State which gave might withdraw, whereas by making payments of contributions the benefits would come as of right. But each increase in the contribution increases, in my opinion, the injustice of the poll tax element in the contribution. We may yet reach the stage when the mass of the people in the country, and particularly the lowest-paid workers, find the increased contributions so heavy that they will resist making further increases in retirement pensions. I do not think that that has yet arisen. Indeed, the worker is very generous, and it was the trade union movement which fought to obtain retirement pensions in the past.

I want to point out the uneasiness which many of us feel at the steady increase in the poll tax element. While the Government claim the credit for pension increases, it is the ordinary people who are footing the bill in this way, and in the least just way time after time. I hope that some day we shall reverse this process, that the Exchequer grant element in the financing will be increased and that the poll tax element will be decreased in accordance with the principle, "From each according to his means and to each according to his needs."

I was very interested in the speech of the hon. Member for Lewisham, North (Mr. Chataway). We have known of his humanitarian interests for a long time, and particularly of his work for the refugees. I was very glad that he supported the comment of my hon. Friend the Member for Sowerby (Mr. Houghton) about the serious fact that there exist in the country many people who will get nothing out of this Clause. I am able to talk about this because subsection (5) confines the new benefits to those who are qualified because they have paid enough National Insurance contributions, and we read: The provisions of this section increasing retirement pensions shall not be taken as affecting the provisions of Section seventy-four of the said Act of 1946 relating to noncontributory pensions. I regret that this subsection is in the Clause and that we continue to exclude a group of very old pensioners. In fact, some of them are not even pensioners, because many have only their National Assistance Board coverage. Others have very meagre pensions as of right, plus some National Assistance protection.

There are three groups. First, there are superannuitants of various kinds. Some of these have superannuation of their own, above the basic national pension, and to some extent the Pension Increase Acts take care of them, although in passing I will say that there is time for another such Act and that many of them still feel that they are unjustly treated, because the pension which they receive is by no means commensurate with the pension being earned by other people doing the same job today.

But some of the superannuitants in the country have smaller pensions as of right than the figures which we shall fix in the Bill. There are some old teachers whose pension is less than 57s. 6d. a week—teachers who broke down in their service, teachers who were not able to qualify for a pension of 40/80ths of their salary, old ladies and gentlemen who are drawing a pension less than the basic minimum which we are fixing for National Insurance.

There are railway superannuitants, as the Committee knows almost ad nauseam, whose pension as of right is a mere few shillings a week, far below the basic pension. In addition, there are thousands of people who have no superannuation or pension at all as of right. They receive help from National Assistance according to their means. Many of them are living on savings. Many are gradually spending their savings, together with National Assistance, and getting by in that way. Some have no savings at all.

When National Insurance was introduced, it was inevitable that we could not bring everybody in. I asked the Minister for a figure in the House last week. I gather from his Answer that about three-quarters of a million people do not qualify for National Insurance benefit because they are too old. Year by year that number will dwindle. The time will come when we should call it a day and bring those people into the scope of the benefits which are the right of an ever-increasing percentage of our population.

We can thank God for National Assistance, because it protects them. It might be argued that since National Assistance protects them we need not worry about them. If we followed that argument we could abolish the basic pension as of right for everyone. We ask that at some stage—we hope even at this stage by taking out part of the Clause—the Minister will bring into the great cover of National Insurance the ever dwindling number of people either with no pension at all or with microscopic pensions which are less than those we are discussing.

Mr. Chataway

How can the hon. Gentleman ask for that, because he believes in the necessity of continuing with the contributory idea in pensions, which is a different one from that which I put forward?

Dr. King

We have always argued—it is part of the common pattern of British thought—that benefits should be in the nature of a reward for insurance. There are people who could never come in under those circumstances. I am not arguing that we change the basic principle. There is a group of citizens who never could come in, for a variety of reasons—some of them were not even in the Lloyd George insurance scheme; some of them were in no insurance scheme before; some of them had no pension before; some of them had minor pensions. I ask that they be brought in at some stage without vitiating the principle which we apply for the country as a whole.

I am very interested to find that this opinion is shared by The Old Age Pensioner. I quote this passage from its editorial: Pensioners who suffer most are those who attained the age of 65 between 1940 and 1945. The editor is wrong there, because some people are even older than that. The editorial continues: They never had a chance to provide for their old age, and these are now 75 and 80 (men) and 70 and 75 (women). … And, whilst some of these doubtless will have some other income apart from their pension, there will be very many who have to depend entirely on the basic pension, plus National Assistance. In my view, it is this mass of pensioners who do require relief immediately, otherwise they are never going to reap the benefit of their lives of service. It is by no accident that the editorial goes on to suggest that the present Minister of Pensions and National Insurance should be in the Cabinet to fight for pensions for old-age pensioners.

I hope that the Minister will take note of the uneasiness which we feel about the lot of non-contributory pensioners.

Mr. Norman Cole (Bedfordshire, South)

I want to support what has been said by my hon. Friend the Member for Lewisham, North (Mr. Chataway) and others, particularly about subsection (5). I know that my right hon. Friend will advance good arguments for the common sense purpose there is in retaining that subsection, but, even technically, I am not quite certain that there is a hard-and-fast case for its inclusion. From the Financial Memorandum I notice that even the increased contributions do not fully cover the extra cost of the increased pensions, and that an extra contribution of about £17 million towards the National Insurance Fund will be necessary from the Exchequer in the first year.

If that principle is accepted, surely it can be extended. A prosperous State should be able to look after its old people better, and can surely afford to contribute the necessary amount of money for their benefit. Indeed, it would not seem technically impossible to have spread the net a little wider by increasing the benefit for the noncontributory pensioners.

For the last eight or ten years we have tried to keep the retirement pension in step with increases in the cost of living. That has not applied to the rates received by non-contributory pensioners, because what they get, plus what was the 2s. 4d. tobacco allowance, was fixed before the last increase in retirement pensions, which, again, was made to keep the ordinary retirement pension in step with the cost of living.

Much more important—and I am glad of it—we are establishing by this Bill, as we promised at the General Election, the principle of giving the retirement pensioner something more than the actuarial equivalent of the contribution. We are giving him a right and proper share in the prosperity of the country which he in the past has helped to build. That is a right principle, and I just cannot see why it cannot be extended to people who cannot, perhaps, claim it on an actuarial basis but most certainly can on humanitarian grounds.

The hon. Member for Sowerby (Mr. Houghton) said that there were still 160,000 or 170,000 non-contributory pensioners. Even if the number was only 5,000, I would still think the same, but the fact that there are only 160,000 or 170,000 of them should commend to my right hon. Friend the extension of this principle. It is a comparatively small and, certainly, a dwindling number but, as I say, even were there only a few thousand of them, I should be equally keen because, to every pensioner—as to every one of us in this Committee and outside it—one's own troubles are of paramount importance. We should argue on that basis.

I want to emphasise that these noncontributory pensioners are getting older; are the oldest part of our pensionable population. I know from my own experience that as one gets older one needs more to maintain life at a reasonable standard of happiness. I realise that all this has been said when we have debated past Bills of like nature, but I hope that my right hon. Friend will seek to do something, apart from the Money Resolution and the rest, to pass on some part of our abounding prosperity to those who, for reasons of age and need should receive our help. I hope that he will look at this subject again, and I add my support to those who have already spoken.

9.0 p.m.

Mr. Tudor Watkins (Brecon and Radnor)

I support what has already been said about non-contributory pensioners. I have just returned from taking part in some of the by-elections, and I can tell the Committee that Government speakers at those by-elections have not made it plain that the non-contributory pensioners do not come into the affluent society at present. There is a great deal of confusion as a result, and in all the propaganda and announcements on television the non-contributory pensioners are completely forgotten. They are under the impression that the Bill gives them an increase, but subsection (5) makes it quite clear that they will not benefit.

Perhaps the Parliamentary Secretary will tell us how many non-contributory pensioners there have been, year by year, since 1946. They are bound to be decreasing all the time. If they are decreasing all the time, these are the people who ought to be getting some result of this increase in pensions. It may be argued that they will get National Assistance, but that is not the point. I should like to know how many of these noncontributory pensioners are getting National Assistance at present. They are in a different category altogether from the contributory pensioners who will be getting an increase of 2s. to 26s. a week. Some increase ought to be allowed to them. They know nothing about the Money Resolution and how impossible it is to get an Amendment through the Chair and all the rest of it. They ask, "Are we the forgotten people? When shall we get something?"

I am concerned about this, because a has always been my religion to bring these people in. It is written that not one sparrow shall fall. These people in my constituency are not sparrows; they can speak their minds and make it plain to the Minister that they want to know why there should be the "haves" and the "have nots" in this matter.

It would be interesting to know exactly what is the situation. As the hon. Member for Bedfordshire, South (Mr. Cole) said, these pensioners are surely entitled to take part in the affluent society. The Minister said on Second Reading that we are raising the standard, but we are not raising the standard of the non-contributory pensioners. Am I to understand that there is to be a new Bill for them? Let us have some information about it. It will be very interesting to hear what the Joint Parliamentary Secretary has to say. I read the speech that she made in the Ludlow by-election and it is no wonder that they asked me to speak the following evening. They had a very different conception of this Bill from the one that I have. If there were to be a referendum on it I am sure that the non-contributory pensioners would come within the scheme purely on their voting alone.

Vice-Admiral Hughes Hallett

It would be true to say that the Clause that we are now discussing, to decide whether or not it should stand part of the Bill, is the most important Clause because it concerns the vast bulk of the people who are affected by this Bill.

I very much regret that I missed the opening speech of the hon. Member for Sowerby (Mr. Houghton), but I must confess that I was taken by surprise by its brevity. The part of the debate to which I have listened tempts me to repeat what I said when speaking on the Amendment, namely, that I would defy anyone coming into this Chamber and not knowing what this Bill is about to imagine that we were taking action to make one of the biggest and most costly increases in the National Insurance Scheme in the history of this country. Any stranger listening, not only to speeches from the Opposition but to some of the speeches of hon. Members on this side of the Committee, would imagine that we were engaged in reducing pensions. It really is too bad.

I want first to say a word about the benefits. I still find that the Order Paper when it comes to Amendments of the Schedules is a very confusing document. It may be that I have missed some vital and obvious point, but I do not think that the Opposition have any Amendments down to increase the basic pension. I do not know Whether I am wrong.

Mr. Houghton

The hon. and gallant Gentleman is, I hope, wrong. We have tabled two Amendments to the Schedules to increase the basic pension.

Vice-Admiral Hughes Hallett

I am very glad to hear that. If that had not been done, it would have been quite contrary to the whole theme of the Opposition's case during the Second Reading debate. I was most interested in the theme then, and I hope it is reflected in the Amendments which I have failed to perceive. The theme was that we should raise the basic rate to something on which a person could live without recourse to any form of National Assistance.

In theory, that may be very desirable, though I am not absolutely certain that it is all that desirable, even in theory, but the point I want to make is that it is not the policy on which the Opposition went to the country at the last General Election, whereas the increased benefits which the Government are asking Parliament to approve represent very accurately indeed the fulfilment of the policy on which the Conservative Party went to the country.

The new basic rates, as was pointed out by my right hon. Friend on Second Reading, straddle the proposals made by the Opposition at the General Election. The Opposition proposed 60s. for the single person and 90s. for the married couple, whereas we are proposing 57s. 6d. for the single person and 92s. 6d. for the married couple. Speaking as a bachelor, I am not sure that there was not some merit in the proposals put forward by the Labour Party. Be that as it may, it is worth considering for a moment what Amendment would be necessary to the Clause to give effect to the Opposition's theme during Second Reading. I believe that it is necessary to increase the pension for a single person to more like £4 or £5 and that for the married couple to more like £8. It is worth considering what, in turn, the effects of that would be. If that were done, it would make the contributions which would be necessary under the Clause so high that they would have to form the sole method of saving for the great bulk of the population.

The Chairman

I am sorry to interrupt the hon. and gallant Gentleman. We are dealing with the Question, "That the Clause stand part of the Bill". He is now suggesting amendments to the Clause.

Vice-Admiral Hnghes Hallett

I bow to your Ruling, Sir Gordon, and will leave that point.

I now turn to the contributions. During the earlier part of the debate the expression "poll tax" was again used. This would not be a poll tax. Nothing could be more misleading than to describe the contributions required under the Bill——

Mr. Houghton

On a point of order, Sir Gordon. May I have your guidance? The hon. and gallant Gentleman, if I may respectfully say so, is anticipating consideration of and debates upon the Schedules which deal with contributions and with benefits over the whole range of National Insurance benefits, and, indeed, industrial injuries benefits, too. Clause 2 is really, it seems to me, the basic authority for the several improvements in benefits and changes in contributions which are written into the Schedules. I submit that we are to have a debate upon the Schedules. The hon. and gallant Gentleman can then deal with all the figures there and all the arguments will then come out. What I should like to know is whether we are to have the debate on the Question, "That the Clause stand part of the Bill", or on the Schedules.

Vice-Admiral Hughes Hallett

Further to the point of order, Sir Gordon. Might I point out that you allowed the hon. Member for Southampton, Itchen (Dr. King) to develop an argument to considerable length as to why it was wrong to pay for the increased benefits under the Bill by means of contributions, and it is his argument to which I should like to reply now.

The Chairman

It is desirable to have the main debate on the question of contributions and benefits on the Schedules, but passing references may be made to the Schedules now.

Vice-Admiral Hughes Hallett

Perhaps I might say at once, if it will be in order to do so, that I do not wish to refer to the actual figures at all. The point to which I wish to refer is the principle of paying for the extra benefits under the Clause by contributions as opposed to paying by some other method. May I have your guidance, Sir Gordon, as to whether that is in order?

The Chairman

I am sorry, but I did not quite catch what the hon. and gallant Member said. I think he is in order.

Vice-Admiral Hughes Hallett

I am much obliged. The suggestion has been made that we propose to impose by this Clause an additional poll tax on the people of this country. It is nothing of the kind, because there are several very important categories of people excluded from the contributions, no matter what their level. There always have been. To begin with, the pensioners themselves pay nothing towards it. To go on, students can be, and usually are, excluded from paying. Those on small incomes are excluded from paying.

Mr. Ellis Smith

That is all part of our case.

Vice-Admiral Hughes Hallett

Finally, the wives of insured persons also are excused from paying such contributions if they wish. It is, therefore, quite misleading to suggest that the Clause will lead to an increase of any form of poll tax at all, because the contributions cannot accurately be so represented.

If it is in order, Sir Gordon, I wish to invite the attention of the Committee to what would happen if we followed the advice of so many hon. Members opposite—I say again that this has been raised since the debate on the Clause began—and made no provision in the Clause for an increase in contributions but allowed the money to be collected through the ordinary revenue. That is what would follow from the argument advanced by hon. Members opposite.

This theory that we are penalising unduly the working population of the country in proceeding on these lines is totally unsound and should be exploded once and for all. I do not propose to go into the details now because I think that it would not be in order to do so, but anyone can calculate what the figures are. It may surprise the hon. Member for Ince (Mr. T. Brown), who raised this point on Second Reading, to know that the average wage-earner in this country would have to pay more if the cost of this Measure were borne on taxation instead of being borne in the way proposed in the Bill. [HON. MEMBERS: "No."] That is a matter of fact. It is true, whether the cost is borne entirely by Income Tax or half by Income Tax and half by indirect taxation. I shall be glad afterwards to show any hon. Member who wishes the figures on which I arrive at that conclusion.

Mr. Bruce Millan (Glasgow, Craigton)

If a wage-earner is paying no Income Tax at all because his income is insufficient to require him to do so, and if the cost were spread over general taxation, he would be paying nothing. That is part of our case.

Vice-Admiral Hughes Hallett

That is perfectly true, but he would be a very unusual wage-earner.

Mr. James Dempsey (Coatbridge and Airdrie)

No.

Vice-Admiral Hughes Hallett

He would be a very unusual wage-earner. This Bill deals with the population as a whole. Therefore, we do not go far wrong if we consider the effect on the average member of the population, and that is the person I had in mind when I made that statement.

We recognise, of course, that it is always the duty of the Opposition to belittle the concessions and the extra benefits which are contained in a Bill of this nature and to ask for more. That is perfectly understandable, and no one quarrels with it. Equally, it is the duty of the Government to go forward at whatever speed the general state of the nation's finances can bear, and any attempt to go beyond that will in the long run do harm rather than good to the people it is intended to benefit. That is why I support the Bill as a whole and this Clause in particular.

It is a very interesting point in the debate, which should bring satisfaction to my right hon. Friend, that so much of it has been concentrated on this occasion, for the first time when one of these Bills has been discussed, not on the main beneficiaries of the Bill but upon special groups of them such as those who are in receipt of non-contributory pensions.

9.15 p.m.

Mr. T. Brown

After listening to the two speeches from the Government Front Bench I felt inclined to come to the conclusion that they supported the plea from this side of the Committee on behalf of the non-contributory pensioner. The noncontributory pensioners make up the oldest section of the old-age pensioner population. We are very anxious, as we were previously in the debate concerning pneumoconiosis and industrial diseases, that they shall not be left out. The Amendment which we tabled to subsection (5) indicated our opinion. We should keep in mind the vast number of old people who, as I have said, make up the oldest section of the ageing population. We should also remember that their numbers are diminishing. In a few years' time there will be very few of them left.

My hon. Friend the Member for Brecon and Radnor (Mr. Watkins) asked the Joint Parliamentary Secretary whether she could give the number of noncontributory pensioners. I looked up the record and found that in 1948, under the first National Insurance Bill of any substance, there were 453,417; in 1952, there were 375,000; in 1953, 344,000; in 1954, 315,000; in 1955, 286,000; in 1956, 257,000; in 1957, 233,000; in 1958, 205,000, and in 1959, 179,000. I am given to understand by the Department that at the end of September this year there were 162,000. These figures are a clear indication that the people on whose behalf we are again pleading are diminishing in number.

The Joint Parliamentary Secretary, or even the Minister himself, cannot advance the argument that if we pay a pension to to the non-contributory pensioner who has been left out it will upset the balance or the financial structure of the Bill. With a will, the matter can be dealt with quite easily Looking through the record, I find that the majority of non-contributory pensioners are between the ages of 70 and 85. In heaven's name, if we are prepared to bring about an improvement in the standard of living of the old-age pensioners, surely we ought to extend our generosity a little and bring in the noncontributory pensioners. The figures which I have quoted indicate that they are diminishing in number. Surely we can lend them a helping hand rather than ignore them, as they are ignored in this Clause.

I do not want to advance the cost of living argument. It has been debated until it is almost threadbare. Next door to me, however, lives a non-contributory pensioner who was 87 last week. She is finding it extremely difficult to manage. She is one of the 162,000 of these pensioners and there are many like her who find it extremely difficult to make ends meet. It is all very well for the right hon. Gentleman and the Joint Parliamentary Secretary to say that they must seek recourse to National Assistance. What a tragedy it is that old people who are well past the eventide of their life must go to the National Assistance Board to maintain themselves in a degree of comfort. As Members of this honourable House and claimants to the British characteristics, we ought to be ashamed of ourselves to leave them high and dry without any pension.

Mr. Chataway

Since that is said so often and since consistently 20 per cent. of old-age pensioners have been in receipt of National Assistance since the inception of the scheme, may I ask the hon. Member whether he does not feel that it is terribly wrong to spread the idea that there is something degrading in accepting supplementary benefits?

The Chairman

This is getting far away from the Question "That the Clause stand part of the Bill".

Mr. Gower

I merely want to follow up what was said in his intervention by the hon. Member for Glasgow, Craigton (Mr. Millan) about the financing of the benefits covered by the Clause. On reflection, the hon. Member will, I think, concede that the feature of these benefits is that for the first time my right hon. Friend has been able to come to Parliament and not impose extraordinary burdens on the lower paid wage earner in industry. That is unique.

Mr. Millan

The fact is that the reduction in contribution which some people were to get will no longer come to them.

Mr. Gower

That is a negative thing. [HON. MEMBERS: "No, it is not."] After the Bill is enacted, as we hope it will be, the lower-paid wage earners will pay no more in contributions than they have been paying recently. That is a positive achievement. It has to be related to the fact that in the last twelve months or so, my right hon. Friend and his advisers have been able to put the whole of the accounts of the National Insurance Scheme on a sound financial basis, which is another considerable achievement.

The other remarkable feature of the Clause is not solely the extent of the benefits, but that for the first time such benefits have not been either partially or almost wholly destroyed in value beforehand by increases in the cost of living. That, again, is a great achievement of the Clause.

Mr. Millan

Hon. Members opposite keep talking about the scheme having been put on a sound financial basis. What they mean is that they are putting it on a pay-as-you-go basis, which is not necessarily more sound financially than what we have been doing before. Our criticism is that when hon. Members opposite talk about putting the scheme on a sound financial basis, what they mean, although they do not say it, is that the scheme is now on such a basis that the increased Exchequer contributions that were to have come will no longer be forthcoming. In other words, the Government are saving money on the kind of scheme that is now put before us.

We seriously object to the fact that the Exchequer contributions will not now be increased, as until recently was contemplated, and that the burden is being placed upon the backs of the contributors.

Mrs. Harriet Slater (Stoke-on-Trent, North)

I rise mainly to support those hon. Members who have spoken about the non-contributory pensions, but I would say at once, in answer to the hon. Member for Barry (Mr. Gower), that my hon. Friend the Member for Sowerby (Mr. Houghton) made quite clear that the benefit of this pension for old-age pensioners is not increased to the amount which some hon. Members opposite seem to think it is—in real money value terms. He used, not our figures, but figures used by the Minister himself in answer to a Question put to him some time ago.

People use the phrase which he also used, that this pension is for the first time to be put up without the cost of living having gone up. I wonder whether people who talk like that have really ever assessed the cost of living. About a fortnight ago there was an article in The Guardian on the page "Mainly for Women". I very rarely read that page, but travelling in the train I had plenty of time, and I read it. It gave a budget for four people with less than £6 a week. As a housewife, I went very carefully through that budget. I will tell the Committee one or two of the items in it.

It was said that for tea, for four people, a man, his wife, and two growing children, sardines and toast fingers could be had for 1s. I defy any hon. Member in this Committee to go out and buy a tin of sardines for less than 1s. He would still have to buy the bread and the butter. I defy any hon. Member to be able to give four folk, including two growing children, a really good tea of sardines at that price. Apparently, that family could have an apple charlotte for 6d. If I were to try to buy apples to make an apple charlotte for myself and my husband I could not get apples at less than 5½d. a 1b. I should still need butter and sugar to make the apple charlotte.

To suggest those sorts of quantities and those sorts of prices is to express the attitude which some people have about the cost of living and their attitude as to how much old-age pensioners need to live on. They simply cannot have assessed the needs of old people—of a widow, say, living all alone. The old folk, widows living alone, cannot afford to buy a tin of sardines at 1s. 4d. Many of them have not the necessary facilities to keep perishable food for more than a day.

Another item in that budget was a chicken at 11s. with a little sausage, and four people, apparently, could make it last for four meals. That is the sort of basis on which we try to assess the cost of living. It simply takes no account of the real value or cost of food. So many people have no real conception of how the old folk live.

We on this side have made very clear that we do not consider the present rates adequate, especially in a society which, the Government claim, is affluent. As my hon. Friend pointed out, what is a small amount for a man with a very large income is a very large amount to lower paid people.

The Chairman

I am sorry to interrupt the hon. Lady, but this argument applies more appropriately to the relevant Schedule.

Mrs. Slater

All right, Sir Gordon, we will argue this when we reach that Schedule.

May I come to the question of the non-contributory pension? There is one hon. Member opposite who seems to me particularly unrealistic, and the hon. and gallant Member——

Mr. Ellis Smith

The admiral.

Mrs. Slater

—the Member for Croydon, North-East (Vice-Admiral Hughes Hallett), who is in receipt of a pension because he was employed in an occupation in which a pension, and a good pension, was possible. He has taken up an extraordinary position in this debate.

Mr. Ellis Smith

Where is he?

Mrs. Slater

To my mind, he completely ignored this very small group of people who, for several reasons, are not receiving any pension at all and are not benefiting at all from this Bill. There are the old people who may have been self-employed as small shopkeepers, for example, and I remember that when I was a teacher those who earned £420 or more were not entitled to join the scheme. It is only since the new scheme was introduced that everyone has been brought into it.

9.30 p.m.

A man of 83 came to see me the other day. He has lived a good life and has done a tremendous amount of voluntary work, especially in cultural circles. His wife was a former school teacher who had a very small pension and when she died he had no resources at all. I told him to go to the National Assistance Board. I am not one of those who, in my own personal case, would think it was wrong to go to the Board, because if the assistance is there people ought to take advantage of it. But to these old people who have grown up in a different age, and who do not understand present insurance schemes at all, National Assistance is nothing more or less than charity. It is a relic of the Poor Law in their lives.

Mr. Ellis Smith

We remember it, and I remember who was responsible for it, too.

Mrs. Slater

The fact remains that National Assistance is the only resource left to these people. Even if they have been good savers—and many of them have had few opportunities of saving, especially if they have brought up a family—they have used up all their savings by the time they are over 80 and they try to depend on less and less to keep them going.

If the Government's claims are right—and they keep reiterating them—that we are living in a wealthy and affluent society, the least that they can do at this stage is to bring within the scope of the Bill this very small and decreasing number of non-contributory pensioners. That, at least, would be justice and, what is more, these people would feel some sense of justice being done to them. They have been living for a long time with the feeling that they have been left out of everything. In the last few years of their lives they should be spared their present feeling that their only hope is to apply for National Assistance which in their minds means charity.

Before the Bill finally becomes law I hope that the Minister will consider bringing this small group of people within the terms of the Bill and will accordingly alter the provisions of subsection (5).

Miss Hornsby-Smith

In answering the debate, I think that it would be to the benefit of the Committee if I dealt mainly with the non-contributory pensions and not with rates of contributory benefits, which we shall have an opportunity to discuss when we come to the Schedules. As the hon. Member for Sowerby (Mr. Houghton) so firmly said, this has been a form of pension which successive Governments have felt unable to bring into, or in any way justify being brought into, the full contributory scheme. These pensions are paid by the Exchequer and are not a charge on the contributory National Insurance Scheme. The obsolescent nature of these pensions has been recognised by all Governments and has been accepted up to the present time. No new non-contributory pensions can be awarded to persons, except blind persons, reaching the age of 70 after the 30th of September next year, because, under the terms of the original 1946 Act, people who were then 55 or over did not have the opportunity of joining the new Scheme under the normal conditions and so were accepted into the noncontributory Scheme. But by September next year they will all have reached 70, and there will be no new awards.

I shall not go into detail about the rates of the non-contributory pension, which the hon. Member for Sowerby quite fairly set out, particularly as I understand that one of his hon. Friends would like to get into the debate after me. I would like to give figures for which the hon. Member for Brecon and Radnor (Mr. Watkins) asked.

There are at present 160,000 of these pensioners. It is quite wrong to suggest that they will not go to the National Assistance Board. They get their noncontributory pensions from the Board. The Board assesses whether or not they are qualified to have this pension according to their means, and at the same time it identifies any additional need which may qualify them for assistance.

The answer to the suggestion that these non-contributory pensioners are too proud to go to the National Assistance Board is simply that they are already under the Board's care. These pensions are paid directly from the Exchequer, but they are administered by the local offices of the National Assistance Board, and if a pensioner is in need the Board——

Mr. Watkins

Has not an applicant to make a separate application for a second visit to be made for this purpose?

Miss Herbison

They have to have a means test.

Miss Hornsby-Smith

In many cases, the pensioners do not have to pay a visit at all to the offices of the Board, because if an officer goes to visit one—as he will, on request, visit all these people—he can at the same time—perhaps to use the phrase "killing two birds with one stone" is the wrong expression—assess whether the pensioner is also entitled to the additional allowances of the Board.

I can assure the Committee that the officers of the Board do just that. Of these 160,000 non-contributory pensioners, 113,000, or 70 per cent., are receiving additional assistance allowances from the Board. It is quite untrue to say that they have had no increase, that nothing has been made up to them. In many cases, if they are receiving the Board's assistance as well, including rent allowance, they will be drawing more than they would be drawing if they had only a contributory pension. If many of them were put onto the contributory pension they would, financially, be no better off, for the simple reason that they are drawing additional grants from the Board.

Hon. Members should not forget that those receiving National Assistance include quite a few people with fairly substantial capital. That capital is treated more favourably in the case of the noncontributory pensioner than under the National Assistance test of need. A man and wife can have as much as £1,730 of capital and if they have no other means they will still receive their non-contributory pension at the maximum rate.

Mr. G. A. Pargiter (Southall)

Would not the right hon. Lady agree that if a person is under the age of 70 the Assistance Board assesses his need, but if he is over the age of 70 the Board does not because such a person has an automatic right and therefore there would be no cause for assessment?

Miss Hornsby-Smith

The pension is always subject to a means test because it is a non-contributory pension. The hon. Gentleman is confusing it with the insurance pension, where there is no earnings rule after 70, but that is quite a different thing.

Thus the corresponding figure for a single pensioner—I am sorry, I was bringing out the fact that for a man and wife the figure of capital is £1,730 and that with that amount they would not lose any part of this pension even though it is assessed according to means. They would not lose the pension entirely—which is a point the hon. Member might care to listen to—until their capital exceeded £2,990. The corresponding figures for a single pensioner would be £865 and £1,495. Therefore, my right hon. Friend does not feel that he would be justified in transferring this, as it were, as a liability to the insurance fund, against all past precedents, since it is a non-contributory benefit based on a test of need. Nor is he prepared to regard an increase in the contributory benefits of the National Insurance Scheme as the occasion for increasing rates for what we believe is an obsolescent pension for which special provision was made. The numbers are falling rapidly and the cost does not fall on the National Insurance Fund but Domes directly from the Exchequer.

Mr. Ross

It is rather depressing once again to hear the right hon. Lady confess her inability to take any step forward in relation to this matter. She takes examples from the past. She says that successive Governments have failed to do this and therefore the present Government cannot do it. There is one grave omission from that argument, and that is the 1946 Act. We are talking here about what is rightly called the old Age Pensions Act, 1936, under which a single pensioner was paid [Os. For the married couple it was 20s. and that was paid on a means test. In 1946, when my right hon. Friend introduced the Act of that year, he did not take the attitude which the right hon. Lady has proclaimed tonight. Then there were between 400,000 and 500,000 of these pensioners. He increased their pension from 10s. to 26s. In other words, he brought it into line with the contributory pension. All we are asking is that the right hon. Lady should give some consideration to taking a similar step. Today there are not 400,000 of these people, but only 160,000 of them, and by the time the provisions of this Bill come into force in April there will be a lot fewer than than number.

I am indeed sorry that the right hon. Lady went into the argument about the National Assistance Board and the merits of that. I do not think that arises. Let us face the fact that these people have two separate means tests. There is the test in relation to the actual pension and there is another test of means relating to the additional help. There are two separate sets of standards which they have to pass. The right hon. Lady herself admitted it.

Miss Hornsby-Smith

With great respect to the hon. Member for Kilmarnock (Mr. Ross), if an officer of the National Assistance Board obtains the information for the purpose of assessing this pension he already has the information on which he can assess entitlement to assistance in addition.

9.45 p.m.

Mr. Ross

The fact is that in relation to the legislation by which he makes (a) a pension and (b) an assistance grant, he has two separate sets of regulations and standards. It may be one set of information, but these people are subject to a double means test, and the logic of this business, if the right hon. Lady insists upon it, is that she should wipe this thing out altogether.

I do not think that this is an adamant attitude in relation to the Ministry of Pensions and National Insurance at all, because, as the right hon. Lady so rightly said, this has nothing to do with the Minister of Pensions and National Insurance. Financing this type of pension is the job of the Treasury; it is done by an Exchequer grant. That was why our Amendment could not be called, because it would be putting a charge, not upon the Insurance Fund, but upon the Treasury.

I appeal to the Minister to have a talk with the Treasury before we reach the other stages of the Bill, to see whether the Government would not like to look with favour on this diminishing number of pensioners. This is not an obsolescent class of pensioner; it is a dying class. Let us be quite blunt about it. I do not think that it would ruin the nation if we took this step, but it would be showing an attitude of understanding and sympathy if we brought them up to the standards of the contributory pensions. This is not a lot to ask, and it is not a tremendously important thing from the overall pensions aspect; but from the point of view of the people who are affected it is important, and it is something that we could quite well afford to do.

Question put and agreed to.

Clause ordered to stand part of the Bill.